BlackRock Utility & Infrastructure Trust

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number: 811-22606

Name of Fund:  BlackRock Utility and Infrastructure Trust (BUI)

Fund Address:   100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Utility and Infrastructure

Trust, 55 East 52nd Street, New York, NY 10055

Registrant’s telephone number, including area code: (800) 882-0052, Option 4

Date of fiscal year end: 10/31/2014

Date of reporting period: 10/31/2014


Item 1 – Report to Stockholders


OCTOBER 31, 2014        

 

 

ANNUAL REPORT

 

      BLACKROCK®

 

BlackRock Dividend Income Trust (BQY)

BlackRock EcoSolutions Investment Trust (BQR)

BlackRock Energy and Resources Trust (BGR)

BlackRock Enhanced Capital and Income Fund, Inc. (CII)

BlackRock Enhanced Equity Dividend Trust (BDJ)

BlackRock Global Opportunities Equity Trust (BOE)

BlackRock Health Sciences Trust (BME)

BlackRock International Growth and Income Trust (BGY)

BlackRock Real Asset Equity Trust (BCF)

BlackRock Resources & Commodities Strategy Trust (BCX)

BlackRock Utility and Infrastructure Trust (BUI)

 

 

 

 

 

Not FDIC Insured ¡ May Lose Value ¡ No Bank Guarantee  

 


      

 

Section 19(a) Notices

BlackRock Dividend Income Trust’s (BQY), BlackRock EcoSolutions Investment Trust’s (BQR), BlackRock Energy and Resources Trust’s (BGR), BlackRock Enhanced Capital and Income Fund, Inc.’s (CII), BlackRock Enhanced Equity Dividend Trust’s (BDJ), BlackRock Global Opportunities Equity Trust’s (BOE), BlackRock Health Sciences Trust’s (BME), BlackRock International Growth and Income Trust’s (BGY), BlackRock Real Asset Equity Trust’s (BCF), BlackRock Resources & Commodities Strategy Trust’s (BCX) and BlackRock Utility and Infrastructure Trust’s (BUI) (each, a “Trust” and collectively, the “Trusts”), reported amounts and sources of distributions are estimates and are not being provided for tax reporting purposes. The actual amounts and sources for tax reporting purposes will depend upon each Trust’s investment experience during the year and may be subject to changes based on the tax regulations. Each Trust will provide a Form 1099-DIV each calendar year that will tell you how to report these distributions for federal income tax purposes.

October 31, 2014

 

     

Total Cumulative Distributions

for the Fiscal Year

    

% Breakdown of the Total Cumulative

Distributions for the Fiscal Year

 
     

Net

Investment

Income

    

Net Realized

Capital Gains

Short-Term

    

Net Realized

Capital Gains

Long-Term

    

Return

of

Capital

    

Total Per

Common Share

    

Net

Investment

Income

   

Net Realized

Capital Gains

Short-Term

   

Net Realized

Capital Gains

Long-Term

   

Return

of

Capital

   

Total Per

Common Share

 

BQY*

   $ 0.253142       $ 0.011898       $ 0.584969       $ 0.146791       $ 0.996800         26     1     59     14     100

BQR*

   $ 0.071912                       $ 0.665838       $ 0.737750         10     0     0     90     100

BGR*

   $ 0.261111       $ 0.698068       $ 2.946380       $ 0.349441       $ 4.255000         6     16     70     8     100

CII*

   $ 0.556866                       $ 0.743134       $ 1.300000         43     0     0     57     100

BDJ*

   $ 0.166587                       $ 0.440213       $ 0.606800         27     0     0     73     100

BOE*

   $ 0.139501                       $ 1.211049       $ 1.350550         10     0     0     90     100

BME

   $ 0.019391       $ 1.965344       $ 1.786309       $ 0.067281       $ 3.838325         1     51     46     2     100

BGY*

   $ 0.105355                       $ 0.622195       $ 0.727550         14     0     0     86     100

BCF*

   $ 0.112816                       $ 0.644784       $ 0.757600         15     0     0     85     100

BCX*

   $ 0.236046                       $ 0.765954       $ 1.002000         24     0     0     76     100

BUI*

   $ 0.488428               $ 0.516716       $ 0.566356       $ 1.571500         31     0     33     36     100

 

  *   Certain Trusts estimate they have distributed more than the amount of earned income and net realized gains; therefore, a portion of the distribution may be a return of capital. A return of capital may occur, for example, when some or all of the shareholder’s investment in a Trust is returned to the shareholder. A return of capital does not necessarily reflect a Trust’s investment performance and should not be confused with ‘yield’ or ‘income.’ When distributions exceed total return performance, the difference will reduce the Trust’s net asset value per share.

Section 19(a) notices for each Trust, as applicable, are available on the BlackRock website http://www.blackrock.com.

 

Section 19(b) Disclosure

The Trusts, acting pursuant to a U.S. Securities and Exchange Commission (“SEC”) exemptive order and with the approval of each Trust’s Board of Trustees/Directors (the “Board”), each have adopted a plan, consistent with its investment objectives and policies to support a level distribution of income, capital gains and/or return of capital (the “Plan”). In accordance with the Plans, the Trusts currently distribute the following fixed amounts per share on a monthly basis as of October 31, 2014:

 

    Exchange Symbol          Amount Per Common Share        
  BQY        $0.0767      
  BQR        $0.0500      
  BGR        $0.1350      
  CII        $0.1000      
  BDJ        $0.0467      
  BOE        $0.1039      
  BME        $0.1650      
  BGY        $0.0560      
  BCF        $0.0583      
  BCX        $0.0771      
    BUI          $0.1210        

The fixed amounts distributed per share are subject to change at the discretion of each Trust’s Board. Under its Plan, each Trust will distribute all available investment income to its shareholders, consistent with its primary investment objectives and as required by the Internal Revenue Code of 1986, as amended (the “Code”). If sufficient investment income is not available on a monthly basis, the Trusts will distribute long-term capital gains and/or return of capital to shareholders in order to maintain a level distribution. Each monthly distribution to shareholders is expected to be at the fixed amount established by the Board, except for extraordinary distributions and potential distribution rate increases or decreases to enable the Trusts to comply with the distribution requirements imposed by the Code.

 

Shareholders should not draw any conclusions about each Trust’s investment performance from the amount of these distributions or from the terms of the Plan. Each Trust’s total return performance on net asset value is presented in its financial highlights table.

The Board may amend, suspend or terminate a Trust’s Plan without prior notice if it deems such actions to be in the best interests of the Trust or its shareholders. The suspension or termination of the Plan could have the effect of creating a trading discount (if the Trust’s stock is trading at or above net asset value) or widening an existing trading discount. The Trusts are subject to risks that could have an adverse impact on their ability to maintain level distributions. Examples of potential risks include, but are not limited to, economic downturns impacting the markets, decreased market volatility, companies suspending or decreasing corporate dividend distributions and changes in the Code. Please refer to each Trust’s prospectus for a more complete description of its risks.

 

2    ANNUAL REPORT    OCTOBER 31, 2014     


Table of Contents     

 

       Page   

Section 19(a) Notices

     2   

Section 19(b) Disclosure

     2   

Shareholder Letter

     4   

Annual Report:

  

The Benefits and Risks of Option Over-Writing

     5   

Trust Summaries

     6   

Derivative Financial Instruments

     28   

Financial Statements:

  

Schedules of Investments

     29   

Statements of Assets and Liabilities

     92   

Statements of Operations

     94   

Statements of Changes in Net Assets

     96   

Statements of Cash Flows

     102   

Financial Highlights

     105   

Notes to Financial Statements

     116   

Report of Independent Registered Public Accounting Firm

     139   

Important Tax Information

     140   

Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement

     141   

Automatic Dividend Reinvestment Plans

     147   

Officers and Trustees

     148   

Additional Information

     152   

 

     ANNUAL REPORT    OCTOBER 31, 2014    3


Shareholder Letter

Dear Shareholder,

The final months of 2013 were generally positive for most risk assets such as equities and high yield bonds even as investors were grappling with uncertainty as to when and by how much the U.S. Federal Reserve would begin to gradually reduce (or “taper”) its asset purchase programs. Higher quality bonds and emerging market investments, however, struggled as Fed tapering became increasingly imminent. When the central bank ultimately announced its tapering plans in mid-December, equity investors reacted positively, as this action signaled the Fed’s perception of real improvement in the economy.

Most asset classes moved higher in the first half of 2014 despite the pull back in Fed stimulus. The year got off to a rocky start, however, as a number of developing economies showed signs of stress and U.S. economic data weakened. Equities declined in January while bond markets found renewed strength from investors seeking relatively safer assets. Although these headwinds persisted, equities were back on the rise in February as investors were assuaged by increasing evidence that the soft patch in U.S. data was temporary and weather-related, and forecasts pointed to growth picking up later in the year.

In the months that followed, interest rates trended lower and bond prices climbed higher in the modest growth environment. Financial markets exhibited a remarkably low level of volatility despite rising tensions in Russia and Ukraine and signs of decelerating growth in China. Equity markets were resilient as investors focused on signs of improvement in the U.S. recovery, stronger corporate earnings, increased merger-and-acquisition activity and, perhaps most importantly, reassurance from the Fed that no changes to short-term interest rates were on the horizon.

In the ongoing low-yield environment, income-seeking investors moved into equities, pushing major indices to record levels. However, as stock prices continued to rise, investors became wary of high valuations and began shedding the stocks that had experienced significant price appreciation in 2013, particularly growth and momentum names. The broad rotation into cheaper valuations resulted in the strongest performers of 2013 struggling most in 2014, and vice versa. Especially hard hit were U.S. small cap and European stocks, where earnings growth had not kept pace with market gains. In contrast, emerging markets benefited from the trend after having suffered heavy selling pressure in early 2014.

Volatility ticked up in the middle of the summer. Markets came under pressure in July as geopolitical turmoil intensified in Gaza, Iraq and Ukraine and financial troubles boiled over in Argentina and Portugal. Investors regained some confidence in August, allowing markets to rebound briefly amid renewed comfort that the Fed would continue to keep rates low and hopes that the European Central Bank would increase stimulus. However, markets swiftly reversed in September as improving U.S. economic indicators raised concerns that the Fed would increase short-term interest rates sooner than previously anticipated. Global credit markets tightened as the U.S. dollar strengthened, ultimately putting a strain on investor flows. High valuations combined with impending rate hikes stoked increasing volatility in financial markets. Escalating geopolitical risks further fueled the fire. The U.S. renewed its involvement in Iraq and the European Union imposed additional sanctions against Russia, while Scottish voters contemplated separating from the United Kingdom.

U.S. risk assets made a comeback in October while other developed markets continued their descent. This divergence in market performance moved in tandem with economic momentum and central bank policy. As the U.S. economy continued to strengthen, the need for monetary policy accommodation diminished. Meanwhile, economies in other parts of the developed world decelerated and central banks in Europe and Japan implemented aggressive measures to stimulate growth.

U.S. large cap stocks were the strongest performers for the six- and 12-month periods ended October 31, 2014. U.S. small caps experienced significantly higher volatility than large caps, but nonetheless generated positive returns. International developed market equities broadly declined while emerging markets posted modest gains. Most fixed income assets produced positive results as rates generally fell. Tax-exempt municipal bonds benefited from a favorable supply-and-demand environment. Short-term interest rates remained near zero, keeping yields on money market securities close to historic lows.

At BlackRock, we believe investors need to think globally, extend their scope across a broad array of asset classes and be prepared to move freely as market conditions change over time. We encourage you to talk with your financial advisor and visit blackrock.com for further insight about investing in today’s markets.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

 

 

 

LOGO

U.S. financial markets generally outperformed other parts of the world given stronger economic growth and corporate earnings, the continuation of low interest rates and the appeal of relative stability amid rising geopolitical uncertainty.

Rob Kapito

President, BlackRock Advisors, LLC

 

Total Returns as of October 31, 2014  
    6-month     12-month  

U.S. large cap equities
(S&P 500® Index)

    8.22     17.27

U.S. small cap equities
(Russell 2000® Index)

    4.83        8.06   

International equities
(MSCI Europe, Australasia,
Far East Index)

    (4.83     (0.60

Emerging market equities
(MSCI Emerging Markets Index)

    3.74        0.64   

3-month Treasury bill
(BofA Merrill Lynch
3-Month Treasury
Bill Index)

    0.02        0.05   

U.S. Treasury securities
(BofA Merrill Lynch
10- Year U.S. Treasury
Index)

    4.29        5.21   

U.S. investment grade
bonds (Barclays U.S.
Aggregate Bond Index)

    2.35        4.14   

Tax-exempt municipal
bonds (S&P Municipal Bond Index)

    3.54        7.94   

U.S. high yield bonds
(Barclays U.S. Corporate
High Yield 2% Issuer
Capped Index)

    1.05        5.82   
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.     

 

 

 

4    THIS PAGE NOT PART OF YOUR TRUST REPORT          


The Benefits and Risks of Option Over-Writing     

 

In general, the goal of each of the Trusts is to provide total return through a combination of current income and realized and unrealized gains (capital appreciation). The Trusts seek to pursue this goal primarily by investing in a portfolio of equity securities and utilizing an option over-writing strategy in an effort to enhance distribution yield and total return performance. However, these objectives cannot be achieved in all market conditions.

The Trusts primarily write single stock covered call options, and may also from time to time write single stock put options. When writing (selling) a covered call option, the Trust holds an underlying equity security and enters into an option transaction which allows the counterparty to purchase the equity security at an agreed-upon price (“strike price”) within an agreed-upon time period. The Trusts receive cash premiums from the counterparties upon writing (selling) the option, which along with net investment income and net realized gains, if any, are generally available to support current or future distributions paid by the Trusts. During the option term, the counterparty will elect to exercise the option if the market value of the equity security rises above the strike price, and the Trust will be obligated to sell the equity security to the counterparty at the strike price, realizing a gain or loss. Premiums received will increase gains or reduce losses realized on the sale of the equity security. If the option remains unexercised upon its expiration, the Trusts will realize gains equal to the premiums received. Alternatively, an option may be closed out by an offsetting purchase or sale of an option prior to expiration. The Trust realizes a capital gain from a closing purchase or sale transaction if the premium paid is less than the premium received from writing the option. The Trust realizes a capital loss from a closing purchase or sale transaction if the premium received is less than the premium paid to purchase the option.

Writing covered call options entails certain risks, which include, but are not limited to, the following: an increase in the value of the underlying equity security above the strike price can result in the exercise of a written option (sale by the Trust to the counterparty) when the Trust might not otherwise have sold the security; exercise of the option by the counterparty will result in a sale below the current market value and will result in a gain or loss being realized by the Trust; and writing covered call options limits the potential appreciation that could be realized on the underlying equity security to the extent of the strike price of the option. As such, an option over-writing strategy may outperform the general equity market in flat or falling markets but underperform in rising markets.

Each Trust employs a plan to support a level distribution of income, capital gains and/or return of capital. The goal of the plan is to provide shareholders with consistent and predictable cash flows by setting distribution rates based on expected long-term returns of the Trusts. Such distributions, under certain circumstances, may exceed a Trust’s total return performance. When total distributions exceed total return performance for the period, the difference will reduce the Trust’s total assets and net asset value per share (“NAV”) and, therefore, could have the effect of increasing the Trust’s expense ratio and reducing the amount of assets the Trust has available for long term investment. In order to make these distributions, a Trust may have to sell portfolio securities at less than opportune times.

The final tax characterization of distributions is determined after the fiscal year and is reported in the Trust’s annual report to shareholders. Distributions will be characterized as ordinary income, capital gains and/or return of capital. The Trust’s taxable net investment income or net realized capital gains (“taxable income”) may not be sufficient to support the level of distributions paid. To the extent that distributions exceed the Trust’s current and accumulated earnings and profits, the excess may be treated as a non-taxable return of capital. Distributions that exceed a Trust’s taxable income but do not exceed the Trust’s current and accumulated earnings and profits, may be classified as ordinary income which are taxable to shareholders. Such distributions are reported as distributions in excess of net investment income.

A return of capital distribution does not necessarily reflect a Trust’s investment performance and should not be confused with ‘yield’ or ‘income.’ A return of capital is a return of a portion of an investor’s original investment. A return of capital is not taxable, but it reduces a shareholder’s tax basis in his or her shares, thus reducing any loss or increasing any gain on a subsequent disposition by the shareholder of his or her shares. It is possible that a substantial portion of the distributions paid during a calendar year may ultimately be classified as return of capital or as distributions in excess of net investment income for income tax purposes when the final determination of the source and character of the distributions is made.

To illustrate these concepts, assume the following: (1) a common stock purchased at and currently trading at $37.15 per share; (2) a three-month call option is written by a Trust with a strike price of $40 (i.e., 7.7% higher than the current market price); and (3) the Trust receives $2.45, or 6.6% of the common stock’s value, as a premium. If the stock price remains unchanged, the option will expire and there would be a 6.6% return for the three-month period. If the stock were to decline in price by 6.6% (i.e., decline to $34.70 per share), the option strategy would “break-even” from an economic perspective resulting in neither a gain nor a loss. If the stock were to climb to a price of $40 or above, the option would be exercised and the stock would return 7.7% coupled with the option premium received of 6.6% for a total return of 14.3%. Under this scenario, the Trust loses the benefit of any appreciation of the stock above $40, and thus is limited to a 14.3% total return. The premium from writing the call option serves to offset some of the unrealized loss on the stock in the event that the price of the stock declines, but if the stock were to decline more than 6.6% under this scenario, the Trust’s downside protection is eliminated and the stock could eventually become worthless.

Each Trust intends to write covered call options to varying degrees depending upon market conditions. Please refer to each Trust’s Schedule of Investments and the Notes to Financial Statements for details of written options.

 

 

     ANNUAL REPORT    OCTOBER 31, 2014    5


Trust Summary as of October 31, 2014    BlackRock Dividend Income Trust

 

 

Trust Overview

BlackRock Dividend Income Trust’s (BQY) (the “Trust”) investment objective is to provide total return through a combination of current income and capital appreciation. The Trust seeks to achieve its investment objective by investing primarily in equity securities of issuers that pay above-average dividends and have the potential for capital appreciation. The Trust invests, under normal market conditions, at least 80% of its assets in equity securities that pay dividends. The Trust seeks to pursue this goal primarily by investing in a portfolio of equity securities and utilizing an option over-writing strategy in an effort to seek total return performance and enhance distributions.

On July 30, 2014, the Boards of the Trust and BlackRock Enhanced Equity Dividend Trust (“BDJ”) approved the reorganization of the Trust with and into BDJ, with BDJ continuing as the surviving fund after the reorganization. At a special meeting of shareholders on November 10, 2014, the shareholders of the Trust approved the reorganization of the Trust with and into BDJ. The reorganization was completed on December 8, 2014.

No assurance can be given that the Trust’s investment objective will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the 12-month period ended October 31, 2014, the Trust returned 10.75% based on market price and 9.01% based on NAV. For the same period, the MSCI World Value Index returned 7.75%. All returns reflect reinvestment of dividends. The Trust’s discount to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

Relative to the benchmark index, the Trust’s stock selection in consumer discretionary and financials made the largest contributions to relative performance during the 12-month period. Within consumer discretionary, non-benchmark holding The Walt Disney Co. posted healthy gains buoyed by the strong performance of its film studio, theme park and ESPN divisions. Within the financials sector, the fund benefited by avoiding lagging stocks within the benchmark. An underweight and stock selection in financials also contributed to returns. In particular, an underweight in banks held in the benchmark, especially Standard Chartered PLC and HSBC Holdings PLC – ADR proved additive during the period.

 

Ÿ  

A combination of stock selection and an underweight to information technology (“IT”), especially Oracle Corp. Japan and Hewlett-Packard Company, detracted from relative return. The Trust’s underweight to IT has been driven by a preference for larger-cap, mature technology companies with prospects for long-term earnings and dividend growth. In health care, the Trust’s overweight to Bristol-Myers Squibb Co. detracted from performance. Relative weakness for Bristol-Myers Squibb can be attributed to concerns over delays in its development pipeline and increasing immuno-oncology (“I/O”) competition. The investment advisor’s view was that the potential of I/O drugs is enormous, and that Bristol-Myers Squibb has the strongest clinical I/O pipeline, which gives the firm multiple opportunities for market share gain.

Ÿ  

Also during the period, the Trust made use of options, principally written call options on individual stocks, in order to seek enhanced income returns while continuing to participate in the performance of the underlying equities. The Trust’s option writing strategy detracted from both relative and absolute performance during the period.

Describe recent portfolio activity.

 

Ÿ  

While the Trust has typically maintained an overweight in consumer staples due to the sector’s healthy balance sheets, stable earnings and consistent dividend streams, its allocation there was reduced over the period due to concerns regarding valuations and the potential for slowing earnings and dividend growth. Within financials, while the sector remains an underweight relative to the benchmark, the Trust has increased its allocation given the sector’s improved fundamentals, the potential for dividend growth as well as attractive valuations.

Describe Trust positioning at period end.

 

Ÿ  

During the period, the Trust sought opportunities in sectors and industries that are likely to benefit from the slowly improving economy and the higher – but not exceedingly high – interest rate environment that the investment advisor believes is unfolding. The Trust had increased exposure to U.S. financial companies, select IT names, and industrials, where the investment advisor sees the strongest fundamentals, the greatest potential for dividend growth and the most attractive valuations. The Trust had eliminated and/or reduced certain positions within consumer staples, telecommunication services and utilities, where valuations had moved higher and dividend growth potential is viewed as limited. As of period end, the Trust’s largest sector allocations on an absolute basis were in financials, consumer staples, health care, industrials and energy. The Trust remained positioned in high quality stocks with a special emphasis on providing relative protection and growth of income.

 

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

6    ANNUAL REPORT    OCTOBER 31, 2014     


     BlackRock Dividend Income Trust

 

 

Trust Information     

 

Symbol on New York Stock Exchange (“NYSE”) MKT

   BQY

Initial Offering Date

   May 28, 2004

Current Distribution Rate on Closing Market Price as of October 31, 2014 ($13.18)1

   6.98%

Current Monthly Distribution per Common Share2,3

   $0.0767

Current Annualized Distribution per Common Share2

   $0.9204

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

  3   

On June 5, 2014, the Board of the Trustees approved a change to the frequency of regular Trust distributions from quarterly to monthly. Please see Note 2 of the Notes to Financial Statements for additional information.

 

Market Price and Net Asset Value Per Share Summary

 

       10/31/14         10/31/13         Change        High         Low   

Market Price

   $ 13.18       $ 12.84         2.65   $ 13.59       $ 11.75   

Net Asset Value

   $ 14.57       $ 14.42         1.04   $ 14.98       $ 13.66   

 

Market Price and Net Asset Value History For the Past Five Years                                 

 

 

LOGO

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    10/31/14

Exxon Mobil Corp.

     3

The Walt Disney Co.

     3   

Bristol-Myers Squibb Co.

     2   

Altria Group, Inc.

     2   

Chevron Corp.

     2   

Microsoft Corp.

     2   

3M Co.

     2   

Emerson Electric Co.

     2   

The Home Depot, Inc.

     2   

Johnson & Johnson

     2   
Sector Allocation    10/31/14   10/31/13

Financials

   24%   20%

Consumer Staples

   12     14  

Health Care

   12     11  

Industrials

   11     12  

Energy

     9     11  

Information Technology

     8       7  

Consumer Discretionary

     8       8  

Utilities

     7       7  

Materials

     5       4  

Telecommunication Services

     4       6  
 

 

For Trust compliance purposes, the Trust’s sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 

     ANNUAL REPORT    OCTOBER 31, 2014    7


Trust Summary as of October 31, 2014    BlackRock EcoSolutions Investment Trust

 

 

Trust Overview

BlackRock EcoSolutions Investment Trust’s (BQR) (the “Trust”) investment objective is to provide total return through a combination of current income, current gains and long-term capital appreciation. The Trust seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its assets in equity securities issued by companies that are engaged in one or more of New Energy (e.g., products, technologies and services connected to the efficient use of energy or the provision or manufacture of alternative forms of energy), Water Resources and Agriculture business segments. The Trust may invest directly in such securities or synthetically through the use of derivatives. The Trust seeks to pursue this goal primarily by investing in a portfolio of equity securities and utilizing an option over-writing strategy in an effort to seek total return performance and enhance distributions.

On July 30, 2014, the Boards of the Trust, BlackRock Real Asset Equity Trust (“BCF”) and BlackRock Resources & Commodities Strategy Trust (“BCX”) approved the reorganizations of the Trust and BCF with and into BCX, with BCX continuing as the surviving fund after the reorganizations. At a special meeting of shareholders on November 10, 2014, the shareholders of the Trust, BCF and BCX approved the reorganizations of the Trust and BCF with and into BCX. The reorganization was completed on December 8, 2014.

No assurance can be given that the Trust’s investment objective will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the 12-month period ended October 31, 2014, the Trust returned 5.74% based on market price and 5.55% based on NAV. For the same period, the closed-end Lipper Utility Funds category posted an average return of 17.46% based on market price and 16.22% based on NAV. All returns reflect reinvestment of dividends and/or distributions. The Trust’s discount to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

The Trust’s position in the global agricultural products company Syngenta AG detracted from absolute performance. The company announced disappointing results, reflecting lower-than-expected sales in South America that resulted from a delayed product launch. The Trust’s holding in BrasilAgro - Cia. Brasileira de Propriedades Agricolas also detracted from performance, as investors became concerned about the potential impact of weak soybean prices on the Brazilian farmland market. The integrated solar power products manufacturer Trina Solar Ltd. was another notable detractor. The stock performed well in 2013 due to the stabilization in solar prices, but it has experienced some profit taking in 2014. In addition, it was negatively impacted by the U.S. Department of Commerce’s announcement of higher-than- expected anti-dumping tariffs against solar products made in China and Taiwan.

 

Ÿ  

The continuation of favorable weather conditions and larger-than-expected stock reports pointed towards a bumper harvest and put downward pressure on the prices of crop prices in the latter half of the period. Certain companies, including many in the agribusiness and livestock industries, benefited from this environment. The Trust’s positions in the agribusiness companies Archer-Daniels-Midland Co. (“ADM”) and Bunge Ltd., as well as its holdings in animal protein stocks BRF SA and Tyson Foods, Inc. were among the top performers during the period. ADM finalized the acquisition of WILD Flavors. This acquisition is an example of ADM’s strategy of seeking to deploy capital

  in high-growth, high-margin businesses that enhance its geographic diversification and may be less subject to volatility in commodity prices.

 

Ÿ  

Within the Trust’s water segment, Tianjin Capital Environmental Protection Co. Ltd. and American States Water Co. were among the notable contributors to 12-month results. Tianjin’s performance was aided by rhetoric from the Chinese government that pointed toward increased political support for environmental protection companies. The company has increased dividends each calendar year since 1954.

 

Ÿ  

The Trust made use of options, principally written call options on individual stocks, in order to seek enhanced income returns while continuing to participate in the performance of the underlying equities. The Trust’s option writing strategy detracted from performance during the period.

 

Ÿ  

The Trust held an above-average cash balance during the period, which did not have a material impact on performance.

Describe recent portfolio activity.

 

Ÿ  

During the period, the Trust added to its animal protein exposure based on the strong profit outlook for companies in the industry. Crop price weakness, which has coincided with a period of price strength for livestock commodities, has been a positive for animal protein companies given that crops are a key input cost.

 

Ÿ  

In the new-energy segment of the portfolio, the Trust reduced its exposure to renewable energy technology companies and increased its position in the energy efficiency industry based on its relative valuation. In the water segment, the Trust initiated a position in the industrial conglomerate Danaher Corp.

Describe portfolio positioning at period end.

 

Ÿ  

As of period end, the Trust continued to hold large allocations to both the agriculture and water segments, with a more modest emphasis on the new-energy segment.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

8    ANNUAL REPORT    OCTOBER 31, 2014     


     BlackRock EcoSolutions Investment Trust

 

 

Trust Information     

 

Symbol on NYSE

   BQR

Initial Offering Date

   September 28, 2007

Current Distribution Rate on Closing Market Price as of October 31, 2014 ($7.65)1

   7.84%

Current Monthly Distribution per Common Share2,3

   $0.05

Current Annualized Distribution per Common Share2

   $0.60

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

  3   

On June 5, 2014, the Board of the Trustees approved a change to the frequency of regular Trust distributions from quarterly to monthly. Please see Note 2 of the Notes to Financial Statements for additional information.

 

Market Price and Net Asset Value Per Share Summary

 

       10/31/14         10/31/13         Change        High         Low   

Market Price

   $ 7.65       $ 7.93         (3.53 )%    $ 8.59       $ 6.92   

Net Asset Value

   $ 8.82       $ 9.16         (3.71 )%    $ 9.44       $ 8.34   

 

Market Price and Net Asset Value History For the Past Five Years                         

 

 

LOGO

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    10/31/14

Monsanto Co.

     5

Archer-Daniels-Midland Co.

     4   

Potash Corp. of Saskatchewan, Inc.

     4   

Bunge Ltd.

     4   

Tyson Foods, Inc., Class A

     4   

Severn Trent PLC

     3   

Syngenta AG

     3   

Ingredion, Inc.

     3   

CF Industries Holdings, Inc.

     3   

The Mosaic Co.

     3   
Industry Allocation    10/31/14   10/31/13

Chemicals

   24%   20%

Food Products

   21     13  

Water Utilities

   18     26  

Machinery

     7     12  

Other4

   30     29  

 

  4   

Other includes a 5% holding or less in each of the following industries; Electric Utilities, Electrical Equipment, Oil, Gas & Consumable Fuels, Real Estate Investment Trusts (REITs), Multi-Utilities, Commercial Services & Supplies, Construction & Engineering, Electronic Equipment, Instruments & Components, Biotechnology, Auto Components, Independent Power Producers & Energy Traders, Semiconductors & Semiconductor Equipment, Road & Rail, Real Estate Management & Development, Building Products, Paper & Forest Products, Food & Staples Retailing, Industrial Conglomerates, Independent Power and Renewable Electricity Producers.

 

 

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 

     ANNUAL REPORT    OCTOBER 31, 2014    9


Trust Summary as of October 31, 2014    BlackRock Energy and Resources Trust

 

 

Trust Overview

BlackRock Energy and Resources Trust’s (BGR) (the “Trust”) investment objective is to provide total return through a combination of current income, current gains and long-term capital appreciation. The Trust seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its total assets in equity securities of energy and natural resources companies and equity derivatives with exposure to the energy and natural resources industry. The Trust may invest directly in such securities or synthetically through the use of derivatives. The Trust seeks to pursue this goal primarily by investing in a portfolio of equity securities and utilizing an option over-writing strategy in an effort to seek total return performance and enhance distributions. During the period, the Board of the Trust approved a change of the fiscal year of the Trust from October 31st to December 31st.

No assurance can be given that the Trust’s investment objective will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the 12-month period ended October 31, 2014, the Trust returned 4.73% based on market price and (2.36)% based on NAV. For the same period, the closed-end Lipper Natural Resources Funds category posted an average return of 11.02% based on market price and 9.05% based on NAV. All returns reflect reinvestment of dividends and/or distributions. The Trust’s discount to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

The price of oil fell sharply during the 12-month period. Global growth expectations weakened, as evidenced by the International Monetary Fund’s reduction of its global economic growth forecast to 3.3% from 3.7% at the start of 2014. The resulting decrease in the demand for oil came at a time of strong supply growth, which pressured prices. During September 2014, OPEC crude oil output rose to its highest level since the summer of 2013 due in part to Libya’s continued recovery and increased flows from Iraq.

 

Ÿ  

In this environment, the Trust’s positions in the North American stocks Noble Energy, Inc. and Encana Corp. weighed on returns. Both stocks lost ground on concerns that lower oil prices will affect their pace of growth. Noble Energy was the Trust’s largest detractor, as the market became wary of the company’s natural gas exposure in Israel once the conflict in Gaza escalated. The company also reduced guidance during the third quarter of 2014, attributing this development to third-party infrastructure bottlenecks in the United States. The Trust’s position in the global exploration & production company Cairn Energy PLC also detracted from performance. The company came under scrutiny from the Indian tax

 

   authorities as a result of the initial public offering of its Indian subsidiary, Cairn India, in 2006.

 

Ÿ  

The Trust’s holdings in large-cap integrated oil & gas companies such as Royal Dutch Shell PLC, Exxon Mobil Corp. and BP PLC bolstered absolute performance. Integrated companies performed well as a group, as the market responded positively to the better-than-expected results, improving free cash flow profiles and attractive valuations of companies in the industry. Additionally, integrated companies typically have lower sensitivity to oil price moves than the wider energy sector due to their size, stronger financial position and diversified operations.

 

Ÿ  

The Trust made use of options, principally written call options on individual stocks, in order to seek enhanced income returns while continuing to participate in the performance of the underlying equities. The Trust’s option writing strategy did not have a material impact on performance during the period.

Describe recent portfolio activity.

 

Ÿ  

During the period, the Trust increased its exposure to the integrated oil & gas industry, where relative price-to-book ratios fell to multi-decade lows. Within this industry, the Trust initiated a position in Total SA and notably increased its exposure to Royal Dutch Shell PLC, which appointed a new CEO in January 2014 and increased its focus on capital discipline. The Fund also initiated a position in the shale gas producer Southwestern Energy Co.

Describe portfolio positioning at period end.

 

Ÿ  

As of period end, the Trust held its largest allocations in the oil & gas exploration & production and integrated oil & gas sub-industries, and it held smaller allocations to oil services, distribution and refining & marketing stocks.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

10    ANNUAL REPORT    OCTOBER 31, 2014     


     BlackRock Energy and Resources Trust

 

Trust Information

 

Symbol on NYSE

   BGR

Initial Offering Date

   December 29, 2004

Current Distribution Rate on Closing Market Price as of October 31, 2014 ($23.78)1

   6.81%

Current Monthly Distribution per Common Share2,3

   $0.135

Current Annualized Distribution per Common Share2

   $1.620

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

  3   

On June 5, 2014, the Board of the Trustees approved a change to the frequency of regular Trust distributions from quarterly to monthly. Please see Note 2 of the Notes to Financial Statements for additional information.

 

Market Price and Net Asset Value Per Share Summary     

 

       10/31/14         10/31/13         Change        High         Low   

Market Price

   $ 23.78       $ 26.82         (11.33 )%    $ 27.30       $ 20.77   

Net Asset Value

   $ 24.90       $ 30.12         (17.33 )%    $ 30.28       $ 23.27   

 

Market Price and Net Asset Value History For the Past Five Years

 

 

LOGO

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    10/31/14

Chevron Corp.

     11

Royal Dutch Shell PLC, Class A — ADR

     11   

Exxon Mobil Corp.

     10   

ConocoPhillips

     6   

Schlumberger Ltd.

     5   

Anadarko Petroleum Corp.

     5   

Total SA

     5   

Marathon Oil Corp.

     3   

Devon Energy Corp.

     3   

EOG Resources, Inc.

     3   
Industry Allocation    10/31/14   10/31/13

Oil, Gas & Consumable Fuels

   91%   83%

Energy Equipment & Services

   9     17  

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 

 

 

     ANNUAL REPORT    OCTOBER 31, 2014    11


Trust Summary as of October 31, 2014    BlackRock Enhanced Capital and Income Fund, Inc.

 

Trust Overview

BlackRock Enhanced Capital and Income Fund, Inc.’s (CII) (the “Trust”) investment objective is to provide investors with a combination of current income and capital appreciation. The Trust seeks to achieve its investment objective by investing in a portfolio of equity and debt securities of U.S. and foreign issuers. The Trust may invest directly in such securities or synthetically through the use of derivatives. The Trust seeks to pursue this goal primarily by investing in a portfolio of equity securities and utilizing an option over-writing strategy in an effort to seek total return performance and enhance distributions. During the period, the Board of the Trust approved a change of the fiscal year of the Trust from October 31st to December 31st.

No assurance can be given that the Trust’s investment objectives will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

Ÿ  

For the 12-month period ended October 31, 2014, the Trust returned 20.43% based on market price and 10.49% based on NAV. For the same period, the benchmark S&P 500® Value Index returned 14.96%. All returns reflect reinvestment of dividends. The Trust’s discount to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

The Trust underperformed the benchmark index due to stock selection in the financials, consumer staples and information technology (“IT”) sectors. Notable individual detractors from performance included Samsung Electronics Co. Ltd. (semiconductors), which underperformed due to declining sales in handsets and uncertainty surrounding company management. Shares of European retailer Metro AG (consumer staples) were pressured on concerns over the company’s exposure to Russia, which came under sanctions as the geopolitical standoff continued between Russia and Ukraine. Lastly, exposure to Japan Airlines Co. Ltd. (industrials) detracted, as a weakening yen provided a headwind for results and the stock declined over the 12-month period despite the company’s industry-lowest cost structure, lack of debt and strong cash flow.

 

Ÿ  

Contributing positively to performance was an underweight in the energy sector, which significantly trailed the broader market. With respect to individual positions, standout contributors to performance included top holdings consumer electronics firm Apple Inc. (IT), fertilizer company CF Industries Holdings, Inc. (materials), managed health care provider UnitedHealth Group, Inc. (health care) and online travel provider Expedia, Inc. (consumer discretionary). CF Industries Holdings, Inc. posted strong gains as the company, under new leadership, announced

   steps to unlock shareholder value by focusing on its cost-advantaged nitrogen business and enhanced balance sheet management. Expedia shares benefited as the company produced strong earnings against an improving backdrop for online travel service.

 

Ÿ  

Also, during the period, the Trust made use of options, principally written call options on individual stocks, in order to seek enhanced income returns while continuing to participate in the performance of the underlying equities. The Trust’s option writing strategy generated net gains during the period.

Describe recent portfolio activity.

 

Ÿ  

The Trust’s sector weightings are generally a result of individual stock selection. Within this context, the Trust increased exposure to the consumer discretionary sector, adding Sinclair Broadcasting Group, Inc. and Nexstar Broadcasting Group, Inc., and building a significant position in online travel provider Orbitz Worldwide, Inc. Additionally, the Trust increased exposure to airlines within the industrials sector through the purchase of United Continental Holdings, Inc. Conversely, the Trust took advantage of strong performance to exit positions in larger capitalization, more defensive holdings such as Unilever NV, General Electric Co., General Mills, Inc. and Kimberly-Clark Corp. Within energy, exposure to large integrated oil & gas companies Exxon Mobil Corp. and Chevron Corp. was eliminated on concerns over the ability of both companies to replace reserves.

Describe portfolio positioning at period end.

 

Ÿ  

Relative to the S&P 500® Value Index, the Trust ended the period with its most significant overweights in consumer discretionary and IT. Conversely, the Trust was significantly underweight in more defensive sectors, including utilities and consumer staples, due to valuation concerns.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

12    ANNUAL REPORT    OCTOBER 31, 2014     


     BlackRock Enhanced Capital and Income Fund, Inc.

 

 

Trust Information     

 

Symbol on NYSE

   CII

Initial Offering Date

   April 30, 2004

Current Distribution Rate on Closing Market Price as of October 31, 2014 ($14.89)1

   8.06%

Current Monthly Distribution per Common Share2,3

   $0.10

Current Annualized Distribution per Common Share2

   $1.20

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

  3   

On June 5, 2014, the Board of the Trustees approved a change to the frequency of regular Trust distributions from quarterly to monthly. Please see Note 2 of the Notes to Financial Statements for additional information.

 

Market Price and Net Asset Value Per Share Summary

 

       10/31/14         10/31/13         Change        High         Low   

Market Price

   $ 14.89       $ 13.52         10.13   $ 15.49       $ 13.15   

Net Asset Value

   $ 15.47       $ 15.31         1.05   $ 16.07       $ 14.27   

 

Market Price and Net Asset Value History For the Past Five Years

 

 

LOGO

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    10/31/14

UnitedHealth Group, Inc.

     5

Apple, Inc.

     5   

Japan Airlines Co. Ltd.

     5   

Sinclair Broadcast Group, Inc., Class A

     4   

American International Group, Inc.

     4   

Orbitz Worldwide, Inc.

     4   

Suncor Energy, Inc.

     3   

CF Industries Holdings, Inc.

     3   

FNF Group

     3   

Pfizer, Inc.

     3   
Sector Allocation    10/31/14   10/31/13

Financials

   21%   18%

Information Technology

   20     20  

Consumer Discretionary

   19     11  

Health Care

   15     14  

Industrials

     8       7  

Energy

     7     13  

Materials

     4       5  

Consumer Staples

     3       6  

Telecommunication Services

     3       6  

For Trust compliance purposes, the Trust’s sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 

 

     ANNUAL REPORT    OCTOBER 31, 2014    13


Trust Summary as of October 31, 2014    BlackRock Enhanced Equity Dividend Trust

 

Trust Overview

BlackRock Enhanced Equity Dividend Trust’s (BDJ) (the “Trust”) primary investment objective is to provide current income and current gains, with a secondary investment objective of long-term capital appreciation. The Trust seeks to achieve its investment objectives by investing in common stocks that pay dividends and have the potential for capital appreciation and by utilizing an option writing (selling) strategy to seek total return performance and enhance distributions. The Trust invests, under normal market conditions, at least 80% of its total assets in dividend paying equities. The Trust may invest directly in such securities or synthetically through the use of derivatives.

On July 30, 2014, the Boards of the Trust and BlackRock Dividend Income Trust (“BQY”) approved the reorganization of BQY with and into the Trust, with the Trust continuing as the surviving fund after the reorganization. At a special meeting of shareholders on November 10, 2014, the shareholders of BQY approved the reorganization of BQY with and into the Trust. The reorganization was completed on December 8, 2014. During the period, the Board of the Trust approved a change of the fiscal year of the Trust from October 31st to December 31st.

No assurance can be given that the Trust’s investment objectives will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the 12-month period ended October 31, 2014, the Trust returned 16.42% based on market price and 11.40% based on NAV. For the same period, the Russell 1000® Value Index returned 16.46%. All returns reflect reinvestment of dividends. The Trust’s discount to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

Relative to the benchmark index, the largest contributors to performance came from stock selection in the industrials and consumer discretionary sectors. Within industrials, the non-benchmark holding Union Pacific Corp. continued to post strong gains, driven by healthy revenue growth and a recovering domestic economy.

 

Ÿ  

In addition, the Trust’s overweight positions in defense contractors Raytheon Co., Northrup Grumman Corp. and Lockheed Martin Corp. posted gains based on renewed geopolitical uncertainty. Within consumer discretionary, an underweight to automobiles – specifically a lack of holdings in Ford Motor Co. and General Motors Co. – and an overweight to non-benchmark positions The Home Depot, Inc. and Comcast Corp., Special Class A shares added to relative performance.

 

Ÿ  

Also, during the period, the Trust made use of options, principally written call options on individual stocks, in order to seek enhanced income returns while continuing to participate in the performance of the underlying equities. During the period, the Trust’s option writing strategy detracted from absolute performance while contributing to relative performance.

 

Ÿ  

The largest detractors from relative performance were stock selection in consumer staples and a combination of stock selection and an underweight in the information technology and health care sectors.

 

Ÿ  

The Trust’s positions in non-benchmark companies Philip Morris International, Inc. and British beverage firm Diageo PLC were the largest individual detractors for the 12-month period. Philip Morris International, Inc. suffered from concerns related to emerging market weakness and foreign exchange. Ultimately, the investment advisor

   believes that the company’s global scale and strong brand loyalty will result in solid pricing and market share gains for its products. Within health care, an underweight to health care providers & services and an overweight to Bristol-Myers Squibb Co. detracted from returns. Relative weakness for Bristol-Myers Squibb can be attributed to concerns over delays in its development pipeline and increasing immuno-oncology (“I/O”) competition. The investment advisor’s view was that the potential of I/O drugs is enormous, and that Bristol-Myers Squibb has the strongest clinical I/O pipeline, which gives the firm multiple opportunities for market share gain.

Describe recent portfolio activity.

 

Ÿ  

During the 12-month period, overall portfolio turnover was low. In addition, while the Trust has typically maintained an overweight in consumer staples due to the sector’s healthy balance sheets, stable earnings and consistent dividend streams, its allocation there was reduced over the period due to concerns regarding valuations and the potential for slowing earnings and dividend growth. Within financials, while the sector remains an underweight relative to the benchmark, the Trust has increased its allocation given the sector’s improved fundamentals, the potential for dividend growth as well as attractive valuations. The Trust also increased exposure to select information technology names as well as to industrials, where the investment advisor saw the strongest fundamentals, the greatest potential for dividend growth and the most attractive valuations. Lastly, the Trust reduced its exposure to telecommunication services, and to utilities, where valuations had moved higher and the investment advisor viewed dividend growth potential as limited.

Describe portfolio positioning at period end.

 

Ÿ  

During the period, the Trust sought opportunities in sectors and industries that are likely to benefit from the slowly improving economy and the higher – but not exceedingly high – interest rate environment that the investment advisor believes is unfolding. As of the end of the period, the Trust’s largest sector allocations on an absolute basis were in financials, industrials, energy, health care and consumer discretionary. The Trust remained positioned in high quality stocks with a special emphasis on providing relative protection and growth of income.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

14    ANNUAL REPORT    OCTOBER 31, 2014     


       BlackRock Enhanced Equity Dividend Trust   

 

Trust Information

 

Symbol on NYSE

   BDJ

Initial Offering Date

   August 31, 2005

Current Distribution Rate on Closing Market Price as of October 31, 2014 ($ 8.35)1

   6.71%

Current Monthly Distribution per Common Share2,3

   $0.0467

Current Annualized Distribution per Common Share2

   $0.5604

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

  3   

On June 5, 2014, the Board of the Trustees approved a change to the frequency of regular Trust distributions from quarterly to monthly. Please see Note 2 of the Notes to Financial Statements for additional information.

 

Market Price and Net Asset Value Per Share Summary

 

      10/31/14      10/31/13      Change     High      Low  

Market Price

   $ 8.35       $ 7.72         8.16   $ 8.47       $ 7.27   

Net Asset Value

   $ 9.19       $ 8.88         3.49   $ 9.36       $ 8.57   

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    10/31/14

Wells Fargo & Co.

     4

JPMorgan Chase & Co.

     3   

Comcast Corp., Special Class A

     3   

General Electric Co.

     3   

The Home Depot, Inc.

     3   

Merck & Co., Inc.

     2   

Raytheon Co.

     2   

Microsoft Corp.

     2   

Chevron Corp.

     2   

Exxon Mobil Corp.

     2   
Sector Allocation    10/31/14   10/31/13

Financials

   27%   21%

Industrials

   15     13  

Energy

   10     14  

Health Care

   10     9

Consumer Discretionary

   10     9

Consumer Staples

   8   12  

Information Technology

   7   5

Utilities

   6   6

Materials

   5   7

Telecommunication Services

   2   4

For Trust compliance purposes, the Trust’s sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 

 

     ANNUAL REPORT    OCTOBER 31, 2014    15


Trust Summary as of October 31, 2014      BlackRock Global Opportunities Equity Trust   

 

Trust Overview

BlackRock Global Opportunities Equity Trust’s (BOE) (the “Trust”) primary investment objective is to provide current income and current gains, with a secondary investment objective of long-term capital appreciation. The Trust seeks to achieve its investment objectives by investing primarily in equity securities issued by companies located in countries throughout the world and utilizing an option writing (selling) strategy to seek total return performance and enhance distributions. The Trust invests, under normal market conditions, at least 80% of its assets in equity securities or options on equity securities or indices or sectors of equity securities. Under normal circumstances, the Trust invests a substantial amount of its total assets in foreign issuers, issuers that primarily trade in a market located outside the United States or issuers that do a substantial amount of business outside the United States. The Trust may invest directly in such securities or synthetically through the use of derivatives. During the period, the Board of the Trust approved a change of the fiscal year of the Trust from October 31st to December 31st.

No assurance can be given that the Trust’s investment objectives will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the 12-month period ended October 31, 2014, the Trust returned 4.09% based on market price and 2.10% based on NAV. For the same period, the MSCI All Country World Index posted a return of 7.77%. All returns reflect reinvestment of dividends. The Trust’s discount to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

An overweight position in Europe was the primary cause of the Trust’s underperformance relative to the benchmark, as holdings within the financials and consumer discretionary sectors were negatively impacted by weaker-than-expected economic growth. In particular, positions in diversified banks within financials and movies & entertainment within consumer discretionary underperformed. Recent actions by the European Central Bank (“ECB”), and the potential for additional ECB steps such as a government bond purchase program, support the outlook for growth and for the Trust’s holdings of European financial and consumer discretionary companies.

 

Ÿ  

Stock selection in materials was the largest relative contributor to performance, while an underweight in the sector also contributed. In particular, positioning in the specialty chemicals segment benefited from lower input costs because of the ongoing development of U.S. shale gas and

   

oil resources. An overweight in health care also contributed, as the sector benefited from a positive outlook for new products and increased investor optimism regarding the long-term prospects for the group.

 

Ÿ  

Also, during the period, the Trust made use of options, principally written call options on individual stocks, in order to seek enhanced income returns while continuing to participate in the performance of the underlying equities. The Trust’s options writing strategy generated net gains during the period.

Describe recent portfolio activity.

 

Ÿ  

During the 12-month period, the Trust reduced exposure to more cyclical sectors such as industrials and consumer discretionary. The proceeds were used to increase exposure to more defensive companies in the health care sector and to U.S. financial companies positioned to benefit from an accelerating U.S. economy. Regionally, the Trust reduced its exposure to developed Europe and Japan, using the proceeds to add to its holdings in the United States and emerging Asia.

Describe portfolio positioning at period end.

 

Ÿ  

Relative to the MSCI All Country World Index, the Trust ended the period overweight in the United States and Europe, and underweight in emerging markets and Japan. From a sector perspective, the Trust was most notably overweight in health care and financials, while the most significant underweights were in utilities and materials.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

16    ANNUAL REPORT    OCTOBER 31, 2014     


       BlackRock Global Opportunities Equity Trust   

 

Trust Information

 

Symbol on NYSE

   BOE

Initial Offering Date

   May 31, 2005

Current Distribution Rate on Closing Market Price as of October 31, 2014 ($ 14.00)1

   8.91%

Current Monthly Distribution per Common Share2,3

   $0.1039

Current Annualized Distribution per Common Share2

   $1.2468

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The monthly distribution per common share, declared on December 8, 2014, was decreased to $0.097 per share. The current distribution rate on closing market price, current monthly distribution per common share and current annualized distribution per common share do not reflect the new distribution rate. The new distribution rate is not constant and is subject to change in the future. A portion of the distribution may be deemed a tax return of capital or net realized gain.

 

  3   

On June 5, 2014, the Board of the Trustees approved a change to the frequency of regular Trust distributions from quarterly to monthly. Please see Note 2 of the Notes to Financial Statements for additional information.

 

Market Price and Net Asset Value Per Share Summary

 

      10/31/14      10/31/13      Change     High      Low  

Market Price

   $ 14.00       $ 14.74         (5.02 )%    $ 15.25       $ 12.52   

Net Asset Value

   $ 15.54       $ 16.68         (6.83 )%    $ 17.27       $ 14.55   

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    10/31/14

Apple, Inc.

     3

JPMorgan Chase & Co.

     2   

Chevron Corp.

     2   

Anheuser-Busch InBev NV

     2   

Merck & Co., Inc.

     1   

Comcast Corp., Class A

     1   

The Hartford Financial Services Group, Inc.

     1   

Novartis AG

     1   

AIA Group Ltd.

     1   

Naspers Ltd., N Shares

     1   
Geographic Allocation    10/31/14   10/31/13

United States

   57%   44%

United Kingdom

   7   10  

Japan

   5   8

France

   4   8

China

   3   2

Germany

   3   2

Other4

   21     26  

 

  4   

Other includes a 2% holding or less in each of the following countries;

       Switzerland, India, Spain, Hong Kong, Sweden, Belgium, South Africa, Canada, Ireland, Indonesia, Italy, Panama, Greece, Peru, South Korea, Mexico, Brazil, New Zealand, Taiwan, Russia, Netherlands and Thailand, Australia.
 

 

     ANNUAL REPORT    OCTOBER 31, 2014    17


Trust Summary as of October 31, 2014      BlackRock Health Sciences Trust   

 

Trust Overview

BlackRock Health Sciences Trust’s (BME) (the “Trust”) investment objective is to provide total return through a combination of current income, current gains and long-term capital appreciation. The Trust seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its assets in equity securities of companies engaged in the health sciences and related industries and equity derivatives with exposure to the health sciences industry. The Trust seeks to pursue this goal primarily by investing in a portfolio of equity securities and utilizing an option over-writing strategy in an effort to seek total return performance and enhance distributions. During the period, the Board of the Trust approved a change of the fiscal year of the Trust from October 31st to December 31st.

No assurance can be given that the Trust’s investment objective will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the 12-month period ended October 31, 2014, the Trust returned 36.99% based on market price and 28.00% based on NAV. For the same period, the Russell 3000® Healthcare Index returned 29.60%. All returns reflect reinvestment of dividends and/or distributions. The Trust moved from a discount to NAV to a premium by period end, which accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

All segments of the health care sector contributed to relative performance during the 12-month period. Favorable clinical developments, mergers and acquisitions (M&A) and/or the reporting of strong underlying financial results drove the positive performance. The biotechnology industry was the largest contributor, as several Trust holdings performed well on the strength of clinical developments. Two of the largest individual contributors were Puma Biotechnology, Inc. and InterMune, Inc., which received positive clinical data on a breast cancer drug and a pulmonary fibrosis treatment, respectively. InterMune also received an acquisition bid from Roche AG. The Trust also benefitted from M&A in the health care equipment & supplies industry, as Covidien PLC and CareFusion Corp. received acquisition offers. In addition, the life sciences tools & services company Illumina, Inc. and the health care equipment company Edwards LifeSciences Corp. both reported solid financial results. Similarly, a position in the health care facilities company HCA Holdings, Inc. also reported good results due in part to changes associated with the Affordable Care Act. Lastly, strong relative

   

performance in the pharmaceutical industry was led by the Trust’s underweight positions in several large benchmark components that lagged during the period, including Pfizer, Inc. and Johnson & Johnson.

 

Ÿ  

In a period of strong performance, only a few elements of the Trust’s positioning detracted from its return. The largest detractors were the Trust’s underweight allocation to the managed health care industry, as well as its positions in several non-U.S. pharmaceutical stocks.

 

Ÿ  

The Trust made use of options, principally written call options on individual stocks, in order to seek enhanced income returns while continuing to participate in the performance of the underlying equities. The Trust’s option writing strategy modestly detracted from performance.

Describe recent portfolio activity.

 

Ÿ  

During the 12-month period, the Trust’s allocations were generally in line with their allocations at the end of the prior fiscal year. The Trust slightly increased its allocations in the health care providers & services and medical devices & supplies industries, while it marginally decreased exposure in the biotechnology and pharmaceutical industries. These allocations were the byproduct of the Trust’s bottom-up, fundamental investment process.

Describe portfolio positioning at period end.

 

Ÿ  

The Trust continues to focus on identifying innovative companies. Accordingly, its three largest allocations at period end were to the biotechnology, medical devices & supplies and pharmaceuticals industries, where uptrends in the innovation cycle have supported positive secular growth.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

18    ANNUAL REPORT    OCTOBER 31, 2014     


       BlackRock Health Sciences Trust   

 

Trust Information

 

Symbol on NYSE

   BME

Initial Offering Date

   March 31, 2005

Current Distribution Rate on Closing Market Price as of October 31, 2014 ($41.37)1

   4.79%

Current Monthly Distribution per Common Share2,3

   $0.165

Current Annualized Distribution per Common Share2

   $1.980

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

  3   

On June 5, 2014, the Board of the Trustees approved a change to the frequency of regular Trust distributions from quarterly to monthly. Please see Note 2 of the Notes to Financial Statements for additional information.

 

Market Price and Net Asset Value Per Share Summary

 

      10/31/14      10/31/13      Change     High      Low  

Market Price

   $ 41.37       $ 33.56         23.27   $ 41.50       $ 32.25   

Net Asset Value

   $ 40.22       $ 34.92         15.18   $ 40.22       $ 33.64   

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    10/31/14

Celgene Corp.

     3

AbbVie, Inc.

     3   

Alexion Pharmaceuticals, Inc.

     3   

Amgen, Inc.

     3   

Biogen Idec, Inc.

     3   

Merck & Co., Inc.

     3   

Johnson & Johnson

     3   

UnitedHealth Group, Inc.

     3   

Novartis AG

     3   

McKesson Corp.

     2   
Industry Allocation    10/31/14   10/31/13

Pharmaceuticals

   34%   35%

Biotechnology

   28     32  

Health Care Equipment & Supplies

   18     16  

Health Care Providers & Services

   14     11  

Life Sciences Tools & Services

   4   4

Other4

   2   2

 

  4   

Other includes a 1% holding or less in each of the following industries; Health Care Technology, Chemicals and Diversified Consumer Services.

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 

 

     ANNUAL REPORT    OCTOBER 31, 2014    19


Trust Summary as of October 31, 2014      BlackRock International Growth and Income Trust   

 

Trust Overview

BlackRock International Growth and Income Trust’s (BGY) (the “Trust”) primary investment objective is to provide current income and current gains, with a secondary objective of long-term capital appreciation. The Trust seeks to achieve its investment objectives by investing primarily in equity securities issued by companies of any market capitalization located in countries throughout the world and utilizing an option writing (selling) strategy to seek total return performance and enhance distributions. The Trust invests, under normal market conditions, at least 80% of its assets in equity securities issued by non-U.S. companies of any market capitalization located in countries throughout the world. The Trust may invest directly in such securities or synthetically through the use of derivatives. During the period, the Board of the Trust approved a change of the fiscal year of the Trust from October 31st to December 31st.

No assurance can be given that the Trust’s investment objectives will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the 12-month period ended October 31, 2014, the Trust returned (2.29)% based on market price and (4.49)% based on NAV. For the same period, the MSCI All Country World Index ex-US returned 0.06%. All returns reflect reinvestment of dividends. The Trust’s discount to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

An overweight position in Europe was the primary cause of the Trust’s underperformance relative to the benchmark, as holdings within the financials and industrials sectors were negatively impacted by weaker-than-expected economic growth. In particular, positions in diversified banks within financials and electrical components & equipment companies within industrials underperformed. Recent actions by the European Central Bank (“ECB”), and the potential for additional ECB steps such as a government bond purchase program, support the outlook for growth and for the Trust’s holdings of European financial and industrial companies.

 

Ÿ  

Stock selection in health care was the largest relative contributor to performance. In particular, positioning in the pharmaceuticals segment within Europe benefited from a positive outlook for new products and increased investor optimism over the long-term prospects for the group. An underweight in materials also contributed to performance, as the

 

sector significantly underperformed over concerns around the impact of prolonged overinvestment in the space on profit margins and weakening commodity demand from China on top-line growth.

 

Ÿ  

Also, during the period, the Trust made use of options, principally written call options on individual stocks, in order to seek enhanced income returns while continuing to participate in the performance of the underlying equities. The Trust’s options writing strategy generated net gains during the period.

Describe recent portfolio activity.

 

Ÿ  

During the 12-month period, the Trust reduced exposure to more cyclical sectors such as industrials and materials, and used the proceeds to increase exposure to more defensive companies in the health care and consumer staples sectors. Regionally, the Trust reduced exposure to developed Europe, using the proceeds to add to holdings in developed Americas, emerging Asia, and Japan.

Describe portfolio positioning at period end.

 

Ÿ  

Relative to the MSCI All Country World Index ex-U.S., the Trust ended the period overweight in Europe and developed Americas, and underweight Asia ex-Japan and emerging Americas. From a sector perspective, the Trust was most notably overweight in health care and consumer discretionary, while the most significant underweights were in materials and financials.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

20    ANNUAL REPORT    OCTOBER 31, 2014     


       BlackRock International Growth and Income Trust   

 

Trust Information

 

Symbol on NYSE

   BGY

Initial Offering Date

   May 30, 2007

Current Distribution Rate on Closing Market Price as of October 31, 2014 ($7.26)1

   9.26%

Current Monthly Distribution per Common Share2,3

   $0.056

Current Annualized Distribution per Common Share2

   $0.672

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The monthly distribution per common share, declared on December 8, 2014, was decreased to $0.049 per share. The current distribution rate on closing market price, current monthly distribution per common share and current annualized distribution per common share do not reflect the new distribution rate. The new distribution rate is not constant and is subject to change in the future. A portion of the distribution may be deemed a tax return of capital or net realized gain.

 

  3   

On June 5, 2014, the Board of the Trustees approved a change to the frequency of regular Trust distributions from quarterly to monthly. Please see Note 2 of the Notes to Financial Statements for additional information.

 

Market Price and Net Asset Value Per Share Summary

 

      10/31/14      10/31/13      Change     High      Low  

Market Price

   $ 7.26       $ 8.14         (10.81 )%    $ 8.40       $ 6.51   

Net Asset Value

   $ 7.89       $ 9.05         (12.82 )%    $ 9.41       $ 7.47   

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    10/31/14

Roche Holding AG

     5

Novartis AG

     4   

Baidu, Inc. — ADR

     3   

Anheuser-Busch InBev NV

     3   

Imperial Tobacco Group PLC

     2   

AstraZeneca PLC

     2   

Teva Pharmaceutical Industries Ltd. — ADR

     2   

Actelion Ltd.

     2   

Qunar Cayman Islands Ltd. — ADR

     2   

Liberty Global PLC, Class A

     2   

 

Geographic Allocation    10/31/14   10/31/13

United Kingdom

   17%   20%

Japan

   13     10  

Switzerland

   10     9

China

   8   3

Ireland

   5   4

Canada

   5   1

France

   5   15  

Other4

   37     38  

 

  4   

Other includes a 4% holding or less in each of the following countries;

       United States, Germany, India, Hong Kong, Netherlands, Italy, Belgium, Spain, Israel, Taiwan, Sweden, South Africa, Indonesia, Panama, Mexico, New Zealand, Peru, Denmark, South Korea, Norway and Greece.
 

 

     ANNUAL REPORT    OCTOBER 31, 2014    21


Trust Summary as of October 31, 2014      BlackRock Real Asset Equity Trust   

 

Trust Overview

BlackRock Real Asset Equity Trust’s (BCF) (the “Trust”) investment objective is to provide total return through a combination of current income, current gains and long-term capital appreciation. The Trust seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its assets in equity securities of energy, natural resources and basic materials companies and equity derivatives with exposure to companies in the energy, natural resources and basic materials industries. The Trust may invest directly in such securities or synthetically through the use of derivatives. The Trust seeks to pursue this goal primarily by investing in a portfolio of equity securities and utilizing an option over-writing strategy in an effort to seek total return performance and enhance distributions.

On July 30, 2014, the Boards of the Trust, BlackRock EcoSolutions Investment Trust (“BQR”) and BlackRock Resources & Commodities Strategy Trust (“BCX”) approved the reorganizations of the Trust and BQR with and into BCX, with BCX continuing as the surviving fund after the reorganizations. At a special meeting of shareholders on November 10, 2014, the shareholders of the Trust, BQR and BCX approved the reorganizations of the Trust and BQR with and into BCX. The reorganization was completed on December 8, 2014.

No assurance can be given that the Trust’s investment objective will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the 12-month period ended October 31, 2014, the Trust returned (4.37)% based on market price and (1.10)% based on NAV. For the same period, the closed-end Lipper Natural Resources Funds category posted an average return of 11.02% based on market price and 9.05% based on NAV. All returns reflect reinvestment of dividends. The Trust’s discount to NAV, which widened during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

The Trust’s exposure to Teck Resources, Ltd., a global metals & mining company, detracted from absolute performance. The spot price of metallurgical coal (which is used to produce steel) fell sharply during the period, putting pressure on results for the company as well as those of other suppliers.

 

Ÿ  

From the beginning of September, 2014 to the end of October, 2014 the spot oil price fell significantly due to a combination of slowing demand growth and increased supply. The alleviation of supply disruptions in Libya and the continued growth of North American supply, coming in a seasonally weak period of demand, contributed to the weakness in oil prices. In this environment, shares of Canadian Oil Sands Ltd., a Canadian exploration & production company, sold off sharply and detracted from the Trust’s performance.

 

Ÿ  

MeadWestvaco Corp., a paper & forest products company, was among the largest contributors to absolute returns during the period. The company’s packaging material business benefited from the improving global growth environment and greater operational efficiencies. In addition, an

   

activist shareholder placed pressure on the company to implement cost-cutting and divest from its non-core businesses. The market responded well to this news, and the stock price rose.

 

Ÿ  

Weyerhaeuser, a timber real estate investment trust (REIT), also generated robust absolute returns during the period. The company benefited from stronger performance from its wood products manufacturing business, and it reported favorable results across all of its business lines. The company also completed the much-anticipated spin-off of its home-building unit and increased its dividend.

 

Ÿ  

The Trust made use of options, principally written call options on individual stocks, in order to seek enhanced income returns while continuing to participate in the performance of the underlying equities. The Trust’s option writing strategy generated a net gain during the period.

Describe recent portfolio activity.

 

Ÿ  

The Trust rotated its fertilizer exposure during the period, initiating a position in CF Industries Holdings Inc. and reducing exposure to Agrium Inc. The Trust also trimmed some of its exposure to U.S. natural gas producers following their strong performance earlier in the year, and it exited BP PLC, the Europe-listed integrated energy company. In the metals & mining sector, the Trust continued to build its nickel exposure based on improving industry fundamentals.

Describe portfolio positioning at period end.

 

Ÿ  

The energy sector was the Trust’s largest allocation as of period end, while the remaining exposure was divided broadly between metals & mining and basic materials.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

22    ANNUAL REPORT    OCTOBER 31, 2014     


       BlackRock Real Asset Equity Trust   

 

Trust Information

 

Symbol on NYSE

   BCF

Initial Offering Date

   September 29, 2006

Current Distribution Rate on Closing Market Price as of October 31, 2014 ($ 8.00)1

   8.75%

Current Monthly Distribution per Common Share2,3

   $0.0583

Current Annualized Distribution per Common Share2

   $0.6996

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

  3   

On June 5, 2014, the Board of the Trustees approved a change to the frequency of regular Trust distributions from quarterly to monthly. Please see Note 2 of the Notes to Financial Statements for additional information.

 

Market Price and Net Asset Value Per Share Summary

 

      10/31/14      10/31/13      Change     High      Low  

Market Price

   $ 8.00       $ 9.12         (12.28 )%    $ 9.53       $ 7.45   

Net Asset Value

   $ 9.29       $ 10.24         (9.28 )%    $ 10.84       $ 8.98   

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    10/31/14

Chevron Corp.

     6

Exxon Mobil Corp.

     6   

EI du Pont de Nemours & Co.

     5   

ConocoPhillips

     4   

Royal Dutch Shell PLC, Class A — ADR

     4   

Monsanto Co.

     4   

Praxair, Inc.

     4   

BHP Billiton PLC

     4   

Rio Tinto PLC

     4   

International Paper Co.

     3   
Industry Allocation    10/31/14   10/31/13

Oil, Gas & Consumable Fuels

   37%   30%

Chemicals

   28     15  

Metal & Mining

   26     36  

Paper & Forest Products

   3   4

Real Estate Investment Trusts (REITs)

   3   2

Energy Equipment & Services

   3   6

Machinery

     4

Containers & Packaging

     3

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 

 

     ANNUAL REPORT    OCTOBER 31, 2014    23


Trust Summary as of October 31, 2014      BlackRock Resources & Commodities Strategy Trust   

 

Trust Overview

BlackRock Resources & Commodities Strategy Trust’s (BCX) (the “Trust”) primary investment objective is to seek high current income and current gains, with a secondary objective of capital appreciation. The Trust will seek to achieve its investment objectives, under normal market conditions, by investing at least 80% of its total assets in equity securities issued by commodity or natural resources companies, derivatives with exposure to commodity or natural resources companies or investments in securities and derivatives linked to the underlying price movement of commodities or natural resources. While permitted, the Trust does not currently expect to invest in securities and derivatives linked to the underlying price movement of commodities or natural resources. The Trust seeks to pursue this goal primarily by investing in a portfolio of equity securities and utilizing an option over-writing strategy in an effort to seek total return performance and enhance distributions.

On July 30, 2014, the Boards of the Trust, BlackRock Real Asset Equity Trust (“BCF”) and BlackRock EcoSolutions Investment Trust (“BQR”) approved the reorganizations of BCF and BQR with and into the Trust, with the Trust continuing as the surviving fund after the reorganizations. At a special meeting of shareholders on November 10, 2014, the shareholders of the Trust, BCF and BQR approved the reorganizations of BCF and BQR with and into the Trust. The reorganization was completed on December 8, 2014. During the period, the Board of the Trust approved a change of the fiscal year of the Trust from October 31st to December 31st.

No assurance can be given that the Trust’s investment objectives will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the 12-month period ended October 31, 2014, the Trust returned 0.58% based on market price and 0.61% based on NAV. For the same period, the closed-end Lipper Natural Resources Funds category posted an average return of 11.02% based on market price and 9.05% based on NAV. All returns reflect reinvestment of dividends and/or distributions. The Trust’s discount to NAV, which widened during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

The Trust’s holding in Cairn Energy PLC, a global oil & gas exploration & production company, was among the largest detractors from performance. Cairn Energy came under scrutiny from Indian tax authorities due to a matter relating to the 2006 initial public offering of the company’s Indian subsidiary, Cairn India. However, the Bharatiya Janata Party’s (BJP) victory in the Indian elections helped the stock recover somewhat as it is believed the BJP’s pro-business economic policies may help resolve the investigation. The Trust retained its position in Cairn Energy based on the company’s strong asset base.

 

Ÿ  

The Trust’s position in the copper producer Freeport-McMoRan, Inc. also weighed on returns. The metals & mining sector suffered extreme headwinds late in the period, as supply continued to grow while demand fell short of expectations. The resulting decline in the price of copper, coupled with uncertainty regarding the company’s Indonesian operating contract, caused the stock to sell off.

 

Ÿ  

The Trust’s position in Ultra Petroleum Corp. was among the largest contributors to absolute performance during the period. The stock moved higher after reporting strong earnings for the full year 2013 and the first quarter of 2014. These positive results stemmed largely from the exceptionally cold

   

winter in North America, which caused gas prices to trend higher in the first half of the period. The company also benefited from the strong supply growth from its unconventional onshore U.S. assets.

 

Ÿ  

The major integrated oil & gas companies Exxon Mobil Corp. and Royal Dutch Shell PLC were also notable contributors to absolute performance, as both reported robust earnings during the period. In addition, they outperformed the broader energy sector during the sharp downturn in oil prices in September and October. Both companies typically have lower sensitivity to oil price moves than the wider energy space due to their size, stronger financial position and the diversified nature of their operations.

 

Ÿ  

The Trust made use of options, principally written call options on individual stocks, in order to seek enhanced income returns while continuing to participate in the performance of the underlying equities. The Trust’s option writing strategy generated a net gain during the period.

Describe recent portfolio activity.

 

Ÿ  

During the period, the Trust added to its position in the fertilizer producer CF Industries Holdings, Inc. and initiated a position in Tyson Foods, Inc., which increased the Trust’s animal protein exposure. The Trust also initiated a position in lumber producer Canfor Corp., as a favorable supply of feedstock materials and a possible pick-up in construction demand improved the out-look for lumber producers. In addition, the Trust trimmed some of its exposure to onshore U.S. natural gas companies following their strong performance early in the period.

Describe portfolio positioning at period end.

