BlackRock Equity Dividend Fund (“Equity Dividend”), BlackRock Natural Resources Trust (“Natural Resources”) and BlackRock Utilities and Telecommunications Fund, Inc. (“Utilities and Telecommunications”) (collectively referred to as the “Funds” or individually as a “Fund”) are registered under the Investment Company Act of 1940, as amended (the “1940 Act”). Equity Dividend and Utilities and Telecommunications are registered as diversified, open-end management investment companies. Natural Resources is registered as a non-diversified, open-end management investment company. Equity Dividend and Natural Resources are organized as Massachusetts business trusts and Utilities and Telecommunications is organized as a Maryland corporation. The Funds’ financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The Board of Directors and the Boards of Trustees of the Funds are referred to throughout this report as the “Board of Directors” or the “Board.” Each Fund offers multiple classes of shares. Institutional and Service Shares are sold without a sales charge and only to certain eligible investors. Investor A Shares are generally sold with a front-end sales charge. Investor B, Investor B1, Investor C and Investor C1 Shares may be subject to a contingent deferred sales charge. Class R Shares are sold without a sales charge and only to certain retirement and other similar plans. All classes of shares have identical voting, dividend, liquidation and other rights and the same terms and conditions, except that Service, Investor A, Investor B, Investor B1, Investor C, Investor C1 and Class R Shares bear certain expenses related to the shareholder servicing of such shares, and Investor B, Investor B1, Investor C, Investor C1 and Class R Shares also bear certain expenses related to the distribution of such shares. Investor B and Investor B1 Shares automatically convert to Investor A Shares after approximately eight years. Investor B, Investor B1 and Investor C1 Shares are only available through exchanges, dividend reinvestment by existing shareholders or for purchase by certain qualified employee benefit plans. Each class has exclusive voting rights with respect to matters relating to its shareholder servicing and distribution expenditures (except that Investor B and Investor B1 shareholders may vote on material changes to the Investor A distribution plan).
The following is a summary of significant accounting policies followed by the Funds:
Certain Funds value their investments in BlackRock Liquidity Series, LLC Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon their pro rata ownership in the net assets of the underlying fund. 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 promulgated by the Securities and Exchange Commission (“SEC”) under the 1940 Act. The Funds 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.
Securities and other assets and liabilities denominated in foreign currencies are translated into US dollars using exchange rates determined as of the close of business on the New York Stock Exchange (“NYSE”). 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.
In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that each Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.
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Notes to Financial Statements (continued) |
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 Fund’s net assets. If events (for example, 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 be valued at their fair value, as determined in good faith by the investment advisor using a pricing service and/or policies approved by the Board. Each business day, the Funds use a pricing service to assist with the valuation of certain foreign exchange-traded equity securities and foreign exchange-traded and over-the-counter (“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 Transactions: The Funds’ books and records are maintained in US dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the date the transactions are entered into. Generally, when the US dollar rises in value against a foreign currency, the Funds’ investments denominated in that currency will lose value because its currency is worth fewer US dollars; the opposite effect occurs if the US dollar falls in relative value.
The Funds report foreign currency related transactions as components of realized gain (loss) for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax purposes.
Preferred Stock: The Funds may invest in preferred stocks. 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.
Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the SEC require that the Funds either deliver collateral or segregate assets in connection with certain investments (e.g., financial futures contracts), the Funds will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on their books and records cash or other liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party has requirements to deliver/deposit securities as collateral for certain investments.
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 the Funds have determined 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. Income and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.
Dividends and Distributions: Dividends and distributions paid by the Funds are recorded on the ex-dividend dates. If the total dividends and distributions made in any tax year exceeds net investment income and accumulated realized capital gains, a portion of the total distribution may be treated as a tax return of capital. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.
Securities Lending: The Funds may lend securities to financial institutions that provide cash as collateral, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. Securities lending income, as disclosed in the Statements of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the securities lending agent. During the term of the loan, the Funds earn dividends and
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SEMI-ANNUAL REPORT | JANUARY 31, 2011 | 43 |
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Notes to Financial Statements (continued) |
interest on the securities loaned. 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. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Funds could experience delays and costs in gaining access to the collateral. The Funds also 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.
Income Taxes: It is each Fund’s 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 its taxable income to its shareholders. Therefore, no federal income tax provision is required.
Each Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Funds’ US federal tax returns remains open for each of the four periods ended as follows:
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| | Four Years
Ended | | Three Periods
Ended | | One Year
Ended | |
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Equity Dividend | | | July 31, 2010 | | | — | | | — | |
Natural Resources | | | July 31, 2010 | | | — | | | — | |
Utilities and Telecommunications | | | — | | | July 31, 2010 | | | November 30, 2007 | |
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The statutes of limitations on each Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. Management does not believe there are any uncertain tax positions that require recognition of a tax liability.
Other: Expenses directly related to a Fund or its classes are charged to that Fund or class. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. Other expenses of the Fund are allocated daily to each class based on its relative net assets. The Funds have an arrangement with the custodians 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 custodians impose fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.
2. Derivative Financial Instruments:
The Funds engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Funds and to economically hedge, or protect, their exposure to certain risks such as equity risk and foreign currency exchange rate risk. These contracts may be transacted on an exchange or OTC.
Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. The Funds’ maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain netted against any collateral pledged by/posted to the counterparty. For OTC options purchased, the Funds bear the risk of loss in the amount of the premiums paid plus the positive change in market values net of any collateral received on the options should the counterparty fail to perform under the contracts. Options written by the Funds do not give rise to counterparty credit risk, as options written obligate the Funds to perform and not the counterparty. Counter-party risk related to exchange-traded financial futures contracts is deemed to be minimal due to the protection against defaults provided by the exchange on which these contracts trade.
The Funds may mitigate counterparty risk by procuring collateral and through netting provisions included within an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement implemented between a Fund and each of its respective counterparties. The ISDA Master Agreement allows each Fund to offset with each separate counterparty certain derivative financial instrument’s payables and/or receivables with collateral held. The amount of collateral moved to/from applicable coun-terparties is generally based upon minimum transfer amounts of up to $500,000. To the extent amounts due to the Funds from their counterpar-ties are not fully collateralized contractually or otherwise, the Funds bear the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for information with respect to collateral practices. In addition, the Funds manage counterparty risk by entering into agreements only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.
Certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event the Funds’ net assets decline by a stated percentage or the Funds fail to meet the terms of its ISDA Master Agreements, which would cause the Funds to accelerate payment of any net liability owed to the counterparty.
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44 | SEMI-ANNUAL REPORT | JANUARY 31, 2011 |
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Notes to Financial Statements (continued) |
Financial Futures Contracts: The Funds purchase or sell financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in the value of equity securities (equity risk). Financial futures contracts are agreements between the Funds and counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and at a specified date. Depending on the terms of the particular contract, futures contracts are settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on settlement date. Pursuant to the contract, the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as margin variation and are recorded by the Funds as unrealized gains or losses. When the contract is closed, the Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of financial futures transactions involves the risk of an imperfect correlation in the movements in the price of financial futures contracts, interest rates and the underlying assets.
Foreign Currency Exchange Contracts: The Funds enter into foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to obtain exposure to foreign currencies (foreign currency exchange rate risk). A 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. Foreign currency exchange contracts, when used by the Funds, help to manage the overall exposure to the currency backing some of the investments held by the Funds. The contract is marked-to-market daily and the change in market value is recorded by the Funds as an unrealized gain or loss. When the contract is closed, the Funds 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 foreign currency exchange contracts involves the risk that the value of a foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies and the risk that a counterparty to the contract does not perform its obligations under the agreement.
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Derivative Instruments Categorized by Risk Exposure: | | | |
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Fair Values of Derivative Instruments as of January 31, 2011 |
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| | Asset Derivatives | |
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| | | | Equity Dividend | |
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| | Statements of Assets and
Liabilities Location | | Value | |
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Equity contracts | | | Net unrealized appreciation/depreciation* | | $ | 13,993,095 | |
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* | Includes cumulative unrealized appreciation/depreciation of financial futures contracts as reported in the Schedules of Investments. Only current day’s margin variation is reported within the Statements of Assets and Liabilities. |
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The Effect of Derivative Instruments in the Statements of Operations
Six Months Ended January 31, 2011 |
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| | Net Realized Gain (Loss) from | |
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| | Equity
Dividend | | Natural
Resources | | Utilities and
Telecommu-
nications | |
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Foreign currency | | | | | | | | | | |
exchange contracts: | | | | | | | | | | |
Foreign currency transactions | | $ | (423,773 | ) | $ | (9,351 | ) | $ | 12,254 | |
Equity contracts: | | | | | | | | | | |
Financial futures contracts | | | 34,692,872 | | | — | | | — | |
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Total | | $ | 34,269,099 | | $ | (9,351 | ) | $ | 12,254 | |
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| | Net Change in Unrealized
Appreciation/Depreciation on | |
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| | Equity
Dividend | | Natural
Resources | |
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Foreign currency exchange contracts: | | | | | | | |
Foreign currency transactions | | $ | (65,455 | ) | $ | (2,107 | ) |
Equity contracts: | | | | | | | |
Financial futures contracts | | | 7,549,713 | | | — | |
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Total | | $ | 7,484,258 | | $ | (2,107 | ) |
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SEMI-ANNUAL REPORT | JANUARY 31, 2011 | 45 |
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Notes to Financial Statements (continued) |
For the six months ended January 31, 2011, the average quarterly balances of outstanding derivative financial instruments were as follows:
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| | Equity
Dividend | | Natural
Resources | | Utilities and
Telecommunications | |
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Financial futures contracts: | | | | | | | | | | |
Average number of contracts purchased | | | 1,325 | | | — | | | — | |
Average notional value of contracts purchased | | $ | 395,619,984 | | | — | | | — | |
Foreign currency exchange contracts: | | | | | | | | | | |
Average number of contracts — US dollars purchased | | | 1 | | | — | | | 1 | |
Average number of contracts — US dollars sold | | | 3 | | | 22 | | | — | |
Average US dollar amounts purchased | | | — | | | — | | $ | 125,928 | |
Average US dollar amounts sold | | $ | 1,454,369 | | $ | 1,161,985 | | | — | |
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3. Investment Advisory Agreement and Other Transactions with Affiliates:
The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Funds for 1940 Act purposes, but BAC and Barclays are not.
Each Fund entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Funds’ 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 Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of each Fund. For such services, each Fund pays the Manager a monthly fee at an annual rate of 0.60% of each Fund’s average daily net assets.
