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 811-21486
811-21538
Name of Fund: BlackRock Real Investment Fund
Master Real Investment Trust
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, BlackRock Real Investment Fund and Master Real Investment
Trust, 800 Scudders Mill Road, Plainsboro, NJ, 08536. Mailing address:
P.O. Box 9011, Princeton, NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 11/30/06
Date of reporting period: 12/01/05 - 11/30/06
Item 1 - Report to Stockholders
ALTERNATIVES BLACKROCK SOLUTIONS EQUITIES FIXED INCOME LIQUIDITY
REAL ESTATE
BlackRock Real Investment Fund
ANNUAL REPORT NOVEMBER 30, 2006
(BLACKROCK logo)
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
This report is transmitted to shareholders only. It is not authorized for
use as an offer of sale or a solicitation of an offer to buy shares of the
Fund unless accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return 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.
BlackRock Real Investment Fund
P.O. Box 9011
Princeton, NJ 08543-9011
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BlackRock Real Investment Fund
Proxy Results
During the six-month period ended November 30, 2006, BlackRock Real Investment
Fund's shareholders voted on the following proposals. On August 15, 2006, a
special shareholders' meeting was adjourned with respect to the proposals
until August 31, 2006, at which time they passed. A description of the
proposals and number of shares voted were as follows:
Shares Voted Shares Voted Shares Voted
For Against Abstain
To approve a new investment advisory agreement with
BlackRock Advisors, Inc. 4,416,374 136,580 108,584
To approve a contingent subadvisory agreement with
BlackRock Advisors, Inc. 4,388,587 159,208 113,743
Change in Fund's Independent Registered Public Accounting Firm
On August 28, 2006, Ernst & Young LLP ("E&Y") resigned as the Independent
Registered Public Accounting Firm of BlackRock Real Investment Fund, (the
"Fund") and for Master Real Investment Trust (the "Trust").
E&Y's reports on the financial statements of the Fund and Trust for the past
two fiscal years did not contain an adverse opinion or a disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or
accounting principles.
In connection with its audits for the two most recent fiscal years and through
August 28, 2006 (1) there were no disagreements with E&Y on any matter of
accounting principle or practice, financial statement disclosure or auditing
scope or procedure, whereby such disagreements, if not resolved to the
satisfaction of E&Y, would have caused them to make reference to the subject
matter of the disagreements in connection with their report on the financial
statements for such years; and (2) there have been no reportable events (as
defined in item 304(a)(1)(v) of Regulation S-K).
The Audit Committee of the Fund's and Trust's Board of Trustees approved the
engagement of Deloitte & Touche LLP as the Fund's and Trust's Independent
Registered Public Accounting Firm for the fiscal year ended November 30, 2006.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
A Letter to Shareholders
Dear Shareholder
As 2006 nears a conclusion, we are able to say it has been an interesting year
for investors. After a volatile start and far-reaching mid-year correction,
the financial markets regained some positive momentum through late summer and
into fall. For the six-month and 12-month periods ended November 30, 2006, the
major market indexes posted positive returns:
Total Returns as of November 30, 2006 6-month 12-month
U.S. equities (Standard & Poor's 500 Index) +11.33% +14.23%
Small cap U.S. equities (Russell 2000 Index) + 9.72 +17.43
International equities (MSCI Europe, Australasia, Far East Index) +11.19 +28.20
Fixed income (Lehman Brothers Aggregate Bond Index) + 5.93 + 5.94
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 4.53 + 6.12
High yield bonds (Credit Suisse High Yield Index) + 6.28 +11.53
After raising the target short-term interest rate 17 times between June 2004
and June 2006, the Federal Reserve Board (the Fed) finally opted to pause on
August 8. This left the federal funds rate at 5.25%, where it remained through
the September, October and December Federal Open Market Committee meetings. In
interrupting its two-year interest rate-hiking campaign, the Fed acknowledged
that economic growth is slowing, led by softness in the housing market.
However, the central bankers continue to take a cautionary position on
inflation, despite a decline in energy prices in the fall. At the time of this
writing, the price of crude oil was roughly $62 per barrel after reaching
nearly $78 per barrel in the summer.
Notwithstanding the mid-year correction, equity markets generally found
support in solid corporate earnings reports in the first three quarters of the
year. Overall corporate health, including strong company balance sheets,
helped to sustain robust dividend-distribution, share-buyback and merger-and-
acquisition activity. Many international equity markets fared equally well or
better, thanks in part to higher economic growth rates and low inflation.
In the U.S. bond market, prices declined (and yields correspondingly rose) for
much of the year as investors focused on decent economic activity and
inflation concerns. Bond prices began to improve (yields fell) in the summer
as the economy showed signs of weakening and the Fed paused. Notably, the
Treasury curve inverted periodically, a phenomenon typically associated with
periods of economic weakness. At the end of November, the one-month Treasury
bill offered the highest yield on the curve at 5.22%, while the 30-year
Treasury bond had a yield of 4.56%.
Amid the uncertainty inherent in the financial markets, we encourage you to
review your goals periodically with your financial professional and to make
portfolio changes, as needed. For additional insight and timely "food for
thought" for investors, we also invite you to visit Shareholder magazine at
www.blackrock.com/shareholdermagazine. We are pleased to make our investor-
friendly magazine available to you online. We thank you for trusting
BlackRock with your investment assets, and we look forward to continuing to
serve your investment needs.
Sincerely,
(Robert C. Doll, Jr.)
Robert C. Doll, Jr.
President and Trustee
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
A Discussion With Your Fund's Portfolio Managers
Fund performance during the period reflected a marked decline in commodity
prices, particularly oil and natural gas prices, in the latter half of the
fiscal year.
What is the Fund's investment objective?
The Fund seeks positive long-term total return, primarily through investment
in commodity-linked derivative instruments and short-term debt obligations.
The commodity-linked derivative instruments in which the Fund may invest
include hybrid instruments, such as structured notes or commodity-linked
notes, whose principal and/or interest payments are tied to the value of a
real asset or commodity index, such as the Goldman Sachs Commodity Total
Return Index. The debt obligations in which the Fund invests are primarily
investment grade, floating rate debt securities of any maturity.
How did the Fund perform during the fiscal year in light of the existing
market conditions?
For the 12-month period ended November 30, 2006, BlackRock Real Investment
Fund's Institutional, Investor A, Investor B and Investor C Shares had total
net returns of -6.52%, -6.77%, -7.46% and -7.50%, respectively. (Fund results
shown do not reflect sales charges and would be lower if sales charges were
included. Complete performance information can be found on pages 6 and 7 of
this report to shareholders.) For the same period, the Goldman Sachs Commodity
Total Return Index returned -5.97%. Importantly, the Index is used to
illustrate the performance of the overall commodities markets, but is not
necessarily a comparable measure of the Fund's results. The Fund is designed
to tap into the performance of the commodities markets and will generally
track the markets' trends. However, it is a fixed income investment and must
fund the cost of gaining that commodity exposure through the creation of
commodity-linked notes. This inherent cost will necessarily impact the Fund's
results relative to the Index.
Falling energy and commodity prices in the latter half of the fiscal year,
particularly in the final four months, contributed to the negative absolute
performance of the benchmark and the Fund. The decline was led by oil, with
the price per barrel reaching a record high near $78 per barrel in July before
falling to roughly $62 per barrel by the end of the period. Natural gas prices
also fell precipitously from a high of $48.21 per British thermal unit on July
31 to about $4.20 per British thermal unit by the end of September. After
climbing for several months, the decline in energy prices could be attributed
to an uneventful hurricane season, a slowing U.S. economy and concerns about
moderate winter temperatures.
Meanwhile, movements in the metals markets were more muted. Prices rose
precipitously in the first half of the fiscal year and leveled off somewhat in
the second half. The price of silver moved from more than $12 per ounce six
months ago to almost $14 per ounce at period-end, and gold from $645 per ounce
to $648 per ounce. Copper prices fell from roughly $7,900 per ton six months
ago to $7,030 per ton at period-end. The moderation in metals prices in the
latter half of the fiscal year can be attributed to a cyclical slowdown in
economic growth and a recent stabilization in inflation data.
Because we use credit-sensitive debt securities to provide yield enhancement
for the portfolio, Fund returns also are influenced by the performance of the
credit markets. During the 12-month reporting period, the spread tightening
phenomenon that had contributed to strong performance in the credit markets
for some time began to moderate, leading us to favor higher-grade credit
product for yield enhancement, as we felt high-quality securities would be
somewhat less susceptible to any spread widening that might occur.
Specifically, we focused primarily on asset-back securities, which included a
significant position in home equity product. These generated excess return
above our target, the London InterBank Offered Rate (LIBOR), thereby
contributing to Fund performance for the period.
What changes were made to the portfolio during the period?
Our overall strategy remained the same throughout the period. We sought to
maintain 33% of total investments in leveraged commodity-linked notes,
providing 100% commodity exposure to shareholders. The remaining 67% was
invested in our enhanced cash strategy designed to outpace LIBOR.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Early in the period, our commodity-linked notes issued by JP Morgan matured
from the portfolio, bringing our total exposure to the Goldman Sachs Commodity
Total Return Index from 100% to 85%. This reduced the beta of the portfolio
given our lower exposure to the commodities markets. In June, we reinvested
the proceeds from these maturing securities into the notes of a new issuer and
effectively returned the portfolio's exposure to the Index to 100%.
We continued to fund the cost of acquiring the commodity-linked exposure with
income generated from low-duration fixed income investments, such as agency
debt, structured finance securities and other corporate and mortgage products.
With spreads at tight levels in nearly every market, it was increasingly
difficult to uncover value in credit product. One area that we found to offer
significant yield pick-up relative to the consumer sectors, particularly autos
and credit cards, was home equity product. As such, we focused our investment
in this area of the fixed income market.
How would you characterize the portfolio's position at the close of the
period?
At period-end, the portfolio's fixed income exposure stood at approximately
66% of overall assets, broken down as follows: 16% in adjustable rate
mortgages; 17% in asset-backed securities, including floating rate home equity
loans; 20% in collateralized mortgage obligations; 6% in Fannie Mae commercial
mortgage product; 4% in 30-year generic pass-throughs; 2% in Treasury
Inflation Linked Securities; and 1% in various debt securities. The Fund ended
the period with a credit profile of AAA.
Despite a decline in energy and commodity prices in recent months, we continue
to believe that commodities will be long-term benefactors of global economic
expansion. Although growth in the United States may be moderating, many global
economies - particularly developing economies - continue to experience robust
rates of expansion. Commodities will continue to be necessary to support these
developing nations' infrastructure and development needs. In addition,
commodities tend to perform opposite of traditional asset classes. Thus, the
Fund offers an opportunity to diversify a traditional portfolio of stocks and
bonds, thereby helping investors to prepare for a wider range of market and
economic conditions. Given its unique structure, the Fund also offers
shareholders access to securities that are not available to individual
investors on the open market.
Stuart Spodek
Co-Portfolio Manager
Brian Weinstein
Co-Portfolio Manager
December 14, 2006
Effective October 2, 2006, Stuart Spodek and Brian Weinstein are the Fund's
co-portfolio managers and are primarily responsible for the day-to-day
management of the Fund's portfolio and the selection of its investments.
Mr. Spodek is a Managing Director of and portfolio manager with BlackRock, Inc.
and a member of the firm's Investment Strategy Group. He joined BlackRock in
1993 as an analyst in the Portfolio Management Group and subsequently was
promoted to portfolio manager. Mr. Weinstein is a Vice President of and
portfolio manager with BlackRock and a member of the Investment Strategy Group.
He joined BlackRock in 2000 as an analyst in the Portfolio Analytics Group
and moved to his current role in the Portfolio Management Group in 2002.
Effective October 2, 2006, The Fund's Class A, Class B, Class C and Class I
Shares were redesignated Investor A, Investor B, Investor C and Institutional
Shares, respectively.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Performance Data
About Fund Performance
Effective October 2, 2006, the Fund's Class A, Class B, Class C and Class I
Shares were redesignated Investor A, Investor B, Investor C and Institutional
Shares, respectively. As previously communicated to shareholders, new sales
charge schedules came into effect at the same time for certain of these
classes.
The Fund has multiple classes of shares:
* Institutional Shares are not subject to any front-end sales charge.
Institutional Shares bear no ongoing distribution or service fees and are
available only to eligible investors.
* Investor A Shares incur a maximum initial sales charge (front-end load) of
5.25% and a service fee of 0.25% per year (but no distribution fee).
* Investor B Shares are subject to a maximum contingent deferred sales charge
of 4.50% declining to 0% after six years. In addition, Investor B Shares are
subject to a distribution fee of 0.75% per year and a service fee of 0.25% per
year. These shares automatically convert to Investor A Shares after
approximately eight years. (There is no initial sales charge for automatic
share conversions.) All returns for periods greater than eight years reflect
this conversion.
* Investor C Shares are subject to a distribution fee of 0.75% per year and a
service fee of 0.25% per year. In addition, Investor C Shares are subject to a
1% contingent deferred sales charge if redeemed within one year of purchase.
Performance information reflects past performance and does not guarantee
future results. Current performance may be lower or higher than the
performance data quoted. Refer to www.blackrock.com to obtain performance data
current to the most recent month-end. Performance results do not reflect the
deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares. Figures shown in each of the following tables
assume reinvestment of all dividends and capital gain distributions, if any,
at net asset value on the ex-dividend date. Investment return and principal
value of shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class of shares
will vary because of the different levels of service, distribution and
transfer agency fees applicable to each class, which are deducted from the
income available to be paid to shareholders. The Fund's Manager has
voluntarily waived a portion of its fee. Without such waiver, the Fund's
returns would have been lower.
Recent Performance Results
6-Month 12-Month Since Inception
As of November 30, 2006 Total Return Total Return Total Return
Institutional Shares* -12.32% -6.52% +16.59%
Investor A Shares* -12.43 -6.77 +15.84
Investor B Shares* -12.72 -7.46 +13.97
Investor C Shares* -12.74 -7.50 +13.97
Goldman Sachs Commodity Total Return Index** -12.15 -5.97 +24.15
* Investment results shown do not reflect sales charges; results shown would be lower if a sales
charge was included. Cumulative total investment returns are based on changes in net asset values
for the periods shown, and assume reinvestment of all dividends and capital gains distributions
at net asset value on the ex-dividend date. The Fund commenced operations on 3/26/04.
** This unmanaged Index is calculated primarily on a world production-weighted basis and comprises
the principal physical commodities that are the subject of active, liquid futures markets.