 

Ÿ  

The energy sector was the Trust’s largest allocation as of period end, while the remaining exposure was divided broadly between metals & mining and agriculture-related stocks. This positioning reflects the relative outlooks and valuations for each of these segments.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

24    ANNUAL REPORT    OCTOBER 31, 2014     


       BlackRock Resources & Commodities Strategy Trust   

 

Trust Information

Symbol on NYSE

   BCX

Initial Offering Date

   March 30, 2011

Current Distribution Rate on Closing Market Price as of October 31, 2014 ($ 10.78)1

   8.58%

Current Monthly Distribution per Common Share2,3

   $0.0771

Current Annualized Distribution per Common Share2

   $0.9252

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

  3   

On June 5, 2014, the Board of the Trustees approved a change to the frequency of regular Trust distributions from quarterly to monthly. Please see Note 2 of the Notes to Financial Statements for additional information.

 

Market Price and Net Asset Value Per Share Summary

 

      10/31/14      10/31/13      Change     High      Low  

Market Price

   $ 10.78       $ 11.68         (7.71 )%    $ 12.53       $ 10.08   

Net Asset Value

   $ 12.50       $ 13.54         (7.68 )%    $ 14.37       $ 12.02   

 

Market Price and Net Asset Value History Since Inception

 

LOGO

 

  4 

Commencement of operations.

 

Overview of the Trust’s Long-Term Investments          

 

Ten Largest Holdings    10/31/14

Exxon Mobil Corp.

     7

Chevron Corp.

     7   

BHP Billiton Ltd. - ADR

     5   

ConocoPhillips

     4   

Royal Dutch Shell PLC, Class A - ADR

     4   

Monsanto Co.

     4   

Rio Tinto PLC - ADR

     3   

Freeport-McMoRan, Inc.

     3   

Archer-Daniels-Midland Co.

     3   

BP PLC - ADR

     3   
Industry Allocation    10/31/14   10/31/13

Oil, Gas & Consumable Fuels

   44%   52%

Metals & Mining

   23     21  

Food Products

   15     6

Chemicals

   13     15  

Paper & Forest Products

   2  

Real Estate Investment Trusts (REITS)

   2   1

Food & Staples Retailing

   1  

Machinery

     5

For Trust compliance purposes, the Trust industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 

 

     ANNUAL REPORT    OCTOBER 31, 2014    25


Trust Summary as of October 31, 2014      BlackRock Utility and Infrastructure Trust   

 

Trust Overview

BlackRock Utility and Infrastructure Trust’s (BUI) (the “Trust”) investment objective is to provide total return through a combination of current income, current gains and long-term capital appreciation. The Trust seeks to achieve its investment objective by investing primarily in equity securities issued by companies that are engaged in the Utilities and Infrastructure business segments anywhere in the world and by utilizing an option writing (selling) strategy in an effort to seek total return performance and enhance distributions. The Trust considers the “Utilities” business segment to include products, technologies and services connected to the management, ownership, operation, construction, development or financing of facilities used to generate, transmit or distribute electricity, water, natural resources or telecommunications and the “Infrastructure” business segment to include companies that own or operate infrastructure assets or that are involved in the development, construction, distribution or financing of infrastructure assets. Under normal circumstances, the Trust invests a substantial amount of its total assets in foreign issuers, issuers that primarily trade in a market located outside the United States or issuers that do a substantial amount of business outside the United States. The Trust may invest directly in such securities or synthetically through the use of derivatives. During the period, the Board of the Trust approved a change of the fiscal year of the Trust from October 31st to December 31st.

No assurance can be given that the Trust’s investment objective will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the 12-month period ended October 31, 2014, the Trust returned 18.29% based on market price and 16.94% based on NAV. For the same period, the closed-end Lipper Utility Funds category posted an average return of 17.46% based on market price and 16.22% based on NAV. All returns reflect reinvestment of dividends. The Trust’s discount to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

The most significant contributions to the Trust’s performance during the period came from holdings in oil, gas and consumable fuels. In particular, Phillips 66 Partners LP posted very strong gains as the company has displayed impressive growth since its 2013 initial public offering. In addition, natural gas producer EQT Midstream Partners LP and energy distributor MPLX LP both performed well. The Trust also benefited from performance within its electric utility positions, led by NextEra Energy, Inc. and NRG Yield, Inc., Class A, as the utility industry has been one of the strongest categories over the 12-month period.

 

Ÿ  

Conversely, the Trust’s exposure to the renewable electricity sub-industry detracted from returns, in particular positions in TerraForm Power, Inc. and Brazil-based Tractebel Energia S.A. Fraport AG Frankfurt Airport Services Worldwide, a German-based air transportation hub, detracted from returns, as airline pilot strikes caused the company’s third-quarter earnings to underperform analyst estimates and there were fears that the spread of the Ebola virus could hurt the broader airline industry.

 

Ÿ  

Also, during the period, the Trust made use of options, principally written call options on individual stocks, in order to seek enhanced income returns while continuing to participate in the performance of the underlying equities. The Trust’s option writing strategy detracted from absolute performance.

Describe recent portfolio activity.

 

Ÿ  

The Trust’s weighting in European-based companies had been increased during mid- to late 2013 based on signs of fundamental improvements in Europe and the prospect of an end to the Continent’s recession. However, as recent developments suggested that Europe is once again slowing, the Trust has modestly reduced the weighting. The Trust eliminated nearly all of its direct investments in Brazil given the political environment in that country and the uncertainty this has caused for the utility sector. Asia/Pacific exposure has remained fairly small, though the Trust continues to search for opportunities in the region. The Trust has sought to take advantage of opportunities in the U.S. market, and has participated in several Master Limited Partnership (“MLP”) opportunities that raised the weighting in energy. Also in the U.S. market, the Trust made several “yield co” purchases. (A yield co is a publicly traded company that is formed to own operating assets that are intended to produce reliable cash flows.)

Describe Trust positioning at period end.

 

Ÿ  

At period end, the utilities sector accounted for approximately half of the Trust’s assets, with holdings concentrated in U.S. electric and multi-utilities. The Trust’s second largest exposure was to MLPs, where the Trust continued to find attractive fundamentals and healthy dividend yields. The investment advisor remains mindful of the potential for rising interest rates in the United States and the changing environment that companies operate within. Therefore, the Trust was positioned for diversification across multiple geographic and regulatory environments to help offset this risk.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

26    ANNUAL REPORT    OCTOBER 31, 2014     


Trust Summary as of October 31, 2014      BlackRock Utility and Infrastructure Trust   

 

 

Trust Information

Symbol on NYSE

   BUI

Initial Offering Date

   November 25, 2011

Current Distribution Rate on Closing Market Price as of October 31, 2014 ($20.02)1

   7.25%

Current Monthly Distribution per Common Share2,3

   $0.121

Current Annualized Distribution per Common Share2

   $1.452

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

  3   

On June 5, 2014, the Board of the Trustees approved a change to the frequency of regular Trust distributions from quarterly to monthly. Please see Note 2 of the Notes to Financial Statements for additional information.

 

Market Price and Net Asset Value Per Share Summary

 

      10/31/14      10/31/13      Change     High      Low  

Market Price

   $ 20.02       $ 18.36         9.04   $ 21.05       $ 16.91   

Net Asset Value

   $ 22.40       $ 20.78         7.80   $ 22.95       $ 19.97   

 

Market Price and Net Asset Value History Since Inception

 

LOGO

 

  4 

Commencement of operations.

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    10/31/14

Shell Midstream Partners LP

     4

NextEra Energy, Inc.

     4   

American Tower Corp.

     4   

National Grid PLC

     4   

CMS Energy Corp.

     3   

Duke Energy Corp.

     3   

Dominion Midstream Partners LP

     3   

Dominion Resources, Inc.

     3   

Atlantia SpA

     3   

American Water Works Co., Inc.

     3   
Industry Allocation    10/31/14   10/31/13

Oil, Gas & Consumable Fuels

   29%   22%

Multi-Utilities

   21     20  

Electric Utilities

   21     17  

Transportation Infrastructure

   12     13  

Other5

   17     28  

 

  5   

Other includes a 7% holding or less in each of the following industries; Diversified Telecommunication Services, Construction & Engineering, Real Estate Investment Trust (REITs), Water Utilities, Independent Power and Renewable Electricity Producers, Media, Gas Utilities, Machinery and Wireless Telecommunication Services.

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 

 

     ANNUAL REPORT    OCTOBER 31, 2014    27


Derivative Financial Instruments     

 

The Trusts may invest in various derivative financial instruments, which may constitute forms of economic leverage. Such derivative financial instruments are used to obtain exposure to a security, index and/or market without owning or taking physical custody of securities or to hedge market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative financial instrument. The Trusts’ ability to use a derivative financial instrument

successfully depends on the investment advisor’s ability to predict pertinent market movements accurately, which cannot be assured. The use of derivative financial instruments may result in losses greater than if they had not been used, may require a Trust to sell or purchase portfolio investments at inopportune times or for distressed values, may limit the amount of appreciation a Trust can realize on an investment, may result in lower distributions paid to shareholders or may cause a Trust to hold an investment that it might otherwise sell. The Trusts’ investments in these instruments are discussed in detail in the Notes to Financial Statements.

 

 

28    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments October 31, 2014      BlackRock Dividend Income Trust (BQY)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Aerospace & Defense — 3.3%

     

Honeywell International, Inc. (a)

     11,500       $ 1,105,380   

Lockheed Martin Corp. (a)

     4,330         825,168   

United Technologies Corp. (a)

     9,400         1,005,800   
     

 

 

 
                2,936,348   

Banks — 9.8%

     

Australia & New Zealand Banking Group Ltd.

     18,000         532,632   

Bank of America Corp. (a)

     80,300         1,377,948   

The Bank of Nova Scotia

     11,700         716,502   

Hang Seng Bank Ltd.

     17,500         296,526   

HSBC Holdings PLC — ADR

     24,100         1,229,582   

M&T Bank Corp. (a)

     4,500         549,810   

National Australia Bank Ltd.

     32,000         989,948   

U.S. Bancorp. (a)

     22,600         962,760   

United Overseas Bank Ltd.

     18,310         328,036   

Wells Fargo & Co. (a)

     30,500         1,619,245   
     

 

 

 
                8,602,989   

Beverages — 1.5%

     

The Coca-Cola Co.

     10,800         452,304   

PepsiCo, Inc. (a)

     7,500         721,275   

Treasury Wine Estates Ltd.

     35,566         145,215   
     

 

 

 
                1,318,794   

Capital Markets — 2.2%

     

The Goldman Sachs Group, Inc. (a)

     2,600         493,974   

Morgan Stanley (a)

     27,500         961,125   

T Rowe Price Group, Inc.

     5,700         467,913   
     

 

 

 
                1,923,012   

Chemicals — 2.7%

     

BASF SE

     9,600         848,257   

PPG Industries, Inc. (a)

     5,800         1,181,402   

Solvay SA

     2,300         313,995   
     

 

 

 
                2,343,654   

Communications Equipment — 0.8%

     

QUALCOMM, Inc. (a)

     8,600         675,186   

Construction & Engineering — 0.8%

     

Vinci SA

     12,100         690,646   

Consumer Finance — 0.7%

     

American Express Co. (a)

     6,600         593,670   

Distributors — 0.7%

     

Genuine Parts Co. (a)

     6,100         592,188   

Diversified Financial Services — 0.8%

     

CME Group, Inc. (a)

     8,700         729,147   

Diversified Telecommunication Services — 3.5%

     

Frontier Communications Corp.

     194,800         1,273,992   

TeliaSonera AB

     53,400         369,783   

Verizon Communications, Inc. (a)

     29,200         1,467,300   
     

 

 

 
                3,111,075   
Common Stocks    Shares      Value  

Electric Utilities — 3.3%

     

Duke Energy Corp. (a)

     5,200       $ 427,180   

NextEra Energy, Inc.

     15,400         1,543,388   

SSE PLC

     35,000         897,081   
     

 

 

 
                2,867,649   

Electrical Equipment — 2.0%

     

Emerson Electric Co. (a)

     26,800         1,716,808   

Food & Staples Retailing — 0.8%

     

Wal-Mart Stores, Inc. (a)

     8,714         664,617   

Food Products — 2.8%

     

General Mills, Inc. (a)

     8,400         436,464   

Kraft Foods Group, Inc. (a)

     9,933         559,724   

Mondelez International, Inc., Class A (a)

     29,200         1,029,592   

Nestle SA

     5,700         418,005   
     

 

 

 
                2,443,785   

Health Care Equipment & Supplies — 0.5%

     

Abbott Laboratories

     11,100         483,849   

Hotels, Restaurants & Leisure — 1.4%

     

McDonald’s Corp. (a)

     12,900         1,209,117   

Household Products — 1.9%

     

The Procter & Gamble Co.

     18,900         1,649,403   

Industrial Conglomerates — 4.8%

     

3M Co. (a)

     11,200         1,722,224   

General Electric Co. (a)

     53,800         1,388,578   

Hopewell Holdings Ltd.

     85,684         304,075   

Keppel Corp. Ltd.

     53,800         394,527   

Siemens AG — ADR

     3,700         417,138   
     

 

 

 
                4,226,542   

Insurance — 6.1%

     

Aflac, Inc. (a)

     7,100         424,083   

Allianz SE

     3,600         572,479   

The Chubb Corp.

     8,500         844,560   

Cincinnati Financial Corp. (a)

     11,400         575,358   

MetLife, Inc. (a)

     24,800         1,345,152   

Prudential Financial, Inc. (a)

     15,000         1,328,100   

Zurich Insurance Group AG

     976         295,366   
     

 

 

 
                5,385,098   

IT Services — 1.2%

     

Automatic Data Processing, Inc.

     13,400         1,095,852   

Leisure Products — 0.3%

     

Mattel, Inc. (a)

     9,655         299,981   

Media — 2.6%

     

The Walt Disney Co. (a)

     25,500         2,330,190   

Metals & Mining — 0.9%

     

BHP Billiton Ltd. — ADR (a)

     8,012         476,233   
 
Portfolio Abbreviations
ADR    American Depositary Receipt      GBP    British Pound    REIT    Real Estate Investment Trust
AUD    Australian Dollar      GDR    Global Depositary Receipts    SEK    Swedish Krona
BRL    Brazil Real      HKD    Hong Kong Dollar    SGD    Singapore Dollar
CAD    Canadian Dollar      JPY    Japanese Yen    TWD    Taiwan Dollar
CHF    Swiss Franc      KRW    Korean Won    USD    U.S. Dollar
DKK    Danish Krone      NOK    Norwegian Krone    ZAR    South African Rand
EUR    Euro      NZD    New Zealand Dollar      

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    29


Schedule of Investments (continued)      BlackRock Dividend Income Trust (BQY)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Metals & Mining (concluded)

     

BHP Billiton PLC

     10,650       $ 275,159   
     

 

 

 
                751,392   

Multi-Utilities — 4.0%

     

Ameren Corp. (a)

     22,300         944,182   

Dominion Resources, Inc.

     23,500         1,675,550   

Sempra Energy

     4,800         528,000   

Wisconsin Energy Corp. (a)

     8,300         412,178   
     

 

 

 
                3,559,910   

Oil, Gas & Consumable Fuels — 9.4%

     

Chevron Corp.

     16,300         1,955,185   

Enbridge, Inc.

     13,400         634,064   

Exxon Mobil Corp. (a)

     27,000         2,611,170   

Santos Ltd.

     66,600         763,189   

Suncor Energy, Inc.

     3,450         122,505   

Total SA — ADR (a)

     28,000         1,676,920   

TransCanada Corp. (a)

     10,700         527,381   
     

 

 

 
                8,290,414   

Paper & Forest Products — 1.1%

     

International Paper Co.

     18,900         956,718   

Pharmaceuticals — 11.0%

     

AbbVie, Inc. (a)

     10,287         652,813   

AstraZeneca PLC

     17,700         1,292,951   

Bristol-Myers Squibb Co. (a)

     34,300         1,995,917   

GlaxoSmithKline PLC

     32,425         733,255   

Johnson & Johnson (a)

     15,700         1,692,146   

Merck & Co., Inc. (a)

     17,500         1,013,950   

Pfizer, Inc. (a)

     50,200         1,503,490   

Sanofi

     3,400         308,516   

Takeda Pharmaceutical Co. Ltd.

     10,800         468,162   
     

 

 

 
                9,661,200   

Real Estate Investment Trusts (REITs) — 3.5%

     

Equity Residential (a)

     10,800         751,248   

HCP, Inc. (a)

     12,000         527,640   

Health Care REIT, Inc. (a)

     10,700         760,877   

Keppel REIT

     15,824         15,038   

Liberty Property Trust

     7,200         250,344   

Ventas, Inc. (a)

     11,213         768,203   
     

 

 

 
                3,073,350   

Road & Rail — 0.4%

     

CSX Corp.

     10,600         377,678   

Semiconductors & Semiconductor Equipment — 2.6%

     

Intel Corp. (a)

     41,900         1,425,019   

Microchip Technology, Inc.

     19,500         840,645   
     

 

 

 
                2,265,664   
Common Stocks    Shares      Value  

Software — 3.0%

     

Microsoft Corp. (a)

     41,500       $ 1,948,425   

Oracle Corp. Japan

     8,900         344,548   

SAP SE — ADR (a)

     5,450         371,309   
     

 

 

 
                2,664,282   

Specialty Retail — 2.9%

     

Hennes & Mauritz AB, B Shares

     21,500         857,839   

The Home Depot, Inc. (a)

     17,400         1,696,848   
     

 

 

 
                2,554,687   

Technology Hardware, Storage & Peripherals — 0.5%

     

Canon, Inc. — ADR

     3,700         114,774   

Ricoh Co. Ltd.

     32,000         330,475   
     

 

 

 
                445,249   

Thrifts & Mortgage Finance — 0.3%

     

Hudson City Bancorp, Inc.

     25,800         248,970   

Tobacco — 5.1%

     

Altria Group, Inc. (a)

     40,500         1,957,770   

British American Tobacco PLC

     17,300         980,518   

Philip Morris International, Inc. (a)

     7,900         703,179   

Reynolds American, Inc. (a)

     12,800         805,248   
     

 

 

 
                4,446,715   

Transportation Infrastructure — 0.0%

     

Hopewell Highway Infrastructure Ltd.

     4,284         2,066   

Total Long-Term Investments

(Cost — $77,020,463) — 99.2%

  

  

     87,187,895   
     
Short-Term Securities                

BlackRock Liquidity Funds, TempFund, Institutional
Class, 0.07% (b)(c)

     2,508,806         2,508,806   

Total Short-Term Securities

(Cost — $2,508,806) — 2.8%

  

  

     2,508,806   

Total Investments Before Options Written

(Cost — $79,529,269) — 102.0%

              89,696,701   
     
Options Written                

(Premiums Received — $516,301) — (1.3)%

              (1,120,101

Total Investments Net of Options Written — 100.7%

        88,576,600   

Liabilities in Excess of Other Assets — (0.7)%

        (648,372
     

 

 

 

Net Assets — 100.0%

      $ 87,928,228   
     

 

 

 
 
Notes to Schedule of Investments

 

(a) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(b) Represents the current yield as of report date.

 

(c) Investments in issuers considered to be an affiliate of the Trust during the year ended October 31, 2014, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate    Shares Held at
October 31, 2013
    

Net

Activity

    Shares Held at
October 31, 2014
     Income  

BlackRock Liquidity Funds, TempFund, Institutional Class

     3,708,345         (1,199,539     2,508,806       $ 1,366   

BlackRock Liquidity Series, LLC Money Market Series.

                          $ 10   

 

See Notes to Financial Statements.

 

30    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)      BlackRock Dividend Income Trust (BQY)   

 

 

Ÿ  

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

 

Ÿ  

Exchange-traded options written as of October 31, 2014 were as follows:

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Bristol-Myers Squibb Co.

     Call         USD         52.00         11/07/14         26       $ (15,405

Philip Morris International, Inc.

     Call         USD         86.00         11/07/14         20         (5,770

BHP Billiton Ltd. — ADR

     Call         USD         67.50         11/22/14         12         (72

Duke Energy Corp.

     Call         USD         77.50         11/22/14         10         (4,550

Equity Residential

     Call         USD         67.50         11/22/14         43         (9,568

Mattel, Inc.

     Call         USD         31.00         11/22/14         10         (625

Total SA — ADR

     Call         USD         67.50         11/22/14         42         (420

Bank of America Corp.

     Call         USD         17.00         12/05/14         245         (11,025

HCP, Inc.

     Call         USD         43.37         12/05/14         48         (3,652

Intel Corp.

     Call         USD         33.50         12/05/14         100         (11,300

Pfizer, Inc.

     Call         USD         29.50         12/05/14         200         (12,100

Ameren Corp.

     Call         USD         41.05         12/08/14         89         (12,776

Cincinnati Financial Corp.

     Call         USD         48.85         12/08/14         46         (8,454

Emerson Electric Co.

     Call         USD         62.75         12/08/14         54         (10,596

The Goldman Sachs Group, Inc.

     Call         USD         180.05         12/08/14         11         (11,334

QUALCOMM, Inc.

     Call         USD         76.05         12/09/14         34         (11,165

Wisconsin Energy Corp.

     Call         USD         48.95         12/09/14         17         (1,846

Reynolds American, Inc.

     Call         USD         58.05         12/10/14         51         (25,652

General Mills, Inc.

     Call         USD         50.00         12/11/14         34         (7,785

AbbVie, Inc.

     Call         USD         55.75         12/12/14         41         (31,949

Verizon Communications, Inc.

     Call         USD         50.50         12/12/14         21         (1,564

3M Co.

     Call         USD         150.00         12/20/14         44         (23,430

Aflac, Inc.

     Call         USD         62.50         12/20/14         28         (616

Altria Group, Inc.

     Call         USD         48.00         12/20/14         53         (5,989

American Express Co.

     Call         USD         87.50         12/20/14         13         (4,810

Bank of America Corp.

     Call         USD         17.00         12/20/14         77         (4,196

Bristol-Myers Squibb Co.

     Call         USD         52.50         12/20/14         44         (26,510

Bristol-Myers Squibb Co.

     Call         USD         55.00         12/20/14         67         (27,135

CME Group, Inc.

     Call         USD         82.50         12/20/14         34         (9,010

Duke Energy Corp.

     Call         USD         82.50         12/20/14         10         (1,275

Emerson Electric Co.

     Call         USD         62.50         12/20/14         53         (12,455

Exxon Mobil Corp.

     Call         USD         95.00         12/20/14         108         (30,780

General Electric Co.

     Call         USD         26.00         12/20/14         215         (8,922

Genuine Parts Co.

     Call         USD         95.00         12/20/14         24         (7,920

Health Care REIT, Inc.

     Call         USD         65.00         12/20/14         42         (25,200

The Home Depot, Inc.

     Call         USD         97.50         12/20/14         69         (18,112

Honeywell International, Inc.

     Call         USD         90.00         12/20/14         23         (15,065

Honeywell International, Inc.

     Call         USD         95.00         12/20/14         23         (6,279

Intel Corp.

     Call         USD         34.00         12/20/14         67         (6,734

Johnson & Johnson

     Call         USD         100.00         12/20/14         31         (24,025

Johnson & Johnson

     Call         USD         105.00         12/20/14         31         (10,618

Kraft Foods Group, Inc.

     Call         USD         57.50         12/20/14         39         (2,437

Lockheed Martin Corp.

     Call         USD         185.00         12/20/14         17         (12,750

M&T Bank Corp.

     Call         USD         120.00         12/20/14         18         (6,480

McDonald’s Corp.

     Call         USD         95.00         12/20/14         13         (1,254

Merck & Co., Inc.

     Call         USD         57.50         12/20/14         70         (13,020

MetLife, Inc.

     Call         USD         52.50         12/20/14         88         (21,032

Microsoft Corp.

     Call         USD         47.00         12/20/14         166         (16,019

Mondelez International, Inc., Class A

     Call         USD         36.00         12/20/14         78         (5,265

Morgan Stanley

     Call         USD         34.00         12/20/14         42         (6,951

Morgan Stanley

     Call         USD         36.00         12/20/14         68         (4,148

PepsiCo, Inc.

     Call         USD         95.00         12/20/14         30         (6,780

Philip Morris International, Inc.

     Call         USD         90.00         12/20/14         11         (1,204

PPG Industries, Inc.

     Call         USD         200.00         12/20/14         23         (18,860

Prudential Financial, Inc.

     Call         USD         85.00         12/20/14         24         (12,000

Prudential Financial, Inc.

     Call         USD         87.50         12/20/14         36         (11,700

SAP SE — ADR

     Call         USD         72.50         12/20/14         21         (945

TransCanada Corp.

     Call         CAD         58.00         12/20/14         42         (3,149

U.S. Bancorp.

     Call         USD         41.00         12/20/14         90         (17,820

United Technologies Corp.

     Call         USD         105.00         12/20/14         37         (12,580

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    31


Schedule of Investments (continued)      BlackRock Dividend Income Trust (BQY)   

 

Exchange-traded options written as of October 31, 2014 were as follows: (concluded)

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Ventas, Inc.

     Call         USD         70.00         12/20/14         22       $ (1,375

Verizon Communications, Inc.

     Call         USD         50.00         12/20/14         95         (10,450

Wal-Mart Stores, Inc.

     Call         USD         75.00         12/20/14         11         (2,337

Wal-Mart Stores, Inc.

     Call         USD         77.50         12/20/14         23         (1,817

The Walt Disney Co.

     Call         USD         90.00         12/20/14         102         (30,957

Wells Fargo & Co.

     Call         USD         50.00         12/20/14         71         (22,188

Wells Fargo & Co.

     Call         USD         52.50         12/20/14         51         (6,044

Total

                  $ (716,251
                 

 

 

 

 

Ÿ  

Over-the-counter options written as of October 31, 2014 were as follows:

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

NextEra Energy, Inc.

   Deutsche Bank AG      Call         USD         98.61         11/06/14         2,000       $ (3,694

Automatic Data Processing, Inc.

   Citibank N.A.      Call         USD         75.86         12/08/14         5,300         (33,181

Enbridge, Inc.

   Deutsche Bank AG      Call         CAD         52.20         12/08/14         5,300         (9,054

Hennes & Mauritz AB, B Shares

   UBS AG      Call         SEK         288.01         12/08/14         8,600         (11,676

Liberty Property Trust

   Citibank N.A.      Call         USD         33.37         12/08/14         2,800         (4,729

MetLife, Inc.

   Deutsche Bank AG      Call         USD         50.90         12/08/14         1,100         (3,672

Mondelez International, Inc., Class A

   Deutsche Bank AG      Call         USD         34.45         12/08/14         3,800         (5,218

NextEra Energy, Inc.

   Citibank N.A.      Call         USD         96.75         12/08/14         4,100         (15,162

Oracle Corp. Japan

   Goldman Sachs International      Call         JPY         4,257.38         12/08/14         3,500         (6,053

Santos Ltd.

   Goldman Sachs International      Call         AUD         13.20         12/08/14         27,000         (6,750

Abbott Laboratories

   Credit Suisse International      Call         USD         41.15         12/09/14         4,400         (11,616

Altria Group, Inc.

   Citibank N.A.      Call         USD         46.31         12/09/14         10,900         (23,657

American Express Co.

   Goldman Sachs International      Call         USD         83.86         12/09/14         1,300         (8,389

Australia & New Zealand Banking Group Ltd.

   Goldman Sachs International      Call         AUD         33.26         12/09/14         7,200         (2,955

The Chubb Corp.

   Credit Suisse International      Call         USD         98.00         12/09/14         1,700         (3,701

The Chubb Corp.

   Morgan Stanley & Co. International PLC      Call         USD         93.48         12/09/14         1,700         (10,088

The Coca-Cola Co.

   Citibank N.A.      Call         USD         41.25         12/09/14         2,200         (2,031

CSX Corp.

   Morgan Stanley & Co. International PLC      Call         USD         34.52         12/09/14         4,200         (6,690

The Procter & Gamble Co.

   Citibank N.A.      Call         USD         83.68         12/09/14         3,200         (12,868

The Procter & Gamble Co.

   UBS AG      Call         USD         86.50         12/09/14         4,300         (7,696

Sanofi

   Morgan Stanley & Co. International PLC      Call         EUR         71.86         12/09/14         1,400         (4,487

Takeda Pharmaceutical Co. Ltd.

   Goldman Sachs International      Call         JPY         4,674.28         12/09/14         4,300         (8,961

Treasury Wine Estates Ltd.

   Citibank N.A.      Call         AUD         4.72         12/09/14         14,200         (1,505

Wisconsin Energy Corp.

   Credit Suisse International      Call         USD         47.59         12/09/14         400         (828

AstraZeneca PLC

   UBS AG      Call         GBP         43.29         12/10/14         7,000         (34,763

BASF SE

   Deutsche Bank AG      Call         EUR         67.29         12/10/14         3,800         (19,021

British American Tobacco PLC

   UBS AG      Call         GBP         34.22         12/10/14         7,000         (17,121

Dominion Resources, Inc.

   Morgan Stanley & Co. International PLC      Call         USD         68.92         12/10/14         9,400         (23,523

GlaxoSmithKline PLC

   Goldman Sachs International      Call         GBP         13.44         12/10/14         13,000         (14,428

International Paper Co.

   Citibank N.A.      Call         USD         50.62         12/10/14         7,500         (12,084

TeliaSonera AB

   UBS AG      Call         SEK         48.82         12/10/14         21,300         (7,470

Zurich Insurance Group AG

   UBS AG      Call         CHF         285.73         12/10/14         390         (3,427

Allianz SE

   UBS AG      Call         EUR         124.53         12/11/14         1,400         (7,275

BHP Billiton PLC

   UBS AG      Call         GBP         16.67         12/11/14         4,300         (1,812

Hang Seng Bank Ltd.

   BNP Paribas S.A.      Call         HKD         131.30         12/11/14         7,000         (1,893

Hopewell Holdings Ltd.

   Goldman Sachs International      Call         HKD         27.55         12/11/14         34,000         (1,779

Keppel REIT

   Morgan Stanley & Co. International PLC      Call         SGD         1.21         12/11/14         6,000         (93

National Australia Bank Ltd.

   UBS AG      Call         AUD         34.95         12/11/14         12,800         (3,431

Nestle SA

   Bank of America N.A.      Call         CHF         69.55         12/11/14         2,300         (3,926

Ricoh Co. Ltd.

   Goldman Sachs International      Call         JPY         1,096.89         12/11/14         12,800         (8,826

Solvay SA

   Morgan Stanley & Co. International PLC      Call         EUR         111.56         12/11/14         920         (2,434

SSE PLC

   Bank of America N.A.      Call         GBP         15.71         12/11/14         14,000         (11,586

United Overseas Bank Ltd.

   UBS AG      Call         SGD         21.84         12/11/14         7,000         (6,862

Ventas, Inc.

   Credit Suisse International      Call         USD         67.76         12/11/14         2,200         (3,539

Vinci SA

   UBS AG      Call         EUR         44.62         12/11/14         4,800         (9,774

Sempra Energy

   UBS AG      Call         USD         112.14         12/15/14         1,900         (3,167

Wisconsin Energy Corp.

   Credit Suisse International      Call         USD         49.72         12/16/14         1,200         (955

Total

                     $ (403,850
                    

 

 

 

 

See Notes to Financial Statements.

 

32    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)      BlackRock Dividend Income Trust (BQY)   

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, please refer to Note 2 of the Notes to Financial Statements.

The following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy as of October 31, 2014:

 

      Level 1      Level 2      Level 3    Total  

Assets:

           

Investments:

           

Long-Term Investments:

           

Common Stocks:

           

Aerospace & Defense

   $ 2,936,348                  $ 2,936,348   

Banks

     6,455,847       $ 2,147,142            8,602,989   

Beverages

     1,173,579         145,215            1,318,794   

Capital Markets

     1,923,012                    1,923,012   

Chemicals

     1,181,402         1,162,252            2,343,654   

Communications Equipment

     675,186                    675,186   

Construction & Engineering

             690,646            690,646   

Consumer Finance

     593,670                    593,670   

Distributors

     592,188                    592,188   

Diversified Financial Services

     729,147                    729,147   

Diversified Telecommunication Services

     2,741,292         369,783            3,111,075   

Electric Utilities

     1,970,568         897,081            2,867,649   

Electrical Equipment

     1,716,808                    1,716,808   

Food & Staples Retailing

     664,617                    664,617   

Food Products

     2,025,780         418,005            2,443,785   

Health Care Equipment & Supplies

     483,849                    483,849   

Hotels, Restaurants & Leisure

     1,209,117                    1,209,117   

Household Products

     1,649,403                    1,649,403   

Industrial Conglomerates

     3,527,940         698,602            4,226,542   

Insurance

     4,517,253         867,845            5,385,098   

IT Services

     1,095,852                    1,095,852   

Leisure Products

     299,981                    299,981   

Media

     2,330,190                    2,330,190   

Metals & Mining

     476,233         275,159            751,392   

Multi-Utilities

     3,559,910                    3,559,910   

Oil, Gas & Consumable Fuels

     7,527,225         763,189            8,290,414   

Paper & Forest Products

     956,718                    956,718   

Pharmaceuticals

     6,858,316         2,802,884            9,661,200   

Real Estate Investment Trusts (REITs)

     3,058,312         15,038            3,073,350   

Road & Rail

     377,678                    377,678   

Semiconductors & Semiconductor Equipment

     2,265,664                    2,265,664   

Software

     2,319,734         344,548            2,664,282   

Specialty Retail

     1,696,848         857,839            2,554,687   

Technology Hardware, Storage & Peripherals

     114,774         330,475            445,249   

Thrifts & Mortgage Finance

     248,970                    248,970   

Tobacco

     3,466,197         980,518            4,446,715   

Transportation Infrastructure

             2,066            2,066   

Short-Term Securities

     2,508,806                    2,508,806   

Total

   $ 75,928,414       $ 13,768,287          $ 89,696,701   

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    33


Schedule of Investments (concluded)      BlackRock Dividend Income Trust (BQY)   

 

 

      Level 1     Level 2     Level 3    Total  

Derivative Financial Instruments1

         

Liabilities:

         

Equity contracts

   $ (591,043   $ (529,058      $ (1,120,101

1    Derivative financial instruments are options written, which are shown at value.

         
The Trust may hold assets in which the fair value approximates the carrying amount for financial statement purposes. As of October 31, 2014, such assets are categorized within the disclosure hierarchy as follows:    
         
      Level 1     Level 2     Level 3    Total  

Assets:

         

Cash

   $ 4,837                $ 4,837   

Foreign currency at value

     24,227                  24,227   

Total

   $ 29,064                $ 29,064   
There were no transfers between levels during the year ended October 31, 2014.          

 

See Notes to Financial Statements.

 

34    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments October 31, 2014      BlackRock EcoSolutions Investment Trust (BQR)   
     (Percentages shown are based on Net Assets   

 

Common Stocks    Shares      Value  

Auto Components — 1.0%

     

Johnson Controls, Inc. (a)

     23,200       $ 1,096,200   

Building Products — 0.4%

     

Kingspan Group PLC

     31,800         497,330   

Chemicals — 23.4%

     

Air Liquide SA

     4,730         570,985   

CF Industries Holdings, Inc. (a)

     13,000         3,380,000   

Johnson Matthey PLC

     17,304         826,117   

Linde AG

     2,900         535,210   

Monsanto Co. (a)

     44,700         5,142,288   

The Mosaic Co.

     71,000         3,146,010   

Novozymes A/S, B Shares

     27,900         1,291,957   

Potash Corp. of Saskatchewan, Inc. (a)

     131,000         4,476,270   

Syngenta AG

     11,600         3,587,388   

Umicore SA

     5,400         211,942   

Uralkali OJSC — GDR

     116,000         2,075,452   

Wacker Chemie AG

     5,600         678,601   
     

 

 

 
                25,922,220   

Commercial Services & Supplies — 1.7%

     

Covanta Holding Corp. (a)

     9,900         218,493   

Tetra Tech, Inc. (a)

     63,500         1,702,435   
     

 

 

 
                1,920,928   

Construction & Engineering — 0.3%

     

Quanta Services, Inc. (a)(b)

     11,200         381,696   

Electric Utilities — 2.3%

     

Fortum OYJ

     16,900         391,941   

ITC Holdings Corp.

     29,300         1,160,573   

NextEra Energy, Inc. (c)

     10,100         1,012,222   
     

 

 

 
                2,564,736   

Electrical Equipment — 3.2%

     

ABB Ltd.

     25,400         557,242   

Eaton Corp. PLC (a)

     8,700         594,993   

Gamesa Corp. Tecnologica SA (b)

     29,200         288,292   

Regal-Beloit Corp.

     11,300         801,961   

Schneider Electric SE

     10,700         843,011   

Vestas Wind Systems A/S (b)

     13,933         465,014   
     

 

 

 
                3,550,513   

Electronic Equipment, Instruments & Components — 0.5%

  

  

Azbil Corp.

     9,800         236,332   

Itron, Inc. (a)(b)

     6,800         264,724   
     

 

 

 
                501,056   

Food & Staples Retailing — 3.1%

     

The Andersons, Inc. (a)

     35,000         2,230,550   

Total Produce PLC

     990,000         1,215,805   
     

 

 

 
                3,446,355   

Food Products — 19.9%

     

Archer-Daniels-Midland Co. (a)

     97,200         4,568,400   

BrasilAgro — Co. Brasileira de Propriedades Agricolas

     120,600         337,285   

BRF SA — ADR (a)

     52,000         1,354,600   

Bunge Ltd.

     49,000         4,343,850   

First Resources Ltd.

     970,000         1,570,483   

Ingredion, Inc.

     44,700         3,453,075   

Origin Enterprises PLC (b)

     30,000         296,996   

Select Harvests Ltd.

     130,000         719,578   

Tyson Foods, Inc., Class A

     96,000         3,873,600   

WH Group Ltd. (b)

     2,000,000         1,307,518   

Wynnstay Group PLC

     24,600         215,258   
     

 

 

 
                22,040,643   
Common Stocks    Shares      Value  

Independent Power and Renewable Electricity Producers — 2.1%

  

  

China Longyuan Power Group Corp. Ltd., Class H

     488,000       $ 520,397   

EDP Renovaveis SA

     119,300         775,646   

Enel Green Power SpA

     223,400         549,178   

Greenko Group PLC (b)

     59,000         134,719   

Ormat Technologies, Inc. (a)

     11,000         318,450   
     

 

 

 
                2,298,390   

Industrial Conglomerates — 3.1%

     

Danaher Corp. (a)

     16,800         1,350,720   

Roper Industries, Inc. (a)

     12,840         2,032,572   
     

 

 

 
                3,383,292   

Machinery — 6.3%

     

IDEX Corp. (a)

     9,150         685,427   

Pall Corp. (a)

     9,300         850,206   

Pentair PLC

     23,960         1,606,518   

Watts Water Technologies, Inc., Class A

     27,300         1,655,199   

Xylem, Inc.

     59,500         2,163,420   
     

 

 

 
                6,960,770   

Multi-Utilities — 3.2%

     

Hera SpA

     361,600         952,267   

National Grid PLC

     33,700         500,105   

Veolia Environnement SA

     126,000         2,092,709   
     

 

 

 
                3,545,081   

Oil, Gas & Consumable Fuels — 1.7%

     

AltaGas Ltd. (a)

     15,500         639,501   

Oil Search Ltd.

     71,100         545,175   

Sasol Ltd.

     10,100         504,346   

Veresen, Inc.

     12,000         188,350   
     

 

 

 
                1,877,372   

Paper & Forest Products — 2.5%

     

Canfor Corp. (a)(b)

     45,000         1,047,691   

Interfor Corp. (b)

     110,000         1,672,863   

Precious Woods Holding AG (b)

     20,000         58,099   
     

 

 

 
                2,778,653   

Real Estate Investment Trusts (REITs) — 2.6%

     

Weyerhaeuser Co. (a)

     85,000         2,878,100   

Semiconductors & Semiconductor Equipment — 1.1%

  

  

Aixtron SE (b)

     7,600         92,731   

SMA Solar Technology AG (b)(d)

     2,600         64,743   

Trina Solar Ltd. — ADR (b)

     64,800         684,288   

Veeco Instruments, Inc. (b)

     11,200         403,088   
     

 

 

 
                1,244,850   

Water Utilities — 17.5%

     

American States Water Co.

     75,800         2,712,124   

American Water Works Co., Inc.

     51,600         2,753,892   

Aqua America, Inc.

     116,525         3,052,955   

California Water Service Group

     86,200         2,243,786   

Pennon Group PLC

     215,200         2,871,685   

Severn Trent PLC

     113,500         3,627,843   

United Utilities Group PLC

     158,381         2,171,118   
     

 

 

 
                19,433,403   

Total Common Stocks — 95.9%

              106,321,588   
     
                  

 

 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    35


Schedule of Investments (continued)      BlackRock EcoSolutions Investment Trust (BQR)   
     (Percentages shown are based on Net Assets   

 

Preferred Stocks    Shares      Value  

Food Products — 0.5%

     

Tyson Foods, Inc., 0.00% (b)

     11,094       $ 556,475   

Total Long-Term Investments

(Cost — $ 95,876,825) — 96.4%

  

  

     106,878,063   
     
Short-Term Securities                

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.07% (e)(f)

     6,046,389         6,046,389   
      Beneficial
Interest
(000)
         

BlackRock Liquidity Series, LLC Money Market
Series, 0.19% (e)(f)(g)

   $ 26         26,416   

Total Short-Term Securities

(Cost — $ 6,072,805) — 5.5%

  

  

     6,072,805   
           Value  

Total Investments Before Options Written

(Cost — $101,949,630) — 101.9%

   $ 112,950,868   
    
Options Written             

(Premiums Received — $991,502) — (1.6)%

         (1,785,981

Total Investments Net of Options Written — 100.3%

       111,164,887   

Liabilities in Excess of Other Assets — (0.3)%

       (356,962
    

 

 

 

Net Assets — 100.0%

     $ 110,807,925   
    

 

 

 
 
Notes to Schedule of Investments

 

(a) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(b) Non-income producing security.

 

(c) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(d) Security, or a portion of security, is on loan.

 

(e) Represents the current yield as of report date.

 

(f) Investments in issuers considered to be affiliates of the Trust during the year ended October 31, 2014, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate   

Shares/

Beneficial Interest
Held at

October 31, 2013

    

Net

Activity

   

Shares/

Beneficial Interest

Held at

October 31, 2014

     Income  

BlackRock Liquidity Funds, TempFund, Institutional Class

     7,688,865         (1,642,476     6,046,389       $ 2,223   

BlackRock Liquidity Series, LLC Money Market Series

           $ 26,416      $ 26,416       $ 1,486   

 

(g) Security was purchased with the cash collateral from loaned securities. The Trust may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

 

Ÿ  

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine industry sub- classifications for reporting ease.

 

Ÿ  

Exchange-traded options written as of October 31, 2014 were as follows:

 

Description   

Put/

Call

    

Strike

Price

    

Expiration

Date

   Contracts     

Market

Value

 

Roper Industries, Inc.

     Call         USD         150.05       11/14/14      29       $ (24,925

AltaGas Ltd.

     Call         CAD         54.00       11/22/14      35         (279

BRF SA — ADR

     Call         USD         25.00       11/22/14      70         (9,975

Canfor Corp.

     Call         CAD         27.00       11/22/14      90         (2,595

CF Industries Holdings, Inc.

     Call         USD         290.00       11/22/14      45         (5,199

Danaher Corp.

     Call         USD         75.00       11/22/14      76         (42,560

Itron, Inc.

     Call         USD         40.00       11/22/14      30         (3,975

Covanta Holding Corp.

     Call         USD         21.35       11/26/14      45         (4,089

IDEX Corp.

     Call         USD         71.00       12/09/14      41         (17,374

Ormat Technologies, Inc.

     Call         USD         28.15       12/09/14      49         (5,510

Johnson Controls, Inc.

     Call         USD         41.75       12/10/14      104         (57,587

Monsanto Co.

     Call         USD         114.05       12/10/14      201         (55,098

Quanta Services, Inc.

     Call         USD         33.55       12/10/14      50         (7,343

Tetra Tech, Inc.

     Call         USD         25.05       12/10/14      285         (55,856

BRF SA — ADR

     Call         USD         26.50       12/15/14      70         (6,671

 

See Notes to Financial Statements.

 

36    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)      BlackRock EcoSolutions Investment Trust (BQR)   

 

Exchange-traded options written as of October 31, 2014 were as follows: (concluded)

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts      Market
Value
 

AltaGas Ltd.

     Call         CAD         46.00       12/20/14      34       $ (5,279

The Andersons, Inc.

     Call         USD         60.00       12/20/14      34         (17,850

The Andersons, Inc.

     Call         USD         65.00       12/20/14      90         (20,250

Archer-Daniels-Midland Co.

     Call         USD         47.00       12/20/14      401         (55,739

BRF SA — ADR

     Call         USD         25.00       12/20/14      94         (16,685

Canfor Corp.

     Call         CAD         25.00       12/20/14      112         (17,142

Eaton Corp. PLC

     Call         USD         67.50       12/20/14      40         (8,600

Pall Corp.

     Call         USD         90.00       12/20/14      42         (15,330

Potash Corp. of Saskatchewan, Inc.

     Call         USD         34.00       12/20/14      438         (47,304

Potash Corp. of Saskatchewan, Inc.

     Call         USD         35.00       12/20/14      57         (3,477

Roper Industries, Inc.

     Call         USD         150.00       12/20/14      29         (27,260

Weyerhaeuser Co.

     Call         USD         34.00       12/20/14      315         (22,050

Total

                  $ (556,002
                 

 

 

 

 

Ÿ  

Over-the-counter options written as of October 31, 2014 were as follows:

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts      Market
Value
 

EDP Renovaveis SA

   Bank of America N.A.      Call         EUR         5.52       11/03/14      33,400       $ (6

American States Water Co.

   Morgan Stanley & Co. International PLC      Call         USD         33.10       11/06/14      17,100         (45,850

NextEra Energy, Inc.

   Deutsche Bank AG      Call         USD         98.61       11/06/14      900         (1,662

National Grid PLC

   Goldman Sachs International      Call         GBP         9.06       11/07/14      15,000         (5,399

American Water Works Co., Inc.

   UBS AG      Call         USD         48.31       11/10/14      5,800         (29,348

Novozymes A/S, B Shares

   Morgan Stanley & Co. International PLC      Call         DKK         260.92       11/10/14      12,500         (31,344

Umicore SA

   Morgan Stanley & Co. International PLC      Call         EUR         36.25       11/10/14      2,400         (1

Wacker Chemie AG

   Deutsche Bank AG      Call         EUR         97.46       11/10/14      2,500         (8,799

Azbil Corp.

   Citibank N.A.      Call         JPY         2,665.97       11/11/14      4,400         (2,534

Oil Search Ltd.

   Morgan Stanley & Co. International PLC      Call         AUD         8.51       11/11/14      16,000         (3,529

Select Harvests Ltd.

   UBS AG      Call         AUD         6.30       11/11/14      12,500         (1,087

ITC Holdings Corp.

   Citibank N.A.      Call         USD         36.13       11/12/14      2,000         (6,955

Ingredion, Inc.

   Citibank N.A.      Call         USD         76.71       11/17/14      20,100         (33,412

Xylem, Inc.

   Credit Suisse International      Call         USD         35.76       11/17/14      26,700         (28,698

EDP Renovaveis SA

   Goldman Sachs International      Call         EUR         5.70       11/18/14      32,500         (215

American Water Works Co., Inc.

   Morgan Stanley & Co. International PLC      Call         USD         48.69       11/19/14      2,800         (13,114

ITC Holdings Corp.

   Bank of America N.A.      Call         USD         35.70       11/20/14      3,600         (14,087

Interfor Corp.

   Deutsche Bank AG      Call         CAD         16.48       11/25/14      2,900         (2,482

Total Produce PLC

   Bank of America N.A.      Call         EUR         0.98       11/25/14      210,000         (7,071

American Water Works Co., Inc.

   Morgan Stanley & Co. International PLC      Call         USD         50.85       12/08/14      5,700         (14,344

The Andersons, Inc.

   Citibank N.A.      Call         USD         61.09       12/08/14      3,350         (13,945

Aqua America, Inc.

   Credit Suisse International      Call         USD         24.29       12/08/14      18,000         (34,200

Interfor Corp.

   Morgan Stanley & Co. International PLC      Call         CAD         16.70       12/08/14      46,600         (39,698

NextEra Energy, Inc.

   Citibank N.A.      Call         USD         96.75       12/08/14      3,600         (13,313

Severn Trent PLC

   Goldman Sachs International      Call         GBP         19.25       12/08/14      25,500         (29,998

Total Produce PLC

   Goldman Sachs International      Call         EUR         0.98       12/08/14      34,000         (1,398

Archer-Daniels-Midland Co.

   UBS AG      Call         USD         45.71       12/09/14      3,600         (7,199

CF Industries Holdings, Inc.

   UBS AG      Call         USD         265.81       12/09/14      1,300         (8,623

Potash Corp. of Saskatchewan, Inc.

   Morgan Stanley & Co. International PLC      Call         USD         34.76       12/09/14      49,400         (28,908

Tyson Foods, Inc., Class A

   UBS AG      Call         USD         38.61       12/09/14      32,200         (84,713

Bunge Ltd.

   Morgan Stanley & Co. International PLC      Call         USD         82.82       12/10/14      22,000         (128,260

Trina Solar Ltd. — ADR

   Credit Suisse International      Call         USD         10.81       12/10/14      29,100         (24,470

Uralkali OJSC — GDR

   UBS AG      Call         USD         17.56       12/10/14      20,000         (18,803

Weyerhaeuser Co.

   Morgan Stanley & Co. International PLC      Call         USD         32.73       12/10/14      6,700         (9,530

American States Water Co.

   Deutsche Bank AG      Call         USD         33.50       12/11/14      17,100         (38,988

California Water Service Group

   Goldman Sachs International      Call         USD         24.59       12/11/14      24,100         (36,628

First Resources Ltd.

   UBS AG      Call         SGD         2.00       12/11/14      218,000         (20,352

Linde AG

   Goldman Sachs International      Call         EUR         153.87       12/11/14      1,300         (1,773

Pennon Group PLC

   Goldman Sachs International      Call         GBP         8.18       12/11/14      96,900         (41,117

Schneider Electric SE

   Morgan Stanley & Co. International PLC      Call         EUR         59.38       12/11/14      4,800         (25,342

Select Harvests Ltd.

   UBS AG      Call         AUD         6.10       12/11/14      33,000         (8,854

Select Harvests Ltd.

   UBS AG      Call         AUD         6.34       12/11/14      13,500         (2,110

Severn Trent PLC

   Bank of America N.A.      Call         GBP         20.16       12/11/14      25,500         (12,301

ABB Ltd.

   Goldman Sachs International      Call         CHF         20.36       12/12/14      11,500         (11,513

Air Liquide SA

   Bank of America N.A.      Call         EUR         95.37       12/12/14      2,100         (7,185

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    37


Schedule of Investments (continued)      BlackRock EcoSolutions Investment Trust (BQR)   

 

Over-the-counter options written as of October 31, 2014 were as follows: (concluded)

 

Description    Counterparty      Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Aixtron SE

     Morgan Stanley & Co. International PLC         Call         EUR         10.60         12/12/14         3,400       $ (829

Fortum OYJ

     UBS AG         Call         EUR         17.99         12/12/14         7,600         (7,025

Gamesa Corp. Tecnologica SA

     Deutsche Bank AG         Call         EUR         7.26         12/12/14         13,000         (14,369

Johnson Matthey PLC

     Bank of America N.A.         Call         GBP         29.11         12/12/14         7,800         (14,398

Kingspan Group PLC

     Goldman Sachs International         Call         EUR         12.32         12/12/14         7,000         (5,666

SMA Solar Technology AG

     Bank of America N.A.         Call         EUR         19.65         12/12/14         1,200         (2,010

Syngenta AG

     UBS AG         Call         CHF         291.79         12/12/14         5,200         (58,111

United Utilities Group PLC

     Bank of America N.A.         Call         GBP         8.48         12/12/14         71,300         (28,461

Veolia Environnement SA

     Goldman Sachs International         Call         EUR         13.21         12/12/14         56,700         (35,290

Aqua America, Inc.

     Deutsche Bank AG         Call         USD         25.29         12/15/14         34,400         (36,547

Tyson Foods, Inc., Class A

     Goldman Sachs International         Call         USD         39.38         12/15/14         11,000         (24,147

American Water Works Co., Inc.

     Citibank N.A.         Call         USD         51.10         12/16/14         8,900         (20,203

ITC Holdings Corp.

     Goldman Sachs International         Call         USD         35.24         12/16/14         7,500         (32,775

The Mosaic Co.

     Deutsche Bank AG         Call         USD         43.71         12/16/14         15,900         (20,769

Vestas Wind Systems A/S

     Deutsche Bank AG         Call         DKK         201.93         12/17/14         6,300         (15,183

California Water Service Group

     Morgan Stanley & Co. International PLC         Call         USD         25.00         1/12/15         14,600         (15,038

Total

                     $ (1,229,979
                    

 

 

 

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, please refer to Note 2 of the Notes to Financial Statements.

The following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy as of October 31, 2014:

 

      Level 1      Level 2      Level 3    Total  

Assets:

           

Investments:

           

Long-Term Investments:

           

Common Stocks:

           

Auto Components

   $ 1,096,200                  $ 1,096,200   

Building Products

     497,330                    497,330   

Chemicals

     16,144,568       $ 9,777,652            25,922,220   

Commercial Services & Supplies

     1,920,928                    1,920,928   

Construction & Engineering

     381,696                    381,696   

Electric Utilities

     2,172,795         391,941            2,564,736   

Electrical Equipment

     1,396,954         2,153,559            3,550,513   

Electronic Equipment, Instruments & Components

     264,724         236,332            501,056   

Food & Staples Retailing

     3,446,355                    3,446,355   

Food Products

     22,040,643                    22,040,643   

Independent Power and Renewable Electricity Producers

     318,450         1,979,940            2,298,390   

Industrial Conglomerates

     3,383,292                    3,383,292   

Machinery

     6,960,770                    6,960,770   

Multi-Utilities

             3,545,081            3,545,081   

Oil, Gas & Consumable Fuels

     827,851         1,049,521            1,877,372   

Paper & Forest Products

     2,720,554         58,099            2,778,653   

 

See Notes to Financial Statements.

 

38    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (concluded)      BlackRock EcoSolutions Investment Trust (BQR)   

 

      Level 1     Level 2     Level 3    Total  

Assets: (concluded)

         

Investments: (concluded)

         

Long-Term Investments: (concluded)

         

Common Stocks: (concluded)

         

Real Estate Investment Trusts (REITs)

   $ 2,878,100                $ $2,878,100   

Semiconductors & Semiconductor Equipment

     1,087,376      $ 157,474           1,244,850   

Water Utilities

     10,762,757        8,670,646           19,433,403   

Preferred Stocks

     556,475                  556,475   

Short-Term Securities

     6,046,389        26,416           6,072,805   

Total

   $ 84,904,207      $ 28,046,661         $ 112,950,868   
         
      Level 1     Level 2     Level 3    Total  

Derivative Financial Instruments1

         

Liabilities:

         

Equity contracts

   $ (321,549   $ (1,464,432      $ (1,785,981

1    Derivative financial instruments are options written, which are shown at value.

         
The Trust may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of October 31, 2014, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:    
         
      Level 1     Level 2     Level 3    Total  

Assets:

         

Foreign currency at value

   $ 7,851                $ 7,851   

Cash pledged as collateral for OTC derivatives

     100,000                  100,000   

Liabilities:

         

Collateral on securities loaned at value

          $ (26,416        (26,416

Total

   $ 107,851      $ (26,416      $ 81,435   

There were no transfers between levels during the year ended October 31, 2014.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    39


Schedule of Investments October 31, 2014      BlackRock Energy and Resources Trust (BGR)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Energy Equipment & Services — 8.9%

     

Cameron International Corp. (a)(b)

     203,100       $ 12,094,605   

Halliburton Co. (b)

     319,200         17,600,688   

Schlumberger Ltd. (b)

     372,024         36,703,888   
     

 

 

 
                66,399,181   

Oil, Gas & Consumable Fuels — 90.0%

     

Anadarko Petroleum Corp. (b)

     371,833         34,126,833   

BG Group PLC

     826,110         13,767,914   

Cabot Oil & Gas Corp.

     510,000         15,861,000   

Cairn Energy PLC (a)

     1,856,000         4,340,416   

Canadian Natural Resources Ltd. (b)

     400,600         13,979,502   

Canadian Oil Sands Ltd.

     316,013         4,951,679   

Chevron Corp. (b)(c)

     664,828         79,746,119   

Cimarex Energy Co. (b)

     114,700         13,037,949   

ConocoPhillips (b)

     598,900         43,210,635   

Devon Energy Corp. (b)

     361,900         21,714,000   

Enbridge, Inc. (b)

     223,800         10,589,818   

Encana Corp. (b)

     1,105,900         20,605,918   

EOG Resources, Inc. (b)

     227,600         21,633,380   

Exxon Mobil Corp. (b)

     792,100         76,603,991   

Imperial Oil Ltd. (b)

     196,000         9,430,886   

Kosmos Energy Ltd. (a)(b)

     1,069,107         9,974,768   

Laredo Petroleum, Inc. (a)

     482,100         9,140,616   

Marathon Oil Corp. (b)

     639,600         22,641,840   

Murphy Oil Corp. (b)

     180,700         9,647,573   

Noble Energy, Inc. (b)

     313,092         18,043,492   

Oil Search Ltd.

     2,232,863         17,120,983   

Phillips 66 (b)

     186,300         14,624,550   

Pioneer Natural Resources Co. (b)

     91,400         17,280,084   

Range Resources Corp.

     283,900         19,418,760   

Royal Dutch Shell PLC, Class A — ADR

     1,073,800         77,088,102   
Common Stocks    Shares      Value  

Oil, Gas & Consumable Fuels (concluded)

     

Southwestern Energy Co. (a)(b)

     533,200       $ 17,334,332   

Statoil ASA

     763,526         17,473,623   

Total SA

     558,500         33,344,257   
     

 

 

 
                666,733,020   

Total Long-Term Investments

(Cost — $698,921,295) — 98.9%

              733,132,201   
     
Short-Term Securities                

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.07% (d)(e)

     11,796,554         11,796,554   

Total Short-Term Securities

(Cost — $11,796,554) — 1.6%

              11,796,554   
     

Options Purchased

(Cost — $4,590) — 0.0%

           6  

Total Investments Before Options Written

(Cost — $710,722,439) — 100.5%

              744,928,761   
     
Options Written                

(Premiums Received — $3,776,701) — (0.3)%

              (2,135,361

Total Investments Net of Options Written — 100.2%

        742,793,400   

Liabilities in Excess of Other Assets — (0.2)%

        (1,684,351
     

 

 

 

Net Assets — 100.0%

      $ 741,109,049   
     

 

 

 
 

 

Notes to Schedule of Investments

 

(a) Non-income producing security.

 

(b) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(c) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(d) Represents the current yield as of report date.

 

(e) Investments in issuers considered to be affiliates of the Trust during the year ended October 31, 2014, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate    Shares Held at
October 31, 2013
    

Net

Activity

    Shares Held at
October 31, 2014
     Income  

BlackRock Liquidity Funds, TempFund, Institutional Class

     60,810,523         (49,013,969     11,796,554       $ 14,208   

BlackRock Liquidity Series, LLC Money Market Series

                          $ 16,642   

 

Ÿ  

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

 

Ÿ  

Over-the-counter options purchased as of October 31, 2014 were as follows:

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

CONSOL Energy, Inc.

   Goldman Sachs International      Call         USD         39.50         11/03/14         76,500       $ 6   

 

Ÿ  

Exchange-traded options written as of October 31, 2014 were as follows:

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Devon Energy Corp.

     Call         USD         74.50         11/03/14         550       $ (1

Chevron Corp.

     Call         USD         120.00         11/07/14         406         (46,284

ConocoPhillips

     Call         USD         79.00         11/07/14         646         (5,814

 

See Notes to Financial Statements.

 

40    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)      BlackRock Energy and Resources Trust (BGR)   

 

Exchange-traded options written as of October 31, 2014 were as follows: (concluded)

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

EOG Resources, Inc.

     Call         USD         106.00         11/07/14         270       $ (2,835

Exxon Mobil Corp.

     Call         USD         98.00         11/07/14         769         (18,072

Phillips 66

     Call         USD         83.00         11/07/14         326         (4,890

Cimarex Energy Co.

     Call         USD         140.00         11/10/14         89         (16

Pioneer Natural Resources Co.

     Call         USD         210.00         11/12/14         190         (5,735

Chevron Corp.

     Call         USD         117.00         11/14/14         233         (85,045

Devon Energy Corp.

     Call         USD         65.00         11/14/14         170         (3,060

Exxon Mobil Corp.

     Call         USD         98.00         11/14/14         309         (11,742

Marathon Oil Corp.

     Call         USD         34.00         11/14/14         1,133         (196,576

Schlumberger Ltd.

     Call         USD         100.00         11/14/14         503         (64,636

Cimarex Energy Co.

     Call         USD         140.00         11/19/14         89         (383

Anadarko Petroleum Corp.

     Call         USD         110.00         11/22/14         473         (4,257

Cameron International Corp.

     Call         USD         72.50         11/22/14         235         (2,350

Cameron International Corp.

     Call         USD         75.00         11/22/14         235         (1,175

Canadian Natural Resources Ltd.

     Call         CAD         48.00         11/22/14         640         (5,679

Chevron Corp.

     Call         USD         120.00         11/22/14         1,280         (215,040

ConocoPhillips

     Call         USD         71.50         11/22/14         935         (172,040

ConocoPhillips

     Call         USD         82.50         11/22/14         515         (1,030

Enbridge, Inc.

     Call         CAD         56.00         11/22/14         524         (10,227

Encana Corp.

     Call         CAD         26.00         11/22/14         830         (4,419

EOG Resources, Inc.

     Call         USD         102.00         11/22/14         263         (24,459

Exxon Mobil Corp.

     Call         USD         100.00         11/22/14         692         (12,456

Imperial Oil Ltd.

     Call         CAD         56.00         11/22/14         686         (27,086

Kosmos Energy Ltd.

     Call         USD         10.00         11/22/14         1,000         (30,000

Marathon Oil Corp.

     Call         USD         35.00         11/22/14         1,100         (117,700

Murphy Oil Corp.

     Call         USD         57.50         11/22/14         210         (5,250

Noble Energy, Inc.

     Call         USD         72.50         11/22/14         383         (3,830

Phillips 66

     Call         USD         80.00         11/22/14         323         (39,568

Schlumberger Ltd.

     Call         USD         110.00         11/22/14         75         (412

Exxon Mobil Corp.

     Call         USD         96.00         12/05/14         501         (92,936

Halliburton Co.

     Call         USD         58.50         12/05/14         559         (47,236

Murphy Oil Corp.

     Call         USD         57.25         12/12/14         210         (11,053

Cimarex Energy Co.

     Call         USD         125.00         12/20/14         92         (22,540

Exxon Mobil Corp.

     Call         USD         95.00         12/20/14         501         (142,785

Pioneer Natural Resources Co.

     Call         USD         200.00         12/20/14         130         (78,000

Southwestern Energy Co.

     Call         USD         36.00         12/20/14         620         (26,350

Total

                  $ (1,542,967
                 

 

 

 

 

Ÿ  

Over-the-counter options written as of October 31, 2014 were as follows:

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Cabot Oil & Gas Corp.

   Deutsche Bank AG      Call         USD         34.66         11/03/14         178,500       $ (12

CONSOL Energy, Inc.

   Deutsche Bank AG      Call         USD         39.90         11/03/14         76,500         (1

Encana Corp.

   Credit Suisse International      Call         CAD         23.86         11/03/14         42,000           

Royal Dutch Shell PLC, Class A — ADR

   Citibank N.A.      Call         USD         79.29         11/03/14         59,200         (1

Royal Dutch Shell PLC, Class A — ADR

   Deutsche Bank AG      Call         USD         77.43         11/03/14         212,800         (2

Schlumberger Ltd.

   Citibank N.A.      Call         USD         106.02         11/03/14         7,500         (3

BG Group PLC

   Morgan Stanley & Co. International PLC      Call         GBP         11.57         11/05/14         80,000         (6

Total SA

   Goldman Sachs International      Call         EUR         52.22         11/05/14         64,000         (48

Anadarko Petroleum Corp.

   Citibank N.A.      Call         USD         107.40         11/06/14         35,600         (8

Kosmos Energy Ltd.

   UBS AG      Call         USD         10.30         11/06/14         54,100         (545

Range Resources Corp.

   Credit Suisse International      Call         USD         75.00         11/06/14         41,800         (229

Statoil ASA

   Morgan Stanley & Co. International PLC      Call         NOK         176.49         11/07/14         155,000         (1,026

Oil Search Ltd.

   Deutsche Bank AG      Call         AUD         9.26         11/11/14         392,000         (67

Total SA

   Deutsche Bank AG      Call         EUR         50.50         11/11/14         67,300         (7,232

Kosmos Energy Ltd.

   Goldman Sachs International      Call         USD         10.61         11/13/14         50,000         (1,209

Laredo Petroleum, Inc.

   Goldman Sachs International      Call         USD         23.40         11/20/14         62,500         (3,247

Statoil ASA

   Goldman Sachs International      Call         NOK         160.09         11/25/14         110,000         (43,462

Enbridge, Inc.

   Goldman Sachs International      Call         CAD         53.00         12/01/14         26,000         (30,329

Schlumberger Ltd.

   Deutsche Bank AG      Call         USD         95.61         12/09/14         64,900         (309,469

Laredo Petroleum, Inc.

   Goldman Sachs International      Call         USD         23.40         12/10/14         62,500         (9,905

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    41


Schedule of Investments (concluded)      BlackRock Energy and Resources Trust (BGR)   

 

Over-the-counter options written as of October 31, 2014 were as follows: (concluded)

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Total SA

   Bank of America N.A.      Call         EUR         46.50         12/10/14         64,100       $ (176,282

Laredo Petroleum, Inc.

   Morgan Stanley & Co. International PLC      Call         USD         23.40         12/17/14         44,000         (9,311

Total

                     $ (592,394
                    

 

 

 

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, please refer to Note 2 of the Notes to Financial Statements.

The following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy as of October 31, 2014:

 

      Level 1     Level 2     Level 3    Total  

Assets:

         

Investments:

         

Long-Term Investments:

         

Common Stocks:

         

Energy Equipment & Services

   $ 66,399,181                $ 66,399,181   

Oil, Gas & Consumable Fuels

     580,685,827      $ 86,047,193           666,733,020   

Short-Term Securities

     11,796,554                  11,796,554   

Options Purchased

            6           6   

Total

   $ 658,881,562      $ 86,047,199         $ 744,928,761   
         
      Level 1     Level 2     Level 3    Total  

Derivative Financial Instruments1

         

Liabilities:

         

Equity contracts

   $ (1,525,777   $ (609,584      $ (2,135,361

1    Derivative financial instruments are options written, which are shown at value.

         
The Trust may hold assets in which the fair value approximates the carrying amount for financial statement purposes. As of October 31, 2014, such assets are categorized within the disclosure hierarchy as follows:    
         
      Level 1     Level 2     Level 3    Total  

Assets:

         

Cash

   $ 31,720                $ 31,720   

Foreign currency at value

     160,963                  160,963   

Total

   $ 192,683                $ 192,683   

There were no transfers between levels during the year ended October 31, 2014.

 

See Notes to Financial Statements.

 

42    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments October 31, 2014      BlackRock Enhanced Capital and Income Fund, Inc. (CII)   
     (Percentages shown are based on Net Assets)   

 

 

Common Stocks   

    

Shares

     Value  

Air Freight & Logistics — 0.0%

     

Royal Mail PLC

     11,200       $ 79,261   

Airlines — 5.9%

     

Japan Airlines Co. Ltd.

     1,161,600         31,191,379   

United Continental Holdings, Inc. (a)(b)

     169,100         8,930,171   
     

 

 

 
                40,121,550   

Auto Components — 1.9%

     

The Goodyear Tire & Rubber Co. (b)

     528,600         12,807,978   

Automobiles — 2.5%

     

Bayerische Motoren Werke AG

     53,800         4,305,402   

General Motors Co. (b)(c)

     314,400         9,872,160   

Renault SA

     36,400         2,707,659   
     

 

 

 
                16,885,221   

Banks — 3.8%

     

Citigroup, Inc. (b)

     186,130         9,963,539   

JPMorgan Chase & Co. (b)

     269,800         16,317,504   
     

 

 

 
                26,281,043   

Beverages — 0.5%

     

PepsiCo, Inc. (b)

     36,800         3,539,056   

Biotechnology — 0.5%

     

Gilead Sciences, Inc. (a)(b)

     33,300         3,729,600   

Building Products — 1.4%

     

Owens Corning (b)

     301,100         9,653,266   

Capital Markets — 1.0%

     

Atlas Mara Co-Nvest Ltd. (a)(d)

     346,364         3,619,504   

Legg Mason, Inc.

     60,200         3,130,400   
     

 

 

 
                6,749,904   

Chemicals — 3.5%

     

CF Industries Holdings, Inc. (b)

     91,300         23,738,000   

Communications Equipment — 1.0%

     

QUALCOMM, Inc. (b)

     91,200         7,160,112   

Consumer Finance — 3.9%

     

Ally Financial, Inc. (a)(b)

     502,400         11,404,480   

Discover Financial Services (b)(c)

     161,400         10,294,092   

Springleaf Holdings, Inc. (a)(b)

     134,300         5,025,506   
     

 

 

 
                26,724,078   

Diversified Consumer Services — 0.2%

     

Houghton Mifflin Harcourt Co. (a)

     67,395         1,348,574   

Diversified Financial Services — 2.0%

     

Berkshire Hathaway, Inc., Class B (a)(b)

     74,200         10,399,872   

FNFV Group (a)

     232,710         3,127,622   
     

 

 

 
                13,527,494   

Diversified Telecommunication Services — 1.2%

     

Verizon Communications, Inc. (b)

     161,610         8,120,902   

Energy Equipment & Services — 1.0%

     

Noble Corp. PLC

     164,900         3,449,708   

Transocean Ltd. (b)

     117,200         3,496,076   
     

 

 

 
                6,945,784   

Food & Staples Retailing — 2.6%

     

METRO AG (a)

     402,600         12,834,257   

Wal-Mart Stores, Inc. (b)

     18,400         1,403,368   

Whole Foods Market, Inc. (b)

     88,000         3,461,040   
     

 

 

 
                17,698,665   

Health Care Providers & Services — 5.6%

     

Express Scripts Holding Co. (a)(b)

     79,000         6,068,780   

UnitedHealth Group, Inc. (b)

     337,800         32,094,378   
     

 

 

 
                38,163,158   
Common Stocks   

    

Shares

     Value  

Industrial Conglomerates — 0.3%

     

3M Co. (b)

     12,900       $ 1,983,633   

Insurance — 8.2%

     

The Allstate Corp. (b)

     121,700         7,892,245   

American International Group, Inc. (b)

     514,000         27,534,980   

FNF Group (b)

     698,200         20,834,288   
     

 

 

 
                56,261,513   

Internet & Catalog Retail — 5.9%

     

Expedia, Inc. (b)

     174,600         14,835,762   

Orbitz Worldwide, Inc. (a)(b)

     3,053,200         25,249,964   
     

 

 

 
                40,085,726   

Internet Software & Services — 4.5%

     

eBay, Inc. (a)(b)

     209,200         10,983,000   

Google, Inc., Class A (a)(b)

     12,001         6,815,008   

Google, Inc., Class C (a)(b)

     10,301         5,759,083   

Yahoo!, Inc. (a)(b)

     150,300         6,921,315   
     

 

 

 
                30,478,406   

IT Services — 4.9%

     

Leidos Holdings, Inc. (b)

     383,500         14,024,595   

Science Applications International Corp.