For Equity Dividend, the Manager voluntarily agreed to waive and/or reimburse fees and expenses (excluding interest expense, dividend expense, acquired fund fees and expenses and certain other expenses) in order to limit expenses to 0.90% for Institutional Shares, 1.15% for Service and Investor A Shares, 1.90% for Investor B Shares and Investor C Shares and 1.40% for Class R Shares of average daily net assets. The Manager may reduce or discontinue this arrangement at any time without notice.
The Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees each Fund pays to the Manager indirectly through each Fund’s investment in affiliated money market funds, however the Manager does not waive its investment advisory fees by the amount of investment advisory fees paid through each Fund’s investment in other affiliated investment companies, if any. These amounts are shown as fees waived by advisor in the Statements of Operations. For the six months ended January 31, 2011, the amounts waived were as follows:
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Equity Dividend | | $ | 229,881 | |
Natural Resources | | $ | 15,904 | |
Utilities and Telecommunications | | $ | 1,252 | |
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The Manager entered into a sub-advisory agreement with BlackRock Investment Management, LLC (“BIM”), an affiliate of the Manager. The Manager pays BIM for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by each Fund to the Manager.
For the six months ended January 31, 2011, each Fund reimbursed the Manager for certain accounting services, which are included in accounting services in the Statements of Operations. The reimbursements were as follows:
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Equity Dividend | | $ | 74,902 | |
Natural Resources | | $ | 4,840 | |
Utilities and Telecommunications | | $ | 1,014 | |
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The Funds entered into a Distribution Agreement and Distribution and Service Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of BlackRock. Pursuant to the Distribution and Service Plan and in accordance with Rule 12b-1 under the 1940 Act, each Fund pays BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at annual rates based upon the average daily net assets of the shares of Funds, as follows:
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| | Service Fees | |
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| | Equity
Dividend | | Natural
Resources | | Utilities and
Telecommunications | |
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Service | | | 0.25 | % | | — | | | — | |
Investor A | | | 0.25 | % | | 0.25 | % | | 0.25 | % |
Investor B | | | 0.25 | % | | 0.25 | % | | 0.25 | % |
Investor B1 | | | — | | | — | | | 0.25 | % |
Investor C | | | 0.25 | % | | 0.25 | % | | 0.25 | % |
Investor C1 | | | — | | | — | | | 0.25 | % |
Class R | | | 0.25 | % | | — | | | — | |
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46 | SEMI-ANNUAL REPORT | JANUARY 31, 2011 |
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Notes to Financial Statements (continued) |
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| | Distribution Fees | |
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| | Equity
Dividend | | Natural
Resources | | Utilities and
Telecommunications | |
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Investor B | | | 0.75 | % | | 0.75 | % | | 0.75 | % |
Investor B1 | | | — | | | — | | | 0.50 | % |
Investor C | | | 0.75 | % | | 0.75 | % | | 0.75 | % |
Investor C1 | | | — | | | — | | | 0.55 | % |
Class R | | | 0.25 | % | | — | | | — | |
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Pursuant to sub-agreements with BRIL, broker-dealers and BRIL provide shareholder servicing and distribution services to each Fund. The ongoing service and/or distribution fee compensates BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to Service, Investor A, Investor B, Investor B1, Investor C, Investor C1 and Class R shareholders.
For the six months ended January 31, 2011, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of the Funds’ Investor A Shares as follows:
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Equity Dividend | | $ | 313,239 | |
Natural Resources | | $ | 17,517 | |
Utilities and Telecommunications | | $ | 2,506 | |
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For the six months ended January 31, 2011, affiliates received the following contingent deferred sales charges relating to transactions in Investor B, Investor B1 and Investor C Shares.
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| | Investor B | | Investor B1 | | Investor C | |
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Equity Dividend | | $ | 53,196 | | | — | | $ | 102,320 | |
Natural Resources | | $ | 13,405 | | | — | | $ | 10,724 | |
Utilities and Telecommunications | | $ | 487 | | $ | 895 | | $ | 1,816 | |
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Furthermore, affiliates received contingent deferred sales charges relating to transactions subject to front-end sales charge waivers as follows:
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| | Investor A | |
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Equity Dividend | | $ | 59,956 | |
Natural Resources | | $ | 6,134 | |
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The Manager maintains a call center, which is responsible for providing certain shareholder services to the Funds, such as responding to shareholder inquiries and processing transactions based upon instructions from shareholders with respect to the subscription and redemption of Fund shares. For the six months ended January 31, 2011, the Funds reimbursed the Manager the following amounts for costs incurred in running the call center, which are included in transfer agent — class specific in the Statements of Operations:
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| | Equity
Dividend | | Natural
Resources | | Utilities and
Telecommunications | |
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Institutional | | $ | 7,676 | | $ | 670 | | $ | 75 | |
Service | | $ | 263 | | | — | | | — | |
Investor A | | $ | 33,851 | | $ | 3,763 | | $ | 618 | |
Investor B | | $ | 834 | | $ | 283 | | $ | 29 | |
Investor B1 | | | — | | | — | | $ | 11 | |
Investor C | | $ | 10,515 | | $ | 1,528 | | $ | 80 | |
Investor C1 | | | — | | | — | | $ | 42 | |
Class R | | $ | 1,836 | | | — | | | — | |
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The Funds received an exemptive order from the SEC permitting them, among other things, to pay an affiliated securities lending agent a fee based on a share of the income derived from the securities lending activities and have retained BIM as the securities lending agent. BIM may, on behalf of the Funds, invest cash collateral received by the Funds for such loans, among other things, in a private investment company managed by the Manager or in registered money market funds advised by the Manager or its affiliates. The market value of securities on loan and the value of the related collateral, if applicable are shown in the Statements of Assets and Liabilities as securities loaned and collateral on securities loaned at value, respectively. The cash collateral invested by BIM is disclosed in the Schedules of Investments. The share of income earned by the Funds on such investments is shown as securities lending — affiliated in the Statements of Operations. For the six months ended January 31, 2011, BIM received securities lending agent fees related to securities lending agent fees as follows:
Certain officers and/or directors of the Funds are officers and/or directors of BlackRock or its affiliates. The Funds reimburse the Manager for compensation paid to the Funds’ Chief Compliance Officer.