Since inception total returns are from 3/26/04.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Performance Data (concluded)
Total Return Based on a $10,000 Investment
A line graph illustrating the growth of a $10,000 investment in Institutional
Shares*++, Investor A Shares*++, Investor B Shares*++ and Investor C Shares*++
compared to a similar investment in Goldman Sachs Commodity Total Return
Index++++. Values illustrated are as follows:
Institutional Shares*++
Date Value
3/26/2004 $10,000.00
November 2004 $11,580.00
November 2005 $12,472.00
November 2006 $11,659.00
Investor A Shares*++
Date Value
3/26/2004 $ 9,475.00
November 2004 $10,963.00
November 2005 $11,773.00
November 2006 $10,976.00
Investor B Shares*++
Date Value
3/26/2004 $10,000.00
November 2004 $11,550.00
November 2005 $12,315.00
November 2006 $11,056.00
Investor C Shares*++
Date Value
3/26/2004 $10,000.00
November 2004 $11,550.00
November 2005 $12,320.00
November 2006 $11,397.00
Goldman Sachs Commodity Total Return Index++++
Date Value
3/26/2004 $ 9,999.00
November 2004 $12,017.00
November 2005 $13,202.00
November 2006 $12,415.00
* Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including administration fees.
** Commencement of operations.
++ The Fund invests all of its assets in Master Real Investment Trust. The
Trust invests primarily in commodity-linked derivative instruments, and
U.S. Government securities and other debt obligations.
++++ This unmanaged Index is calculated primarily on a world production-
weighted basis and comprises the principal physical commodities that are
the subject of active, liquid futures markets.
Average Annual Total Return
Return
Institutional Shares
One Year Ended 11/30/06 -6.52%
Inception (3/26/04)
through 11/30/06 +5.89
Return Without Return With
Sales Charge Sales Charge*
Investor A Shares
One Year Ended 11/30/06 -6.77% -11.67%
Inception (3/26/04)
through 11/30/06 +5.63 + 3.53
Return Return
Without CDSC With CDSC++++++
Investor B Shares++
One Year Ended 11/30/06 -7.46% -11.03%
Inception (3/26/04)
through 11/30/06 +5.00 + 3.81
Return Return
Without CDSC With CDSC++++++
Investor C Shares++++
One Year Ended 11/30/06 -7.50% - 8.29%
Inception (3/26/04)
through 11/30/06 +5.00 + 5.00
* Assuming maximum sales charge of 5.25%.
++ Maximum contingent deferred sales charge is 4.50% and is
reduced to 0% after six years.
++++ Maximum contingent deferred sales charge is 1% and is reduced
to 0% after one year.
++++++ Assuming payment of applicable contingent deferred sales
charge.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Disclosure of Expenses
Shareholders of this Fund may incur the following charges: (a) expenses
related to transactions, including sales charges, redemption fees and exchange
fees; and (b) operating expenses including advisory fees, distribution fees
including 12b-1 fees, and other Fund expenses. The following example (which is
based on a hypothetical investment of $1,000 invested on June 1, 2006 and held
through November 30, 2006) is intended to assist shareholders both in
calculating expenses based on an investment in the Fund and in comparing these
expenses with similar costs of investing in other mutual funds.
The first table below provides information about actual account values and
actual expenses. In order to estimate the expenses a shareholder paid during
the period covered by this report, shareholders can divide their account value
by $1,000 and then multiply the result by the number in the first line under
the heading entitled "Expenses Paid During the Period."
The second table below provides information about hypothetical account values
and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses. In order to assist
shareholders in comparing the ongoing expenses of investing in this Fund and
other funds, compare the 5% hypothetical example with the 5% hypothetical
examples that appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders'
ongoing costs only and do not reflect any transactional expenses, such as
sales charges, redemption fees or exchange fees. Therefore, the second table
is useful in comparing ongoing expenses only, and will not help shareholders
determine the relative total expenses of owning different funds. If these
transactional expenses were included, shareholder expenses would have been
higher.
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value June 1, 2006 to
June 1, November 30, November 30,
2006 2006 2006
Actual
Institutional $1,000 $ 876.80 $ 6.21
Investor A $1,000 $ 875.70 $ 7.38
Investor B $1,000 $ 872.80 $10.99
Investor C $1,000 $ 872.60 $10.98
Hypothetical (5% annual return before expenses)**
Institutional $1,000 $1,018.48 $ 6.68
Investor A $1,000 $1,017.23 $ 7.94
Investor B $1,000 $1,013.37 $11.81
Investor C $1,000 $1,013.37 $11.81
* For each class of the Fund, expenses are equal to the annualized expense ratio for the class
(1.32% for Institutional, 1.57% for Investor A, 2.34% for Investor B and 2.34% for Investor C),
multiplied by 183/365 (to reflect the one-half year period shown). Because the Fund is a feeder
fund, the expense table example reflects the expenses of both the feeder fund and the master
trust in which it invests.
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in
the most recent fiscal half-year divided by 365.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Statement of Assets and Liabilities BlackRock Real Investment Fund
As of November 30, 2006
Assets
Investment in Master Real Investment Trust (the "Trust"), at value
(identified cost--$78,310,574) $ 76,646,059
Prepaid expenses 2,588
---------------
Total assets 76,648,647
---------------
Liabilities
Payables:
Distributor $ 39,664
Other affiliates 21,770
Administrator 12,436 73,870
---------------
Accrued expenses 22,233
---------------
Total liabilities 96,103
---------------
Net Assets
Net assets $ 76,552,544
===============
Net Assets Consist of
Institutional Shares of beneficial interest, $.01 par value, unlimited number
of shares authorized $ 17,997
Investor A Shares of beneficial interest, $.01 par value, unlimited number
of shares authorized 13,275
Investor B Shares of beneficial interest, $.01 par value, unlimited number
of shares authorized 8,894
Investor C Shares of beneficial interest, $.01 par value, unlimited number
of shares authorized 38,284
Paid-in capital in excess of par 84,229,391
Undistributed investment income--net $ 3,236,898
Accumulated capital losses allocated from the Trust--net (9,327,680)
Unrealized depreciation allocated from the Trust--net (1,664,515)
---------------
Total accumulated losses--net (7,755,297)
---------------
Net Assets $ 76,552,544
===============
Net Asset Value
Institutional--Based on net assets of $17,665,665 and 1,799,744 shares of
beneficial interest outstanding $ 9.82
===============
Investor A--Based on net assets of $12,994,840 and 1,327,504 shares of
beneficial interest outstanding $ 9.79
===============
Investor B--Based on net assets of $8,659,737 and 889,425 shares of
beneficial interest outstanding $ 9.74
===============
Investor C--Based on net assets of $37,232,302 and 3,828,420 shares of
beneficial interest outstanding $ 9.73
===============
See Notes to Financial Statements.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Statement of Operations BlackRock Real Investment Fund
For the Year Ended November 30, 2006
Investment Income
Net investment income allocated from the Trust:
Interest $ 3,823,600
Expenses (638,492)
---------------
Total income 3,185,108
---------------
Expenses
Investment advisory fees $ 553,670
Service and distribution fees--Investor C 453,248
Administration fees 156,721
Service and distribution fees--Investor B 110,570
Transfer agent fees--Investor C 68,592
Registration fees 61,392
Printing and shareholder reports 50,264
Professional fees 44,974
Service fees--Investor A 34,905
Transfer agent fees--Institutional 27,450
Transfer agent fees--Investor A 18,041
Transfer agent fees--Investor B 16,687
Other 24,565
---------------
Total expenses before waiver 1,621,079
Waiver of expenses (440,159)
---------------
Total expenses after waiver 1,180,920
---------------
Investment income--net 2,004,188
---------------
Realized & Unrealized Loss Allocated from the Trust--Net
Realized loss on investments, financial futures contracts, swaps and
options written--net (7,484,576)
Change in unrealized appreciation/depreciation on investments,
financial futures contracts, swaps and options written--net (1,542,807)
---------------
Total realized and unrealized loss--net (9,027,383)
---------------
Net Decrease in Net Assets Resulting from Operations $ (7,023,195)
===============
See Notes to Financial Statements.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Statements of Changes in Net Assets BlackRock Real Investment Fund
For the Year Ended
November 30,
Increase (Decrease) in Net Assets: 2006 2005
Operations
Investment income--net $ 2,004,188 $ 899,146
Realized gain (loss)--net (7,484,576) 12,008,250
Change in unrealized appreciation/depreciation--net (1,542,807) (7,658,589)
--------------- ---------------
Net increase (decrease) in net assets resulting from operations (7,023,195) 5,248,807
--------------- ---------------
Dividends & Distributions to Shareholders
Investment income--net:
Institutional (3,384,545) (96,002)
Investor A (1,944,127) (62,433)
Investor B (1,680,740) (21,074)
Investor C (6,489,922) (82,000)
Realized gain--net:
Institutional (14,322) --
Investor A (8,348) --
Investor B (7,565) --
Investor C (29,112) --
--------------- ---------------
Net decrease in net assets resulting from dividends and distributions to shareholders (13,558,681) (261,509)
--------------- ---------------
Beneficial Interest Transactions
Net increase in net assets derived from beneficial interest transactions 6,640,243 15,930,594
--------------- ---------------
Net Assets
Total increase (decrease) in net assets (13,941,633) 20,917,892
Beginning of year 90,494,177 69,576,285
--------------- ---------------
End of year* $ 76,552,544 $ 90,494,177
=============== ===============
* Undistributed investment income--net $ 3,236,898 $ 13,486,577
=============== ===============
See Notes to Financial Statements.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Financial Highlights BlackRock Real Investment Fund
Institutional Investor A
For the For the
Period Period
For the March 26, For the March 26,
The following per share data and ratios Year Ended 2004++ to Year Ended 2004++ to
have been derived from information November 30, November 30, November 30, November 30,
provided in the financial statements. 2006 2005 2004 2006 2005 2004
Per Share Operating Performance
Net asset value, beginning of period $ 12.38 $ 11.58 $ 10.00 $ 12.35 $ 11.57 $ 10.00
---------- ---------- ---------- ---------- ---------- ----------
Investment income--net .31++++ .22 .02 .28++++ .18 .01
Realized and unrealized gain (loss)--net (.97) .66 1.56 (.97) .67 1.56
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations (.66) .88 1.58 (.69) .85 1.57
---------- ---------- ---------- ---------- ---------- ----------
Less dividends and distributions from:
Investment income--net (1.89) (.08) -- (1.86) (.07) --
Realized gain--net (.01) -- -- (.01) -- --
---------- ---------- ---------- ---------- ---------- ----------
Total dividends and distributions (1.90) (.08) -- (1.87) (.07) --
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 9.82 $ 12.38 $ 11.58 $ 9.79 $ 12.35 $ 11.57
========== ========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share (6.52%) 7.70% 15.80%+++ (6.77%) 7.39% 15.70%+++
========== ========== ========== ========== ========== ==========
Ratios to Average Net Assets***
Expenses, net of waiver and reimbursement 1.32% 1.32% 1.27%* 1.57% 1.57% 1.42%*
========== ========== ========== ========== ========== ==========
Expenses 1.80% 2.12% 2.36%* 2.04% 2.37% 2.61%*
========== ========== ========== ========== ========== ==========
Investment income--net 2.86% 1.79% .35%* 2.62% 1.51% .19%*
========== ========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 17,666 $ 21,808 $ 13,643 $ 12,995 $ 12,860 $ 10,867
========== ========== ========== ========== ========== ==========
Portfolio turnover of the Trust 66.90% 50.00% 19.40% 66.90% 50.00% 19.40%
========== ========== ========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Includes the Fund's share of the Trust's allocated expenses and/or investment income--net.
++ Commencement of operations.
++++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Financial Highlights (concluded) BlackRock Real Investment Fund
Investor B Investor C
For the For the
Period Period
For the March 26, For the March 26,
The following per share data and ratios Year Ended 2004++ to Year Ended 2004++ to
have been derived from information November 30, November 30, November 30, November 30,
provided in the financial statements. 2006 2005 2004 2006 2005 2004
Per Share Operating Performance
Net asset value, beginning of period $ 12.29 $ 11.55 $ 10.00 $ 12.29 $ 11.55 $ 10.00
---------- ---------- ---------- ---------- ---------- ----------
Investment income (loss)--net .20++++++ .09 --++++ .20++++++ .09 --++++
Realized and unrealized gain (loss)--net (.96) .67 1.55 (.97) .68 1.55
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations (.76) .76 1.55 (.77) .77 1.55
---------- ---------- ---------- ---------- ---------- ----------
Less dividends and distributions from:
Investment income--net (1.78) (.02) -- (1.78) (.03) --
Realized gain--net (.01) -- -- (.01) -- --
---------- ---------- ---------- ---------- ---------- ----------
Total dividends and distributions (1.79) (.02) -- (1.79) (.03) --
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 9.74 $ 12.29 $ 11.55 $ 9.73 $ 12.29 $ 11.55
========== ========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share (7.46%) 6.63% 15.50%+++ (7.50%) 6.67% 15.50%+++
========== ========== ========== ========== ========== ==========
Ratios to Average Net Assets***
Expenses, net of waiver and reimbursement 2.34% 2.34% 1.65%* 2.34% 2.34% 1.67%*
========== ========== ========== ========== ========== ==========
Expenses 2.83% 3.14% 3.37%* 2.82% 3.14% 3.37%*
========== ========== ========== ========== ========== ==========
Investment income (loss)--net 1.83% .73% (.03%)* 1.83% .75% (.03%)*
========== ========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 8,660 $ 11,534 $ 10,663 $ 37,232 $ 44,292 $ 34,403
========== ========== ========== ========== ========== ==========
Portfolio turnover of the Trust 66.90% 50.00% 19.40% 66.90% 50.00% 19.40%
========== ========== ========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Includes the Fund's share of the Trust's allocated expenses and/or investment income (loss)--net.
++ Commencement of operations.
++++ Amount is less than $(.01) per share.
++++++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Notes to Financial Statements BlackRock Real Investment Fund
1. Significant Accounting Policies:
On September 29, 2006, Merrill Lynch Real Investment Fund was renamed
BlackRock Real Investment Fund (the "Fund"). The Fund is registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end
investment company. The Fund seeks to achieve its investment objective by
investing all of its assets in Master Real Investment Trust (the "Trust"),
which has the same investment objective and strategies as the Fund. The value
of the Fund's investment in the Trust reflects the Fund's proportionate
interest in the net assets of the Trust. The performance of the Fund is
directly affected by the performance of the Trust. The financial statements of
the Trust, including the Schedule of Investments, are included elsewhere in
this report and should be read in conjunction with the Fund's financial
statements. The Fund's financial statements are prepared in conformity with
U.S. generally accepted accounting principles, which may require the use of
management accruals and estimates. Actual results may differ from these
estimates. The percentage of the Trust owned by the Fund at November 30, 2006
was 85.5%. The Fund offers multiple classes of shares. Effective October 2,
2006, Class I, Class A, Class B and Class C Shares were redesignated
Institutional, Investor A, Investor B and Investor C Shares, respectively.