     182,092         8,906,120   

ServiceSource International, Inc. (a)

     1,328,400         5,074,488   

Visa, Inc., Class A (b)

     22,700         5,480,461   
     

 

 

 
                33,485,664   

Leisure Products — 0.2%

     

Brunswick Corp. (b)

     29,500         1,380,600   

Media — 8.2%

     

CBS Corp., Class B

     28,200         1,529,004   

Comcast Corp., Special Class A (b)

     316,700         17,462,838   

News Corp., Class A (a)

     57,400         888,552   

Nexstar Broadcasting Group, Inc., Class A (b)

     112,500         5,076,000   

Sinclair Broadcast Group, Inc., Class A (b)

     1,002,100         29,111,005   

The Walt Disney Co. (b)

     19,300         1,763,634   
     

 

 

 
                55,831,033   

Metals & Mining — 0.3%

     

Freeport-McMoRan, Inc.

     79,800         2,274,300   

Oil, Gas & Consumable Fuels — 6.5%

     

HollyFrontier Corp. (b)

     159,960         7,258,985   

Linn Energy LLC (b)

     68,000         1,695,920   

Marathon Petroleum Corp. (b)

     94,000         8,544,600   

PBF Energy, Inc., Class A (b)

     103,100         2,687,817   

Suncor Energy, Inc. (b)

     671,700         23,872,218   
     

 

 

 
                44,059,540   

Paper & Forest Products — 0.3%

     

International Paper Co.

     37,100         1,878,002   

Pharmaceuticals — 8.8%

     

Eli Lilly & Co.

     125,300         8,311,149   

Johnson & Johnson (b)

     138,900         14,970,642   

Merck & Co., Inc. (b)

     237,500         13,760,750   

Novartis AG - ADR (b)

     43,300         4,013,477   

Pfizer, Inc. (b)

     645,800         19,341,710   
     

 

 

 
                60,397,728   

Real Estate Investment Trusts (REITs) — 2.0%

     

American Capital Agency Corp. (b)

     226,000         5,139,240   

American Realty Capital Properties, Inc.

     152,840         1,355,691   

Annaly Capital Management, Inc. (b)

     606,100         6,915,601   
     

 

 

 
                13,410,532   

Software — 2.2%

     

Activision Blizzard, Inc. (b)

     432,800         8,634,360   
 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    43


Schedule of Investments (continued)      BlackRock Enhanced Capital and Income Fund, Inc. (CII)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Software (concluded)

  

Oracle Corp. (b)

     169,100       $ 6,603,355   
     

 

 

 
                15,237,715   

Technology Hardware, Storage & Peripherals — 7.4%

  

Apple, Inc. (b)

     296,100         31,978,800   

Samsung Electronics Co. Ltd.

     20,200         18,645,881   
                50,624,681   

Trading Companies & Distributors — 0.4%

  

AerCap Holdings NV (a)(b)

     56,600         2,453,044   

Wireless Telecommunication Services — 1.7%

  

Vodafone Group PLC — ADR (b)

     342,308         11,371,471   

Total Common Stocks — 100.3%

              684,487,234   
     
Warrants (e)                

Capital Markets — 0.0%

     

Atlas Mara Co-Nvest Ltd., Expires 12/17/17 (a)

     200,000         80,000   

Total Long-Term Investments

(Cost — $585,614,747) — 100.3%

              684,567,234   
     
                  
Short-Term Securities    Shares      Value  

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.07% (f)(g)

     7,658,919       $ 7,658,919   
      Beneficial
Interest
(000)
         

BlackRock Liquidity Series, LLC Money Market Series, 0.19% (f)(g)(h)

   $ 16         15,621   

Total Short-Term Securities

(Cost — $7,674,540) — 1.2%

              7,674,540   
     

Options Purchased

(Cost — $5,066) — 0.0%

           6,650  

Total Investments Before Options Written

(Cost — $593,294,353) — 101.5%

              692,248,424   
     

Options Written

(Premiums Received — $5,757,132) — (1.5)%

           (10,099,589)  

Total Investments Net of Options Written — 100.0%

  

     682,148,835   

Other Assets Less Liabilities — 0.0%

        336,221   
     

 

 

 

Net Assets — 100.0%

      $ 682,485,056   
     

 

 

 
 
Notes to Schedule of Investments

 

(a) Non-income producing security.

 

(b) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(c) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(d) Security, or a portion of security, is on loan.

 

(e) Warrants entitle the Trust to purchase a predetermined number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date of the warrants, if any.

 

(f) Represents the current yield as of report date.

 

(g) Investments in issuers considered to be affiliates of the Trust during the year ended October 31, 2014, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate   

Shares/

Beneficial Interest

Held at

October 31, 2013

    

Net

Activity

   

Shares/

Beneficial Interest

Held at

October 31, 2014

     Income  

BlackRock Liquidity Funds, TempFund, Institutional Class

     20,482,532         (12,823,613     7,658,919       $ 5,601   

BlackRock Liquidity Series, LLC Money Market Series

           $ 15,621      $ 15,621       $ 51   

 

(h) Security was purchased with the cash collateral from loaned securities. The Trust may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

 

Ÿ  

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine industry sub- classifications for reporting ease.

 

See Notes to Financial Statements.

 

44    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)      BlackRock Enhanced Capital and Income Fund, Inc. (CII)   

 

 

Ÿ  

Forward foreign currency exchange contracts outstanding as of October 31, 2014 were as follows:

 

Currency

Purchased

       Currency
Sold
    Counterparty   Settlement
Date
      

Unrealized
Appreciation/

Depreciation

 
EUR        2,574,392           USD           3,296,666      BNP Paribas S.A     1/22/15         $ (68,718
JPY        8,262,000           USD           77,368      Deutsche Bank AG     1/22/15           (3,739
USD        21,806,137           EUR           17,072,763      Goldman Sachs & Co.     1/22/15           399,143   
USD        30,231,734           JPY           3,192,264,881      Morgan Stanley & Co. International PLC     1/22/15           1,782,955   
USD        16,582,710           KRW           17,716,470,263      RBS Securities, Inc.     1/22/15           58,629   
Total                         $ 2,168,270   
                       

 

 

 

 

Ÿ  

Exchange-traded options purchased as of October 31, 2014 were as follows:

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts      Market
Value
 

American International Group, Inc.

     Call         USD         57.00       11/22/14      665       $ 6,650   

 

Ÿ  

Exchange-traded options written as of October 31, 2014 were as follows:

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts      Market
Value
 

Berkshire Hathaway, Inc., Class B

     Call         USD         142.05       11/03/14      205       $ (3,543

Novartis AG — ADR

     Call         USD         95.70       11/04/14      239         (111

3M Co.

     Call         USD         144.00       11/07/14      70         (67,025

American Capital Agency Corp.

     Call         USD         23.00       11/07/14      413         (2,684

American International Group, Inc.

     Call         USD         53.00       11/07/14      986         (111,911

Apple, Inc.

     Call         USD         103.00       11/07/14      305         (153,262

Apple, Inc.

     Call         USD         105.00       11/07/14      104         (32,240

CF Industries Holdings, Inc.

     Call         USD         295.00       11/07/14      229         (12,137

Citigroup, Inc.

     Call         USD         53.00       11/07/14      120         (9,720

Discover Financial Services

     Call         USD         64.00       11/07/14      445         (18,911

Expedia, Inc.

     Call         USD         84.00       11/07/14      250         (48,125

Express Scripts Holding Co.

     Call         USD         73.50       11/07/14      218         (74,120

The Goodyear Tire & Rubber Co.

     Call         USD         25.00       11/07/14      1,000         (15,000

Google, Inc., Class A

     Call         USD         610.00       11/07/14      35         (700

HollyFrontier Corp.

     Call         USD         45.00       11/07/14      439         (42,802

JPMorgan Chase & Co.

     Call         USD         61.00       11/07/14      233         (6,524

JPMorgan Chase & Co.

     Call         USD         61.50       11/07/14      23         (334

Merck & Co., Inc.

     Call         USD         61.50       11/07/14      502         (2,259

Oracle Corp.

     Call         USD         39.00       11/07/14      336         (12,096

PepsiCo, Inc.

     Call         USD         93.00       11/07/14      203         (65,975

Pfizer, Inc.

     Call         USD         29.50       11/07/14      768         (33,024

UnitedHealth Group, Inc.

     Call         USD         90.00       11/07/14      702         (347,490

Verizon Communications, Inc.

     Call         USD         50.00       11/07/14      184         (8,924

Visa, Inc., Class A

     Call         USD         217.50       11/07/14      47         (109,980

Wal-Mart Stores, Inc.

     Call         USD         78.00       11/07/14      42         (189

Whole Foods Market, Inc.

     Call         USD         39.00       11/07/14      242         (35,090

Yahoo!, Inc.

     Call         USD         44.00       11/07/14      470         (111,625

Yahoo!, Inc.

     Call         USD         44.50       11/07/14      47         (9,282

Brunswick Corp.

     Call         USD         44.90       11/11/14      290         (61,525

Activision Blizzard, Inc.

     Call         USD         20.00       11/14/14      380         (31,160

American International Group, Inc.

     Call         USD         55.00       11/14/14      323         (11,305

Annaly Capital Management, Inc.

     Call         USD         11.50       11/14/14      1,553         (17,083

Apple, Inc.

     Call         USD         104.00       11/14/14      305         (125,812

CF Industries Holdings, Inc.

     Call         USD         290.00       11/14/14      274         (17,810

Citigroup, Inc.

     Call         USD         53.00       11/14/14      289         (30,056

eBay, Inc.

     Call         USD         55.00       11/14/14      358         (5,907

General Motors Co.

     Call         USD         35.00       11/14/14      485         (1,940

Gilead Sciences, Inc.

     Call         USD         103.00       11/14/14      137         (127,068

Google, Inc., Class C

     Call         USD         580.00       11/14/14      16         (1,560

HollyFrontier Corp.

     Call         USD         45.00       11/14/14      440         (51,700

JPMorgan Chase & Co.

     Call         USD         61.00       11/14/14      234         (11,466

Merck & Co., Inc.

     Call         USD         63.00       11/14/14      335         (3,015

Oracle Corp.

     Call         USD         40.00       11/14/14      234         (2,925

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    45


Schedule of Investments (continued)    BlackRock Enhanced Capital and Income Fund, Inc. (CII)

 

Exchange-traded options written as of October 31, 2014 were as follows: (continued)

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts      Market
Value
 

Pfizer, Inc.

     Call         USD         29.00       11/14/14      250       $ (23,000

Pfizer, Inc.

     Call         USD         29.50       11/14/14      1,400         (67,900

United Continental Holdings, Inc.

     Call         USD         50.00       11/14/14      233         (85,045

Verizon Communications, Inc.

     Call         USD         50.50       11/14/14      114         (4,047

Visa, Inc., Class A

     Call         USD         220.00       11/14/14      31         (65,565

Whole Foods Market, Inc.

     Call         USD         40.50       11/14/14      242         (20,812

Activision Blizzard, Inc.

     Call         USD         20.50       11/22/14      400         (26,800

AerCap Holdings NV

     Call         USD         45.00       11/22/14      150         (10,875

The Allstate Corp.

     Call         USD         61.91       11/22/14      670         (204,686

American Capital Agency Corp.

     Call         USD         23.00       11/22/14      413         (7,228

American International Group, Inc.

     Call         USD         52.50       11/22/14      850         (145,350

American International Group, Inc.

     Call         USD         57.50       11/22/14      665         (4,322

Apple, Inc.

     Call         USD         105.00       11/22/14      305         (105,225

Berkshire Hathaway, Inc., Class B

     Call         USD         140.00       11/22/14      205         (41,820

Citigroup, Inc.

     Call         USD         55.00       11/22/14      325         (9,425

Comcast Corp., Special Class A

     Call         USD         55.00       11/22/14      474         (43,845

eBay, Inc.

     Call         USD         53.50       11/22/14      396         (26,334

Expedia, Inc.

     Call         USD         85.00       11/22/14      211         (48,530

Express Scripts Holding Co.

     Call         USD         75.00       11/22/14      216         (52,164

FNF Group

     Call         USD         28.00       11/22/14      1,686         (320,340

General Motors Co.

     Call         USD         34.00       11/22/14      1,244         (7,464

Gilead Sciences, Inc.

     Call         USD         110.00       11/22/14      46         (23,805

The Goodyear Tire & Rubber Co.

     Call         USD         26.00       11/22/14      500         (10,000

Google, Inc., Class C

     Call         USD         620.00       11/22/14      41         (718

Johnson & Johnson

     Call         USD         105.00       11/22/14      479         (150,885

JPMorgan Chase & Co.

     Call         USD         62.50       11/22/14      255         (4,845

Leidos Holdings, Inc.

     Call         USD         35.00       11/22/14      150         (27,750

Linn Energy LLC

     Call         USD         28.00       11/22/14      187         (1,870

Marathon Petroleum Corp.

     Call         USD         86.00       11/22/14      197         (110,320

Merck & Co., Inc.

     Call         USD         57.50       11/22/14      234         (36,738

Nexstar Broadcasting Group, Inc., Class A

     Call         USD         45.00       11/22/14      200         (36,000

Oracle Corp.

     Call         USD         39.50       11/22/14      182         (7,098

Orbitz Worldwide, Inc.

     Call         USD         9.00       11/22/14      8,100         (243,000

Owens Corning

     Call         USD         36.00       11/22/14      1,000         (10,000

PBF Energy, Inc., Class A

     Call         USD         25.50       11/22/14      284         (27,203

Pfizer, Inc.

     Call         USD         30.00       11/22/14      200         (5,000

QUALCOMM, Inc.

     Call         USD         77.50       11/22/14      548         (121,656

Sinclair Broadcast Group, Inc., Class A

     Call         USD         29.00       11/22/14      1,000         (115,000

Springleaf Holdings, Inc.

     Call         USD         35.00       11/22/14      250         (75,000

Transocean Ltd.

     Call         USD         33.00       11/22/14      322         (8,694

UnitedHealth Group, Inc.

     Call         USD         87.50       11/22/14      450         (349,875

UnitedHealth Group, Inc.

     Call         USD         90.00       11/22/14      705         (377,175

Visa, Inc., Class A

     Call         USD         215.00       11/22/14      46         (119,715

Vodafone Group PLC — ADR

     Call         USD         36.00       11/22/14      375         (7,500

Wal-Mart Stores, Inc.

     Call         USD         75.00       11/22/14      59         (11,180

The Walt Disney Co.

     Call         USD         92.50       11/22/14      64         (7,264

Yahoo!, Inc.

     Call         USD         45.00       11/22/14      47         (9,588

JPMorgan Chase & Co.

     Call         USD         55.60       12/04/14      483         (240,950

Apple, Inc.

     Call         USD         108.00       12/05/14      407         (89,744

Discover Financial Services

     Call         USD         62.50       12/05/14      442         (89,505

Expedia, Inc.

     Call         USD         85.00       12/05/14      375         (110,625

Oracle Corp.

     Call         USD         38.50       12/05/14      178         (19,313

Suncor Energy, Inc.

     Call         USD         35.50       12/05/14      360         (38,700

Verizon Communications, Inc.

     Call         USD         49.50       12/05/14      100         (12,550

JPMorgan Chase & Co.

     Call         USD         59.25       12/09/14      128         (25,161

Verizon Communications, Inc.

     Call         USD         50.50       12/12/14      390         (29,055

JPMorgan Chase & Co.

     Call         USD         59.25       12/16/14      128         (26,408

Activision Blizzard, Inc.

     Call         USD         21.00       12/20/14      400         (24,600

AerCap Holdings NV

     Call         USD         45.00       12/20/14      160         (20,400

Ally Financial, Inc.

     Call         USD         23.00       12/20/14      280         (20,300

Ally Financial, Inc.

     Call         USD         24.00       12/20/14      500         (20,000

Apple, Inc.

     Call         USD         100.00       12/20/14      203         (168,490

Citigroup, Inc.

     Call         USD         52.50       12/20/14      289         (57,366

 

See Notes to Financial Statements.

 

46    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)      BlackRock Enhanced Capital and Income Fund, Inc. (CII)   

 

Exchange-traded options written as of October 31, 2014 were as follows: (concluded)

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts      Market
Value
 

eBay, Inc.

     Call         USD         55.00       12/20/14      396       $ (31,482

Google, Inc., Class A

     Call         USD         605.00       12/20/14      32         (10,400

Johnson & Johnson

     Call         USD         100.00       12/20/14      284         (220,100

Linn Energy LLC

     Call         USD         29.00       12/20/14      187         (3,740

Marathon Petroleum Corp.

     Call         USD         87.50       12/20/14      197         (107,365

Merck & Co., Inc.

     Call         USD         57.50       12/20/14      234         (43,524

Sinclair Broadcast Group, Inc., Class A

     Call         USD         29.00       12/20/14      500         (77,500

Sinclair Broadcast Group, Inc., Class A

     Call         USD         30.00       12/20/14      500         (56,250

United Continental Holdings, Inc.

     Call         USD         52.50       12/20/14      232         (80,040

Verizon Communications, Inc.

     Call         USD         50.00       12/20/14      100         (11,000

The Walt Disney Co.

     Call         USD         90.00       12/20/14      45         (13,658

Yahoo!, Inc.

     Call         USD         44.00       12/20/14      262         (87,115

Orbitz Worldwide, Inc.

     Put         USD         7.95       11/06/14      1,500         (22,418

Total

                  $ (6,811,830
                 

 

 

 

 

Ÿ  

Over-the-counter options written as of October 31, 2014 were as follows:

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts      Market
Value
 

Eli Lilly & Co.

   Citibank N.A.      Call         USD         67.27       11/03/14      69,000       $ (6,167

Science Applications International Corp.

   UBS AG      Call         USD         46.35       11/03/14      61,500         (159,438

Springleaf Holdings, Inc.

   UBS AG      Call         USD         34.42       11/03/14      25,000         (75,178

Suncor Energy, Inc.

   Citibank N.A.      Call         USD         36.72       11/04/14      90,000         (4,259

Legg Mason, Inc.

   Citibank N.A.      Call         USD         51.64       11/05/14      33,100         (28,444

Comcast Corp., Special Class A

   Citibank N.A.      Call         USD         56.88       11/06/14      34,000         (1,163

FNF Group

   Morgan Stanley & Co. International PLC      Call         USD         28.06       11/06/14      102,000         (181,736

International Paper Co.

   Citibank N.A.      Call         USD         49.67       11/06/14      20,400         (27,663

Marathon Petroleum Corp.

   Goldman Sachs International      Call         USD         89.67       11/06/14      12,300         (24,501

Science Applications International Corp.

   Citibank N.A.      Call         USD         46.51       11/06/14      38,700         (98,542

United Continental Holdings, Inc.

   Deutsche Bank AG      Call         USD         50.56       11/06/14      46,500         (122,774

News Corp., Class A

   Deutsche Bank AG      Call         USD         17.43       11/07/14      37,000           

Samsung Electronics Co. Ltd.

   UBS AG      Call         KRW         1,012,700.00       11/07/14      1,500         (12,541

Freeport-McMoRan, Inc.

   UBS AG      Call         USD         32.76       11/10/14      25,000         (39

Bayerische Motoren Werke AG

   Deutsche Bank AG      Call         EUR         74.35       11/11/14      14,500           

FNF Group

   Citibank N.A.      Call         USD         27.62       11/11/14      50,400         (112,202

Japan Airlines Co. Ltd.

   Morgan Stanley & Co. International PLC      Call         JPY         3,003.90       11/11/14      160,000         (80,905

Samsung Electronics Co. Ltd.

   Goldman Sachs International      Call         KRW         912,958.14       11/11/14      2,600         (182,460

Springleaf Holdings, Inc.

   Citibank N.A.      Call         USD         34.38       11/13/14      23,800         (77,361

Japan Airlines Co. Ltd.

   Morgan Stanley & Co. International PLC      Call         JPY         2,914.14       11/14/14      160,000         (170,880

Samsung Electronics Co. Ltd.

   UBS AG      Call         KRW         920,845.75       11/14/14      2,700         (176,835

Comcast Corp., Special Class A

   Goldman Sachs International      Call         USD         54.24       11/17/14      37,000         (47,072

FNF Group

   Credit Suisse International      Call         USD         27.40       11/17/14      63,000         (154,298

Samsung Electronics Co. Ltd.

   UBS AG      Call         KRW         860,057.00       11/19/14      2,900         (342,093

Bayerische Motoren Werke AG

   Bank of America N.A.      Call         EUR         63.93       11/25/14      15,000         (25,987

Japan Airlines Co. Ltd.

   Morgan Stanley & Co. International PLC      Call         JPY         2,815.44       11/25/14      160,000         (310,859

METRO AG

   Bank of America N.A.      Call         EUR         25.46       11/25/14      108,000         (94,574

Renault SA

   UBS AG      Call         EUR         56.77       11/25/14      10,000         (42,928

Comcast Corp., Special Class A

   Citibank N.A.      Call         USD         55.38       12/01/14      37,000         (35,710

Samsung Electronics Co. Ltd.

   Morgan Stanley & Co. International PLC      Call         KRW         901,680.00       12/02/14      1,400         (123,787

Ally Financial, Inc.

   Citibank N.A.      Call         USD         22.76       12/03/14      54,000         (33,514

Noble Corp. PLC

   UBS AG      Call         USD         21.34       12/03/14      54,000         (35,387

Comcast Corp., Special Class A

   Credit Suisse International      Call         USD         53.76       12/08/14      18,800         (44,224

Japan Airlines Co. Ltd.

   Goldman Sachs International      Call         JPY         2,871.66       12/11/14      160,000         (259,740

Pfizer, Inc.

   Morgan Stanley & Co. International PLC      Call         USD         29.42       12/11/14      93,300         (65,891

Vodafone Group PLC — ADR

   Deutsche Bank AG      Call         USD         33.32       12/11/14      150,700         (92,778

Houghton Mifflin Harcourt Co.

   UBS AG      Call         USD         19.92       1/06/15      37,000         (35,829

Total

                     $ (3,287,759
                    

 

 

 

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    47


Schedule of Investments (continued)    BlackRock Enhanced Capital and Income Fund, Inc. (CII)

 

 

value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, please refer to Note 2 of the Notes to Financial Statements.

The following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy as of October 31, 2014:

 

      Level 1      Level 2      Level 3    Total  

Assets:

           

Investments:

           

Long-Term Investments:

           

Common Stocks:

           

Air Freight & Logistics

           $ 79,261          $ 79,261   

Airlines

   $ 8,930,171         31,191,379            40,121,550   

Auto Components

     12,807,978                    12,807,978   

Automobiles

     14,177,562         2,707,659            16,885,221   

Banks

     26,281,043                    26,281,043   

Beverages

     3,539,056                    3,539,056   

Biotechnology

     3,729,600                    3,729,600   

Building Products

     9,653,266                    9,653,266   

Capital Markets

     3,130,400         3,619,504            6,749,904   

Chemicals

     23,738,000                    23,738,000   

Communications Equipment

     7,160,112                    7,160,112   

Consumer Finance

     26,724,078                    26,724,078   

Diversified Consumer Services

     1,348,574                    1,348,574   

Diversified Financial Services

     13,527,494                    13,527,494   

Diversified Telecommunication Services

     8,120,902                    8,120,902   

Energy Equipment & Services

     6,945,784                    6,945,784   

Food & Staples Retailing

     4,864,408         12,834,257            17,698,665   

Health Care Providers & Services

     38,163,158                    38,163,158   

Industrial Conglomerates

     1,983,633                    1,983,633   

Insurance

     56,261,513                    56,261,513   

Internet & Catalog Retail

     40,085,726                    40,085,726   

Internet Software & Services

     30,478,406                    30,478,406   

IT Services

     33,485,664                    33,485,664   

Leisure Products

     1,380,600                    1,380,600   

Media

     55,831,033                    55,831,033   

Metals & Mining

     2,274,300                    2,274,300   

Oil, Gas & Consumable Fuels

     44,059,540                    44,059,540   

Paper & Forest Products

     1,878,002                    1,878,002   

Pharmaceuticals

     60,397,728                    60,397,728   

Real Estate Investment Trusts (REITs)

     13,410,532                    13,410,532   

Software

     15,237,715                    15,237,715   

Technology Hardware, Storage & Peripherals

     31,978,800         18,645,881            50,624,681   

Trading Companies & Distributors

     2,453,044                    2,453,044   

Wireless Telecommunication Services

     11,371,471                    11,371,471   

Warrants

             80,000            80,000   

Short-Term Securities

     7,658,919         15,621            7,674,540   

Options Purchased

     6,650                    6,650   

Total

   $ 623,074,862       $ 69,173,562          $ 692,248,424   

 

See Notes to Financial Statements.

 

48    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (concluded)      BlackRock Enhanced Capital and Income Fund, Inc. (CII)   

 

 

      Level 1     Level 2     Level 3      Total  

Derivative Financial Instruments1

         

Assets:

         

Forward foreign currency exchange contracts

          $ 2,240,727              $ 2,240,727   

Liabilities:

         

Equity contracts.

   $ (6,199,827     (3,899,762             (10,099,589

Forward foreign currency exchange contracts

            (72,457             (72,457

Total

   $ (6,199,827   $ (1,731,492           $ (7,931,319

1    Derivative financial instruments are forward foreign currency exchange contracts and options written. Forward foreign currency exchange contracts are value at the unrealized appreciation/depreciation on the instrument and options written are shown at value.

 

The Trust may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of October 31, 2014, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:

         

   

         
      Level 1     Level 2     Level 3      Total  

Assets:

         

Foreign currency at value

   $ 4,176                     $ 4,176   

Cash pledged as collateral for OTC derivatives

     100,000                       100,000   

Liabilities:

         

Bank overdraft

          $ (15,877             (15,877

Collateral on securities loaned at value

            (15,621             (15,621

Total

   $ 104,176      $ (31,498           $ 72,678   
         
Transfers between Level 1 and Level 2 were as follows:          
         
      Transfers into
Level 1
    Transfers out
of Level 1 1
    Transfers into
Level 2 1
     Transfers out
of Level 2
 

Assets:

         

Long-Term Investments:

         

Common Stocks

          $ 49,916,521      $ 49,916,521           

1    External pricing service used to reflect any significant market movements between the time the Trust valued such foreign securities and the earlier closing of foreign markets.

       

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    49


Schedule of Investments October 31, 2014      BlackRock Enhanced Equity Dividend Trust (BDJ)   
     (Percentages shown are based on Net Assets)   

 

 

Common Stocks   

    

Shares

     Value  

Aerospace & Defense — 7.0%

     

Honeywell International, Inc. (a)

     215,300       $ 20,694,636   

Lockheed Martin Corp. (a)

     81,000         15,436,170   

Northrop Grumman Corp.

     179,200         24,722,432   

Raytheon Co. (a)

     343,100         35,641,228   

United Technologies Corp. (a)

     173,600         18,575,200   
     

 

 

 
                115,069,666   

Air Freight & Logistics — 1.2%

     

United Parcel Service, Class B (a)

     183,000         19,198,530   

Auto Components — 0.5%

     

Johnson Controls, Inc.

     172,300         8,141,175   

Banks — 15.7%

     

Bank of America Corp. (a)

     1,505,100         25,827,516   

Citigroup, Inc. (a)

     501,900         26,866,707   

Fifth Third Bancorp. (a)

     703,500         14,062,965   

JPMorgan Chase & Co. (a)(b)

     919,399         55,605,251   

M&T Bank Corp. (a)

     33,800         4,129,684   

SunTrust Banks, Inc. (a)

     672,340         26,315,388   

The Toronto-Dominion Bank (a)

     355,500         17,511,930   

U.S. Bancorp. (a)

     637,100         27,140,460   

Wells Fargo & Co. (a)(b)

     1,157,300         61,441,057   
     

 

 

 
                258,900,958   

Beverages — 1.5%

     

The Coca-Cola Co. (a)

     200,700         8,405,316   

Diageo PLC — ADR (a)(b)

     139,800         16,492,206   
     

 

 

 
                24,897,522   

Capital Markets — 1.1%

     

Morgan Stanley (a)

     512,000         17,894,400   

Chemicals — 3.1%

     

The Dow Chemical Co.

     230,200         11,371,880   

EI du Pont de Nemours & Co. (a)

     408,500         28,247,775   

Praxair, Inc.

     91,600         11,540,684   
     

 

 

 
                51,160,339   

Commercial Services & Supplies — 0.5%

     

Tyco International Ltd. (a)

     192,400         8,259,732   

Communications Equipment — 1.7%

     

Motorola Solutions, Inc. (a)

     190,800         12,306,600   

QUALCOMM, Inc. (a)

     211,400         16,597,014   
     

 

 

 
                28,903,614   

Consumer Finance — 1.5%

     

American Express Co. (a)

     276,300         24,853,185   

Diversified Financial Services — 0.8%

     

CME Group, Inc. (a)

     162,700         13,635,887   

Diversified Telecommunication Services — 2.1%

  

  

BCE, Inc.

     115,700         5,145,179   

Verizon Communications, Inc. (a)

     598,500         30,074,625   
     

 

 

 
                35,219,804   

Electric Utilities — 2.4%

     

Duke Energy Corp. (a)

     97,200         7,984,980   

ITC Holdings Corp.

     134,000         5,307,740   

NextEra Energy, Inc.

     186,200         18,660,964   

Northeast Utilities (a)

     155,220         7,660,107   
     

 

 

 
                39,613,791   

Electrical Equipment — 0.4%

     

Rockwell Automation, Inc.

     53,400         5,999,490   

Energy Equipment & Services — 0.6%

     

Schlumberger Ltd. (a)

     98,300         9,698,278   
Common Stocks   

    

Shares

     Value  

Food & Staples Retailing — 1.1%

     

The Kroger Co. (a)

     232,800       $ 12,969,288   

Wal-Mart Stores, Inc. (a)

     67,600         5,155,852   
     

 

 

 
                18,125,140   

Food Products — 1.4%

     

General Mills, Inc. (a)

     74,200         3,855,432   

Kraft Foods Group, Inc. (a)

     75,795         4,271,048   

Mondelez International, Inc., Class A (a)

     220,285         7,767,249   

Unilever NV (a)

     191,200         7,405,176   
     

 

 

 
                23,298,905   

Health Care Equipment & Supplies — 1.0%

     

Abbott Laboratories

     145,700         6,351,063   

Becton Dickinson and Co. (a)

     73,400         9,446,580   
     

 

 

 
                15,797,643   

Health Care Providers & Services — 0.5%

     

Quest Diagnostics, Inc. (a)

     124,800         7,919,808   

Hotels, Restaurants & Leisure — 1.4%

     

McDonald’s Corp. (a)

     239,700         22,467,081   

Household Products — 2.4%

     

Kimberly-Clark Corp. (a)

     77,950         8,907,347   

The Procter & Gamble Co.

     352,300         30,745,221   
     

 

 

 
                39,652,568   

Industrial Conglomerates — 3.9%

     

3M Co. (a)

     121,500         18,683,055   

General Electric Co. (a)

     1,747,200         45,095,232   
     

 

 

 
                63,778,287   

Insurance — 6.4%

     

ACE Ltd. (a)

     171,000         18,690,300   

The Chubb Corp.

     153,800         15,281,568   

MetLife, Inc. (a)

     462,050         25,061,592   

Prudential Financial, Inc. (a)

     278,100         24,622,974   

The Travelers Cos., Inc. (a)

     212,200         21,389,760   
     

 

 

 
                105,046,194   

IT Services — 1.2%

     

Automatic Data Processing, Inc.

     63,400         5,184,852   

International Business Machines Corp. (a)

     90,230         14,833,812   
     

 

 

 
                20,018,664   

Leisure Products — 0.4%

     

Mattel, Inc. (a)

     187,868         5,837,059   

Media — 3.6%

     

Comcast Corp., Special Class A (a)

     859,000         47,365,260   

The Walt Disney Co. (a)

     123,500         11,285,430   
     

 

 

 
                58,650,690   

Metals & Mining — 0.7%

     

BHP Billiton Ltd. — ADR (a)

     122,200         7,263,568   

Southern Copper Corp. (a)

     156,877         4,514,920   
     

 

 

 
                11,778,488   

Multi-Utilities — 2.1%

     

Dominion Resources, Inc. (a)

     254,300         18,131,590   

Sempra Energy (a)

     88,700         9,757,000   

Wisconsin Energy Corp.

     151,800         7,538,388   
     

 

 

 
                35,426,978   

Oil, Gas & Consumable Fuels — 9.7%

     

Chevron Corp. (a)(b)

     294,100         35,277,295   

ConocoPhillips (a)

     119,860         8,647,899   

Enbridge, Inc. (a)

     248,600         11,763,309   

Exxon Mobil Corp. (a)

     359,600         34,776,916   
 

 

See Notes to Financial Statements.

 

50    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)      BlackRock Enhanced Equity Dividend Trust (BDJ)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Oil, Gas & Consumable Fuels (concluded)

     

Marathon Oil Corp. (a)

     381,300       $ 13,498,020   

Marathon Petroleum Corp.

     104,400         9,489,960   

Occidental Petroleum Corp. (a)

     170,200         15,135,886   

Phillips 66 (a)

     80,350         6,307,475   

Spectra Energy Corp. (a)

     204,000         7,982,520   

Total SA — ADR (a)

     280,400         16,793,156   
     

 

 

 
                159,672,436   

Paper & Forest Products — 1.1%

     

International Paper Co. (a)

     351,750         17,805,585   

Pharmaceuticals — 8.5%

     

AbbVie, Inc. (a)

     143,127         9,082,839   

Bristol-Myers Squibb Co. (a)

     458,100         26,656,839   

Johnson & Johnson (a)

     295,500         31,848,990   

Merck & Co., Inc. (a)(b)

     648,200         37,556,708   

Pfizer, Inc. (a)

     1,158,700         34,703,065   
     

 

 

 
                139,848,441   

Professional Services — 0.4%

     

Nielsen NV (a)

     145,700         6,190,793   

Real Estate Investment Trusts (REITs) — 0.9%

     

American Tower Corp. (a)

     72,500         7,068,750   

Weyerhaeuser Co.

     244,500         8,278,770   
     

 

 

 
                15,347,520   

Road & Rail — 1.7%

     

CSX Corp.

     198,300         7,065,429   

Union Pacific Corp. (a)

     181,400         21,124,030   
     

 

 

 
                28,189,459   

Semiconductors & Semiconductor Equipment — 1.7%

  

  

Intel Corp. (a)

     814,400         27,697,744   

Software — 2.1%

     

Microsoft Corp. (a)

     751,400         35,278,230   
Common Stocks    Shares      Value  

Specialty Retail — 2.7%

     

The Home Depot, Inc. (a)

     456,800       $ 44,547,136   

Textiles, Apparel & Luxury Goods — 1.2%

     

VF Corp. (a)

     301,600         20,412,288   

Tobacco — 1.6%

     

Altria Group, Inc. (a)

     202,800         9,803,352   

Lorillard, Inc.

     136,200         8,376,300   

Philip Morris International, Inc. (a)

     96,600         8,598,366   
     

 

 

 
                26,778,018   

Water Utilities — 0.8%

     

American Water Works Co., Inc.

     258,600         13,801,482   

Total Long-Term Investments

(Cost — $1,293,338,413) — 98.6%

              1,624,813,008   
     
Short-Term Securities                

BlackRock Liquidity Funds, TempFund, Institutional
Class, 0.07% (c)(d)

     48,015,351         48,015,351   

Total Short-Term Securities

(Cost — $48,015,351) — 2.9%

              48,015,351   

Total Investments Before Options Written

(Cost — $1,341,353,764) — 101.5%

              1,672,828,359   
     
Options Written                

(Premiums Received — $12,597,822) — (1.5)%

  

     (23,677,221

Total Investments Net of Options Written — 100.0%

  

     1,649,151,138   

Liabilities in Excess of Other Assets — 0.0%

  

     (467,946
     

 

 

 

Net Assets — 100.0%

      $ 1,648,683,192   
     

 

 

 
 
Notes to Schedule of Investments

 

(a) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(b) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(c) Represents the current yield as of report date.

 

(d) Investments in companies considered to be affiliates of the Trust during the year ended October 31, 2014, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate    Shares Held at
October 31, 2013
     Net
Activity
    Shares Held at
October 31, 2014
     Income  

BlackRock Liquidity Funds, TempFund, Institutional Class

     48,920,346         (904,995     48,015,351       $ 15,143   

BlackRock Liquidity Series, LLC Money Market Series

                          $ 524   

 

Ÿ  

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

 

Ÿ  

Exchange-traded options written as of October 31, 2014 were as follows:

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

3M Co.

     Call         USD         144.00         11/07/14         334       $ (319,805

ACE Ltd.

     Call         USD         107.55         11/07/14         509         (103,527

Altria Group, Inc.

     Call         USD         46.00         11/07/14         371         (83,290

American Express Co.

     Call         USD         91.00         11/07/14         600         (22,200

Bank of America Corp.

     Call         USD         17.00         11/07/14         1,881         (46,084

Bristol-Myers Squibb Co.

     Call         USD         52.00         11/07/14         330         (195,525

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    51


Schedule of Investments (continued)      BlackRock Enhanced Equity Dividend Trust (BDJ)   

 

Exchange-traded options written as of October 31, 2014 were as follows: (continued)

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Bristol-Myers Squibb Co.

     Call         USD         52.50         11/07/14         170       $ (92,225

Chevron Corp.

     Call         USD         120.00         11/07/14         214         (24,396

Citigroup, Inc.

     Call         USD         53.00         11/07/14         604         (48,924

CME Group, Inc.

     Call         USD         82.00         11/07/14         300         (60,000

CME Group, Inc.

     Call         USD         84.00         11/07/14         148         (11,100

The Coca-Cola Co.

     Call         USD         43.50         11/07/14         275         (962

ConocoPhillips

     Call         USD         79.00         11/07/14         160         (1,440

EI du Pont de Nemours & Co.

     Call         USD         70.00         11/07/14         305         (8,388

EI du Pont de Nemours & Co.

     Call         USD         72.00         11/07/14         205         (1,025

Exxon Mobil Corp.

     Call         USD         98.00         11/07/14         634         (14,899

The Home Depot, Inc.

     Call         USD         95.00         11/07/14         810         (226,395

Intel Corp.

     Call         USD         35.00         11/07/14         1,516         (10,612

International Business Machines Corp.

     Call         USD         192.50         11/07/14         362         (1,086

JPMorgan Chase & Co.

     Call         USD         61.00         11/07/14         1,448         (40,544

McDonald’s Corp.

     Call         USD         97.00         11/07/14         687         (3,778

Morgan Stanley

     Call         USD         36.00         11/07/14         646         (4,845

Pfizer, Inc.

     Call         USD         29.50         11/07/14         1,385         (59,555

Philip Morris International, Inc.

     Call         USD         86.00         11/07/14         537         (154,924

Phillips 66

     Call         USD         83.00         11/07/14         220         (3,300

U.S. Bancorp.

     Call         USD         43.50         11/07/14         1,177         (7,062

Union Pacific Corp.

     Call         USD         108.00         11/07/14         498         (409,605

United Technologies Corp.

     Call         USD         104.00         11/07/14         141         (46,530

Verizon Communications, Inc.

     Call         USD         50.00         11/07/14         385         (18,672

Wal-Mart Stores, Inc.

     Call         USD         79.00         11/07/14         195         (585

The Walt Disney Co.

     Call         USD         90.00         11/07/14         167         (35,154

Wells Fargo & Co.

     Call         USD         53.00         11/07/14         1,391         (43,121

General Mills, Inc.

     Call         USD         51.25         11/10/14         634         (59,673

3M Co.

     Call         USD         144.00         11/14/14         334         (326,485

Altria Group, Inc.

     Call         USD         47.50         11/14/14         371         (39,512

American Express Co.

     Call         USD         89.00         11/14/14         460         (78,890

Bank of America Corp.

     Call         USD         17.00         11/14/14         1,880         (61,100

Bristol-Myers Squibb Co.

     Call         USD         51.00         11/14/14         700         (484,750

Chevron Corp.

     Call         USD         117.00         11/14/14         84         (30,660

Citigroup, Inc.

     Call         USD         53.00         11/14/14         375         (39,000

CME Group, Inc.

     Call         USD         84.00         11/14/14         447         (49,170

Exxon Mobil Corp.

     Call         USD         98.00         11/14/14         2         (76

General Electric Co.

     Call         USD         25.50         11/14/14         1,500         (69,750

The Home Depot, Inc.

     Call         USD         97.00         11/14/14         1,174         (187,253

International Business Machines Corp.

     Call         USD         192.50         11/14/14         362         (1,448

JPMorgan Chase & Co.

     Call         USD         61.00         11/14/14         1,446         (70,854

Marathon Oil Corp.

     Call         USD         34.00         11/14/14         235         (40,772

Merck & Co., Inc.

     Call         USD         63.00         11/14/14         1,376         (12,384

Microsoft Corp.

     Call         USD         47.50         11/14/14         1,032         (36,120

Morgan Stanley

     Call         USD         34.00         11/14/14         810         (98,820

Occidental Petroleum Corp.

     Call         USD         100.00         11/14/14         234         (1,170

Pfizer, Inc.

     Call         USD         29.00         11/14/14         800         (73,600

QUALCOMM, Inc.

     Call         USD         77.00         11/14/14         56         (13,636

Schlumberger Ltd.

     Call         USD         100.00         11/14/14         240         (30,840

Verizon Communications, Inc.

     Call         USD         50.50         11/14/14         712         (25,276

Wells Fargo & Co.

     Call         USD         53.00         11/14/14         1,392         (43,152

AbbVie, Inc.

     Call         USD         62.50         11/22/14         395         (75,050

Bank of America Corp.

     Call         USD         17.00         11/22/14         1,950         (73,125

Becton Dickinson and Co.

     Call         USD         115.00         11/22/14         202         (282,800

BHP Billiton Ltd. — ADR

     Call         USD         67.50         11/22/14         249         (1,494

Citigroup, Inc.

     Call         USD         55.00         11/22/14         1,406         (40,774

Comcast Corp., Special Class A

     Call         USD         55.00         11/22/14         1,402         (129,685

ConocoPhillips

     Call         USD         71.50         11/22/14         499         (91,816

Duke Energy Corp.

     Call         USD         77.50         11/22/14         534         (242,970

Enbridge, Inc.

     Call         CAD         56.00         11/22/14         848         (16,553

Exxon Mobil Corp.

     Call         USD         100.00         11/22/14         505         (9,090

Fifth Third Bancorp.

     Call         USD         20.00         11/22/14         943         (27,347

Fifth Third Bancorp.

     Call         USD         21.00         11/22/14         943         (3,300

Fifth Third Bancorp.

     Call         USD         22.00         11/22/14         750         (5,250

General Electric Co.

     Call         USD         26.00         11/22/14         4,554         (111,573

 

See Notes to Financial Statements.

 

52    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)      BlackRock Enhanced Equity Dividend Trust (BDJ)   

 

Exchange-traded options written as of October 31, 2014 were as follows: (continued)

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

The Home Depot, Inc.

     Call         USD         92.50         11/22/14         528       $ (300,960

Honeywell International, Inc.

     Call         USD         95.00         11/22/14         592         (121,656

Intel Corp.

     Call         USD         34.00         11/22/14         981         (70,142

Johnson & Johnson

     Call         USD         105.00         11/22/14         810         (255,150

JPMorgan Chase & Co.

     Call         USD         62.50         11/22/14         956         (18,164

Kimberly-Clark Corp.

     Call         USD         105.00         11/22/14         214         (199,020

Kimberly-Clark Corp.

     Call         USD         110.00         11/22/14         214         (95,230

Kraft Foods Group, Inc.

     Call         USD         57.50         11/22/14         408         (11,220

The Kroger Co.

     Call         USD         52.50         11/22/14         1,217         (389,440

M&T Bank Corp.

     Call         USD         125.00         11/22/14         185         (11,100

Marathon Oil Corp.

     Call         USD         40.00         11/22/14         527         (527

Mattel, Inc.

     Call         USD         31.00         11/22/14         250         (15,625

Merck & Co., Inc.

     Call         USD         57.50         11/22/14         1,094         (171,758

MetLife, Inc.

     Call         USD         60.00         11/22/14         1,080         (10,800

MetLife, Inc.

     Call         USD         62.50         11/22/14         1,080         (7,560

Morgan Stanley

     Call         USD         34.00         11/22/14         810         (105,705

Motorola Solutions, Inc.

     Call         USD         62.50         11/22/14         525         (174,562

Motorola Solutions, Inc.

     Call         USD         65.00         11/22/14         524         (98,512

Nielsen NV

     Call         USD         45.00         11/22/14         441         (7,718

Northeast Utilities

     Call         USD         45.00         11/22/14         468         (201,240

Occidental Petroleum Corp.

     Call         USD         100.00         11/22/14         236         (826

Pfizer, Inc.

     Call         USD         30.00         11/22/14         750         (18,750

Philip Morris International, Inc.

     Call         USD         87.50         11/22/14         267         (53,534

Phillips 66

     Call         USD         80.00         11/22/14         220         (26,950

Prudential Financial, Inc.

     Call         USD         87.50         11/22/14         719         (185,502

QUALCOMM, Inc.

     Call         USD         77.50         11/22/14         832         (184,704

Quest Diagnostics, Inc.

     Call         USD         60.00         11/22/14         686         (274,400

Raytheon Co.

     Call         USD         97.50         11/22/14         472         (313,880

Schlumberger Ltd.

     Call         USD         110.00         11/22/14         81         (446

Sempra Energy

     Call         USD         105.00         11/22/14         487         (272,720

Spectra Energy Corp.

     Call         USD         40.00         11/22/14         561         (18,232

SunTrust Banks, Inc.

     Call         USD         38.00         11/22/14         1,648         (224,128

The Toronto-Dominion Bank

     Call         USD         50.00         11/22/14         500         (18,750

Total SA — ADR

     Call         USD         67.50         11/22/14         99         (990

The Travelers Cos., Inc.

     Call         USD         95.00         11/22/14         1,167         (706,035

Tyco International Ltd.

     Call         USD         43.00         11/22/14         1,055         (92,840

U.S. Bancorp.

     Call         USD         45.00         11/22/14         1,152         (4,608

Unilever NV

     Call         USD         40.00         11/22/14         525         (7,875

Union Pacific Corp.

     Call         USD         110.00         11/22/14         500         (347,500

United Parcel Service, Class B

     Call         USD         100.00         11/22/14         503         (251,500

United Technologies Corp.

     Call         USD         104.00         11/22/14         406         (144,130

The Walt Disney Co.

     Call         USD         92.50         11/22/14         346         (39,271

Dominion Resources, Inc.

     Call         USD         70.95         12/04/14         600         (68,581

American Tower Corp.

     Call         USD         97.25         12/05/14         200         (40,983

Bristol-Myers Squibb Co.

     Call         USD         54.50         12/05/14         482         (196,415

Exxon Mobil Corp.

     Call         USD         96.00         12/05/14         418         (77,539

Intel Corp.

     Call         USD         33.50         12/05/14         500         (56,500

Microsoft Corp.

     Call         USD         47.00         12/05/14         516         (40,506

U.S. Bancorp.

     Call         USD         41.00         12/05/14         587         (107,714

United Technologies Corp.

     Call         USD         105.00         12/05/14         406         (125,454

Verizon Communications, Inc.

     Call         USD         49.50         12/05/14         713         (89,482

Wal-Mart Stores, Inc.

     Call         USD         77.00         12/05/14         88         (7,832

JPMorgan Chase & Co.

     Call         USD         59.25         12/09/14         478         (93,960

QUALCOMM, Inc.

     Call         USD         76.05         12/09/14         274         (89,973

Raytheon Co.

     Call         USD         97.00         12/11/14         473         (344,221

AbbVie, Inc.

     Call         USD         56.25         12/12/14         390         (285,591

Verizon Communications, Inc.

     Call         USD         50.50         12/12/14         769         (57,290

International Paper Co.

     Call         USD         49.00         12/15/14         1,934         (485,171

JPMorgan Chase & Co.

     Call         USD         59.25         12/16/14         478         (98,616

Bank of America Corp.

     Call         USD         17.00         12/20/14         1,950         (106,275

Becton Dickinson and Co.

     Call         USD         115.00         12/20/14         202         (281,790

Citigroup, Inc.

     Call         USD         52.50         12/20/14         375         (74,437

Diageo PLC — ADR

     Call         USD         120.00         12/20/14         427         (74,725

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    53


Schedule of Investments (continued)      BlackRock Enhanced Equity Dividend Trust (BDJ)   

 

Exchange-traded options written as of October 31, 2014 were as follows: (concluded)

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Exxon Mobil Corp.

     Call         USD         95.00         12/20/14         418       $ (119,130

Fifth Third Bancorp.

     Call         USD         20.00         12/20/14         1,233         (57,951

General Electric Co.

     Call         USD         26.00         12/20/14         1,000         (41,500

Honeywell International, Inc.

     Call         USD         95.00         12/20/14         592         (161,616

Johnson & Johnson

     Call         USD         100.00         12/20/14         816         (632,400

JPMorgan Chase & Co.

     Call         USD         62.50         12/20/14         250         (13,500

Lockheed Martin Corp.

     Call         USD         185.00         12/20/14         445         (333,750

McDonald’s Corp.

     Call         USD         95.00         12/20/14         286         (27,599

Merck & Co., Inc.

     Call         USD         57.50         12/20/14         1,094         (203,484

Microsoft Corp.

     Call         USD         47.00         12/20/14         516         (49,794

Mondelez International, Inc., Class A

     Call         USD         36.00         12/20/14         361         (24,367

Nielsen NV

     Call         USD         45.00         12/20/14         360         (9,900

Northeast Utilities

     Call         USD         48.59         12/20/14         385         (50,061

Prudential Financial, Inc.

     Call         USD         87.50         12/20/14         810         (263,250

Raytheon Co.

     Call         USD         100.00         12/20/14         471         (246,098

Southern Copper Corp.

     Call         USD         32.00         12/20/14         215         (2,688

SunTrust Banks, Inc.

     Call         USD         39.00         12/20/14         810         (77,760

U.S. Bancorp.

     Call         USD         42.00         12/20/14         588         (72,030

Verizon Communications, Inc.

     Call         USD         50.00         12/20/14         713         (78,430

VF Corp.

     Call         USD         67.50         12/20/14         560         (96,600

Wal-Mart Stores, Inc.

     Call         USD         77.50         12/20/14         88         (6,952

The Walt Disney Co.

     Call         USD         90.00         12/20/14         166         (50,381

Wells Fargo & Co.

     Call         USD         50.00         12/20/14         1,648         (515,000

Raytheon Co.

     Call         USD         100.00         1/17/15         471         (270,825

Total

                  $ (16,746,557
                 

 

 

 

 

Ÿ  

Over-the-counter options written as of October 31, 2014 were as follows:

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Abbott Laboratories

   UBS AG      Call         USD         44.23         11/03/14         40,000       $ (1,608

Bank of America Corp.

   Morgan Stanley & Co. International PLC      Call         USD         17.40         11/03/14         61,700         (1,999

BHP Billiton Ltd. — ADR

   Morgan Stanley & Co. International PLC      Call         USD         65.12         11/03/14         54,400         (1

Bristol-Myers Squibb Co.

   Citibank N.A.      Call         USD         51.67         11/03/14         83,800         (546,270

The Dow Chemical Co.

   UBS AG      Call         USD         54.57         11/03/14         63,000         (1

EI du Pont de Nemours & Co.

   UBS AG      Call         USD         72.27         11/03/14         75,100         (20

Intel Corp.

   Citibank N.A.      Call         USD         35.48         11/03/14         148,200         (809

Johnson Controls, Inc.

   Citibank N.A.      Call         USD         47.10         11/03/14         94,700         (37,876

Microsoft Corp.

   Morgan Stanley & Co. International PLC      Call         USD         47.07         11/03/14         206,800         (44,762

Morgan Stanley

   Credit Suisse International      Call         USD         36.66         11/03/14         55,000         (64

Schlumberger Ltd.

   Citibank N.A.      Call         USD         106.02         11/03/14         8,200         (3

Total SA — ADR

   Citibank N.A.      Call         USD         64.63         11/03/14         65,600         (1

United Parcel Service, Class B

   Deutsche Bank AG      Call         USD         100.54         11/03/14         50,300         (220,139

ACE Ltd.

   Goldman Sachs International      Call         USD         108.46         11/04/14         43,100         (46,684

American Water Works Co., Inc.

   Citibank N.A.      Call         USD         48.87         11/05/14         35,700         (160,584

Comcast Corp., Special Class A

   Citibank N.A.      Call         USD         56.88         11/06/14         171,000         (5,852

Dominion Resources, Inc.

   Morgan Stanley & Co. International PLC      Call         USD         69.56         11/06/14         48,000         (86,835

Marathon Petroleum Corp.

   Goldman Sachs International      Call         USD         89.67         11/06/14         69,400         (138,243

NextEra Energy, Inc.

   Citibank N.A.      Call         USD         96.34         11/06/14         64,400         (250,679

Northrop Grumman Corp.

   Goldman Sachs International      Call         USD         134.91         11/06/14         49,300         (165,599

Spectra Energy Corp.

   Citibank N.A.      Call         USD         41.07         11/06/14         56,100         (230

SunTrust Banks, Inc.

   Morgan Stanley & Co. International PLC      Call         USD         38.10         11/06/14         124,000         (132,771

Weyerhaeuser Co.

   Credit Suisse International      Call         USD         32.48         11/06/14         44,500         (61,247

Mondelez International, Inc., Class A

   Morgan Stanley & Co. International PLC      Call         USD         36.28         11/07/14         85,200         (3,747

American Water Works Co., Inc.

   UBS AG      Call         USD         48.31         11/10/14         15,400         (77,924

Marathon Oil Corp.

   Credit Suisse International      Call         USD         36.84         11/10/14         110,000         (17,943

VF Corp.

   Citibank N.A.      Call         USD         65.29         11/10/14         54,200         (137,384

VF Corp.

   Morgan Stanley & Co. International PLC      Call         USD         66.85         11/10/14         55,600         (69,284

Wisconsin Energy Corp.

   Credit Suisse International      Call         USD         45.11         11/10/14         30,200         (137,555

ITC Holdings Corp.

   Citibank N.A.      Call         USD         36.13         11/12/14         18,300         (63,642

American Tower Corp.

   UBS AG      Call         USD         95.00         11/13/14         19,800         (59,783

Northrop Grumman Corp.

   Goldman Sachs International      Call         USD         134.91         11/13/14         49,300         (188,011

American Water Works Co., Inc.

   Morgan Stanley & Co. International PLC      Call         USD         48.69         11/19/14         35,600         (166,736

 

See Notes to Financial Statements.

 

54    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)      BlackRock Enhanced Equity Dividend Trust (BDJ)   

 

Over-the-counter options written as of October 31, 2014 were as follows: (concluded)

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts     

Market

Value

 

ITC Holdings Corp.

   Bank of America N.A.      Call         USD         35.70       11/20/14      18,300       $ (71,607

Diageo PLC — ADR

   Citibank N.A.      Call         USD         111.31       11/25/14      34,200         (234,000

Enbridge, Inc.

   Goldman Sachs International      Call         CAD         53.00       12/01/14      52,000         (60,659

American Water Works Co., Inc.

   Morgan Stanley & Co. International PLC      Call         USD         50.85       12/08/14      55,500         (139,666

Automatic Data Processing, Inc.

   Citibank N.A.      Call         USD         75.86       12/08/14      34,800         (217,866

Comcast Corp., Special Class A

   Credit Suisse International      Call         USD         53.76       12/08/14      161,200         (379,196

MetLife, Inc.

   Deutsche Bank AG      Call         USD         50.90       12/08/14      38,100         (127,178

NextEra Energy, Inc.

   Citibank N.A.      Call         USD         96.75       12/08/14      38,000         (140,525

Abbott Laboratories

   Credit Suisse International      Call         USD         41.15       12/09/14      40,100         (105,867

Altria Group, Inc.

   Citibank N.A.      Call         USD         46.31       12/09/14      37,300         (80,956

American Express Co.

   Goldman Sachs International      Call         USD         83.86       12/09/14      46,000         (296,842

The Chubb Corp.

   Credit Suisse International      Call         USD         98.00       12/09/14      42,300         (92,098

The Chubb Corp.

   Morgan Stanley & Co. International PLC      Call         USD         93.48       12/09/14      42,200         (250,410

The Coca-Cola Co.

   Citibank N.A.      Call         USD         41.25       12/09/14      41,400         (38,225

CSX Corp.

   Morgan Stanley & Co. International PLC      Call         USD         34.52       12/09/14      109,000         (173,659

The Dow Chemical Co.

   Citibank N.A.      Call         USD         48.25       12/09/14      63,600         (154,816

EI du Pont de Nemours & Co.

   Credit Suisse International      Call         USD         68.43       12/09/14      98,500         (157,426

Marathon Oil Corp.

   Morgan Stanley & Co. International PLC      Call         USD         34.57       12/09/14      23,500         (36,891

Praxair, Inc.

   Credit Suisse International      Call         USD         125.14       12/09/14      50,300         (128,429

The Procter & Gamble Co.

   Citibank N.A.      Call         USD         83.68       12/09/14      124,900         (502,254

The Procter & Gamble Co.

   UBS AG      Call         USD         86.50       12/09/14      68,800         (123,128

Schlumberger Ltd.

   Deutsche Bank AG      Call         USD         95.61       12/09/14      13,700         (65,327

Wisconsin Energy Corp.

   Credit Suisse International      Call         USD         47.59       12/09/14      13,300         (27,518

Dominion Resources, Inc.

   Morgan Stanley & Co. International PLC      Call         USD         68.92       12/10/14      31,800         (79,578

The Kroger Co.

   Goldman Sachs International      Call         USD         51.86       12/10/14      6,200         (24,915

Weyerhaeuser Co.

   Morgan Stanley & Co. International PLC      Call         USD         32.73       12/10/14      90,000         (128,012

Occidental Petroleum Corp.

   Credit Suisse International      Call         USD         90.12       12/11/14      46,600         (75,451

ITC Holdings Corp.

   Goldman Sachs International      Call         USD         35.24       12/16/14      37,100         (162,127

Wisconsin Energy Corp.

   Credit Suisse International      Call         USD         49.72       12/16/14      39,900         (31,752

Total

                     $ (6,930,664
                    

 

 

 

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, please refer to Note 2 of the Notes to Financial Statements.

The following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy as of October 31, 2014:

 

      Level 1      Level 2    Level 3    Total  

Assets:

           

Investments:

           

Long-Term Investments:

           

Common Stocks1

   $ 1,624,813,008             $ 1,624,813,008   

Short-Term Securities

     48,015,351               48,015,351   

Total

   $ 1,672,828,359             $ 1,672,828,359   

1    See above Schedule of Investments for values in each industry.

           

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    55


Schedule of Investments (concluded)      BlackRock Enhanced Equity Dividend Trust (BDJ)   

 

 

      Level 1     Level 2     Level 3    Total  

Derivative Financial Instruments2

         

Liabilities:

         

Equity contracts

   $ (15,085,984   $ (8,591,237      $ (23,677,221

2    Derivative financial instruments are options written, which are shown at value.

         
The Trust may hold assets in which the fair value approximates the carrying amount for financial statement purposes. As of October 31, 2014, such assets are categorized within the disclosure hierarchy as follows:    
         
      Level 1     Level 2     Level 3    Total  

Assets:

         

Cash

   $ 207,768                $ 207,768   

Foreign currency at value

     1,965                  1,965   

Cash pledged as collateral for OTC derivatives

     100,000                  100,000   

Total

   $ 309,733                $ 309,733   

There were no transfers between levels during the year ended October 31, 2014.

 

See Notes to Financial Statements.

 

56    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments October 31, 2014      BlackRock Global Opportunities Equity Trust (BOE)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Belgium — 1.6%

     

Anheuser-Busch InBev NV

     153,559       $ 17,028,814   

Brazil — 0.4%

     

Petroleo Brasileiro SA — ADR

     402,900         4,713,930   

Canada — 1.3%

     

MEG Energy Corp. (a)

     288,000         6,950,535   

Suncor Energy, Inc.

     185,800         6,597,503   
     

 

 

 
                13,548,038   

China — 3.1%

     

Alibaba Group Holding — ADR (a)(b)

     100,300         9,889,580   

Baidu, Inc. — ADR (a)(b)

     45,900         10,959,543   

Beijing Enterprises Water Group Ltd.

     10,224,000         7,320,341   

Ping An Insurance Group Co. of China Ltd.,
Class H

     604,500         4,941,627   
     

 

 

 
                33,111,091   

France — 3.7%

     

Schneider Electric SE

     136,800         10,777,932   

Societe Generale SA

     193,201         9,310,551   

Unibail-Rodamco SE — REIT

     30,600         7,846,060   

Vivendi SA

     506,450         12,372,206   
     

 

 

 
                40,306,749   

Germany — 2.6%

     

Daimler AG

     145,000         11,305,487   

Henkel AG & Co. KGaA

     98,100         9,708,754   

Telefonica Deutschland Holding AG

     1,375,600         6,769,164   
     

 

 

 
                27,783,405   

Greece — 0.6%

     

Alpha Bank AE (a)

     10,299,521         6,714,443   

Hong Kong — 1.8%

     

AIA Group Ltd.

     2,673,500         14,919,266   

Melco Crown Entertainment Ltd. — ADR (b)

     144,800         3,929,872   
     

 

 

 
                18,849,138   

India — 1.8%

     

HDFC Bank Ltd.

     660,372         10,691,658   

ITC Ltd.

     1,419,900         8,214,145   
     

 

 

 
                18,905,803   

Indonesia — 1.0%

     

Global Mediacom Tbk PT

     32,923,100         5,343,437   

Matahari Department Store Tbk PT

     4,651,623         5,632,058   
     

 

 

 
                10,975,495   

Ireland — 1.2%

     

Green REIT PLC (a)

     8,117,137         12,816,693   

Italy — 1.0%

     

Banca Generali SpA

     291,290         7,728,727   

Moncler SpA

     222,400         3,086,746   
     

 

 

 
                10,815,473   

Japan — 5.5%

     

Kenedix Office Investment Corp. — REIT

     990         5,293,929   

Mitsubishi Estate Co. Ltd.

     442,000         11,259,843   

Nabtesco Corp.

     333,400         8,068,449   

Recruit Holdings Co. Ltd. (a)

     70,400         2,315,851   

Shinsei Bank Ltd.

     4,965,000         11,158,212   

SMC Corp.

     20,900         5,927,939   

SoftBank Corp.

     75,000         5,459,956   

Tokyo Tatemono Co. Ltd.

     1,139,300         9,945,351   
     

 

 

 
                59,429,530   

Mexico — 0.5%

     

Cemex SAB de CV — ADR (a)

     453,592         5,579,182   

 

Common Stocks    Shares      Value  

New Zealand — 0.4%

     

Xero Ltd. (Acquired 10/15/13,
Cost $5,317,368) (a)(c)

     350,000       $ 4,341,326   

Panama — 0.6%

     

Copa Holdings SA, Class A

     57,800         6,757,976   

Peru — 0.6%

     

Credicorp Ltd. (b)

     40,700         6,552,700   

South Africa — 1.3%

     

Naspers Ltd., N Shares

     115,900         14,456,107   

South Korea — 0.5%

     

Hyundai Development Co.-Engineering & Construction

     6,896         260,359   

NAVER Corp.

     7,620         5,392,081   
     

 

 

 
                5,652,440   

Spain — 1.9%

     

Abengoa Yield PLC (a)(b)

     109,700         3,565,250   

NH Hotel Group SA (a)

     2,256,849         10,304,557   

Sacyr SA (a)

     1,582,242         6,952,108   
     

 

 

 
                20,821,915   

Sweden — 1.7%

     

Nordea Bank AB

     756,758         9,733,238   

Svenska Cellulosa AB SCA, Class B

     400,127         8,965,443   
     

 

 

 
                18,698,681   

Switzerland — 2.5%

     

Novartis AG

     162,800         15,108,308   

Roche Holding AG

     38,070         11,234,519   

UBS AG

     49         852   
     

 

 

 
                26,343,679   

Taiwan — 0.3%

     

Hermes Microvision, Inc.

     77,042         3,622,844   

United Kingdom — 6.7%

     

AstraZeneca PLC

     180,200         13,163,260   

Crest Nicholson Holdings PLC

     1,501,002         8,073,000   

Delphi Automotive PLC (b)

     96,600         6,663,468   

Foxtons Group PLC

     1,664,787         4,504,315   

Lloyds Banking Group PLC (a)

     5,415,100         6,687,023   

Metro Bank PLC (Acquired 1/16/14,
Cost $5,768,771) (a)(c)

     271,008         5,644,555   

Nomad Holdings Ltd. (a)

     556,597         6,414,780   

Polypipe Group PLC

     2,752,947         10,588,228   

Poundland Group PLC (a)

     382,700         1,928,438   

Prudential PLC

     352,300         8,157,832   

Vodafone Group PLC — ADR

     40         1,329   
     

 

 

 
                71,826,228   

United States — 54.5%

     

Abbott Laboratories (b)

     261,600         11,403,144   

AbbVie, Inc. (b)(d)

     190,723         12,103,281   

Actavis PLC (a)(b)

     51,100         12,404,014   

Adobe Systems, Inc. (a)(b)

     98,800         6,927,856   

Alkermes PLC (a)(b)

     265,000         13,395,750   

Allergan, Inc. (b)

     70,000         13,304,200   

Altria Group, Inc. (b)

     293,800         14,202,292   

American Airlines Group, Inc. (b)

     243,200         10,056,320   

Apple, Inc. (b)(d)

     299,288         32,323,104   

Aramark

     306,200         8,546,042   

Autodesk, Inc. (a)(b)

     142,400         8,193,696   

Bank of America Corp. (b)

     656,900         11,272,404   

BankUnited, Inc.

     452,683         13,535,222   

Best Buy Co., Inc. (b)

     184,680         6,304,975   
 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    57


Schedule of Investments (continued)      BlackRock Global Opportunities Equity Trust (BOE)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

United States (concluded)

     

Biogen Idec, Inc. (a)(b)

     17,200       $ 5,522,576   

BioMarin Pharmaceutical, Inc. (a)(b)

     113,600         9,372,000   

Cabot Oil & Gas Corp. (d)

     119,009         3,701,180   

Charles River Laboratories International, Inc. (a)(b)

     140,200         8,855,032   

Chevron Corp. (b)

     168,200         20,175,590   

Citigroup, Inc. (b)

     167,761         8,980,246   

Comcast Corp., Class A (b)

     285,200         15,785,820   

Concho Resources, Inc. (a)

     69,200         7,544,876   

Covidien PLC (b)

     93,500         8,643,140   

Crown Holdings, Inc. (a)(b)

     153,700         7,366,841   

Eastman Chemical Co.

     115,700         9,346,246   

Enterprise Products Partners LP (b)

     172,200         6,354,180   

EOG Resources, Inc. (b)

     105,200         9,999,260   

Facebook, Inc., Class A (a)(b)

     93,800         7,034,062   

FireEye, Inc. (a)

     158,700         5,394,213   

Flowserve Corp. (b)

     95,300         6,479,447   

Google, Inc., Class A (a)(b)

     23,939         13,594,240   

Google, Inc., Class C (a)(b)

     24,239         13,551,540   

The Hain Celestial Group, Inc. (a)(b)

     115,141         12,464,013   

The Hartford Financial Services Group, Inc. (b)

     392,500         15,535,150   

JPMorgan Chase & Co. (b)(d)

     381,615         23,080,075   

Kennedy-Wilson Holdings, Inc.

     473,500         12,827,115   

Kinder Morgan, Inc. (b)

     254,000         9,829,800   

Las Vegas Sands Corp. (b)

     77,300         4,812,698   

LendingClub Corp. (Acquired 5/7/14,
Cost $625,247) (a)(c)

     30,736         641,264   

Lowe’s Cos., Inc. (b)

     146,000         8,351,200   

Merck & Co., Inc. (b)

     274,200         15,887,148   

Microsoft Corp. (b)

     228,300         10,718,685   

Mondelez International, Inc., Class A (b)

     363,400         12,813,484   

Oasis Petroleum, Inc. (a)

     90,422         2,709,043   

Pfizer, Inc. (b)

     150,000         4,492,500   

Platform Specialty Products Corp. (a)(b)

     443,733         11,537,058   

PVH Corp. (b)

     75,000         8,576,250   

Roper Industries, Inc. (b)

     90,200         14,278,660   

Samsonite International SA

     2,561,300         8,510,496   

Schlumberger Ltd. (b)(d)

     119,260         11,766,192   

St. Jude Medical, Inc.

     86,600         5,557,122   

Strategic Growth Bancorp. (Acquired 3/10/14,
Cost $5,461,690) (a)(c)

     438,690         5,058,096   

SunPower Corp. (a)(b)(d)(e)

     123,645         3,936,857   

U.S. Silica Holdings, Inc.

     104,700         4,701,030   

United Parcel Service, Class B (b)

     118,800         12,463,308   

United Rentals, Inc. (a)(b)

     45,049         4,958,093   

WisdomTree Investments, Inc. (a)(b)

     702,793         10,366,197   

Yahoo!, Inc. (a)(b)

     128,200         5,903,610   

Yelp, Inc. (a)(b)

     89,100         5,346,000   
     

 

 

 
                588,793,933   

Total Common Stocks — 97.1%

              1,048,445,613   
     
Investment Companies                

United Kingdom — 0.5%

     

Kennedy Wilson Europe Real Estate PLC

     302,475         5,032,218   
     
                  
Preferred Stocks    Shares      Value  

India — 0.2%

     

Snapdeal.com, Series F (Acquired 5/7/14,
Cost $1,871,178), 0.00% (a)(c)

     266       $ 1,830,959   

Snapdeal.com, Series G (Acquired 10/29/14,
Cost $741,913), 0.00% (a)(c)

     88         740,206   
     

 

 

 
                2,571,165   

United States — 2.5%

     

Hortonworks, Inc., Series D (Acquired 3/21/14,
Cost $10,246,000), 0.00% (a)(c)

     840,725         10,248,438   

LendingClub Corp. (Acquired 4/15/14,
Cost $2,810,154), 0.00% (a)(c)

     138,142         2,882,139   

New Relic, Inc. (Acquired 4/15/14,
Cost $7,078,530), 0.00% (a)(c)

     244,644         7,078,530   

Palantir Technologies, Inc., Series I (Acquired 2/7/14, Cost $3,118,944), 0.00% (a)(c)

     508,800         3,118,944   

Uber Technologies, Inc., Series D (Acquired 6/6/14, Cost $3,845,800), 0.00% (a)(c)

     61,977         3,860,653   
     

 

 

 
                27,188,704   

Total Preferred Stocks — 2.7%

              29,759,869   
     
Warrants (f)                

United Kingdom — 0.0%

     

Nomad Holdings Ltd., Expires 4/10/17 (a)

     556,597         297,779   

Total Long Term Investments

(Cost — $961,834,391) — 100.3%

  

  

     1,083,535,479   
     
Short-Term Securities                

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.07% (g)(h)

     9,876,038         9,876,038   
      Beneficial
Interest
(000)
         

BlackRock Liquidity Series, LLC Money Market
Series, 0.19% (g)(h)(i)

   $ 1,398         1,398,320   

Total Short-Term Securities

(Cost — $11,274,358) — 1.1%

  

  

     11,274,358   

Total Investments Before Options Written

(Cost — $973,108,749) — 101.4%

  

  

     1,094,809,837   
     
Options Written                

(Premiums Received — $10,021,049) — (1.7)%

  

     (18,671,948

Total Investments Net of Options Written — 99.7%

  

     1,076,137,889   

Other Assets Less Liabilities — 0.3%

        3,723,619   
     

 

 

 

Net Assets — 100.0%

      $ 1,079,861,508   
     

 

 

 
 

 

See Notes to Financial Statements.