4. Investments:
Purchases and sales of investments, excluding short-term securities, for the six months ended January 31, 2011, were as follows:
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| | Purchases | | Sales | |
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Equity Dividend | | $ | 1,680,764,493 | | $ | 126,433,283 | |
Natural Resources | | $ | 8,369,786 | | $ | 3,817,208 | |
Utilities and Telecommunications | | $ | 502,263 | | $ | 4,313,138 | |
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SEMI-ANNUAL REPORT | JANUARY 31, 2011 | 47 |
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Notes to Financial Statements (continued) |
5. Borrowings:
The Funds, along with certain other funds managed by the Manager and its affiliates, are a party to a $500 million credit agreement with a group of lenders, which expired in November 2010. The Funds may borrow under the credit agreement to fund shareholder redemptions. Effective Novem-ber 2009, the credit agreement had the following terms: 0.02% upfront fee on the aggregate commitment amount which was allocated to each Fund based on its net assets as of October 31, 2009, a commitment fee of 0.10% per annum based on each Fund’s pro rata share of the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.25% per annum and (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. In addition, the Funds paid administration and arrangement fees which were allocated to the Funds based on their net assets as of October 31, 2009. Effective Novem-ber 2010, the credit agreement was renewed until November 2011 with the following terms: a commitment fee of 0.08% per annum based on the Funds’ pro rata share of the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.00% per annum and (b) the Fed Funds rate plus 1.00% per annum on amounts borrowed. In addition, the Funds paid administration and arrangement fees which were allocated to the Funds based on their net assets as of October 31, 2010. The Funds did not borrow under the credit agreement during the six months ended January 31, 2011.
6. Capital Loss Carryforwards:
As of July 31, 2010, the Funds had capital loss carryforwards available to offset future realized gains through the indicated expiration dates:
| | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
Expires July 31, | | Equity
Dividend | | Natural
Resources | | Utilities
and Telecom-
munications | |
|
|
|
|
|
|
|
|
2016 | | $ | 5,748,100 | | | — | | | — | |
2017 | | | 55,141,466 | | $ | 3,394,198 | | $ | 3,372,478 | |
2018 | | | 243,453,541 | | | 6,882,828 | | | 2,622,554 | |
| |
|
|
|
|
|
|
|
|
|
Total | | $ | 304,343,107 | | $ | 10,277,026 | | $ | 5,995,032 | |
| |
|
|
|
|
|
|
|
|
|
Under the recently enacted Regulated Investment Company Modernization Act of 2010, capital losses incurred by the Funds after July 31, 2011 will not be subject to expiration. In addition, these losses must be utilized prior to the losses incurred in pre-enactment taxable years.
7. Concentration, Market and Credit Risk:
As of January 31, 2011, Natural Resources and Utilities and Telecommunications invest a significant portion of their assets in securities in the Energy and Utilities and Telecommunications Services sectors, respectively. Changes in economic conditions affecting the Energy, Utilities or Telecommunications Services sectors would have a greater impact on these Funds and could affect the value, income and/or liquidity of positions in such securities.
In the normal course of business, the Funds 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 Funds may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Funds; 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 Funds may be exposed to counter-party credit risk, or the risk that an entity with which the Funds have unsettled or open transactions may fail to or be unable to perform on its commitments. The Funds 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 Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded in the Funds’ Statements of Assets and Liabilities, less any collateral held by the Funds.