Institutional Shares are sold only to certain eligible investors. Investor A
Shares are sold with a front-end sales charge. Shares of Investor B and
Investor C may be subject to a contingent deferred sales charge. All classes
of shares have identical voting, dividend, liquidation and other rights and
the same terms and conditions, except that Investor A, Investor B and Investor
C Shares bear certain expenses related to the account maintenance of such
shares, and Investor B and Investor C Shares also bear certain expenses
related to the distribution of such shares. Each class has exclusive voting
rights with respect to matters relating to its account maintenance and
distribution expenditures (except that Investor B shareholders may vote on
certain changes to the Investor A distribution plan). Income, expenses (other
than expenses attributable to a specific class) and realized and unrealized
gains and losses are allocated daily to each class based on its relative net
assets. The following is a summary of significant accounting policies followed
by the Fund.
(a) Valuation of investments--The Fund records its investment in the Trust at
fair value. Valuation of securities held by the Trust is discussed in Note
1(a) of the Trust's Notes to Financial Statements, which are included
elsewhere in this report.
(b) Investment income and expenses--The Fund records daily its proportionate
share of the Trust's income, expenses and realized and unrealized gains and
losses. In addition, the Fund accrues its own expenses.
(c) Income taxes--It is the Fund's policy to comply with the requirements of
the Internal Revenue Code 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.
(d) Prepaid registration fees--Prepaid registration fees are charged to
expense as the related shares are issued.
(e) Dividends and distributions--Dividends and distributions paid by the Fund
are recorded on the ex-dividend dates.
(f) Investment transactions--Investment transactions in the Trust are
accounted for on a trade-date basis.
(g) Recent accounting pronouncements--In July 2006, the Financial Accounting
Standards Board ("FASB") issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109."
FIN 48 prescribes the minimum recognition threshold a tax position must meet in
connection with accounting for uncertainties in income tax positions taken or
expected to be taken by an entity including mutual funds before being measured
and recognized in the financial statements. Adoption of FIN 48 is required for
fiscal years beginning after December 15, 2006. The impact on the Fund's
financial statements, if any, is currently being assessed.
In addition, in September 2006, Statement of Financial Accounting Standards
No. 157, "Fair Value Measurements" ("FAS 157"), was issued and is effective for
fiscal years beginning after November 15, 2007. FAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the implications
of FAS 157. At this time its impact on the Fund's financial statements has
not been determined.
(h) Reclassification--U.S. generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, during the
current year, $1,245,467 has been reclassified between accumulated net
realized capital losses and undistributed net investment income as a result of
permanent differences attributable to the characterization of realized gains
on certain debt instruments, swap agreements, and the reclassification of
distributions. These reclassifications have no effect on net assets or net
asset values per share.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Notes to Financial Statements (continued) BlackRock Real Investment Fund
2. Transactions with Affiliates:
On September 29, 2006, BlackRock, Inc. and Merrill Lynch & Co., Inc. ("Merrill
Lynch") combined Merrill Lynch's investment management business, Merrill Lynch
Investment Managers, L.P. ("MLIM"), and its affiliates, with BlackRock, Inc.
to create a new independent company. Merrill Lynch has a 49.8% economic
interest and a 45% voting interest in the combined company and The PNC
Financial Services Group, Inc. ("PNC"), has approximately a 34% economic and
voting interest. The new company operates under the BlackRock name and is
governed by a board of directors with a majority of independent members.
On August 31, 2006, shareholders of the Fund approved a new Investment
Advisory Agreement for the Trust with BlackRock Advisors, Inc. (the
"Manager"), an indirect, wholly owned subsidiary of BlackRock, Inc. BlackRock
Advisors, Inc. was recently reorganized into a limited liability company and
renamed BlackRock Advisors, LLC. The new Investment Advisory Agreement between
the Trust and the Manager became effective on September 29, 2006. Prior to
September 29, 2006, MLIM was the Investment Adviser of the Trust and the Fund.
The general partner of MLIM is Princeton Services, Inc. ("PSI"), an indirect,
wholly owned subsidiary of Merrill Lynch, which is the limited partner.
Under the investment advisory agreements with the Fund from December 1, 2005 to
June 15, 2006, MLIM received a fee at the annual rate of 1.00% of the average
daily net assets of the Fund and contractually agreed to waive the Fund's
management fee in the amount of the Fund's share of the management fee paid by
the Trust. Effective June 16, 2006, the Fund entered into an administrative
agreement with MLIM. The Fund pays a monthly fee at an annual rate of 0.50% of
the Fund's average net assets for the performance of administrative services
(other than investment advice and related portfolio activities) necessary for
the operation of the Fund. As a result, the contractual waiver of the Trust's
portion of the management fee was discontinued. Effective September 29, 2006,
BlackRock Advisors, LLC became the administrator.
In addition, the Manager (and previously MLIM) has agreed to voluntarily waive
the investment advisory fees and/or reimburse expenses in order to cap total
expenses (excluding distribution fees and/or account maintenance fees
("service fees")) at 1.33%. The fees earned and waivers were as follows:
Manager MLIM
Fees earned $63,371 $647,020
Waiver $31,928 $408,231
The Fund has also entered into separate Distribution Agreements and
Distribution Plans with FAM Distributors, Inc. ("FAMD") and BlackRock
Distributors, Inc. ("BDI") (collectively, the "Distributor"). FAMD is a wholly
owned subsidiary of Merrill Lynch Group, Inc. and BDI is an affiliate of
BlackRock, Inc.
Pursuant to the Distribution Plans adopted by the Fund in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Fund pays the Distributor
ongoing service fees and distribution fees. The fees are accrued daily and
paid monthly at annual rates based upon the average daily net assets of the
shares as follows:
Service Distribution
Fee Fee
Investor A .25% --
Investor B .25% .75%
Investor C .25% .75%
Pursuant to sub-agreements with each Distributor, broker-dealers, including
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a wholly owned
subsidiary of Merrill Lynch, and an affiliate of the Distributor, also provide
account maintenance and distribution services to the Fund. The ongoing service
fee compensates the Distributors and each broker-dealer (including MLPF&S) for
providing account maintenance services to Investor A, Investor B and Investor
C shareholders. The ongoing distribution fee compensates the Distributors and
the broker-dealers for providing shareholder and distribution-related services
to Investor B and Investor C shareholders.
For the year ended November 30, 2006, FAMD, the Fund's sole Distributor until
September 29, 2006, and BDI for the period September 30, 2006 to November 30,
2006, earned underwriting discounts and MLPF&S earned dealer concessions on
sales of the Fund's Institutional and Investor A Shares as follows:
FAMD MLPF&S BDI
Institutional $ -- $ 416 $ --
Investor A $ 13,191 $ 167,701 $ --
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Notes to Financial Statements (continued) BlackRock Real Investment Fund
For the year ended November 30, 2006, MLPF&S received contingent deferred
sales charges of $4,355 and $7,866 relating to transactions in Investor B and
Investor C Shares, respectively. Furthermore, MLPF&S received contingent
deferred sales charges of $28 relating to transactions subject to front-end
sales charge waivers in Investor A Shares.
BlackRock maintains a call center, which is responsible for providing certain
shareholder services to the Fund, such as responding to shareholder inquiries
and processing transactions based upon instructions from shareholders with
respect to the subscription and redemption of Fund shares. During the period
September 29, 2006 to November 30, 2006, the following amounts have been
accrued by the Fund to reimburse BlackRock for costs incurred in running the
call center, which are a component of the transfer agent fees in the
accompanying Statements of Operations.
Call Center
Fees
Institutional $ 36
Investor A $123
Investor B $ 35
Investor C $130
Effective September 29, 2006, PFPC Inc., an indirect, wholly owned subsidiary
of PNC and an affiliate of the Manager, became the Fund's transfer agent.
Prior to September 29, 2006, the Fund's transfer agent was Financial Data
Services, Inc. ("FDS"), a wholly owned subsidiary of Merrill Lynch.
Prior to September 29, 2006, certain officers and/or trustees of the Fund
were officers and/or directors of MLIM, PSI, Merrill Lynch, FAMD, FDS,
and/or MLIM, LLC.
Commencing September 29, 2006, certain officers and/or trustees of the Fund
are officers and/or directors of BlackRock, Inc. or its affiliates.
3. Beneficial Interest Transactions:
Net increase in net assets derived from beneficial interest transactions
were $6,640,243 and $15,930,594 for the years ended November 30, 2006 and
November 30, 2005, respectively.
Transactions in beneficial interest for each class were as follows:
Institutional Shares for the Year Dollar
Ended November 30, 2006 Shares Amount
Shares sold 1,150,740 $ 12,392,997
Shares issued to shareholders in
reinvestment of dividends and
distributions 226,083 2,403,265
-------------- ---------------
Total issued 1,376,823 14,796,262
Shares redeemed (1,338,472) (14,155,346)
-------------- ---------------
Net increase 38,351 $ 640,916
============== ===============
Institutional Shares for the Year Dollar
Ended November 30, 2005 Shares Amount
Shares sold 1,159,874 $ 14,285,155
Shares issued to shareholders in
reinvestment of dividends 8,062 87,793
-------------- ---------------
Total issued 1,167,936 14,372,948
Shares redeemed (584,467) (7,175,057)
-------------- ---------------
Net increase 583,469 $ 7,197,891
============== ===============
Investor A Shares for the Year Dollar
Ended November 30, 2006 Shares Amount
Shares sold 631,418 $ 6,701,348
Automatic conversion of shares 14,499 154,897
Shares issued to shareholders in
reinvestment of dividends and
distributions 158,581 1,684,129
-------------- ---------------
Total issued 804,498 8,540,374
Shares redeemed (517,953) (5,324,468)
-------------- ---------------
Net increase 286,545 $ 3,215,906
============== ===============
Investor A Shares for the Year Dollar
Ended November 30, 2005 Shares Amount
Shares sold 487,075 $ 5,946,383
Automatic conversion of shares 19,621 237,061
Shares issued to shareholders in
reinvestment of dividends 5,089 55,421
-------------- ---------------
Total issued 511,785 6,238,865
Shares redeemed (410,076) (4,981,361)
-------------- ---------------
Net increase 101,709 $ 1,257,504
============== ===============
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Notes to Financial Statements (concluded) BlackRock Real Investment Fund
Investor B Shares for the Year Dollar
Ended November 30, 2006 Shares Amount
Shares sold 167,012 $ 1,857,565
Shares issued to shareholders in
reinvestment of dividends and
distributions 132,292 1,407,587
-------------- ---------------
Total issued 299,304 3,265,152
-------------- ---------------
Shares redeemed (333,683) (3,425,582)
Automatic conversion of shares (14,505) (154,897)
-------------- ---------------
Total redeemed (348,188) (3,580,479)
-------------- ---------------
Net decrease (48,884) $ (315,327)
============== ===============
Investor B Shares for the Year Dollar
Ended November 30, 2005 Shares Amount
Shares sold 318,856 $ 3,929,559
Shares issued to shareholders in
reinvestment of dividends 1,630 17,783
-------------- ---------------
Total issued 320,486 3,947,342
-------------- ---------------
Shares redeemed (285,334) (3,572,607)
Automatic conversion of shares (19,653) (237,061)
-------------- ---------------
Total redeemed (304,987) (3,809,668)
-------------- ---------------
Net increase 15,499 $ 137,674
============== ===============
Investor C Shares for the Year Dollar
Ended November 30, 2006 Shares Amount
Shares sold 1,519,631 $ 16,472,768
Shares issued to shareholders in
reinvestment of dividends and
distributions 530,170 5,635,707
-------------- ---------------
Total issued 2,049,801 22,108,475
Shares redeemed (1,826,184) (19,009,727)
-------------- ---------------
Net increase 223,617 $ 3,098,748
============== ===============
Investor C Shares for the Year Dollar
Ended November 30, 2005 Shares Amount
Shares sold 1,673,853 $ 20,280,854
Shares issued to shareholders in
reinvestment of dividends 6,648 72,532
-------------- ---------------
Total issued 1,680,501 20,353,386
Shares redeemed (1,053,157) (13,015,861)
-------------- ---------------
Net increase 627,344 $ 7,337,525
============== ===============
4. Distributions to Shareholders:
The tax character of distributions paid during the fiscal years ended
November 30, 2006 and November 30, 2005 was as follows:
11/30/2006 11/30/2005
Distributions paid from:
Ordinary income $ 13,499,334 $ 261,509
Net long-term capital gains 59,347 --
-------------- ---------------
Total distributions $ 13,558,681 $ 261,509
============== ===============
As of November 30, 2006, the components of accumulated losses on a tax basis
were as follows:
Undistributed ordinary income--net $ 3,247,982
Undistributed long-term capital gains--net --
---------------
Total undistributed earnings--net 3,247,982
Capital loss carryforward (9,400,583)*
Unrealized losses--net (1,602,696)**
---------------
Total accumulated losses--net $ (7,755,297)
===============
* On November 30, 2006, the Fund had a net capital loss carryforward
of $9,400,583, all of which expires in 2014. This amount will be