 

58    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)      BlackRock Global Opportunities Equity Trust (BOE)   

 

Notes to Schedule of Investments

 

(a) Non-income producing security.

 

(b) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(c) Restricted securities as to resale. As of October 31, 2014 the Trust held 4.2% of its net assets, with current market value of $45,445,110 and original cost of $46,885,595, in these securities.

 

(d) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(e) Security, or a portion of security, is on loan.

 

(f) Warrants entitle the Trust to purchase a predetermined number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date of the warrants, if any.

 

(g) Represents the current yield as of report date.

 

(h) Investments in issuers considered to be affiliates of the Trust during the year ended October 31, 2014, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate   

Shares/

Beneficial Interest

Held at

October 31, 2013

    

Net

Activity

   

Shares/

Beneficial Interest

Held at

October 31, 2014

     Income  

BlackRock Liquidity Funds, TempFund, Institutional Class

     36,387,584         (26,511,546     9,876,038       $ 9,513   

BlackRock Liquidity Series, LLC Money Market Series

           $ 1,398,320      $ 1,398,320       $ 110,061   

 

(i) Security was purchased with the cash collateral from loaned securities. The Trust may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

 

Ÿ  

Exchange-traded options written as of October 31, 2014 were as follows:

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

PVH Corp.

     Call         USD         127.50         11/06/14         205       $ (14

Altria Group, Inc.

     Call         USD         46.00         11/07/14         401         (90,025

Apple, Inc.

     Call         USD         103.00         11/07/14         247         (124,118

Apple, Inc.

     Call         USD         105.00         11/07/14         244         (75,640

Bank of America Corp.

     Call         USD         17.00         11/07/14         901         (22,075

Best Buy Co., Inc.

     Call         USD         33.50         11/07/14         853         (86,580

Biogen Idec, Inc.

     Call         USD         345.00         11/07/14         95         (7,125

Chevron Corp.

     Call         USD         120.00         11/07/14         347         (39,558

EOG Resources, Inc.

     Call         USD         106.00         11/07/14         322         (3,381

Facebook, Inc., Class A

     Call         USD         83.00         11/07/14         265         (398

Google, Inc., Class A

     Call         USD         610.00         11/07/14         66         (1,320

The Hartford Financial Services Group, Inc.

     Call         USD         38.50         11/07/14         539         (60,099

JPMorgan Chase & Co.

     Call         USD         61.00         11/07/14         128         (3,584

Melco Crown Entertainment Ltd. — ADR

     Call         USD         28.00         11/07/14         796         (45,770

Merck & Co., Inc.

     Call         USD         61.50         11/07/14         424         (1,908

Pfizer, Inc.

     Call         USD         29.50         11/07/14         407         (17,501

SunPower Corp.

     Call         USD         39.00         11/07/14         215         (3,010

United Rentals, Inc.

     Call         USD         112.00         11/07/14         140         (14,350

Yahoo!, Inc.

     Call         USD         44.50         11/07/14         353         (69,718

Adobe Systems, Inc.

     Call         USD         70.00         11/10/14         272         (29,569

Alibaba Group Holding — ADR

     Call         USD         92.00         11/14/14         184         (149,960

Altria Group, Inc.

     Call         USD         47.50         11/14/14         400         (42,600

American Airlines Group, Inc.

     Call         USD         35.00         11/14/14         745         (486,113

Apple, Inc.

     Call         USD         104.00         11/14/14         249         (102,713

Bank of America Corp.

     Call         USD         17.00         11/14/14         902         (29,315

Best Buy Co., Inc.

     Call         USD         32.50         11/14/14         160         (32,000

Chevron Corp.

     Call         USD         117.00         11/14/14         232         (84,680

Citigroup, Inc.

     Call         USD         53.00         11/14/14         451         (46,904

Comcast Corp., Class A

     Call         USD         55.00         11/14/14         788         (70,920

Facebook, Inc., Class A

     Call         USD         84.00         11/14/14         250         (1,125

Google, Inc., Class C

     Call         USD         580.00         11/14/14         66         (6,435

The Hartford Financial Services Group, Inc.

     Call         USD         38.50         11/14/14         540         (71,550

JPMorgan Chase & Co.

     Call         USD         61.00         11/14/14         129         (6,321

Las Vegas Sands Corp.

     Call         USD         68.00         11/14/14         131         (655

Merck & Co., Inc.

     Call         USD         63.00         11/14/14         211         (1,899

Pfizer, Inc.

     Call         USD         29.00         11/14/14         50         (4,600

Pfizer, Inc.

     Call         USD         29.50         11/14/14         200         (9,700

Roper Industries, Inc.

     Call         USD         150.05         11/14/14         304         (261,285

Schlumberger Ltd.

     Call         USD         100.00         11/14/14         304         (39,064

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    59


Schedule of Investments (continued)      BlackRock Global Opportunities Equity Trust (BOE)  

 

Exchange-traded options written as of October 31, 2014 were as follows: (continued)

 

Description    Put/
Call
    

Strike

Price

   Expiration
Date
     Contracts      Market
Value
 

Adobe Systems, Inc.

     Call       USD    70.00      11/17/14         272       $ (37,995

PVH Corp.

     Call       USD    127.50      11/20/14         205         (2,611

Abbott Laboratories

     Call       USD    43.00      11/22/14         525         (53,025

Abbott Laboratories

     Call       USD    44.00      11/22/14         525         (23,888

AbbVie, Inc.

     Call       USD    62.50      11/22/14         399         (75,810

Abengoa Yield PLC

     Call       USD    40.00      11/22/14         300         (12,000

Actavis PLC

     Call       USD    240.00      11/22/14         152         (121,600

Actavis PLC

     Call       USD    245.00      11/22/14         130         (74,100

Alibaba Group Holding — ADR

     Call       USD    100.00      11/22/14         184         (73,600

Alibaba Group Holding — ADR

     Call       USD    95.00      11/22/14         183         (120,780

Alkermes PLC

     Call       USD    45.00      11/22/14         1,458         (874,800

Allergan, Inc.

     Call       USD    170.00      11/22/14         385         (789,250

American Airlines Group, Inc.

     Call       USD    40.00      11/22/14         592         (148,296

Apple, Inc.

     Call       USD    105.00      11/22/14         247         (85,215

Autodesk, Inc.

     Call       USD    57.50      11/22/14         384         (95,424

Baidu, Inc. — ADR

     Call       USD    230.00      11/22/14         33         (39,270

BioMarin Pharmaceutical, Inc.

     Call       USD    75.00      11/22/14         312         (263,640

Charles River Laboratories International, Inc.

     Call       USD    60.00      11/22/14         772         (262,480

Citigroup, Inc.

     Call       USD    55.00      11/22/14         143         (4,147

Comcast Corp., Class A

     Call       USD    55.00      11/22/14         781         (81,615

Covidien PLC

     Call       USD    92.50      11/22/14         100         (31,000

Covidien PLC

     Call       USD    95.00      11/22/14         415         (67,438

Credicorp Ltd.

     Call       USD    155.00      11/22/14         111         (74,925

Credicorp Ltd.

     Call       USD    160.00      11/22/14         110         (36,025

Crown Holdings, Inc.

     Call       USD    47.00      11/22/14         433         (60,620

Crown Holdings, Inc.

     Call       USD    48.00      11/22/14         412         (32,960

Delphi Automotive PLC

     Call       USD    67.50      11/22/14         532         (118,370

Enterprise Products Partners LP

     Call       USD    40.00      11/22/14         475         (4,750

EOG Resources, Inc.

     Call       USD    102.00      11/22/14         128         (11,904

Flowserve Corp.

     Call       USD    75.00      11/22/14         174         (3,480

Google, Inc., Class C

     Call       USD    620.00      11/22/14         67         (1,172

The Hartford Financial Services Group, Inc.

     Call       USD    38.00      11/22/14         540         (96,660

JPMorgan Chase & Co.

     Call       USD    62.50      11/22/14         248         (4,712

Kinder Morgan, Inc.

     Call       USD    37.50      11/22/14         407         (66,545

Kinder Morgan, Inc.

     Call       USD    39.00      11/22/14         300         (20,550

Las Vegas Sands Corp.

     Call       USD    70.00      11/22/14         131         (852

Lowe’s Cos., Inc.

     Call       USD    53.25      11/22/14         399         (166,979

Merck & Co., Inc.

     Call       USD    57.50      11/22/14         436         (68,452

Pfizer, Inc.

     Call       USD    30.00      11/22/14         50         (1,250

Platform Specialty Products Corp.

     Call       USD    30.00      11/22/14         500         (25,000

Roper Industries, Inc.

     Call       USD    155.00      11/22/14         192         (93,120

Schlumberger Ltd.

     Call       USD    110.00      11/22/14         65         (358

United Parcel Service, Class B

     Call       USD    100.00      11/22/14         325         (162,500

United Rentals, Inc.

     Call       USD    113.00      11/22/14         52         (10,400

WisdomTree Investments, Inc.

     Call       USD    12.00      11/22/14         1,000         (290,000

Yahoo!, Inc.

     Call       USD    45.00      11/22/14         353         (72,012

BioMarin Pharmaceutical, Inc.

     Call       USD    71.00      12/04/14         312         (407,136

JPMorgan Chase & Co.

     Call       USD    55.60      12/04/14         496         (247,435

Apple, Inc.

     Call       USD    108.00      12/05/14         494         (108,927

Baidu, Inc. — ADR

     Call       USD    225.00      12/05/14         187         (334,262

Microsoft Corp.

     Call       USD    47.00      12/05/14         1,256         (98,596

SunPower Corp.

     Call       USD    34.50      12/05/14         235         (23,852

Yelp, Inc.

     Call       USD    66.50      12/05/14         490         (52,675

JPMorgan Chase & Co.

     Call       USD    59.25      12/09/14         124         (24,375

JPMorgan Chase & Co.

     Call       USD    59.25      12/16/14         124         (25,582

Apple, Inc.

     Call       USD    100.00      12/20/14         165         (136,950

Autodesk, Inc.

     Call       USD    55.50      12/20/14         400         (164,064

Baidu, Inc. — ADR

     Call       USD    230.00      12/20/14         33         (49,912

Citigroup, Inc.

     Call       USD    52.50      12/20/14         329         (65,306

Enterprise Products Partners LP

     Call       USD    38.75      12/20/14         475         (29,688

Flowserve Corp.

     Call       USD    70.00      12/20/14         350         (42,875

Google, Inc., Class A

     Call       USD    605.00      12/20/14         66         (21,450

The Hain Celestial Group, Inc.

     Call       USD    110.00      12/20/14         304         (104,880

 

See Notes to Financial Statements.

 

60    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)      BlackRock Global Opportunities Equity Trust (BOE)  

 

Exchange-traded options written as of October 31, 2014 were as follows: (concluded)

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

The Hartford Financial Services Group, Inc.

     Call         USD         38.00         12/20/14         540       $ (110,970

JPMorgan Chase & Co.

     Call         USD         62.50         12/20/14         850         (45,900

Kinder Morgan, Inc.

     Call         USD         37.50         12/20/14         700         (151,550

Lowe’s Cos., Inc.

     Call         USD         57.50         12/20/14         404         (65,246

Merck & Co., Inc.

     Call         USD         57.50         12/20/14         436         (81,096

Mondelez International, Inc., Class A

     Call         USD         36.00         12/20/14         363         (24,502

Total

                  $ (9,322,391
                 

 

 

 

 

Ÿ  

Over-the-counter options written as of October 31, 2014 were as follows:

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts      Market
Value
 

Bank of America Corp.

   Morgan Stanley & Co. International PLC      Call         USD         17.40       11/03/14      181,000       $ (5,864

Eastman Chemical Co.

   Goldman Sachs International      Call         USD         85.32       11/03/14      63,700         (243

Schlumberger Ltd.

   Citibank N.A.      Call         USD         106.02       11/03/14      28,600         (11

SunPower Corp.

   UBS AG      Call         USD         38.51       11/03/14      23,000           

U.S. Silica Holdings, Inc.

   Credit Suisse International      Call         USD         73.80       11/03/14      29,600           

United Parcel Service, Class B

   Deutsche Bank AG      Call         USD         100.54       11/03/14      32,900         (143,988

Kenedix Office Investment Corp. — REIT

   Goldman Sachs International      Call         JPY         566,610.00       11/04/14      120         (36,510

Anheuser-Busch InBev NV

   Deutsche Bank AG      Call         EUR         85.23       11/05/14      53,000         (227,624

Crest Nicholson Holdings PLC

   Morgan Stanley & Co. International PLC      Call         GBP         3.27       11/05/14      50,000         (8,655

Nabtesco Corp.

   UBS AG      Call         JPY         2,580.60       11/05/14      22,500         (27,957

NH Hotel Group SA

   Bank of America N.A.      Call         EUR         3.93       11/05/14      100,000         (1,220

Roche Holding AG

   Morgan Stanley & Co. International PLC      Call         CHF         285.93       11/05/14      27,800         (40,810

Shinsei Bank Ltd.

   Goldman Sachs International      Call         JPY         241.06       11/05/14      1,365,000         (141,891

Svenska Cellulosa AB SCA, Class B

   Goldman Sachs International      Call         SEK         173.82       11/05/14      57,000         (60

Svenska Cellulosa AB SCA, Class B

   UBS AG      Call         SEK         169.19       11/05/14      80,000         (2,414

Telefonica Deutschland Holding AG

   Deutsche Bank AG      Call         EUR         4.25       11/05/14      120,000         (20

AbbVie, Inc.

   Goldman Sachs International      Call         USD         59.29       11/06/14      64,900         (271,094

Aramark

   Deutsche Bank AG      Call         USD         27.58       11/06/14      59,000         (25,847

Henkel AG & Co. KGaA

   Deutsche Bank AG      Call         EUR         84.71       11/06/14      30,000         (500

Kennedy-Wilson Holdings, Inc.

   UBS AG      Call         USD         25.83       11/06/14      32,000         (41,303

Societe Generale SA

   Goldman Sachs International      Call         EUR         41.41       11/06/14      106,000         (9,650

AstraZeneca PLC

   Morgan Stanley & Co. International PLC      Call         GBP         43.75       11/07/14      20,000         (65,071

Kenedix Office Investment Corp. — REIT

   UBS AG      Call         JPY         556,876.91       11/07/14      65         (25,379

Mondelez International, Inc., Class A

   Morgan Stanley & Co. International PLC      Call         USD         36.28       11/07/14      36,200         (1,592

Samsonite International SA

   Goldman Sachs International      Call         HKD         26.43       11/07/14      66,000         (1,494

MEG Energy Corp.

   Deutsche Bank AG      Call         CAD         35.43       11/10/14      50,000           

Telefonica Deutschland Holding AG

   Deutsche Bank AG      Call         EUR         4.25       11/10/14      120,000         (270

Vivendi SA

   Deutsche Bank AG      Call         EUR         18.21       11/10/14      139,000         (225,394

Vivendi SA

   Deutsche Bank AG      Call         EUR         19.43       11/10/14      140,000         (49,461

AIA Group Ltd.

   Citibank N.A.      Call         HKD         41.88       11/11/14      476,000         (97,266

Beijing Enterprises Water Group Ltd.

   BNP Paribas S.A.      Call         HKD         5.48       11/11/14      142,000         (2,336

Beijing Enterprises Water Group Ltd.

   Goldman Sachs International      Call         HKD         5.45       11/11/14      350,000         (6,396

Cabot Oil & Gas Corp.

   Citibank N.A.      Call         USD         33.94       11/11/14      65,500         (4,909

Hermes Microvision, Inc.

   Morgan Stanley & Co. International PLC      Call         TWD         1,312.27       11/11/14      42,000         (174,529

Kenedix Office Investment Corp. — REIT

   Goldman Sachs International      Call         JPY         578,550.00       11/11/14      35         (7,771

Kenedix Office Investment Corp. — REIT

   UBS AG      Call         JPY         579,360.00       11/11/14      90         (19,468

Mitsubishi Estate Co. Ltd.

   Morgan Stanley & Co. International PLC      Call         JPY         2,312.85       11/11/14      98,000         (478,623

Nabtesco Corp.

   Goldman Sachs International      Call         JPY         2,635.20       11/11/14      52,000         (46,970

Naspers Ltd., N Shares

   Deutsche Bank AG      Call         ZAR         1,342.92       11/11/14      28,000         (135,919

NAVER Corp.

   Citibank N.A.      Call         KRW         857,990.00       11/11/14      1,590         (750

NH Hotel Group SA

   Goldman Sachs International      Call         EUR         4.32       11/11/14      50,000         (213

Samsonite International SA

   Citibank N.A.      Call         HKD         25.99       11/11/14      355,200         (19,396

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    61


Schedule of Investments (continued)      BlackRock Global Opportunities Equity Trust (BOE)   

 

Over-the-counter options written as of October 31, 2014 were as follows: (continued)

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts      Market
Value
 

Samsonite International SA

   Morgan Stanley & Co. International PLC      Call         HKD         25.67       11/11/14      71,100       $ (5,144

Schneider Electric SE

   Deutsche Bank AG      Call         EUR         59.07       11/11/14      75,400         (367,257

SMC Corp.

   Morgan Stanley & Co. International PLC      Call         JPY         30,303.18       11/11/14      6,300         (95,804

SoftBank Corp.

   Morgan Stanley & Co. International PLC      Call         JPY         8,075.17       11/11/14      41,000         (88,843

Telefonica Deutschland Holding AG

   Deutsche Bank AG      Call         EUR         4.20       11/11/14      100,000         (1,413

Tokyo Tatemono Co. Ltd.

   Citibank N.A.      Call         JPY         859.76       11/11/14      85,000         (91,405

Kennedy-Wilson Holdings, Inc.

   Deutsche Bank AG      Call         USD         24.86       11/12/14      35,000         (78,493

Aramark

   UBS AG      Call         USD         26.49       11/13/14      41,900         (70,268

Lloyds Banking Group PLC

   Morgan Stanley & Co. International PLC      Call         GBP         0.77       11/13/14      1,490,000         (42,586

Platform Specialty Products Corp.

   Credit Suisse International      Call         USD         27.52       11/13/14      75,000         (25,936

AIA Group Ltd.

   UBS AG      Call         HKD         41.76       11/14/14      515,000         (115,984

Beijing Enterprises Water Group Ltd.

   BNP Paribas S.A.      Call         HKD         5.50       11/14/14      142,000         (2,233

Beijing Enterprises Water Group Ltd.

   Goldman Sachs International      Call         HKD         5.51       11/14/14      350,000         (5,367

Kenedix Office Investment Corp. — REIT

   Bank of America N.A.      Call         JPY         578,340.00       11/14/14      30         (6,931

Nabtesco Corp.

   Goldman Sachs International      Call         JPY         2,648.11       11/14/14      52,000         (45,211

Nabtesco Corp.

   UBS AG      Call         JPY         2,465.53       11/14/14      17,500         (39,555

NAVER Corp.

   Citibank N.A.      Call         KRW         807,520.00       11/14/14      2,600         (13,727

Samsonite International SA

   Barclays Bank PLC      Call         HKD         26.21       11/14/14      139,800         (6,935

Samsonite International SA

   Citibank N.A.      Call         HKD         25.85       11/14/14      270,900         (18,694

Samsonite International SA

   Morgan Stanley & Co. International PLC      Call         HKD         25.93       11/14/14      71,100         (4,694

Telefonica Deutschland Holding AG

   Bank of America N.A.      Call         EUR         4.28       11/14/14      75,000         (317

Beijing Enterprises Water Group Ltd.

   UBS AG      Call         HKD         5.27       11/18/14      1,600,000         (63,203

Henkel AG & Co. KGaA

   Deutsche Bank AG      Call         EUR         80.52       11/18/14      24,000         (33,535

Kenedix Office Investment Corp. — REIT

   Goldman Sachs International      Call         JPY         575,700.00       11/18/14      10         (2,569

BankUnited, Inc.

   Bank of America N.A.      Call         USD         30.90       11/19/14      49,500         (7,603

Cemex SAB de CV — ADR

   Deutsche Bank AG      Call         USD         13.53       11/19/14      126,800         (2,123

Kennedy-Wilson Holdings, Inc.

   Bank of America N.A.      Call         USD         24.04       11/19/14      42,000         (128,100

Nabtesco Corp.

   UBS AG      Call         JPY         2,465.53       11/19/14      17,500         (39,869

Nabtesco Corp.

   UBS AG      Call         JPY         2,580.60       11/19/14      22,500         (30,983

Samsonite International SA

   UBS AG      Call         HKD         23.42       11/19/14      183,000         (56,034

Shinsei Bank Ltd.

   Goldman Sachs International      Call         JPY         241.06       11/19/14      1,365,000         (161,082

AIA Group Ltd.

   Barclays Bank PLC      Call         HKD         43.15       11/24/14      476,000         (66,469

Anheuser-Busch InBev NV

   Deutsche Bank AG      Call         EUR         85.07       11/25/14      31,000         (156,490

Beijing Enterprises Water Group Ltd.

   UBS AG      Call         HKD         5.27       11/25/14      1,600,000         (65,350

Kenedix Office Investment Corp. — REIT

   UBS AG      Call         JPY         577,942.20       11/25/14      92         (23,626

NH Hotel Group SA

   Bank of America N.A.      Call         EUR         3.65       11/25/14      80,000         (17,461

Novartis AG

   UBS AG      Call         CHF         85.02       11/25/14      33,600         (158,736

Ping An Insurance Group Co. of China Ltd., Class H

   UBS AG      Call         HKD         58.65       11/25/14      165,000         (105,727

Samsonite International SA

   UBS AG      Call         HKD         23.42       11/25/14      183,000         (56,576

Kennedy-Wilson Holdings, Inc.

   Deutsche Bank AG      Call         USD         24.86       11/26/14      20,000         (46,390

Mitsubishi Estate Co. Ltd.

   UBS AG      Call         JPY         2,326.08       11/26/14      47,000         (224,049

Tokyo Tatemono Co. Ltd.

   Goldman Sachs International      Call         JPY         815.36       11/26/14      271,000         (398,642

Prudential PLC

   Morgan Stanley & Co. International PLC      Call         GBP         14.30       12/01/14      194,000         (141,482

NH Hotel Group SA

   Goldman Sachs International      Call         EUR         3.44       12/02/14      75,000         (29,633

Lloyds Banking Group PLC

   Morgan Stanley & Co. International PLC      Call         GBP         0.77       12/03/14      1,490,000         (62,841

Nordea Bank AB

   Morgan Stanley & Co. International PLC      Call         SEK         92.44       12/03/14      216,200         (109,346

Unibail-Rodamco SE — REIT

   Deutsche Bank AG      Call         EUR         196.48       12/03/14      8,400         (100,489

FireEye, Inc.

   Credit Suisse International      Call         USD         33.57       12/04/14      43,600         (129,772

Kenedix Office Investment Corp. — REIT

   Goldman Sachs International      Call         JPY         570,430.00       12/04/14      92         (30,138

Mitsubishi Estate Co. Ltd.

   Barclays Bank PLC      Call         JPY         2,378.65       12/04/14      99,000         (426,046

Naspers Ltd., N Shares

   Goldman Sachs International      Call         ZAR         1,300.28       12/04/14      35,400         (342,678

Samsonite International SA

   Goldman Sachs International      Call         HKD         25.11       12/04/14      66,000         (10,495

St. Jude Medical, Inc.

   Credit Suisse International      Call         USD         60.78       12/04/14      47,700         (173,193

See Notes to Financial Statements.

 

 

62    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)      BlackRock Global Opportunities Equity Trust (BOE)   

 

Over-the-counter options written as of October 31, 2014 were as follows: (concluded)

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts     

Market

Value

 

Aramark

   UBS AG      Call         USD         26.33       12/08/14      29,000       $ (59,549

Kennedy-Wilson Holdings, Inc.

   Morgan Stanley & Co. International PLC      Call         USD         25.03       12/08/14      47,800         (100,469

Mondelez International, Inc., Class A

   Deutsche Bank AG      Call         USD         34.45       12/08/14      127,400         (174,944

Abbott Laboratories

   Credit Suisse International      Call         USD         43.16       12/09/14      39,000         (45,096

Altria Group, Inc.

   Citibank N.A.      Call         USD         46.31       12/09/14      81,500         (176,888

AstraZeneca PLC

   UBS AG      Call         GBP         43.29       12/10/14      79,000         (392,320

BankUnited, Inc.

   Deutsche Bank AG      Call         USD         30.90       12/10/14      66,000         (16,942

Kenedix Office Investment Corp. — REIT

   UBS AG      Call         JPY         573,959.36       12/10/14      10         (3,154

Tokyo Tatemono Co. Ltd.

   Bank of America N.A.      Call         JPY         810.78       12/10/14      271,000         (410,204

Beijing Enterprises Water Group Ltd.

   Goldman Sachs International      Call         HKD         5.43       12/11/14      700,000         (21,105

Kennedy-Wilson Holdings, Inc.

   Goldman Sachs International      Call         USD         25.56       12/11/14      35,100         (58,405

Pfizer, Inc.

   Morgan Stanley & Co. International PLC      Call         USD         29.42       12/11/14      11,800         (8,334

Unibail-Rodamco SE — REIT

   Deutsche Bank AG      Call         EUR         197.45       12/12/14      8,400         (97,709

Aramark

   Deutsche Bank AG      Call         USD         28.13       12/15/14      38,600         (20,079

Daimler AG

   UBS AG      Call         EUR         61.80       12/16/14      40,000         (112,482

Nordea Bank AB

   UBS AG      Call         SEK         93.61       12/16/14      200,000         (91,228

BankUnited, Inc.

   Morgan Stanley & Co. International PLC      Call         USD         30.90       12/17/14      67,000         (20,308

NH Hotel Group SA

   Bank of America N.A.      Call         EUR         3.67       12/17/14      75,000         (21,390

SMC Corp.

   Citibank N.A.      Call         JPY         29,566.15       12/18/14      5,200         (127,923

Novartis AG

   Deutsche Bank AG      Call         CHF         87.77       1/06/15      56,000         (184,527

BankUnited, Inc.

   Credit Suisse International      Call         USD         30.90       1/07/15      66,000         (24,710

Beijing Enterprises Water Group Ltd.

   Citibank N.A.      Call         HKD         5.55       1/08/15      700,000         (16,564

Kennedy-Wilson Holdings, Inc.

   Deutsche Bank AG      Call         USD         26.76       1/09/15      48,000         (49,569

The Hain Celestial Group, Inc.

   Morgan Stanley & Co. International PLC      Call         USD         104.75       1/15/15      32,900         (239,263

Total

                     $ (9,349,557
                    

 

 

 

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets and liabilities or the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, please refer to Note 2 of the Notes to Financial Statements.

The following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy as of October 31, 2014:

 

      Level 1      Level 2      Level 3    Total  

Assets:

           

Investments:

           

Long-Term Investments:

           

Common Stocks:

           

Belgium

           $ 17,028,814          $ 17,028,814   

Brazil

   $ 4,713,930                    4,713,930   

Canada

     13,548,038                    13,548,038   

China

     20,849,123         12,261,968            33,111,091   

France

             40,306,749            40,306,749   

Germany

             27,783,405            27,783,405   

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    63


Schedule of Investments (continued)      BlackRock Global Opportunities Equity Trust (BOE)   

 

      Level 1     Level 2     Level 3      Total  

Assets: (concluded)

         

Investments: (concluded)

         

Long-Term Investments: (concluded)

         

Common Stocks: (concluded)

         

Greece

          $ 6,714,443              $ 6,714,443   

Hong Kong

   $ 3,929,872        14,919,266                18,849,138   

India

     8,214,145        10,691,658                18,905,803   

Indonesia

            10,975,495                10,975,495   

Ireland

     12,816,693                       12,816,693   

Italy

            10,815,473                10,815,473   

Japan

     2,315,851        57,113,679                59,429,530   

Mexico

     5,579,182                       5,579,182   

New Zealand

            4,341,326                4,341,326   

Panama

     6,757,976                       6,757,976   

Peru

     6,552,700                       6,552,700   

South Africa

            14,456,107                14,456,107   

South Korea

     260,359        5,392,081                5,652,440   

Spain

     3,565,250        17,256,665                20,821,915   

Sweden

            18,698,681                18,698,681   

Switzerland

            26,343,679                26,343,679   

Taiwan

            3,622,844                3,622,844   

United Kingdom

     15,008,015        51,173,658      $ 5,644,555         71,826,228   

United States

     574,584,077        8,510,496        5,699,360         588,793,933   

Investment Companies

     5,032,218                       5,032,218   

Preferred Stocks

                   29,759,869         29,759,869   

Warrants

     297,779                       297,779   

Short-Term Securities

     9,876,038        1,398,320                11,274,358   

Total

   $ 693,901,246      $ 359,804,807      $ 41,103,784       $ 1,094,809,837   
         
      Level 1     Level 2     Level 3      Total  

Derivative Financial Instruments1

         

Liabilities:

         

Equity contracts.

   $ (7,955,341   $ (10,716,607           $ (18,671,948

 

1    Derivative financial instruments are options written, which are shown at value.

         
The Trust may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of October 31, 2014, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:    
         
      Level 1     Level 2     Level 3      Total  

Assets:

         

Cash

   $ 122,460                     $ 122,460   

Foreign currency at value

     879,256                       879,256   

Liabilities:

         

Collateral on securities loaned at value

          $ (1,398,320             (1,398,320

Total

   $ 1,001,716      $ (1,398,320           $ (396,604
Transfers between Level 1 and Level 2 were as follows:          
      Transfers
into Level 1
   

Transfers out of

Level 11

   

Transfers into

Level 21

     Transfers out
of Level 2
 

Assets:

         

Long-Term Investments:

         

Common Stocks

            $46,188,008        $46,188,008           

1    External pricing service used to reflect any significant market movements between the time the Trust valued such foreign securities and the earlier closing of foreign markets.

       

 

See Notes to Financial Statements.

 

64    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (concluded)      BlackRock Global Opportunities Equity Trust (BOE)   

 

A reconciliation of Level 3 investments is presented when the Trust had a significant amount of Level 3 investments at the beginning and/or end of the period in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

 

      Common
Stocks
    Preferred
Stocks
     Total  

Assets:

       

Opening Balance, as of October 31, 2013

                      

Transfers into Level 3

                      

Transfers out of Level 3

                      

Accrued discounts/premiums

                      

Net realized gain (loss)

                      

Net change in unrealized appreciation/depreciation

   $ (511,793   $ 47,350       $ (464,443

Purchases

     11,855,708        29,712,519         41,568,227   

Sales

                      
  

 

 

 

Closing Balance, as of October 31, 2014

   $ 11,343,915      $ 29,759,869       $ 41,103,784   
  

 

 

 

Net change in unrealized appreciation/depreciation on investments still held at October 31, 2014

   $ (511,793   $ 47,350       $ (464,443
  

 

 

 

The following table summarizes the valuation techniques used and unobservable inputs utilized by the BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) to determine the value of certain of the Trust’s Level 3 investments as of October 31, 2014. The table does not include Level 3 investments with values based upon unadjusted third party pricing information in the amount of $740,206. A significant change in such third party pricing information could result in a significantly lower or higher value of such Level 3 investments.

 

      Value      Valuation Techniques   

Unobservable

Inputs

   Range of
Unobservable Inputs
Utilized
 

Assets:

           

Common Stocks

   $ 5,644,555       Market Comparable Companies    Price to Tangible Book Value Multiple1      1.70x   
     5,058,096       Market Comparable Companies    Price to Tangible Book Value Multiple1      1.15x   
         P/E Multiple1      7.75x   
     641,264       Market Comparable Companies    Net Revenue Multiple1      18.25x   

Preferred Stocks

     3,860,653       Market Comparable Companies    Bookings Multiple1      5.63x   
         Implied Volatility1      64.00
     10,248,438       Market Comparable Companies    Implied 2016P Revenue Multiple1      5.50x   
     3,118,944       Market Comparable Companies    Implied 2015P Revenue Multiple1      11.50x   
     7,078,530       Market Comparable Companies    Implied 2016P Revenue Multiple1      7.00x   
     1,830,959       Market Comparable Companies    Current Fiscal Year Revenue Multiple1      2.28x   
         Implied Volatility1      65.00
       2,882,139       Market Comparable Companies    Net Revenue Multiple1      18.25x   

Total

   $ 40,363,578            
  

 

 

          
  1   

Increase in unobservable input may result in a significant increase to value, while a decrease in the unobservable input may result in a significant decrease to value.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    65


Schedule of Investments October 31, 2014      BlackRock Health Sciences Trust (BME)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks   Shares     Value  

Biotechnology — 28.1%

   

Acceleron Pharma, Inc. (a)(b)

    12,100      $ 447,458   

Acorda Therapeutics, Inc. (a)(b)

    15,200        529,264   

Actelion Ltd.

    13,000        1,548,238   

Adamas Pharmaceuticals, Inc. (a)

    5,700        86,811   

Agios Pharmaceuticals, Inc. (a)(b)

    18,100        1,520,943   

Alder Biopharmaceuticals, Inc. (a)

    17,500        313,425   

Alexion Pharmaceuticals, Inc. (a)(b)

    51,660        9,885,658   

Alkermes PLC (a)

    60,200        3,043,110   

Amgen, Inc. (b)

    60,600        9,828,108   

Anacor Pharmaceuticals, Inc. (a)

    10,600        311,746   

Aquinox Pharmaceuticals, Inc. (a)

    6,800        45,492   

Array BioPharma, Inc. (a)

    88,100        316,279   

Avalanche Biotechnologies, Inc. (a)

    3,400        121,992   

BioCryst Pharmaceuticals, Inc. (a)(b)

    16,900        198,068   

Biogen Idec, Inc. (a)(b)

    29,900        9,600,292   

BioMarin Pharmaceutical, Inc. (a)(b)

    52,600        4,339,500   

Biota Pharmaceuticals, Inc. (a)

    38,100        93,345   

Bluebird Bio, Inc. (a)(b)

    3,200        134,368   

Celgene Corp. (a)(b)

    99,186        10,621,826   

Celldex Therapeutics, Inc. (a)(b)

    22,600        378,550   

Clovis Oncology, Inc. (a)(b)

    18,900        1,127,574   

Conatus Pharmaceuticals, Inc. (a)

    8,700        62,640   

Concert Pharmaceuticals, Inc. (a)

    9,200        134,596   

Dyax Corp. (a)(b)

    56,027        693,054   

Genomic Health, Inc. (a)

    13,200        479,688   

Gilead Sciences, Inc. (a)(b)

    48,900        5,476,800   

Incyte Corp. (a)(b)

    34,300        2,300,158   

Infinity Pharmaceuticals, Inc. (a)

    52,700        717,774   

Isis Pharmaceuticals, Inc. (a)

    15,700        723,142   

Karyopharm Therapeutics, Inc. (a)(b)

    30,953        1,271,549   

Kite Pharma, Inc. (Acquired 6/25/14, cost $222,000) (a)(c)

    14,655        514,984   

Medivation, Inc. (a)(b)

    17,900        1,892,030   

Neurocrine Biosciences, Inc. (a)(b)

    60,362        1,117,904   

Otonomy, Inc. (a)

    6,400        168,640   

ProQR Therapeutics NV (a)

    4,100        52,603   

Protalix BioTherapeutics, Inc. (a)

    122,100        268,620   

Puma Biotechnology, Inc. (a)(b)

    12,500        3,132,500   

Receptos, Inc. (a)(b)

    16,100        1,668,765   

Regeneron Pharmaceuticals, Inc. (a)(b)

    11,158        4,393,128   

Sage Therapeutics, Inc. (a)

    2,000        78,240   

Sage Therapeutics, Inc. (Acquired 3/10/14,cost $631,483) (a)(c)

    47,342        1,759,418   

Seattle Genetics, Inc. (a)(b)

    33,867        1,241,903   

Ultragenyx Pharmaceutical, Inc. (a)

    44,249        2,080,146   

uniQure B.V. (a)

    7,000        79,520   

Vertex Pharmaceuticals, Inc. (a)(b)

    30,505        3,436,083   
   

 

 

 
              88,235,932   

Chemicals — 0.9%

   

Sigma-Aldrich Corp.

    19,800        2,691,018   

Health Care Equipment & Supplies — 18.3%

   

Abbott Laboratories (b)

    146,000        6,364,140   

Alere, Inc. (a)(b)

    18,600        743,442   

Align Technology, Inc. (a)(b)

    11,000        578,820   

AtriCure, Inc. (a)

    25,562        445,801   

Baxter International, Inc. (b)

    47,100        3,303,594   

Becton Dickinson and Co. (b)

    27,300        3,513,510   

Boston Scientific Corp. (a)(b)

    224,600        2,982,688   

CareFusion Corp. (a)

    54,900        3,149,613   

Coloplast A/S, Class B

    24,700        2,152,883   

The Cooper Cos., Inc. (b)

    13,000        2,130,700   

Covidien PLC (b)

    69,300        6,406,092   

DENTSPLY International, Inc. (b)

    12,800        649,856   
Common Stocks   Shares     Value  

Health Care Equipment & Supplies (concluded)

   

DexCom, Inc. (a)(b)

    23,200      $ 1,042,840   

Edwards Lifesciences Corp. (a)

    37,299        4,510,195   

Insulet Corp. (a)(b)

    8,500        366,945   

Intuitive Surgical, Inc. (a)(b)

    6,100        3,024,380   

Masimo Corp. (a)

    16,600        418,984   

Medtronic, Inc. (b)

    66,900        4,559,904   

PW Medtech Group Ltd. (a)

    928,400        586,185   

St. Jude Medical, Inc.

    44,700        2,868,399   

Stryker Corp. (b)

    63,300        5,540,649   

Thoratec Corp. (a)(b)

    12,700        345,186   

Volcano Corp. (a)

    22,500        227,700   

Zimmer Holdings, Inc. (b)

    13,300        1,479,492   
   

 

 

 
              57,391,998   

Health Care Providers & Services — 14.6%

   

Aetna, Inc. (b)

    28,211        2,327,690   

AmerisourceBergen Corp. (b)

    19,500        1,665,495   

Cardinal Health, Inc. (b)

    60,230        4,726,850   

Cigna Corp. (b)

    49,700        4,948,629   

Envision Healthcare Holdings, Inc. (a)

    58,400        2,041,080   

Express Scripts Holding Co. (a)(b)

    21,276        1,634,422   

HCA Holdings, Inc. (a)(b)

    71,694        5,022,165   

HealthEquity, Inc. (a)

    6,200        126,480   

McKesson Corp. (b)

    35,700        7,261,737   

Premier, Inc., Class A (a)

    30,900        1,031,442   

Team Health Holdings, Inc. (a)(b)

    29,500        1,844,930   

UnitedHealth Group, Inc. (b)

    90,334        8,582,633   

Universal Health Services, Inc., Class B (b)

    27,900        2,893,509   

WellPoint, Inc. (b)

    13,700        1,735,653   
   

 

 

 
              45,842,715   

Health Care Technology — 0.7%

   

Cerner Corp. (a)(b)

    36,200        2,292,908   

Life Sciences Tools & Services — 3.9%

   

Charles River Laboratories International, Inc. (a)

    47,600        3,006,416   

ICON PLC (a)(b)

    14,000        736,540   

Illumina, Inc. (a)(b)

    25,500        4,910,790   

Thermo Fisher Scientific, Inc. (b)

    30,600        3,597,642   
   

 

 

 
              12,251,388   

Pharmaceuticals — 34.4%

   

AbbVie, Inc. (b)(d)

    158,184        10,038,357   

Achaogen, Inc. (a)

    13,794        146,492   

Actavis PLC (a)(b)

    29,324        7,118,108   

Allergan, Inc. (b)

    32,900        6,252,974   

AstraZeneca PLC

    68,700        5,018,402   

Bayer AG

    24,600        3,518,332   

Bristol-Myers Squibb Co. (b)

    101,100        5,883,009   

Catalent, Inc. (a)

    24,100        627,323   

Chugai Pharmaceutical Co. Ltd.

    56,600        1,769,471   

Dermira, Inc. (a)

    12,500        192,125   

Eli Lilly & Co.

    83,500        5,538,555   

Intra-Cellular Therapies, Inc. (a)

    66,181        1,025,806   

Jazz Pharmaceuticals PLC (a)(b)

    6,600        1,114,344   

Johnson & Johnson (b)

    82,370        8,877,839   

Mallinckrodt PLC (a)(b)

    33,600        3,097,248   

Merck & Co., Inc. (b)

    156,500        9,067,610   

Mylan, Inc. (a)(b)

    67,000        3,587,850   

Novartis AG

    90,600        8,407,940   

Pacira Pharmaceuticals, Inc. (a)(b)

    3,300        306,306   

Perrigo Co. PLC (b)

    27,100        4,375,295   

Pfizer, Inc. (b)

    131,000        3,923,450   

Phibro Animal Health Corp., Class A

    21,000        544,320   

Roche Holding AG

    14,600        4,308,484   
 

 

66    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)      BlackRock Health Sciences Trust (BME)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Pharmaceuticals (concluded)

     

Salix Pharmaceuticals Ltd. (a)(b)

     9,700       $ 1,395,345   

Shire PLC — ADR (b)

     14,700         2,937,060   

Teva Pharmaceutical Industries Ltd. — ADR (b)

     85,200         4,811,244   

Valeant Pharmaceuticals International, Inc. (a)(b)

     24,400         3,246,176   

Zoetis, Inc. (b)

     27,600         1,025,616   
     

 

 

 
                108,155,081   

Total Common Stocks — 100.9%

              316,861,040   
     
Preferred Stocks                

ProNAi Therapeutics, Inc., Series D (Acquired 4/15/14,
cost $270,735) (a)(c)

     386,764         270,735   

Spark Therapeutics (Acquired 5/23/14,
cost $154,641) (a)(c)

     96,050         154,642   
     

 

 

 
                425,377   

Total Preferred Stocks — 0.2%

  

     425,377   

Total Long-Term Investments

(Cost — $202,207,532) — 101.1%

  

  

     317,286,417   
     
                  
Short-Term Securities    Shares      Value  

BlackRock Liquidity Funds, TempFund,
Institutional Class, 0.07% (e)(f)

     433,398       $ 433,398   

Total Short-Term Securities

(Cost — $433,398) — 0.1%

  

  

     433,398   

Total Investments Before Options Written

(Cost — $202,640,930) — 101.2%

  

  

     317,719,815   
     
Options Written                

(Premiums Received — $3,053,730) — (1.3)%

  

     (4,206,661

Total Investments Net of Options Written — 99.9%

  

     313,513,154   

Other Assets Less Liabilities — 0.1%

  

     419,851   
     

 

 

 

Net Assets — 100.0%

      $ 313,933,005   
     

 

 

 
 
Notes to Schedule of Investments

 

(a) Non-income producing security.

 

(b) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(c) Restricted securities as to resale. As of October 31, 2014 the Trust held 0.9% of its net assets, with current market value of $2,699,779 and the original cost of $1,278,859, in these securities.

 

(d) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(e) Represents the current yield as of report date.

 

(f) Investments in issuers considered to be an affiliate of the Trust during the year ended October 31, 2014, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliates    Shares Held at
October 31, 2013
    

Net

Activity

    Shares Held at
October 31, 2014
     Income  

BlackRock Liquidity Funds, TempFund, Institutional Class

     1,144,662         (711,264     433,398       $ 2,339   

BlackRock Liquidity Series, LLC Money Market Series

                          $ 8,206   

 

Ÿ  

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

 

Ÿ  

Exchange-traded options written as of October 31, 2014 were as follows:

 

Description    Put/
Call
    

Strike

Price

    

Expiration

Date

   Contracts     

Market

Value

 

Dyax Corp.

     Call         USD         11.05       11/03/14      196       $ (25,907

Incyte Corp.

     Call         USD         56.00       11/03/14      20         (22,122

Universal Health Services, Inc., Class B

     Call         USD         111.00       11/03/14      100         (8

Cardinal Health, Inc.

     Call         USD         77.55       11/06/14      207         (26,288

Cigna Corp.

     Call         USD         96.65       11/06/14      85         (26,080

Baxter International, Inc.

     Call         USD         73.00       11/07/14      82         (410

Biogen Idec, Inc.

     Call         USD         345.00       11/07/14      51         (3,825

Express Scripts Holding Co.

     Call         USD         73.50       11/07/14      36         (12,240

Gilead Sciences, Inc.

     Call         USD         113.00       11/07/14      100         (18,350

Mallinckrodt PLC

     Call         USD         94.00       11/07/14      65         (5,200

Merck & Co., Inc.

     Call         USD         61.50       11/07/14      314         (1,413

Pfizer, Inc.

     Call         USD         29.50       11/07/14      103         (4,429

Puma Biotechnology, Inc.

     Call         USD         280.00       11/07/14      43         (11,180

Teva Pharmaceutical Industries Ltd. — ADR

     Call         USD         55.00       11/07/14      70         (11,620

Aetna, Inc.

     Call         USD         82.00       11/14/14      99         (16,088

 

     ANNUAL REPORT    OCTOBER 31, 2014    67


Schedule of Investments (continued)    BlackRock Health Sciences Trust (BME)

 

Exchange-traded options written as of October 31, 2014 were as follows: (continued)

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts      Market
Value
 

Alexion Pharmaceuticals, Inc.

     Call         USD         190.00       11/14/14      200       $ (107,000

Allergan, Inc.

     Call         USD         180.00       11/14/14      125         (146,875

Amgen, Inc.

     Call         USD         149.00       11/14/14      215         (270,360

Celgene Corp.

     Call         USD         101.00       11/14/14      380         (250,800

HCA Holdings, Inc.

     Call         USD         70.50       11/14/14      430         (76,325

Illumina, Inc.

     Call         USD         190.00       11/14/14      100         (60,000

Johnson & Johnson

     Call         USD         105.00       11/14/14      300         (87,000

Medtronic, Inc.

     Call         USD         66.00       11/14/14      125         (29,688

Medtronic, Inc.

     Call         USD         66.50       11/14/14      120         (23,880

Merck & Co., Inc.

     Call         USD         63.00       11/14/14      88         (792

Regeneron Pharmaceuticals, Inc.

     Call         USD         410.00       11/14/14      50         (30,000

UnitedHealth Group, Inc.

     Call         USD         92.00       11/14/14      350         (126,000

Valeant Pharmaceuticals International, Inc.

     Call         USD         131.00       11/14/14      50         (25,750

Acceleron Pharma, Inc.

     Call         USD         35.00       11/18/14      50         (16,272

Agios Pharmaceuticals, Inc.

     Call         USD         80.00       11/18/14      70         (47,258

BioMarin Pharmaceutical, Inc.

     Call         USD         82.00       11/18/14      200         (60,758

Abbott Laboratories

     Call         USD         43.00       11/22/14      300         (30,300

AbbVie, Inc.

     Call         USD         62.50       11/22/14      290         (55,100

Acorda Therapeutics, Inc.

     Call         USD         37.00       11/22/14      50         (4,750

Actavis PLC

     Call         USD         230.00       11/22/14      50         (74,750

Actavis PLC

     Call         USD         240.00       11/22/14      51         (40,800

Alere, Inc.

     Call         USD         39.00       11/22/14      125         (23,125

Align Technology, Inc.

     Call         USD         55.00       11/22/14      38         (1,710

AmerisourceBergen Corp.

     Call         USD         77.50       11/22/14      33         (26,070

AmerisourceBergen Corp.

     Call         USD         80.00       11/22/14      34         (18,530

Baxter International, Inc.

     Call         USD         75.00       11/22/14      82         (410

Becton Dickinson and Co.

     Call         USD         125.00       11/22/14      60         (27,600

BioCryst Pharmaceuticals, Inc.

     Call         USD         14.00       11/22/14      60         (1,920

Bluebird Bio, Inc.

     Call         USD         50.00       11/22/14      12         (960

Boston Scientific Corp.

     Call         USD         13.00       11/22/14      400         (18,600

Celgene Corp.

     Call         USD         107.00       11/22/14      88         (25,168

Cigna Corp.

     Call         USD         95.00       11/22/14      88         (44,660

Clovis Oncology, Inc.

     Call         USD         60.00       11/22/14      75         (41,250

The Cooper Cos., Inc.

     Call         USD         160.00       11/22/14      46         (31,740

Covidien PLC

     Call         USD         92.50       11/22/14      98         (30,380

Covidien PLC

     Call         USD         95.00       11/22/14      145         (23,562

Express Scripts Holding Co.

     Call         USD         75.00       11/22/14      37         (8,936

Gilead Sciences, Inc.

     Call         USD         110.00       11/22/14      77         (39,848

ICON PLC

     Call         USD         55.00       11/22/14      50         (3,500

Insulet Corp.

     Call         USD         40.00       11/22/14      30         (12,150

Intuitive Surgical, Inc.

     Call         USD         490.00       11/22/14      11         (18,865

Jazz Pharmaceuticals PLC

     Call         USD         180.00       11/22/14      25         (6,188

Johnson & Johnson

     Call         USD         105.00       11/22/14      36         (11,340

Karyopharm Therapeutics, Inc.

     Call         USD         40.00       11/22/14      50         (19,500

Karyopharm Therapeutics, Inc.

     Call         USD         45.00       11/22/14      50         (8,750

Mallinckrodt PLC

     Call         USD         95.00       11/22/14      52         (9,360

McKesson Corp.

     Call         USD         200.00       11/22/14      126         (76,860

Medivation, Inc.

     Call         USD         98.00       11/22/14      62         (66,114

Merck & Co., Inc.

     Call         USD         57.50       11/22/14      72         (11,304

Mylan, Inc.

     Call         USD         50.00       11/22/14      100         (38,500

Mylan, Inc.

     Call         USD         55.00       11/22/14      200         (18,100

Neurocrine Biosciences, Inc.

     Call         USD         18.00       11/22/14      225         (32,063

Pacira Pharmaceuticals, Inc.

     Call         USD         110.00       11/22/14      11         (990

Perrigo Co. PLC

     Call         USD         150.00       11/22/14      94         (122,200

Pfizer, Inc.

     Call         USD         31.00       11/22/14      350         (1,575

Salix Pharmaceuticals Ltd.

     Call         USD         159.00       11/22/14      41         (9,477

Seattle Genetics, Inc.

     Call         USD         45.00       11/22/14      153         (5,355

Stryker Corp.

     Call         USD         85.00       11/22/14      102         (33,915

Team Health Holdings, Inc.

     Call         USD         60.00       11/22/14      100         (34,500

Teva Pharmaceutical Industries Ltd. — ADR

     Call         USD         55.00       11/22/14      230         (44,965

Thermo Fisher Scientific, Inc.

     Call         USD         125.00       11/22/14      105         (3,412

Thoratec Corp.

     Call         USD         29.00       11/22/14      45         (2,362

Valeant Pharmaceuticals International, Inc.

     Call         USD         135.00       11/22/14      40         (15,800

 

68    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)      BlackRock Health Sciences Trust (BME)   

 

Exchange-traded options written as of October 31, 2014 were as follows: (concluded)

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts      Market
Value
 

Vertex Pharmaceuticals, Inc.

     Call         USD         120.00       11/22/14      10       $ (1,275

Vertex Pharmaceuticals, Inc.

     Call         USD         130.00       11/22/14      45         (13,050

Zoetis, Inc.

     Call         USD         37.00       11/22/14      94         (10,340

Shire PLC — ADR

     Call         USD         195.00       12/05/14      52         (57,200

WellPoint, Inc.

     Call         USD         123.00       12/05/14      47         (24,910

DENTSPLY International, Inc.

     Call         USD         46.00       12/15/14      45         (21,757

Becton Dickinson and Co.

     Call         USD         125.00       12/20/14      46         (23,920

Boston Scientific Corp.

     Call         USD         13.00       12/20/14      385         (23,870

Bristol-Myers Squibb Co.

     Call         USD         60.00       12/20/14      400         (47,200

Celldex Therapeutics, Inc.

     Call         USD         18.00       12/20/14      80         (9,600

Cerner Corp.

     Call         USD         60.00       12/20/14      125         (51,250

DexCom, Inc.

     Call         USD         45.00       12/20/14      80         (25,200

Merck & Co., Inc.

     Call         USD         57.50       12/20/14      72         (13,392

Vertex Pharmaceuticals, Inc.

     Call         USD         110.00       12/20/14      51         (39,525

Zimmer Holdings, Inc.

     Call         USD         105.00       12/20/14      47         (33,370

Receptos, Inc.

     Call         USD         96.00       1/02/15      56         (85,809

Receptos, Inc.

     Put         USD         80.00       11/22/14      38         (1,425

Receptos, Inc.

     Put         USD         85.00       11/22/14      36         (2,250

Receptos, Inc.

     Put         USD         90.00       11/22/14      34         (4,675

Total

                  $ (3,211,250
                 

 

 

 

 

Ÿ  

Over-the-counter options written as of October 31, 2014 were as follows:

 

Description   Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts      Market
Value
 

Abbott Laboratories

  UBS AG      Call         USD         44.23       11/03/14      19,600       $ (788

Biogen Idec, Inc.

  Credit Suisse International      Call         USD         352.11       11/03/14      5,200         (3

Eli Lilly & Co.

  Citibank N.A.      Call         USD         67.27       11/03/14      28,700         (2,565

Infinity Pharmaceuticals, Inc.

  Deutsche Bank AG      Call         USD         16.75       11/03/14      18,500         (8

St. Jude Medical, Inc.

  UBS AG      Call         USD         63.88       11/03/14      15,700         (9,815

Catalent, Inc.

  Morgan Stanley & Co. International PLC      Call         USD         24.98       11/05/14      17,300         (20,817

Envision Healthcare Holdings, Inc.

  Morgan Stanley & Co. International PLC      Call         USD         37.32       11/05/14      20,000         (387

Genomic Health, Inc.

  Goldman Sachs International      Call         USD         31.76       11/05/14      5,000         (22,904

Isis Pharmaceuticals, Inc.

  Morgan Stanley & Co. International PLC      Call         USD         44.00       11/05/14      6,000         (14,302

Premier, Inc., Class A

  Goldman Sachs International      Call         USD         31.85       11/05/14      11,000         (16,978

Roche Holding AG

  Morgan Stanley & Co. International PLC      Call         CHF         285.93       11/05/14      5,000         (7,340

AbbVie, Inc.

  Goldman Sachs International      Call         USD         59.29       11/06/14      25,400         (106,099

HCA Holdings, Inc.

  Morgan Stanley & Co. International PLC      Call         USD         74.13       11/06/14      13,500         (1,223

Stryker Corp.

  Citibank N.A.      Call         USD         85.53       11/06/14      12,000         (27,066

AstraZeneca PLC

  Morgan Stanley & Co. International PLC      Call         GBP         43.75       11/07/14      11,500         (37,416

Actelion Ltd.

  Goldman Sachs International      Call         CHF         110.86       11/10/14      3,300         (15,233

Bayer AG

  Goldman Sachs International      Call         EUR         107.18       11/11/14      8,500         (75,607

Chugai Pharmaceutical Co. Ltd.

  Goldman Sachs International      Call         JPY         3,240.99       11/11/14      20,000         (48,277

PW Medtech Group Ltd.

  Morgan Stanley & Co. International PLC      Call         HKD         4.38       11/11/14      165,000         (11,153

PW Medtech Group Ltd.

  Goldman Sachs International      Call         HKD         4.48       11/14/14      165,000         (9,140

Actelion Ltd.

  Goldman Sachs International      Call         CHF         104.68       11/18/14      1,200         (12,802

Alkermes PLC

  UBS AG      Call         USD         46.50       11/18/14      22,000         (101,487

Charles River Laboratories International, Inc.

  Morgan Stanley & Co. International PLC      Call         USD         63.75       11/18/14      18,000         (14,547

Edwards Lifesciences Corp.

  Citibank N.A.      Call         USD         117.50       11/18/14      14,000         (63,893

Incyte Corp.

  UBS AG      Call         USD         57.00       11/18/14      10,000         (103,527

Coloplast A/S, Class B

  Bank of America N.A.      Call         DKK         462.45       11/19/14      8,700         (80,918

Novartis AG

  UBS AG      Call         CHF         85.02       11/25/14      16,500         (77,951

AstraZeneca PLC

  UBS AG      Call         GBP         43.29       12/10/14      12,500         (62,076

Novartis AG

  Deutsche Bank AG      Call         CHF         87.77       1/06/15      15,500         (51,074

Alkermes PLC

  Citibank N.A.      Put         USD         42.03       11/10/14      20,500         (15

Total

                    $ (995,411
                   

 

 

 

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value

 

     ANNUAL REPORT    OCTOBER 31, 2014    69


Schedule of Investments (concluded)      BlackRock Health Sciences Trust (BME)   

 

 

measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, please refer to Note 2 of the Notes to Financial Statements.

The following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy as of October 31, 2014:

 

      Level 1   Level 2   Level 3    Total

Assets:

                 

Investments:

                 

Long-Term Investments:

                 

Common Stocks:

                 

Biotechnology.

     $ 84,413,292       $ 3,822,640                $ 88,235,932  

Chemicals

       2,691,018                          2,691,018  

Health Care Equipment & Supplies

       54,652,930         2,739,068                  57,391,998  

Health Care Providers & Services

       45,842,715                          45,842,715  

Health Care Technology

       2,292,908                          2,292,908  

Life Sciences Tools & Services

       12,251,388                          12,251,388  

Pharmaceuticals

       85,132,452         23,022,629                  108,155,081  

Preferred Stocks

                     $ 425,377          425,377  

Short-Term Securities

       433,398                          433,398  

Total

     $ 287,710,101       $ 29,584,337       $ 425,377        $ 317,719,815  
                 
      Level 1   Level 2   Level 3    Total

Derivative Financial Instruments1

                 

Liabilities:

                 

Equity contracts.

     $ (2,803,401 )     $ (1,403,260 )              $ (4,206,661 )

1    Derivative financial instruments are options written, which are shown at value.

                 
The Trust may hold assets in which the fair value approximates the carrying amount for financial statement purposes. As of October 31, 2014, such assets are categorized within the disclosure hierarchy as follows:    
                 
      Level 1   Level 2   Level 3    Total

Assets:

                 

Foreign currency at value

     $ 4,526                        $ 4,526  

Cash collateral on exchange-traded options written

       961,801                          961,801  

Total

     $ 966,327                        $ 966,327  
Transfers between Level 1 and Level 2 were as follows:   
                 
      Transfers into
Level 1
  Transfers out
of Level 1 1
  Transfers into
Level 2 1
   Transfers out
of Level 2

Assets:

                 

Long-Term Investments:

                 

Common Stocks

               $3,701,121         $3,701,121           

1    External pricing service used to reflect any significant market movements between the time the Trust valued such foreign securities and the earlier closing of foreign markets.

       

 

See Notes to Financial Statements.

 

70    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments October 31, 2014    BlackRock International Growth and Income Trust (BGY)
   (Percentages shown are based on Net Assets)

 

Common Stocks    Shares      Value  

Belgium — 2.6%

     

Anheuser-Busch InBev NV

     199,046       $ 22,073,061   

Canada — 4.8%

     

Element Financial Corp. (a)(b)

     936,300         10,882,862   

Gildan Activewear, Inc. (b)

     109,600         6,529,031   

Lundin Mining Corp. (a)

     1,907,300         8,512,239   

MEG Energy Corp. (a)

     302,100         7,290,821   

Suncor Energy, Inc.

     122,500         4,349,807   

Tourmaline Oil Corp. (a)

     109,072         3,912,676   
     

 

 

 
                41,477,436   

China — 8.4%

     

Alibaba Group Holding — ADR (a)(b)

     108,674         10,715,256   

Anhui Conch Cement Co. Ltd. (c)

     1,571,940         5,147,890   

Baidu, Inc. — ADR (a)(b)

     100,920         24,096,668   

Beijing Enterprises Water Group Ltd.

     8,542,000         6,116,036   

CSR Corp Ltd., Class H (Acquired 7/29/14,
cost $6,077,241) (d)

     6,683,000         6,799,207   

Qunar Cayman Islands Ltd. — ADR (a)

     581,700         15,647,730   

Tencent Holdings Ltd.

     272,300         4,339,862   
     

 

 

 
                72,862,649   

Denmark — 0.6%

     

Novo Nordisk A/S, Class B

     117,500         5,311,320   

France — 4.7%

     

BNP Paribas SA

     100,200         6,296,767   

Schneider Electric SE

     108,600         8,556,165   

Societe Generale SA

     199,000         9,590,011   

Unibail-Rodamco SE — REIT

     29,100         7,461,449   

Vivendi SA

     357,900         8,743,237   
     

 

 

 
                40,647,629   

Germany — 3.7%

     

Bayer AG

     96,900         13,858,794   

Continental AG

     28,200         5,554,430   

Daimler AG

     88,200         6,876,855   

DMG MORI SEIKI AG

     133,254         3,411,927   

Henkel AG & Co. KGaA

     26,700         2,642,444   
     

 

 

 
                32,344,450   

Greece — 0.3%

     

Alpha Bank AE (a)

     3,808,117         2,482,580   

Hong Kong — 3.2%

     

AIA Group Ltd.

     2,032,152         11,340,271   

Melco Crown Entertainment Ltd. — ADR (b)

     409,400         11,111,116   

MTR Corp. Ltd.

     1,192,000         4,860,359   
     

 

 

 
                27,311,746   

India — 3.1%

     

HDFC Bank Ltd.

     578,202         9,361,296   

ITC Ltd.

     873,700         5,054,369   

MakeMyTrip Ltd. (a)

     25,580         770,853   

Tata Motors Ltd. — ADR (b)

     250,300         11,789,130   
     

 

 

 
                26,975,648   

Indonesia — 1.0%

     

Global Mediacom Tbk PT

     23,528,302         3,818,656   

Matahari Department Store Tbk PT

     3,998,580         4,841,372   
     

 

 

 
                8,660,028   

Ireland — 5.2%

     

Dalata Hotel Group PLC (a)

     1,128,668         4,101,727   

Green REIT PLC (a)

     6,756,926         10,668,964   

Kingspan Group PLC

     303,813         4,784,491   

Ryanair Holdings PLC — ADR (a)(b)

     243,900         13,546,206   

Shire PLC — ADR (b)

     58,800         11,748,240   
     

 

 

 
                44,849,628   
Common Stocks    Shares      Value  

Israel — 2.0%

     

Teva Pharmaceutical Industries Ltd. — ADR (b)

     311,700       $ 17,601,699   

Italy — 2.6%

     

Banca Generali SpA

     321,400         8,527,629   

UniCredit SpA

     1,988,000         14,398,520   
     

 

 

 
                22,926,149   

Japan — 12.9%

     

FANUC Corp.

     65,900         11,613,938   

Japan Tobacco, Inc.

     317,800         10,843,036   

Kenedix Office Investment Corp. — REIT

     1,314         7,026,487   

Makita Corp.

     179,500         9,891,876   

Mitsubishi Estate Co. Ltd.

     505,000         12,864,753   

Nabtesco Corp.

     493,900         11,952,630   

ORIX Corp.

     453,900         6,300,243   

Recruit Holdings Co. Ltd. (a)

     57,500         1,891,498   

Shinsei Bank Ltd.

     4,147,000         9,319,860   

SMC Corp.

     32,800         9,303,177   

Tokyo Tatemono Co. Ltd.

     1,050,500         9,170,185   

Toyota Motor Corp.

     192,200         11,566,060   
     

 

 

 
                111,743,743   

Mexico — 0.7%

     

Cemex SAB de CV — ADR (a)(b)

     503,848         6,197,330   

Netherlands — 3.1%

     

Aalberts Industries NV

     215,052         5,732,373   

ASML Holding NV

     83,900         8,365,858   

Royal Dutch Shell PLC, A Shares

     358,100         12,805,791   
     

 

 

 
                26,904,022   

New Zealand — 0.7%

     

Xero Ltd. (a)

     164,700         2,042,904   

Xero Ltd. (Acquired 10/15/13, cost $4,566,935) (a)(d)

     300,605         3,728,641   
     

 

 

 
                5,771,545   

Norway — 0.4%

     

Statoil ASA

     166,500         3,810,425   

Panama — 0.7%

     

Copa Holdings SA, Class A

     54,200         6,337,064   

Peru — 0.6%

     

Credicorp Ltd. (b)

     33,500         5,393,500   

South Africa — 1.2%

     

Naspers Ltd., N Shares

     82,500         10,290,154   

South Korea — 0.5%

     

Coway Co. Ltd.

     57,300         4,380,398   

Hyundai Development Co.-Engineering & Construction

     6,364         240,273   
     

 

 

 
                4,620,671   

Spain — 2.4%

     

Abengoa Yield PLC (a)(b)

     97,100         3,155,750   

NH Hotel Group SA (a)

     2,109,078         9,629,848   

Sacyr SA (a)

     1,781,450         7,827,394   
     

 

 

 
                20,612,992   

Sweden — 1.5%

     

Nordea Bank AB

     1,041,236         13,392,124   

Switzerland — 10.5%

     

Actelion Ltd.

     135,715         16,163,008   

Novartis AG

     341,600         31,701,461   

Roche Holding AG

     145,423         42,914,564   
     

 

 

 
                90,779,033   
 

 

See Notes to Financial Statements.

     ANNUAL REPORT    OCTOBER 31, 2014    71


Schedule of Investments (continued)      BlackRock International Growth and Income Trust (BGY)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Taiwan — 1.6%

  

Hermes Microvision, Inc.

     114,437       $ 5,381,317   

Hon Hai Precision Industry Co. Ltd.

     2,590,600         8,199,248   
     

 

 

 
                13,580,565   

United Kingdom — 15.6%

  

ARM Holdings PLC

     840,000         11,892,136   

AstraZeneca PLC

     260,000         18,992,495   

Crest Nicholson Holdings PLC

     1,615,546         8,689,064   

Foxtons Group PLC

     2,203,118         5,960,845   

Hargreaves Lansdown PLC

     215,177         3,428,670   

Imperial Tobacco Group PLC

     488,900         21,238,625   

Liberty Global PLC, Class A (a)(b)

     320,200         14,559,494   

Lloyds Banking Group PLC (a)

     5,364,900         6,625,032   

Metro Bank PLC (Acquired 1/15/14,
cost $4,917,700) (a)(d)

     231,026         4,811,810   

Nomad Holdings Ltd. (a)

     475,571         5,480,956   

Polypipe Group PLC

     2,282,709         8,779,626   

Prudential PLC

     397,200         9,197,534   

SABMiller PLC

     117,200         6,629,152   

Whitbread PLC

     133,700         9,345,719   
     

 

 

 
                135,631,158   

United States — 3.9%

  

EOG Resources, Inc. (b)(e)

     77,100         7,328,355   

Euronet Worldwide, Inc. (a)(b)(e)

     84,207         4,519,390   

Las Vegas Sands Corp. (b)

     69,000         4,295,940   

Samsonite International SA

     3,602,100         11,968,788   

Schlumberger Ltd. (b)

     61,480         6,065,617   
     

 

 

 
                34,178,090   

Total Common Stocks — 98.5%

              854,766,439   
     
Investment Companies                

United Kingdom — 0.8%

     

Kennedy Wilson Europe Real Estate PLC

     429,439         7,144,493   
     
                  
Preferred Stocks    Shares      Value  

India — 0.5%

  

Snapdeal.com, Series F (Acquired 5/07/14,
cost $2,799,733), 0.00% (a)(d)

     398       $ 2,739,556   

Snapdeal.com, Series G (Acquired 10/31/14, cost $1,112,870), 0.00% (a)(d)

     132         1,110,310   

Total Preferred Stocks — 0.5%

              3,849,866   
     
Warrants (f)                

United Kingdom — 0.0%

  

Nomad Holdings Ltd., Expires 4/10/17 (a)

     475,571         254,430   

Total Long-Term Investments

(Cost — $816,331,186) — 99.8%

              866,015,228   
     
Short-Term Securities                

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.07% (g)(h)

     19,071,027         19,071,027   
      Beneficial
Interest
(000)
         

BlackRock Liquidity Series, LLC Money Market Series, 0.19% (g)(h)(i)

   $ 1,855         1,854,728   

Total Short-Term Securities

(Cost — $20,925,755) — 2.4%

              20,925,755   

Total Investments Before Options Written

(Cost — $837,256,941) — 102.2%

              886,940,983   
     
Options Written                

(Premiums Received — $8,615,856) — (1.9)%

              (16,460,929

Total Investments Net of Options Written — 100.3%

  

     870,480,054   

Liabilities in Excess of Other Assets — (0.3)%

  

     (2,494,184
     

 

 

 

Net Assets — 100.0%

  

   $ 867,985,870   
     

 

 

 
 
Notes to Schedule of Investments

 

(a) Non-income producing security.

 

(b) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(c) Security, or a portion of security, is on loan.

 

(d) Restricted securities as to resale. As of October 31, 2014 the Trust held 2.2% of its net assets, with a current market value of $19,189,524 and its original cost of $19,474,479, in the securities.

 

(e) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(f) Warrants entitle the Trust to purchase a predetermined number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date of the warrants, if any.

 

(g) Investments in issuers considered to be an affiliate of the Trust during the year ended October 31, 2014, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliates   

Shares/

Beneficial Interest

Held at

October 31, 2013

    

Net

Activity

   

Shares/

Beneficial Interest

Held at

October 31, 2014

     Income  

BlackRock Liquidity Funds, TempFund, Institutional Class

     22,346,730         (3,275,703     19,071,027       $ 10,701   

BlackRock Liquidity Series, LLC, Money Market Series

           $ 1,854,728      $ 1,854,728       $ 145,293   

 

See Notes to Financial Statements.

 

72    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)      BlackRock International Growth and Income Trust (BGY)   

 

 

(h) Represents the current yield as of report date.

 

(i) Security was purchased with the cash collateral from loaned securities. The Trust may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

 

Ÿ  

Exchange-traded options written as of October 31, 2014 were as follows:

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts      Market
Value
 

Cemex SAB de CV — ADR

     Call         USD         13.35       11/05/14      1,400       $ (4

Baidu, Inc. — ADR

     Call         USD         225.00       11/07/14      35         (51,888

Melco Crown Entertainment Ltd. — ADR

     Call         USD         26.50       11/07/14      828         (103,500

Melco Crown Entertainment Ltd. — ADR

     Call         USD         28.00       11/07/14      957         (55,028

Teva Pharmaceutical Industries Ltd. — ADR

     Call         USD         54.50       11/07/14      390         (86,580

Alibaba Group Holding — ADR

     Call         USD         92.00       11/14/14      199         (162,185

Schlumberger Ltd.

     Call         USD         100.00       11/14/14      198         (25,443

Abengoa Yield PLC

     Call         USD         40.00       11/22/14      270         (10,800

Alibaba Group Holding — ADR

     Call         USD         100.00       11/22/14      199         (79,600

Alibaba Group Holding — ADR

     Call         USD         95.00       11/22/14      199         (131,340

Baidu, Inc. — ADR

     Call         USD         230.00       11/22/14      157         (186,830

Credicorp Ltd.

     Call         USD         155.00       11/22/14      92         (62,100

Credicorp Ltd.

     Call         USD         160.00       11/22/14      90         (29,475

Element Financial Corp.

     Call         CAD         13.00       11/22/14      910         (30,278

Element Financial Corp.

     Call         CAD         14.00       11/22/14      845         (4,873

EOG Resources, Inc.

     Call         USD         102.00       11/22/14      212         (19,716

Euronet Worldwide, Inc.

     Call         USD         50.00       11/22/14      260         (109,200

Gildan Activewear, Inc.