| | |
|
|
|
48 | SEMI-ANNUAL REPORT | JANUARY 31, 2011 |
| |
|
| |
Notes to Financial Statements (continued) | |
| |
8. Capital Share Transactions: |
|
Transactions in capital shares for each class were as follows: | |
| | | | | | | | | | | | | |
| | Six Months Ended
January 31, 2011 | | Year Ended
July 31, 2010 | |
| |
| |
|
|
Equity Dividend | | Shares | | Amount | | Shares | | Amount | |
|
|
|
|
|
|
|
|
|
|
Institutional | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold | | | 97,062,970 | | $ | 1,629,127,411 | | | 112,716,024 | | $ | 1,749,154,256 | |
Shares issued to shareholders in reinvestment of dividends | | | 2,614,034 | | | 44,172,214 | | | 2,488,467 | | | 39,482,348 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
Total issued | | | 99,677,004 | | | 1,673,299,625 | | | 115,204,491 | | | 1,788,636,604 | |
Shares redeemed | | | (23,327,193 | ) | | (392,772,548 | ) | | (36,031,762 | ) | | (557,163,159 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
Net increase | | | 76,349,811 | | $ | 1,280,527,077 | | | 79,172,729 | | $ | 1,231,473,445 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
| | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold | | | 776,022 | | $ | 13,256,720 | | | 1,959,950 | | $ | 31,031,418 | |
Shares issued to shareholders in reinvestment of dividends | | | 25,229 | | | 425,286 | | | 36,681 | | | 582,721 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
Total issued | | | 801,251 | | | 13,682,006 | | | 1,996,631 | | | 31,614,139 | |
Shares redeemed | | | (474,281 | ) | | (7,879,894 | ) | | (1,807,228 | ) | | (27,593,319 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
Net increase | | | 326,970 | | $ | 5,802,112 | | | 189,403 | | $ | 4,020,820 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
| | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor A | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold | | | 69,779,273 | | $ | 1,173,610,864 | | | 146,971,643 | | $ | 2,282,326,523 | |
Shares issued to shareholders in reinvestment of dividends | | | 2,758,019 | | | 46,509,068 | | | 3,521,305 | | | 55,783,817 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
Total issued | | | 72,537,292 | | | 1,220,119,932 | | | 150,492,948 | | | 2,338,110,340 | |
Shares redeemed | | | (52,192,200 | ) | | (851,249,893 | ) | | (62,552,678 | ) | | (967,410,272 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
Net increase | | | 20,345,092 | | $ | 368,870,039 | | | 87,940,270 | | $ | 1,370,700,068 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
| | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor B | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold | | | 188,722 | | $ | 3,162,997 | | | 307,081 | | $ | 4,780,670 | |
Shares issued to shareholders in reinvestment of dividends | | | 21,471 | | | 363,926 | | | 30,346 | | | 482,516 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
Total issued | | | 210,193 | | | 3,526,923 | | | 337,427 | | | 5,263,186 | |
Shares redeemed | | | (504,046 | ) | | (8,437,483 | ) | | (1,528,632 | ) | | (23,754,278 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
Net decrease | | | (293,853 | ) | $ | (4,910,560 | ) | | (1,191,205 | ) | $ | (18,491,092 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
| | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor C | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold | | | 15,657,449 | | $ | 258,009,622 | | | 26,946,565 | | $ | 412,107,667 | |
Shares issued to shareholders in reinvestment of dividends | | | 480,289 | | | 7,934,991 | | | 511,546 | | | 7,951,723 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
Total issued | | | 16,137,738 | | | 265,944,613 | | | 27,458,111 | | | 420,059,390 | |
Shares redeemed | | | (5,916,325 | ) | | (96,678,864 | ) | | (10,073,547 | ) | | (152,503,502 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
Net increase | | | 10,221,413 | | $ | 169,265,749 | | | 17,384,564 | | $ | 267,555,888 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
| | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class R | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold | | | 7,688,926 | | $ | 128,918,411 | | | 15,681,924 | | $ | 244,739,743 | |
Shares issued to shareholders in reinvestment of dividends | | | 281,076 | | | 4,761,671 | | | 297,690 | | | 4,738,565 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
Total issued | | | 7,970,002 | | | 133,680,082 | | | 15,979,614 | | | 249,478,308 | |
Shares redeemed | | | (3,153,379 | ) | | (52,756,723 | ) | | (4,945,169 | ) | | (76,753,831 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
Net increase | | | 4,816,623 | | $ | 80,923,359 | | | 11,034,445 | | $ | 172,724,477 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
| | |
|
SEMI-ANNUAL REPORT | JANUARY 31, 2011 | 49 |
|
|
|
Notes to Financial Statements (continued) |
| | | | | | | | | | | | | |
| | Six Months Ended
January 31, 2011 | | Year Ended
July 31, 2010 | |
| |
| |
|
|
Natural Resources | | Shares | | Amount | | Shares | | Amount | |
|
|
|
|
|
|
|
|
|
|
Institutional | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold | | | 427,742 | | $ | 25,876,978 | | | 735,716 | | $ | 39,410,774 | |
Shares redeemed | | | (234,195 | ) | | (13,842,666 | ) | | (553,111 | ) | | (28,591,815 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
Net increase | | | 193,547 | | $ | 12,034,312 | | | 182,605 | | $ | 10,818,959 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
| | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor A | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold and automatic conversion of shares | | | 784,633 | | $ | 46,351,811 | | | 2,436,230 | | $ | 127,245,444 | |
Shares redeemed | | | (788,864 | ) | | (45,439,025 | ) | | (1,519,130 | ) | | (78,671,501 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