available to offset like amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized
losses is attributable primarily to the tax deferral of losses on wash
sales, the realization for tax purposes of unrealized gains (losses)
on certain futures contracts, the deferral of post October capital
losses for tax purposes and other book/tax differences.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Report of Independent Registered Public Accounting Firm
BlackRock Real Investment Fund
To the Shareholders and Board of Trustees
of BlackRock Real Investment Fund:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of BlackRock Real Investment Fund
(formerly Merrill Lynch Real Investment Fund) as of November 30, 2006, and the
related statements of operations and changes in net assets and the financial
highlights for the year then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audit. The financial statements of the Fund for the
year ended November 30, 2005 and the financial highlights for the year then
ended and for the period March 26, 2004 (commencement of operations) to
November 30, 2004, were audited by other auditors whose report, dated January
18, 2006, expressed an unqualified opinion on those financial statements and
financial highlights.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. The Fund is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audit
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
Fund's 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. We believe
that our audit provides 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 Real Investment Fund as of November 30, 2006, the results of its
operations, the changes in its net assets, and its financial highlights for
the year then ended, in conformity with accounting principles generally
accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
January 24, 2007
Important Tax Information (unaudited)
During the fiscal year ended November 30, 2006, BlackRock Real Investment Fund
distributed long-term capital gains of $.007995 per share to shareholders of
record on December 22, 2005.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Portfolio Information Master Real Investment Trust
As of November 30, 2006
Percent of
Total
Asset Mix Investments
Corporate Bonds & Structured Notes 36.3%
Non-Government Agency Mortgage-Backed
Securities--Collateralized Mortgage
Obligations 23.2
Government Agency Mortgage-Backed
Securities 18.7
Asset-Backed Securities 14.8
Government Agency Mortgage-Backed
Securities--Collateralized Mortgage
Obligations 3.4
Government & Agency Obligations 1.4
Other* 2.2
* Includes portfolio holdings in short-term investments and options.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Schedule of Investments as of November 30, 2006 Master Real Investment Trust
Face
Amount Asset-Backed Securities++ Value
$ 200,000 American Express Credit Account Master Trust Series 2002-1 Class A,
5.43% due 9/15/2009 (a) $ 200,052
Ameriquest Mortgage Securities, Inc. (a):
1,000,000 Series 2004-IA1 Class M4, 6.82% due 9/25/2034 1,008,911
1,500,000 Series 2004-R1 Class M2, 5.90% due 2/25/2034 1,504,450
436,958 Amortizing Residential Collateral Trust Series 2002-BC3 Class M2,
6.42% due 6/25/2032 (a) 439,635
200,000 Bank One Issuance Trust Series 2002-A5 Class A5, 5.44% due 6/15/2010 (a) 200,237
1,000,000 Bear Stearns Asset Backed Securities, Inc. Series 2004-FR3 Class M2,
6.49% due 10/25/2034 (a) 1,015,156
Countrywide Asset Backed Certificates (a):
584,061 Series 2003-2 Class M1, 6.02% due 6/26/2033 588,951
1,000,000 Series 2004-5 Class M2, 5.99% due 7/25/2034 1,007,584
2,000,000 Series 2004-8 Class M1, 6.02% due 2/25/2035 2,014,308
1,000,000 Series 2005-BC3 Class 2A3, 5.73% due 6/25/2035 1,011,203
245,354 Series 2006-6 Class 2A1, 5.39% due 9/25/2036 245,361
2,000,000 Fremont Home Loan Trust Series 2004-3 Class M2, 6.02% due 11/25/2034 (a) 2,009,143
208,784 GSAA Home Equity Trust Series 2006-8N Class N1, 6% due 10/26/2036 206,696
77,754 Household Automotive Trust Series 2002-3 Class A4B, 5.66% due 5/18/2009 (a) 77,766
214,805 MSDWCC Heloc Trust Series 2003-2 Class A, 5.58% due 4/25/2016 (a) 215,158
1,000,000 Master Asset Backed Securities Trust Series 2004-HE1 Class M5, 6.67%
due 9/25/2034 (a) 1,015,612
1,978 Morgan Stanley ABS Capital I, Inc. Series 2004-NC1 Class A2, 5.69%
due 12/27/2033 (a) 1,978
Residential Asset Mortgage Products, Inc. (a):
500,000 Series 2004-RZ4 Class M3, 6.22% due 12/25/2034 504,031
525,000 Series 2006-RS6 Class A2, 5.47% due 11/25/2036 524,987
55,901 Wachovia Asset Securitization, Inc. Series 2003-HE1 Class A1, 5.61%
due 3/25/2033 (a) 55,949
459,000 Wells Fargo Home Equity Trust Series 2004-2 Class M5, 6.57% due
11/25/2033 (a) 470,078
Total Asset-Backed Securities (Cost--$14,213,812)--16.0% 14,317,246
Industry Corporate Bonds & Structured Notes
Capital Markets--4.9% 5,000,000 Morgan Stanley & Co., 4.82% due 3/22/2007 (a) 4,385,180
Commercial Banks--11.6% 8,700,000 Barclays Bank Plc (Goldman Sachs Commodity Index Total Return
Linked Notes), 5.39% due 9/13/2007 (b)(c) 10,368,363
Diversified Financial AIG-FP Structured Finance (Cayman) Limited (Goldman Sachs
Services--22.9% Commodity Index Total Return Linked Notes) (c):
3,000,000 1.50% due 5/14/2007 3,497,030
9,000,000 5.65% due 11/05/2007 10,537,389
180,000 Goldman Sachs Group, Inc., 5.476% due 7/29/2008 (a) 180,282
5,000,000 IXIS Financial Products, Inc., 5.126% due 10/29/2007 (a) 4,822,950
1,000,000 Links Finance Corp. Series 55, 5.64% due 9/15/2010 (a) 999,292
500,000 Sigma Finance Corp., 5.372% due 3/31/2014 (a)(b)(f) 501,569
20,538,512
Total Corporate Bonds & Structured Notes (Cost--$37,449,292)--39.4% 35,292,055
Government & Agency Obligations
1,356,561 U.S. Treasury Inflation Indexed Bonds, 2.50% due 7/15/2016 1,397,417
Total Government & Agency Obligations (Cost--$1,365,120)--1.6% 1,397,417
Government Agency Mortgage-Backed Securities++
Fannie Mae Guaranteed Pass-Through Certificates:
1,010,033 4.70% due 12/01/2012 983,192
430,726 4.968% due 8/01/2035 (a) 421,567
3,114,457 5.23% due 12/01/2012 3,134,732
874,852 5.713% due 10/01/2036 (a) 883,005
1,049,980 5.719% due 10/01/2036 (a) 1,059,958
228,806 5.95% due 11/01/2011 232,508
3,825,000 6.00% due 12/15/2036 (i) 3,864,906
865,046 6.091% due 9/01/2036 (a) 880,981
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Schedule of Investments (continued) Master Real Investment Trust
Face
Amount Government Agency Mortgage-Backed Securities++ Value
Fannie Mae Guaranteed Pass-Through Certificates (concluded):
$ 471,177 6.83% due 1/01/2011 $ 482,753
246,506 7.367% due 10/01/2009 256,173
Freddie Mac Mortgage Participation Certificates:
1,302,777 4.804% due 9/01/2035 (a) 1,293,481
1,050,000 5.752% due 11/01/2036 (a) 1,058,114
1,775,000 5.95% due 10/01/2036 1,797,223
473,693 6.029% due 9/01/2036 (a) 478,851
1,350,000 6.045% due 10/01/2036 1,367,719
Total Government Agency Mortgage-Backed Securities
(Cost--$18,202,623)--20.3% 18,195,163
Collateralized Mortgage 2,332,226 Fannie Mae Trust Series 360 Class 2, 5.00% due 8/01/2035 (a)(g) 525,345
Obligations--3.6% Freddie Mac Multiclass Certificates:
13,649 Series 1625 Class FG, 5.282% due 12/15/2008 (a) 13,617
1,310,000 Series 3063 Class YB, 5.50% due 6/15/2026 1,323,044
Ginnie Mae Trust (a)(g):
9,797,981 Series 2005-9 Class IO, 0.778% due 1/16/2045 517,209
7,900,068 Series 2005-76 Class IO, 0.882% due 9/16/2045 447,735
7,915,910 Series 2005-90 Class IO, 0.912% due 11/16/2045 430,942
Total Government Agency Mortgage-Backed Securities--Collateralized
Mortgage Obligations (Cost--$3,266,209)--3.6% 3,257,892
Non-Government Agency Mortgage-Backed Securities++
Collateralized Mortgage 979,197 ABN AMRO Mortgage Corp. Series 2003-2 Class 2A1, 5.82% due 3/25/2018 (a) 978,301
Obligations--25.1% Banc of America Mortgage Securities (a):
1,097,404 Series 2004-C Class 2A1, 3.712% due 4/25/2034 1,071,079
1,261,239 Series 2004-E Class 1A1, 3.504% due 6/25/2034 1,249,791
488,006 Bear Stearns Alt-A Trust Series 2004-13 Class A1, 5.69% due 11/25/2034 (a) 488,048
706,872 Countrywide Alternative Loan Trust Series 2004-2CB Class 1A4, 5.72%
due 3/25/2034 (a) 708,915
Countrywide Home Loan Mortgage Pass-Through Trust (a):
626,835 Series 2004-J2 Class A2, 5.82% due 3/25/2034 628,965
1,406,082 Series 2004-J7 Class 1A1, 5.77% due 8/25/2034 1,407,827
579,164 First Horizon Mortgage Pass-Through Trust Series 2003-4 Class 2A2,
5.77% due 6/25/2018 (a) 582,037
550,000 GMAC Commercial Mortgage Securities, Inc. Series 2001-C1 Class B,
6.67% due 4/15/2034 584,245
1,872,479 GMAC Mortgage Corp. Loan Trust Series 2004-J2 Class A2, 5.82% due
6/25/2034 (a) 1,878,475
228,549 Granite Mortgages Plc Series 2002-1 Class 1C, 6.674% due 4/20/2042 (a) 228,549
714,693 Harborview Mortgage Loan Trust Series 2006-11 Class A1A, 5.49% due
12/19/2036 (a) 716,202
581,705 Homebanc Mortgage Trust Series 2005-4 Class A1, 5.59% due 10/25/2035 (a) 582,486
3,000,000 Impac Secured Assets CMN Owner Trust Series 2004-3 Class M1, 5.92% due
11/25/2034 (a) 3,010,497
1,318,587 Luminent Mortgage Trust Series 2005-1 Class A1, 5.58% due 11/25/2035 (a) 1,320,058
Residential Accredit Loans, Inc. (a):
2,161,098 Series 2004-QS8 Class A4, 5.72% due 6/25/2034 2,170,280
754,349 Series 2005-QS12 Class A8, 5.66% due 8/25/2035 754,647
790,824 Series 2006-QA9 Class A1, 5.50% due 11/25/2036 792,321
Residential Funding Mortgage Security I (a):
2,185,010 Series 2003-S14 Class A5, 5.72% due 7/25/2018 2,192,897
1,188,099 Series 2003-S14 Class A6, 5.72% due 7/25/2018 1,190,170
Total Non-Government Agency Mortgage-Backed Securities--Collateralized
Mortgage Obligations (Cost--$22,497,702)--25.1% 22,535,790
Beneficial
Interest Short-Term Securities
$ 2,226,213 BlackRock Liquidity Series, LLC Cash Sweep Series I, 5.26% (d)(e) 2,226,213
Total Short-Term Securities (Cost--$2,226,213)--2.5% 2,226,213
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Schedule of Investments (continued) Master Real Investment Trust
Number of
Contracts++++ Options Purchased Value
Call Options Purchased 1.4 Receive a fixed rate of 4.90% and pay a floating rate based on
3-month LIBOR, expiring March 2007, Broker Deutsche Bank AG (h) $ 14,920
Put Options Purchased 1.4 Receive a fixed rate of 5.277% and pay a floating rate based on
3-month LIBOR, expiring March 2007, Broker Deutsche Bank AG (h) 3,965
Total Options Purchased (Premiums Paid--$31,874)--0.0% 18,885
Total Investments (Cost--$99,252,845)--108.5% 97,240,661
Options Written
Call Options Written 2.7 Receive a fixed rate of 5.29% and pay a floating rate based on
3-month LIBOR, expiring October 2007, Broker Deutsche Bank AG (h) (100,967)
Put Options Written 2.7 Pay a fixed rate of 5.29% and receive a floating rate based on
3-month LIBOR, expiring October 2007, Broker Deutsche Bank AG (h) (26,746)
Total Options Written (Premiums Received--$118,800)--(0.1%) (127,713)
Total Investments, Net of Options Written (Cost--$99,134,045*)--108.4% 97,112,948
Liabilities in Excess of Other Assets--(8.4%) (7,511,470)
--------------
Net Assets--100.0% $ 89,601,478
==============
* The cost and unrealized appreciation (depreciation) of investments,
net of options written, as of November 30, 2006, as computed for
federal income tax purposes, were as follows:
Aggregate cost $ 99,085,943
===============
Gross unrealized appreciation $ 2,422,175
Gross unrealized depreciation (4,395,170)
---------------
Net unrealized depreciation $ (1,972,995)
===============
++ Asset-Backed and Mortgage-Backed Securities are subject to principal
paydowns as a result of prepayments or refinancings of the underlying
instruments. As a result, the average life may be substantially less than
the original maturity.
++++ One contract represents a notional amount of $1,000,000.
(a) Floating rate security.
(b) The security may be offered and sold to "qualified institutional buyers"
under Rule 144A of the Securities Act of 1933.
(c) Represents a structured note; the interest rate shown reflects the
effective yield at the time of purchase.
(d) Investments in companies considered to be an affiliate of the Trust,
for purposes of Section 2(a)(3) of the Investment Company Act of
1940, were as follows:
Net Interest
Affiliate Activity Income
BlackRock Liquidity Series, LLC
Cash Sweep Series I $(8,692,525) $489,946
(e) Represents the current yield as of November 30, 2006.
(f) Restricted security as to resale, representing 0.6% of net assets,
were as follows:
Acquisition
Issue Date Cost Value
Sigma Finance Corp.,
5.372% due 3/31/2014 3/26/2004 $500,000 $501,569
(g) Represents the interest only portion of a mortgage-backed obligation.
(h) This European style swaption, which can be exercised only on the
expiration date, represents a standby commitment whereby the writer
of the option is obligated to enter into a predetermined interest rate
swap contract upon exercise of the swaption.
(i) Represents a "to-be-announced" transaction. The Trust has committed to
purchasing and/or selling securities for which all specific information
is not available at this time.
o 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 Trust management. This definition may not
apply for purposes of this report which may combine industry sub-
classifications for reporting ease. Industries are shown as a percent
of net assets. These industry classifications are unaudited.
o Financial futures contracts purchased as of November 30, 2006 were
as follows:
Number of Expiration Face Unrealized
Contracts Issue Date Value Appreciation
13 10-Year U.S. March
Treasury Bond 2007 $1,415,252 $ 4,186
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Schedule of Investments (concluded) Master Real Investment Trust
o Financial futures contracts sold as of November 30, 2006 were
as follows:
Number of Expiration Face Unrealized
Contracts Issue Date Value Depreciation
50 Euro Dollar December
Futures 2007 $11,910,213 $ (7,912)
51 Two-Year U.S. March
Treasury Bond 2007 $10,444,646 (10,354)
134 Five-Year U.S. March
Treasury Bond 2007 $14,157,528 (67,410)
-----------
Total Unrealized Depreciation--Net $ (85,676)
===========
o Swaps outstanding as of November 30, 2006 were as follows:
Unrealized
Notional Appreciation
Amount (Depreciation)
Sold credit default protection on
Fannie Mae and receive 0.18%
Broker, Lehman Brothers Inc.
Expires March 2010 $1,000,000 $ 4,319
Sold credit default protection on
Freddie Mac and receive 0.15%
Broker, Lehman Brothers Inc.