     Call         CAD         64.00       11/22/14      600         (188,989

Las Vegas Sands Corp.

     Call         USD         66.00       11/22/14      180         (6,750

Liberty Global PLC, Class A

     Call         USD         45.00       11/22/14      225         (33,750

Liberty Global PLC, Class A

     Call         USD         47.50       11/22/14      225         (11,812

Ryanair Holdings PLC — ADR

     Call         USD         55.00       11/22/14      470         (108,100

Schlumberger Ltd.

     Call         USD         110.00       11/22/14      29         (160

Tata Motors Ltd. — ADR

     Call         USD         44.00       11/22/14      373         (136,145

Teva Pharmaceutical Industries Ltd. — ADR

     Call         USD         55.00       11/22/14      1,170         (228,735

Teva Pharmaceutical Industries Ltd. — ADR

     Call         USD         56.00       11/22/14      154         (20,020

Baidu, Inc. — ADR

     Call         USD         225.00       12/05/14      206         (368,225

Las Vegas Sands Corp.

     Call         USD         62.00       12/05/14      200         (47,600

Melco Crown Entertainment Ltd. — ADR

     Call         USD         26.50       12/05/14      466         (83,880

Shire PLC — ADR

     Call         USD         195.00       12/05/14      153         (168,300

Tata Motors Ltd. — ADR

     Call         USD         46.00       12/05/14      184         (48,300

Liberty Global PLC, Class A

     Call         USD         43.25       12/15/14      1,220         (383,599

Baidu, Inc. — ADR

     Call         USD         230.00       12/20/14      157         (237,462

Shire PLC — ADR

     Call         USD         205.00       12/20/14      110         (89,100

Liberty Global PLC, Class A

     Call         USD         47.50       1/17/15      90         (13,275

Total

                  $ (3,323,042
                 

 

 

 

 

Ÿ  

Over-the-counter options written as of October 31, 2014 were as follows:

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts      Market
Value
 

CSR Corp Ltd., Class H1

   Goldman Sachs International      Call         HKD         7.16       10/29/14      1,750,000       $ (165,316

Element Financial Corp.

   Citibank N.A.      Call         CAD         14.32       11/03/14      106,000         (1

Qunar Cayman Islands Ltd. — ADR

   Citibank N.A.      Call         USD         31.07       11/03/14      122,000         (1

Schlumberger Ltd.

   Citibank N.A.      Call         USD         106.02       11/03/14      2,900         (1

DMG MORI SEIKI AG

   Deutsche Bank AG      Call         EUR         20.75       11/04/14      26,000         (7,317

DMG MORI SEIKI AG

   Deutsche Bank AG      Call         EUR         23.24       11/04/14      23,500         (75

Euronet Worldwide, Inc.

   Deutsche Bank AG      Call         USD         51.00       11/04/14      20,200         (55,462

Aalberts Industries NV

   Bank of America N.A.      Call         EUR         21.55       11/05/14      27,500         (4,328

Anheuser-Busch InBev NV

   Deutsche Bank AG      Call         EUR         85.23       11/05/14      52,000         (223,329

Anheuser-Busch InBev NV

   Goldman Sachs International      Call         EUR         84.95       11/05/14      5,700         (26,356

ARM Holdings PLC

   Morgan Stanley & Co. International PLC      Call         GBP         9.13       11/05/14      54,700         (1,672

Bayer AG

   Goldman Sachs International      Call         EUR         111.03       11/05/14      22,200         (93,086

Crest Nicholson Holdings PLC

   Morgan Stanley & Co. International PLC      Call         GBP         3.27       11/05/14      50,000         (8,655

Daimler AG

   Morgan Stanley & Co. International PLC      Call         EUR         60.69       11/05/14      48,600         (107,970

Kingspan Group PLC

   Morgan Stanley & Co. International PLC      Call         EUR         12.87       11/05/14      4,400         (384

Nabtesco Corp.

   UBS AG      Call         JPY         2,580.60       11/05/14      71,500         (88,840

NH Hotel Group SA

   Bank of America N.A.      Call         EUR         3.93       11/05/14      100,000         (1,220

Prudential PLC

   Goldman Sachs International      Call         GBP         13.76       11/05/14      59,500         (69,909

Roche Holding AG

   Morgan Stanley & Co. International PLC      Call         CHF         285.93       11/05/14      79,900         (117,291

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    73


Schedule of Investments (continued)    BlackRock International Growth and Income Trust (BGY)

 

Over-the-counter options written as of October 31, 2014 were as follows: (continued)

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts      Market
Value
 

Shinsei Bank Ltd.

   Goldman Sachs International      Call         JPY         241.06       11/05/14      1,347,000       $ (140,020

Whitbread PLC

   Morgan Stanley & Co. International PLC      Call         GBP         41.92       11/05/14      27,000         (78,061

Henkel AG & Co. KGaA

   Deutsche Bank AG      Call         EUR         84.71       11/06/14      2,700         (45

Lundin Mining Corp.

   Credit Suisse International      Call         CAD         5.07       11/06/14      898,000         (50,730

Societe Generale SA

   Goldman Sachs International      Call         EUR         39.70       11/06/14      104,000         (40,488

Tata Motors Ltd. — ADR

   Citibank N.A.      Call         USD         48.06       11/06/14      82,000         (38,231

AstraZeneca PLC

   Morgan Stanley & Co. International PLC      Call         GBP         43.75       11/07/14      111,000         (361,145

Beijing Enterprises Water Group Ltd.

   Morgan Stanley & Co. International PLC      Call         HKD         5.51       11/07/14      650,000         (7,618

Kenedix Office Investment Corp. — REIT

   UBS AG      Call         JPY         556,876.91       11/07/14      165         (64,425

Samsonite International SA

   Goldman Sachs International      Call         HKD         26.43       11/07/14      282,000         (6,382

Statoil ASA

   Morgan Stanley & Co. International PLC      Call         NOK         176.49       11/07/14      15,700         (104

Xero Ltd.

   Morgan Stanley & Co. International PLC      Call         NZD         22.63       11/07/14      14,000           

Actelion Ltd.

   Bank of America N.A.      Call         CHF         114.85       11/10/14      9,000         (19,792

Actelion Ltd.

   Goldman Sachs International      Call         CHF         110.86       11/10/14      31,000         (143,097

Cemex SAB de CV — ADR

   Credit Suisse International      Call         USD         12.87       11/10/14      178,400         (3,347

Element Financial Corp.

   Deutsche Bank AG      Call         CAD         14.20       11/10/14      58,500         (337

Imperial Tobacco Group PLC

   Morgan Stanley & Co. International PLC      Call         GBP         27.34       11/10/14      77,000         (45,640

Kingspan Group PLC

   Morgan Stanley & Co. International PLC      Call         EUR         12.87       11/10/14      4,400         (694

MEG Energy Corp.

   Deutsche Bank AG      Call         CAD         35.43       11/10/14      50,000           

Prudential PLC

   Goldman Sachs International      Call         GBP         14.49       11/10/14      65,000         (23,059

Ryanair Holdings PLC — ADR

   Citibank N.A.      Call         USD         56.50       11/10/14      42,000         (39,969

Vivendi SA

   Deutsche Bank AG      Call         EUR         18.21       11/10/14      253,000         (410,249

AIA Group Ltd.

   Citibank N.A.      Call         HKD         41.88       11/11/14      273,000         (55,785

Anhui Conch Cement Co. Ltd.

   UBS AG      Call         HKD         26.67       11/11/14      143,000         (2,075

ARM Holdings PLC

   UBS AG      Call         GBP         8.53       11/11/14      167,000         (97,787

ASML Holding NV

   UBS AG      Call         EUR         75.66       11/11/14      33,900         (172,591

Bayer AG

   Goldman Sachs International      Call         EUR         107.18       11/11/14      31,000         (275,742

Beijing Enterprises Water Group Ltd.

   BNP Paribas S.A.      Call         HKD         5.48       11/11/14      796,000         (13,094

Beijing Enterprises Water Group Ltd.

   Goldman Sachs International      Call         HKD         5.45       11/11/14      536,000         (9,796

Coway Co. Ltd.

   UBS AG      Call         KRW         88,196.98       11/11/14      31,500         (11,188

CSR Corp Ltd., Class H

   Goldman Sachs International      Call         HKD         7.03       11/11/14      1,920,000         (213,238

FANUC Corp.

   Morgan Stanley & Co. International PLC      Call         JPY         19,706.23       11/11/14      29,000         (101,524

Hermes Microvision, Inc.

   Morgan Stanley & Co. International PLC      Call         TWD         1,312.27       11/11/14      62,000         (257,639

Hon Hai Precision Industry Co. Ltd.

   Bank of America N.A.      Call         TWD         98.84       11/11/14      583,000         (10,243

Kenedix Office Investment Corp. — REIT

   Goldman Sachs International      Call         JPY         578,550.00       11/11/14      145         (32,192

Makita Corp.

   Goldman Sachs International      Call         JPY         6,090.77       11/11/14      51,200         (116,701

Mitsubishi Estate Co. Ltd.

   Morgan Stanley & Co. International PLC      Call         JPY         2,312.85       11/11/14      135,000         (659,327

MTR Corp. Ltd.

   Goldman Sachs International      Call         HKD         31.59       11/11/14      160,000         (7,924

Nabtesco Corp.

   Goldman Sachs International      Call         JPY         2,635.20       11/11/14      20,000         (18,066

Naspers Ltd., N Shares

   Deutsche Bank AG      Call         ZAR         1,342.92       11/11/14      12,000         (58,251

NH Hotel Group SA

   Goldman Sachs International      Call         EUR         4.32       11/11/14      50,000         (213

Nordea Bank AB

   Bank of America N.A.      Call         SEK         92.16       11/11/14      187,000         (80,169

Nordea Bank AB

   UBS AG      Call         SEK         91.00       11/11/14      55,000         (31,454

Samsonite International SA

   Citibank N.A.      Call         HKD         25.99       11/11/14      210,000         (11,467

Samsonite International SA

   Morgan Stanley & Co. International PLC      Call         HKD         25.67       11/11/14      210,000         (15,193

Schneider Electric SE

   Deutsche Bank AG      Call         EUR         59.07       11/11/14      24,000         (116,899

SMC Corp.

   Morgan Stanley & Co. International PLC      Call         JPY         30,303.18       11/11/14      13,500         (205,294

Tokyo Tatemono Co. Ltd.

   Citibank N.A.      Call         JPY         859.76       11/11/14      190,000         (204,317

Toyota Motor Corp.

   Goldman Sachs International      Call         JPY         6,517.53       11/11/14      64,000         (159,009

Xero Ltd.

   UBS AG      Call         NZD         21.94       11/11/14      45,000         (8

Hargreaves Lansdown PLC

   Morgan Stanley & Co. International PLC      Call         GBP         9.50       11/13/14      94,000         (75,890

Lloyds Banking Group PLC

   Goldman Sachs International      Call         GBP         0.77       11/13/14      953,000         (25,313

Lloyds Banking Group PLC

   Morgan Stanley & Co. International PLC      Call         GBP         0.78       11/13/14      1,011,000         (16,947

Whitbread PLC

   Goldman Sachs International      Call         GBP         40.23       11/13/14      29,000         (162,279

Whitbread PLC

   Goldman Sachs International      Call         GBP         40.25       11/13/14      17,000         (94,722

Aalberts Industries NV

   Bank of America N.A.      Call         EUR         21.17       11/14/14      24,300         (13,775

AIA Group Ltd.

   UBS AG      Call         HKD         41.76       11/14/14      570,000         (128,370

Anhui Conch Cement Co. Ltd.

   Goldman Sachs International      Call         HKD         25.69       11/14/14      461,000         (24,702

 

See Notes to Financial Statements.

 

74    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)    BlackRock International Growth and Income Trust (BGY)

 

Over-the-counter options written as of October 31, 2014 were as follows: (continued)

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts      Market
Value
 

Beijing Enterprises Water Group Ltd.

   BNP Paribas S.A.      Call         HKD         5.50       11/14/14      796,000       $ (12,516

Beijing Enterprises Water Group Ltd.

   Goldman Sachs International      Call         HKD         5.51       11/14/14      536,000         (8,219

Kenedix Office Investment Corp. — REIT

   Bank of America N.A.      Call         JPY         578,340.00       11/14/14      130         (30,033

Nabtesco Corp.

   Goldman Sachs International      Call         JPY         2,648.11       11/14/14      20,000         (17,389

Nabtesco Corp.

   UBS AG      Call         JPY         2,465.53       11/14/14      45,000         (101,712

Samsonite International SA

   Barclays Bank PLC      Call         HKD         26.21       11/14/14      102,900         (5,105

Samsonite International SA

   Citibank N.A.      Call         HKD         25.85       11/14/14      64,800         (4,472

Samsonite International SA

   Morgan Stanley & Co. International PLC      Call         HKD         25.93       11/14/14      210,000         (13,863

Toyota Motor Corp.

   Morgan Stanley & Co. International PLC      Call         JPY         6,500.06       11/14/14      25,000         (67,299

Actelion Ltd.

   Goldman Sachs International      Call         CHF         104.68       11/18/14      35,000         (373,386

Beijing Enterprises Water Group Ltd.

   UBS AG      Call         HKD         5.27       11/18/14      250,000         (9,875

DMG MORI SEIKI AG

   Goldman Sachs International      Call         EUR         20.80       11/18/14      23,500         (15,348

Element Financial Corp.

   Deutsche Bank AG      Call         CAD         13.65       11/18/14      84,000         (7,946

Henkel AG & Co. KGaA

   Deutsche Bank AG      Call         EUR         80.52       11/18/14      12,000         (16,768

Imperial Tobacco Group PLC

   UBS AG      Call         GBP         26.13       11/18/14      68,000         (133,292

Kenedix Office Investment Corp. — REIT

   Goldman Sachs International      Call         JPY         575,700.00       11/18/14      53         (13,618

Mitsubishi Estate Co. Ltd.

   Morgan Stanley & Co. International PLC      Call         JPY         2,228.44       11/18/14      57,000         (321,218

Cemex SAB de CV — ADR

   Deutsche Bank AG      Call         USD         13.53       11/19/14      58,600         (981

Continental AG

   Goldman Sachs International      Call         EUR         147.27       11/19/14      15,500         (216,802

MTR Corp. Ltd.

   UBS AG      Call         HKD         31.37       11/19/14      163,000         (12,435

Nabtesco Corp.

   UBS AG      Call         JPY         2,465.53       11/19/14      45,000         (102,520

Nabtesco Corp.

   UBS AG      Call         JPY         2,580.60       11/19/14      71,500         (98,458

Samsonite International SA

   UBS AG      Call         HKD         23.42       11/19/14      126,000         (38,581

Shinsei Bank Ltd.

   Goldman Sachs International      Call         JPY         241.06       11/19/14      1,347,000         (158,958

Qunar Cayman Islands Ltd. — ADR

   Morgan Stanley & Co. International PLC      Call         USD         26.34       11/20/14      147,000         (232,580

AIA Group Ltd.

   Barclays Bank PLC      Call         HKD         43.15       11/24/14      273,000         (38,122

Anheuser-Busch InBev NV

   Deutsche Bank AG      Call         EUR         85.07       11/25/14      61,200         (308,941

ARM Holdings PLC

   Morgan Stanley & Co. International PLC      Call         GBP         8.27       11/25/14      75,000         (75,534

Beijing Enterprises Water Group Ltd.

   UBS AG      Call         HKD         5.27       11/25/14      250,000         (10,211

Hargreaves Lansdown PLC

   UBS AG      Call         GBP         9.62       11/25/14      25,000         (19,064

Kenedix Office Investment Corp. — REIT

   UBS AG      Call         JPY         577,942.20       11/25/14      88         (22,599

NH Hotel Group SA

   Bank of America N.A.      Call         EUR         3.65       11/25/14      80,000         (17,461

Novartis AG

   UBS AG      Call         CHF         85.02       11/25/14      95,000         (448,807

Samsonite International SA

   UBS AG      Call         HKD         23.42       11/25/14      126,000         (38,954

Imperial Tobacco Group PLC

   UBS AG      Call         GBP         26.13       11/26/14      68,000         (142,625

Tokyo Tatemono Co. Ltd.

   Goldman Sachs International      Call         JPY         815.36       11/26/14      194,000         (285,375

Imperial Tobacco Group PLC

   Morgan Stanley & Co. International PLC      Call         GBP         26.86       12/01/14      56,000         (81,894

Prudential PLC

   Goldman Sachs International      Call         GBP         14.24       12/01/14      44,000         (36,381

Prudential PLC

   Morgan Stanley & Co. International PLC      Call         GBP         14.30       12/01/14      50,000         (36,464

MTR Corp. Ltd.

   Goldman Sachs International      Call         HKD         30.91       12/02/14      335,000         (44,195

NH Hotel Group SA

   Goldman Sachs International      Call         EUR         3.44       12/02/14      75,000         (29,633

ASML Holding NV

   UBS AG      Call         EUR         76.48       12/03/14      12,200         (62,519

Lloyds Banking Group PLC

   Morgan Stanley & Co. International PLC      Call         GBP         0.78       12/03/14      1,011,000         (30,701

Nordea Bank AB

   Morgan Stanley & Co. International PLC      Call         SEK         92.44       12/03/14      138,100         (69,846

SABMiller PLC

   Goldman Sachs International      Call         GBP         35.05       12/03/14      21,400         (41,631

SABMiller PLC

   Morgan Stanley & Co. International PLC      Call         GBP         34.52       12/03/14      16,100         (40,105

Unibail-Rodamco SE — REIT

   Deutsche Bank AG      Call         EUR         196.48       12/03/14      8,000         (95,704

Aalberts Industries NV

   Deutsche Bank AG      Call         EUR         20.63       12/04/14      24,600         (29,715

Japan Tobacco, Inc.

   Goldman Sachs International      Call         JPY         3,681.55       12/04/14      174,500         (229,442

Kenedix Office Investment Corp. — REIT

   Goldman Sachs International      Call         JPY         570,430.00       12/04/14      88         (28,828

Makita Corp.

   UBS AG      Call         JPY         5,720.45       12/04/14      47,500         (257,991

Mitsubishi Estate Co. Ltd.

   Barclays Bank PLC      Call         JPY         2,378.65       12/04/14      84,000         (361,494

Naspers Ltd., N Shares

   Goldman Sachs International      Call         ZAR         1,300.28       12/04/14      33,500         (324,286

Samsonite International SA

   Goldman Sachs International      Call         HKD         25.11       12/04/14      279,000         (44,364

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    75


Schedule of Investments (continued)    BlackRock International Growth and Income Trust (BGY)

 

Over-the-counter options written as of October 31, 2014 were as follows: (concluded)

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
   Contracts      Market
Value
 

Samsonite International SA

   Morgan Stanley & Co. International PLC      Call         HKD         25.70       12/04/14      186,000       $ (21,704

Samsonite International SA

   Goldman Sachs International      Call         HKD         26.12       12/09/14      250,200         (24,320

Schlumberger Ltd.

   Deutsche Bank AG      Call         USD         95.61       12/09/14      15,400         (73,433

AstraZeneca PLC

   UBS AG      Call         GBP         43.29       12/10/14      33,000         (163,880

Hon Hai Precision Industry Co. Ltd.

   Bank of America N.A.      Call         TWD         95.84       12/10/14      840,000         (84,076

Kenedix Office Investment Corp. — REIT

   UBS AG      Call         JPY         573,959.36       12/10/14      53         (16,715

Royal Dutch Shell PLC, A Shares

   Bank of America N.A.      Call         EUR         28.19       12/10/14      76,000         (66,989

Statoil ASA

   Deutsche Bank AG      Call         NOK         156.06       12/10/14      76,000         (57,817

Tokyo Tatemono Co. Ltd.

   Bank of America N.A.      Call         JPY         810.78       12/10/14      194,000         (293,652

Anhui Conch Cement Co. Ltd.

   UBS AG      Call         HKD         26.41       12/11/14      260,000         (16,485

Beijing Enterprises Water Group Ltd.

   Goldman Sachs International      Call         HKD         5.43       12/11/14      500,000         (15,075

Schneider Electric SE

   Deutsche Bank AG      Call         EUR         61.18       12/11/14      16,000         (57,453

Schneider Electric SE

   Morgan Stanley & Co. International PLC      Call         EUR         59.38       12/11/14      20,000         (105,592

SABMiller PLC

   UBS AG      Call         GBP         33.37       12/12/14      27,000         (100,409

Societe Generale SA

   Morgan Stanley & Co. International PLC      Call         EUR         39.38       12/12/14      24,000         (39,546

Unibail-Rodamco SE — REIT

   Deutsche Bank AG      Call         EUR         197.45       12/12/14      8,000         (93,056

BNP Paribas SA

   Morgan Stanley & Co. International PLC      Call         EUR         50.84       12/16/14      20,000         (39,262

Nordea Bank AB

   Goldman Sachs International      Call         SEK         94.33       12/16/14      92,000         (36,125

Nordea Bank AB

   UBS AG      Call         SEK         93.61       12/16/14      100,000         (45,614

Ryanair Holdings PLC — ADR

   Goldman Sachs International      Call         USD         56.18       12/16/14      45,000         (110,274

NH Hotel Group SA

   Bank of America N.A.      Call         EUR         3.67       12/17/14      75,000         (21,390

SMC Corp.

   Citibank N.A.      Call         JPY         29,566.15       12/18/14      4,600         (113,163

Novartis AG

   Deutsche Bank AG      Call         CHF         87.77       1/06/15      94,000         (309,741

Beijing Enterprises Water Group Ltd.

   Citibank N.A.      Call         HKD         5.55       1/08/15      400,000         (9,465

Imperial Tobacco Group PLC

   Morgan Stanley & Co. International PLC      Put         GBP         27.29       11/05/14      51,600         (32,561

Total

                     $ (13,137,887
                    

 

 

 

1    Underlying security was restricted from trading on October 24, 2014.

       

        

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, please refer to Note 2 of the Notes to Financial Statements.

 

See Notes to Financial Statements.

 

76    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)    BlackRock International Growth and Income Trust (BGY)

 

The following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy as of October 31, 2014:

 

 

      Level 1     Level 2     Level 3      Total  

Assets:

         

Investments:

         

Long-Term Investments:

         

Common Stocks:

         

Belgium

          $ 22,073,061              $ 22,073,061   

Canada

   $ 41,477,436                       41,477,436   

China

     54,799,516        18,063,133                72,862,649   

Denmark

            5,311,320                5,311,320   

France

            40,647,629                40,647,629   

Germany

            32,344,450                32,344,450   

Greece

            2,482,580                2,482,580   

Hong Kong

     11,111,116        16,200,630                27,311,746   

India

     17,614,352        9,361,296                26,975,648   

Indonesia

            8,660,028                8,660,028   

Ireland

     40,065,137        4,784,491                44,849,628   

Israel

     17,601,699                       17,601,699   

Italy

            22,926,149                22,926,149   

Japan

     11,783,374        99,960,369                111,743,743   

Mexico

     6,197,330                       6,197,330   

Netherlands

            26,904,022                26,904,022   

New Zealand

            5,771,545                5,771,545   

Norway

            3,810,425                3,810,425   

Panama

     6,337,064                       6,337,064   

Peru

     5,393,500                       5,393,500   

South Africa

            10,290,154                10,290,154   

South Korea

     240,273        4,380,398                4,620,671   

Spain

     3,155,750        17,457,242                20,612,992   

Sweden

            13,392,124                13,392,124   

Switzerland

            90,779,033                90,779,033   

Taiwan

            13,580,565                13,580,565   

United Kingdom

     20,040,450        110,778,898      $ 4,811,810         135,631,158   

United States

     22,209,302        11,968,788                34,178,090   

Investment Companies

     7,144,493                       7,144,493   

Preferred Stocks

                   3,849,866         3,849,866   

Warrants

     254,430                       254,430   

Short-Term Securities

     19,071,027        1,854,728                20,925,755   

Total

   $ 284,496,249      $ 593,783,058      $ 8,661,676       $ 886,940,983   
         
      Level 1     Level 2     Level 3      Total  

Derivative Financial Instruments1

         

Liabilities:

         

Equity contracts

   $ (2,939,439   $ (13,521,490           $ (16,460,929

1    Derivative financial instruments are options written, which are shown at value.

         
The Trust may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of October 31, 2014, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:    
         
      Level 1     Level 2     Level 3      Total  

Assets:

         

Cash

   $ 14,344                     $ 14,344   

Foreign currency at value

     2,883,249                       2,883,249   

Cash pledged as collateral for OTC derivatives

     4,658,184                       4,658,184   

Cash pledged as collateral for exchange-traded options written

     759,000                       759,000   

Liabilities:

         

Collateral on securities loaned at value

          $ (1,854,728             (1,854,728

Total

   $ 8,314,777      $ (1,854,728           $ 6,460,049   

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    77


Schedule of Investments (concluded)    BlackRock International Growth and Income Trust (BGY)

 

The Trust’s investments that are categorized as Level 3 were valued utilizing third party pricing information without adjustment. Such valuations are based on unobservable inputs. A significant change in third party information inputs could result in a significantly lower or higher value of such Level 3 investments.

Transfers between Level 1 and Level 2 were as follows:

 

      Transfers into
Level 1
   Transfers out
of Level 1 1
     Transfers into
Level 2 1
     Transfers out
of Level 2

Assets:

           

Long-Term Investments:

           

Common Stocks

      $ 73,862,214       $ 73,862,214      

1    External pricing service used to reflect any significant market movements between the time the Trust valued such foreign securities and the earlier closing of foreign markets.

 

See Notes to Financial Statements.

 

78    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments October 31, 2014      BlackRock Real Asset Equity Trust (BCF)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Chemicals — 27.0%

     

Agrium, Inc. (a)

     67,900       $ 6,641,978   

Air Products & Chemicals, Inc. (a)

     88,600         11,930,876   

Celanese Corp., Series A

     89,300         5,244,589   

CF Industries Holdings, Inc.

     41,000         10,660,000   

The Dow Chemical Co.

     154,325         7,623,655   

EI du Pont de Nemours & Co. (a)

     347,700         24,043,455   

Monsanto Co. (a)

     180,000         20,707,200   

The Mosaic Co.

     310,000         13,736,100   

Potash Corp. of Saskatchewan, Inc. (a)

     330,000         11,276,100   

Praxair, Inc.

     157,600         19,856,024   

Syngenta AG

     38,000         11,751,789   
     

 

 

 
                143,471,766   

Energy Equipment & Services — 2.8%

     

Halliburton Co. (a)

     88,000         4,852,320   

Schlumberger Ltd. (a)

     99,983         9,864,323   
     

 

 

 
                14,716,643   

Metals & Mining — 24.2%

     

Alcoa, Inc. (a)

     250,100         4,191,676   

Allegheny Technologies, Inc.

     35,000         1,149,750   

Alumina Ltd. (b)

     3,570,946         5,161,079   

BHP Billiton PLC

     750,530         19,391,061   

Eldorado Gold Corp. (a)

     1,096,107         5,990,878   

First Quantum Minerals Ltd.

     484,600         7,309,525   

Freeport-McMoRan, Inc. (a)

     486,883         13,876,166   

Fresnillo PLC

     475,000         5,308,241   

Glencore PLC

     2,596,938         13,323,876   

Lundin Mining Corp. (b)

     1,180,762         5,269,716   

MMC Norilsk Nickel OJSC — ADR

     526,113         9,816,838   

Nevsun Resources Ltd.

     1,724,701         5,830,363   

Platinum Group Metals Ltd. (b)

     888,518         717,405   

Rio Tinto PLC

     370,659         17,636,409   

Southern Copper Corp. (a)

     242,979         6,992,936   

United States Steel Corp. (a)

     38,200         1,529,528   

Vedanta Resources PLC

     390,288         5,150,278   
     

 

 

 
                128,645,725   

Oil, Gas & Consumable Fuels — 34.8%

     

Anadarko Petroleum Corp. (c)

     92,200         8,462,116   

Cairn Energy PLC (b)

     498,000         1,164,616   

Canadian Oil Sands Ltd.

     587,000         9,197,835   

Chevron Corp. (a)

     257,000         30,827,147   
Common Stocks    Shares      Value  

Oil, Gas & Consumable Fuels (concluded)

     

China Shenhua Energy Co. Ltd., Class H

     3,731,500       $ 10,517,369   

ConocoPhillips (c)

     304,000         21,933,600   

Enbridge, Inc.

     246,000         11,640,282   

Encana Corp.

     254,100         4,734,573   

EOG Resources, Inc.

     58,700         5,579,435   

Exxon Mobil Corp. (a)(c)

     300,000         29,013,000   

Imperial Oil Ltd.

     52,000         2,502,072   

Noble Energy, Inc.

     80,700         4,650,741   

Pioneer Natural Resources Co. (a)

     28,000         5,293,680   

Royal Dutch Shell PLC, Class A — ADR (c)

     303,000         21,752,370   

Southwestern Energy Co. (a)(b)

     137,500         4,470,125   

Statoil ASA

     198,451         4,541,637   

Total SA

     144,200         8,609,207   
     

 

 

 
                184,889,805   

Paper & Forest Products — 3.3%

     

International Paper Co. (a)

     341,900         17,306,978   

Real Estate Investment Trusts (REITs) — 2.8%

  

Weyerhaeuser Co. (a)

     440,000         14,898,400   

Total Long-Term Investments

(Cost — $442,899,480) — 94.9%

              503,929,317   
     
Short-Term Securities                

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.07% (d)(e)

     39,026,977         39,026,977   

Total Short-Term Securities

(Cost — $39,026,977) — 7.4%

              39,026,977   

Total Investments Before Options Written

(Cost — $481,926,457) — 102.3%

              542,956,294   
     
Options Written                

(Premiums Received — $3,104,112) — (0.6)%

              (3,229,938

Total Investments Net of Options Written — 101.7%

  

     539,726,356   

Liabilities in Excess of Other Assets — (1.7)%

  

     (8,807,521
     

 

 

 

Net Assets — 100.0%

      $ 530,918,835   
     

 

 

 
 
Notes to Schedule of Investments

 

(a) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(b) Non-income producing security.

 

(c) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(d) Represents the current yield as of report date.

 

(e) Investments in isssuers considered to be an affiliate of the Trust during the year ended October 31, 2014, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as follows:

 

Affiliates    Shares Held at
October 31, 2013
    

Net

Activity

     Sharesl Held at
October 31, 2014
     Income  

BlackRock Liquidity Funds, TempFund, Institutional Class

     21,163,179         17,863,798         39,026,977       $ 8,050   

BlackRock Liquidity Series, LLC, Money Market Series

                           $ 998   

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    79


Schedule of Investments (continued)      BlackRock Real Asset Equity Trust (BCF)   

 

Ÿ  

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

 

Ÿ  

Exchange-traded options written as of October 31, 2014 were as follows:

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts     

Market

Value

 

Chevron Corp.

     Call         USD         120.00         11/07/14         102       $ (11,628

EI du Pont de Nemours & Co.

     Call         USD         70.00         11/07/14         186         (5,115

EI du Pont de Nemours & Co.

     Call         USD         72.00         11/07/14         582         (2,910

Potash Corp. of Saskatchewan, Inc.

     Call         USD         33.50         11/07/14         317         (24,884

Exxon Mobil Corp.

     Call         USD         98.00         11/14/14         113         (4,294

Agrium, Inc.

     Call         USD         95.00         11/22/14         120         (46,200

Eldorado Gold Corp.

     Call         CAD         8.50         11/22/14         1,300         (9,228

Freeport-McMoRan, Inc.

     Call         USD         31.50         11/22/14         930         (4,650

Monsanto Co.

     Call         USD         114.05         12/10/14         630         (172,694

International Paper Co.

     Call         USD         49.00         12/15/14         598         (150,017

Agrium, Inc.

     Call         USD         95.00         12/20/14         120         (55,200

Air Products & Chemicals, Inc.

     Call         USD         130.00         12/20/14         155         (118,575

Air Products & Chemicals, Inc.

     Call         USD         135.00         12/20/14         155         (72,850

Alcoa, Inc.

     Call         USD         17.00         12/20/14         436         (27,904

Eldorado Gold Corp.

     Call         CAD         9.00         12/20/14         2,500         (8,873

Exxon Mobil Corp.

     Call         USD         95.00         12/20/14         937         (267,044

Halliburton Co.

     Call         USD         60.00         12/20/14         154         (12,243

Pioneer Natural Resources Co.

     Call         USD         190.00         12/20/14         25         (25,625

Pioneer Natural Resources Co.

     Call         USD         200.00         12/20/14         73         (43,800

Potash Corp. of Saskatchewan, Inc.

     Call         USD         34.00         12/20/14         683         (73,764

Potash Corp. of Saskatchewan, Inc.

     Call         USD         35.00         12/20/14         155         (9,455

Schlumberger Ltd.

     Call         USD         105.00         12/20/14         165         (17,820

Southern Copper Corp.

     Call         USD         32.00         12/20/14         215         (2,688

Southwestern Energy Co.

     Call         USD         36.00         12/20/14         160         (6,800

United States Steel Corp.

     Call         USD         42.00         12/20/14         133         (23,009

Weyerhaeuser Co.

     Call         USD         34.00         12/20/14         135         (9,450

Total

                  $ (1,206,720
                 

 

 

 

 

Ÿ  

Over-the-counter options written as of October 31, 2014 were as follows:

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

EI du Pont de Nemours & Co.

   UBS AG      Call         USD         72.27         11/03/14         24,600       $ (6

Lundin Mining Corp.

   Citibank N.A.      Call         CAD         6.07         11/03/14         43,000           

Royal Dutch Shell PLC, Class A — ADR

   Deutsche Bank AG      Call         USD         77.43         11/03/14         22,000           

Vedanta Resources PLC

   Goldman Sachs International      Call         GBP         10.97         11/03/14         31,800         (1

Total SA

   Goldman Sachs International      Call         EUR         52.22         11/05/14         16,500         (12

Lundin Mining Corp.

   Deutsche Bank AG      Call         CAD         5.96         11/06/14         118,000         (1

Weyerhaeuser Co.

   Credit Suisse International      Call         USD         32.48         11/06/14         44,500         (61,247

Statoil ASA

   Morgan Stanley & Co. International PLC      Call         NOK         176.49         11/07/14         40,000         (265

Freeport-McMoRan, Inc.

   UBS AG      Call         USD         32.76         11/10/14         12,000         (19

Glencore PLC

   Morgan Stanley & Co. International PLC      Call         GBP         3.35         11/10/14         525,000         (9,473

Glencore PLC

   Morgan Stanley & Co. International PLC      Call         GBP         3.53         11/10/14         310,000         (228

Alumina Ltd.

   Goldman Sachs International      Call         AUD         1.71         11/11/14         285,000         (4,467

BHP Billiton PLC

   Morgan Stanley & Co. International PLC      Call         GBP         17.06         11/11/14         113,500         (3,414

Rio Tinto PLC

   Bank of America N.A.      Call         GBP         31.88         11/11/14         54,000         (3,203

Fresnillo PLC

   Bank of America N.A.      Call         GBP         7.42         11/13/14         62,883         (2,958

BHP Billiton PLC

   Bank of America N.A.      Call         GBP         16.87         11/25/14         149,000         (33,540

MMC Norilsk Nickel OJSC — ADR

   Goldman Sachs International      Call         USD         18.96         11/25/14         64,800         (27,897

Rio Tinto PLC

   Goldman Sachs International      Call         GBP         31.29         11/25/14         15,000         (6,137

Statoil ASA

   Goldman Sachs International      Call         NOK         160.09         11/25/14         29,000         (11,458

Vedanta Resources PLC

   Deutsche Bank AG      Call         GBP         8.49         11/25/14         36,500         (13,610

Alcoa, Inc.

   Credit Suisse International      Call         USD         16.91         12/08/14         43,900         (24,729

Enbridge, Inc.

   Deutsche Bank AG      Call         CAD         52.20         12/08/14         53,700         (91,735

Enbridge, Inc.

   Goldman Sachs International      Call         CAD         53.56         12/08/14         32,400         (33,269

Glencore PLC

   Goldman Sachs International      Call         GBP         3.32         12/08/14         307,500         (25,859

Syngenta AG

   Morgan Stanley & Co. International PLC      Call         CHF         299.78         12/08/14         13,000         (79,073

Alumina Ltd.

   UBS AG      Call         AUD         1.74         12/09/14         680,000         (25,481

Celanese Corp., Series A

   Morgan Stanley & Co. International PLC      Call         USD         59.44         12/09/14         31,200         (41,772

 

See Notes to Financial Statements.

 

80    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)      BlackRock Real Asset Equity Trust (BCF)   

 

Over-the-counter options written as of October 31, 2014 were as follows: (concluded)

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts     

Market

Value

 

CF Industries Holdings, Inc.

   UBS AG      Call         USD         265.81         12/09/14         14,300       $ (94,857

China Shenhua Energy Co. Ltd., Class H

   UBS AG      Call         HKD         21.41         12/09/14         1,306,000         (154,849

ConocoPhillips

   Morgan Stanley & Co. International PLC      Call         USD         71.15         12/09/14         106,400         (265,236

The Dow Chemical Co.

   Citibank N.A.      Call         USD         48.25         12/09/14         54,000         (131,448

EI du Pont de Nemours & Co.

   Credit Suisse International      Call         USD         68.43         12/09/14         20,200         (32,284

MMC Norilsk Nickel OJSC — ADR

   Deutsche Bank AG      Call         USD         18.68         12/09/14         119,300         (84,070

Praxair, Inc.

   Credit Suisse International      Call         USD         125.14         12/09/14         55,100         (140,685

Rio Tinto PLC

   Deutsche Bank AG      Call         GBP         31.83         12/09/14         39,400         (18,228

Schlumberger Ltd.

   Deutsche Bank AG      Call         USD         95.61         12/09/14         18,400         (87,739

Alumina Ltd.

   UBS AG      Call         AUD         1.62         12/10/14         285,000         (24,543

Fresnillo PLC

   UBS AG      Call         GBP         8.20         12/10/14         62,700         (1,209

International Paper Co.

   Citibank N.A.      Call         USD         50.62         12/10/14         59,800         (96,348

Total SA

   Bank of America N.A.      Call         EUR         46.50         12/10/14         16,600         (45,652

Total SA

   Goldman Sachs International      Call         EUR         44.88         12/10/14         17,300         (72,955

Weyerhaeuser Co.

   Morgan Stanley & Co. International PLC      Call         USD         32.73         12/10/14         96,000         (136,547

Lundin Mining Corp.

   Deutsche Bank AG      Call         CAD         5.18         12/15/14         252,000         (41,007

The Mosaic Co.

   Deutsche Bank AG      Call         USD         43.71         12/16/14         54,300         (70,928

Vedanta Resources PLC

   Bank of America N.A.      Call         GBP         8.80         12/17/14         68,300         (20,645

Fresnillo PLC

   UBS AG      Call         GBP         7.76         12/18/14         41,200         (4,134

Total

                     $ (2,023,218
                    

 

 

 

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, please refer to Note 2 of the Notes to Financial Statements.

The following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy as of October 31, 2014:

 

      Level 1      Level 2      Level 3    Total  

Assets:

           

Investments:

           

Long-Term Investments:

           

Common Stocks:

           

Chemicals

   $ 131,719,977       $ 11,751,789          $ 143,471,766   

Energy Equipment & Services

     14,716,643                    14,716,643   

Metals & Mining

     52,857,943         75,787,782            128,645,725   

Oil, Gas & Consumable Fuels

     160,056,976         24,832,829            184,889,805   

Paper & Forest Products

     17,306,978                    17,306,978   

Real Estate Investment Trusts (REITs)

     14,898,400                    14,898,400   

Short-Term Securities

     39,026,977                    39,026,977   

Total

   $ 430,583,894       $ 112,372,400          $ 542,956,294   
  

 

 

 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    81


Schedule of Investments (concluded)      BlackRock Real Asset Equity Trust (BCF)   

 

      Level 1     Level 2     Level 3    Total  

Derivative Financial Instruments1

         

Liabilities:

         

Equity contracts

   $ (884,009   $ (2,345,929      $ (3,229,938

 

 

1    Derivative financial instruments are options written, which are shown at value.

         
The Trust may hold assets in which the fair value approximates the carrying amount for financial statement purposes. As of October 31, 2014, such assets are categorized within the disclosure hierarchy as follows:    
         
      Level 1     Level 2     Level 3    Total  

Assets:

         

Cash

   $ 21,412                $ 21,412   

Foreign currency at value

     44,715                  44,715   

 

 

Total

   $ 66,127                $ 66,127   
  

 

 

 

There were no transfers between levels during the year ended October 31, 2014.

 

See Notes to Financial Statements.

 

82    ANNUAL REPORT    OCTOBER 31, 2014     


Consolidated Schedule of Investments October 31,  2014      BlackRock Resources & Commodities Strategy Trust (BCX)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Chemicals — 13.2%

     

CF Industries Holdings, Inc. (a)

     49,863       $ 12,964,380   

Israel Chemicals Ltd.

     35,000         235,966   

Monsanto Co. (a)

     194,334         22,356,183   

The Mosaic Co.

     218,989         9,703,403   

Potash Corp. of Saskatchewan, Inc. (a)

     355,000         12,130,350   

Syngenta AG

     37,000         11,442,531   

Uralkali OJSC — GDR

     433,500         7,756,107   
     

 

 

 
                76,588,920   

Food & Staples Retailing — 1.4%

     

The Andersons, Inc. (a)

     126,200         8,042,726   

Food Products — 14.0%

     

Archer-Daniels-Midland Co. (a)

     372,800         17,521,600   

BRF SA — ADR (a)

     290,000         7,554,500   

Bunge Ltd.

     113,116         10,027,733   

First Resources Ltd.

     3,972,000         6,430,887   

Ingredion, Inc.

     143,195         11,061,814   

Origin Enterprises PLC (b)

     200,000         1,979,975   

Scandi Standard AB (b)

     1,065,000         7,788,303   

Select Harvests Ltd.

     120,000         664,226   

Tyson Foods, Inc., Class A (a)

     343,000         13,840,050   

WH Group Ltd. (b)

     7,306,500         4,776,691   
     

 

 

 
                81,645,779   

Metals & Mining — 22.5%

     

Alcoa, Inc. (a)

     200,000         3,352,000   

Alumina Ltd. (b)

     2,200,000         3,179,654   

BHP Billiton Ltd. — ADR (a)

     490,580         29,160,075   

First Quantum Minerals Ltd.

     352,600         5,318,486   

Fortescue Metals Group Ltd.

     1,250,000         3,850,012   

Freeport-McMoRan, Inc.

     673,200         19,186,200   

Fresnillo PLC

     563,700         6,299,486   

Glencore PLC

     1,786,500         9,165,835   

Lundin Mining Corp. (b)

     935,000         4,172,885   

MMC Norilsk Nickel OJSC — ADR

     410,200         7,653,996   

Nevsun Resources Ltd.

     2,604,650         8,805,037   

Rio Tinto PLC — ADR (a)

     404,800         19,418,256   

Southern Copper Corp. (a)

     250,000         7,195,000   

Vedanta Resources PLC

     344,200         4,542,096   
     

 

 

 
                131,299,018   

Oil, Gas & Consumable Fuels — 43.4%

     

BP PLC — ADR (a)(c)

     380,000         16,514,800   

Cairn Energy PLC (b)

     1,950,000         4,560,243   

Canadian Oil Sands Ltd.

     670,000         10,498,381   

Chevron Corp. (a)

     331,000         39,703,450   

China Shenhua Energy Co. Ltd., Class H

     4,580,500         12,910,307   

ConocoPhillips (a)

     349,000         25,180,350   

Enbridge, Inc. (a)

     279,800         13,239,638   

Eni SpA — ADR

     176,000         7,480,000   

Exxon Mobil Corp. (a)(c)

     442,000         42,745,820   
Common Stocks   Shares     Value  

Oil, Gas & Consumable Fuels (concluded)

   

Imperial Oil Ltd. (a)

    197,300      $ 9,493,438   

Inpex Corp.

    897,900        11,484,537   

Royal Dutch Shell PLC, Class A — ADR (c)

    341,324        24,503,650   

Southwestern Energy Co. (a)(b)

    133,500        4,340,085   

Statoil ASA

    482,100        11,033,067   

Total SA — ADR (a)

    148,900        8,917,621   

Ultra Petroleum Corp. (b)(d)

    441,100        10,057,080   
   

 

 

 
              252,662,467   

Paper & Forest Products — 1.9%

   

Canfor Corp. (a)(b)

    214,500        4,993,993   

Interfor Corp. (b)

    384,000        5,839,812   
   

 

 

 
              10,833,805   

Real Estate Investment Trusts (REITs) — 1.7%

   

Weyerhaeuser Co.

    301,700        10,215,562   

Total Common Stocks — 98.1%

            571,288,277   
   
Preferred Stocks              

Food Products — 0.8%

   

Tyson Foods, Inc. (b)

    88,748        4,451,600   

Total Long-Term Investments

(Cost — $577,110,532) — 98.9%

  

  

    575,739,877   
   
Short-Term Securities              

BlackRock Liquidity Funds, TempFund, Institutional
Class, 0.07% (e)(f)

    9,369,900        9,369,900   
     Beneficial
Interest
(000)
        

BlackRock Liquidity Series, LLC Money Market Series, 0.19% (e)(f)(g)

  $ 4,138        4,137,800   

Total Short-Term Securities

(Cost — $13,507,700) — 2.3%

  

  

    13,507,700   

Total Investments Before Options Written

(Cost — $590,618,232) — 101.2%

  

  

    589,247,577   
   
Options Written              

(Premiums Received — $2,646,767) — (0.4)%

  

    (2,468,312

Total Investments Net of Options Written — 100.8%

  

    586,779,265   

Liabilities in Excess of Other Assets — (0.8)%

      (4,559,727
   

 

 

 

Net Assets — 100.0%

    $ 582,219,538   
   

 

 

 
 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    83


Consolidated Schedule of Investments (continued)      BlackRock Resources & Commodities Strategy Trust (BCX)   

 

Notes to Schedule of Investments

 

(a) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(b) Non-income producing security.

 

(c) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(d) Security, or a portion of security, is on loan.

 

(e) Investments in issuers considered to be an affiliate of the Trust during the year ended October 31, 2014, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliates    Shares/
Beneficial Interest
Held at
October 31, 2013
    

Net

Activity

    Shares/
Beneficial Interest
Held at
October 31, 2014
     Income  

BlackRock Liquidity Funds, TempFund, Institutional Class

     29,416,955         (20,047,055     9,369,900       $ 9,059   

BlackRock Liquidity Series, LLC Money Market Series

           $ 4,137,800      $ 4,137,800       $ 31,751   

 

(f) Represents the current yield as of report date.

 

(g) Security was purchased with the cash collateral from loaned securities. The Trust may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

 

Ÿ  

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

 

Ÿ  

Exchange-traded options written as of October 31, 2014 were as follows:

 

Description    Put/
Call
    

Strike

Price

    

Expiration

Date

     Contracts      Market
Value
 

Archer-Daniels-Midland Co.

     Call         USD         52.55         11/03/14         296       $   

Alcoa, Inc.

     Call         USD         16.50         11/07/14         700         (31,850

Archer-Daniels-Midland Co.

     Call         USD         50.00         11/07/14         409         (3,476

CF Industries Holdings, Inc.

     Call         USD         295.00         11/07/14         21         (1,113

Chevron Corp.

     Call         USD         120.00         11/07/14         178         (20,292

ConocoPhillips

     Call         USD         79.00         11/07/14         430         (3,870

Exxon Mobil Corp.

     Call         USD         98.00         11/07/14         189         (4,442

Potash Corp. of Saskatchewan, Inc.

     Call         USD         33.50         11/07/14         216         (16,956

Monsanto Co.

     Call         USD         117.50         11/10/14         840         (20,430

CF Industries Holdings, Inc.

     Call         USD         290.00         11/14/14         28         (1,820

Chevron Corp.

     Call         USD         117.00         11/14/14         102         (37,230

Exxon Mobil Corp.

     Call         USD         98.00         11/14/14         354         (13,452

Potash Corp. of Saskatchewan, Inc.

     Call         USD         34.00         11/14/14         270         (16,065

BHP Billiton Ltd. — ADR

     Call         USD         67.50         11/22/14         439         (2,634

BP PLC — ADR

     Call         USD         44.00         11/22/14         330         (9,405

BRF SA — ADR

     Call         USD         25.00         11/22/14         305         (43,462

CF Industries Holdings, Inc.

     Call         USD         290.00         11/22/14         125         (14,438

Chevron Corp.

     Call         USD         120.00         11/22/14         700         (117,600

ConocoPhillips

     Call         USD         82.50         11/22/14         400         (800

Enbridge, Inc.

     Call         CAD         56.00         11/22/14         535         (10,443

Exxon Mobil Corp.

     Call         USD         100.00         11/22/14         325         (5,850

Imperial Oil Ltd.

     Call         CAD         56.00         11/22/14         690         (27,244

Rio Tinto PLC — ADR

     Call         USD         52.50         11/22/14         200         (3,000

Total SA — ADR

     Call         USD         67.50         11/22/14         197         (1,970

Tyson Foods, Inc., Class A

     Call         USD         43.00         11/22/14         363         (15,428

Exxon Mobil Corp.

     Call         USD         96.00         12/05/14         340         (63,070

BRF SA — ADR

     Call         USD         26.50         12/15/14         304         (28,969

The Andersons, Inc.

     Call         USD         60.00         12/20/14         221         (116,025

BRF SA — ADR

     Call         USD         25.00         12/20/14         406         (72,065

Canfor Corp.

     Call         CAD         25.00         12/20/14         750         (114,791

Exxon Mobil Corp.

     Call         USD         95.00         12/20/14         340         (96,900

Potash Corp. of Saskatchewan, Inc.

     Call         USD         34.00         12/20/14         243         (26,244

Potash Corp. of Saskatchewan, Inc.

     Call         USD         35.00         12/20/14         243         (14,823

Southern Copper Corp.

     Call         USD         32.00         12/20/14         220         (2,750

Southwestern Energy Co.

     Call         USD         36.00         12/20/14         155         (6,588

Total

                  $ (965,495
                 

 

 

 

 

See Notes to Financial Statements.

 

84    ANNUAL REPORT    OCTOBER 31, 2014     


Consolidated Schedule of Investments (continued)      BlackRock Resources & Commodities Strategy Trust (BCX)   

 

Ÿ  

Over-the-counter options written as of October 31, 2014 were as follows:

 

Description    Counterparty     

Put/

Call

    

Strike

Price

      

Expiration

Date

       Contracts       

Market

Value

 

Lundin Mining Corp.

   Citibank N.A.        Call         CAD         6.07           11/03/14           196,000         $ (2

Royal Dutch Shell PLC, Class A — ADR

   Deutsche Bank AG        Call         USD         77.43           11/03/14           40,600             

Total SA — ADR

   Citibank N.A.        Call         USD         64.63           11/03/14           3,200             

Vedanta Resources PLC

   Goldman Sachs International        Call         GBP         10.97           11/03/14           20,000             

Fresnillo PLC

   Deutsche Bank AG        Call         GBP         7.64           11/05/14           53,456           (63

Ingredion, Inc.

   Morgan Stanley & Co. International PLC        Call         USD         79.47           11/05/14           25,200           (1,946

Interfor Corp.

   Citibank N.A.        Call         CAD         16.37           11/06/14           28,400           (20,626

Weyerhaeuser Co.

   Credit Suisse International        Call         USD         32.48           11/06/14           105,500           (145,203

Statoil ASA

   Goldman Sachs International        Call         NOK         185.32           11/07/14           107,000           (79

Freeport-McMoRan, Inc.

   UBS AG        Call         USD         32.76           11/10/14           78,000           (122

Glencore PLC

   Morgan Stanley & Co. International PLC        Call         GBP         3.35           11/10/14           110,000           (1,985

Glencore PLC

   Morgan Stanley & Co. International PLC        Call         GBP         3.53           11/10/14           258,000           (190

Scandi Standard AB

   Goldman Sachs International        Call         SEK         52.53           11/10/14           90,000           (23,398

Alumina Ltd.

   Goldman Sachs International        Call         AUD         1.71           11/11/14           385,000           (6,034

China Shenhua Energy Co. Ltd., Class H

   Citibank N.A.        Call         HKD         22.08           11/11/14           700,000           (25,783

First Resources Ltd.

   Citibank N.A.        Call         SGD         2.02           11/11/14           300,000           (18,349

Inpex Corp.

   Goldman Sachs International        Call         JPY         1,530.17           11/11/14           315,000           (11,833

Select Harvests Ltd.

   UBS AG        Call         AUD         6.30           11/11/14           21,000           (1,826

Vedanta Resources PLC

   Credit Suisse International        Call         GBP         10.40           11/11/14           34,900           (1

Fresnillo PLC

   Bank of America N.A.        Call         GBP         7.42           11/13/14           57,868           (2,723

Syngenta AG

   Deutsche Bank AG        Call         CHF         292.86           11/13/14           13,000           (98,875

First Resources Ltd.

   Morgan Stanley & Co. International PLC        Call         SGD         2.02           11/14/14           475,000           (29,557

Vedanta Resources PLC

   Goldman Sachs International        Call         GBP         9.72           11/14/14           44,000           (145

Ingredion, Inc.

   Citibank N.A.        Call         USD         76.71           11/17/14           24,900           (41,391

Glencore PLC

   Goldman Sachs International        Call         GBP         3.32           11/18/14           257,500           (11,894

China Shenhua Energy Co. Ltd., Class H

   Goldman Sachs International        Call         HKD         22.29           11/19/14           900,000           (34,574

Interfor Corp.

   Citibank N.A.        Call         CAD         16.12           11/20/14           50,000           (52,180

Alumina Ltd.

   UBS AG        Call         AUD         1.62           11/25/14           385,000           (25,274

Fresnillo PLC

   UBS AG        Call         GBP         8.20           11/25/14           57,700           (285

Interfor Corp.

   Deutsche Bank AG        Call         CAD         16.48           11/25/14           56,000           (47,921

MMC Norilsk Nickel OJSC — ADR

   Goldman Sachs International        Call         USD         18.96           11/25/14           145,000           (62,424

Statoil ASA

   Goldman Sachs International        Call         NOK         160.09           11/25/14           61,000           (24,102

Vedanta Resources PLC

   Deutsche Bank AG        Call         GBP         8.49           11/25/14           11,000           (4,102

Enbridge, Inc.

   Goldman Sachs International        Call         CAD         53.00           12/01/14           44,500           (51,910

The Andersons, Inc.

   Citibank N.A.        Call         USD         61.09           12/08/14           22,050           (91,788

Archer-Daniels-Midland Co.

   UBS AG        Call         USD         45.71           12/09/14           60,000           (119,988

Tyson Foods, Inc., Class A

   UBS AG        Call         USD         38.61           12/09/14           29,800           (78,399

Bunge Ltd.

   Morgan Stanley & Co. International PLC        Call         USD         82.82           12/10/14           39,600           (230,868

Uralkali OJSC — GDR

   Morgan Stanley & Co. International PLC        Call         USD         17.88           12/10/14           76,000           (59,182

Select Harvests Ltd.

   UBS AG        Call         AUD         6.34           12/11/14           21,000           (3,282

Tyson Foods, Inc., Class A

   Goldman Sachs International        Call         USD         39.38           12/15/14           53,900           (118,319

The Mosaic Co.

   Deutsche Bank AG        Call         USD         43.71           12/16/14           38,300           (50,029

Vedanta Resources PLC

   Bank of America N.A.        Call         GBP         8.80           12/17/14           11,000           (3,325

Fresnillo PLC

   UBS AG        Call         GBP         7.76           12/18/14           28,300           (2,840

Total

                             $ (1,502,817
                            

 

 

 

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    85


Consolidated Schedule of Investments (concluded)      BlackRock Resources & Commodities Strategy Trust (BCX)   

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, please refer to Note 2 of the Notes to Financial Statements.

The following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy as of October 31, 2014:

 

      Level 1     Level 2     Level 3    Total  

Assets:

         

Investments:

         

Long-Term Investments:

         

Common Stocks:

         

Chemicals

   $ 57,154,316      $ 19,434,604         $ 76,588,920   

Food & Staples Retailing

     8,042,726                  8,042,726   

Food Products

     81,645,779                  81,645,779   

Metals & Mining

     100,457,951        30,841,067           131,299,018   

Oil, Gas & Consumable Fuels

     212,674,313        39,988,154           252,662,467   

Paper & Forest Products

     10,833,805                  10,833,805   

Real Estate Investment Trusts (REITs)

     10,215,562                  10,215,562   

Preferred Stocks

     4,451,600                  4,451,600   

Short-Term Securities

     9,369,900        4,137,800           13,507,700   

Total

   $ 494,845,952      $ 94,401,625         $ 589,247,577   
         
      Level 1     Level 2     Level 3    Total  

Derivative Financial Instruments1

         

Liabilities:

         

Equity contracts

   $ (916,095     $(1,552,217)         $ (2,468,312

1    Derivative financial instruments are options written, which are shown at value

       

The Trust may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of October 31, 2014, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:    
         
      Level 1     Level 2     Level 3    Total  

Assets:

         

Cash

   $ 61,761                $ 61,761   

Liabilities:

         

Collateral on securities loaned at value

          $ (4,137,800        (4,137,800

Total

   $ 61,761      $ (4,137,800      $ (4,076,039
Transfers between Level 1 and Level 2 were as follows:          
         
      Transfers
into Level 1
    Transfers out of
Level 1 1
    Transfers into
Level 2 1
   Transfers out of
Level 2
 

Assets:

         

Long-Term Investments:

         

Common Stocks

          $ 12,910,307      $12,910,307        

1    External pricing service used to reflect any significant market movements between the time the Trust valued such foreign securities and the earlier closing of foreign markets.

       

 

See Notes to Financial Statements.

 

86    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments October 31, 2014      BlackRock Utility and Infrastructure Trust (BUI)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Construction & Engineering — 2.8%

     

Ferrovial SA

     393,500       $ 8,045,118   

Vinci SA

     47,300         2,699,799   
     

 

 

 
                10,744,917   

Diversified Telecommunication Services — 1.0%

     

Verizon Communications, Inc. (a)

     79,500         3,994,875   

Electric Utilities — 20.6%

     

American Electric Power Co., Inc. (a)

     36,300         2,117,742   

Cleco Corp.

     36,400         1,956,864   

Duke Energy Corp. (a)

     157,868         12,968,856   

Edison International (a)

     127,600         7,985,208   

Enel SpA (a)

     236,200         1,206,962   

Exelon Corp. (a)

     192,700         7,050,893   

Iberdrola SA

     182,200         1,289,777   

ITC Holdings Corp.

     144,600         5,727,606   

NextEra Energy, Inc. (b)

     150,400         15,073,088   

Northeast Utilities (a)

     74,000         3,651,900   

NRG Yield, Inc., Class A (a)

     154,500         7,720,365   

OGE Energy Corp.

     52,400         1,953,996   

Pinnacle West Capital Corp.

     31,000         1,905,570   

PPL Corp. (a)

     82,600         2,890,174   

Spark Infrastructure Group

     670,800         1,127,609   

Terna Rete Elettrica Nazionale SpA

     251,100         1,265,968   

Xcel Energy, Inc.

     59,900         2,004,853   
     

 

 

 
                77,897,431   

Gas Utilities — 1.4%

     

New Jersey Resources Corp.

     25,400         1,485,392   

Snam SpA (a)

     691,900         3,741,436   
     

 

 

 
                5,226,828   

Independent Power and Renewable Electricity Producers — 4.7%

  

Calpine Corp. (a)(c)

     41,700         951,594   

EDP Renovaveis SA

     313,900         2,040,865   

Enel Green Power SpA

     822,500         2,021,929   

NextEra Energy Partners LP

     70,600         2,581,136   

NRG Energy, Inc. (a)

     143,401         4,299,162   

Pattern Energy Group, Inc.

     92,200         2,653,516   

TerraForm Power, Inc., Class A (c)

     120,700         3,435,122   
     

 

 

 
                17,983,324   

Media — 0.3%

     

Comcast Corp., Special Class A (a)(b)

     20,100         1,108,314   

Multi-Utilities — 21.0%

     

CenterPoint Energy, Inc. (a)

     155,900         3,827,345   

CMS Energy Corp. (b)

     397,600         12,989,592   

Dominion Resources, Inc. (a)

     152,400         10,866,120   

DTE Energy Co. (a)

     25,100         2,062,216   

E.ON SE

     39,300         677,535   

MDU Resources Group, Inc.

     71,500         2,014,870   

National Grid PLC

     956,000         14,186,939   

NiSource, Inc. (a)

     119,300         5,017,758   

NorthWestern Corp.

     67,000         3,540,280   

Public Service Enterprise Group, Inc.

     188,656         7,793,379   

RWE AG

     49,100         1,742,154   

Sempra Energy (a)

     75,300         8,283,000   

Veolia Environnement SA

     55,000         913,484   

Wisconsin Energy Corp.

     113,000         5,611,580   
     

 

 

 
                79,526,252   
Common Stocks    Shares      Value  

Oil, Gas & Consumable Fuels — 28.7%

     

Access Midstream Partners LP

     33,276       $ 2,072,762   

Delek Logistics Partners LP (a)

     37,200         1,553,472   

Dominion Midstream Partners LP (c)

     365,900         10,922,115   

Enable Midstream Partners LP

     45,800         1,106,528   

Enbridge, Inc.

     162,200         7,681,792   

Energy Transfer Partners LP

     29,496         1,900,427   

Enterprise Products Partners LP

     231,954         8,559,103   

EQT Midstream Partners LP (a)

     49,000         4,340,420   

GasLog Partners LP

     6,500         173,940   

Genesis Energy LP (a)

     143,669         6,893,239   

Magellan Midstream Partners LP (a)

     74,100         6,066,567   

MarkWest Energy Partners LP (a)

     77,453         5,425,583   

MPLX LP

     60,500         4,034,140   

ONEOK Partners LP

     78,245         3,998,320   

PBF Logistics LP (a)

     32,300         795,549   

Phillips 66 Partners LP (a)

     52,900         3,686,601   

Plains All American Pipeline LP (a)(b)

     109,670         6,179,906   

QEP Midstream Partners LP

     34,459         556,513   

Rose Rock Midstream LP

     18,300         1,005,768   

Shell Midstream Partners LP (c)

     448,000         15,093,116   

Sunoco Logistics Partners LP (a)

     98,600         4,706,178   

Tesoro Logistics LP (a)

     65,558         3,690,915   

TransCanada Corp. (a)

     74,800         3,686,740   

Valero Energy Partners LP (a)

     45,300         1,934,310   

Western Gas Partners LP (a)

     23,514         1,643,629   

Williams Partners LP

     16,790         865,526   
     

 

 

 
                108,573,159   

Real Estate Investment Trusts (REITs) — 4.2%

     

American Tower Corp. (a)(b)

     153,400         14,956,500   

Crown Castle International Corp. (a)

     11,300         882,756   
     

 

 

 
                15,839,256   

Transportation Infrastructure — 11.8%

     

Abertis Infraestructuras SA

     390,900         8,151,172   

Aeroports de Paris

     29,300         3,468,065   

Atlantia SpA (a)

     418,084         9,873,966   

CCR SA

     223,900         1,667,119   

Flughafen Zuerich AG

     6,300         4,014,474   

Fraport AG Frankfurt Airport Services Worldwide

     49,600         3,073,249   

Groupe Eurotunnel SA

     348,800         4,408,563   

Sydney Airport

     597,666         2,323,574   

Transurban Group

     1,090,300         7,808,652   
     

 

 

 
                44,788,834   

Water Utilities — 2.6%

     

American Water Works Co., Inc.

     184,600         9,852,102   

Wireless Telecommunication Services — 0.7%

     

SBA Communications Corp., Class A (a)(c)

     22,800         2,561,124   

Total Long-Term Investments

(Cost — $291,974,506) — 99.8%

              378,096,416   
     
                  
 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    87


Schedule of Investments (continued)

     BlackRock Utility and Infrastructure Trust (BUI)   
     (Percentages shown are based on Net Assets)   

 

 

 

Short-Term Securities    Shares      Value  

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.07% (d)(e)

     14,980,589       $ 14,980,589   

Total Short-Term Securities

(Cost — $14,980,589) — 4.0%

              14,980,589   

Total Investments Before Options Written

(Cost — $306,955,095) — 103.8%

              393,077,005   
Options Written          Value  

(Premiums Received — $2,019,971) — (1.1)%

        $ (4,054,473

Total Investments Net of Options Written — 102.7%

        389,022,532   

Liabilities in Excess of Other Assets — (2.7)%

        (10,260,562
     

 

 

 

Net Assets — 100.0%

      $ 378,761,970   
     

 

 

 
 
Notes to Schedule of Investments

 

(a) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(b) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(c) Non-income producing security.

 

(d) Investments in issuers considered to be an affiliate of the Trust during the year ended October 31, 2014, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliates    Shares Held at
October 31, 2013
     Net
Activity
    Shares Held at
October 31, 2014
     Income  

BlackRock Liquidity Funds, TempFund, Institutional Class

     15,720,002         (739,413     14,980,589       $ 3,509   

BlackRock Liquidity Series, LLC Money Market Series

                          $ 547   

 

(e) Represents the current yield as of report date.

 

Ÿ  

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

 

Ÿ  

Exchange-traded options written as of October 31, 2014 were as follows:

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Verizon Communications, Inc.

     Call         USD         50.00         11/07/14         20       $ (970

Verizon Communications, Inc.

     Call         USD         50.50         11/14/14         60         (2,130

Atlantia SpA

     Call         EUR         21.00         11/21/14         156         (4,868

Enel SpA

     Call         EUR         4.40         11/21/14         42         (678

Snam SpA

     Call         EUR         4.40         11/21/14         121         (10,204

Calpine Corp.

     Call         USD         23.00         11/22/14         145         (8,700

CenterPoint Energy, Inc.

     Call         USD         25.00         11/22/14         316         (6,320

Comcast Corp., Special Class A

     Call         USD         55.00         11/22/14         71         (6,568

Crown Castle International Corp.

     Call         USD         87.50         11/22/14         39         (488

Delek Logistics Partners LP

     Call         USD         40.00         11/22/14         130         (25,025

Duke Energy Corp.

     Call         USD         77.50         11/22/14         553         (251,615

Edison International

     Call         USD         60.00         11/22/14         223         (64,112

EQT Midstream Partners LP

     Call         USD         90.00         11/22/14         88         (13,860

Exelon Corp.

     Call         USD         35.00         11/22/14         677         (116,782

Genesis Energy LP

     Call         USD         52.50         11/22/14         250         (6,250

Magellan Midstream Partners LP

     Call         USD         82.50         11/22/14         100         (16,500

Magellan Midstream Partners LP

     Call         USD         85.00         11/22/14         190         (16,625

MarkWest Energy Partners LP

     Call         USD         75.00         11/22/14         67         (2,680

MarkWest Energy Partners LP

     Call         USD         80.00         11/22/14         136         (2,040

Northeast Utilities

     Call         USD         45.00         11/22/14         196         (84,280

NRG Energy, Inc.

     Call         USD         32.00         11/22/14         250         (8,750

NRG Energy, Inc.

     Call         USD         33.00         11/22/14         251         (4,392

NRG Yield, Inc., Class A

     Call         USD         45.00         11/22/14         270         (139,050

PBF Logistics LP

     Call         USD         25.00         11/22/14         113         (7,345

Phillips 66 Partners LP

     Call         USD         70.00         11/22/14         99         (18,562

Plains All American Pipeline LP

     Call         USD         60.00         11/22/14         62         (1,240

PPL Corp.

     Call         USD         34.00         11/22/14         288         (33,840

SBA Communications Corp., Class A

     Call         USD         110.00         11/22/14         80         (30,400

Sempra Energy

     Call         USD         105.00         11/22/14         197         (110,320

Sunoco Logistics Partners LP

     Call         USD         50.00         11/22/14         173         (11,678

TransCanada Corp.

     Call         CAD         56.00         11/22/14         260         (22,954

 

See Notes to Financial Statements.

 

88    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (continued)      BlackRock Utility and Infrastructure Trust (BUI)   

 

Exchange-traded options written as of October 31, 2014 were as follows: (concluded)

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts     

Market

Value

 

Valero Energy Partners LP

     Call         USD         50.00         11/22/14         73       $ (1,278

Western Gas Partners LP

     Call         USD         75.00         11/22/14         82         (7,380

Dominion Resources, Inc.

     Call         USD         70.95         12/04/14         100         (11,430

American Tower Corp.

     Call         USD         97.25         12/05/14         268         (54,918

Verizon Communications, Inc.

     Call         USD         49.50         12/05/14         80         (10,040

Verizon Communications, Inc.

     Call         USD         50.50         12/12/14         38         (2,831

Genesis Energy LP

     Call         USD         50.00         12/20/14         250         (25,000

MarkWest Energy Partners LP

     Call         USD         77.50         12/20/14         68         (3,230

NiSource, Inc.

     Call         USD         42.00         12/20/14         273         (33,442

Northeast Utilities

     Call         USD         48.59         12/20/14         63         (8,192

NRG Yield, Inc., Class A

     Call         USD         50.00         12/20/14         272         (47,600

Sunoco Logistics Partners LP

     Call         USD         49.00         12/20/14         173         (24,480

Tesoro Logistics LP

     Call         USD         60.00         12/20/14         63         (7,088

Valero Energy Partners LP

     Call         USD         50.00         12/20/14         35         (2,188

Verizon Communications, Inc.

     Call         USD         50.00         12/20/14         80         (8,800

DTE Energy Co.

     Call         USD         80.25         1/05/15         87         (23,904

Total

                  $ (1,301,027
                 

 

 

 

 

Ÿ  

Over-the-counter options written as of October 31, 2014 were as follows:

 

Description    Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Public Service Enterprise Group, Inc.

   Morgan Stanley & Co. International PLC      Call         USD         37.46         11/04/14         5,900       $ (22,739

Aeroports de Paris

   Morgan Stanley & Co. International PLC      Call         EUR         102.26         11/06/14         5,000         (43

EDP Renovaveis SA

   Morgan Stanley & Co. International PLC      Call         EUR         5.63         11/06/14         42,000         (20

Fraport AG Frankfurt Airport Services Worldwide

   Deutsche Bank AG      Call         EUR         52.95         11/06/14         2,200         (26

NextEra Energy, Inc.

   Deutsche Bank AG      Call         USD         98.61         11/06/14         17,200         (31,770

ONEOK Partners LP

   UBS AG      Call         USD         56.31         11/06/14         9,100         (3

RWE AG

   UBS AG      Call         EUR         30.02         11/06/14         17,100         (1,172

Valero Energy Partners LP

   Morgan Stanley & Co. International PLC      Call         USD         48.00         11/06/14         5,000         (105

MDU Resources Group, Inc.

   Morgan Stanley & Co. International PLC      Call         USD         31.63         11/07/14         20,700           

MDU Resources Group, Inc.

   UBS AG      Call         USD         27.88         11/07/14         7,000         (3,783

National Grid PLC

   Deutsche Bank AG      Call         GBP         8.88         11/07/14         145,000         (93,544

National Grid PLC

   Goldman Sachs International      Call         GBP         9.06         11/07/14         193,000         (69,465

OGE Energy Corp.

   Credit Suisse International      Call         USD         37.43         11/07/14         9,200         (2,726

Abertis Infraestructuras SA

   Morgan Stanley & Co. International PLC      Call         EUR         15.74         11/10/14         35,800         (40,593

American Water Works Co., Inc.

   UBS AG      Call         USD         48.31         11/10/14         16,000         (80,960

CCR SA

   Credit Suisse International      Call         BRL         18.11         11/10/14         30,000         (9,048

CMS Energy Corp.