Net increase (decrease) | | | (4,231 | ) | $ | 912,786 | | | 917,100 | | $ | 48,573,943 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
| | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor B | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold | | | 7,383 | | $ | 394,219 | | | 23,917 | | $ | 1,155,470 | |
Shares redeemed and automatic conversion of shares | | | (53,792 | ) | | (2,802,379 | ) | | (149,141 | ) | | (7,105,308 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
Net decrease | | | (46,409 | ) | $ | (2,408,160 | ) | | (125,224 | ) | $ | (5,949,838 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
| | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor C | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold | | | 284,315 | | $ | 15,352,571 | | | 821,100 | | $ | 39,071,943 | |
Shares redeemed | | | (229,563 | ) | | (11,835,514 | ) | | (529,126 | ) | | (24,791,323 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
Net increase | | | 54,752 | | $ | 3,517,057 | | | 291,974 | | $ | 14,280,620 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
| | | | | | | | | | | | | |
Utilities and Telecommunications | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold | | | 54,250 | | $ | 624,707 | | | 354,269 | | $ | 3,891,766 | |
Shares issued to shareholders in reinvestment of dividends | | | 11,190 | | | 129,210 | | | 31,094 | | | 342,703 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
Total issued | | | 65,440 | | | 753,917 | | | 385,363 | | | 4,234,469 | |
Shares redeemed | | | (386,605 | ) | | (4,454,602 | ) | | (603,111 | ) | | (6,384,411 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
Net decrease | | | (321,165 | ) | $ | (3,700,685 | ) | | (217,748 | ) | $ | (2,149,942 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
| | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor A | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold and automatic conversion of shares | | | 507,507 | | $ | 5,856,817 | | | 938,052 | | $ | 10,254,149 | |
Shares issued to shareholders in reinvestment of dividends | | | 52,714 | | | 608,650 | | | 122,378 | | | 1,349,253 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
Total issued | | | 560,221 | | | 6,465,467 | | | 1,060,430 | | | 11,603,402 | |
Shares redeemed | | | (440,752 | ) | | (5,070,731 | ) | | (1,248,058 | ) | | (13,530,700 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
Net increase (decrease) | | | 119,469 | | $ | 1,394,736 | | | (187,628 | ) | $ | (1,927,298 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
| | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor B | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold | | | 8,119 | | $ | 92,695 | | | 9,262 | | $ | 99,769 | |
Shares issued to shareholders in reinvestment of dividends | | | 380 | | | 4,355 | | | 955 | | | 10,452 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
Total issued | | | 8,499 | | | 97,050 | | | 10,217 | | | 110,221 | |
Shares redeemed and automatic conversion of shares | | | (12,022 | ) | | (139,021 | ) | | (29,949 | ) | | (322,803 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
Net decrease | | | (3,523 | ) | $ | (41,971 | ) | | (19,732 | ) | $ | (212,582 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
| | |
|
|
|
50 | SEMI-ANNUAL REPORT | JANUARY 31, 2011 |
|
|
|
Notes to Financial Statements (concluded) |
| | | | | | | | | | | | | |
| | Six Months Ended
January 31, 2011 | | Year Ended
July 31, 2010 | |
| |
| |
|
|
Utilities and Telecommunications (concluded) | | Shares | | Amount | | Shares | | Amount | |
|
|
|
|
|
|
|
|
|
|
Investor B1 | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold | | | 2,939 | | $ | 33,358 | | | 4,333 | | $ | 46,938 | |
Shares issued to shareholders in reinvestment of dividends | | | 834 | | | 9,646 | | | 2,855 | | | 31,478 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
Total issued | | | 3,773 | | | 43,004 | | | 7,188 | | | 78,416 | |
Shares redeemed | | | (76,305 | ) | | (883,550 | ) | | (192,400 | ) | | (2,073,185 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
Net decrease | | | (72,532 | ) | $ | (840,546 | ) | | (185,212 | ) | $ | (1,994,769 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
| | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor C | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold | | | 191,339 | | $ | 2,159,113 | | | 567,288 | | $ | 6,067,328 | |
Shares issued to shareholders in reinvestment of dividends | | | 4,459 | | | 50,197 | | | 9,968 | | | 107,069 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
Total issued | | | 195,798 | | | 2,209,310 | | | 577,256 | | | 6,174,397 | |
Shares redeemed | | | (221,579 | ) | | (2,450,932 | ) | | (177,079 | ) | | (1,856,736 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
Net increase (decrease) | | | (25,781 | ) | $ | (241,622 | ) | | 400,177 | | $ | 4,317,661 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
| | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor C1 | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold | | | 11,857 | | $ | 133,227 | | | 33,262 | | $ | 358,877 | |
Shares issued to shareholders in reinvestment of dividends | | | 3,972 | | | 45,220 | | | 11,273 | | | 122,416 | |
| |
|
|
|
|
| |
|
|
|
|
|
|
Total issued | | | 15,829 | | | 178,447 | | | 44,535 | | | 481,293 | |
Shares redeemed | | | (75,246 | ) | | (850,564 | ) | | (131,963 | ) | | (1,408,056 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
Net decrease | | | (59,417 | ) | $ | (672,117 | ) | | (87,428 | ) | $ | (926,763 | ) |
| |
|
|
|
|
| |
|
|
|
|
|
|
9. Subsequent Events:
Management has evaluated the impact of all subsequent events on each Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.