Expires June 2010 $4,000,000 15,044
Sold credit default protection on
Fannie Mae and receive 0.48%
Broker, Deutsche Bk AG London
Expires June 2010 $2,000,000 23,848
Receive a fixed rate of 5.036%
and pay a floating rate based on
3-month LIBOR
Broker, Citibank N.A.
Expires November 2010 $4,000,000 26,483
Receive a fixed rate of 5.085%
and pay a floating rate based on
3-month LIBOR
Broker, Deutsche Bk AG
Expires November 2016 $ 601,724 5,312
Sold credit default protection on
Holmes Financing Plc Series 8
Class 2C and receive 0.55%
Broker, Deutsche Bank
Securities Corporation
Expires July 2040 $2,000,000 (4,064)
Sold credit default protection on
Permanent Financing Plc Series 4
Class 2C and receive 0.55%
Broker, Deutsche Bank
Securities Corporation
Expires June 2042 $2,000,000 (4,454)
---------
Total $ 66,488
=========
See Notes to Financial Statements.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Statement of Assets and Liabilities Master Real Investment Trust
As of November 30, 2006
Assets
Investments in unaffiliated securities, at value (identified cost--$96,994,758) $ 94,995,563
Investments in affiliated securities, at value (identified cost--$2,226,213) 2,226,213
Options purchased, at value (premiums paid--$31,874) 18,885
Cash 46,802
Unrealized appreciation on swaps 75,006
Receivables:
Securities sold $ 6,027,557
Interest 416,152
Contributions 119,492
Paydowns 45,713
Swaps 6,644 6,615,558
---------------
Prepaid expenses and other assets 13,488
---------------
Total assets 103,991,515
---------------
Liabilities
Options written, at value (premiums received--$118,800) 127,713
Unrealized depreciation on swaps 8,518
Payables:
Securities purchased 13,089,001
Withdrawals 1,049,185
Investment adviser 36,128
Variation margin 29,232
Options purchased 13,067
Other affiliates 931 14,217,544
---------------
Accrued expenses and other liabilities 36,262
---------------
Total liabilities 14,390,037
---------------
Net Assets
Net assets $ 89,601,478
===============
Net Assets Consist of
Investors' capital $ 91,637,577
Unrealized depreciation--net (2,036,099)
---------------
Net Assets $ 89,601,478
===============
See Notes to Financial Statements.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Statement of Operations Master Real Investment Trust
For the Year Ended November 30, 2006
Investment Income
Interest (including $489,946 from affiliates) $ 4,561,299
---------------
Total income 4,561,299
---------------
Expenses
Investment advisory fees $ 548,888
Accounting services 113,391
Professional fees 43,322
Custodian fees 17,273
Trustees' fees and expenses 16,836
Pricing fees 10,371
Printing and shareholder reports 1,766
Other 11,576
---------------
Total expenses 763,423
---------------
Investment income--net 3,797,876
---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain (loss) on:
Investments--net (9,089,264)
Financial futures contracts and swaps--net 106,195
Options written--net (78,110) (9,061,179)
---------------
Change in unrealized appreciation/depreciation on:
Investments--net (1,761,398)
Financial futures contracts and swaps--net (52,027)
Options written--net 52,849 (1,760,576)
--------------- ---------------
Total realized and unrealized loss--net (10,821,755)
---------------
Net Decrease in Net Assets Resulting from Operations $ (7,023,879)
===============
See Notes to Financial Statements.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Statements of Changes in Net Assets Master Real Investment Trust
For the Year Ended
November 30,
Increase (Decrease) in Net Assets: 2006 2005
Operations
Investment income--net $ 3,797,876 $ 2,228,733
Realized gain (loss)--net (9,061,179) 13,477,189
Change in unrealized appreciation/depreciation--net (1,760,576) (8,614,688)
--------------- ---------------
Net increase (decrease) in net assets resulting from operations (7,023,879) 7,091,234
--------------- ---------------
Capital Transactions
Proceeds from contributions 49,004,105 64,720,931
Fair value of withdrawals (58,535,826) (41,636,849)
--------------- ---------------
Net increase (decrease) in net assets derived from capital transactions (9,531,721) 23,084,082
--------------- ---------------
Net Assets
Total increase (decrease) in net assets (16,555,600) 30,175,316
Beginning of year 106,157,078 75,981,762
--------------- ---------------
End of year $ 89,601,478 $ 106,157,078
=============== ===============
See Notes to Financial Statements.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Financial Highlights Master Real Investment Trust
For the Period
For the Year Ended March 26, 2004++
The following ratios have been derived from November 30, to November 30,
information provided in the financial statements. 2006 2005 2004
Total Investment Return
Total investment return (5.92%) 8.26% 16.20%**
=============== =============== ===============
Ratios to Average Net Assets
Expenses, net of waiver .70% .73% .68%*
=============== =============== ===============
Expenses .70% .73% .73%*
=============== =============== ===============
Investment income--net 3.46% 2.37% .95%*
=============== =============== ===============
Supplemental Data
Net assets, end of period (in thousands) $ 89,601 $ 106,157 $ 75,982
=============== =============== ===============
Portfolio turnover 66.90% 50.00% 19.40%
=============== =============== ===============
* Annualized.
** Aggregate total investment return.
++ Commencement of operations.
See Notes to Financial Statements.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Notes to Financial Statements Master Real Investment Trust
1. Significant Accounting Policies:
Master Real Investment Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended, and is organized as a Delaware statutory
trust. The Declaration of Trust permits the Trustees to issue non-transferable
interests in the Trust, subject to certain limitations. The Trust's financial
statements are prepared in conformity with U.S. generally accepted accounting
principles, which may require the use of management accruals and estimates.
Actual results may differ from these estimates. The following is a summary of
significant accounting policies followed by the Trust.
(a) Valuation of investments--Debt securities are traded primarily in the over-
the-counter ("OTC") markets and are valued at the last available bid price in
the OTC markets or on the basis of yield equivalents as obtained by the
Trust's pricing service from one or more dealers that make markets in the
securities. Financial futures contracts and options thereon, which are traded
on exchanges, are valued at their closing prices as of the close of such
exchanges. Options written or purchased are valued at the last sale price in
the case of exchange-traded options. Options traded in the OTC markets are
valued at the last asked price (options written) or the last bid price
(options purchased). Swap agreements are valued based upon quoted fair
valuations received daily by the Trust from a pricing service or counterparty.
Short-term investments with a remaining maturity of 60 days or less are valued
at amortized cost, which approximates market value. Valuation of other short-
term investment vehicles is generally based upon the net asset value of the
underlying investment vehicle or amortized cost. Repurchase agreements are
valued at cost plus accrued interest. The Trust employs pricing services to
provide certain securities prices for the Trust. Securities and assets for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of Trustees of
the Trust, including valuations furnished by the pricing services retained by
the Trust, which may utilize a matrix system for valuations. The procedures of
the pricing service and its valuations are reviewed by the officers of the
Trust under the general direction of the Board of Trustees. Such valuations
and procedures will be reviewed periodically by the Board of Trustees of the
Trust.
Equity securities held by the Trust, which are traded on stock exchanges or
the NASDAQ Global Market are valued at the last sale price or official close
price on the exchange, as of the close of business on the day the securities
are being valued or, lacking any sales, at the last available bid price for
long positions, and at the last available asked price for short positions. In
cases where equity securities are traded on more than one exchange, the
securities are valued on the exchange designated as the primary market by or
under the authority of the Board of Trustees of the Trust. Long positions
traded in the OTC markets, NASDAQ Capital Market or Bulletin Board are valued
at the last available bid price or yield equivalent obtained from one or more
dealers or pricing services approved by the Board of Trustees of the Trust.
Short positions traded in the OTC markets are valued at the last available
asked price. Portfolio securities that are traded both in the OTC markets and
on a stock exchange are valued according to the broadest and most
representative market.
Generally, trading in foreign securities, as well as U.S. government
securities, money market instruments and certain fixed income securities is
substantially completed each day at various times prior to the close of
business on the New York Stock Exchange ("NYSE"). The values of such
securities used in computing the net assets of the Trust are determined as of
such times. Foreign currency exchange rates will be determined as of the close
of business on the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which they
are determined and the close of business on the NYSE that may not be reflected
in the computation of the Trust'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
securities, those securities may be valued at their fair value as determined
in good faith by the Trust's Board of Trustees or by the Manager using a
pricing service and/or procedures approved by the Trust's Board of Trustees.
(b) Derivative financial instruments--The Trust may engage in various
portfolio investment strategies both to increase the return of the Trust and
to hedge, or protect, its exposure to interest rate movements and movements in
the securities and commodities markets. Losses may arise due to changes in the
value of the contract or if the counterparty does not perform under the
contract.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Notes to Financial Statements (continued) Master Real Investment Trust
* Hybrid instruments--The Trust may invest in hybrid instruments, including
structured notes and commodity-linked notes. The principal and/or interest
payments on these hybrid instruments are linked to the value of commodities,
commodity futures contracts, or the performance of one or more indexes or
other readily measurable economic variables. The principal value of the hybrid
instruments, and/or the value of the interest that they pay, will rise or fall
in response to changes in the values of the underlying commodities, commodity
futures contracts, or commodity indexes. Although these hybrid instruments are
primarily debt obligations, they indirectly provide exposure to changes in the
value of the underlying commodities.
* Options--The Trust may purchase and write covered call and put options. When
the Trust writes an option, an amount equal to the premium received by the
Trust is reflected as an asset and an equivalent liability. The amount of the
liability is subsequently marked-to-market to reflect the current market value
of the option written. When a security 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 security acquired or deducted from (or added
to) the proceeds of the security sold. When an option expires (or the Trust
enters into a closing transaction), the Trust realizes 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 premium paid or
received).
Written and purchased options are non-income producing investments.
* Financial futures contracts--The Trust may purchase or sell financial
futures contracts and options on such financial futures contracts. Financial
futures contracts are contracts for delayed delivery of securities at a
specific future date and at a specific price or yield. Upon entering into a
contract, the Trust deposits and maintains as collateral such initial margin
as required by the exchange on which the transaction is effected. Pursuant to
the contract, the Trust agrees 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 variation margin and are recorded by the Trust as
unrealized gains or losses. When the contract is closed, the Trust records 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.
* Swaps--The Trust may enter into swap agreements, which are OTC contracts in
which the Trust and a counterparty agree to make periodic net payments on a
specified notional amount. The net payments can be made for a set period of
time or may be triggered by a predetermined credit event. The net periodic
payments may be based on a fixed or variable interest rate, the change in
market value of a specified security, basket of securities or index; or the
return generated by a security. These periodic payments received or made by
the Trust are recorded in the accompanying Statement of Operations as realized
gains or losses, respectively. Gains or losses are also realized upon
termination of the swap agreements. Swaps are marked-to-market daily and
changes in value are recorded as unrealized appreciation (depreciation). Risks
include changes in the returns of the underlying instruments, failure of the
counterparties to perform under the contracts' terms and the possible lack of
liquidity with respect to the swap agreements.
(c) Income taxes--The Trust is classified as a partnership for federal income
tax purposes. As such, each investor in the Trust is treated as owner of its
proportionate share of the net assets, income, expenses and realized and
unrealized gains and losses of the Trust. Therefore, no federal income tax
provision is required. It is intended that the Trust's assets will be managed
so an investor in the Trust can satisfy the requirements of Subchapter M of
the Internal Revenue Code.
(d) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis.
(e) Securities lending--The Trust may lend securities to financial institutions
that provide cash or securities issued or guaranteed by the U.S. government 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
Trust and any additional required collateral is delivered to the Trust on the
next business day. Where the Trust receives securities as collateral for the
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Notes to Financial Statements (continued) Master Real Investment Trust
loaned securities, it collects a fee from the borrower. The Trust typically
receives the income on the loaned securities but does not receive the income
on the collateral. Where the Trust receives cash collateral, it may invest
such collateral and retain the amount earned on such investment, net of any
amount rebated to the borrower. Loans of securities are terminable at any time
and the borrower, after notice, is required to return borrowed securities
within five business days. The Trust may pay reasonable finder's, lending
agent, administrative and custodial fees in connection with its loans. In the
event that the borrower defaults on its obligation to return borrowed
securities because of insolvency or for any other reason, the Trust could
experience delays and costs in gaining access to the collateral. The Trust
also could suffer a loss where the value of the collateral falls below the
market value of the borrowed securities, in the event of borrower default or
in the event of losses on investments made with cash collateral.
(f) Recent accounting pronouncements--In July 2006, the Financial Accounting
Standards Board ("FASB") issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes - an interpretation of FASB Statement No.
109." FIN 48 prescribes the minimum recognition threshold a tax position must
meet in connection with accounting for uncertainties in income tax positions
taken or expected to be taken by an entity including mutual funds before being
measured and recognized in the financial statements. Adoption of FIN 48 is
required for fiscal years beginning after December 15, 2006. The impact on the
Trust's financial statements, if any, is currently being assessed.
In addition, in September 2006, Statement of Financial Accounting Standards
No. 157, "Fair Value Measurements" ("FAS 157"), was issued and is effective
for fiscal years beginning after November 15, 2007. FAS 157 defines fair
value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements. Management is currently evaluating
the implications of FAS 157. At this time its impact on the Trust's financial
statements has not been determined.
2. Investment Advisory Agreement and Transactions with Affiliates:
On September 29, 2006, BlackRock, Inc. and Merrill Lynch & Co., Inc. ("Merrill
Lynch") combined Merrill Lynch's investment management business, Merrill Lynch
Investment Managers, L.P. ("MLIM"), and its affiliates, with BlackRock, Inc.
to create a new independent company. Merrill Lynch has a 49.8% economic
interest and a 45% voting interest in the combined company and The PNC
Financial Services Group, Inc., has approximately a 34% economic and voting
interest. The new company operates under the BlackRock name and is governed by
a board of directors with a majority of independent members.
On August 31, 2006, shareholders of the investors in the Trust approved a new
Investment Advisory Agreement for the Trust, with BlackRock Advisors, Inc.
(the "Manager"), an indirect, wholly owned subsidiary of BlackRock, Inc.
BlackRock Advisors, Inc. was recently reorganized into a limited liability
company and renamed BlackRock Advisors, LLC. The new Investment Advisory
Agreement between the Trust and the Manager became effective on September 29,
2006. Prior to September 29, 2006, MLIM was the investment adviser. The
general partner of MLIM is Princeton Services, Inc. ("PSI"), an indirect,
wholly owned subsidiary of Merrill Lynch, which is the limited partner.