   Goldman Sachs International      Call         USD         30.28         11/10/14         33,600         (81,259

EDP Renovaveis SA

   Morgan Stanley & Co. International PLC      Call         EUR         5.67         11/10/14         13,200         (24

Enbridge, Inc.

   Goldman Sachs International      Call         USD         47.37         11/10/14         28,400         (21,803

Enbridge, Inc.

   Goldman Sachs International      Call         USD         50.00         11/10/14         28,300         (2,490

Enterprise Products Partners LP

   Goldman Sachs International      Call         USD         39.79         11/10/14         71,000         (1,288

Fraport AG Frankfurt Airport Services Worldwide

   Morgan Stanley & Co. International PLC      Call         EUR         52.18         11/10/14         4,700         (320

Groupe Eurotunnel SA

   Morgan Stanley & Co. International PLC      Call         EUR         9.58         11/10/14         44,000         (30,480

OGE Energy Corp.

   Citibank N.A.      Call         USD         37.24         11/10/14         9,100         (3,826

Public Service Enterprise Group, Inc.

   Morgan Stanley & Co. International PLC      Call         USD         37.95         11/10/14         24,900         (87,340

Tesoro Logistics LP

   Citibank N.A.      Call         USD         68.68         11/10/14         16,600         (120

Abertis Infraestructuras SA

   Bank of America N.A.      Call         EUR         15.11         11/11/14         35,800         (68,940

Ferrovial SA

   UBS AG      Call         EUR         15.61         11/11/14         29,000         (25,698

ONEOK Partners LP

   Citibank N.A.      Call         USD         54.59         11/11/14         9,100         (532

Spark Infrastructure Group

   Deutsche Bank AG      Call         AUD         1.84         11/11/14         117,000         (7,381

Sydney Airport

   Deutsche Bank AG      Call         AUD         4.37         11/11/14         105,000         (7,066

Transurban Group

   Goldman Sachs International      Call         AUD         7.80         11/11/14         191,000         (59,063

Veolia Environnement SA

   UBS AG      Call         EUR         13.63         11/11/14         19,200         (2,943

EQT Midstream Partners LP

   UBS AG      Call         USD         95.78         11/12/14         8,300         (1,541

ITC Holdings Corp.

   Citibank N.A.      Call         USD         36.13         11/12/14         12,600         (43,819

Phillips 66 Partners LP

   Morgan Stanley & Co. International PLC      Call         USD         73.00         11/12/14         8,600         (4,001

American Tower Corp.

   UBS AG      Call         USD         95.00         11/13/14         26,800         (80,919

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    89


Schedule of Investments (continued)      BlackRock Utility and Infrastructure Trust (BUI)   

 

Over-the-counter options written as of October 31, 2014 were as follows: (concluded)

 

Description    Counterparty      Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

E.ON SE

     Deutsche Bank AG         Call         EUR         14.03         11/13/14         13,700       $ (3,031

Edison International

     Morgan Stanley & Co. International PLC         Call         USD         57.25         11/13/14         22,300         (117,901

EDP Renovaveis SA

     Morgan Stanley & Co. International PLC         Call         EUR         5.41         11/13/14         13,300         (561

Sydney Airport

     UBS AG         Call         AUD         4.32         11/14/14         105,000         (10,988

Transurban Group

     UBS AG         Call         AUD         7.83         11/14/14         95,000         (27,175

NextEra Energy Partners LP

     Morgan Stanley & Co. International PLC         Call         USD         35.50         11/17/14         12,300         (16,792

Pattern Energy Group, Inc.

     UBS AG         Call         USD         31.18         11/17/14         12,500         (1,914

Xcel Energy, Inc.

     Goldman Sachs International         Call         USD         31.00         11/17/14         21,000         (52,039

Aeroports de Paris

     Deutsche Bank AG         Call         EUR         96.65         11/18/14         2,600         (2,727

EDP Renovaveis SA

     Goldman Sachs International         Call         EUR         5.70         11/18/14         28,100         (186

Ferrovial SA

     Goldman Sachs International         Call         EUR         15.23         11/18/14         77,000         (105,164

Fraport AG Frankfurt Airport Services Worldwide

     Deutsche Bank AG         Call         EUR         52.87         11/18/14         2,200         (250

Iberdrola SA

     UBS AG         Call         EUR         5.52         11/18/14         63,500         (13,804

NiSource, Inc.

     Goldman Sachs International         Call         USD         39.37         11/18/14         14,500         (42,731

Public Service Enterprise Group, Inc.

     Citibank N.A.         Call         USD         38.42         11/18/14         10,400         (30,171

Public Service Enterprise Group, Inc.

     Credit Suisse International         Call         USD         37.54         11/18/14         24,800         (93,643

American Electric Power Co., Inc.

     Credit Suisse International         Call         USD         54.15         11/19/14         12,700         (53,264

American Water Works Co., Inc.

     Morgan Stanley & Co. International PLC         Call         USD         48.69         11/19/14         8,100         (37,937

Cleco Corp.

     Morgan Stanley & Co. International PLC         Call         USD         54.50         11/19/14         5,900         (891

CMS Energy Corp.

     UBS AG         Call         USD         29.99         11/19/14         35,900         (98,993

Access Midstream Partners LP

     Deutsche Bank AG         Call         USD         63.48         11/20/14         6,000         (5,047

ITC Holdings Corp.

     Bank of America N.A.         Call         USD         35.70         11/20/14         12,600         (49,303

Enterprise Products Partners LP

     Deutsche Bank AG         Call         USD         37.04         11/21/14         10,100         (8,796

Fraport AG Frankfurt Airport Services Worldwide

     Deutsche Bank AG         Call         EUR         52.58         11/25/14         4,600         (1,198

MPLX LP

     Citibank N.A.         Call         USD         60.60         11/25/14         10,600         (68,082

Pinnacle West Capital Corp.

     UBS AG         Call         USD         59.10         11/26/14         10,800         (27,983

NorthWestern Corp.

     Deutsche Bank AG         Call         USD         46.51         12/01/14         2,100         (13,435

CCR SA

     Citibank N.A.         Call         BRL         18.74         12/02/14         22,000         (2,898

EDP Renovaveis SA

     Bank of America N.A.         Call         EUR         5.16         12/02/14         13,200         (2,919

Groupe Eurotunnel SA

     Morgan Stanley & Co. International PLC         Call         EUR         9.68         12/03/14         34,000         (23,465

MPLX LP

     Citibank N.A.         Call         USD         60.25         12/03/14         10,500         (75,156

NextEra Energy Partners LP

     Goldman Sachs International         Call         USD         36.13         12/03/14         12,400         (17,469

CenterPoint Energy, Inc.

     Deutsche Bank AG         Call         USD         24.48         12/04/14         23,000         (11,998

Energy Transfer Partners LP

     Deutsche Bank AG         Call         USD         65.32         12/04/14         10,300         (19,422

Transurban Group

     Morgan Stanley & Co. International PLC         Call         AUD         8.12         12/04/14         95,600         (12,488

American Water Works Co., Inc.

     Morgan Stanley & Co. International PLC         Call         USD         50.85         12/08/14         16,200         (40,767

Cleco Corp.

     Goldman Sachs International         Call         USD         54.85         12/08/14         6,900         (1,403

NextEra Energy, Inc.

     Citibank N.A.         Call         USD         96.75         12/08/14         35,400         (130,910

New Jersey Resources Corp.

     Morgan Stanley & Co. International PLC         Call         USD         55.58         12/09/14         8,900         (37,157

Plains All American Pipeline LP

     Citibank N.A.         Call         USD         57.16         12/09/14         32,100         (43,697

Wisconsin Energy Corp.

     Credit Suisse International         Call         USD         47.59         12/09/14         9,900         (20,483

Dominion Resources, Inc.

     Morgan Stanley & Co. International PLC         Call         USD         68.92         12/10/14         43,300         (108,357

Fraport AG Frankfurt Airport Services Worldwide

     Morgan Stanley & Co. International PLC         Call         EUR         49.18         12/11/14         3,700         (7,285

Spark Infrastructure Group

     Citibank N.A.         Call         AUD         1.88         12/11/14         117,000         (6,513

Vinci SA

     UBS AG         Call         EUR         44.62         12/11/14         16,500         (33,598

Sempra Energy

     UBS AG         Call         USD         112.14         12/15/14         6,600         (11,002

Access Midstream Partners LP

     Credit Suisse International         Call         USD         61.00         12/16/14         5,600         (13,346

American Water Works Co., Inc.

     Citibank N.A.         Call         USD         51.10         12/16/14         24,300         (55,161

ITC Holdings Corp.

     Goldman Sachs International         Call         USD         35.24         12/16/14         25,400         (110,998

Wisconsin Energy Corp.

     Credit Suisse International         Call         USD         49.72         12/16/14         29,600         (23,555

CCR SA

     Morgan Stanley & Co. International PLC         Call         BRL         18.61         12/17/14         26,300         (5,444

CMS Energy Corp.

     Credit Suisse International         Call         USD         32.15         12/17/14         69,600         (62,882

Groupe Eurotunnel SA

     Morgan Stanley & Co. International PLC         Call         EUR         9.69         12/17/14         44,000         (32,986

Ferrovial SA

     Bank of America N.A.         Call         EUR         16.02         12/18/14         32,000         (18,160

NorthWestern Corp.

     Morgan Stanley & Co. International PLC         Call         USD         51.12         1/06/15         21,400         (45,406

Williams Partners LP

     Credit Suisse International         Call         USD         53.14         1/06/15         5,800         (7,665

Total

                     $ (2,753,446
                    

 

 

 

 

See Notes to Financial Statements.

 

90    ANNUAL REPORT    OCTOBER 31, 2014     


Schedule of Investments (concluded)      BlackRock Utility and Infrastructure Trust (BUI)   

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instrument, please refer to Note 2 of the Notes to Financial Statements.

The following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy as of October 31, 2014:

 

      Level 1     Level 2     Level 3      Total  

Assets:

         

Investments:

         

Long-Term Investments:

         

Common Stocks:

         

Construction & Engineering

          $ 10,744,917              $ 10,744,917   

Diversified Telecommunication Services

   $ 3,994,875                       3,994,875   

Electric Utilities.

     73,007,115        4,890,316                77,897,431   

Gas Utilities

     1,485,392        3,741,436                5,226,828   

Independent Power and Renewable Electricity Producers

     13,920,530        4,062,794                17,983,324   

Media

     1,108,314                       1,108,314   

Multi-Utilities

     62,006,140        17,520,112                79,526,252   

Oil, Gas & Consumable Fuels

     108,573,159                       108,573,159   

Real Estate Investment Trusts (REITs)

     15,839,256                       15,839,256   

Transportation Infrastructure.

     1,667,119        43,121,715                44,788,834   

Water Utilities

     9,852,102                       9,852,102   

Wireless Telecommunication Services

     2,561,124                       2,561,124   

Short-Term Securities

     14,980,589                       14,980,589   

Total

   $ 308,995,715      $ 84,081,290              $ 393,077,005   
         
      Level 1     Level 2     Level 3      Total  

Derivative Financial Instruments1

         

Liabilities:

         

Equity contracts.

   $ (1,243,271   $ (2,811,202           $ (4,054,473

1    Derivative financial instruments are options written, which are shown at value.

         
The Trust may hold assets in which the fair value approximates the carrying amount for financial statement purposes. As of October 31, 2014, foreign currency at value of $29,023 is categorized as level 1 within the disclosure hierarchy.    
Transfers between Level 1 and Level 2 were as follows:          
         
      Transfers into
Level 1
    Transfers out of
Level 1 1
    Transfers into
Level 2 1
     Transfers out of
Level 2
 

Assets:

         

Long-Term Investments:

         

Common Stocks

          $ 7,209,501      $ 7,209,501           

1    External pricing service used to reflect any significant market movements between the time the Trust valued such foreign securities and the earlier closing of foreign markets.

       

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    91


Statements of Assets and Liabilities     

 

October 31, 2014    BlackRock
Dividend
Income
Trust (BQY)
    BlackRock
EcoSolutions
Investment
Trust (BQR)
    BlackRock
Energy and
Resources
Trust (BGR)
     BlackRock
Enhanced
Capital and
Income
Fund, Inc. (CII)
    BlackRock
Enhanced
Equity
Dividend Trust
(BDJ)
   

BlackRock
Global
Opportunities
Equity

Trust (BOE)

 
             
Assets                                            

Investments at value — unaffiliated1,2

   $   87,187,895      $ 106,878,063      $   733,132,207       $ 684,573,884      $   1,624,813,008      $   1,083,535,479   

Investments at value — affiliated3

     2,508,806        6,072,805        11,796,554         7,674,540        48,015,351        11,274,358   

Cash

     4,837               31,720                207,768        122,460   

Cash pledged as collateral for OTC derivatives

            100,000                100,000        100,000          

Foreign currency at value4

     24,227        7,851        160,963         4,176        1,965        879,256   

Investments sold receivable

     67,288        56,771                       1,319,617        6,778,881   

Options written receivable

     16,082        18,801                26,884        220,455        391,858   

Dividends receivable — affiliated

     78        278        557         438        1,323        1,330   

Unrealized appreciation on forward foreign currency exchange contracts

                           2,240,727                 

Dividends receivable

     132,654        86,308        538,372         327,227        1,505,289        1,161,626   

Securities lending income receivable — affiliated

     5        84                82        524        5,800   

Other assets

     443        2,332        2,582         3,828        15,568        18,379   
  

 

 

 

Total assets

     89,942,315        113,223,293        745,662,955         694,951,786        1,676,200,868        1,104,169,427   
  

 

 

 
             
Liabilities                                            

Bank overdraft

                           15,877                 

Options written at value5

     1,120,101        1,785,981        2,135,361         10,099,589        23,677,221        18,671,948   

Collateral on securities loaned at value

            26,416                15,621               1,398,320   

Investments purchased payable

                           490,748        77,925        1,833,938   

Options written payable

     30,517        39,343                1,965        565,724        113,833   

Income dividends payable

     477,584        150,315        1,130,790         1,019,139        1,173,141        581,616   

Investment advisory fees payable

     54,183        105,091        749,810         473,615        1,099,522        890,084   

Reorganization costs payable

     197,585        198,072                                

Officer’s and Trustees’ fees payable

     16,380        1,680        386,968         95,597        696,958        555,225   

Unrealized depreciation on forward foreign currency exchange contracts

                           72,457                 

Other accrued expenses payable

     117,737        108,470        150,977         182,122        227,185        262,955   
  

 

 

 

Total liabilities

     2,014,087        2,415,368        4,553,906         12,466,730        27,517,676        24,307,919   
  

 

 

 

Net Assets

   $ 87,928,228      $ 110,807,925      $ 741,109,049       $ 682,485,056      $ 1,648,683,192      $ 1,079,861,508   
  

 

 

 
             
Net Assets Consist of                                            

Paid-in capital

   $ 82,721,272      $ 163,735,345      $ 671,744,850       $ 693,595,916      $ 1,518,259,039      $ 1,071,962,714   

Undistributed (distributions in excess of) net investment income

     (388,491            11,513,217         (1,937,207     (691,062     (4,181,410

Accumulated net realized gain (loss)

     (3,965,924     (63,128,841     22,007,049         (105,945,809     (189,280,025     (100,903,737

Net unrealized appreciation/depreciation

     9,561,371        10,201,421        35,843,933         96,772,156        320,395,240        112,983,941   
  

 

 

 

Net Assets

   $ 87,928,228      $ 110,807,925      $ 741,109,049       $ 682,485,056      $ 1,648,683,192      $ 1,079,861,508   
  

 

 

 

Net asset value6,7

   $ 14.57      $ 8.82      $ 24.90       $ 15.47      $ 9.19      $ 15.54   
  

 

 

 

1       Investments at cost — unaffiliated

   $ 77,020,463      $ 95,876,825      $ 698,925,885       $ 585,619,813      $ 1,293,338,413      $ 961,834,391   

2       Securities loaned at value

          $ 25,831              $ 16,083             $ 1,474,256   

3       Investments at cost — affiliated

   $ 2,508,806      $ 6,072,805      $ 11,796,554       $ 7,674,540      $ 48,015,351      $ 11,274,358   

4       Foreign currency at cost

   $ 24,270      $ 9,627      $ 160,963       $ 10,034      $ 1,921      $ 894,486   

5       Premiums received

   $ 516,301      $ 991,502      $ 3,776,701       $ 5,757,132      $ 12,597,822      $ 10,021,049   

6       Shares outstanding, unlimited number of shares authorized, $0.001 par value.

     6,033,028        12,564,457        29,766,217                179,482,756        69,483,161   

7       Shares outstanding, 200 million shares authorized, $0.10 par value

                           44,121,400                 

 

See Notes to Financial Statements.

 

92    ANNUAL REPORT    OCTOBER 31, 2014     


Statements of Assets and Liabilities     

 

October 31, 2014   

BlackRock
Health

Sciences

Trust (BME)

    

BlackRock
International
Growth and
Income

Trust (BGY)

   

BlackRock

Real Asset
Equity

Trust (BCF)

   

BlackRock
Resources &
Commodities
Strategy

Trust (BCX)1

    BlackRock
Utility and
Infrastructure
Trust (BUI)
 
           
Assets                                          

Investments at value — unaffiliated2,3

   $   317,286,417       $ 866,015,228      $ 503,929,317      $ 575,739,877      $ 378,096,416   

Investments at value — affiliated4

     433,398         20,925,755        39,026,977        13,507,700        14,980,589   

Cash

             14,344        21,412        61,761          

Cash pledged as collateral for OTC derivatives

             4,658,184                        

Cash pledged as collateral for exchange-traded options written

     961,801         759,000                        

Foreign currency at value5

     4,526         2,883,249        44,715               29,023   

Investments sold receivable

     260,755         8,313,348                      82,989   

Options written receivable

             431,017        31,952               47,590   

Dividends receivable — affiliated

     109         1,733        1,154        531        524   

Dividends receivable

     274,555         1,311,523        775,799        857,377        824,907   

Securities lending income receivable — affiliated

     148         6,807               15,111          

Other assets

     2,332         9,542        4,960        4,041        2,332   
  

 

 

 

Total assets

     319,224,041         905,329,730        543,836,286        590,186,398        394,064,370   
  

 

 

 
           
Liabilities                                          

Options written at value6

     4,206,661         16,460,929        3,229,938        2,468,312        4,054,473   

Collateral on securities loaned at value

             1,854,728               4,137,800          

Investments purchased payable

     706,303         16,360,859        1,566,944               10,304,000   

Options written payable

             11,293                      148,112   

Income dividends payable

             1,233,527        6,825,038        672,332        335,594   

Reorganization costs payable

                    300,364                 

Investment advisory fees payable

     253,108         686,612        539,776        491,194        307,393   

Officer’s and Trustees’ fees payable

     20,669         493,718        308,180        6,275        3,293   

Other accrued expenses payable

     104,295         242,194        147,211        190,947        149,535   
  

 

 

 

Total liabilities

     5,291,036         37,343,860        12,917,451        7,966,860        15,302,400   
  

 

 

 

Net Assets

   $ 313,933,005       $ 867,985,870      $ 530,918,835      $ 582,219,538      $ 378,761,970   
  

 

 

 
           
Net Assets Consist of                                          

Paid-in capital

   $ 183,207,205       $   1,354,954,442      $ 590,491,724      $ 733,445,686      $ 298,785,482   

Undistributed (distributions in excess of) net investment income

     80,023         (3,848,440     (6,982,373     (398,604     1,271,735   

Accumulated net realized gain (loss)

     16,727,894         (524,879,364     (113,431,055     (149,623,026     (5,375,038

Net unrealized appreciation/depreciation

     113,917,883         41,759,232        60,840,539        (1,204,518     84,079,791   
  

 

 

 

Net Assets

   $ 313,933,005       $ 867,985,870      $ 530,918,835      $ 582,219,538      $ 378,761,970   
  

 

 

 

Net asset value7

   $ 40.22       $ 7.89      $ 9.29      $ 12.50      $ 22.40   
  

 

 

 

1       Consolidated Statement of Assets and Liabilities.

           

2       Investments at cost — unaffiliated

   $ 202,207,532       $ 816,331,186      $ 442,899,480      $ 577,110,532      $ 291,974,506   

3       Securities loaned at value

           $ 1,771,251             $ 4,021,920          

4       Investments at cost — affiliated

   $ 433,398       $ 20,925,755      $ 39,026,977      $ 13,507,700      $ 14,980,589   

5       Foreign currency at cost

   $ 4,530       $ 2,900,855      $ 45,467             $ 29,032   

6       Premiums received

   $ 3,053,730       $ 8,615,856      $ 3,104,112      $ 2,646,767      $ 2,019,971   

7       Shares outstanding, unlimited number of shares authorized, $0.001 par value

     7,804,858         109,989,277        57,173,280        46,575,310        16,906,964   

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    93


Statements of Operations     

 

Year Ended October 31, 2014    BlackRock
Dividend Income
Trust (BQY)
    BlackRock
EcoSolutions
Investment
Trust (BQR)
    BlackRock
Energy and
Resources
Trust (BGR)
    BlackRock
Enhanced
Capital and
Income
Fund, Inc. (CII)
    BlackRock
Enhanced
Equity
Dividend
Trust (BDJ)
   

BlackRock
Global
Opportunities
Equity

Trust (BOE)

 
            
Investment Income                                                 

Dividends — unaffiliated

   $ 2,755,307      $ 2,765,129      $ 18,845,035      $ 31,067,597      $ 44,084,322      $ 22,545,655   

Foreign taxes withheld

     (64,967     (150,272     (1,129,834     (316,626     (504,357     (965,168

Dividends — affiliated

     1,366        2,223        14,208        5,601        15,143        9,513   

Securities lending — affiliated — net

     10        1,486        16,642        51        524        110,061   

Other income — affiliated

     1,802        3,778        7,901        843        7,663        7,530   
  

 

 

 

Total income

     2,693,518        2,622,344        17,753,952        30,757,466        43,603,295        21,707,591   
  

 

 

 
            
Expenses                                                 

Investment advisory

     656,525        1,372,212        9,919,201        5,829,083        13,220,957        11,371,765   

Reorganization

     215,813        248,587                      148,630          

Licensing

     115,716                                      

Custodian

     89,841        98,060        124,995        117,798        192,148        351,000   

Professional

     48,500        56,976        61,629        187,816        107,725        97,714   

Transfer agent

     27,431        30,166        114,477        76,709        201,901        152,385   

Officer and Trustees

     10,461        11,775        98,729        67,463        178,176        136,624   

Printing

     8,182        8,902        34,479        26,474        53,307        40,295   

Insurance

     4,406        6,938        41,588        20,473        59,038        42,426   

Registration

     2,660        9,318        9,203        15,230        62,300        23,985   

Miscellaneous

     41,135        38,593        28,633        33,663        32,605        82,365   
  

 

 

 

Total expenses

     1,220,670        1,881,527        10,432,934        6,374,709        14,256,787        12,298,559   

Less fees waived by Manager

     (2,560     (61,285     (25,351     (10,357     (30,697     (18,678

Less reorganization costs reimbursed by Manager

                                 (148,630       
  

 

 

 

Total expenses after fees waived and/or reimbursed by Manager

     1,218,110        1,820,242        10,407,583        6,364,352        14,077,460        12,279,881   
  

 

 

 

Net investment income

     1,475,408        802,102        7,346,369        24,393,114        29,525,835        9,427,710   
  

 

 

 
            
Realized and Unrealized Gain (Loss)                                                 

Net realized gain (loss) from:

            

Investments — unaffiliated

     3,696,902        (1,472,776     83,707,986        3,344,991        (2,870,394     4,233,379   

Options written

     (131,069     111,180        (460,975     11,842,946        1,156,503        23,107,432   

Foreign currency transactions

     1,226        (105,285     (44,762     2,226,609        7,870        (103,568
  

 

 

 
     3,567,059        (1,466,881     83,202,249        17,414,546        (1,706,021     27,237,243   
  

 

 

 

Net change in unrealized appreciation/depreciation on:

            

Investments — unaffiliated

     2,137,376        6,241,057        (118,599,960     20,474,136        138,772,116        (17,402,999

Options written

     (218,668     (633,552     (815,532     (45,982     (3,221,974     (4,401,165

Foreign currency translations

     (2,574     (3,013     (3,694     2,135,043        (4     (231,065
  

 

 

 
     1,916,134        5,604,492        (119,419,186     22,563,197        135,550,138        (22,035,229
  

 

 

 

Total realized and unrealized gain (loss)

     5,483,193        4,137,611        (36,216,937     39,977,743        133,844,117        5,202,014   
  

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   $ 6,958,601      $ 4,939,713      $ (28,870,568   $ 64,370,857      $ 163,369,952      $ 14,629,724   
  

 

 

 

 

See Notes to Financial Statements.

 

94    ANNUAL REPORT    OCTOBER 31, 2014     


Statements of Operations     

 

Year Ended October 31, 2014    BlackRock
Health
Sciences
Trust (BME)
    BlackRock
International
Growth and
Income
Trust (BGY)
    BlackRock
Real Asset
Equity
Trust (BCF)
    BlackRock
Resources &
Commodities
Strategy
Trust (BCX)1
    BlackRock
Utility and
Infrastructure
Trust (BUI)
 
Investment Income                                         

Dividends — unaffiliated

   $ 3,185,700      $ 22,804,892      $ 14,458,227      $ 18,888,539      $ 13,123,311   

Foreign taxes withheld

     (92,618     (1,603,832     (561,910     (1,502,728     (497,713

Dividends — affiliated

     2,339        10,701        8,050        9,059        3,509   

Securities lending — affiliated — net

     8,206        145,293        998        31,751        547   

Other income — affiliated

     2,267        7,166        3,498        21,128        3,288   
  

 

 

 

Total income

     3,105,894        21,364,220        13,908,863        17,447,749        12,632,942   
  

 

 

 
          
Expenses                                         

Investment advisory

     2,825,619        9,635,153        6,982,316        7,592,061        3,646,598   

Reorganization

                   400,860        522,264          

Custodian

     112,489        348,227        154,483        112,620        125,875   

Professional

     62,725        98,824        55,994        78,185        66,225   

Transfer agent

     39,667        135,267        97,159        82,221        51,369   

Officer and Trustees

     29,845        121,821        69,946        62,226        35,823   

Printing

     15,226        35,761        19,039        3,000        15,213   

Insurance

     11,433        60,162        35,201        17,502        9,581   

Registration

     9,281        37,969        15,435        16,079        9,279   

Miscellaneous

     27,176        116,345        54,141        32,535        58,000   
  

 

 

 

Total expenses

     3,133,461        10,589,529        7,884,574        8,518,693        4,017,963   

Less fees waived by Manager

     (4,244     (502,491     (282,238     (1,283,483     (6,623

Less reorganization costs reimbursed by Manager

                          (522,264       
  

 

 

 

Total expenses after fees waived and/or reimbursed by Manager

     3,129,217        10,087,038        7,602,336        6,712,946        4,011,340   
  

 

 

 

Net investment income (loss)

     (23,323     11,277,182        6,306,527        10,734,803        8,621,602   
  

 

 

 
          
Realized and Unrealized Gain (Loss)                                         

Net realized gain (loss) from:

          

Investments — unaffiliated

     35,691,906        23,435,384        (6,686,457     (9,395,919     9,106,272   

Options written

     (2,802,215     13,684,874        3,298,468        (196,096     (3,029,227

Foreign currency transactions

     39,589        262,487        (152,710     (52,301     (39,186
  

 

 

 
     32,929,280        37,382,745        (3,540,699     (9,644,316     6,037,859   
  

 

 

 

Net change in unrealized appreciation/depreciation on:

          

Investments — unaffiliated

     40,043,542        (92,525,089     (14,015,882 )2      (3,231,843     39,522,788   

Options written

     (1,797,104     (3,743,858     (156,605     425,446        (186,639

Foreign currency translations

     (11,979     (117,975     6,493        (13,584     10,366   
  

 

 

 
     38,234,459        (96,386,922     (14,165,994     (2,819,981     39,346,515   
  

 

 

 

Total realized and unrealized gain (loss)

     71,163,739        (59,004,177     (17,706,693     (12,464,297     45,384,374   
  

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   $   71,140,416      $   (47,726,995   $   (11,400,166   $ (1,729,494   $ 54,005,976   
  

 

 

 

 

  1   

Consolidated Statement of Operations.

  2   

Net of $69,827 foreign capital gain tax.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    95


Statements of Changes in Net Assets     

 

 

     BlackRock
Dividend Income
Trust (BQY)
    BlackRock
EcoSolutions Investment
Trust (BQR)
 
     Year Ended October 31,     Year Ended October 31,  
Increase (Decrease) in Net Assets:    2014     2013     2014     2013  
        
Operations                                 

Net investment income

   $ 1,475,408      $ 1,911,679      $ 802,102      $ 1,147,375   

Net realized gain (loss)

     3,567,059        4,615,388        (1,466,881     1,515,988   

Net change in unrealized appreciation/depreciation

     1,916,134        4,941,159        5,604,492        6,617,063   
  

 

 

   

 

 

 

Net increase in net assets resulting from operations

     6,958,601        11,468,226        4,939,713        9,280,426   
  

 

 

   

 

 

 
        
Distributions to Shareholders1                                 

Net investment income

     (2,186,227     (1,708,290     (788,584     (1,031,216

Net realized gains

     (3,812,737     (3,962,756              

Return of capital

     (14,758            (8,480,844     (7,977,500
  

 

 

   

 

 

 

Decrease in net assets resulting from distributions to shareholders

     (6,013,722     (5,671,046     (9,269,428     (9,008,716
  

 

 

   

 

 

 
        
Net Assets                                 

Total increase (decrease) in net assets

     944,879        5,797,180        (4,329,715     271,710   

Beginning of year

     86,983,349        81,186,169        115,137,640        114,865,930   
  

 

 

   

 

 

 

End of year

   $ 87,928,228      $ 86,983,349      $ 110,807,925      $ 115,137,640   
  

 

 

   

 

 

 

Undistributed (distributions in excess of) net investment income, end of year

   $ (388,491   $ 183,768                 
  

 

 

   

 

 

 

 

  1   

Determined in accordance with federal income tax regulations.

 

See Notes to Financial Statements.

 

96    ANNUAL REPORT    OCTOBER 31, 2014     


Statements of Changes in Net Assets     

 

 

     BlackRock
Energy and
Resources Trust (BGR)
    BlackRock
Enhanced Capital and
Income Fund, Inc. (CII)
 
     Year Ended October 31,     Year Ended October 31,  
Increase (Decrease) in Net Assets:    2014     2013     2014     2013  
        
Operations                                 

Net investment income

   $ 7,346,369      $ 3,487,794      $ 24,393,114      $ 13,662,033   

Net realized gain

     83,202,249        137,486,490        17,414,546        41,586,734   

Net change in unrealized appreciation/depreciation

     (119,419,186     31,425,100        22,563,197        50,511,787   
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     (28,870,568     172,399,384        64,370,857        105,760,554   
  

 

 

   

 

 

 
        
        
Distributions to Shareholders1                                 

Net investment income

     (13,106,479            (28,519,674     (13,908,365

Net realized gains

     (113,548,774     (48,221,272              

Return of capital

                   (28,838,146     (39,037,315
  

 

 

   

 

 

 

Decrease in net assets resulting from distributions to shareholders

     (126,655,253     (48,221,272     (57,357,820     (52,945,680
  

 

 

   

 

 

 
        
        
Net Assets                                 

Total increase (decrease) in net assets

     (155,525,821     124,178,112        7,013,037        52,814,874   

Beginning of year

     896,634,870        772,456,758        675,472,019        622,657,145   
  

 

 

   

 

 

 

End of year

   $ 741,109,049      $ 896,634,870      $ 682,485,056      $ 675,472,019   
  

 

 

   

 

 

 

Undistributed (distributions in excess of) net investment income, end of year

   $ 11,513,217      $ (2,782,487   $ (1,937,207   $ (37,256
  

 

 

   

 

 

 

 

  1   

Determined in accordance with federal income tax regulations.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    97


Statements of Changes in Net Assets     

 

 

     BlackRock
Enhanced Equity
Dividend Trust (BDJ)
    BlackRock
Global Opportunities
Equity Trust (BOE)
 
     Year Ended October 31,     Year Ended October 31,  
Increase (Decrease) in Net Assets:    2014     2013     2014     2013  
        
Operations                                 

Net investment income

   $ 29,525,835      $ 32,816,080      $ 9,427,710      $ 8,382,978   

Net realized gain (loss)

     (1,706,021     117,623,639        27,237,243        109,951,890   

Net change in unrealized appreciation/depreciation

     135,550,138        54,197,961        (22,035,229     86,145,100   
  

 

 

   

 

 

 

Net increase in net assets resulting from operations

     163,369,952        204,637,680        14,629,724        204,479,968   
  

 

 

   

 

 

 
        
Distributions to Shareholders1                                 

Net investment income

     (29,340,373     (32,582,758     (11,495,722     (11,468,669

Distributions in excess of net investment income2

            (35,787,362     (19,478,198     (63,152,174

Net realized gains

            (32,140,223              

Return of capital

     (79,569,763            (62,866,563     (11,996,866
  

 

 

   

 

 

 

Decrease in net assets resulting from distributions to shareholders

     (108,910,136     (100,510,343     (93,840,483     (86,617,709
  

 

 

   

 

 

 
        
Net Assets                                 

Total increase (decrease) in net assets

     54,459,816        104,127,337        (79,210,759     117,862,259   

Beginning of year

     1,594,223,376        1,490,096,039        1,159,072,267        1,041,210,008   
  

 

 

   

 

 

 

End of year

   $ 1,648,683,192      $ 1,594,223,376      $ 1,079,861,508      $ 1,159,072,267   
  

 

 

   

 

 

 

Distributions in excess of net investment income, end of year

   $ (691,062   $ (600,773   $ (4,181,410   $ (2,479,284
  

 

 

   

 

 

 

 

  1   

Determined in accordance with federal income tax regulations.

 

  2   

Taxable distribution.

 

See Notes to Financial Statements.

 

98    ANNUAL REPORT    OCTOBER 31, 2014     


Statements of Changes in Net Assets     

 

 

     BlackRock
Health Sciences
Trust (BME)
    BlackRock
International Growth
and Income Trust (BGY)
 
     Year Ended October 31,     Year Ended October 31,  
Increase (Decrease) in Net Assets:    2014     2013     2014     2013  
        
Operations                                 

Net investment income (loss)

   $ (23,323   $ 923,733      $ 11,277,182      $ 14,055,907   

Net realized gain

     32,929,280        24,717,008        37,382,745        72,629,297   

Net change in unrealized appreciation/depreciation

     38,234,459        43,710,073        (96,386,922     72,416,478   
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     71,140,416        69,350,814        (47,726,995     159,101,682   
  

 

 

   

 

 

 
        
Distributions to Shareholders1                                 

Net investment income

     (806,862     (446,759     (13,975,718     (18,226,947

Distributions in excess of net investment income2

                   (8,305,169       

Net realized gains

     (28,969,492     (17,987,036              

Return of capital

                   (57,741,812     (55,619,854
  

 

 

   

 

 

 

Decrease in net assets resulting from distributions to shareholders

     (29,776,354     (18,433,795     (80,022,699     (73,846,801
  

 

 

   

 

 

 
        
Capital Share Transactions                                 

Reinvestment of distributions

     2,407,444        867,486                 
  

 

 

   

 

 

 
        
Net Assets                                 

Total increase (decrease) in net assets

     43,771,506        51,784,505        (127,749,694     85,254,881   

Beginning of year

     270,161,499        218,376,994        995,735,564        910,480,683   
  

 

 

   

 

 

 

End of year

   $ 313,933,005      $ 270,161,499      $ 867,985,870      $ 995,735,564   
  

 

 

   

 

 

 

Undistributed (distributions in excess of) net investment income, end of period

   $ 80,023      $ 466,794      $ (3,848,440   $ (2,109,861
  

 

 

   

 

 

 

 

  1   

Determined in accordance with federal income tax regulations.

 

  2   

Tax distribution.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    99


Statements of Changes in Net Assets     

 

     BlackRock
Real Asset
Equity Trust (BCF)
    BlackRock Resources
& Commodities
Strategy Trust (BCX)1
 
     Year Ended October 31,     Year Ended October 31,  
Increase (Decrease) in Net Assets:    2014     2013     2014     2013  
        
Operations                                 

Net investment income

   $ 6,306,527      $ 6,199,566      $ 10,734,803      $ 11,454,960   

Net realized loss

     (3,540,699     (10,322,502     (9,644,316     (65,371,790

Net change in unrealized appreciation/depreciation

     (14,165,994     9,610,522        (2,819,981     20,545,737   
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     (11,400,166     5,487,586        (1,729,494     (33,371,093
  

 

 

   

 

 

 
        
Distributions to Shareholders2                                 

Net investment income

     (13,152,919     (6,692,838     (14,352,994     (6,452,839

Return of capital

     (30,161,558     (43,962,688     (32,315,467     (47,574,521
  

 

 

   

 

 

 

Decrease in net assets resulting from distributions to shareholders

     (43,314,477     (50,655,526     (46,668,461     (54,027,360
  

 

 

   

 

 

 
        
Net Assets                                 

Total decrease in net assets

     (54,714,643     (45,167,940     (48,397,955     (87,398,453

Beginning of year

     585,633,478        630,801,418        630,617,493        718,015,946   
  

 

 

   

 

 

 

End of year

   $ 530,918,835      $ 585,633,478      $ 582,219,538      $ 630,617,493   
  

 

 

   

 

 

 

Distributions in excess of net investment income, end of year

   $ (6,982,373   $ (3,635,115   $ (398,604   $ (4,416,905
  

 

 

   

 

 

 

 

  1   

Consolidated Statements of Changes in Net Assets.

 

  2  

Determined in accordance with federal income tax regulations.

 

See Notes to Financial Statements.

 

100    ANNUAL REPORT    OCTOBER 31, 2014     


Statements of Changes in Net Assets     

 

     BlackRock Utility and
Infrastructure
Trust (BUI)
 
     Year Ended October 31,  
Increase (Decrease) in Net Assets:    2014     2013  
    
Operations                 

Net investment income

   $ 8,621,602      $ 9,640,424   

Net realized gain

     6,037,859        6,418,044   

Net change in unrealized appreciation/depreciation

     39,346,515        17,842,699   
  

 

 

 

Net increase in net assets resulting from operations

     54,005,976        33,901,167   
  

 

 

 
    
Distributions to Shareholders1                 

Net investment income

     (8,667,652     (8,709,264

Net realized gains

     (6,308,640     (7,173,603

Return of capital

     (11,593,002     (8,632,231
  

 

 

 

Decrease in net assets resulting from distributions to shareholders

     (26,569,294     (24,515,098
  

 

 

 
    
Net Assets                 

Total increase in net assets

     27,436,682        9,386,069   

Beginning of year

     351,325,288        341,939,219   
  

 

 

 

End of year

   $ 378,761,970      $ 351,325,288   
  

 

 

 

Undistributed net investment income, end of year

   $ 1,271,735      $ 1,564,553   
  

 

 

 

 

  1   

Determined in accordance with federal income tax regulations.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    101


Statements of Cash Flows     

 

Year Ended October 31, 2014    BlackRock
Dividend
Income
Trust (BQY)
    BlackRock
EcoSolutions
Investment
Trust (BQR)
    BlackRock
Energy and
Resources
Trust (BGR)
    BlackRock
Enhanced
Capital and
Income
Fund, Inc. (CII)
 
        
Cash Provided by Operating Activities                                 

Net increase (decrease) in net assets resulting from operations

   $ 6,958,601      $ 4,939,713      $ (28,870,568   $ 64,370,857   

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities:

        

Decrease in cash pledged as collateral for OTC derivatives

                          600,000   

Decrease (increase) in dividends receivable

     20,945        22,186        (197     (173,092

Decrease (increase) in dividends receivable — affiliated

            (26     1,187        36   

Increase in securities lending income receivable — affiliated

     (5     (84            (82

Decrease in other assets

     2,026        3,706        15,611        1,949   

Decrease in investment advisory fees payable

     (10     (7,057     (157,511     (3,811

Increase in collateral on securities loaned at value

            26,416               15,621   

Increase in reorganization costs payable

     197,585        198,072                 

Increase in Officer’s and Trustees’ fees payable

     2,211        1,084        56,339        32,021   

Increase (decrease) in other accrued expenses payable

     5,394        (11,751     (42,637     (89,373

Net realized (gain) loss on investments and options written

     (3,565,833     1,361,596        (83,247,011     (15,187,937

Net unrealized (gain) loss on investments, options written and foreign currency translations

     (1,918,786     (5,615,926     119,415,493        (22,595,855

Premiums received from options written

     4,494,182        7,766,435        40,165,454        59,365,130   

Premiums paid on closing options written

     (4,102,820     (7,370,289     (42,759,749     (41,282,187

Proceeds from sales of long-term investments

     40,632,352        85,703,853        795,101,349        553,803,932   

Purchases of long-term investments

     (38,381,307     (78,896,557     (723,085,544     (557,289,932

Net sales of short-term securities

     1,199,539        1,616,060        49,013,969        12,807,992   
  

 

 

 

Cash provided by operating activities

     5,544,074        9,737,431        125,606,185        54,375,269   
  

 

 

 
        
Cash Used for Financing Activities                                 

Decrease in bank overdraft/bank overdraft on foreign currency at value

            (618,888            (103,383

Cash dividends paid to shareholders

     (5,536,138     (9,119,113     (125,524,463     (56,338,681
  

 

 

 

Cash used for financing activities

     (5,536,138     (9,738,001     (125,524,463     (56,442,064
  

 

 

 
        
Cash Impact from Foreign Exchange Fluctuations                                 

Cash impact from foreign exchange fluctuations

     59        8,421        (1     2,434   
  

 

 

 
        
Cash and Foreign Currency                                 

Net increase (decrease) in cash and foreign currency at value

     7,995        7,851        81,721        (2,064,361

Cash and foreign currency at value beginning of year

     21,069               110,962        2,068,537   
  

 

 

 

Cash and foreign currency at value end of year

   $ 29,064      $ 7,851      $ 192,683      $ 4,176   
  

 

 

 

 

 

See Notes to Financial Statements.

 

102    ANNUAL REPORT    OCTOBER 31, 2014     


Statements of Cash Flows (continued)     

 

Year Ended October 31, 2014   

BlackRock
Enhanced
Equity
Dividend

Trust (BDJ)

   

BlackRock

Global

Opportunities
Equity

Trust (BOE)

   

BlackRock
Health

Sciences

Trust (BME)

   

BlackRock
International
Growth and
Income

Trust (BGY)

 
        
Cash Provided by Operating Activities                                 

Net increase (decrease) in net assets resulting from operations

   $ 163,369,952      $ 14,629,724      $ 71,140,416      $ (47,726,995

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities:

        

Decrease in cash pledged as collateral for OTC derivatives

                          1,065,816   

Increase in cash pledged as collateral for exchange-traded options written

                   (961,801     (759,000

Increase in dividends receivable — affiliated

     (203     (986     (16     (1,352

Decrease in dividends receivable

     95,986        1,113,099        63,268        1,118,717   

Increase in securities lending income receivable — affiliated

     (524     (5,800     (148     (6,807

Decrease in other assets

     15,295        379,947        3,866        32,698   

Increase (decrease) in investment advisory fees payable

     24,095        (82,577     25,675        (106,186

Increase in collateral on securities loaned at value

            1,398,320               1,854,728   

Increase in Officer’s and Trustees’ fees payable

     93,450        77,251        3,444        71,774   

Decrease in other accrued expenses payable

     (90,983     (73,250     (11,463     (93,106

Net realized (gain) loss on investments and options written

     1,713,891        (27,340,811     (32,889,691     (37,120,258

Net unrealized (gain) loss on investments, options written and foreign currency translations

     (135,550,146     21,628,394        (38,246,452     96,267,541   

Premiums received from options written

     108,784,387        105,842,155        20,696,888        90,783,411   

Premiums paid on closing options written

     (93,682,339     (74,143,535     (21,793,773     (71,673,865

Proceeds from sales of long-term investments

     1,114,012,634        1,767,353,584        237,315,777        1,888,929,736   

Purchases of long-term investments

     (1,051,752,876     (1,745,853,253     (208,686,330     (1,845,402,837

Net sales of short-term securities

     904,995        25,113,226        711,264        1,420,975   
  

 

 

 

Cash provided by operating activities

     107,937,614        90,035,488        27,370,924        78,654,990   
  

 

 

 
        
Cash Used for Financing Activities                                 

Decrease in bank overdraft

            (295            (1,358

Cash dividends paid to shareholders

     (107,736,995     (93,258,867     (27,368,910     (78,789,172
  

 

 

 

Cash used for financing activities

     (107,736,995     (93,259,162     (27,368,910     (78,790,530
  

 

 

 
        
Cash Impact from Foreign Exchange Fluctuations                                 

Cash impact from foreign exchange fluctuations

     4        182,032        14        (8,907
  

 

 

 
        
Cash and Foreign Currency                                 

Net increase (decrease) in cash and foreign currency at value

     200,623        (3,041,642     2,028        (144,447

Cash and foreign currency at value beginning of year

     9,110        4,043,358        2,498        3,042,040   
  

 

 

 

Cash and foreign currency at value end of year

   $ 209,733      $ 1,001,716      $ 4,526      $ 2,897,593   
  

 

 

 
        
Non-Cash Financing Activities                                 

Capital shares issued in reinvestment of dividends paid to shareholders

                 $ 2,407,444          
  

 

 

 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    103


Statements of Cash Flows (concluded)     

 

Year Ended October 31, 2014   

BlackRock

Real Asset
Equity

Trust (BCF)

    BlackRock
Resources &
Commodities
Strategy
Trust (BCX)1
   

BlackRock

Utility and
Infrastructure

Trust (BUI)

 
      
Cash Provided by Operating Activities                         

Net increase (decrease) in net assets resulting from operations

   $ (11,400,166   $ (1,729,494   $ 54,005,976   

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities:

      

Decrease (increase) in dividends receivable — affiliated

     (437     105        (16

Decrease in dividends receivable

     118,899        132,673        339,581   

Increase in securities lending income receivable — affiliated

            (15,111       

Decrease (increase) in other assets

     14,535        (84     (49

Increase in collateral on securities on loaned at value

            4,137,800          

Increase (decrease) in investment advisory fees payable

     (26,495     (38,512     15,343   

Increase in Officer’s and Trustees’ fees payable

     40,276        3,137        1,506   

Increase (decrease) in other accrued expenses payable

     240,612        (74,565     (33,869

Net realized (gain) loss on investments and options written

     3,387,989        9,592,015        (6,077,045

Net unrealized (gain) loss on investments, options written and foreign currency translations

     14,101,764        2,806,188        (39,330,615

Premiums received from options written

     32,869,895        28,811,456        15,949,640   

Premiums paid on closing options written

     (28,779,113     (28,001,657     (17,250,040

Proceeds from sales of long-term investments

     477,887,899        411,501,691        163,006,422   

Purchases of long-term investments

     (434,198,868     (397,223,188     (145,602,881

Net (purchases) sales of short-term securities

     (17,863,798     15,909,255        739,413   
  

 

 

 

Cash provided by operating activities

     36,392,992        45,811,709        25,763,366   
  

 

 

 
      
Cash Used for Financing Activities                         

Decrease in bank overdraft on foreign currency at value

                   (990,610

Cash dividends paid to shareholders

     (36,489,439     (45,996,129     (26,233,700
  

 

 

 

Cash used for financing activities

     (36,489,439     (45,996,129     (27,224,310
  

 

 

 
      
Cash Impact from Foreign Exchange Fluctuations                         

Cash impact from foreign exchange fluctuations

     754               (5,534
  

 

 

 
      
Cash and Foreign Currency                         

Net decrease in cash and foreign currency at value

     (95,693     (184,420     (1,466,478

Cash and foreign currency at value beginning of year

     161,820        246,181        1,495,501   
  

 

 

 

Cash and foreign currency at value end of year

   $ 66,127      $ 61,761      $ 29,023   
  

 

 

 

 

  1  

Consolidated Statement of Cash Flows.

 

See Notes to Financial Statements.

 

104    ANNUAL REPORT    OCTOBER 31, 2014     


Financial Highlights      BlackRock Dividend Income Trust (BQY)   

 

 

 

 

     Year Ended October 31,  
     2014     2013     2012     2011     2010  
Per Share Operating Performance                                         

Net asset value, beginning of year

   $ 14.42      $ 13.46      $ 13.61      $ 14.26      $ 13.38   
  

 

 

 

Net investment income1

     0.24        0.32        0.33        0.35        0.33   

Net realized and unrealized gain (loss)

     0.91        1.58        0.79        (0.00 )2      1.36   
  

 

 

 

Net increase from investment operations

     1.15        1.90        1.12        0.35        1.69   
  

 

 

 

Distributions:3

          

Net investment income

     (0.36     (0.28     (0.67     (0.22     (0.11

Net realized gain

     (0.63     (0.66     (0.60     (0.78     (0.70

Return of capital

     (0.01                            
  

 

 

 

Total distributions

     (1.00     (0.94     (1.27     (1.00     (0.81
  

 

 

 

Net asset value, end of year

   $ 14.57      $ 14.42      $ 13.46      $ 13.61      $ 14.26   
  

 

 

 

Market price, end of year

   $ 13.18      $ 12.84      $ 12.34      $ 12.43      $ 13.44   
  

 

 

 
          
Total Return4                                         

Based on net asset value

     9.01     15.50     9.48     2.79     14.08
  

 

 

 

Based on market price

     10.75     12.18     9.90     (0.40 )%      24.67
  

 

 

 
          
Ratios to Average Net Assets                                         

Total expenses

     1.39 %5      1.19     1.18     1.19     1.23
  

 

 

 

Total expenses after fees waived

     1.39 %5      1.18     1.18     1.19     1.22
  

 

 

 

Net investment income

     1.69     2.29     2.50     2.45     2.40
  

 

 

 
          
Supplemental Data                                         

Net assets, end of year (000)

   $ 87,928      $ 86,893      $ 81,186      $ 82,096      $ 86,047   
  

 

 

 

Portfolio turnover rate

     45     103     129     97     59
  

 

 

 

 

  1   

Based on average shares outstanding.

 

  2   

Amount is less than $(0.005) per share.

 

  3   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  4   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

  5   

Includes reorganization costs associated with the Trust’s merger. Without these costs, total expenses and total expenses after fees waived would have been 1.15% and 1.15%, respectively.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    105


Financial Highlights      BlackRock EcoSolutions Investments Trust (BQR)   

 

 

     Year Ended October 31,  
     2014     2013     2012     2011     2010  
Per Share Operating Performance                                         

Net asset value, beginning of year

   $ 9.16      $ 9.14      $ 9.38      $ 10.65      $ 10.56   
  

 

 

 

Net investment income1

     0.06        0.09        0.08        0.10        0.05   

Net realized and unrealized gain (loss)

     0.34        0.65        0.56        (0.30     1.24   
  

 

 

 

Net increase (decrease) from investment operations

     0.40        0.74        0.64        (0.20     1.29   
  

 

 

 

Distributions:2

          

Net investment income

     (0.06     (0.08     (0.07     (0.11     (0.05

Return of capital

     (0.68     (0.64     (0.81     (0.96     (1.15
  

 

 

 

Total distributions

     (0.74     (0.72     (0.88     (1.07     (1.20
  

 

 

 

Net asset value, end of year

   $ 8.82      $ 9.16      $ 9.14      $ 9.38      $ 10.65   
  

 

 

 

Market price, end of year

   $ 7.65      $ 7.93      $ 8.66      $ 8.58      $ 11.69   
  

 

 

 
          
Total Return3                                         

Based on net asset value

     5.55     9.08     7.77     (2.13 )%      13.04
  

 

 

 

Based on market price

     5.74     (0.34 )%      11.63     (18.45 )%      28.08
  

 

 

 
          
Ratios to Average Net Assets                                         

Total expenses

     1.65 %4      1.44     1.44     1.40     1.45
  

 

 

 

Total expenses after fees waived

     1.59 %4      1.41     1.43     1.40     1.45
  

 

 

 

Net investment income

     0.70     0.98     0.92     0.98     0.47
  

 

 

 
          
Supplemental Data                                         

Net assets, end of year (000)

   $ 110,808      $ 115,138      $ 114,866      $ 117,497      $ 131,002   
  

 

 

 

Portfolio turnover rate

     71     94     107     86     124
  

 

 

 

 

  1   

Based on average shares outstanding.

 

  2   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  3   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

  4   

Includes reorganization costs associated with the Trust’s merger. Without these costs, total expenses and total expenses after fees waived would have been 1.43% and 1.37%, respectively.

 

See Notes to Financial Statements.

 

106    ANNUAL REPORT    OCTOBER 31, 2014     


Financial Highlights      BlackRock Energy and Resources Trust (BGR)   

 

     Year Ended October 31,  
     2014     2013     2012     2011     2010  
          
Per Share Operating Performance                                         

Net asset value, beginning of year

   $ 30.12      $ 25.95      $ 28.33      $ 25.87      $ 23.81   
  

 

 

 

Net investment income1

     0.25        0.12        0.13        0.06        0.26   

Net realized and unrealized gain (loss)

     (1.21     5.67        (0.74     4.02        3.42   
  

 

 

 

Net increase (decrease) from investment operations

     (0.96     5.79        (0.61     4.08        3.68   
  

 

 

 

Distributions:2

          

Net investment income

     (0.44            (0.03     (0.24     (0.17

Net realized gain

     (3.82     (1.62     (1.44     (1.38     (1.45

Return of capital

                   (0.30              
  

 

 

 

Total distributions

     (4.26     (1.62     (1.77     (1.62     (1.62
  

 

 

 

Net asset value, end of year

   $ 24.90      $ 30.12      $ 25.95      $ 28.33      $ 25.87   
  

 

 

 

Market price, end of year

   $ 23.78      $ 26.82      $ 24.28      $ 26.54      $ 25.36   
  

 

 

 
          
Total Return3                                         

Based on net asset value

     (2.36 )%      23.68     (1.76 )%      16.09     15.89
  

 

 

 

Based on market price

     4.73     17.70     (1.88 )%      10.95     21.95
  

 

 

 
          
Ratios to Average Net Assets                                         

Total expenses

     1.26     1.26     1.28     1.26     1.27
  

 

 

 

Total expenses after fees waived

     1.26     1.25     1.22     1.15     1.11
  

 

 

 

Net investment income

     0.89     0.42     0.50     0.19     1.04
  

 

 

 
          
Supplemental Data                                         

Net assets, end of year (000)

   $ 741,109      $ 896,635      $ 772,457      $ 843,328      $ 769,976   
  

 

 

 

Portfolio turnover rate

     85     132     86     111     80
  

 

 

 

 

  1   

Based on average shares outstanding.

 

  2   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  3   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    107


Financial Highlights      BlackRock Enhanced Capital and Income Fund, Inc. (CII)   

 

     Year Ended October 31,  
     2014     2013     2012     2011     2010  
Per Share Operating Performance                                         

Net asset value, beginning of year

   $ 15.31      $ 14.11      $ 13.87      $ 14.53      $ 14.40   
  

 

 

 

Net investment income1

     0.55        0.31        0.33        0.35        0.31   

Net realized and unrealized gain

     0.91        2.09        1.29        0.68        1.76   
  

 

 

 

Net increase from investment operations

     1.46        2.40        1.62        1.03        2.07   
  

 

 

 

Distributions:2

          

Net investment income

     (0.65     (0.32     (0.33 )3      (0.35 )3      (0.31

Distributions in excess of net investment income4

                   (0.20 )3      (0.23 )3        

Net realized gain

                   (0.13     (1.11     (1.33

Return of capital

     (0.65     (0.88     (0.72            (0.30
  

 

 

 

Total distributions

     (1.30     (1.20     (1.38     (1.69     (1.94
  

 

 

 

Net asset value, end of year

   $ 15.47      $ 15.31      $ 14.11      $ 13.87      $ 14.53   
  

 

 

 

Market price, end of year

   $ 14.89      $ 13.52      $ 12.99      $ 12.39      $ 15.03   
  

 

 

 
          
Total Return5                                         

Based on net asset value

     10.49     18.97     12.94     7.56     15.22
  

 

 

 

Based on market price

     20.43     14.11     16.39     (7.11 )%      24.73
  

 

 

 
          
Ratios to Average Net Assets                                         

Total expenses

     0.93     0.93     0.94     0.94     0.93
  

 

 

 

Total expenses after fees waived

     0.93     0.93     0.94     0.93     0.93
  

 

 

 

Net investment income

     3.56     2.15     2.34     2.40     2.14
  

 

 

 
          
Supplemental Data                                         

Net assets, end of year (000)

   $ 682,485      $ 675,472      $ 622,657      $ 612,145      $ 635,849   
  

 

 

 

Portfolio turnover rate

     80     218     205     190     210
  

 

 

 

 

  1   

Based on average shares outstanding.

 

  2   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  3   

The amount of distributions to shareholders from net investment income reported in October 31, 2012 and October 31, 2011 has been reclassified to allocate the amount between distributions from net investment income and distributions in excess of net investment income; both of which were included in the prior year net investment income in the amount of $0.53 and $0.58, respectively.

 

  4   

Taxable distribution.

 

  5   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

 

See Notes to Financial Statements.

 

108    ANNUAL REPORT    OCTOBER 31, 2014     


Financial Highlights      BlackRock Enhanced Equity Dividend Trust (BDJ)   

 

     Year Ended October 31,  
     2014     2013     2012     2011     2010  
Per Share Operating Performance                                         

Net asset value, beginning of year

   $ 8.88      $ 8.30      $ 8.03      $ 8.32      $ 8.13   
  

 

 

 

Net investment income1

     0.16        0.18        0.18        0.16        0.17   

Net realized and unrealized gain

     0.76        0.96        0.77        0.38        1.00   
  

 

 

 

Net increase from investment operations

     0.92        1.14        0.95        0.54        1.17   
  

 

 

 

Distributions:2

          

Net investment income

     (0.17     (0.18     (0.18 )3      (0.16 )3      (0.17

Distributions in excess of net investment income4

            (0.20     (0.22 )3      (0.35 )3        

Net realized gain

            (0.18                     

Return of capital

     (0.44            (0.28     (0.32     (0.81
  

 

 

 

Total distributions

     (0.61     (0.56     (0.68     (0.83     (0.98
  

 

 

 

Net asset value, end of year

   $ 9.19      $ 8.88      $ 8.30      $ 8.03      $ 8.32   
  

 

 

 

Market price, end of year

   $ 8.35      $ 7.72      $ 7.41      $ 7.29      $ 8.99   
  

 

 

 
          
Total Return5                                         

Based on net asset value

     11.40     15.11     13.22     6.88     15.23
  

 

 

 

Based on market price

     16.42     12.09     11.34     (10.20 )%      28.30
  

 

 

 
          
Ratios to Average Net Assets                                         

Total expenses

     0.87 %6      0.87     0.95     1.15     1.16
  

 

 

 

Total expenses after fees waived

     0.86 %6      0.87     0.95     1.14     1.16
  

 

 

 

Net investment income

     1.81     2.13     2.16     1.92     2.06
  

 

 

 
          
Supplemental Data                                         

Net assets, end of year (000)

   $ 1,648,683      $ 1,594,223      $ 1,490,096      $ 575,712      $ 592,328   
  

 

 

 

Portfolio turnover rate

     63     180     185     231     232
  

 

 

 

 

  1   

Based on average shares outstanding.

 

  2   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  3   

The amount of distributions to shareholders from net investment income reported in October 31, 2012 and October 31, 2011 has been reclassified to allocate the amount between distributions from net investment income and distributions in excess of net investment income; both of which were included in the prior year net investment income in the amount of $0.40 and $0.51, respectively.

 

  4   

Taxable distribution.

 

  5   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

  6   

Includes reorganization costs associated with the Trust’s merger. Without these costs, total expenses and total expenses after fees waived would have been 0.86% and 0.86%, respectively

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    109


Financial Highlights    BlackRock Global Opportunities Equity Trust (BOE)

 

 

     Year Ended October 31,  
     2014     2013     2012     2011     2010  
Per Share Operating Performance                                         

Net asset value, beginning of year

   $ 16.68      $ 14.99      $ 16.03      $ 18.68      $ 18.64   
  

 

 

 

Net investment income1

     0.14        0.12        0.20        0.17        0.19   

Net realized and unrealized gain (loss)

     0.07        2.82        0.72        (0.54     2.13   
  

 

 

 

Net increase (decrease) from investment operations

     0.21        2.94        0.92        (0.37     2.32   
  

 

 

 

Distributions:2

          

Net investment income

     (0.17     (0.17     (0.22     (0.17 )3      (0.18 )3 

Distributions in excess of net investment income4

     (0.28     (0.91            (0.68 )3      (1.26 )3 

Net realized gain

                          (0.61     (0.25

Return of capital

     (0.90     (0.17     (1.74     (0.82     (0.59
  

 

 

 

Total distributions

     (1.35     (1.25     (1.96     (2.28     (2.28
  

 

 

 

Net asset value, end of year

   $ 15.54      $ 16.68      $ 14.99      $ 16.03      $ 18.68   
  

 

 

 

Market price, end of year

   $ 14.00      $ 14.74      $ 13.24      $ 14.95      $ 19.06   
  

 

 

 
          
Total Return5                                         

Based on net asset value

     2.10     21.93     7.36     (2.55 )%      13.76
  

 

 

 

Based on market price

     4.09     21.99     1.68     (10.93 )%      17.58
  

 

 

 
          
Ratios to Average Net Assets                                         

Total expenses

     1.08     1.08     1.10     1.10     1.11
  

 

 

 

Total expenses after fees waived

     1.08     1.08     1.10     1.09     1.10
  

 

 

 

Net investment income

     0.83     0.77     1.34     0.96     1.03
  

 

 

 
          
Supplemental Data                                         

Net assets, end of year (000)

   $ 1,079,862      $ 1,159,072      $ 1,041,210      $ 1,113,920      $ 1,290,105   
  

 

 

 

Portfolio turnover rate

     150     279     298     253     264
  

 

 

 

 

  1  

Based on average shares outstanding.

 

  2  

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  3  

The amount of distributions to shareholders from net investment income reported in October 31, 2011 and October 31, 2010 has been reclassified to allocate the amount between distributions from net investment income and distributions in excess of net investment income; both of which were included in the prior year net investment income in the amount of $0.85 and $1.44, respectively.

 

  4  

Taxable distribution.

 

  5  

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

See Notes to Financial Statements.

 

110    ANNUAL REPORT    OCTOBER 31, 2014     


Financial Highlights    BlackRock Health Sciences Trust (BME)

 

 

     Year Ended October 31,  
     2014     2013     2012     2011     2010  
Per Share Operating Performance                                         

Net asset value, beginning of year

   $ 34.92      $ 28.34      $ 26.65      $ 27.19      $ 25.37   
  

 

 

 

Net investment income (loss)1

     (0.00 )2      0.12        0.08        (0.01     0.02   

Net realized and unrealized gain

     9.14        8.85        4.11        1.71        3.34   
  

 

 

 

Net increase from investment operations

     9.14        8.97        4.19        1.70        3.36   
  

 

 

 

Distributions:3

          

Net investment income

     (0.10     (0.06     (0.09            (0.02

Net realized gain

     (3.74     (2.33     (2.41     (2.24     (1.52

Return of capital

                                   
  

 

 

 

Total distributions

     (3.84     (2.39     (2.50     (2.24     (1.54
  

 

 

 

Net asset value, end of year

   $ 40.22      $ 34.92      $ 28.34      $ 26.65      $ 27.19   
  

 

 

 

Market price, end of year

   $ 41.37      $ 33.56      $ 27.86      $ 25.81      $ 27.14   
  

 

 

 
          
Total Return4                                         

Based on net asset value

     28.00     33.37     16.42     6.43     13.69
  

 

 

 

Based on market price

     36.99     30.38     18.17     3.26     27.33
  

 

 

 
          
Ratios to Average Net Assets                                         

Total expenses

     1.11     1.12     1.13     1.14     1.15
  

 

 

 

Total expenses after fees waived

     1.11     1.12     1.13     1.13     1.15
  

 

 

 

Net investment income (loss)

     (0.01 )%      0.38     0.29     (0.02 )%      0.09
  

 

 

 
          
Supplemental Data                                         

Net assets, end of year (000)

   $ 313,933      $ 270,161      $ 218,377      $ 202,675      $ 206,392   
  

 

 

 

Portfolio turnover rate

     74     155     209     226     239
  

 

 

 

 

  1  

Based on average shares outstanding.

 

  2  

Amount is less than $(0.005) per share.

 

  3  

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  4  

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    111


Financial Highlights      BlackRock International Growth and Income Trust (BGY)   

 

     Year Ended October 31,  
     2014     2013     2012     2011     2010  
Per Share Operating Performance                                         

Net asset value, beginning of year

   $ 9.05      $ 8.28      $ 8.72      $ 10.52      $ 10.92   
  

 

 

 

Net investment income1

     0.10        0.13        0.16        0.14        0.14   

Net realized and unrealized gain (loss)

     (0.53     1.31        0.35        (0.58     1.05   
  

 

 

 

Net increase (decrease) from investment operations

     (0.43     1.44        0.51        (0.44     1.19   
  

 

 

 

Distributions:2

          

Net investment income

     (0.13     (0.17     (0.18     (0.14 )3      (0.12

Distributions in excess of net investment income4

     (0.08                   (0.53 )3        

Return of capital

     (0.52     (0.50     (0.77     (0.69     (1.47
  

 

 

 

Total distributions

     (0.73     (0.67     (0.95     (1.36     (1.59
  

 

 

 

Net asset value, end of year

   $ 7.89      $ 9.05      $ 8.28      $ 8.72      $ 10.52   
  

 

 

 

Market price, end of year

   $ 7.26      $ 8.14      $ 7.41      $ 7.88      $ 10.56   
  

 

 

 
          
Total Return5                                         

Based on net asset value

     (4.49 )%      19.25     7.65     (4.55 )%      12.06
  

 

 

 

Based on market price

     (2.29 )%      19.86     6.61     (14.07 )%      12.49
  

 

 

 
          
Ratios to Average Net Assets                                         

Total expenses

     1.10     1.09     1.11     1.10     1.13
  

 

 

 

Total expenses after fees waived

     1.05     1.07     1.11     1.10     1.13
  

 

 

 

Net investment income

     1.17     1.49     1.97     1.37     1.40
  

 

 

 
          
Supplemental Data                                         

Net assets, end of year (000)

   $ 867,986      $ 995,736      $ 910,481      $ 959,153      $ 1,156,583   
  

 

 

 

Portfolio turnover rate

     195     266     226     217     247
  

 

 

 

 

  1   

Based on average shares outstanding.

 

  2   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  3   

The amount of distributions to shareholders from net investment income reported in October 31, 2011 has been reclassified to allocate the amount between distributions from net investment income and distributions in excess of net investment income; both of which were included in the prior year net investment income in the amount of $0.67.

 

  4   

Taxable distribution.

 

  5   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

See Notes to Financial Statements.

 

112    ANNUAL REPORT    OCTOBER 31, 2014     


Financial Highlights      BlackRock Real Asset Equity Trust (BCF)   

 

     Year Ended October 31,  
     2014     2013     2012     2011     2010  
Per Share Operating Performance                                         

Net asset value, beginning of year

   $ 10.24      $ 11.03      $ 12.45      $ 13.42      $ 11.73   
  

 

 

 

Net investment income1

     0.11        0.11        0.12        0.11        0.17   

Net realized and unrealized gain (loss)

     (0.30     (0.01     (0.50     0.01        2.61   
  

 

 

 

Net increase (decrease) from investment operations

     (0.19     0.10        (0.38     0.12        2.78   
  

 

 

 

Distributions:2

          

Net investment income

     (0.23     (0.12     (0.13     (0.07 )3      (0.26 )3 

Distributions in excess of net investment income4

                          (0.14 )3      (0.48 )3 

Net realized gain

                   (0.55     (0.50       

Return of capital

     (0.53     (0.77     (0.36     (0.38     (0.35
  

 

 

 

Total distributions

     (0.76     (0.89     (1.04     (1.09     (1.09
  

 

 

 

Net asset value, end of year

   $ 9.29      $ 10.24      $ 11.03      $ 12.45      $ 13.42   
  

 

 

 

Market price, end of year

   $ 8.00      $ 9.12      $ 10.39      $ 11.84      $ 13.46   
  

 

 

 
          
Total Return5                                         

Based on net asset value

     (1.10 )%      1.81     (2.79 )%      0.58     24.65
  

 

 

 

Based on market price

     (4.37 )%      (3.75 )%      (3.71 )%      (4.64 )%      28.08
  

 

 

 
          
Ratios to Average Net Assets                                         

Total expenses

     1.36 %6      1.29     1.29     1.29     1.28
  

 

 

 

Total expenses after fees waived and paid indirectly

     1.31 %6      1.19     1.14     1.09     1.08
  

 

 

 

Net investment income

     1.08     1.04     1.08     0.77     1.37
  

 

 

 
          
Supplemental Data         

Net assets, end of year (000)

   $ 530,919      $ 585,633      $ 630,801      $ 711,917      $ 765,463   
  

 

 

 

Portfolio turnover rate

     76     89     72     79     71
  

 

 

 

 

  1   

Based on average shares outstanding.

 

  2   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  3   

The amount of distributions to shareholders from net investment income reported in October 31, 2011 and October 31, 2010 has been reclassified to allocate the amount between distributions from net investment income and distributions in excess of net investment income; both of which were included in the prior year net investment income in the amount of $0.21 and $0.74, respectively.

 

  4   

Taxable distribution.

 

  5   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

  6   

Includes reorganization costs associated with the Trust’s merger. Without these costs, total expenses and total expenses after fees waived would have been 1.29% and 1.24%, respectively.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    113


Consolidated Financial Highlights      BlackRock Resources & Commodities Strategy Trust (BCX)   

 

 

                      

Period

March 30,

20111

through

October 31,

2011

 
        
     Year Ended October 31    
     2014     2013     2012    
        
Per Share Operating Performance                                 

Net asset value, beginning of period

   $ 13.54      $ 15.42      $ 16.83      $ 19.10 2 
  

 

 

 

Net investment income3

     0.23        0.25        0.18        0.03   

Net realized and unrealized loss

     (0.27     (0.97     (0.19     (1.57
  

 

 

 

Net decrease from investment operations

     (0.04     (0.72     (0.01     (1.54
  

 

 

 

Distributions:4

        

Net investment income

     (0.31     (0.14     (0.26       

Net realized gain

                   (0.01     (0.24

Return of capital

     (0.69     (1.02     (1.13     (0.46
  

 

 

 

Total distributions

     (1.00     (1.16     (1.40     (0.70
  

 

 

 

Capital charges with respect to the issuance of shares

                          (0.03
  

 

 

 

Net asset value, end of period

   $ 12.50      $ 13.54      $ 15.42      $ 16.83   
  

 

 

 

Market price, end of period

   $ 10.78      $ 11.68      $ 14.12      $ 14.95   
  

 

 

 
        
Total Return5                                 

Based on net asset value

     0.61     (3.61 )%6      0.90     (7.80 )%7 
  

 

 

 

Based on market price

     0.58     (9.19 )%      4.02     (21.79 )%7 
  

 

 

 
        
Ratios to Average Net Assets                                 

Total expenses

     1.35 %8      1.27     1.25     1.35 %9 
  

 

 

 

Total expenses after fees waived

     1.06 %8      1.07     1.05     1.13 %9 
  

 

 

 

Net investment income

     1.70     1.76     1.14     0.27 %9 
  

 

 

 
        
Supplemental Data                                 

Net assets, end of period (000)

   $ 582,220      $ 630,617      $ 718,016      $ 783,792   
  

 

 

 

Portfolio turnover rate

     62     156     100     27
  

 

 

 

 

  1   

Commencement of investment operations. This information includes the initial investment by BlackRock HoldCo2, Inc.

