UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-02739
811-10179
Name of Fund: BlackRock Basic Value Fund, Inc.
Master Basic Value 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 Basic Value Fund, Inc. and Master Basic Value 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: 06/30/07
Date of reporting period: 07/01/06 - 12/31/06
Item 1 - Report to Stockholders
ALTERNATIVES BLACKROCK SOLUTIONS EQUITIES FIXED INCOME LIQUIDITY
REAL ESTATE
BlackRock Basic Value
Fund, Inc.
SEMI-ANNUAL REPORT DECEMBER 31, 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. Please see the Fund's prospectus for a description
of risks associated with global investments.
BlackRock Basic Value Fund, Inc.
P.O. Box 9011
Princeton, NJ 08543-9011
(GO PAPERLESS... logo)
It's Fast, Convenient, & Timely!
To sign up today, go to www.blackrock.com/edelivery.
BlackRock Basic Value Fund, Inc.
Proxy Results
During the six-month period ended December 31, 2006, BlackRock Basic Value
Fund, Inc.'s shareholders voted on the following proposals, which were
approved at a special shareholders' meeting on August 15, 2006. A description
of the proposals and number of shares voted are as follows:
Shares Voted Shares Voted Shares Voted
For Against Abstain
To approve a new investment advisory agreement with
BlackRock Advisors, Inc. 126,800,349 3,275,189 2,392,066
To approve a contingent subadvisory agreement with
BlackRock Advisors, Inc. 126,601,709 3,416,511 2,449,384
Officers and Directors/Trustees
Robert C. Doll, Jr., President and Director/Trustee
Donald W. Burton, Director/Trustee
John Francis O'Brien, Director/Trustee
David H. Walsh, Director/Trustee
Fred G. Weiss, Director/Trustee
Donald C. Burke, Vice President and Treasurer
Robert J. Martorelli, Vice President and
Co-Portfolio Manager
Kevin M. Rendino, Vice President and
Co-Portfolio Manager
Jeffrey Hiller, Fund Chief Compliance Officer
Alice A. Pellegrino, Secretary
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent
PFPC Inc.
Wilmington, DE 19809
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
A Letter to Shareholders
Dear Shareholder
As 2007 begins, we are able to look back on 2006 as a volatile, but ultimately,
a positive year for most major markets. Returns for the annual and semi-annual
periods ended December 31, 2006 were as follows:
Total Returns as of December 31, 2006 6-month 12-month
U.S. equities (Standard & Poor's 500 Index) +12.74% +15.79%
Small cap U.S. equities (Russell 2000 Index) + 9.38 +18.37
International equities (MSCI Europe, Australasia, Far East Index) +14.69 +26.34
Fixed income (Lehman Brothers Aggregate Bond Index) + 5.09 + 4.33
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 4.55 + 4.84
High yield bonds (Credit Suisse High Yield Index) + 8.14 +11.92
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, 2006. This left the federal funds rate at 5.25%, where it remained
through year-end. In interrupting its two-year interest rate-hiking campaign,
the Fed acknowledged that economic growth is slowing, led by a downturn in the
housing market, but has maintained a cautionary view on inflation.
Overall, it was a good 12 months for U.S. equities, despite a significant
correction in the middle of the year that was largely triggered by rising
interest rates, inflation fears, elevated oil prices and geopolitical
uncertainties. Nevertheless, strong corporate earnings, abundant liquidity and
record merger-and-acquisition activity provided a solid backdrop for stocks.
Many international equity markets (with the notable exception of Japan)
performed even better, outpacing U.S. stocks for the fifth consecutive year.
Strength was especially notable in European equities and select emerging
markets.
Bonds experienced a more modest annual return than stocks. Interest rates and
bond yields moved higher for much of the year as bond prices, which move
opposite of yields, declined. Prices began to improve in the summer as the
economy showed signs of weakening and the Fed paused. Notably, the Treasury
curve remained inverted for much of 2006. The 10-year Treasury yield ended
December at 4.71%, well below the federal funds rate.
As we begin a new year, investors are left with a few key questions: Will the
U.S. economy achieve a soft landing, will the Fed reverse its prior policy and
cut interest rates, and how might these outcomes impact the investment
climate. As you navigate the uncertainties inherent in the financial markets,
we encourage you to start the year by reviewing your investment goals with
your financial professional and making portfolio changes, as needed. For more
reflection on 2006 and our thoughts on the year ahead, please ask your
financial professional for a copy of "What's Ahead in 2007: An Investment
Perspective," or view it online at www.blackrock.com/funds. We thank you for
trusting BlackRock with your investment assets, and we look forward to
continuing to serve you in the new year and beyond.