The Manager is responsible for the management of the Trust's investments and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Trust. For such services, the
Trust pays a monthly fee based upon the average daily value of the Trust's net
assets at the annual rate of 0.50%. In addition, the Manager has entered into
Sub-Advisory Agreements with BlackRock Investment Management, LLC ("BIM") and
BlackRock Financial Management, Inc., both affiliates of the Manager, under
which the Manager pays each Sub-Advisor for services it provides a fee equal
to 37% of the management fee paid by the Trust to the Manager. Prior to
September 29, 2006, MLIM had a Sub-Advisory Agreement with Merrill Lynch
Investment Managers, LLC ("MLIM, LLC"), an affiliate of MLIM.
The Trust has received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("MLPF&S"), or its affiliates. Pursuant to
that order, the Trust has retained BIM, an affiliate of the Manager, as the
securities lending agent for a fee based on a share of the returns on
investment of cash collateral. Prior to September 29, 2006, BIM was organized
as MLIM, LLC, an affiliate of MLIM, and MLIM, LLC was the Trust's securities
lending agent. BIM may, on behalf of the Trust, invest cash collateral
received by the Trust 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.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Notes to Financial Statements (concluded) Master Real Investment Trust
For the year ended November 30, 2006, the Trust reimbursed MLIM and the
Manager $2,253 and $356 respectively, for certain accounting services.
Prior to September 29, 2006, certain officers and/or trustees of the Trust
were officers and/or directors of MLIM, PSI, Merrill Lynch, and/or MLIM, LLC.
Commencing September 29, 2006, certain officers and/or trustees of the Trust
are officers and/or directors of BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales (including paydowns) of investments, excluding short-term
securities, for the year ended November 30, 2006 were $78,422,911 and
$66,825,042, respectively.
Transactions in call options written for the year ended November 30, 2006 were
as follows:
Number of Premiums
Contracts* Received
Outstanding call options written,
beginning of year 12 $ 18,700
Options written 2.7 59,400
Options closed (7) (13,700)
Options expired (5) (5,000)
-------------- --------------
Outstanding call options written,
end of year 2.7 $ 59,400
============== ==============
* One contract represents a notional amount of $1,000,000.
Transactions in put options written for the year ended November 30,
2006 were as follows:
Number of Premiums
Contracts* Received
Outstanding put options written,
beginning of year 17.8 $ 126,675
Options written 2.7 59,400
Options closed (17.8) (126,675)
-------------- --------------
Outstanding put options written,
end of year 2.7 $ 59,400
============== ==============
* One contract represents a notional amount of $1,000,000.
4. Short-Term Borrowings:
Effective November 22, 2006, the Trust, along with certain other funds managed
by the Manager and its affiliates, is a party to a $500,000,000 credit
agreement with a group of lenders. The Trust may borrow under the credit
agreement to fund shareholder redemptions and for other lawful purposes other
than for leverage. The Trust may borrow up to the maximum amount allowable
under the Trust's current prospectus and statement of additional information,
subject to various other legal, regulatory or contractual limits. The Trust
pays a commitment fee of .06% per annum based on the Trust's pro rata share of
the unused portion of the credit agreement. Amounts borrowed under the credit
agreement bear interest at a rate equal to, at the Trust's election, the
federal funds rate plus .35% or a base rate as defined in the credit
agreement. The Trust did not borrow under the credit agreement during the year
ended November 30, 2006.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Report of Independent Registered Public Accounting Firm
Master Real Investment Trust
To the Investors and Board of Trustees
of Master Real Investment Trust:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Master Real Investment Trust as of
November 30, 2006, and the related statement of operations, the statement of
changes in net assets, and the financial highlights for the year then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The
financial statements of the Fund for the year ended November 30, 2005 and the
financial highlights for the year then ended and for the period March 26, 2004
(commencement of operations) to November 30, 2004, were audited by other
auditors whose report, dated January 18, 2006, expressed an unqualified
opinion on those financial statements and financial highlights.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. The Fund is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audit
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
Fund's 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 November 30, 2006,
by correspondence with the custodian and brokers; where replies were not
received from brokers, we performed other auditing procedures. We believe that
our audit provides 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
Master Real Investment Trust as of November 30, 2006, the results of its
operations, the changes in its net assets, and its financial highlights for
the year then ended, in conformity with accounting principles generally
accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
January 24, 2007
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Disclosure of Investment Advisory Agreement
BlackRock Investment Advisory Agreement--Matters Considered by Each Board
The following disclosure appeared in the May 31, 2006 Semi-Annual Report of
the Fund and the Trust and is the discussion referred to in "New BlackRock Sub-
Advisory Agreements - Matters Considered by Each Board" below.
In connection with the Transaction between Merrill Lynch and BlackRock, the
Board of Trustees of Merrill Lynch Real Investment Fund and the Board of
Trustees of Master Real Investment Trust considered a new investment advisory
agreement (the "New Investment Advisory Agreement") between the Trust and
BlackRock Advisors, Inc. or its successor ("BlackRock Advisors"). If the New
Investment Advisory Agreement is approved by the Fund's shareholders, it will
become effective upon the closing of the Transaction, which is expected in the
third quarter of 2006.
The Boards discussed the New Investment Advisory Agreement at telephonic and
in-person meetings held during April and May 2006. The Boards, including the
independent trustees, approved the New Investment Advisory Agreement at a
meeting held on May 10, 2006.
To assist each Board in its consideration of the New Investment Advisory
Agreement, BlackRock provided materials and information about BlackRock,
including its financial condition and asset management capabilities and
organization, and Merrill Lynch provided materials and information about the
Transaction. The independent trustees, through their independent legal
counsel, also requested and received additional information from Merrill Lynch
and BlackRock in connection with their consideration of the New Investment
Advisory Agreement. The additional information was provided in advance of the
May 10, 2006 meetings. In addition, the independent trustees consulted with
their counsel and counsel for the Fund and Trust on numerous occasions,
discussing, among other things, the legal standards and certain other
considerations relevant to each Board's deliberations.
At each Board meeting, the trustees discussed with Merrill Lynch management
and certain BlackRock representatives the Transaction, its strategic rationale
and BlackRock's general plans and intentions regarding the Fund and the Trust.
At these Board meetings, representatives of Merrill Lynch and BlackRock made
presentations to and responded to questions from each Board. Each Board also
inquired about the plans for and anticipated roles and responsibilities of
certain employees and officers of the Investment Adviser and certain
affiliates being transferred to BlackRock in connection with the Transaction.
The independent trustees also conferred separately and with their counsel
about the Transaction and other matters related to the Transaction on a number
of occasions, including in connection with the April and May 2006 meetings.
After the presentations and after reviewing the written materials provided,
the independent trustees met in executive sessions with their counsel to
consider the New Investment Advisory Agreement.
In connection with each Board's review of the New Investment Advisory
Agreement, Merrill Lynch and/or BlackRock advised the Board about a variety of
matters. The advice included the following, among other matters:
* that there is not expected to be any diminution in the nature, quality and
extent of services provided to the Fund and the Trust and their shareholders
by BlackRock Advisors, including compliance services;
* that operation of New BlackRock as an independent investment management
firm will enhance its ability to attract and retain talented professionals;
* that the Fund and Trust should benefit from having access to BlackRock's
state of the art technology and risk management analytic tools, including
investment tools, provided under the BlackRock Solutions (R) brand name;
* that BlackRock has no present intention to alter any applicable expense
waivers and reimbursements currently in effect and, while it reserves the
right to do so in the future, it would seek the approval of each Board
before making any changes;
* that BlackRock and Merrill Lynch will enter into an agreement, for an
initial three-year period and automatically renewable from year to year
thereafter, in connection with the Transaction under which Merrill Lynch-
affiliated broker-dealers will continue to offer the Fund as an investment
product;
* that BlackRock Advisors will have substantially the same access to the
Merrill Lynch sales force when distributing shares of the Fund as is
currently provided to the Investment Adviser and that other arrangements
between the Investment Adviser and Merrill Lynch sales channels will be
preserved;
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
* that the Fund will have access to BlackRock's network of third party
brokers, retirement plan platforms and registered investment advisers;
* that under the Transaction Agreement, Merrill Lynch and BlackRock have agreed
to conduct, and use reasonable best efforts to cause their respective
affiliates to conduct, their respective businesses in compliance with the
conditions of Section 15(f) of the Investment Company Act of 1940 (the "1940
Act") in relation to any public funds advised by BlackRock or the Investment
Adviser (or its affiliates), respectively; and
* that Merrill Lynch and BlackRock would derive benefits from the Transaction
and that, as a result, they have a different financial interest in the
matters that were being considered than do Fund or Trust shareholders.
Each Board considered the information provided by Merrill Lynch and BlackRock
above, and, among other factors, the following:
* the potential benefits to Fund and Trust shareholders from being part of a
combined fund family with BlackRock-sponsored funds, including possible
economies of scale and access to investment opportunities;
* the potential for expanding distribution of Fund shares through improved
access to third party distribution;
* the reputation, financial strength and resources of BlackRock and its
investment advisory subsidiaries and the anticipated financial strength and
resources of New BlackRock;
* the compliance policies and procedures of BlackRock Advisors;
* the terms and conditions of the New Investment Advisory Agreement,
including the fact that the schedule of the Fund's/Trust's total advisory
fees will not increase by virtue of the New Investment Advisory Agreement,
but will remain the same;
* that within the past year each Board performed a full annual review of the
investment advisory agreement under which the Investment Adviser currently
provides advisory services (the "Current Investment Advisory Agreement") as
required by the 1940 Act, and has determined that the Investment Adviser
has the capabilities, resources and personnel necessary to provide the
advisory and administrative services currently provided to the Fund/Trust;
and that the advisory and/or management fees paid by the Fund/Trust, taking
into account any applicable agreed-upon fee waivers and breakpoints,
represent reasonable compensation to the Investment Adviser in light of the
services provided, the costs to the Investment Adviser of providing those
services, economies of scale, the fees and other expenses paid by similar
funds (including information provided by Lipper, Inc. ["Lipper"]), and such
other matters as the trustees have considered relevant in the exercise of
their reasonable judgment (each Board had most recently performed a full
annual review of the Current Investment Advisory Agreement in May 2005);
and
* that Merrill Lynch agreed to pay all expenses of the Fund and Trust in
connection with each Board's consideration of the New Investment Advisory
Agreement and related agreements and all costs of shareholder approval of
the New Investment Advisory Agreement and as a result neither the Fund nor
Trust would bear costs in obtaining shareholder approval of the New
Investment Advisory Agreement.
Certain of these considerations are discussed in more detail below.
In its review of the New Investment Advisory Agreement, each Board assessed
the nature, scope and quality of the services to be provided to the Fund and
the Trust by the personnel of BlackRock Advisors and its affiliates, including
administrative services, shareholder services, oversight of fund accounting,
marketing services and assistance in meeting legal and regulatory
requirements. In its review of the New Investment Advisory Agreement, each
Board also considered a range of information in connection with its oversight
of the services to be provided by BlackRock Advisors and its affiliates. Among
the matters considered were: (a) fees (in addition to management fees) to be
paid to BlackRock Advisors and its affiliates by the Fund and Trust; (b) Fund
and Trust operating expenses paid to third parties; (c) the resources devoted
to and compliance reports relating to the Fund's and Trust's investment
objectives, policies and restrictions, and their compliance with their Code of
Ethics and BlackRock Advisors' compliance policies and procedures; and (d) the
nature, cost and character of non-investment management services to be
provided by BlackRock Advisors and its affiliates.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Disclosure of Investment Advisory Agreement (continued)
In the period prior to the Board meetings to consider renewal of the Current
Investment Advisory Agreement, each Board had requested and received materials
specifically relating to the agreement. These materials included (a)
information compiled by Lipper on the fees and expenses and the investment
performance of the Fund as compared to a comparable group of funds as
classified by Lipper; (b) a discussion by the Trust's portfolio management
team on investment strategies used by the Trust during its most recent fiscal
year; (c) information on the profitability to the Investment Adviser of the
Current Investment Advisory Agreement and other payments received by the
Investment Adviser and its affiliates from the Fund and the Trust; and (d)
information provided by the Investment Adviser concerning services related to
the valuation and pricing of Trust portfolio holdings, allocation of Trust
brokerage fees, the Trust's portfolio turnover statistics, and direct and
indirect benefits to the Investment Adviser and its affiliates from their
relationship with the Fund and the Trust.
In its deliberations, each Board considered information received in connection
with its most recent continuation of the Current Investment Advisory
Agreement, in addition to information provided by BlackRock and BlackRock
Advisors in connection with its evaluation of the terms and conditions of the
New Investment Advisory Agreement. The trustees did not identify any
particular information that was all-important or controlling, and each trustee
attributed different weights to the various factors. Each Board, including a
majority of the Board's independent trustees, concluded that the terms of the
New Investment Advisory Agreement are appropriate, that the fees to be paid
are reasonable in light of the services to be provided to the Fund/Trust, and
that the New Investment Advisory Agreement should be approved and recommended
to Fund/Trust shareholders.
Nature, Quality and Extent of Services Provided--Each Board reviewed the
nature, extent and quality of services provided by the Investment Adviser,
including the investment advisory services and the resulting performance of
the Fund and Trust, as well as the nature, quality and extent of services
expected to be provided by BlackRock Advisors. Each Board focused primarily on
the Investment Adviser's investment advisory services and the investment
performance of the Fund and Trust, but also considered certain areas in which
both the Investment Adviser and the Fund/Trust receive services as part of the
Merrill Lynch complex. Each Board compared the performance of the Fund - both
including and excluding the effects of the Fund's fees and expenses - to the
performance of a comparable group of mutual funds, and the performance of a
relevant index or combination of indexes. While each Board reviews performance
data at least quarterly, consistent with the Investment Adviser's investment
goals, the Board will attach more importance to performance over relatively
long periods of time, typically three to five years.
In evaluating the nature, quality and extent of the services to be provided by
BlackRock Advisors, each Board considered, among other things, the expected
impact of the Transaction on the operations, facilities, organization and
personnel of BlackRock Advisors and how it would affect the Fund and the
Trust; the ability of BlackRock Advisors to perform its duties after the
Transaction; and any anticipated changes to the current investment and other
practices of the Fund or Trust. Each Board considered BlackRock's advice as to
proposed changes in portfolio management personnel of the Trust after the
closing of the Transaction.
Each Board was given information with respect to the potential benefits to the
Fund and Trust and their shareholders from having access to BlackRock's state
of the art technology and risk management analytic tools, including the
investment tools provided under the BlackRock Solutions brand name.
Each Board was advised that, as a result of Merrill Lynch's equity interest in
BlackRock after the Transaction, the Fund and Trust will continue to be
subject to restrictions concerning certain transactions involving Merrill
Lynch affiliates (for example, transactions with a Merrill Lynch broker-dealer
acting as principal) absent revised or new regulatory relief. Each Board was
advised that a revision of existing regulatory relief with respect to these
restrictions was being sought from the Securities and Exchange Commission and
were advised of the possibility of receipt of such revised regulatory relief.