 

  2   

Net asset value, beginning of period, reflects a deduction of $0.8975 per share sales charge from initial offering price of $20.00 per share.

 

  3   

Based on average shares outstanding.

 

  4   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  5   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

  6   

Includes a payment from an affiliate to compensate for foregone securities lending revenue which impacted the Trust’s total return. Not including this payment the Trust’s total return would have been (3.68)%.

 

  7   

Aggregate total return.

 

  8   

Includes reorganization costs associated with the Trust’s merger. Without these costs, total expenses and total expenses after fees waived would have been 1.26% and 1.06%, respectively.

 

  9   

Annualized.

 

See Notes to Financial Statements.

 

114    ANNUAL REPORT    OCTOBER 31, 2014     


Financial Highlights      BlackRock Utility and Infrastructure Trust (BUI)   

 

 

                

Period

November 25,
20111

through

October 31,
2012

 
                
     Year Ended October 31,    
     2014     2013    
      
Per Share Operating Performance                         

Net asset value, beginning of period

   $ 20.78      $ 20.22      $ 19.10 2 
  

 

 

 

Net investment income3

     0.51        0.57        0.54   

Net realized and unrealized gain

     2.68        1.44        1.71   
  

 

 

 

Net increase from investment operations

     3.19        2.01        2.25   
  

 

 

 

Distributions:4

      

Net investment income

     (0.51     (0.52     (0.49

Net realized gain

     (0.37     (0.42     (0.41

Return of capital

     (0.69     (0.51     (0.19
  

 

 

 

Total distributions

     (1.57     (1.45     (1.09
  

 

 

 

Capital charges with respect to the issuance of shares

                   (0.04
  

 

 

 

Net asset value, end of period

   $ 22.40      $ 20.78      $ 20.22   
  

 

 

 

Market price, end of period

   $ 20.02      $ 18.36      $ 19.03   
  

 

 

 
      
Total Return5                         

Based on net asset value

     16.94     11.18     12.05 %6 
  

 

 

 

Based on market price

     18.29     4.37     0.71 %6 
  

 

 

 
      
Ratios to Average Net Assets                         

Total expenses

     1.10     1.11     1.12 %7 
  

 

 

 

Total expenses after fees waived

     1.10     1.10     1.11 %7 
  

 

 

 

Total expenses after fees waived and excluding excise tax

     1.10     1.10     1.10 %7 
  

 

 

 

Net investment income

     2.36     2.83     2.94 %7 
  

 

 

 
      
Supplemental Data                         

Net assets, end of period (000)

   $ 378,762      $ 351,325      $ 341,939   
  

 

 

 

Portfolio turnover rate

     41     133     90
  

 

 

 

 

  1   

Commencement of investment operations. This information includes the initial investment by BlackRock HoldCo2, Inc.

 

  2   

Net asset value, beginning of period, reflects a deduction of $0.8975 per share sales charge from initial offering price of $20.00 per share.

 

  3   

Based on average shares outstanding.

 

  4   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  5   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

  6   

Aggregate total return.

 

  7   

Annualized.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    OCTOBER 31, 2014    115


Notes to Financial Statements     

 

1. Organization:

BlackRock Dividend Income Trust (“BQY”), BlackRock EcoSolutions Investment Trust (“BQR”), BlackRock Energy and Resources Trust (“BGR”), BlackRock Enhanced Capital and Income Fund, Inc. (“CII”), BlackRock Enhanced Equity Dividend Trust (“BDJ”), BlackRock Global Opportunities Equity Trust (“BOE”), BlackRock Health Sciences Trust (“BME”), BlackRock International Growth and Income Trust (“BGY”), BlackRock Real Asset Equity Trust (“BCF”), BlackRock Resources & Commodities Strategy Trust (“BCX”), and BlackRock Utility and Infrastructure Trust (“BUI”) (each, a “Trust” and collectively, the “Trusts”) are organized as Delaware statutory trusts, except CII which is organized as a Maryland Corporation. BQY, CII, BDJ and BOE are registered as diversified, closed-end management investment companies under the Investment Company Act of 1940, as amended (the “1940 Act”). BQR, BGR, BME, BGY, BCF, BCX and BUI are registered as non-diversified, closed-end management investment companies under the 1940 Act. The Board of Directors and Board of Trustees of the Trusts are collectively referred to throughout this report as the “Board of Trustees” or the “Board”, and the directors/trustees thereof are collectively referred to throughout this report as “Trustees.” The Trusts determine and make available for publication the NAVs of their shares on a daily basis. During the period, the Board approved a change of the fiscal year of each Trust from October 31st to December 31st.

The Trusts, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of closed-end funds referred to as the Closed-End Complex.

Reorganizations: On June 5, 2014, the Board and shareholders of each of BQY, BQR and BCF (individually a “Target Trust” and collectively the “Target Trusts”) approved separate plans of reorganization whereby BDJ would acquire all of the assets and assume all of the liabilities of BQY in exchange for newly issued shares of BDJ and BCX would acquire all of the assets and assume all of the liabilities of BQR and BCF in exchange for newly issued shares of BCX in separate merger transactions.

Basis of Consolidation: The accompanying consolidated financial statements of BCX include the accounts of BlackRock Cayman Resources & Commodities Strategy Fund, Ltd. (the “Subsidiary”), which is a wholly owned subsidiary of BCX and primarily invests in commodity-related instruments. The Subsidiary enables BCX to hold these commodity-related instruments and satisfy regulated investment company tax requirements. BCX may invest up to 25% of its total assets in the Subsidiary. Intercompany accounts and transactions, if any, have been eliminated. The Subsidiary is subject to the same investment policies and restrictions that apply to BCX, except that the Subsidiary may invest without limitation in commodity-related instruments.

2. Significant Accounting Policies:

The Trusts’ financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Trust is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Trusts.

Valuation: The Trusts’ investments are valued at fair value as of the close of trading on the New York Stock Exchange (“NYSE”) (generally 4:00 p.m., Eastern time). U.S. GAAP defines fair value as the price the Trusts would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Trusts determine the fair values of their financial instruments at market value using independent dealers or pricing services under policies approved by the Board. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to provide oversight of the pricing function for the Trusts for all financial instruments.

Equity investments traded on a recognized securities exchange are valued at the official close each day, if available. For equity investments traded on more than one exchange, the official close price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day may be valued at the last available bid. Investments in open-end registered investment companies are valued at the NAV each business day.

The Trusts value their investments in BlackRock Liquidity Series, LLC Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon each Trust’s pro rata ownership in the underlying fund’s net assets. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments will follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act. The Trusts may withdraw up to 25% of their investment daily, although the manager of the Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

 

116    ANNUAL REPORT    OCTOBER 31, 2014     


Notes to Financial Statements (continued)     

 

Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of business on the NYSE. Forward foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of business on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

Exchange-traded options are valued at the mean between the last bid and ask prices at the close of the options market in which the options trade. An exchange-traded option for which there is no mean price is valued at the last bid (long positions) or ask (short positions) price. If no bid or ask price is available, the prior day’s price will be used, unless it is determined that the prior day’s price no longer reflects the fair value of the option. Over-the-counter (“OTC”) options are valued by an independent pricing service using a mathematical model which incorporates a number of market data factors, such as the trades and prices of the underlying instruments.

In the event that the application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Investments”). When determining the price for Fair Value Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Trust might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant consistent with the principles of fair value measurement, which include the market approach, income approach and/or in the case of recent investments, the cost approach, as appropriate. The market approach generally consists of using comparable market transactions. The income approach generally is used to discount future cash flows to present value and is adjusted for liquidity as appropriate. These factors include but are not limited to: (i) attributes specific to the investment or asset; (ii) the principal market for the investment or asset; (iii) the customary participants in the principal market for the investment or asset; (iv) data assumptions by market participants for the investment or asset, if reasonably available; (v) quoted prices for similar investments or assets in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates. Due to the inherent uncertainty of valuations of such investments, the fair values may differ from the values that would have been used had an active market existed. The Global Valuation Committee, or its delegate, employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Trusts’ pricing vendors, regular reviews of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values and reviews of any market related activity. The pricing of all Fair Value Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of business on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of business on the NYSE that may not be reflected in the computation of each Trust’s net assets. If events (e.g., a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such instruments, those instruments may be Fair Value Assets and valued at their fair value, as determined in good faith by the Global Valuation Committee, or it’s delegate, using a pricing service and/or policies approved by the Board. Each business day, each Trust uses a pricing service to assist with the valuation of certain foreign exchange-traded equity securities and foreign exchange-traded and OTC options (the “Systematic Fair Value Price”). Using current market factors, the Systematic Fair Value Price is designed to value such foreign securities and foreign options at fair value as of the close of business on the NYSE, which follows the close of the local markets.

Foreign Currency: The Trusts’ books and records are maintained in U.S. dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the respective date of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the Trusts’ investments denominated in that currency will lose value because that currency is worth fewer U.S. dollars; the opposite effect occurs if the U.S. dollar falls in relative value.

The Trusts do not isolate the portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of investments held or sold for financial reporting purposes. Accordingly, the effects of changes in foreign currency exchange rates on investments are not segregated in the Statements of Operations from the effects of changes in market prices of those investments but are included as a component of net realized and unrealized gain (loss) from investments. The Trusts report realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for federal income tax purposes.

Segregation and Collateralization: In cases where a Trust enters into certain investments (e.g., options written), that would be “senior securities” for 1940 Act purposes, such Trust may segregate or designate on its books and records cash or liquid securities having a market value at least equal to the amount of a Trust’s future obligations under such investments or borrowings. Doing so allows the investment to be excluded from treatment as a

 

     ANNUAL REPORT    OCTOBER 31, 2014    117


Notes to Financial Statements (continued)     

 

“senior security.” Furthermore, if required by an exchange or counterparty agreement, each Trust may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.

Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when a Trust is informed of the ex-dividend date. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be redesignated as a reduction of cost of the related investment and/or realized gain. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on the accrual basis.

Distributions: Distributions paid by the Trusts are recorded on the ex-dividend date. Subject to each Trust’s level distribution plan, each Trust intends to make monthly distributions to shareholders, which may consist of net investment income, net options premium, net realized and unrealized gains on investments, and/or return of capital.

On June 5, 2014, the Board approved a change to the frequency of regular Trust distributions from quarterly to monthly. As a result of the change, beginning in August 2014 (with respect to BQY, BOE and BUI) or September 2014 (with respect to BQR, BGR, CII, BDJ, BME, BGY, BCF and BCX) shareholders of each Trust began receiving distributions on a monthly basis.

Portions of return of capital distributions under U.S. GAAP may be taxed at ordinary income rates.

The character of distributions is determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. The portion of distributions that exceeds a Trust’s current and accumulated earnings and profits, which are measured on a tax basis, will constitute a non-taxable return of capital. Realized net capital gains can be offset by capital losses carried forward from prior years. However, certain Trusts have capital loss carry-forwards from pre-2012 tax years that offset realized net capital gains but do not offset current and accumulated earnings and profits. Consequently, if distributions in any tax year are less than a Trust’s current earnings and profits but greater than net investment income and net realized capital gains (taxable income), distributions in excess of taxable income are not treated as non-taxable return of capital, but rather may be taxable to shareholders at ordinary income rates. Under certain circumstances, taxable excess distributions could be significant. See Note 7, Income Tax Information, for the tax character of each Trust’s distributions paid during the period.

Net income and realized gains from investments held by the Subsidiary are treated as ordinary income for tax purposes. Accordingly, the net investment income (loss) and realized gains (losses) reported in the Trust’s financial statements presented under U.S. GAAP for such investments held by the Subsidiary may differ significantly from distributions. As such, any net gain will pass through to the Trust as ordinary income for federal income tax purposes. If a net loss is realized by the Subsidiary in any taxable year, the loss will generally not be available to offset the Trust’s ordinary income and/or capital gains for that year.

Deferred Compensation Plan: Under the Deferred Compensation Plan (the “Plan”) approved by each Trust’s Board, except CII, the independent Trustees (“Independent Trustees”) may defer a portion of their annual complex-wide compensation. Deferred amounts earn an approximate return as though equivalent dollar amounts had been invested in common shares of certain other BlackRock Closed-End Funds selected by the Independent Trustees. This has the same economic effect for the Independent Trustees as if the Independent Trustees had invested the deferred amounts directly in certain other BlackRock Closed-End Funds.

The Plan is not funded and obligations thereunder represent general unsecured claims against the general assets of each Trust. Deferred compensation liabilities are included in officer’s and trustees fees payable in the Statement of Assets and Liabilities and will remain as a liability of the Trusts until such amounts are distributed in accordance with the Plan.

S&P Quality Rankings: BQY had been granted a license by Standard & Poor’s® (“S&P”) to use the S&P Quality Rankings and the S&P International Quality Rankings. Effective September 17, 2013, BQY terminated its license to use either the S&P Quality Rankings or the S&P International Quality Rankings. “Standard & Poor’s,” “S&P,” “Standard & Poor’s Earnings and Dividend Rankings,” “S&P Earnings and Dividend Rankings,” “Standard & Poor’s Quality Rankings,” “Standard & Poor’s International Quality Rankings,” “S&P International Quality Rankings” and “S&P Quality Rankings” are trademarks of S&P and had been licensed for use by BQY. BQY was not sponsored, endorsed, managed, sold or promoted by S&P and S&P made no representation regarding the advisability of investing in BQY. BQY was required to pay a quarterly licensing fee, which is shown in the Statements of Operations as licensing, until September 16, 2014.

 

118    ANNUAL REPORT    OCTOBER 31, 2014     


Notes to Financial Statements (continued)     

 

Other: Expenses directly related to a Trust are charged to that Trust. Other operating expenses shared by several Trusts are prorated among those Trusts on the basis of relative net assets or other appropriate methods.

The Trusts have an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which, if applicable, are shown as fees paid indirectly in the Statements of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

3. Securities and Other Investments:

Preferred Stock: The Trusts may invest in preferred stock. Preferred stock has a preference over common stock in liquidation (and generally in receiving dividends as well) but is subordinated to the liabilities of the issuer in all respects. As a general rule, the market value of preferred stock with a fixed dividend rate and no conversion element varies inversely with interest rates and perceived credit risk, while the market price of convertible preferred stock generally also reflects some element of conversion value. Because preferred stock is junior to debt securities and other obligations of the issuer, deterioration in the credit quality of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similar stated yield characteristics. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions.

Securities Lending: Each Trust may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Trusts collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. government. The initial collateral received by each Trust is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter, at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Trust and any additional required collateral is delivered to the Trust on the next business day. During the term of the loan, the Trust is entitled to all distributions made on or in respect of the loaned securities. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

The market value of securities on loan and the value of the related collateral are shown separately in the Statements of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value unaffiliated, respectively. As of October 31, 2014, any securities on loan were collateralized by cash. The cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedules of Investments.

Securities lending transactions are entered into by the Trusts under Master Securities Lending Agreements (each an “MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Trust, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, the borrower can resell or re-pledge the loaned securities, and the Trusts can reinvest cash collateral, or, upon an event of default, resell or re-pledge the collateral.

The following table is a summary of the Trusts’ securities lending agreements by counterparty which are subject to offset under an MSLA as of October 31, 2014:

 

BQR                        
Counterparty   

Securities Loaned

at Value

    

Cash Collateral

Received1

    

Net

Amount

 

Citigroup Global Markets, Inc.

   $ 25,831       $ (25,831        
        
CII                        
Counterparty   

Securities Loaned

at Value

    

Cash Collateral

Received

    

Net

Amount

 

Citigroup Global Markets, Inc.

   $ 16,083       $ (15,621    $ 462   

 

 

     ANNUAL REPORT    OCTOBER 31, 2014    119


Notes to Financial Statements (continued)     

 

BOE                          
Counterparty    Securities Loaned
at Value
     Cash Collateral
Received
    Net
Amount
 

Goldman Sachs & Co.

   $ 1,474,256       $ (1,398,320   $ 75,936   
       
BGY                          
Counterparty    Securities Loaned
at Value
     Cash Collateral
Received1
    Net
Amount
 

Credit Suisse Securities (USA) LLC

   $ 867,939       $ (867,939       

Morgan Stanley & Co. LLC

     903,312         (903,312       

Total

   $ 1,771,251       $ (1,771,251       
  

 

 

 
       
BCX                          
Counterparty    Securities Loaned
at Value
     Cash Collateral
Received1
    Net
Amount
 

Barclays Capital, Inc.

   $ 1,436,400       $ (1,436,400       

Goldman Sachs & Co.

     1,732,800         (1,732,800       

JP Morgan Clearing Corp.

     852,720         (852,720       

Total

   $ 4,021,920       $ (4,021,920       
  

 

 

 

 

  1   

Collateral with a value of $26,416, $1,854,728 and $4,137,800 has been received in connection with securities lending agreements for BQR, BGY and BCX, respectively. Excess of collateral received from the individual counterparty is not shown for financial reporting purposes.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Trusts benefit from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities lent if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Trusts could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received.

4. Derivative Financial Instruments:

The Trusts engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Trusts and/or to economically hedge, their exposure to certain risks such as equity risk. These contracts may be transacted on an exchange or OTC.

Forward Foreign Currency Exchange Contracts: The Trusts enter into forward foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to obtain exposure to, or hedge exposure away from, foreign currencies (foreign currency exchange rate risk). A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Forward foreign currency exchange contracts, when used by the Trust, help to manage the overall exposure to the currencies in which some of the investments held by the Trust are denominated. The contract is marked-to-market daily and the change in market value is recorded by the Trust as an unrealized gain or loss. When the contract is closed, the Trusts record a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of forward foreign currency exchange contracts involves the risk that the value of a forward foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies.

Options: The Trusts purchase and write call and put options to increase or decrease their exposure to underlying instruments (including equity risk and/or commodity price risk) and/or, in the case of options written, to generate gains from options premiums. A call option gives the purchaser (holder) of the option the right (but not the obligation) to buy, and obligates the seller (writer) to sell (when the option is exercised), the underlying instrument at the exercise or strike price at any time or at a specified time during the option period. A put option gives the holder the right to sell and obligates the writer to buy the underlying instrument at the exercise or strike price at any time or at a specified time during the option period. When the Trusts purchase (write) an option, an amount equal to the premium paid (received) by the Trusts is reflected as an asset (liability). The amount of the asset (liability) is subsequently marked-to-market to reflect the current market value of the option purchased (written). When an instrument is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the instrument acquired or deducted from (or added to) the proceeds of the instrument sold. When an option expires (or the Trusts enter into a closing transaction), the Trusts realize a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premiums received or paid). When the Trusts write a call option, such option is “covered,” meaning that the Trusts hold the underlying instrument subject to being called by the option counterparty. When the Trusts write a put option, such option is covered by cash in an amount sufficient to cover the obligation.

 

120    ANNUAL REPORT    OCTOBER 31, 2014     


Notes to Financial Statements (continued)     

 

In purchasing and writing options, the Trusts bear the risk of an unfavorable change in the value of the underlying instrument or the risk that the Trusts may not be able to enter into a closing transaction due to an illiquid market. Exercise of a written option could result in the Trusts purchasing or selling a security when it otherwise would not, or at a price different from the current market value.

Transactions in options written for the year ended October 31, 2014, were as follows:

 

BQY                                      
     Calls          Puts  
      Contracts     Premiums
Received
          Contracts     Premiums
Received
 

Outstanding options at beginning of period

     442,340      $ 543,360                    

Options written

     3,133,198        4,509,496           31      $ 768   

Options expired

     (1,540,997     (1,457,817        (24     (544

Options closed

     (1,418,326     (2,543,907                 

Options exercised

     (305,807     (534,831        (7     (224
  

 

 

      

 

 

 

Outstanding options at end of period

     310,408      $ 516,301                    
  

 

 

      

 

 

 
           
BQR                                      

Outstanding options at beginning of period

     6,216,894      $ 1,199,341                    

Options written

     33,143,452        7,785,236                    

Options expired

     (19,074,066     (3,424,621                 

Options closed

     (17,960,682     (4,096,191                 

Options exercised

     (878,942     (472,263                 
  

 

 

      

 

 

 

Outstanding options at end of period

     1,446,656      $ 991,502                    
  

 

 

      

 

 

 
           
BGR                                      

Outstanding options at beginning of period

     3,588,237      $ 8,474,085                    

Options written

     23,211,803        40,165,454                    

Options expired

     (12,803,632     (17,467,035                 

Options closed

     (11,136,501     (24,831,739                 

Options exercised

     (890,912     (2,564,064                 
  

 

 

      

 

 

 

Outstanding options at end of period

     1,968,995      $ 3,776,701                    
  

 

 

      

 

 

 
           
CII                                      

Outstanding options at beginning of period

     2,714,615      $ 6,091,953                    

Options written

     16,599,913        58,122,024           847,775      $ 1,269,990   

Options expired

     (7,270,959     (24,396,006        (2,420     (118,480

Options closed

     (7,119,575     (27,722,564        (782,900     (890,048

Options exercised

     (2,863,191     (6,396,716        (60,955     (203,021
  

 

 

      

 

 

 

Outstanding options at end of period

     2,060,803      $ 5,698,691           1,500      $ 58,441   
  

 

 

      

 

 

 
           
BDJ                                      

Outstanding options at beginning of period

     5,090,227      $ 12,448,564                    

Options written

     31,900,746        108,814,404           122,040      $ 190,438   

Options expired

     (9,967,853     (32,740,989        (121,911     (186,454

Options closed

     (17,929,842     (62,477,123                 

Options exercised

     (5,305,665     (13,447,034        (129     (3,984
  

 

 

      

 

 

 

Outstanding options at end of period

     3,787,613      $ 12,597,822                    
  

 

 

      

 

 

 

 

     ANNUAL REPORT    OCTOBER 31, 2014    121


Notes to Financial Statements (continued)     

 

BOE                                      
     Calls          Puts  
      Contracts     Premiums
Received
          Contracts     Premiums
Received
 

Outstanding options at beginning of period

     25,066,642      $ 15,614,350                    

Options written

     152,040,674        103,410,643           1,903,918      $ 2,823,370   

Options expired

     (70,097,295     (42,487,284        (406,100     (745,878

Options closed

     (71,730,139     (53,857,515        (6,060     (274,123

Options exercised

     (15,389,762     (12,659,145        (1,491,758     (1,803,369
  

 

 

      

 

 

 

Outstanding options at end of period

     19,890,120      $ 10,021,049                    
  

 

 

      

 

 

 
           
BME                                      

Outstanding options at beginning of period

     599,254      $ 3,147,245           36,800      $ 105,616   

Options written

     3,832,926        20,363,430           21,436        333,458   

Options expired

     (1,837,551     (6,712,795        (512     (111,912

Options closed

     (1,552,289     (12,022,659        (316     (144,192

Options exercised

     (337,082     (1,798,845        (36,800     (105,616
  

 

 

      

 

 

 

Outstanding options at end of period

     705,258      $ 2,976,376           20,608      $ 77,354   
  

 

 

      

 

 

 
           
BGY                                      

Outstanding options at beginning of period

     57,843,462      $ 13,626,299                    

Options written

     244,197,382        87,434,207           4,423,188      $ 3,780,221   

Options expired

     (113,028,727     (39,338,314        (49,400     (147,734

Options closed

     (124,983,520     (45,449,301        (127,600     (434,683

Options exercised

     (36,578,622     (7,747,721        (4,194,588     (3,107,118
  

 

 

      

 

 

 

Outstanding options at end of period

     27,449,975      $ 8,525,170           51,600      $ 90,686   
  

 

 

      

 

 

 
           
BCF                                      

Outstanding options at beginning of period

     9,327,960      $ 4,859,346                    

Options written

     62,806,627        32,901,847                    

Options expired

     (33,266,783     (14,175,355                 

Options closed

     (30,637,967     (17,902,226                 

Options exercised

     (2,373,675     (2,579,500                 
  

 

 

      

 

 

 

Outstanding options at end of period

     5,856,162      $ 3,104,112                    
  

 

 

      

 

 

 
           
BCX                                      

Outstanding options at beginning of period

     5,065,799      $ 4,250,223                    

Options written

     43,849,493        28,811,456                    

Options expired

     (24,920,645     (12,485,269                 

Options closed

     (15,452,138     (15,320,292                 

Options exercised

     (2,696,971     (2,609,351                 
  

 

 

      

 

 

 

Outstanding options at end of period

     5,845,538      $ 2,646,767                    
  

 

 

      

 

 

 

 

122    ANNUAL REPORT    OCTOBER 31, 2014     


Notes to Financial Statements (continued)     

 

BUI                                    
     Calls          Puts  
      Contracts     Premiums
Received
          Contracts      Premiums
Received
 

Outstanding options at beginning of period

     3,799,037      $ 2,144,575                     

Options written

     25,476,699        15,997,230                     

Options expired

     (9,206,339     (5,265,182                  

Options closed

     (14,988,353     (9,103,743                  

Options exercised

     (2,237,916     (1,752,909                  
  

 

 

      

 

 

 

Outstanding options at end of period

     2,843,128      $ 2,019,971                     
  

 

 

      

 

 

 

As of October 31, 2014, the value of portfolio securities subject to covered call options written was as follows:

 

      Value  

BQY

   $ 30,527,922   

BQR

   $ 42,822,635   

BGR

   $ 195,942,740   

CII

   $ 311,771,814   

BDJ

   $ 822,202,285   

BOE

   $ 464,782,921   

BME

   $ 112,349,315   

BGY

   $ 370,074,576   

BCF

   $ 134,862,946   

BCX

   $ 136,487,903   

BUI

   $ 113,473,965   

The following is a summary of the Trusts’ derivative financial instruments categorized by risk exposure:

 

Fair Values of Derivative Financial Instruments as of October 31, 2014  
          Value  
        BQY          BQR            BGR   
      Statements of Assets and Liabilities Location    Derivative
Assets
     Derivative
Liabilities
           Derivative
Assets
   Derivative
Liabilities
           Derivative
Assets
     Derivative
Liabilities
 

Equity contracts

  

Investments at value — unaffiliated1; Options written at value

           $ 1,120,101               $ 1,785,981            $ 6       $ 2,135,361   
          Value  
        CII          BDJ            BOE   
      Statements of Assets and Liabilities Location    Derivative
Assets
     Derivative
Liabilities
           Derivative
Assets
   Derivative
Liabilities
           Derivative
Assets
     Derivative
Liabilities
 

Foreign currency exchange contracts

  

Unrealized appreciation/depreciation on forward foreign currency exchange contracts

   $ 2,240,727       $ 72,457                                        

Equity contracts

  

Investments at value — unaffiliated1; Options written at value

     6,650         10,099,589               $ 23,677,221                    $ 18,671,948   

Total

      $ 2,247,377       $ 10,172,046             $ 23,677,221                  $ 18,671,948   
     

 

 

       

 

       

 

 

 
               
          Value  
        BME          BGY            BCF   
      Statements of Assets and Liabilities Location    Derivative
Assets
     Derivative
Liabilities
           Derivative
Assets
   Derivative
Liabilities
           Derivative
Assets
     Derivative
Liabilities
 

Equity contracts

  

Options written at value

           $ 4,206,661               $ 16,460,929                    $ 3,229,938   

 

     ANNUAL REPORT    OCTOBER 31, 2014    123


Notes to Financial Statements (continued)     

 

          Value  
          BCX      BUI  
      Statements of Assets and Liabilities Location    Derivative
Assets
   Derivative
Liabilities
     Derivative
Assets
     Derivative
Liabilities
 

Equity contracts

  

Options written at value

      $ 2,468,312               $ 4,054,473   

 

1    Includes options purchased at value as reported in the Schedules of Investments.

 

       

 

The Effect of Derivative Financial Instruments in the Statements of Operations

Year Ended October 31, 2014

 
     BQY     BQR     BGR          BQY     BQR     BGR  
      Net Realized Gain (Loss)
From
         Net Change in Unrealized
Appreciation/Depreciation on
 

Foreign currency exchange contracts:

               

Foreign currency transactions/translations

                           $ 19                 

Equity contracts:

               

Options1

   $ (131,391   $ 110,791      $ (465,490        (218,612   $ (633,552   $ (820,116
  

 

 

      

 

 

 

Total

   $ (131,391   $ 110,791      $ (465,490      $ (218,593   $ (633,552   $ (820,116
  

 

 

      

 

 

 
               
      CII     BDJ     BOE           CII     BDJ     BOE  
      Net Realized Gain (Loss)
From
         Net Change in Unrealized
Appreciation/Depreciation on
 

Foreign currency exchange contracts:

               

Foreign currency transactions/translations

   $ 2,535,846             $ (507      $ 2,165,267             $ (6,262

Equity contracts:

               

Options1

     11,842,946      $ 1,134,980        23,122,803           (44,398   $ (3,221,974     (4,401,165
  

 

 

      

 

 

 

Total

   $ 14,378,792      $ 1,134,980      $ 23,122,296         $ 2,120,869      $ (3,221,974   $ (4,407,427
  

 

 

      

 

 

 
               
      BME     BGY     BCF           BME     BGY     BCF  
      Net Realized Gain (Loss)
From
         Net Change in Unrealized
Appreciation/Depreciation on
 

Foreign currency exchange contracts:

               

Foreign currency transactions/translations

          $ (636                    $ 10,313      $ 142   

Equity contracts:

               

Options1

   $ (2,804,855     13,684,874      $ 3,298,134         $ (1,796,110     (3,743,858     (156,605
  

 

 

      

 

 

 

Total

   $ (2,804,855   $ 13,684,238      $ 3,298,134         $ (1,796,110   $ (3,733,545   $ (156,463
  

 

 

      

 

 

 
               
        BCX      BUI                   BCX        BUI  
        Net Realized Gain (Loss)
From
                Net Change in Unrealized
Appreciation/Depreciation on
 

Foreign currency exchange contracts:

                      

Foreign currency transactions/translations

                            $ 209             

Equity contracts:

                      

Options1

     $ (197,414    $ (3,029,438             425,446         $ (186,639
    

 

 

           

 

 

 

Total

     $ (197,414    $ (3,029,438           $ 425,655         $ (186,639
    

 

 

           

 

 

 

 

  1   

Options purchased are included in the net realized gain (loss) from investments - unaffiliated and net change in unrealized appreciation/depreciation on investments.

 

124    ANNUAL REPORT    OCTOBER 31, 2014     


Notes to Financial Statements (continued)     

 

For the year ended October 31, 2014, the average quarterly balances of outstanding derivative financial instruments were as follows:

 

      BQY      BQR      BGR      CII      BDJ      BOE  

Forward foreign currency exchange contracts:

                 

Average number of contracts - US dollars purchased

                             2                   

Average number of contracts - US dollars sold

                             1                 1   

Average US dollar amounts purchased

                           $ 43,520,772                   

Average US dollar amounts sold

                           $ 1,943,731               $ 10,098   

Options:

                 

Average number of options contracts purchased

     2,075         3,200         45,700         16,625         153,075         56,500   

Average number of options contracts written

     737,510         4,316,991         5,143,275         6,915,275         13,878,175         23,615,272   

Average notional value of options contracts purchased

   $ 52,913       $ 19,200       $ 3,111,588         947,625       $ 8,055,675       $ 2,793,900   

Average notional value of contracts written

   $ 31,795,387       $ 43,190,631       $ 264,069,619       $ 338,830,659       $ 816,514,864       $ 509,179,661   

 

      BME      BGY      BCF      BCX      BUI  

Forward foreign currency exchange contracts:

              

Average number of contracts - U.S. dollars sold

             1                           

Average U.S. dollar amounts sold

           $ 12,669                           

Options:

              

Average number of options contracts purchased

     1,575                 29,900         3,750         1,750   

Average number of options contracts written

     1,569,713         30,800,724         9,961,995         7,774,044         4,254,800   

Average notional value of options contracts purchased

   $ 141,750               $ 2,267,263       $ 476,250       $ 87,500   

Average notional value of options contracts written

   $ 97,748,721       $ 420,845,777       $ 184,663,357       $ 191,803,939       $ 114,496,269   

Counterparty Credit Risk: A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

A Trust’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by such Trust.

For OTC options purchased, each Trust bears the risk of loss of the amount of the premiums paid plus the positive change in market values net of any collateral held by such Trust should the counterparty fail to perform under the contracts. Options written by the Trusts do not typically give rise to counterparty credit risk, as options written generally obligate the Trusts, and not, the counterparty to perform.

With exchange traded purchased options, there is less counterparty credit risk to the Trusts since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Trust does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency) of the clearing broker or clearinghouse. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Trusts.

In order to better define its contractual rights and to secure rights that will help the Trusts mitigate their counterparty risk, the Trusts may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its counterparties. An ISDA Master Agreement is a bilateral agreement between each Trust and a counterparty that governs certain OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, each Trust may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. Bankruptcy or insolvency laws of a particular jurisdiction may

 

     ANNUAL REPORT    OCTOBER 31, 2014    125


Notes to Financial Statements (continued)     

 

restrict or prohibit the right of offset in bankruptcy, insolvency or other events. In addition, certain ISDA Master Agreements allow counterparties to terminate derivative contracts prior to maturity in the event the Trusts’ net assets decline by a stated percentage or the Trusts fail to meet the terms of its ISDA Master Agreements. The result would cause the Trusts to accelerate payment of any net liability owed to the counterparty.

Collateral Requirements: For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the mark-to-market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by a Trust and the counterparty.

Cash collateral that has been pledged to cover obligations of a Trust and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as cash pledged as collateral and cash received as collateral, respectively. Non-cash collateral pledged by a Trust, if any, is noted in the Schedule of Investments. Generally, the amount of collateral due from or to a party has to exceed a minimum transfer amount threshold (typically either $250,000 or $500,000) before a transfer is required, which is determined at the close of business of the Trusts. Any additional required collateral is delivered to/pledged by the Trusts on the next business day. Typically, the Trusts and counterparties are not permitted to sell, re-pledge or use the collateral they receive. To the extent amounts due to a Trust from its counterparties are not fully collateralized, a Trust bears the risk of loss from counterparty non-performance. Likewise, to the extent the Trust has delivered collateral to a counterparty and stands ready to perform under the terms of its agreement with such counterparty, the Trust bears the risk of loss from a counterparty in the amount of the value of the collateral in the event the counterparty fails to return such collateral.

For financial reporting purposes, the Trusts do not offset derivative assets and derivative liabilities that are subject to netting arrangements, if any, in the Statements of Assets and Liabilities.

As of October 31, 2014, the Trusts’ derivative assets and liabilities (by type) are as follows:

 

      BQY           BQR           BGR           CII  
      Assets    Liabilities           Assets    Liabilities           Assets     Liabilities           Assets     Liabilities  

Derivative Financial Instruments:

                           

Forward foreign currency exchange contracts

                                              $ 2,240,727      $ 72,457   

Options

      $ 1,120,101            $ 1,785,981         $ 6 1    $ 2,135,361           6,650 1      10,099,589   
  

 

      

 

      

 

 

      

 

 

 

Total derivative assets and liabilities in the Statement of Assets and Liabilities

      $ 1,120,101            $ 1,785,981         $ 6      $ 2,135,361         $ 2,247,377      $ 10,172,046   
  

 

      

 

      

 

 

      

 

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

        (716,251           (556,002               (1,542,967        (2,247,377     (6,884,287
  

 

      

 

      

 

 

      

 

 

 

Total derivative assets and liabilities subject to an MNA

      $ 403,850            $ 1,229,979         $ 6      $ 592,394                $ 3,287,759   
  

 

      

 

      

 

 

      

 

 

 

 

  1   

Includes options purchased at value which is included in Investments at value — unaffiliated in the Statement of Assets and Liabilities and reported in the Schedule of Investments.

 

126    ANNUAL REPORT    OCTOBER 31, 2014     


Notes to Financial Statements (continued)     

 

 

      BDJ           BOE           BME           BGY  
      Assets    Liabilities           Assets    Liabilities           Assets    Liabilities           Assets    Liabilities  

Derivative Financial Instruments:

                             

Options

      $ 23,677,221            $ 18,671,948            $ 4,206,661            $ 16,460,929   
  

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

        (16,746,557           (9,322,391           (3,211,250           (3,323,042
  

 

 

Total derivative assets and liabilities subject to an MNA

      $ 6,930,664            $ 9,349,557            $ 995,411            $ 13,137,887   
  

 

 

 

      BCF           BCX           BUI  
      Assets    Liabilities           Assets    Liabilities           Assets      Liabilities  

Derivative Financial Instruments:

                     

Options

      $ 3,229,938            $ 2,468,312                 $ 4,054,473   
  

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

        (1,206,720           (965,495                (1,301,027
  

 

 

Total derivative assets and liabilities subject to an MNA

      $ 2,023,218            $ 1,502,817                 $ 2,753,446   
  

 

 

The following tables present the Trusts’ derivative assets and liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral received and pledged by the Trusts as of October 31, 2014:

 

BQY

                                      
Counterparty    Derivative Liabilities
Subject to an MNA  by
Counterparty
     Derivatives Available
for Offset
   Non-cash
Collateral
Pledged
    Cash
Collateral
Pledged
    Net Amount of
Derivative Liabilities1
 

Bank of America N.A.

   $ 15,512                        $ 15,512   

BNP Paribas S.A.

     1,893                          1,893   

Citibank N.A.

     105,217                          105,217   

Credit Suisse International

     20,639                          20,639   

Deutsche Bank AG

     40,659                          40,659   

Goldman Sachs International

     58,141                          58,141   

Morgan Stanley & Co. International PLC

     47,315                          47,315   

UBS AG

     114,474                          114,474   
  

 

 

 

Total

   $ 403,850                        $ 403,850   
  

 

 

 
            

BQR

                                      
Counterparty    Derivative Liabilities
Subject to an MNA by
Counterparty
     Derivatives Available
for Offset
   Non-cash
Collateral
Pledged2
    Cash
Collateral
Pledged
    Net Amount of
Derivative Liabilities1
 

Bank of America N.A.

   $ 85,519                        $ 85,519   

Citibank N.A.

     90,362                          90,362   

Credit Suisse International

     87,368          $ (87,368              

Deutsche Bank AG

     138,799                 $ (100,000     38,799   

Goldman Sachs International

     225,919                          225,919   

Morgan Stanley & Co. International PLC

     355,787                          355,787   

UBS AG

     246,225            (246,225              
  

 

 

 

Total

   $ 1,229,979          $ (333,593   $ (100,000   $ 796,386   
  

 

 

 

 

  1   

Net amount represents the net amount payable due to the counterparty in the event of default. Net Amount may be offset further by the net options written receivable/payable on the Statement of Assets and Liabilities.

 

  2   

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 

     ANNUAL REPORT    OCTOBER 31, 2014    127


Notes to Financial Statements (continued)     

 

 

BGR

                                         
      Gross Amounts Not Offset in the Statements of Assets and Liabilities
and Subject to MNA
 
Counterparty    Derivative Assets
Subject to an MNA by
Counterparty
     Derivatives Available
for Offset1
    Non-cash
Collateral
Received
    Cash
Collateral
Received
    Net Amount of
Derivative Assets
 

Goldman Sachs International

   $ 6       $ (6                     
           
Counterparty    Derivative Liabilities
Subject to an MNA by
Counterparty
     Derivatives Available
for Offset
    Non-cash
Collateral
Pledged2
    Cash
Collateral
Pledged
    Net Amount of
Derivative Liabilities3
 

Bank of America N.A.

   $ 176,282                            $ 176,282   

Citibank N.A.

     12              $ (12              

Credit Suisse International

     229                              229   

Deutsche Bank AG

     316,783                (316,783              

Goldman Sachs International

     88,200       $ (6                   88,194   

Morgan Stanley & Co. International PLC

     10,343                              10,343   

UBS AG

     545                              545   
  

 

 

 

Total

   $ 592,394       $ (6   $ (316,795          $ 275,593   
  

 

 

 
           

CII

                                         
Counterparty    Derivative Liabilities
Subject to an MNA  by
Counterparty
     Derivatives Available
for Offset
    Non-cash
Collateral
Pledged2
    Cash
Collateral
Pledged
    Net Amount of
Derivative Liabilities3
 

Bank of America N.A.

   $ 120,561                            $ 120,561   

Citibank N.A.

     425,025                              425,025   

Credit Suisse International

     198,522                              198,522   

Deutsche Bank AG

     215,552              $ (88,862   $ (100,000     26,690   

Goldman Sachs International

     513,773                              513,773   

Morgan Stanley & Co. International PLC

     934,058                (934,058              

UBS AG

     880,268                (880,268              
  

 

 

 

Total

   $ 3,287,759              $ (1,903,188   $ (100,000     1,284,571   
  

 

 

 
           

BDJ

                                         
Counterparty    Derivative Liabilities
Subject to an MNA  by
Counterparty
     Derivatives Available
for Offset
    Non-cash
Collateral
Pledged2
    Cash
Collateral
Pledged
    Net Amount of
Derivative Liabilities3
 

Bank of America N.A.

   $ 71,607                            $ 71,607   

Citibank N.A.

     2,571,972              $ (2,471,972   $ (100,000       

Credit Suisse International

     1,214,546                (1,214,546              

Deutsche Bank AG

     412,644                (412,644              

Goldman Sachs International

     1,083,080                (1,083,080              

Morgan Stanley & Co. International PLC

     1,314,351                (1,314,351              

UBS AG

     262,464                              262,464   
  

 

 

 

Total

   $ 6,930,664              $ (6,496,593   $ (100,000   $ 334,071   
  

 

 

 

 

  1   

The amount of derivatives available for offset is limited to the amount of derivative assets and/or liabilities that are subject to an MNA.

 

  2   

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 

  3   

Net amount represents the net amount payable due to the counterparty in the event of default. Net Amount may be offset further by the net options written receivable/payable on the Statement of Assets and Liabilities.

 

128    ANNUAL REPORT    OCTOBER 31, 2014     


Notes to Financial Statements (continued)     

 

BOE                                       
Counterparty    Derivative Liabilities
Subject to an MNA  by
Counterparty
     Derivatives Available
for Offset
   Non-cash
Collateral
Pledged1
    Cash
Collateral
Pledged
    Net Amount of
Derivative Liabilities2
 

Bank of America N.A.

   $ 593,226          $ (156,600          $ 436,626   

Barclays Bank PLC

     499,450                          499,450   

BNP Paribas S.A.

     4,569                          4,569   

Citibank N.A.

     567,533            (567,533              

Credit Suisse International

     398,707            (398,707              

Deutsche Bank AG

     2,138,983            (2,138,983              

Goldman Sachs International

     1,627,617            (512,093            1,115,524   

Morgan Stanley & Co. International PLC

     1,694,258            (1,443,053            251,205   

UBS AG

     1,825,214            (1,493,982            331,232   
  

 

 

 

Total

   $ 9,349,557          $ (6,710,951          $ 2,638,606   
  

 

 

 
            
BME                                       
Counterparty    Derivative Liabilities
Subject to an MNA by
Counterparty
     Derivatives Available
for Offset
   Non-cash
Collateral
Pledged1
    Cash
Collateral
Pledged
    Net Amount of
Derivative Liabilities2
 

Bank of America N.A.

   $ 80,918                        $ 80,918   

Citibank N.A.

     93,539                          93,539   

Credit Suisse International

     3                          3   

Deutsche Bank AG

     51,082                          51,082   

Goldman Sachs International

     307,040                          307,040   

Morgan Stanley & Co. International PLC

     107,185          $ (107,185              

UBS AG

     355,644                          355,644   
  

 

 

 

Total

   $ 995,411          $ (107,185          $ 888,226   
  

 

 

 
            
BGY                                       
Counterparty    Derivative Liabilities
Subject to an MNA by
Counterparty
     Derivatives Available
for Offset
   Non-cash
Collateral
Pledged1
    Cash
Collateral
Pledged1
    Net Amount of
Derivative Liabilities2
 

Bank of America N.A.

   $ 643,128                 $ (83,000   $ 560,128   

Barclays Bank PLC

     404,721                          404,721   

BNP Paribas S.A.

     25,610                          25,610   

Citibank N.A.

     476,872          $ (476,872              

Credit Suisse International

     54,077                          54,077   

Deutsche Bank AG

     1,923,519                   (867,000     1,056,519   

Goldman Sachs International

     3,901,259                   (1,920,000     1,981,259   

Morgan Stanley & Co. International PLC

     3,269,217            (1,070,180     (810,184     1,388,853   

UBS AG

     2,439,484                   (978,000     1,461,484   
  

 

 

 

Total

   $ 13,137,887          $ (1,547,052   $ (4,658,184   $ 6,932,651   
  

 

 

 
            
BCF                                       
Counterparty    Derivative Liabilities
Subject to an MNA by
Counterparty
     Derivatives Available
for Offset
   Non-cash
Collateral
Pledged1
    Cash
Collateral
Pledged
    Net Amount of
Derivative Liabilities2
 

Bank of America N.A.

   $ 105,998                        $ 105,998   

Citibank N.A.

     227,796                          227,796   

Credit Suisse International

     258,945          $ (258,945              

Deutsche Bank AG

     407,318            (407,318              

Goldman Sachs International

     182,055            (182,055              

Morgan Stanley & Co. International PLC

     536,008            (481,845            54,163   

UBS AG

     305,098            (305,098              
  

 

 

 

Total

   $ 2,023,218          $ (1,635,261          $ 387,957   
  

 

 

 

 

  1   

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 

  2   

Net amount represents the net amount payable due to the counterparty in the event of default. Net Amount may be offset further by the net options written receivable/ payable on the Statement of Assets and Liabilities.

 

     ANNUAL REPORT    OCTOBER 31, 2014    129


Notes to Financial Statements (continued)     

 

BCX                                    
Counterparty    Derivative Liabilities
Subject to an MNA  by
Counterparty
     Derivatives Available
for Offset
   Non-cash
Collateral
Pledged1
    Cash
Collateral
Pledged
   Net Amount of
Derivative Liabilities2
 

Bank of America N.A.

   $ 6,048                    $ 6,048   

Citibank N.A.

     250,119          $ (250,119          

Credit Suisse International

     145,204                      145,204   

Deutsche Bank AG

     200,990            (200,990          

Goldman Sachs International

     344,712            (39,628        305,084   

Morgan Stanley & Co. International PLC

     323,728            (323,728          

UBS AG

     232,016            (121,371        110,645   
  

 

 

 

Total

   $ 1,502,817          $ (935,836      $ 566,981   
  

 

 

 
             
BUI                                    
Counterparty    Derivative Liabilities
Subject to an MNA by
Counterparty
     Derivatives Available
for Offset
   Non-cash
Collateral
Pledged1
    Cash
Collateral
Pledged
   Net Amount of
Derivative Liabilities2
 

Bank of America N.A.

   $ 139,322                    $ 139,322   

Citibank N.A.

     460,885          $ (460,885          

Credit Suisse International

     286,612                      286,612   

Deutsche Bank AG

     205,691            (205,691          

Goldman Sachs International

     565,358            (565,358          

Morgan Stanley & Co. International PLC

     673,102            (673,102          

UBS AG

     422,476            (422,476          
  

 

 

 

Total

   $ 2,753,446          $ (2,327,512      $ 425,934   
  

 

 

 

 

  1   

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 

  2   

Net amount represents the net amount payable due to the counterparty in the event of default. Net Amount may be offset further by the net options written receivable/ payable on the Statement of Assets and Liabilities.

5. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate, for 1940 Act purposes, of BlackRock.

Each Trust entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Trusts’ investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of each Trust’s portfolio and provides the necessary personnel, facilities, equipment and certain other services to the operations of each Trust. For such services, each Trust pays the Manager a monthly fee at the following annual rates:

 

Average weekly value of each Trust’s net assets:

        

BQY

     0.75

BGR

     1.20

BDJ

     0.81

BOE

     1.00

BME

     1.00

BCF

     1.20

Average daily value of each Trust’s net assets:

        

BQR

     1.20

CII

     0.85

BGY

     1.00

BCX

     1.20

BUI

     1.00
 

 

Prior to September 29, 2014, the Manager had agreed to waive 0.05% of the investment advisory fees on BCF as a percentage of their average weekly net assets. Effective September 30, 2014, this waiver expired.

The Manager has agreed to waive a portion of the investment advisory fees on BCX as a percentage of its average daily net assets as follows:

 

             Expiration Date  

BCX

     0.20     October 31, 2015   
     0.15     October 31, 2016   
     0.10     October 31, 2017   
       0.05     October 31, 2018   

 

 

130    ANNUAL REPORT    OCTOBER 31, 2014     


Notes to Financial Statements (continued)     

 

The Manager has voluntarily agreed to waive a portion of the investment advisory fees on BQR and BGY as a percentage of their average daily net assets as follows:

 

BQR

     0.05

BGY

     0.05

The Manager provides investment management and other services to the Subsidiary. The Manager does not receive separate compensation from the Subsidiary for providing investment management or administrative services. However, BCX pays the Manager based on the Trust’s net assets which includes the assets of the Subsidiary.

The Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees each Trust pays to the Manager indirectly through its investment in affiliated money market funds. However, the Manager does not waive its investment advisory fees by the amount of investment advisory fees paid in connection with each Trust’s investment in other affiliated investment companies, if any. These amounts are included in fees waived by Manager in the Statements of Operations. For the year ended October 31, 2014, the amounts waived were as follows:

 

BQY

   $ 2,560   

BQR

   $ 4,108   

BGR

   $ 25,351   

CII

   $ 10,357   

BDJ

   $ 30,697   

BOE

   $ 18,678   

BME

   $ 4,244   

BGY

   $ 20,721   

BCF

   $ 15,442   

BCX

   $ 18,128   

BUI

   $ 6,623   

The Manager entered into separate sub-advisory agreements with BlackRock International Limited (“BIL”), an affiliate of the Manager, to serve as sub-advisor for BQR, BGR, BCF and BCX. The Manager pays BIL for services it provides to a Trust, a monthly fee that is a percentage of the investment advisory fees paid by the Trust to the Manager. Prior to July 1, 2014, the Manager entered into separate sub-advisory agreements with BlackRock Financial Management, Inc. (“BFM”) for BQY, BGR, CII, BDJ and BUI, BlackRock Investment Management, LLC (“BIM”) for BQR, CII, BCF and BUI and BlackRock Capital Management, Inc. (“BCM”) for BGY, BCF and BCX, each an affiliate of the Manager. Each sub-advisor received for services it provides to a Trust a monthly fee from the Manager at an annual rate equal to a percentage of the investment advisory fees paid by the Trust to the Manager. Effective July 1, 2014, each sub-advisory agreement between the Manager and BFM, BIM and BCM, with respect to each Trust, expired.

The U.S. Securities and Exchange Commission has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Trusts, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Trusts are responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment advisor to the private investment company will not charge any advisory fees with respect to shares purchased by the Trusts.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. Each Trust retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent. Pursuant to a securities lending agreement effective February 1, 2014, BIM may lend securities only when the difference between the borrower rebate rate and the risk free rate exceeds a certain level (such securities, the “specials only securities”).

Pursuant to such agreement, each Trust retains 80% of securities lending income. In addition, commencing the business day following the date that the aggregate securities lending income earned across the Closed-End Complex in a calendar year exceeds the breakpoint dollar threshold applicable in the given year as set forth in the securities lending agreement, each Trust, pursuant to the securities lending agreement, will retain for the remainder

 

     ANNUAL REPORT    OCTOBER 31, 2014    131


Notes to Financial Statements (continued)     

 

of the calendar year securities lending income in an amount equal to 85% of securities lending income. Prior to February 1, 2014, each Trust retained 65% of securities lending income and paid a fee to BIM equal to 35% of such income.

The share of securities lending income earned by each Trust is shown as securities lending–affiliated–net in the Statements of Operations. For the year ended October 31, 2014, each Trust paid BIM the following amounts for securities lending agent services:

 

BQY

   $ 4   

BQR

   $ 374   

BGR

   $ 4,161   

CII

   $ 11   

BDJ

   $ 131   

BOE

   $ 27,521   

BME

   $ 2,059   

BGY

   $ 36,611   

BCF

   $ 116   

BCX

   $ 8,311   

BUI

   $ 137   

Certain Trusts recorded payments from an affiliate to compensate for foregone securities lending revenue which is included in other income–affiliated in the Statements of Operations as follows:

 

BQY

   $ 1,802   

BQR

   $ 3,778   

BGR

   $ 7,901   

CII

   $ 843   

BDJ

   $ 7,663   

BOE

   $ 7,530   

BME

   $ 2,267   

BGY

   $ 7,166   

BCF

   $ 3,498   

BCX

   $ 21,128   

BUI

   $ 3,288   

Certain officers and/or trustees of the Trusts are officers and/or trustees of BlackRock or its affiliates. The Trusts reimburse the Manager for a portion of the compensation paid to the Trusts’ Chief Compliance Officer, which is included in officer and trustees in the Statements of Operations.

The Trusts may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment advisor, common officers, or common trustees. For the year ended October 31, 2014, the purchase and sale transactions with an affiliated fund in compliance with Rule 17a-7 under the 1940 Act were as follows:

 

      Purchases      Sales  

BQY

   $ 170,827           

BGR

           $ 9,890,273   

BDJ

   $ 2,962,425           

BOE

   $ 396,740       $ 106,334   

BME

   $ 1,018,711       $ 1,771,780   

BGY

   $ 339,380       $ 91,731   

 

132    ANNUAL REPORT    OCTOBER 31, 2014     


Notes to Financial Statements (continued)     

 

6. Purchases and Sales:

For the year ended October 31, 2014, purchases and sales of investments, excluding short-term securities, were as follows:

 

      Purchases      Sales  

BQY

   $ 38,195,808       $ 39,396,940   

BQR

   $ 78,048,787       $ 83,585,763   

BGR

   $ 678,142,072       $ 750,904,871   

CII

   $ 545,049,173       $ 543,509,725   

BDJ

   $ 1,013,050,673       $ 1,108,074,495   

BOE

   $ 1,701,572,911       $ 1,747,454,107   

BME

   $ 208,547,829       $ 235,635,840   

BGY

   $ 1,835,852,799       $ 1,875,535,469   

BCF

   $ 431,639,573       $ 470,250,678   

BCX

   $ 380,154,767       $ 405,092,035   

BUI

   $ 147,508,423       $ 160,278,302   

7. Income Tax Information:

It is the Trusts’ policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of their taxable income to their shareholders. Therefore, no federal income tax provision is required.

The Trusts file U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on each Trust’s U.S. federal tax returns remains open for each of the four years ended October 31, 2014 with the exception of BCX and BUI. The statutes of limitations on BCX’s U.S. federal tax returns remains open for the three years ended October 31, 2014 and the period ended October 31, 2011. The statutes of limitations on BUI’s U.S. federal tax returns remains open for the two years ended October 31, 2014 and the period ended October 31, 2012. The statute of limitations on each Trust’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Trusts’ facts and circumstances and does not believe that there are any uncertain tax positions that require recognition of a tax liability.

U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share. As of October 31, 2014, the following permanent differences attributable to foreign currency transactions, the sale of stock of passive foreign investment companies, net operating losses, non-deductible expenses, income recognized from investments in partnerships, distributions paid in excess of taxable income and the accounting for real estate investment trusts were reclassified to the following accounts:

 

      BQY     BQR     BGR     CII     BDJ     BOE  

Paid-in capital

   $ (215,813   $ (248,587                        $ (19,478,198

Undistributed (distributions in excess of) net investment income

   $ 138,560      $ (13,518   $ 20,055,814      $ 2,226,609      $ (275,751   $ 19,844,084   

Accumulated net realized gain (loss)

   $ 77,253      $ 262,105      $ (20,055,814   $ (2,226,609   $ 275,751      $ (365,886

 

      BME     BGY     BCF     BCX     BUI  

Paid-in capital

          $ (8,305,169   $ (400,860   $ (5,784       

Undistributed (distributions in excess of) net investment income

   $ 443,414      $ 9,265,126      $ 3,499,134      $ 7,636,492      $ (246,768

Accumulated net realized gain (loss)

   $ (443,414   $ (959,957   $ (3,098,274   $ (7,630,708   $ 246,768   

 

     ANNUAL REPORT    OCTOBER 31, 2014    133


Notes to Financial Statements (continued)     

 

The tax character of distributions paid were as follows:

 

      BQY      BQR      BGR      CII      BDJ      BOE  

Ordinary income

                 

10/31/14

   $ 2,384,891       $ 788,584       $ 44,116,137       $ 28,519,674       $ 29,340,373       $ 30,973,920   

10/31/13

   $ 4,042,418       $ 1,031,216       $ 13,788,843       $ 13,908,365       $ 68,370,120       $ 74,620,843   

Long-term capital gains

                 

10/31/14

     3,151,340                 82,539,116                           

10/31/13

     1,628,628                 34,432,429                 32,140,223           

Return of capital

                 

10/31/14

     14,758         8,480,844                 28,838,146         79,569,763         62,866,563   

10/31/13

             7,977,500                 39,037,315                 11,996,866   
  

 

 

 

Total

                 

10/31/14

   $ 5,550,989       $ 9,269,428       $ 126,655,253       $ 57,357,820       $ 108,910,136       $ 93,840,483   
  

 

 

 

10/31/13

   $ 5,671,046       $ 9,008,716       $ 48,221,272       $ 52,945,680       $ 100,510,343       $ 86,617,709   
  

 

 

 

 

      BME      BGY      BCF      BCX      BUI  

Ordinary income

              

10/31/14

   $ 16,767,193       $ 22,280,887       $ 6,486,515       $ 14,352,994       $ 8,735,252   

10/31/13

   $ 6,308,117       $ 18,226,947       $ 6,692,838       $ 6,452,839       $ 14,081,651   

Long-term capital gains

              

10/31/14

     13,009,161                                 6,241,040   

10/31/13

     12,125,678                                 1,801,216   

Return of capital

              

10/31/14

             57,741,812         30,161,558         32,315,467         11,593,002   

10/31/13

             55,619,854         43,962,688         47,574,521         8,632,231   
  

 

 

 

Total

              

10/31/14

   $ 29,776,354       $ 80,022,699       $ 36,648,073       $ 46,668,461       $ 26,569,294   
  

 

 

 

10/31/13

   $ 18,433,795       $ 73,846,801       $ 50,655,526       $ 54,027,360       $ 24,515,098   
  

 

 

 

As of October 31, 2014, the tax components of accumulated net earnings (losses) were as follows:

 

      BQY      BQR     BGR      CII     BDJ     BOE  

Undistributed ordinary income

                  $ 18,470,929                         

Undistributed long-term capital gains

                    21,497,236                         

Capital loss carryforwards

           $ (53,050,054           $ (78,562,097   $ (129,782,134   $ (90,849,445

Net unrealized gains (losses)1

   $ 5,206,956         122,634        29,396,034         67,451,237        260,206,287        98,748,239   
  

 

 

 

Total

   $ 5,206,956       $ (52,927,420   $ 69,364,199       $ (11,110,860   $ 130,424,153      $ 7,898,794   

 

      BME      BGY     BCF     BCX     BUI  

Undistributed ordinary income

   $ 10,142,119                                

Undistributed long-term capital gains

     10,918,686                                

Capital loss carryforwards

           $ (514,449,397   $ (77,570,599   $ (130,214,658       

Net unrealized gains (losses)1

     109,664,995         27,480,825        17,997,710        (21,011,490   $ 79,976,488   
  

 

 

 

Total

   $ 130,725,800       $ (486,968,572   $ (59,572,889   $ (151,226,148   $ 79,976,488   

 

  1   

The difference between book-basis and tax-basis net unrealized gains (losses) was attributable primarily to the tax deferral of losses on wash sales and straddles, the realization for tax purposes of unrealized gains/losses on certain foreign currency contracts, the realization for tax purposes of unrealized gains on investments in passive foreign investment companies, the timing and recognition of partnership income, the deferral of compensation to Trustees and the accounting for real estate investment trusts.

 

134    ANNUAL REPORT    OCTOBER 31, 2014     


Notes to Financial Statements (continued)     

 

As of October 31, 2013, the Trusts had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:

 

Expires October 31,    BQR      CII      BDJ      BOE      BGY      BCF      BCX  

2016

           $ 2,664,939       $ 29,846,203       $ 52,701,404                           

2017

   $ 21,140,114         70,040,876         77,635,340         38,148,041       $ 458,843,935                   

2018

     9,080,494         2,615,197         8,526,748                 55,605,462                   

2019

     1,795,201                                                   

No expiration date1

     21,034,245         3,241,085         13,773,843                       $ 77,570,599       $ 130,214,658   
  

 

 

 

Total

   $ 53,050,054       $ 78,562,097       $ 129,782,134       $ 90,849,445       $ 514,449,397       $ 77,570,599       $ 130,214,658   
  

 

 

 

 

  1  

Must be utilized prior to losses subject to expiration.

During the year ended October 31, 2014, the Funds listed below utilized the following amounts of their respective capital loss carryforward:

 

CII

   $ 9,312,099   

BOE

   $ 19,478,198   

BGY

   $ 28,762,210   

As of October 31, 2014, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:

 

      BQY     BQR     BGR     CII     BDJ     BOE  

Tax cost

   $ 83,017,400      $ 110,947,156      $ 716,605,509      $ 617,299,465      $ 1,397,451,073      $ 981,489,005   
  

 

 

 

Gross unrealized appreciation

   $ 11,151,344      $ 15,805,060      $ 69,093,355      $ 115,043,156      $ 334,511,963      $ 148,659,517   

Gross unrealized depreciation

     (4,472,043     (13,801,348     (40,770,103     (40,094,197     (59,134,677     (35,338,685
  

 

 

 

Net unrealized appreciation

   $ 6,679,301      $ 2,003,712      $ 28,323,252      $ 74,948,959      $ 275,377,286      $ 113,320,832   

 

      BME     BGY     BCF     BCX     BUI  

Tax cost

   $ 204,245,753      $ 844,262,891      $ 512,237,697      $ 609,399,940      $ 304,574,500   
  

 

 

 

Gross unrealized appreciation

   $ 116,093,958      $ 76,234,179      $ 80,323,015      $ 35,663,971      $ 89,805,524   

Gross unrealized depreciation

     (2,619,896     (33,556,087     (49,604,418     (55,816,334     (1,303,019
  

 

 

 

Net unrealized appreciation (depreciation)

   $ 113,474,062      $ 42,678,092      $ 30,718,597      $ (20,152,363   $ 88,502,505   

8. Principal Risks:

In the normal course of business, the Trusts invest in securities and enter into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Trusts may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Trusts; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Trusts may be exposed to counterparty credit risk, or the risk that an entity with which the Trusts have unsettled or open transactions may fail to or be unable to perform on its commitments. The Trusts manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Trusts to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Trusts’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded in the Statements of Assets and Liabilities, less any collateral held by the Trusts.

As of October 31, 2014, the Trusts listed below invested a significant portion of their assets in securities in the following sectors:

 

Utilities

   BQR, BUI

Energy

   BGR, BCF, BCX, BUI

Health Care

   BME

Financials

   BQY, CII, BDJ

Information Technology

   CII

Materials

   BCF, BCX

Consumer Staples

   BQR

 

     ANNUAL REPORT    OCTOBER 31, 2014    135


Notes to Financial Statements (continued)     

 

 

Changes in economic conditions affecting these sectors would have a greater impact on these Trusts and could affect the value, income and/or liquidity of positions in such securities.

BOE and BGY invest a substantial amount of their assets in issuers located in a single country or a limited number of countries. When a Trust concentrates its investments in this manner, it assumes the risk that economic, political and social conditions in those countries may have a significant impact on their investment performance. Foreign issuers may not be subject to the same uniform accounting, auditing and financial reporting standards and practices as used in the U.S. Foreign securities markets may also be less liquid, more volatile, and less subject to governmental supervision not typically associated with investing in United States securities. Please see the Schedule of Investments for concentrations in specific countries.

As of October 31, 2014, the Trusts’ investments listed below had the following industry classifications:

 

Industry    BOE     BGY  

Banks

     11     9

Pharmaceuticals

     9     16

Oil, Gas & Consumable Fuels

     7     5

Internet Software & Services

     7     5

Software

     5     1

Machinery

     2     7

Other*

     59     57

 

  *   All other industries held were each less than 5%.

9. Capital Share Transactions:

There are an unlimited number of $0.001 par value common shares of beneficial interest authorized for each Trust, with the exception of CII. CII is authorized to issue 200 million shares of $0.10 par value shares, all of which were initially classified as Common Shares. The Board is authorized, however, to reclassify any unissued Common Shares to Preferred Shares without approval of Common Shareholders.

Shares issued and outstanding during the year ended October 31, 2014 and the year ended October 31, 2013 increased by the following amounts as a result of dividend reinvestments:

 

      Year Ended
October 31, 2014
     Year Ended
October 31, 2013
 

BME

     67,810         31,115   

Shares issued and outstanding remained constant for BQY, BQR, BGR, CII, BDJ, BOE, BGY, BCF, BCX and BUI for the year ended October 31, 2014 and the year ended October 31, 2013.

At October 31, 2014, 7,592 shares of BlackRock Science & Technology Fund (BST) were owned by affiliates.

10. Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Trusts’ financial statements was completed through the date the financial statements were issued and the following items were noted:

The Trusts paid a distribution on November 28, 2014 to shareholders of record on November 14, 2014 as follows:

 

      Common
Dividend Per
Share
 

BQY

   $ 0.07670   

BQR

   $ 0.05000   

BGR

   $ 0.13500   

CII

   $ 0.10000   

BDJ

   $ 0.04670   

BOE

   $ 0.10390   

BME

   $ 0.16500   

BGY

   $ 0.05600   

BCF

   $ 0.05830   

BCX

   $ 0.07710   

BUI

   $ 0.12100   

 

136    ANNUAL REPORT    OCTOBER 31, 2014     


Notes to Financial Statements (continued)     

 

Additionally, certain Trusts declared a distribution in the following amounts per share on December 8, 2014 payable to shareholders of record on December 22, 2014 as follows:

 

      Common Dividend
Per Share
 

BGR1

   $ 1.27500   

CII

   $ 0.10000   

BDJ

   $ 0.04670   

BOE

   $ 0.09700   

BME2

   $ 2.53500   

BGY

   $ 0.04900   

BCX

   $ 0.07710   

BUI

   $ 0.12100   

 

  1   

Includes special distribution of $1.14000.

  2   

Includes special distribution of $2.37000.

The Board of BDJ and the Board and shareholders of BQY approved the reorganization of BQY with and into BDJ. As a result, BDJ acquired all of the assets and all of the liabilities of BQY in exchange for an equal aggregate value of newly issued shares of BDJ in a merger transaction.

Each shareholder of BQY received shares of BDJ in an amount equal to the aggregate NAV of such shareholder’s shares, as determined at the close of business on December 5, 2014. Cash was distributed for any fractional shares.

The Boards and shareholders of BCX, BQR and BCF approved the reorganizations of BQR and BCF with and into BCX. As a result, BCX acquired all of the assets and all of the liabilities of BQR and BCF in exchange for an equal aggregate value of newly issued shares of BCX in a merger transaction.

Each shareholder of BQR and BCF received shares of BCX in an amount equal to the aggregate NAV of such shareholder’s shares, as determined at the close of business on December 5, 2014. Cash was distributed for any fractional shares.

The reorganizations were accomplished by a tax-free exchange of shares of BDJ and BCX in the following amounts and at the following conversion ratios:

 

Target Trust    Shares Prior to
Reorganizations
     Conversion
Ratio
     Shares of
BDJ
 

BQY

     6,033,028         1.57393059         9,495,566   

    

                          
Target Trusts    Shares Prior to
Reorganizations
     Conversion
Ratio
     Shares of
BCX
 

BQR

     12,564,457         0.73620796         9,250,050   

BCF

     57,173,280         0.75619994         43,234,424   

Each Target Trust’s net assets and composition of net assets on December 5, 2014, the date of the reorganization, were as follows:

 

Target Trusts   

Paid-In

Capital

     Distributions in
Excess of Net
Investment
Income
   

Realized

Loss

   

Net

Unrealized
Appreciation

    

Net

Assets

 

BQY

   $ 82,012,845       $ 74,388      $ (4,394,868   $ 10,788,969       $ 88,481,334   

    

                                          
Target Trusts   

Paid-In

Capital

     Distributions in
Excess of Net
Investment
Income
   

Realized

Loss

   

Net

Unrealized
Appreciation

    

Net

Assets

 

BQR

   $ 163,163,281       $      $ (64,418,338   $ 11,883,961       $ 110,628,904   

BCF

   $ 581,405,775       $ (315,467   $ (112,655,107   $ 48,639,598       $ 517,074,799   

 

     ANNUAL REPORT    OCTOBER 31, 2014    137


Notes to Financial Statements (concluded)     

 

For financial reporting purposes, assets received and shares issued by BDJ and BCX were recorded at fair value. However, the cost basis of the investments being received from the respective Target Trusts were carried forward to align ongoing reporting of BDJ’s and BCX’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.

The net assets of BDJ and BCX before the acquisitions were $1,672,452,880 and $557,033,644, respectively.

The aggregate net assets of BDJ and BCX immediately after the acquisitions amounted to $1,760,934,213 and $1,184,737,348, respectively. Each Target Trust’s fair value and cost of investments prior to the reorganizations were as follows:

 

Target Trust    Fair Value of
Investments
     Cost of
Investments
 

BQY

   $ 88,510,430       $ 77,716,510   

    

                 
Target Trust    Fair Value of
Investments
     Cost of
Investments
 

BQR

   $ 110,216,946       $ 98,315,757   

BCF

   $ 517,114,717       $ 468,473,614   

The purpose of these transactions was to combine five funds managed by the Manager with the same or substantially similar (but not identical) investment objectives, investment policies, strategies, risks and restrictions into two funds. Each reorganization was a tax-free event and was effective on December 8, 2014.

Reorganization costs incurred by the Target Trusts in connection with their respective reorganizations were expensed by BCX and BDJ. The Manager reimbursed BCX in the amount of $522,264 and BDJ in the amount of $148,630, which are shown as reorganization costs reimbursed by Manager in the Statements of Operations.

 

138    ANNUAL REPORT    OCTOBER 31, 2014     


Report of Independent Registered Public Accounting Firm     

 

To the Board of Trustees and Shareholders of BlackRock Dividend Income Trust, BlackRock EcoSolutions Investment Trust, BlackRock Energy and Resources Trust, BlackRock Enhanced Equity Dividend Trust, BlackRock Global Opportunities Equity Trust, BlackRock Health Sciences Trust, BlackRock International Growth and Income Trust, BlackRock Real Asset Equity Trust, BlackRock Resources & Commodities Strategy Trust, BlackRock Utility and Infrastructure Trust, and the Board of Directors and Shareholders of BlackRock Enhanced Capital and Income Fund, Inc.:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of BlackRock Dividend Income Trust, BlackRock EcoSolutions Investment Trust, BlackRock Energy and Resources Trust, BlackRock Enhanced Capital and Income Fund, Inc., BlackRock Enhanced Equity Dividend Trust, BlackRock Global Opportunities Equity Trust, BlackRock Health Sciences Trust, BlackRock International Growth and Income Trust, BlackRock Real Asset Equity Trust, and BlackRock Utility and Infrastructure Trust, as of October 31, 2014, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two periods presented, and the financial highlights for each of the periods presented. We have also audited the consolidated statement of assets and liabilities, including the consolidated schedule of investments of BlackRock Resources & Commodities Strategy Trust (collectively with BlackRock Dividend Income Trust, BlackRock EcoSolutions Investment Trust, BlackRock Energy and Resources Trust, BlackRock Enhanced Capital and Income Fund, Inc., BlackRock Enhanced Equity Dividend Trust, BlackRock Global Opportunities Equity Trust, BlackRock Health Sciences Trust, BlackRock International Growth and Income Trust, BlackRock Real Asset Equity Trust, and BlackRock Utility and Infrastructure Trust, the “Trusts”), as of October 31, 2014, and the related consolidated statements of operations and cash flows for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, and the consolidated financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Trusts’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable

assurance about whether the financial statements and financial highlights are free of material misstatement. The Trusts are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trusts’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2014, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of BlackRock Dividend Income Trust, BlackRock EcoSolutions Investment Trust, BlackRock Energy and Resources Trust, BlackRock Enhanced Capital and Income Fund, Inc., BlackRock Enhanced Equity Dividend Trust, BlackRock Global Opportunities Equity Trust, BlackRock Health Sciences Trust, BlackRock International Growth and Income Trust, BlackRock Real Asset Equity Trust, and BlackRock Utility and Infrastructure Trust, the results of their operations and cash flows for the year then ended, the changes in their net assets and the financial highlights for each of the periods presented, and the consolidated financial position of BlackRock Resources & Commodities Strategy Trust, the consolidated results of its operations and cash flows for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended, and its consolidated financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Philadelphia, Pennsylvania

December 22, 2014

 

 

     ANNUAL REPORT    OCTOBER 31, 2014    139


Important Tax Information (Unaudited)     

 

The following information is provided with respect to the distributions paid during the taxable period ended October 31, 2014.