| | |
|
SEMI-ANNUAL REPORT | JANUARY 31, 2011 | 51 |
Officers and Directors
|
Robert M. Hernandez, Chairman of the Board, Director and Member of the Audit Committee |
Fred G. Weiss, Vice Chairman of the Board, Chairman of the Audit Committee and Director |
James H. Bodurtha, Director |
Bruce R. Bond, Director |
Donald W. Burton, Director |
Richard S. Davis, Fund President1 and Director |
Stuart E. Eizenstat, Director |
Laurence D. Fink, Director |
Kenneth A. Froot, Director |
Henry Gabbay, Director |
John F. O’Brien, Director |
Roberta Cooper Ramo, Director |
David H. Walsh, Director |
John M. Perlowski, Fund President2 and Chief Executive Officer |
Brendan Kyne, Vice President |
Brian Schmidt, Vice President |
Neal Andrews, Chief Financial Officer |
Jay Fife, Treasurer |
Brian Kindelan, Chief Compliance Officer of the Funds |
Ira Shapiro, Secretary |
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1 | Fund President for Equity Dividend. |
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2 | Fund President for Natural Resources and Utilities and Telecommunications. |
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Investment Advisor |
BlackRock Advisors, LLC |
Wilmington, DE 19809 |
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Sub-Advisor |
BlackRock Investment Management, LLC |
Plainsboro, NJ 08536 |
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Custodians |
State Street Bank and Trust Company3 |
Boston, MA 02111 |
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The Bank of New York4 |
Brooklyn, NY 11217 |
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JPMorgan Chase Bank & Co.5 |
Brooklyn, NY 11245 |
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Transfer Agent |
BNY Mellon Investment Servicing (US) Inc. |
Wilmington, DE 19809 |
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Accounting Agent |
State Street Bank and Trust Company |
Princeton, NJ 08540 |
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Distributor |
BlackRock Investments, LLC |
New York, NY 10022 |
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Independent Registered Public Accounting Firm |
Deloitte & Touche LLP |
Princeton, NJ 08540 |
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Legal Counsel |
Willkie Farr & Gallagher LLP |
New York, NY 10019 |
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Address of the Funds |
100 Bellevue Parkway |
Wilmington, DE 19809 |
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3 | For Equity Dividend. |
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4 | For Natural Resources. |
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5 | For Utilities and Telecommunications. |
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Effective December 31, 2010, Richard R. West retired as a Director of the Funds. The Board wishes Mr. West well in his retirement. |
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Effective September 15, 2010, John M. Perlowski became President and Chief Executive Officer of the Funds. |
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Effective November 10, 2010, Ira Shapiro became Secretary of the Funds. |
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52 | SEMI-ANNUAL REPORT | JANUARY 31, 2011 |
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Additional Information |
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General Information |
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Electronic Delivery
Electronic copies of most financial reports and prospectuses are available on the Funds’ websites or shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual reports and prospectuses by enrolling in the Funds’ electronic delivery program.
To enroll:
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.
Shareholders Who Hold Accounts Directly with BlackRock:
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1) | Access the BlackRock website at |
| http://www.blackrock.com/edelivery |
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2) | Select “eDelivery” under the “More Information” section |
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3) | Log into your account |
Householding
The Funds will mail only one copy of shareholder documents, including prospectuses, 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 (800) 441-7762.
Availability of Quarterly Schedule of Investments
The Funds file their complete schedule of portfolio holdings with the Security and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ 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, D.C. Information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. The Funds’ Forms N-Q may also be obtained upon request and without charge by calling (800) 441-7762.
Availability of Proxy Voting Policies and Procedures
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available
(1) without charge, upon request, by calling (800) 441-7762;
(2) at http://www.blackrock.com; and (3) on the SEC’s website at http://www.sec.gov.
Availability of Proxy Voting Record
Information about how the Funds voted proxies relating to securities held in the Funds’ portfolios 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) 441-7762 and
(2) on the SEC’s website at http://www.sec.gov.
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SEMI-ANNUAL REPORT | JANUARY 31, 2011 | 53 |
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Additional Information (concluded) |
Account Information
Call us at (800) 441-7762 from 8:00 AM to 6:00 PM EST on any business day to get information about your account balances, recent transactions and share prices. You can also reach us on the Web at http://www.blackrock.com/funds.
Automatic Investment Plans
Investor Class shareholders who want to invest regularly can arrange to have $50 or more automatically deducted from their checking or savings account and invested in any of the BlackRock funds.
Systematic Withdrawal Plans
Investor Class shareholders can establish a systematic withdrawal plan and receive periodic payments of $50 or more from their BlackRock funds, as long as their account balance is at least $10,000.
Retirement Plans
Shareholders may make investments in conjunction with Traditional, Rollover, Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans.
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BlackRock Privacy Principles |
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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.
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54 | SEMI-ANNUAL REPORT | JANUARY 31, 2011 |
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A World-Class Mutual Fund Family |
BlackRock offers a diverse lineup of open-end mutual funds crossing all investment styles and managed by experts in equity, fixed income and tax-exempt investing.