There can be no assurance that such relief will be obtained.
Based on their review of the materials provided and the assurances they had
received from the management of Merrill Lynch and of BlackRock, the trustees
determined that the nature and quality of services to be provided to the Fund/
Trust under the New Investment Advisory Agreement were expected to be as good
or better than that provided under the Trust's Current Investment Advisory
Agreement. It was noted, however, that it is expected that there will be
changes in personnel following the Transaction and the combination of the
operations of the Investment Adviser and its affiliates with those of
BlackRock. Each Board noted that if current portfolio managers or other
personnel cease to be available, the Board would consider all available
options, which could include seeking the investment advisory or other services
of BlackRock affiliates. Accordingly, each Board concluded that, overall, the
Board was satisfied at the present time with assurances from BlackRock and
BlackRock Advisors as to the expected nature, extent and quality of the
services to be provided to the Fund/Trust under the New Investment Advisory
Agreement.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Costs of Services Provided and Profitability--It was noted that, in
conjunction with the recent review of the Current Investment Advisory
Agreement, each Board had received, among other things, a report from Lipper
comparing the Fund's fees, expenses and performance to those of a peer group
selected by Lipper, and information as to the fees charged by the Investment
Adviser or its affiliates to other registered investment company clients for
investment management services. Each Board reviewed the Fund's/Trust's
contractual management fee rate and actual management fee rate as a percentage
of total assets at common asset levels - the actual rate includes advisory
fees and the effects of any fee waivers - compared to the other funds in the
Fund's Lipper category. They also compared the Fund's total expenses to those
of other comparable funds. The information showed that the Fund had fees and
expenses within the range of fees and expenses of comparable funds. Each Board
considered the services to be provided by and the fees to be charged by
BlackRock Advisors to other funds with similar investment mandates and noted
that the fees charged by BlackRock Advisors in those cases, including fee
waivers and expense reimbursements, were generally comparable to those being
charged to the Fund/Trust. Each Board also noted that, as a general matter,
according to the information provided by BlackRock, fees charged to
institutional clients were lower than the fees charged to the Fund, but
BlackRock Advisors provided less extensive services to such clients. Each
Board concluded that the Fund's/Trust's management fee and fee rate and
overall expense ratio are reasonable compared to those of other comparable
funds.
In evaluating the costs of the services to be provided by BlackRock Advisors
under the New Investment Advisory Agreement, each Board considered, among
other things, whether advisory fees or other expenses would change as a result
of the Transaction. Based on its review of the materials provided and the fact
that the New Investment Advisory Agreement is substantially similar to the
Current Investment Advisory Agreement in all material respects, including the
rate of compensation, each Board determined that the Transaction should not
increase the total fees payable, including any fee waivers and expense
reimbursements, for advisory and administrative services. Each Board noted
that it was not possible to predict with certainty New BlackRock's future
profitability from its relationship with the Fund and Trust.
Each Board discussed with BlackRock Advisors its general methodology to be
used in determining New BlackRock's profitability with respect to its
relationship with the Fund and Trust. Each Board noted that the Board expects
to receive profitability information from New BlackRock on at least an annual
basis and thus be in a position to evaluate whether any adjustments in fees
and/or fee breakpoints would be appropriate.
Fees and Economies of Scale--Each Board considered the extent to which
economies of scale might be realized as the assets of the Fund and Trust
increase and whether there should be changes in the management fee rate or
structure in order to enable the Fund and Trust to participate in these
economies of scale. Each Board determined that changes were not currently
necessary and that the Fund and Trust appropriately participated in these
economies of scale.
In reviewing the Transaction, each Board considered, among other things,
whether advisory fees or other expenses would change as a result of the
Transaction. Based on the fact that the New Investment Advisory Agreement is
substantially similar to the Current Investment Advisory Agreement in all
material respects, including the rate of compensation, each Board determined
that as a result of the Transaction, the Fund's/Trust's total advisory fees
would be no higher than the fees under the Current Investment Advisory
Agreement. Each Board noted that in conjunction with the Board's most recent
deliberations concerning the Current Investment Advisory Agreement, the Board
had determined that the total fees for advisory and administrative services
for the Fund and Trust were reasonable in light of the services provided. It
was noted that in conjunction with the recent review of the Current Investment
Advisory Agreement, each Board had received, among other things, a report from
Lipper comparing the Fund's fees, expenses and performance to those of a peer
group selected by Lipper, and information as to the fees charged by the
Investment Adviser to other registered investment company clients for
investment management services. Each Board concluded that, because the rates
for advisory fees for the Fund/Trust would be no higher than current fee
rates, the proposed management fee structure, including any fee waivers, was
reasonable and that no additional changes were currently necessary.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Disclosure of Investment Advisory Agreement (concluded)
Fall-Out Benefits--In evaluating the fall-out benefits to be received by
BlackRock Advisors under the New Investment Advisory Agreement, each Board
considered whether the Transaction would have an impact on the fall-out
benefits received by the Investment Adviser by virtue of the Current
Investment Advisory Agreement. Based on their review of the materials
provided, including materials received in connection with their most recent
approval or continuance of the Current Investment Advisory Agreement, and
their discussions with management of the Investment Adviser and BlackRock, the
trustees determined that those benefits could include increased ability for
BlackRock to distribute shares of its funds and other investment products and,
where applicable, to obtain research services using the Trust's portfolio
transaction brokerage commissions. The trustees also considered possible
benefits stemming from the proposal that PFPC Financial Services, an affiliate
of BlackRock, serve as transfer agent for the Fund following the Transaction.
Each Board noted that any benefits were difficult to quantify with certainty
at this time, and indicated that the Board would continue to evaluate them
going forward.
Investment Performance--Each Board considered investment performance for the
Fund and Trust. Each Board compared the performance of the Fund and Trust -
both including and excluding the effects of fees and expenses - to the
performance of a comparable group of mutual funds, and the performance of a
relevant index or combination of indexes. The comparative information received
from Lipper showed Fund performance at various levels within the range of
performance of comparable funds over different time periods. While each Board
reviews performance data at least quarterly, consistent with FAM's investment
goals, the Board will attach more importance over relatively long periods of
time, typically three to five years. Each Board believed the Fund's and
Trust's performance was satisfactory. Also, each Board took into account the
investment performance of funds currently advised by BlackRock Advisors. Each
Board considered comparative information from Lipper which showed that the
performance of the funds advised by BlackRock Advisors was within the range of
performance of comparable funds over different time periods. Each Board noted
BlackRock's considerable investment management experience and capabilities,
but were unable to predict what effect, if any, consummation of the
Transaction would have on the future performance of the Fund and Trust.
Conclusion--After the independent trustees of the Fund and independent
trustees of the Trust deliberated in executive session, each entire Board,
including the independent trustees, approved the New Investment Advisory
Agreement, concluding that the advisory fee rate was reasonable in relation to
the services provided and that the New Investment Advisory Agreement was in
the best interests of the shareholders. In approving the New Investment
Advisory Agreement, each Board noted that it anticipated reviewing the
continuance of the agreement in advance of the expiration of the initial
two-year period.
Contingent BlackRock Sub-Advisory Agreement--Matters Considered by Each Board
At the telephonic and in-person meetings held during April and May 2006 at
which the Boards discussed and approved the New Investment Advisory Agreement,
the Trust's Board, including the independent trustees, also considered a
contingent sub-advisory agreement (the "Contingent Sub-Advisory Agreement")
between the Investment Adviser and BlackRock Advisors (the "BlackRock Sub-
Adviser"). The Contingent Sub-Advisory Agreement is intended to ensure that
the Trust operates with efficient portfolio management services until the
closing of the Transaction, in the event that each Board deems it necessary
and in the best interests of the Fund and Trust and their shareholders that
the BlackRock Sub-Adviser assist in managing the operations of the Trust
during the interim period until the closing of the Transaction. If
shareholders approve the Contingent Sub-Advisory Agreement, it will take
effect only upon recommendation from the Investment Adviser and upon
subsequent approval of each Board in the period up to the closing of the
Transaction. The effectiveness of the Contingent Sub-Advisory Agreement,
therefore, would be contingent on further Board approval after shareholders
approve it. Pursuant to the Contingent Sub-Advisory Agreement, the BlackRock
Sub-Adviser would receive a monthly fee from the Investment Adviser equal to
50% of the advisory fee received by the Investment Adviser. The Investment
Adviser would pay the BlackRock Sub-Adviser out of its own resources. There
would be no increase in Fund or Trust expenses as a result of the Contingent
Sub-Advisory Agreement.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
In making its approval at the May in-person meeting, each Board considered the
Contingent Sub-Advisory Agreement in conjunction with the New Investment
Advisory Agreement and reviewed the same information and factors discussed
above. Each Board also considered in conjunction with the Contingent Sub-
Advisory Agreement the necessity of ensuring that the Trust operates with
effective management services until the closing of the Transaction. In
reviewing the sub-advisory fee rate provided in the Contingent Sub-Advisory
Agreement, each Board took note of the fact that both the Investment Adviser
and the BlackRock Sub-Adviser would have significant responsibilities under
their respective advisory agreements. The Investment Adviser would remain
responsible for oversight of the operations and administration of the Fund and
Trust, and the BlackRock Sub-Adviser would provide advisory services to the
Trust under the Contingent Sub-Advisory Agreement. Each Board also took into
account the expected short duration of the term of any Contingent Sub-Advisory
Agreement and the fact that total advisory fees paid by the Fund and Trust
would not increase as a result of the Contingent Sub-Advisory Agreement. Under
all of the circumstances, each Board concluded that it was a reasonable
allocation of fees for the BlackRock Sub-Adviser to receive 50% of the
advisory fee paid by the Trust to the Investment Adviser.
After the independent trustees deliberated in executive session, each entire
Board, including the independent trustees, approved the Contingent Sub-
Advisory Agreement, concluding that the advisory fee was reasonable in
relation to the services provided and that the Contingent Sub-Advisory
Agreement was in the best interests of shareholders.
Disclosure of Sub-Advisory Agreement
New BlackRock Sub-Advisory Agreements--Matters Considered by Each Board
At an in-person meeting held on August 24 - 25, 2006, the Board of the Fund
and the Board of the Trust, including the independent trustees, discussed and
approved the sub-advisory agreements between BlackRock Advisors and each of
BlackRock Financial Management, Inc. and BlackRock Investment Management, LLC,
each an affiliate (the "Sub-Advisers") (the "BlackRock Sub-Advisory
Agreements"). The BlackRock Sub-Advisory Agreements became effective on
September 29, 2006, at the same time the New Investment Advisory Agreement
with BlackRock Advisors (which had been approved by the Fund's shareholders)
became effective.
Pursuant to the pertinent BlackRock Sub-Advisory Agreement, each Sub-Adviser
receives a monthly fee from BlackRock Advisors equal to 37% of the advisory
fee received by BlackRock Advisors from the Trust. BlackRock Advisors pays the
Sub-Adviser out of its own resources, and there is no increase in Fund or
Trust expenses as a result of the BlackRock Sub-Advisory Agreements.
In approving the BlackRock Sub-Advisory Agreements at the August in-person
meeting, the Boards reviewed their considerations in connection with their
approval of the New Investment Advisory Agreement in May 2006. The Boards
relied on the same information and considered the same factors as those
discussed above in connection with the approval of the New Investment Advisory
Agreement. In reviewing the sub-advisory fee rate provided for in the
BlackRock Sub-Advisory Agreements, the Boards noted the fact that both
BlackRock Advisors and each Sub-Adviser have significant responsibilities
under their respective advisory agreements. Under the New Investment Advisory
Agreement, BlackRock Advisors remains responsible for the overall management
of the Fund and the Trust and for oversight of the Fund's and the Trust's
operations and administration. Under each BlackRock Sub-Advisory Agreement,
each Sub-Adviser provides advisory services to the Trust and is responsible
for the day-to-day management of the Trust's portfolio. The Boards also took
into account the fact that there is no increase in total advisory fees paid by
the Fund or the Trust as a result of the BlackRock Sub-Advisory Agreements.
Based on its considerations, each Board concluded that it was a reasonable
allocation of fees for each Sub-Adviser to receive 37% of the advisory fee
paid by the Trust to BlackRock Advisors.
After the independent trustees deliberated in executive session, the entire
Board of the Fund and the entire Board of the Trust, including the independent
trustees, approved each BlackRock Sub-Advisory Agreement, concluding that the
sub-advisory fee was reasonable in relation to the services provided and that
each BlackRock Sub-Advisory Agreement was in the best interests of
shareholders.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Officers and Trustees
Number of
Funds and
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name, Address & Age Fund/Trust Served Principal Occupation(s) During Past 5 Years Trustee Trustee
Interested Trustee
Robert C. Doll, Jr.* President 2005 to Vice Chairman and Director of BlackRock, Inc., 122 Funds None
P.O. Box 9011 and Trustee present Global Chief Investment Officer for Equities, 168 Portfolios
Princeton, Chairman of the BlackRock Retail Operating
NJ 08543-9011 Committee, and member of the BlackRock Executive
Age: 52 Committee since 2006; President of the funds
advised by Merrill Lynch Investment Managers, L.P.
("MLIM") and its affiliates ("MLIM/FAM-advised
funds") from 2005 to 2006; President and Chief
Investment Officer of MLIM and Fund Asset
Management, L.P. ("FAM") from 2001 to 2006;
Co-Head (Americas Region) thereof from 2000 to
2001 and Senior Vice President from 1999 to 2001;
President and Director of Princeton Services, Inc.
("Princeton Services") and President of Princeton
Administrators, L.P. ("Princeton Administrators")
from 2001 to 2006; Chief Investment Officer of
OppenheimerFunds, Inc. in 1999 and Executive
Vice President thereof from 1991 to 1999.
* Mr. Doll is a director, trustee or member of an advisory board of certain
other investment companies for which BlackRock Advisors acts as investment
adviser. Mr. Doll is an "interested person," as described in the Investment
Company Act, of the Fund based on his current and former positions with
BlackRock, Inc. and its affiliates. Trustees serve until their resignation,
removal or death, or until December 31 of the year in which they turn 72. As
Fund/Trust President, Mr. Doll serves at the pleasure of the Board of Trustees.
Independent Trustees*
David O. Beim** Trustee 2004 to Professor of Finance and Economics at the 17 Funds None
P.O. Box 9095 present Columbia University Graduate School of 24 Portfolios
Princeton, Business since 1991; Chairman of Outward
NJ 08543-9095 Bound USA from 1997 to 2001; Chairman
Age: 66 of Wave Hill Inc., since 1990; Trustee of
Phillips Exeter Academy from 2002 to present.