 

      Payable Date      Long-Term
Capital  Gains
    Non-Taxable
Return of
Capital
    Qualified
Dividend
Income for
Individuals1
    Dividends
Qualifying for
the Dividends
Received
Deduction for
Corporations1
    Short-Term
Capital  Gain
Dividends for
Non-U.S.
Residents2
    Foreign
Source
Income
    Foreign
Taxes
Paid3
 

BQY

     11/29/13        9.59            48.96     37.52     17.64              
     2/28/14 - 10/31/14         56.77     0.27     40.39     26.86     11.91              

BQR

     12/31/13                       12.31     7.40                     
     3/31/14 - 10/31/14                100.00                                   

BGR

     12/31/13         70.46            9.00     6.34     15.63              
     3/31/14 - 10/31/14         53.79            21.40     9.82     43.54              

CII

     12/31/13                       16.37     12.60                     
     3/31/14 - 10/31/14                65.36     33.68     17.52                     

BDJ

     12/31/13                       30.05     29.98                     
     3/31/14 - 10/31/14                94.97     5.03     5.03                     

BOE

     11/29/13                       6.15     2.79                     
     2/28/14 - 10/31/14                87.09     12.91     6.33                     

BME

     12/31/13         38.61            11.51     8.70     57.60              
     3/31/14 - 10/31/14         51.84            8.81     6.70     47.69              

BGY

     12/31/13                       5.72                   3.24     0.26
     3/31/14 - 10/31/14                93.80     6.20                   6.20     2.43

BCF

     12/31/13                       17.93     10.45                     
     3/31/14 - 10/31/14                100.00                                   

BCX

     12/31/13                       21.10     17.03                     
     3/31/14 - 10/31/14                90.01     9.99     9.99            9.99     3.15

BUI

     11/29/13                       34.51     15.17                     
       2/28/14 - 10/31/14         30.53     56.72     12.75     12.75     0.33              

 

  1   

The Trusts hereby designate the percentages indicated above to the maximum amount allowable by law.

 

  2   

Represents the portion of the dividends eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations.

 

  3   

The foreign taxes paid represent taxes incurred by the trust on dividends received from foreign sources. Foreign taxes paid may be included in taxable income with an offsetting deduction from gross income or may be taken as a credit for taxes paid to foreign governments. You should consult your tax advisor regarding the appropriate treatment of foreign taxes paid.

 

140    ANNUAL REPORT    OCTOBER 31, 2014     


Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements     

 

The Board of Directors or Trustees, as applicable (each, a “Board,” collectively, the “Boards,” and the members of which are referred to as “Board Members”), of BlackRock Dividend Income Trust (“BQY”), BlackRock EcoSolutions Investment Trust (“BQR”), BlackRock Energy and Resources Trust (“BGR”), BlackRock Enhanced Capital and Income Fund, Inc. (“CII”), BlackRock Enhanced Equity Dividend Trust (“BDJ”), BlackRock Global Opportunities Equity Trust (“BOE”), BlackRock Health Sciences Trust (“BME”), BlackRock International Growth and Income Trust (“BGY”), BlackRock Real Asset Equity Trust (“BCF”), BlackRock Resources & Commodities Strategy Trust (“BCX”) and BlackRock Utility and Infrastructure Trust (“BUI” and together with BQY, BQR, BGR, CII, BDJ, BOE, BME, BGY, BCF and BCX, each a “Fund,” and, collectively, the “Funds”) met in person on May 9, 2014 (the “May Meeting”) and June 5-6, 2014 (the “June Meeting”) to consider the approval of each Fund’s investment advisory agreement (each, an “Advisory Agreement,” and, collectively, the “Advisory Agreements”) with BlackRock Advisors, LLC (the “Manager”), each Fund’s investment advisor. At the June Meeting, it was noted that (i) with respect to BQY, BGR, CII, BDJ and BUI, the sub-advisory agreement among the Manager, BlackRock Financial Management, Inc. and each Fund would expire effective July 1, 2014, (ii) with respect to BQR, CII, BCF and BUI, the sub-advisory agreement among the Manager, BlackRock Investment Management, LLC and each Fund would expire effective July 1, 2014 and (iii) with respect to BGY, BCF and BCX, the sub-advisory agreement among the Manager, BlackRock Capital Management, Inc. and each Fund would expire effective July 1, 2014. It was also noted that the non-renewal of each Fund’s sub-advisory agreement would not result in any change in the nature or quality of services provided to such Fund, or in the portfolio management team that serves such Fund. The Board of each of BQR, BGR, BCF and BCX also considered the approval of the sub-advisory agreement (each, a “BIL Sub-Advisory Agreement”) among the Manager, BlackRock International Limited (the “BIL Sub-Advisor”), and its Fund. The Manager and the BIL Sub-Advisor are referred to herein as “BlackRock.” The Advisory Agreements and the BIL Sub-Advisory Agreements are referred to herein as the “Agreements.”

Activities and Composition of the Board

Each Board consists of eleven individuals, nine of whom are not “interested persons” of such Fund as defined in the Investment Company Act of 1940 (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of the Funds and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chairman of each Board is an Independent Board Member. Each Board has established six standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee, an Executive Committee, and a Leverage Committee, each of which is chaired by an Independent Board Member and composed of Independent Board Members (except for the Executive Committee and the Leverage Committee, each of which also has one interested Board Member).

The Agreements

Pursuant to the 1940 Act, each Board is required to consider the continuation of its Advisory Agreement, and with respect to BQR, BGR, BCF and BCX, its BIL Sub-Advisory Agreement, on an annual basis. The Boards have four quarterly meetings per year, each extending over two days, and a fifth one-day meeting to consider specific information surrounding the consideration of renewing the Agreements. In connection with this process, the Boards assessed, among other things, the nature, scope and quality of the services provided to the Funds by BlackRock, its personnel and its affiliates, including, as applicable, investment management, administrative, and shareholder services; oversight of fund service providers; marketing services; risk oversight; compliance and assistance in meeting applicable legal and regulatory requirements.

The Boards, acting directly and through their respective committees, consider at each of their meetings, and from time to time as appropriate, factors that are relevant to their annual consideration of the renewal of the Agreements, including the services and support provided by BlackRock to the Funds and their shareholders. Among the matters the Boards considered were: (a) investment performance for one-year, three-year, five-year and/or since inception periods, as applicable, against peer funds, and applicable benchmarks, if any, as well as senior management’s and portfolio managers’ analysis of the reasons for any over-performance or underperformance against their peers and/or benchmark, as applicable; (b) fees, including advisory, administration, if applicable, and other amounts paid to BlackRock and its affiliates by the Funds for services such as call center; (c) Fund operating expenses and how BlackRock allocates expenses to the Funds; (d) the resources devoted to, risk oversight of, and compliance reports relating to, implementation of the Funds’ investment objective, policies and restrictions, and meeting new regulatory requirements; (e) the Funds’ compliance with their Code of Ethics and other compliance policies and procedures; (f) the nature, cost and character of non-investment management services provided by BlackRock and its affiliates; (g) BlackRock’s and other service providers’ internal controls and risk and compliance oversight mechanisms; (h) BlackRock’s implementation of the proxy voting policies approved by the Boards; (i) the use of brokerage commissions and execution quality of portfolio transactions; (j) BlackRock’s implementation of the Funds’ valuation and liquidity procedures; (k) an analysis of management fees for products with similar investment objectives across the open-end fund, closed-end fund and institutional account product channels, as applicable; (l) BlackRock’s compensation methodology for its investment professionals and the incentives it creates; and (m) periodic updates on BlackRock’s business.

 

     ANNUAL REPORT    OCTOBER 31, 2014    141


Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)     

 

The Boards have engaged in an ongoing strategic review with BlackRock of opportunities to consolidate funds and of BlackRock’s commitment to investment performance. BlackRock also furnished information to the Boards in response to specific questions. These questions covered issues such as: BlackRock’s profitability; investment performance; subadvisory and advisory relationships with other clients (including mutual funds sponsored by third parties); investment professional investment in funds they manage; and management fee levels and breakpoints. The Boards further discussed with BlackRock: BlackRock’s management structure; portfolio turnover; BlackRock’s portfolio manager compensation and performance accountability; marketing support for the Funds; services provided to the Funds by BlackRock affiliates; and BlackRock’s oversight of relationships with third party service providers.

Board Considerations in Approving the Agreements

The Approval Process: Prior to the May Meeting, the Boards requested and received materials specifically relating to the Agreements. The Boards are continuously engaged in a process with their independent legal counsel and BlackRock to review the nature and scope of the information provided to better assist their deliberations. The materials provided in connection with the May Meeting included (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on Fund fees and expenses as compared with a peer group of funds as determined by Lipper (“Expense Peers”) and the investment performance of the Funds as compared with a peer group of funds as determined by Lipper1 as well as the investment performance of BQY, BGR, CII, BDJ, BOE, BME, BGY, BCF, BCX and BUI as compared with its custom benchmark; (b) information on the profits realized by BlackRock and its affiliates pursuant to the Agreements and a discussion of fall-out benefits to BlackRock and its affiliates; (c) a general analysis provided by BlackRock concerning investment management fees charged to other clients, such as institutional clients and open-end funds, under similar investment mandates, as applicable; (d) review of non-management fees; (e) the existence, impact and sharing of potential economies of scale; (f) a summary of aggregate amounts paid by each Fund to BlackRock and (g) if applicable, a comparison of management fees to similar BlackRock closed-end funds, as classified by Lipper.

At the May Meeting, the Boards reviewed materials relating to their consideration of the Agreements. As a result of the discussions that occurred during the May Meeting, and as a culmination of the Boards’ year-long deliberative process, the Boards presented BlackRock with questions and requests for additional information. BlackRock responded to these requests with additional written information in advance of the June Meeting.

At the June Meeting, each Board, including the Independent Board Members, unanimously approved the continuation of the Advisory Agreement between the Manager and its Fund for a one-year term ending June 30, 2015. The Board of each of BQR, BGR, BCF and BCX, including the Independent Board Members, also unanimously approved the continuation of the BIL Sub-Advisory Agreement among the Manager, the BIL Sub-Adviser and its Fund for a one-year term ending June 30, 2015. In approving the continuation of the Agreements, the Boards considered: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of the Funds and BlackRock; (c) the advisory fee and the cost of the services and profits to be realized by BlackRock and its affiliates from their relationship with the Funds; (d) the Funds’ costs to investors compared to the costs of Expense Peers and performance compared to the relevant performance comparison as previously discussed; (e) economies of scale; (f) fall-out benefits to BlackRock and its affiliates as a result of its relationship with the Funds; and (g) other factors deemed relevant by the Board Members.

The Boards also considered other matters they deemed important to the approval process, such as payments made to BlackRock or its affiliates relating to securities lending, services related to the valuation and pricing of Fund portfolio holdings, direct and indirect benefits to BlackRock and its affiliates from their relationship with the Funds and advice from independent legal counsel with respect to the review process and materials submitted for the Boards’ review. The Boards noted the willingness of BlackRock personnel to engage in open, candid discussions with the Boards. The Boards did not identify any particular information as determinative, and each Board Member may have attributed different weights to the various items considered.

A. Nature, Extent and Quality of the Services Provided by BlackRock: The Boards, including the Independent Board Members, reviewed the nature, extent and quality of services provided by BlackRock, including the investment advisory services and the resulting performance of the Funds. Throughout the year, each Board compared its Fund’s performance to the performance of a comparable group of closed-end funds and/or the performance of a relevant benchmark, as applicable. The Boards met with BlackRock’s senior management personnel responsible for investment activities, including the senior investment officers. Each Board also reviewed the materials provided by its Fund’s portfolio management team discussing the Fund’s performance and the Fund’s investment objective, strategies and outlook.

 

 

  1   

Funds are ranked by Lipper in quartiles, ranging from first to fourth, where first is the most desirable quartile position and fourth is the least desirable.

 

142    ANNUAL REPORT    OCTOBER 31, 2014     


Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)     

 

Each Board considered, among other factors, with respect to BlackRock: the number, education and experience of investment personnel generally and its Fund’s portfolio management team; investments by portfolio managers in the funds they manage; portfolio trading capabilities; use of technology; commitment to compliance; credit analysis capabilities; risk analysis and oversight capabilities; and the approach to training and retaining portfolio managers and other research, advisory and management personnel. Each Board engaged in a review of BlackRock’s compensation structure with respect to its Fund’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent and create performance incentives.

In addition to advisory services, the Boards considered the quality of the administrative and other non-investment advisory services provided to the Funds. BlackRock and its affiliates provide the Funds with certain services (in addition to any such services provided to the Funds by third parties) and officers and other personnel as are necessary for the operations of the Funds. In particular, BlackRock and its affiliates provide the Funds with the following administrative services including, among others: (i) preparing disclosure documents, such as the prospectus and the statement of additional information in connection with the initial public offering and periodic shareholder reports; (ii) preparing communications with analysts to support secondary market trading of the Funds; (iii) oversight of daily accounting and pricing; (iv) preparing periodic filings with regulators and stock exchanges; (v) overseeing and coordinating the activities of other service providers; (vi) organizing Board meetings and preparing the materials for such Board meetings; (vii) providing legal and compliance support; (viii) furnishing analytical and other support to assist the Board in its consideration of strategic issues such as the merger or consolidation of certain closed-end funds; and (ix) performing other administrative functions necessary for the operation of the Funds, such as tax reporting, fulfilling regulatory filing requirements and call center services. The Boards reviewed the structure and duties of BlackRock’s fund administration, shareholder services, legal and compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.

B. The Investment Performance of the Funds and BlackRock: Each Board, including the Independent Board Members, also reviewed and considered the performance history of its Fund. In preparation for the May Meeting, the Boards worked with their independent legal counsel, BlackRock and Lipper to develop a template for, and were provided with reports independently prepared by Lipper, which included a comprehensive analysis of each Fund’s performance. The Boards also reviewed a narrative and statistical analysis of the Lipper data that was prepared by BlackRock, which analyzed various factors that affect Lipper’s rankings. In connection with its review, each Board received and reviewed information regarding the investment performance, based on net asset value (NAV), of its Fund as compared to other funds in that Fund’s applicable Lipper category, and with respect to BQY, BGR, CII, BDJ, BOE, BME, BGY, BCF, BCX and BUI, the investment performance of the Fund as compared with its custom benchmark. The Boards were provided with a description of the methodology used by Lipper to select peer funds and periodically meets with Lipper representatives to review its methodology. Each Board and its Performance Oversight Committee regularly review, and meet with Fund management to discuss, the performance of its Fund throughout the year.

The Board of BUI noted that for each of the one-year and since-inception periods reported, BUI exceeded its customized benchmark. The since inception period is as of the customized benchmark creation date. BlackRock believes that performance relative to the customized benchmark is an appropriate performance metric for BUI.

The Board of each of BOE and BGY noted that for the one-year and since-inception periods reported, its respective Fund exceeded and underperformed, respectively, its customized benchmark. The since inception period is as of the customized benchmark creation date. BlackRock believes that performance relative to the customized benchmark is an appropriate performance metric for each of BOE and BGY.

The Board of BQY noted that for each of the one-year and since-inception periods reported, BQY underperformed its customized benchmark. The since inception period is as of the customized benchmark creation date. BlackRock believes that performance relative to the customized benchmark is an appropriate performance metric for BQY. The Board of BQY and BlackRock reviewed and discussed the reasons for BQY’s underperformance during the one-year and since-inception periods. BQY’s Board was informed that, among other things, underperformance during the one-year period was due to stock selection concentrated primarily in five sectors: financials, technology, consumer staples, telecommunications and industrials. The largest detractors of performance during the since-inception period were the combination of an underweight position and stock selection within the health care and telecommunication sectors.

The Board of BQR noted that for the one-, three- and five-year periods reported, BQR ranked third out of three funds, second out of two funds and second out of two funds, respectively, against its Lipper Performance Universe. The Board of BQR and BlackRock reviewed and discussed the reasons for BQR’s underperformance during these periods. BQR’s Board was informed that, among other things, underperformance during these periods was attributed to the water and agriculture portions of the portfolio, sectors that are not emphasized by peer funds.

The Board of BGR noted that for each of the one-year and since-inception periods reported, BGR underperformed its customized benchmark. The since inception period is as of the customized benchmark creation date. BlackRock believes that performance relative to the customized benchmark is an appropriate performance metric for BGR. The Board of BGR and BlackRock reviewed and discussed the reasons for BGR’s underperformance during

 

     ANNUAL REPORT    OCTOBER 31, 2014    143


Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)     

 

these periods. BGR’s Board was informed that, among other things, relative underperformance to the customized benchmark was due to stock selection in the energy and materials sectors. The weighting to oil, gas and mining within the portfolio also hindered performance relative to the customized benchmark.

The Board of CII noted that for each of the one-year and since-inception periods reported, CII underperformed its customized benchmark. The since inception period is as of the customized benchmark creation date. BlackRock believes that performance relative to the customized benchmark is an appropriate performance metric for CII. The Board of CII and BlackRock reviewed and discussed the reasons for CII’s underperformance during these periods. CII’s Board was informed that, among other things, the impact of the portfolio’s cash position in a rising equity market drove the majority of underperformance relative to the customized benchmark. In addition, stock selection in energy, industrials and healthcare detracted from returns.

The Board of BDJ noted that for each of the one-year and since-inception periods reported, BDJ underperformed its customized benchmark. The since inception period is as of the customized benchmark creation date. BlackRock believes that performance relative to the customized benchmark is an appropriate performance metric for BDJ. The Board of BDJ and BlackRock reviewed and discussed the reasons for BDJ’s underperformance during these periods. BDJ’s Board was informed that, among other things, the largest detractor during the past year was stock selection in consumer staples, information technology and industrials.

The Board of BME noted that for each of the one-year and since-inception periods reported, BME underperformed its customized benchmark. The since inception period is as of the customized benchmark creation date. BlackRock believes that performance relative to the customized benchmark is an appropriate performance metric for BME. The Board of BME and BlackRock reviewed and discussed the reasons for BME’s underperformance during these periods. BME’s Board was informed that, among other things, for the one-year period, the cash position slightly eroded performance relative to the customized benchmark due to the appreciation of stocks in the health care sector. The overweight allocation and stock selection in the health care equipment industry (medical devices and supplies sub-sector) was the key detractor from relative return during 2011, which drove underperformance over the since-inception period.

The Board of BCF noted that for the since-inception period reported, BCF underperformed its customized benchmark. The since inception period is as of the customized benchmark creation date. The Board of BCF and BlackRock reviewed and discussed the reasons for BCF’s underperformance during the since-inception period. BCF’s Board was informed that, among other things, relative underperformance is primarily attributable to the challenges faced by the mining sector. Also, BCF’s exposure to precious metals, particularly silver, was a drag on performance.

The Board of BCX noted that for each of the one-year and since-inception periods reported, BCX underperformed its customized benchmark. The since inception period is as of the customized benchmark creation date. BlackRock believes that performance relative to the customized benchmark is an appropriate performance metric for BCX. The Board of BCX and BlackRock reviewed and discussed the reasons for BCX’s underperformance during these periods. BCX’s Board was informed that, among other things, the underperformance is primarily attributable to the challenges faced by the mining sector. BCX’s exposure to precious metals, particularly silver, was a drag on performance during both time periods. The gold industry was also put under pressure during both periods as markets moved away from the safe haven metal as investor confidence began to return.

The Board of each of BQY, BQR, BGR, CII, BDJ, BME, BCF, BCX and BlackRock also discussed BlackRock’s strategy for improving its respective Fund’s performance and BlackRock’s commitment to providing the resources necessary to assist its respective Fund’s portfolio managers in seeking to improve each Fund’s performance.

The Board of each of BGR, CII, BCF and BCX and BlackRock previously had concurred, given its respective Fund’s poor historical performance, in changing the portfolio management team. Both BlackRock and the Board of each of BGR, CII, BCF and BCX are hopeful that the change in portfolio management will result in improved performance going forward, although there can be no assurance that will be the case. The Board of each of BGR, CII, BCF and BCX will continue to monitor its respective Fund’s performance.

C. Consideration of the Advisory/Management Fees and the Cost of the Services and Profits to be Realized by BlackRock and its Affiliates from their Relationship with the Funds: Each Board, including the Independent Board Members, reviewed its Fund’s contractual management fee rate compared with the other funds in its Lipper category. The contractual management fee rate represents a combination of the advisory fee and any administrative fees, before taking into account any reimbursements or fee waivers. Each Board also compared its Fund’s total expense ratio, as well as its actual management fee rate, to those of other funds in its Lipper category. The total expense ratio represents a fund’s total net operating expenses, excluding any investment related expenses. The total expense ratio gives effect to any expense reimbursements or fee waivers that benefit a fund, and the actual management fee rate gives effect to any management fee reimbursements or waivers that benefit a fund. The Boards considered the services provided and the fees charged by BlackRock and its affiliates to other types of clients with similar investment mandates, as applicable, including institutional accounts.

 

144    ANNUAL REPORT    OCTOBER 31, 2014     


Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)     

 

The Boards received and reviewed statements relating to BlackRock’s financial condition. Each Board was also provided with a profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to its Fund. Each Board reviewed BlackRock’s profitability with respect to its Fund and other funds the Board currently oversees for the year ended December 31, 2013 compared to available aggregate profitability data provided for the prior two years. The Boards reviewed BlackRock’s profitability with respect to certain other fund complexes managed by the Manager and/or its affiliates. The Boards reviewed BlackRock’s assumptions and methodology of allocating expenses in the profitability analysis, noting the inherent limitations in allocating costs among various advisory products. The Boards recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Manager, the types of funds managed, precision of expense allocations and business mix. As a result, calculating and comparing profitability at individual fund levels is difficult.

The Boards noted that, in general, individual fund or product line profitability of other advisors is not publicly available. The Boards reviewed BlackRock’s overall operating margin, in general, compared to that of certain other publicly-traded asset management firms. The Boards considered the differences between BlackRock and these other firms, including the contribution of technology at BlackRock, BlackRock’s expense management, and the relative product mix.

In addition, each Board considered the cost of the services provided to its Fund by BlackRock, and BlackRock’s and its affiliates’ profits relating to the management of its Fund and the other funds advised by BlackRock and its affiliates. As part of its analysis, each Board reviewed BlackRock’s methodology in allocating its costs to the management of its Fund. Each Board also considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreements for its Fund and to continue to provide the high quality of services that is expected by the Board. The Boards further considered factors including but not limited to BlackRock’s commitment of time, assumption of risk and liability profile in servicing the Funds in contrast to what is required of BlackRock with respect to other products with similar investment objectives across the open-end fund, ETF, closed-end fund and institutional account product channels, as applicable.

The Board of BQY noted that BQY’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio ranked in the first and second quartiles, respectively, relative to BQY’s Expense Peers.

The Board of BQR noted that BQR’s contractual management fee rate ranked in the fourth quartile, and that the actual management fee rate and total expense ratio each ranked in the second quartile, relative to BQR’s Expense Peers. The Board of BQR also noted that BlackRock had voluntarily agreed to waive a portion of the advisory fee payable by BQR, which was implemented on June 6, 2013. After discussions between BQR’s Board, including the Independent Board Members, and BlackRock, BQR’s Board and BlackRock agreed to a continuation of the voluntary advisory fee waiver, which results in savings to shareholders.

The Board of BGR noted that BGR’s contractual management fee rate ranked fourth out of four funds, and that the actual management fee rate and total expense ratio each ranked in the second quartile, relative to BGR’s Expense Peers.

The Board of each of CII, BDJ and BME noted that its respective Fund’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio each ranked in the first quartile, relative to the Fund’s Expense Peers.

The Board of BOE noted that BOE’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio ranked in the second and first quartiles, respectively, relative to BOE’s Expense Peers.

The Board of BGY noted that BGY’s contractual management fee rate ranked in the second quartile, and that the actual management fee rate and total expense ratio each ranked in the second quartile, relative to BGY’s Expense Peers. The Board of BGY also noted that BlackRock had voluntarily agreed to waive a portion of the advisory fee payable by BGY, which was implemented on June 6, 2013. After discussions between BGY’s Board, including the Independent Board Members, and BlackRock, BGY’s Board and BlackRock agreed to a continuation of the voluntary advisory fee waiver, which results in savings to shareholders.

The Board of BCF noted that BCF’s contractual management fee rate ranked fourth out of four funds, and that the actual management fee rate and total expense ratio ranked in the third and second quartiles, respectively, relative to BCF’s Expense Peers.

The Board of BCX noted that BCX’s contractual management fee rate ranked fourth out of four funds, and that the actual management fee rate and total expense ratio ranked in the third and first quartiles, respectively, relative to BCX’s Expense Peers.

The Board of BUI noted that BUI’s contractual management fee rate ranked second out of four funds, and that the actual management fee rate and total expense ratio ranked in the third and first quartiles, respectively, relative to BUI’s Expense Peers.

 

     ANNUAL REPORT    OCTOBER 31, 2014    145


Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (concluded)     

 

D. Economies of Scale: Each Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of its Fund increase. Each Board also considered the extent to which its Fund benefits from such economies and whether there should be changes in the advisory fee rate or breakpoint structure in order to enable the Fund to participate in these economies of scale, for example through the use of breakpoints in the advisory fee based upon the asset level of the Fund.

Based on the Boards’ review and consideration of the issue, the Boards concluded that most closed-end funds do not have fund level breakpoints because closed-end funds generally do not experience substantial growth after the initial public offering. They are typically priced at scale at a fund’s inception.

E. Other Factors Deemed Relevant by the Board Members: Each Board, including the Independent Board Members, also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates may derive from their respective relationships with its Fund, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios and risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to the Fund, including securities lending and cash management services. The Boards also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Boards also noted that BlackRock may use and benefit from third party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or a number of its other client accounts. The Boards further noted that it had considered the investment by BlackRock’s funds in exchange traded funds (i.e., ETFs) without any offset against the management fees payable by the funds to BlackRock.

In connection with its consideration of the Agreements, the Boards also received information regarding BlackRock’s brokerage and soft dollar practices. The Boards received reports from BlackRock which included information on brokerage commissions and trade execution practices throughout the year.

Each Board noted the competitive nature of the closed-end fund marketplace, and that shareholders are able to sell their Fund shares in the secondary market if they believe that their Fund’s fees and expenses are too high or if they are dissatisfied with the performance of their Fund.

The Boards also considered the various notable initiatives and projects BlackRock performed in connection with its closed-end fund product line. These initiatives included completion of the refinancing of auction rate preferred securities; developing equity shelf programs; efforts to eliminate product overlap with fund mergers; ongoing services to manage leverage that has become increasingly complex; share repurchases and other support initiatives for certain BlackRock funds; and continued communications efforts with shareholders, fund analysts and financial advisers. With respect to the latter, the Independent Board Members noted BlackRock’s continued commitment to supporting the secondary market for the common shares of its closed-end funds through a comprehensive secondary market communication program designed to raise investor and analyst awareness and understanding of closed-end funds. BlackRock’s support services included, among other things: continuing communications concerning the refinancing efforts related to auction rate preferred securities; sponsoring and participating in conferences; communicating with closed-end fund analysts covering the BlackRock funds throughout the year; providing marketing and product updates for the closed-end funds; and maintaining and enhancing its closed-end fund website.

Conclusion

Each Board, including the Independent Board Members, unanimously approved the continuation of the Advisory Agreement between the Manager and its Fund for a one-year term ending June 30, 2015. The Board of each of BQR, BGR, BCF and BCX, including the Independent Board Members, also unanimously approved the continuation of the BIL Sub-Advisory Agreement among the Manager, the BIL Sub-Adviser and its Fund for a one-year term ending June 30, 2015. Based upon its evaluation of all of the aforementioned factors in their totality, each Board, including the Independent Board Members, were satisfied that the terms of the Agreements were fair and reasonable and in the best interest of its Fund and its shareholders. In arriving at its decision to approve the Agreements for its Fund, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination. The contractual fee arrangements for the Funds reflect the results of several years of review by the Board Members and predecessor Board Members, and discussions between such Board Members (and predecessor Board Members) and BlackRock. As a result, the Board Members’ conclusions may be based in part on their consideration of these arrangements in prior years.

 

146    ANNUAL REPORT    OCTOBER 31, 2014     


Automatic Dividend Reinvestment Plans     

 

Pursuant to each Trust’s Dividend Reinvestment Plan (the “Reinvestment Plan”), Common Shareholders are automatically enrolled, to have all distributions of dividends and capital gains reinvested by Computershare Trust Company, N.A. (the “Reinvestment Plan Agent”) in the respective Trust’s shares pursuant to the Reinvestment Plan. Shareholders who do not participate in the Reinvestment Plan will receive all distributions in cash paid by check and mailed directly to the shareholders of record (or if the shares are held in street or other nominee name, then to the nominee) by the Reinvestment Plan Agent, which serves as agent for the shareholders in administering the Reinvestment Plan.

After the Trusts declare a dividend or determines to make a capital gain distribution, the Reinvestment Plan Agent will acquire shares for the participants’ account, depending upon the following circumstances, either (i) through receipt of unissued but authorized shares from the Trust (“newly issued shares”) or (ii) by purchase of outstanding shares on the open market, on a Trust’s primary exchange (“open market purchases”). If, on the dividend payment date, the net asset value per share (“NAV”) is equal to or less than the market price per share plus estimated brokerage commissions (such condition being referred to herein as “market premium”), the Reinvestment Plan Agent will invest the dividend amount in newly issued shares acquired on behalf of the participants. The number of newly issued shares to be credited to each participant’s account will be determined by dividing the dollar amount of the dividend by the NAV on the date the shares are issued. However, if the NAV is less than 95% of the market price on the dividend payment date, the dollar amount of the dividend will be divided by 95% of the market price on the dividend payment date. If, on the dividend payment date, the NAV is greater than the market price per share plus estimated brokerage commissions (such condition being referred to herein as “market discount”), the Reinvestment Plan Agent will invest the dividend amount in shares acquired on behalf of the participants in open-market purchases. If the Reinvestment Plan Agent is unable to invest the full dividend amount in open market purchases, or if the market discount shifts to a market premium during the purchase period, the Reinvestment Plan Agent will invest any un-invested portion in newly issued shares. Investments innewly issued shares made in this manner would be made pursuant to the same process described above and the date of issue for such newly issued shares will substitute for the dividend payment date.

Participation in the Reinvestment Plan is completely voluntary and may be terminated or resumed at any time without penalty by notice if received and processed by the Reinvestment Plan Agent prior to the dividend record date. Additionally, the Reinvestment Plan Agent seeks to process notices received after the record date but prior to the payable date and such notices often will become effective by the payable date. Where late notices are not processed by the applicable payable date, such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution.

The Reinvestment Plan Agent’s fees for the handling of the reinvestment of all distributions will be paid by each Trust. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Reinvestment Plan Agent’s open market purchases in connection with the reinvestment of all distributions. The automatic reinvestment of all distributions will not relieve participants of any federal income tax that may be payable on such dividends or distributions.

Each Trust reserves the right to amend or terminate the Reinvestment Plan. There is no direct service charge to participants in the Reinvestment Plan; however, each Trust reserves the right to amend the Reinvestment Plan to include a service charge payable by the participants. Participants that request a sale of shares are subject to a $0.02 per share sold brokerage commission. All correspondence concerning the Reinvestment Plan should be directed to Computershare Trust Company, N.A. through the internet at http://www.computershare.com/blackrock, or in writing to Computershare, P.O. Box 30170, College Station, TX 77842-3170, Telephone: (800) 699-1236. Overnight correspondence should be directed to the Reinvestment Plan Agent at Computershare, 211 Quality Circle, Suite 210, College Station, TX 77845.

 

     ANNUAL REPORT    OCTOBER 31, 2014    147


Officers and Trustees     

 

Name, Address1 ,

and Year of Birth

 

Position(s)

Held with

the Trusts

 

Length

of Time

Served as

a Trustee3

   Principal Occupation(s) During Past Five Years  

Number of BlackRock-
Advised Registered
Investment Companies

(“RICs”) Consisting of

Investment Portfolios

(“Portfolios”) Overseen

 

Public

Directorships

Independent Trustees2                     

Richard E. Cavanagh

1946

  Chairman of the Board and Trustee  

Since

2003

   Trustee, Aircraft Finance Trust from 1999 to 2009; Director, The Guardian Life Insurance Company of America since 1998; Director, Arch Chemical (chemical and allied products) from 1999 to 2011; Trustee, Educational Testing Service from 1997 to 2009 and Chairman thereof from 2005 to 2009; Senior Advisor, The Fremont Group since 2008 and Director thereof since 1996; Faculty Member/Adjunct Lecturer, Harvard University since 2007; President and Chief Executive Officer, The Conference Board, Inc. (global business research organization) from 1995 to 2007.  

79 RICs consisting of

79 Portfolios

  None

Karen P. Robards

1950

  Vice Chairperson of the Board, Chairperson of the Audit Committee and Trustee  

Since

2007

   Partner of Robards & Company, LLC (financial advisory firm) since 1987; Co-founder and Director of the Cooke Center for Learning and Development (a not-for-profit organization) since 1987; Director of Care Investment Trust, Inc. (health care real estate investment trust) from 2007 to 2010; Investment Banker at Morgan Stanley from 1976 to 1987.  

79 RICs consisting of

79 Portfolios

  AtriCure, Inc. (medical devices); Greenhill & Co., Inc.

Michael J. Castellano

1946

  Trustee and Member of the Audit Committee  

Since

2011

   Chief Financial Officer of Lazard Group LLC from 2001 to 2011; Chief Financial Officer of Lazard Ltd from 2004 to 2011; Director, Support Our Aging Religious (non-profit) since 2009; Director, National Advisory Board of Church Management at Villanova University since 2010. Trustee, Domestic Church Media Foundation since 2012.  

79 RICs consisting of

79 Portfolios

  None

Frank J. Fabozzi4

1948

  Trustee and Member of the Audit Committee  

Since

2003

   Editor of and Consultant for The Journal of Portfolio Management since 2006; Professor of Finance, EDHEC Business School since 2011; Professor in the Practice of Finance and Becton Fellow, Yale University School of Management from 2006 to 2011; Adjunct Professor of Finance and Becton Fellow, Yale University from 1994 to 2006.  

112 RICs consisting of

232 Portfolios

  None

Kathleen F. Feldstein

1941

  Trustee  

Since

2005

   President of Economics Studies, Inc. (private economic consulting firm) since 1987; Chair, Board of Trustees, McLean Hospital from 2000 to 2008 and Trustee Emeritus thereof since 2008; Member of the Board of Partners Community Healthcare, Inc. from 2005 to 2009; Member of the Corporation of Partners HealthCare since 1995; Trustee, Museum of Fine Arts, Boston since 1992; Member of the Visiting Committee to the Harvard University Art Museum since 2003; Director, Catholic Charities of Boston since 2009.  

79 RICs consisting of

79 Portfolios

  The McClatchy Company (publishing)

James T. Flynn

1939

  Trustee and Member of the Audit Committee  

Since

2007

   Chief Financial Officer of JPMorgan & Co., Inc. from 1990 to 1995.  

79 RICs consisting of

79 Portfolios

  None

Jerrold B. Harris

1942

  Trustee  

Since

2007

   Trustee, Ursinus College since 2000; Director, Ducks Unlimited, Inc. (conservations) since 2013 ; Director, Troemner LLC (scientific equipment) since 2000; Director of Delta Waterfowl Foundation from 2010 to 2012; President and Chief Executive Officer, VWR Scientific Products Corporation from 1990 to 1999.  

79 RICs consisting of

79 Portfolios

  BlackRock Kelso Capital Corp. (business development company)

R. Glenn Hubbard

1958

  Trustee  

Since

2004

   Dean, Columbia Business School since 2004; Faculty member, Columbia Business School since 1988.  

79 RICs consisting of

79 Portfolios

  ADP (data and information services), Metropolitan Life Insurance Company (insurance)

 

148    ANNUAL REPORT    OCTOBER 31, 2014     


Officers and Trustees (continued)     

 

Name, Address1,

and Year of Birth

 

Position(s)
Held with

the Trusts

 

Length

of Time
Served as

a Trustee3

   Principal Occupation(s) During Past Five Years   Number of BlackRock-
Advised Registered
Investment Companies
(“RICs”) Consisting of
Investment Portfolios
(“Portfolios”) Overseen
  Public
Directorships
Independent Trustees2 (concluded)                 

W. Carl Kester

1951

  Trustee and Member of the Audit Committee  

Since

2007

   George Fisher Baker Jr. Professor of Business Administration, Harvard Business School since 2008. Deputy Dean for Academic Affairs from 2006 to 2010; Chairman of the Finance Unit, 2005 to 2006; Senior Associate Dean and Chairman of the MBA Program from 1999 to 2005; Member of the faculty of Harvard Business School since 1981.  

79 RICs consisting of

79 Portfolios

  None
 

1    The address of each Trustee is c/o BlackRock, Inc., Park Avenue Plaza, 55 East 52nd Street, New York, NY 10055.

 

2    Independent Trustees serve until their resignation, removal or death, or until December 31 of the year in which they turn 74. The maximum age limitation may be waived as to any Trustee by action of a majority of the Trustees upon finding of good cause thereof. In 2013, the Board of Trustees unanimously approved further extending the mandatory retirement age for James T. Flynn by one additional year which the Board believed would be in the best interest of shareholders. Mr. Flynn can serve until December 31 of the year in which he turns 75. Mr Flynn turns 75 in 2014.

 

3    Date shown is the earliest date a person has served for the Trusts covered by this annual report. Following the combination of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. (“BlackRock”) in September 2006, the various legacy MLIM and legacy BlackRock fund boards were realigned and consolidated into three new fund boards in 2007. As a result, although the chart shows certain Trustees as joining the Trust’s board in 2007, those Trustees first became members of the boards of other legacy MLIM or legacy BlackRock funds as follows: Richard E. Cavanagh, 1994; Frank J. Fabozzi, 1988; Kathleen F. Feldstein, 2005; James T. Flynn, 1996; Jerrold B. Harris, 1999; R. Glenn Hubbard, 2004; W. Carl Kester, 1995 and Karen P. Robards, 1998.

 

4    Dr. Fabozzi is also a board member of the BlackRock Equity-Liquidity Complex.

Interested Trustees5    

Paul L. Audet

1953

  Trustee  

Since

2011

   Senior Managing Director of BlackRock and Head of U.S. Mutual Funds since 2011; Head of BlackRock’s Real Estate business from 2008 to 2011; Member of BlackRock’s Global Operating and Corporate Risk Management Committees since 2008; Head of BlackRock’s Global Cash Management business from 2005 to 2010; Acting Chief Financial Officer of BlackRock from 2007 to 2008; Chief Financial Officer of BlackRock from 1998 to 2005.  

141 RICs consisting of

329 Portfolios

  None

Henry Gabbay

1947

  Trustee  

Since

2007

   Consultant, BlackRock from 2007 to 2008; Managing Director, BlackRock from 1989 to 2007; Chief Administrative Officer, BlackRock Advisors, LLC from 1998 to 2007; President of BlackRock Funds and BlackRock Bond Allocation Target Shares from 2005 to 2007; Treasurer of certain closed-end funds in the BlackRock fund complex from 1989 to 2006.  

141 RICs consisting of

329 Portfolios

  None
 

5    Mr. Audet is an “interested person,” as defined in the 1940 Act, of the Trusts based on his position with BlackRock and its affiliates as well as his ownership of BlackRock securities. Mr. Gabbay is an “interested person” of the Trusts based on his former positions with BlackRock and its affiliates as well as his ownership of BlackRock and The PNC Financial Services Group, Inc. securities. Mr. Audet and Mr. Gabbay are also Directors of two complexes of BlackRock registered open-end funds, the BlackRock Equity-Liquidity Complex and the BlackRock Equity-Bond Complex. Interested Trustees of the BlackRock Closed-End Complex serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. The maximum age limitation may be waived as to any Trustee by action of a majority of the Trustees upon finding good cause thereof.

 

     ANNUAL REPORT    OCTOBER 31, 2014    149


Officers and Trustees (continued)     

 

Name, Address1,

and Year of Birth

 

Position(s)
Held with

the Trusts

 

Length

of Time
Served as

a Trustee

   Principal Occupation(s) During Past Five Years
Officers2             

John Perlowski

1964

 

President

and Chief Executive Officer

 

Since

2011

   Managing Director of BlackRock since 2009; Global Head of BlackRock Fund Services since 2009; Managing Director and Chief Operating Officer of the Global Product Group at Goldman Sachs Asset Management, L.P. from 2003 to 2009; Treasurer of Goldman Sachs Mutual Funds from 2003 to 2009 and Senior Vice President thereof from 2007 to 2009; Director of Goldman Sachs Offshore Funds from 2002 to 2009; Director of Family Resource Network (charitable foundation) since 2009.

Robert W. Crothers

1981

  Vice President  

Since

2012

   Director of BlackRock since 2011; Vice President of BlackRock from 2008 to 2010

Neal Andrews

1966

  Chief Financial Officer  

Since

2007

   Managing Director of BlackRock since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. from 1992 to 2006.

Jay Fife

1970

  Treasurer  

Since

2007

   Managing Director of BlackRock since 2007; Director of BlackRock in 2006; Assistant Treasurer of the MLIM and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.

Charles Park

1967

  Chief Compliance Officer and Anti-Money Laundering Officer  

Since

2014

   Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the Equity-Bond Complex, the Equity-Liquidity Complex and the Closed-End Complex since 2014; Principal of and Chief Compliance Officer for iShares® Delaware Trust Sponsor LLC since 2012 and BlackRock Fund Advisors (“BFA”) since 2006; Chief Compliance Officer for the BFA-advised iShares exchange traded funds since 2006; Chief Compliance Officer for BlackRock Asset Management International Inc. since 2012.

Janey Ahn

1975

  Secretary  

Since

2012

   Director of BlackRock since 2009; Vice President of BlackRock from 2008 to 2009; Assistant Secretary of the Funds from 2008 to 2012.
 

1    The address of each Officer is c/o BlackRock, Inc., Park Avenue Plaza, 55 East 52nd Street, New York, NY 10055.

 

2    Officers of the Trusts serve at the pleasure of the Board.

 

Effective September 5, 2014, Brendan Kyne resigned as a Vice President of the Trusts.

 

150    ANNUAL REPORT    OCTOBER 31, 2014     


Officers and Trustees (concluded)     

 

Investment Advisor

BlackRock Advisors, LLC

Wilmington, DE 19809

 

Custodians

The Bank of New York Mellon

New York, NY 102862

 

Sub-Advisors

BlackRock International LTD.1

Edinburgh, EH3 8JB

United Kingdom

 

    
Brown Brothers, Harriman & Co.

Boston, MA 021093

 

Accounting Agent

The Bank of New York Mellon

Brooklyn, NY 11217

 

Transfer Agent

Computershare Trust Company, N.A.

Canton, MA 02021

 
 

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Philadelphia, PA 19103

 
 

Legal Counsel

Skadden, Arps, Slate, Meagher & Flom LLP

New York, NY 10036

 
 

Address of the Trusts

100 Bellevue Parkway

Wilmington, DE 19809

 

  1   

For BQR, BGR, BCF and BCX.

 

  2   

For all Trusts except CII.

 

  3   

For CII.

 

Effective August 4, 2014, Tony DeSpirito became a portfolio manager of BQY and BDJ. The other portfolio managers of BQY and BDJ are
Bob Shearer, Kathleen Anderson, Kyle McClements and Christopher Accettella.

 

 

 

     ANNUAL REPORT    OCTOBER 31, 2014    151


Additional Information     

 

 

Proxy Results

The Annual Meeting of Shareholders was held on July 30, 2014 for shareholders of record on June 3, 2014, to elect trustee nominees for each Trust. There were no broker non-votes with regard to any of the Trusts.

Approved the Class I Trustees as follows except for CII:

 

     Paul L. Audet        Michael J. Castellano        R. Glenn Hubbard        W. Carl Kester
     Votes For     Votes Withheld     Abstain        Votes For     Votes Withheld     Abstain        Votes For     Votes Withheld     Abstain        Votes For     Votes Withheld     Abstain

BQY

    4,403,906        170,132      0       4,405,147        168,891      0       4,384,239        189,799      0       4,400,557        173,481      0

BQR

    8,593,970        227,170      0       8,591,715        229,425      0       8,604,237        216,903      0       8,604,799        216,341      0

BGR

    24,090,684        894,799      0       24,081,008        904,475      0       24,081,979        903,504      0       24,099,950        885,533      0

BDJ

    152,629,275        9,876,428      0       152,532,483        9,973,220      0       152,462,762        10,042,941      0       152,625,605        9,880,098      0

BOE

    59,798,238        1,243,282      0       59,760,079        1,281,441      0       59,756,234        1,285,286      0       59,831,783        1,209,737      0

BME

    6,741,229        77,605      0       6,754,674        64,160      0       6,753,516        65,318      0       6,738,008        80,826      0

BGY

    92,540,355        4,481,716      0       92,571,941        4,450,130      0       92,405,036        4,617,035      0       92,524,451        4,497,620      0

BCF

    46,275,071        868,208      0       46,213,149        930,130      0       46,221,649        921,630      0       46,242,514        900,765      0

BCX

    40,233,597        1,513,217      0       40,220,487        1,526,327      0       40,221,989        1,524,825      0       40,224,682        1,522,132      0

BUI

    15,009,156        267,217      0         14,989,083        287,290      0         14,983,187        293,186      0         14,976,349        300,024      0

For the Trusts listed above, Trustees whose term of office continued after the Annual Meeting of Shareholders because they were not up for election are Richard E. Cavanagh, Frank J. Fabozzi, Kathleen F. Feldstein, James T. Flynn, Henry Gabbay, Jerrold B. Harris and Karen P.Robards.

The Annual Meeting of Shareholders was held on July 30, 2014 for shareholders of record on June 3, 2014, to elect director nominees for BlackRock Enhanced Capital and Income Fund, Inc. There were no broker non-votes with regard to the Fund.

Approved the Directors as follows for CII only:

 

      Votes For      Votes Withheld      Abstain

Paul L. Audet

     38,712,973         1,096,954       0

Michael J. Castellano

     38,345,625         1,464,302       0

Richard E. Cavanagh

     38,333,831         1,476,096       0

Frank J. Fabozzi

     38,387,165         1,422,762       0

Kathleen F. Feldstein

     38,247,849         1,562,078       0

James T. Flynn

     38,311,831         1,498,096       0

Henry Gabbay

     38,441,740         1,368,187       0

Jerrold B. Harris

     38,317,845         1,492,082       0

R. Glenn Hubbard

     38,609,550         1,200,377       0

W. Carl Kester

     38,729,799         1,080,128       0

Karen P. Robards

     38,388,663         1,421,264       0

 

Trust Certification

All Trusts, other than BQY which is listed on NYSE MKT, are listed for trading on the NYSE. All Trusts have filed with the relevant exchange their annual chief executive officer certification regarding compliance with such exchange’s listing standards. The Trusts filed with the SEC the certification of its chief executive officer and chief financial officer required by section 302 of the Sarbanes-Oxley Act.

 

152    ANNUAL REPORT    OCTOBER 31, 2014     


Additional Information (continued)     

 

 

General Information

 

During the period, there were no material changes in the Trusts’ investment objectives or policies or to the Trusts’ charters or by-laws that would delay or prevent a change of control of the Trusts that were not approved by the shareholders or in the principal risk factors associated with investment in the Trusts. Other than as disclosed on page 145, there have been no changes in the persons who are primarily responsible for the day-to-day management of the Trusts’ portfolios.

Quarterly performance, semi-annual and annual reports and other information regarding the Trusts may be found on BlackRock’s website, which can be accessed at http://www.blackrock.com. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Trusts and does not, and is not intended to, incorporate BlackRock’s website in this report.

Electronic Delivery

Shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual shareholder reports by enrolling in the electronic delivery program. Electronic copies of shareholder reports are available on BlackRock’s website.

To enroll in electronic delivery:

Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:

Please contact your financial advisor. Please note that not all investment advisors, banks or brokerages may offer this service.

Householding

The Trusts will mail only one copy of shareholder documents, including annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call the Trusts at (800) 882-0052.

Availability of Quarterly Schedule of Investments

The Trusts file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Trusts’ Forms N-Q are available on the SEC’s website at
http:// www.sec.gov. and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on how to access documents on the SEC’s website without charge may be obtained by calling (800) SEC-0330. The Trusts’ Forms N-Q may also be obtained upon request and without charge by calling (800) 882-0052.

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Trusts use to determine how to vote proxies relating to portfolio securities is available (1) without charge, upon request, by calling
(800) 882-0052; (2) at http://www.blackrock.com; and (3) on the SEC’ at http://www.sec.gov.

Availability of Proxy Voting Record

Information about how the Trusts’ voted proxies relating to securities held in the Trusts’ portfolio during the most recent 12-month period ended June 30 is available upon request and without charge (1) at http://www.blackrock.com or by calling (800) 882-0052 and (2) on the SEC’s website at http://www.sec.gov.

Availability of Trust Updates

BlackRock will update performance and certain other data for the Trusts on a monthly basis on its website in the “Closed-end Funds” section of http://www.blackrock.com. Investors and others are advised to periodically check the website for updated performance information and the release of other material information about the Trusts. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Trusts and does not, and is not intended to, incorporate BlackRock’s website in this report.

 

 

     ANNUAL REPORT    OCTOBER 31, 2014    153


Additional Information (concluded)     

 

 

Dividend Policy

 

Each Trust’s dividend policy is to distribute all or a portion of its net investment income to its shareholders on a monthly basis. In order to provide shareholders with a more stable level of dividend distributions, the dividends paid by the Trusts for any particular month may be more or less than the amount of net investment income earned by the Trusts during such month. The portion of dividend distributions that exceeds a Trust’s current and accumulated earnings and profits, which are measured on a tax basis, will constitute a nontaxable return of capital.

Dividend distributions in excess of a Trust’s taxable income and net capital gains, but not in excess of a Trust’s earnings and profits, will be taxable to shareholders as ordinary income and will not constitute a nontaxable return of capital. The Trusts’ current accumulated but undistributed net investment income, if any, is disclosed in the Statements of Assets and Liabilities, which comprises part of the financial information included in this report.

 

 

BlackRock Privacy Principles

BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.

If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.

BlackRock obtains or verifies personal non-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.

 

BlackRock does not sell or disclose to non-affiliated third parties any non-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. These non-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.

We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.

 

 

154    ANNUAL REPORT    OCTOBER 31, 2014     


 

 

 

 

 

This report is intended for existing shareholders. It is not a prospectus. Past performance results shown in this report should not be considered a representation of future performance. The Trusts have leveraged their Common Shares, which creates risks for Common Shareholders, including the likelihood of greater volatility of net asset value and market price of the Common Shares, and the risk that fluctuations in short-term interest rates may reduce the Common Shares’ yield. Statements and other information herein are as dated and are subject to change.

 

LOGO

CEF-BK11-10/14-AR

 

  

LOGO

 


Item 2 –   Code of Ethics – The registrant (or the “Fund”) has adopted a code of ethics, as of the end of the period covered by this report, applicable to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. During the period covered by this report, the code of ethics was amended to update certain information and to make other non-material changes. During the period covered by this report, there have been no waivers granted under the code of ethics. A copy of the code of ethics is available without charge at www.blackrock.com.
Item 3 –   Audit Committee Financial Expert – The registrant’s board of directors (the “board of directors”), has determined that (i) the registrant has the following audit committee financial experts serving on its audit committee and (ii) each audit committee financial expert is independent:
  Michael Castellano
  Frank J. Fabozzi
  James T. Flynn
  W. Carl Kester
  Karen P. Robards
  The registrant’s board of directors has determined that W. Carl Kester and Karen P. Robards qualify as financial experts pursuant to Item 3(c)(4) of Form N-CSR.
  Prof. Kester has a thorough understanding of generally accepted accounting principles, financial statements and internal control over financial reporting as well as audit committee functions. Prof. Kester has been involved in providing valuation and other financial consulting services to corporate clients since 1978. Prof. Kester’s financial consulting services present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrant’s financial statements.
  Ms. Robards has a thorough understanding of generally accepted accounting principles, financial statements and internal control over financial reporting as well as audit committee functions. Ms. Robards has been President of Robards & Company, a financial advisory firm, since 1987. Ms. Robards was formerly an investment banker for more than 10 years where she was responsible for evaluating and assessing the performance of companies based on their financial results. Ms. Robards has over 30 years of experience analyzing financial statements. She also is a member of the audit committee of one publicly held company and a non-profit organization.
  Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification. The designation or identification of a person as an audit committee financial expert does not affect the duties, obligations, or liability of any other member of the audit committee or board of directors.

 

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Item 4 –   Principal Accountant Fees and Services
  The following table presents fees billed by Deloitte & Touche LLP (“D&T”) in each of the last two fiscal years for the services rendered to the Fund:

 

     (a) Audit Fees   (b) Audit-Related Fees1   (c) Tax Fees2   (d) All Other Fees3
        Entity Name          

Current

Fiscal Year

End

 

Previous

Fiscal Year

End

 

Current

Fiscal Year

End

 

Previous

Fiscal Year

End

 

Current

Fiscal Year

End

 

Previous

Fiscal Year

End

 

Current

Fiscal Year

End

 

Previous

Fiscal Year

End

BlackRock Utility and Infrastructure Trust   $52,281   $50,013   $0   $0   $14,850   $14,850   $0   $0

 

       The following table presents fees billed by D&T that were required to be approved by the registrant’s audit committee (the “Committee”) for services that relate directly to the operations or financial reporting of the Fund and that are rendered on behalf of BlackRock Advisors, LLC (“Investment Adviser” or “BlackRock”) and entities controlling, controlled by, or under common control with BlackRock (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Fund (“Fund Service Providers”):

 

     Current Fiscal Year End   Previous Fiscal Year End

(b) Audit-Related Fees1

  $0   $0

(c) Tax Fees2

  $0   $0

(d) All Other Fees3

  $2,555,000   $2,865,000

1 The nature of the services includes assurance and related services reasonably related to the performance of the audit of financial statements not included in Audit Fees.

2 The nature of the services includes tax compliance, tax advice and tax planning.

3 Aggregate fees borne by BlackRock in connection with the review of compliance procedures and attestation thereto performed by D&T with respect to all of the registered closed-end funds and some of the registered open-end funds advised by BlackRock.

(e)(1) Audit Committee Pre-Approval Policies and Procedures:

      

The Committee has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the Investment Adviser and Fund Service Providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are (a) consistent with the SEC’s auditor independence rules and (b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis (“general pre-approval”). The term of any general pre-approval is 12 months from the date of the pre-approval, unless the Committee provides for a different period. Tax or other non-audit services provided to the registrant which have a direct impact on the operations or financial reporting of the registrant will only be deemed pre-approved provided that any individual project does not exceed $10,000 attributable to the registrant or $50,000 per project. For this purpose, multiple projects will be aggregated to determine if they exceed the previously mentioned cost levels.

 

Any proposed services exceeding the pre-approved cost levels will require specific pre-approval by the Committee, as will any other services not subject to general pre-approval (e.g.,

 

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       unanticipated but permissible services). The Committee is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting. At this meeting, an analysis of such services is presented to the Committee for ratification. The Committee may delegate to the Committee Chairman the authority to approve the provision of and fees for any specific engagement of permitted non-audit services, including services exceeding pre-approved cost levels.
  (e)(2) None of the services described in each of Items 4(b) through (d) were approved by the Committee pursuant to the de minimis exception in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
  (f) Not Applicable
  (g) The aggregate non-audit fees paid to the accountant for services rendered by the accountant to the registrant, the Investment Adviser and the Fund Service Providers were:

 

    Entity Name  

Current Fiscal Year

End

 

Previous Fiscal Year

End

  BlackRock Utility and Infrastructure Trust   $14,850   $14,850

 

  Additionally, SSAE 16 Review (Formerly, SAS No. 70) fees for the current and previous fiscal years of $2,555,000 and $2,865,000, respectively, were billed by D&T to the Investment Adviser.
  (h) The Committee has considered and determined that the provision of non-audit services that were rendered to the Investment Adviser, and the Fund Service Providers that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
Item 5 –   Audit Committee of Listed Registrants

 

  (a) The following individuals are members of the registrant’s separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(58)(A)):

Michael Castellano

Frank J. Fabozzi

James T. Flynn

W. Carl Kester

Karen P. Robards

 

  (b) Not Applicable

 

Item 6 –   Investments
  (a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this Form.

 

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  (b) Not Applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing.
Item 7 –   Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – The board of directors has delegated the voting of proxies for the Fund’s portfolio securities to the Investment Adviser pursuant to the Investment Adviser’s proxy voting guidelines. Under these guidelines, the Investment Adviser will vote proxies related to Fund securities in the best interests of the Fund and its stockholders. From time to time, a vote may present a conflict between the interests of the Fund’s stockholders, on the one hand, and those of the Investment Adviser, or any affiliated person of the Fund or the Investment Adviser, on the other. In such event, provided that the Investment Adviser’s Equity Investment Policy Oversight Committee, or a sub-committee thereof (the “Oversight Committee”) is aware of the real or potential conflict or material non-routine matter and if the Oversight Committee does not reasonably believe it is able to follow its general voting guidelines (or if the particular proxy matter is not addressed in the guidelines) and vote impartially, the Oversight Committee may retain an independent fiduciary to advise the Oversight Committee on how to vote or to cast votes on behalf of the Investment Adviser’s clients. If the Investment Adviser determines not to retain an independent fiduciary, or does not desire to follow the advice of such independent fiduciary, the Oversight Committee shall determine how to vote the proxy after consulting with the Investment Adviser’s Portfolio Management Group and/or the Investment Adviser’s Legal and Compliance Department and concluding that the vote cast is in its client’s best interest notwithstanding the conflict. A copy of the Fund’s Proxy Voting Policy and Procedures are attached as Exhibit 99.PROXYPOL. Information on how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, (i) at www.blackrock.com and (ii) on the SEC’s website at http://www.sec.gov.
Item 8 –   Portfolio Managers of Closed-End Management Investment Companies – as of October 31, 2014.

 

  (a)(1) The registrant is managed by a team of investment professionals comprised of Kathleen Anderson, Managing Director at BlackRock, Robert Shearer, Managing Director at BlackRock, Kyle G. McClements, CFA, Managing Director at BlackRock and Christopher Accettella, Director at BlackRock. Messrs. Shearer, McClements and Accettella and Ms. Anderson are the Fund’s portfolio managers and are responsible for the day-to-day management of the Fund’s portfolio and the selection of its investments. Messrs. Shearer, McClements and Accettella and Ms. Anderson have been members of the Fund’s portfolio management team since 2011.

 

Portfolio Manager   Biography
Kathleen Anderson   Managing Director of BlackRock since 2007; Director of BlackRock from 2006 to 2007; Director of Merrill Lynch Investment Managers, L.P. (“MLIM”) from 2000 to 2006.
Robert Shearer   Managing Director of BlackRock since 2006; Managing Director of MLIM from 2000 to 2006.
Kyle G. McClements, CFA    Managing Director of BlackRock since 2009; Director of BlackRock from 2006 to 2008; Vice President of BlackRock in 2005; Vice President of State Street Research & Management from 2004 to 2005.
Christopher Accettella   Director of BlackRock since 2008; Vice President of BlackRock, Inc. from 2005 to 2008.

 

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(a)(2) As of October 31, 2014:

 

    

(ii) Number of Other Accounts Managed

and Assets by Account Type

 

(iii) Number of Other Accounts and

Assets for Which Advisory Fee is

Performance-Based

(i) Name of

Portfolio Manager

 

Other

Registered

Investment

Companies

 

Other Pooled

Investment

Vehicles

 

Other

Accounts

 

Other

Registered

Investment

Companies

 

Other Pooled

Investment

Vehicles

 

Other

Accounts

Kathleen Anderson

  11   5   5   0   0   0
    $34.53 Billion   $2.43 Billion   $623.5 Million   $0   $0   $0

Robert Shearer

  12   5   5   0   0   0
    $34.99 Billion   $2.43 Billion   $623.5 Million   $0   $0   $0

Kyle G. McClements, CFA

  11   3   0   0   0   0
    $7.05 Billion   $1.32 Billion   $0   $0   $0   $0

Christopher Accettella

  11   3   0   0   0   0
    $7.05 Billion   $1.32 Billion   $0   $0   $0   $0

 

   (iv) Portfolio Manager Potential Material Conflicts of Interest

BlackRock has built a professional working environment, firm-wide compliance culture and compliance procedures and systems designed to protect against potential incentives that may favor one account over another. BlackRock has adopted policies and procedures that address the allocation of investment opportunities, execution of portfolio transactions, personal trading by employees and other potential conflicts of interest that are designed to ensure that all client accounts are treated equitably over time. Nevertheless, BlackRock furnishes investment management and advisory services to numerous clients in addition to the Fund, and BlackRock may, consistent with applicable law, make investment recommendations to other clients or accounts (including accounts which are hedge funds or have performance or higher fees paid to BlackRock, or in which portfolio managers have a personal interest in the receipt of such fees), which may be the same as or different from those made to the Fund. In addition, BlackRock, Inc., its affiliates and significant shareholders and any officer, director, shareholder or employee may or may not have an interest in the securities whose purchase and sale BlackRock recommends to the Fund. BlackRock, Inc., or any of its affiliates or significant shareholders, or any officer, director, shareholder, employee or any member of their families may take different actions than those recommended to the Fund by BlackRock with respect to the same securities. Moreover, BlackRock may refrain from rendering any advice or services concerning securities of companies of which any of BlackRock, Inc.’s (or its affiliates’ or significant shareholders’) officers, directors or employees are directors or officers, or companies as to which BlackRock, Inc. or any of its affiliates or significant shareholders or the officers, directors and employees of any of them has any substantial economic interest or possesses material non-public information. Certain portfolio managers also may manage accounts whose investment strategies may at times be opposed to the strategy utilized for a fund. It should also be noted that a portfolio manager may be managing hedge fund and/or long only accounts, or may be part of a team managing hedge fund and/or long only accounts, subject to incentive fees. Such portfolio managers may therefore be entitled to receive a portion of any incentive fees earned on such accounts. Currently, the portfolio managers of this Fund are not entitled to receive a portion of incentive fees of other accounts.

 

6


As a fiduciary, BlackRock owes a duty of loyalty to its clients and must treat each client fairly. When BlackRock purchases or sells securities for more than one account, the trades must be allocated in a manner consistent with its fiduciary duties. BlackRock attempts to allocate investments in a fair and equitable manner among client accounts, with no account receiving preferential treatment. To this end, BlackRock, Inc. has adopted policies that are intended to ensure reasonable efficiency in client transactions and provide BlackRock with sufficient flexibility to allocate investments in a manner that is consistent with the particular investment discipline and client base, as appropriate.

(a)(3) As of October 31, 2014:

Portfolio Manager Compensation Overview

The discussion below describes the portfolio managers’ compensation as of October 31, 2014.

BlackRock’s financial arrangements with its portfolio managers, its competitive compensation and its career path emphasis at all levels reflect the value senior management places on key resources. Compensation may include a variety of components and may vary from year to year based on a number of factors. The principal components of compensation include a base salary, a performance-based discretionary bonus, participation in various benefits programs and one or more of the incentive compensation programs established by BlackRock.

Base compensation. Generally, portfolio managers receive base compensation based on their position with the firm.

Discretionary Incentive Compensation

Ms. Anderson and Mr. Shearer

Generally, discretionary incentive compensation for Active Equity portfolio managers is based on a formulaic compensation program. BlackRock’s formulaic portfolio manager compensation program is based on team revenue and pre-tax investment performance relative to appropriate competitors or benchmarks over 1-, 3- and 5-year performance periods, as applicable. In most cases, these benchmarks are the same as the benchmark or benchmarks against which the performance of the Funds or other accounts managed by the portfolio managers are measured. BlackRock’s Chief Investment Officers determine the benchmarks or rankings against which the performance of funds and other accounts managed by each portfolio management team is compared and the period of time over which performance is evaluated. With respect to these portfolio managers, such benchmarks for the Fund and other accounts are Lipper Equity Income and Lipper Global Natural Resources classification.

A smaller element of portfolio manager discretionary compensation may include consideration of: financial results, expense control, profit margins, strategic planning and implementation, quality of client service, market share, corporate reputation, capital allocation, compliance and risk control, leadership, technology and innovation. These factors are considered collectively by BlackRock management and the relevant Chief Investment Officers.

 

7


Discretionary Incentive Compensation

Messrs. Accettella and McClements

Discretionary incentive compensation is a function of several components: the performance of BlackRock, Inc., the performance of the portfolio manager’s group within BlackRock, the investment performance, including risk-adjusted returns, of the firm’s assets or strategies under management or supervision by that portfolio manager, and/or the individual’s performance and contribution to the overall performance of these portfolios and BlackRock. Among other things, BlackRock’s Chief Investment Officers make a subjective determination with respect to each portfolio manager’s compensation based on the performance of the Funds, other accounts or strategies managed by each portfolio manager. Performance is generally measured on a pre-tax basis over various time periods including 1-, 3- and 5- year periods, as applicable. The performance of some Funds, other accounts or strategies may not be measured against a specific benchmark.

Distribution of Discretionary Incentive Compensation. Discretionary incentive compensation is distributed to portfolio managers in a combination of cash and BlackRock, Inc. restricted stock units which vest ratably over a number of years. For some portfolio managers, discretionary incentive compensation is also distributed in deferred cash awards that notionally track the returns of select BlackRock investment products they manage and that vest ratably over a number of years. The BlackRock, Inc. restricted stock units, upon vesting, will be settled in BlackRock, Inc. common stock. Typically, the cash portion of the discretionary incentive compensation, when combined with base salary, represents more than 60% of total compensation for the portfolio managers. Paying a portion of discretionary incentive compensation in BlackRock, Inc. stock puts compensation earned by a portfolio manager for a given year “at risk” based on BlackRock’s ability to sustain and improve its performance over future periods. Providing a portion of discretionary incentive compensation in deferred cash awards that notionally track the BlackRock investment products they manage provides direct alignment with investment product results.

Long-Term Incentive Plan Awards — From time to time long-term incentive equity awards are granted to certain key employees to aid in retention, align their interests with long-term shareholder interests and motivate performance. Equity awards are generally granted in the form of BlackRock, Inc. restricted stock units that, once vested, settle in BlackRock, Inc. common stock. Ms. Anderson and Mr. Shearer have unvested long-term incentive awards.

Deferred Compensation Program — A portion of the compensation paid to eligible United States-based BlackRock employees may be voluntarily deferred at their election for defined periods of time into an account that tracks the performance of certain of the firm’s investment products. Any portfolio manager who is either a managing director or director at BlackRock with compensation above a specified threshold is eligible to participate in the deferred compensation program.

Other Compensation Benefits. In addition to base salary and discretionary incentive compensation, portfolio managers may be eligible to receive or participate in one or more of the following:

Incentive Savings Plans — BlackRock, Inc. has created a variety of incentive savings plans in which BlackRock, Inc. employees are eligible to participate, including a 401(k) plan, the BlackRock Retirement Savings Plan (RSP), and the BlackRock Employee Stock Purchase Plan (ESPP). The employer contribution components of the RSP include a company match equal to 50% of the first 8% of eligible pay contributed to the plan capped at $5,000 per year, and a company retirement contribution

 

8


equal to 3-5% of eligible compensation up to the Internal Revenue Service limit ($260,000 for 2014). The RSP offers a range of investment options, including registered investment companies and collective investment funds managed by the firm. BlackRock, Inc. contributions follow the investment direction set by participants for their own contributions or, absent participant investment direction, are invested into a target date fund that corresponds to, or is closest to, the year in which the participant attains age 65. The ESPP allows for investment in BlackRock, Inc. common stock at a 5% discount on the fair market value of the stock on the purchase date. Annual participation in the ESPP is limited to the purchase of 1,000 shares of common stock or a dollar value of $25,000 based on its fair market value on the purchase date. All of the eligible portfolio managers eligible to participate in these plans.

(a)(4) Beneficial Ownership of Securities – As of October 31, 2014.

 

Portfolio Manager  

Dollar Range of Equity Securities

of the Fund Beneficially Owned

Kathleen Anderson   $100,001 - $500,000
Robert Shearer   $50,001 - $100,000
Kyle McClements, CFA   $10,001 - $50,000
Christopher Accettella   None

(b) Not Applicable

 

Item 9 –   Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable due to no such purchases during the period covered by this report.
Item 10 –   Submission of Matters to a Vote of Security Holders – There have been no material changes to these procedures.
Item 11 –   Controls and Procedures
  (a) – The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by
Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended.
  (b) – There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12 –   Exhibits attached hereto
  (a)(1) – Code of Ethics – See Item 2
  (a)(2) – Certifications – Attached hereto

 

9


  (a)(3) – Not Applicable
  (b) – Certifications – Attached hereto
12(c) –   Notices to the registrant’s common shareholders in accordance with the order under Section 6(c) of the 1940 Act granting an exemption from Section 19(b) of the 1940 Act and Rule 19b-1 under the 1940 Act, dated May 9, 20091
 

 

1 The Fund has received exemptive relief from the Securities and Exchange Commission permitting it to make periodic distributions of long-term capital gains with respect to its outstanding common stock as frequently as twelve times each year, and as frequently as distributions are specified by or in accordance with the terms of its outstanding preferred stock. This relief is conditioned, in part, on an undertaking by the Fund to make the disclosures to the holders of the Fund’s common shares, in addition to the information required by Section 19(a) of the 1940 Act and Rule 19a-1 thereunder. The Fund is likewise obligated to file with the SEC the information contained in any such notice to shareholders and, in that regard, has attached hereto copies of each such notice made during the period.

 

10


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

BlackRock Utility and Infrastructure Trust
By:           /s/ John M. Perlowski                
  John M. Perlowski
  Chief Executive Officer (principal executive officer) of
  BlackRock Utility and Infrastructure Trust
Date: January 2, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By:           /s/ John M. Perlowski                
  John M. Perlowski
  Chief Executive Officer (principal executive officer) of
  BlackRock Utility and Infrastructure Trust
Date: January 2, 2015
By:           /s/ Neal J. Andrews                    
  Neal J. Andrews
  Chief Financial Officer (principal financial officer) of
  BlackRock Utility and Infrastructure Trust
Date: January 2, 2015

 

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