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Equity Funds |
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BlackRock All-Cap Energy & Resources Portfolio |
BlackRock Asset Allocation Portfolio† |
BlackRock Balanced Capital Fund† |
BlackRock Basic Value Fund |
BlackRock Capital Appreciation Fund |
BlackRock Energy & Resources Portfolio |
BlackRock Equity Dividend Fund |
BlackRock EuroFund |
BlackRock Focus Growth Fund |
BlackRock Focus Value Fund |
BlackRock Global Allocation Fund† |
BlackRock Global Dividend Income Portfolio |
BlackRock Global Dynamic Equity Fund |
BlackRock Global Emerging Markets Fund |
BlackRock Global Growth Fund |
BlackRock Global Opportunities Portfolio |
BlackRock Global SmallCap Fund |
BlackRock Health Sciences Opportunities Portfolio |
BlackRock Healthcare Fund |
BlackRock Index Equity Portfolio |
BlackRock International Fund |
BlackRock International Index Fund |
BlackRock International Opportunities Portfolio |
BlackRock International Value Fund |
BlackRock Large Cap Core Fund |
BlackRock Large Cap Core Plus Fund |
BlackRock Large Cap Growth Fund |
BlackRock Large Cap Value Fund |
BlackRock Latin America Fund |
BlackRock Mid-Cap Growth Equity Portfolio |
BlackRock Mid-Cap Value Equity Portfolio |
BlackRock Mid Cap Value Opportunities Fund |
BlackRock Natural Resources Trust |
BlackRock Pacific Fund |
BlackRock Science & Technology |
Opportunities Portfolio |
BlackRock Small Cap Growth Equity Portfolio |
BlackRock Small Cap Growth Fund II |
BlackRock Small Cap Index Fund |
BlackRock Small/Mid-Cap Growth Portfolio |
BlackRock S&P 500 Index Fund |
BlackRock S&P 500 Stock Fund |
BlackRock U.S. Opportunities Portfolio |
BlackRock Utilities and Telecommunications Fund |
BlackRock Value Opportunities Fund |
BlackRock World Gold Fund |
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Fixed Income Funds |
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BlackRock Bond Index Fund |
BlackRock Bond Portfolio |
BlackRock Emerging Market Debt Portfolio |
BlackRock Floating Rate Income Portfolio |
BlackRock GNMA Portfolio |
BlackRock Government Income Portfolio |
BlackRock High Income Fund |
BlackRock High Yield Bond Portfolio |
BlackRock Income Portfolio† |
BlackRock Inflation Protected Bond Portfolio |
BlackRock Intermediate Government |
Bond Portfolio |
BlackRock International Bond Portfolio |
BlackRock Long Duration Bond Portfolio |
BlackRock Low Duration Bond Portfolio |
BlackRock Managed Income Portfolio |
BlackRock Multi-Sector Bond Portfolio |
BlackRock Short-Term Bond Fund |
BlackRock Strategic Income |
Opportunities Portfolio |
BlackRock Total Return Fund |
BlackRock Total Return Portfolio II |
BlackRock World Income Fund |
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Municipal Bond Funds |
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BlackRock AMT-Free Municipal Bond Portfolio |
BlackRock California Municipal Bond Fund |
BlackRock High Yield Municipal Fund |
BlackRock Intermediate Municipal Fund |
BlackRock Municipal Fund |
BlackRock National Municipal Fund |
BlackRock New Jersey Municipal Bond Fund |
BlackRock New York Municipal Bond Fund |
BlackRock Pennsylvania Municipal Bond Fund |
BlackRock Short-Term Municipal Fund |
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Target Risk & Target Date Funds† |
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BlackRock Prepared Portfolios |
Conservative Prepared Portfolio |
Moderate Prepared Portfolio |
Growth Prepared Portfolio |
Aggressive Growth Prepared Portfolio |
BlackRock Lifecycle Prepared Portfolios |
2015 |
2020 |
2025 |
2030 |
2035 |
2040 |
2045 |
2050 |
BlackRock LifePath Portfolios |
Retirement |
2020 |
2025 |
2030 |
2035 |
2040 |
2045 |
2050 |
2055 |
† Mixed asset fund.
BlackRock mutual funds are currently distributed by BlackRock Investments, LLC. You should consider the investment objectives, risks, charges and expenses of the funds under consideration carefully before investing. Each fund’s prospectus contains this and other information and is available at www.blackrock.com or by calling (800) 441-7762 or from your financial advisor. The prospectus should be read carefully before investing.
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SEMI-ANNUAL REPORT | JANUARY 31, 2011 | 55 |
This report is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Funds unless accompanied or preceded by the Funds’ current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
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#EDNRUT-1/11 | 
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Item 2 – | Code of Ethics – Not Applicable to this semi-annual report |
| |
Item 3 – | Audit Committee Financial Expert – Not Applicable to this semi-annual report |
| |
Item 4 – | Principal Accountant Fees and Services – Not Applicable to this semi-annual report |
| |
Item 5 – | Audit Committee of Listed Registrants – 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. |
| (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 – Not Applicable |
| |
Item 8 – | Portfolio Managers of Closed-End Management Investment Companies – Not Applicable |
| |
Item 9 – | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable |
| |
Item 10 – | Submission of Matters to a Vote of Security Holders – The registrant’s Nominating and Governance Committee will consider nominees to the board of directors recommended by shareholders when a vacancy becomes available. Shareholders who wish to recommend a nominee should send nominations that include biographical information and set forth the qualifications of the proposed nominee to the registrant’s Secretary. There have been no material changes to these procedures. |
| |
Item 11 – | Controls and Procedures |
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11(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 15d-15(b) under the Securities Exchange Act of 1934, as amended. |
| |
11(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 |
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12(a)(1) – | Code of Ethics – Not Applicable to this semi-annual report |
| |
12(a)(2) – | Certifications – Attached hereto |
| |
12(a)(3) – | Not Applicable |
| |
12(b) – | Certifications – Attached hereto |
| 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 Natural Resources Trust |
| | |
| | By: | /s/ John M. Perlowski | |
| | | John M. Perlowski |
| | | Chief Executive Officer of |
| | | BlackRock Natural Resources Trust |
| | |
| | Date: April 4, 2011 |
| | |
| | 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 Natural Resources Trust |
| | |
| | Date: April 4, 2011 |
| | |
| | By: | /s/ Neal J. Andrews | |
| | | Neal J. Andrews |
| | | Chief Financial Officer (principal financial officer) of |
| | | BlackRock Natural Resources Trust |
| | | |
| | Date: April 4, 2011 |