James T. Flynn Trustee 2004 to Chief Financial Officer of JP Morgan & Co., 17 Funds None
P.O. Box 9095 present Inc. from 1990 to 1995 and an employee of 24 Portfolios
Princeton, JP Morgan in various capacities from 1967
NJ 08543-9095 to 1995.
Age: 67
W. Carl Kester Trustee 2004 to Deputy Dean for Academic Affairs, Harvard 17 Funds None
P.O. Box 9095 present Business School since 2006; Mizuho Financial 24 Portfolios
Princeton, Group, Professor of Finance, Harvard Business
NJ 08543-9095 School; Unit Head, Finance in 2005 - 2006;
Age: 54 Senior Associate Dean and Chairman of the
MBA Program of Harvard Business School, 1999
to 2005; Member of the faculty of Harvard
Business School since 1981; Independent
Consultant since 1978.
Karen P. Robards*** Trustee 2004 to President of Robards & Company, a financial 17 Funds AtriCure, Inc.
P.O. Box 9095 present advisory firm since 1987; formerly an investment 24 Portfolios (medical
Princeton, banker with Morgan Stanley for more than ten devices)
NJ 08543-9095 years; Director of Enable Medical Corp. from
Age: 56 1996 to 2005; Director of AtriCure, Inc. since
2000; Director of the Cooke Center for Learning
and Development, a not-for-profit organization,
since 1987.
* Trustees serve until their resignation, removal or death, or until December 31 of the year
in which they turn 72.
** Chairman of the Audit Committee.
*** Chair of the Board of Trustees.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Officers and Trustees (concluded)
Position(s) Length of
Held with Time
Name, Address & Age Fund/Trust Served Principal Occupation(s) During Past 5 Years
Fund Officers*
Donald C. Burke Vice 1999 to Managing Director of BlackRock, Inc. since 2006; Managing Director of Merrill
P.O. Box 9011 President present Lynch Investment Managers, L.P. ("MLIM") and Fund Asset Management, L.P. ("FAM")
Princeton, and in 2006; First Vice President of MLIM and FAM from 1997 to 2005 and Treasurer
NJ 08543-9011 Treasurer thereof from 1999 to 2006; Vice President of MLIM and FAM from 1990 to 1997.
Age: 46
Jeffrey Hiller Fund Chief 2004 to Managing Director of BlackRock and Fund Chief Compliance Officer since 2006; Chief
P.O. Box 9011 Compliance present Compliance Officer of the MLIM/FAM-advised funds and First Vice President and Chief
Princeton, Officer Compliance Officer of MLIM (Americas Region) from 2004 to 2006; Chief Compliance
NJ 08543-9011 Officer of the IQ Funds since 2004; Global Director of Compliance at Morgan Stanley
Age: 55 Investment Management from 2002 to 2004; Managing Director and Global Director
of Compliance at Citigroup Asset Management from 2000 to 2002; Chief Compliance
Officer at Soros Fund Management in 2000; Chief Compliance Officer at Prudential
Financial from 1995 to 2000; Senior Counsel in the Securities and Exchange
Commission's Division of Enforcement in Washington, D.C. from 1990 to 1995.
Alice A. Pellegrino Secretary 2004 to Director of BlackRock, Inc. since 2006; Director (Legal Advisory) of MLIM from 2002
P.O. Box 9011 present to 2006; Vice President of MLIM from 1999 to 2002; Attorney associated with MLIM
Princeton, from 1997 to 2006; Secretary of MLIM, FAM, FAM Distributors, Inc. ("FAMD") and
NJ 08543-9011 Princeton Services from 2004 to 2006.
Age: 46
* Officers of the Fund/Trust serve at the pleasure of the Board of Trustees.
Further information about the Fund's Officers and Trustees is available
in the Fund's Statement of Additional Information, which can be obtained
without charge by calling 1-800-441-7762.
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent
PFPC Inc.
Wilmington, DE 19809
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
BlackRock Funds
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 nonpublic 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 nonpublic 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 Web sites.
BlackRock does not sell or disclose to nonaffiliated third parties any
nonpublic personal information about its Clients, except as permitted by law
or as is necessary to service Client accounts. These nonaffiliated 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
nonpublic 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 nonpublic personal information of its Clients, including procedures
relating to the proper storage and disposal of such information.
Availability of Additional Information
Electronic copies of most financial reports and prospectuses are available on
the Fund's Web site or shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Fund's electronic delivery program.
To enroll:
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial adviser. Please note that not all investment
advisers, banks or brokerages may offer this service.
Shareholders Who Hold Accounts Directly with BlackRock:
1) Access the BlackRock Web site at
http://www.blackrock.com/edelivery
2) Select eDelivery under the More Information section
3) Log into your account
The Fund 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 it 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 contact the Fund at
(800) 441-7762.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Availability of Additional Information (concluded)
Availability of Proxy Voting Policies and Procedures
The Fund has delegated proxy voting responsibilities to BlackRock and its
affiliates, subject to the general oversight of the Fund's Board of Trustees.
A description of the policies and procedures that BlackRock and its affiliates
use to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, on our Web site at www.blackrock.com,
by calling (800) 441-7762, or on the Web site of the Securities and Exchange
Commission (the "Commission") at http://www.sec.gov.
Availability of Proxy Voting Record
Information on how proxies relating to the Fund's voting securities were
voted (if any) by BlackRock during the most recent 12-month period ended
June 30 is available, upon request and without charge, on our Web site at
www.blackrock.com, by calling (800) 441-7762 or on the Web site of the
Commission at http://www.sec.gov.
Availability of Quarterly Portfolio Schedule
The Fund files its complete schedule of portfolio holdings for the first and
third quarters of its fiscal year with the Commission on Form N-Q. The Fund's
Forms N-Q are available on the Commission's Web site at http://www.sec.gov and
may be reviewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330. The Fund's Forms N-Q may also
be obtained upon request, without charge, by calling (800) 441-7762.
Shareholder Privileges
Account Information
Call us at (800) 441-7762 8:00 AM - 6:00 PM EST to get information about your
account balances, recent transactions and share prices. You can also reach us
on the web at www.blackrock.com.
Automatic Investment Plans
Investor Class shareholders who want to invest regularly can arrange to have
$50 or more automatically deducted from their checking or savings account and
invested in any of the BlackRock portfolios.
Systematic Withdrawal Plans
Investor Class shareholders can establish a systematic withdrawal plan and
receive periodic payments of $50 or more from their BlackRock portfolios, as
long as their account 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.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
A World-Class Mutual Fund Family
BlackRock now offers an expanded lineup of open-end mutual funds. Our range
includes more than 85 funds crossing all investment styles and managed by
experts in equity, fixed income and tax-exempt investing.
Equity Portfolios
BlackRock All-Cap Global Resources Portfolio
BlackRock Aurora Portfolio
BlackRock Asset Allocation Portfolio++
BlackRock Balanced Capital Fund++
BlackRock Basic Value Fund
BlackRock Developing Capital Markets Fund
BlackRock Equity Dividend Fund
BlackRock EuroFund
BlackRock Focus Twenty Fund
BlackRock Focus Value Fund
BlackRock Fundamental Growth Fund
BlackRock Global Allocation Fund++
BlackRock Global Dynamic Equity Fund
BlackRock Global Financial Services Fund
BlackRock Global Growth Fund
BlackRock Global Opportunities Portfolio
BlackRock Global Resources Portfolio*
BlackRock Global Science & Technology
Opportunities Portfolio
BlackRock Global SmallCap Fund
BlackRock Global Technology Fund
BlackRock Global Value Fund
BlackRock Healthcare Fund
BlackRock Health Sciences Opportunities Portfolio
BlackRock Index Equity Portfolio*
BlackRock International Fund
BlackRock International Index Fund
BlackRock International Opportunities Portfolio*
BlackRock International Value Fund
BlackRock Investment Trust
BlackRock Large Cap Core Fund
BlackRock Large Cap Growth Fund
BlackRock Large Cap Value Fund
BlackRock Latin America Fund
BlackRock Legacy Portfolio
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 Small Cap Core Equity Portfolio
BlackRock Small Cap Growth Equity Portfolio
BlackRock Small Cap Growth Fund II
BlackRock Small Cap Index Fund
BlackRock Small Cap Value Equity Portfolio*
BlackRock Small/Mid-Cap Growth Portfolio
BlackRock S&P 500 Index Fund
BlackRock U.S. Opportunities Portfolio
BlackRock Utilities and Telecommunications Fund
BlackRock Value Opportunities Fund
Fixed Income Portfolios
BlackRock Bond Fund
BlackRock Enhanced Income Portfolio
BlackRock GNMA Portfolio
BlackRock Government Income Portfolio
BlackRock High Income Fund
BlackRock High Yield Bond Portfolio
BlackRock Inflation Protected Bond Portfolio
BlackRock Intermediate Bond Portfolio
BlackRock Intermediate Bond Portfolio II
BlackRock Intermediate Government
Bond Portfolio
BlackRock International Bond Portfolio
BlackRock Low Duration Bond Portfolio
BlackRock Managed Income Portfolio
BlackRock Real Investment Fund
BlackRock Short-Term Bond Fund
BlackRock Total Return Portfolio
BlackRock Total Return Portfolio II
BlackRock World Income Fund
Municipal Bond Portfolios
BlackRock AMT-Free Municipal Bond Portfolio
BlackRock California Insured Municipal Bond Fund
BlackRock Delaware Municipal Bond Portfolio
BlackRock Florida Municipal Bond Fund
BlackRock High Yield Municipal Fund
BlackRock Intermediate Municipal Fund
BlackRock Kentucky Municipal Bond Portfolio
BlackRock Municipal Insured Fund
BlackRock National Municipal Fund
BlackRock New Jersey Municipal Bond Fund
BlackRock New York Municipal Bond Fund
BlackRock Ohio Municipal Bond Portfolio
BlackRock Pennsylvania Municipal Bond Fund
BlackRock Short-Term Municipal Fund
Money Market Portfolios
BlackRock Money Market Portfolio
BlackRock Municipal Money Market Portfolio+++
BlackRock NC Municipal MM Portfolio+++
BlackRock NJ Municipal MM Portfolio+++
BlackRock OH Municipal MM Portfolio+++
BlackRock PA Municipal MM Portfolio+++
BlackRock Summit Cash Reserves Fund*
BlackRock U.S. Treasury MM Portfolio
BlackRock VA Municipal MM Portfolio+++
* See the prospectus for information on specific
limitations on investments in the fund.
++ Mixed asset fund.
+++ Tax-exempt fund.
BlackRock mutual funds are distributed by BlackRock Distributors, Inc. and
certain funds are also distributed by FAM Distributors, Inc. 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 800-882-0052 or from your financial advisor. The prospectus should
be read carefully before investing.
BLACKROCK REAL INVESTMENT FUND NOVEMBER 30, 2006
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as of
the end of the period covered by this report, that applies to the
registrant's principal executive officer, principal financial
officer and principal accounting officer, or persons performing
similar functions. 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 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: (1) David
O. Beim, (2) W. Carl Kester, (3) James T. Flynn and (4) Karen P.
Robards.
The registrant's board of directors has determined that David O.
Beim, W. Carl Kester and Karen P. Robards qualify as financial
experts pursuant to Item 3(c)(4) of Form N-CSR.
Mr. Beim has a thorough understanding of generally accepted
accounting principles, financial statements and internal control
over financial reporting as well as audit committee functions. For
25 years, Mr. Beim was an investment banker actively engaged in
financial analysis for securities transactions and mergers. These
transactions presented 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. Mr. Beim has also been a
professor of finance and economics at the Columbia University
Graduate School of Business for the past 13 years.
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 the member of the Audit
Committees of two privately held companies and a non-profit
organization.
Item 4 - Principal Accountant Fees and Services
BlackRock Real Investment Fund
(a) Audit Fees - Fiscal Year Ending November 30, 2006 - $6,600
Fiscal Year Ending November 30, 2005 - $6,500
(b) Audit-Related Fees -
Fiscal Year Ending November 30, 2006 - $0
Fiscal Year Ending November 30, 2005 - $0
(c) Tax Fees - Fiscal Year Ending November 30, 2006 - $6,000
Fiscal Year Ending November 30, 2005 - $5,700
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ending November 30, 2006 - $0
Fiscal Year Ending November 30, 2005 - $0
Master Real Investment Trust
(a) Audit Fees - Fiscal Year Ending November 30, 2006 - $31,000
Fiscal Year Ending November 30, 2005 - $31,000
(b) Audit-Related Fees -
Fiscal Year Ending November 30, 2006 - $0
Fiscal Year Ending November 30, 2005 - $0
(c) Tax Fees - Fiscal Year Ending November 30, 2006 - $9,200
Fiscal Year Ending November 30, 2005 - $5,700
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ending November 30, 2005 - $0
Fiscal Year Ending November 30, 2004 - $0
(e)(1) The registrant's audit committee (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 registrant's affiliated 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"). However, such services will only be
deemed pre-approved provided that any individual project does not
exceed $5,000 attributable to the registrant or $50,000 for all of
the registrants the Committee oversees. 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., 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.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ending November 30, 2006 - $3,138,117
Fiscal Year Ending November 30, 2005 - $5,700
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser and any entity controlling,
controlled by, or under common control with the investment adviser
that provides ongoing services to the registrant 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.
Regulation S-X Rule 2-01(c)(7)(ii) - $1,739,500, 0%
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - Not Applicable
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 - Not Applicable
Item 11 - Controls and Procedures
11(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others
particularly during the period in which this report is being
prepared. The registrant's certifying officers have determined that
the registrant's disclosure controls and procedures are effective
based on our evaluation of these controls and procedures as of a
date within 90 days prior to the filing date of this report.
11(b) - As of September 29, 2006, with the conclusion of the combination of
Merrill Lynch's asset management business with BlackRock, the
registrant was migrated to BlackRock's trading and compliance
monitoring systems, and various personnel changes occurred. In
conjunction with these business improvements, there were no changes
in the registrants internal control over financial reporting (as
defined in Rule 30a-3(d) under Act (17 CFR 270.30a-3(d)) that
occurred during the last fiscal half-year of the period covered by
this report that has materially affected, or is reasonably likely to
affect, the registrant's internal control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
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 Real Investment Fund and Master Real Investment Trust
By: /s/ Robert C. Doll, Jr.
-----------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock Real Investment Fund and Master Real Investment Trust
Date: January 29, 2007
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/ Robert C. Doll, Jr.
-----------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock Real Investment Fund and Master Real Investment Trust
Date: January 29, 2007
By: /s/ Donald C. Burke
-----------------------
Donald C. Burke,
Chief Financial Officer of
BlackRock Real Investment Fund and Master Real Investment Trust
Date: January 29, 2007