Sincerely,
(Robert C. Doll, Jr.)
Robert C. Doll, Jr.
President and Director/Trustee
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
A Discussion With Your Fund's Portfolio Managers
The Fund outperformed its benchmark and comparable Lipper category average for
the period, benefiting from our shift toward attractively valued larger-cap
stocks, which led the market off the bottom of a dramatic mid-year correction.
How did the Fund perform during the period in light of the existing market
conditions?
For the six-month period ended December 31, 2006, BlackRock Basic Value Fund,
Inc.'s (formerly Merrill Lynch Basic Value Fund, Inc.) Institutional, Investor
A, Investor B, Investor C and Class R Shares had total returns of +15.86%,
+15.74%, +15.30%, +15.30% and +15.58%, 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 - 8 of this report to
shareholders.) This compared to a return of +12.74% for the Standard & Poor's
500 (S&P 500) Index, +13.40% for the S&P 500 Citigroup Value Index and an
average return of +12.74% for the Lipper Large-Cap Value Funds category for
the same period. (Funds in this Lipper category invest in companies considered
to be undervalued relative to a major unmanaged stock index.)
As the six-month period began, the market was recovering from a far-reaching
correction that sent the average U.S. stock 12% lower. It was the first double-
digit correction for U.S. equity markets in nearly four years. Areas of the
market that had suffered most were those that had done the best in the
preceding few years, particularly materials and energy stocks. The pullback
could be attributed to several factors, but primarily, it appeared that the
lagged effects of higher interest rates and oil prices were finally taking
their toll on the economy and stock prices. In addition, a resurgence of
inflation fears had prompted the Federal Reserve Board (the Fed) to continue
its interest rate tightening campaign through June.
In August, the Fed finally ended its two-year streak of interest rate
increases. Oil prices, after reaching an all-time high near $78 per barrel in
July, also began to recede and ended the year where they started - at $61 per
barrel. Stocks generally climbed back above the levels they reached prior to
the market's retrenchment. Once the bottom was hit, a different collection of
companies started to outperform those that had been the market leaders. From
June to year-end, it was large cap, multinational companies that dominated the
market. As discussed in our last report to shareholders, valuations on these
big names had become incredibly attractive from a risk-reward standpoint,
prompting us to increase our exposure. This move proved advantageous, as many
of our top performers during the six-month period were just those types of
companies: International Business Machines Corp. (with a market capitalization
of $150 billion), Morgan Stanley ($85 billion), Exxon Mobil Corp. ($420
billion), Comcast Corp. ($90 billion), McDonald's Corp. ($55 billion),
Unilever NV ($45 billion) and Time Warner, Inc. ($90 billion).
For the most part, Fund performance during the period was driven by favorable
security selection. However, from a sector perspective, we saw very strong
results in industrials, led by defense company Raytheon Co. and another
safehaven, General Electric Co. Both of these stocks began to perform
particularly well at the end of the year as investors started rotating into
large, stable companies that could offer consistent earnings. Other stocks
that contributed meaningfully to relative performance were Baxter
International, Inc. in health care and Interpublic Group of Cos., Inc. in
consumer discretionary.
For the 12-month period ended December 31, 2006, the Fund's Institutional,
Investor A, Investor B, Investor C and Class R Shares returned +22.65%,
+22.36%, +21.41%, +21.42% and +22.03%, respectively. These results surpassed
the +15.79% return of the S&P 500 Index, the +20.80% return of the S&P 500
Citigroup Value Index and the +17.96% average return of the Lipper Large-Cap
Value Funds category for the same period.
What changes were made to the portfolio during the period?
Reflecting our increased emphasis on large-cap, multinational names, the Fund's
average market cap ended the year near $100 billion, up from approximately
$70 billion at the start of 2006. It has been many years since we have seen
large-capitalization companies look as attractive as they have recently based
on all measures, including price-to-book and price-to-earnings ratios. Of
course, this is not to say that we have abandoned some of the smaller,
cyclically oriented sectors and names that we believe still have tremendous
potential. While the economy has slowed somewhat, it remains reasonably
resilient and should continue to benefit these types of companies. We view the
current economic environment as a "Goldilocks" scenario (not too hot, not too
cold). As such, we believe it makes sense to have representation in the more
stable names that can benefit in a "not too hot" environment as well as the
smaller, high-growth potential companies that can perform well under a "not
too cold" scenario.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
In general, we continued to de-emphasize the energy sector as profit-taking
opportunities became available. We had been overweight in energy from the
middle of 2002 through the summer of 2005, when Hurricane Katrina ravaged the
Gulf Coast. Around that time, we began to move our energy exposure toward
neutral in anticipation of a slowing economy and the resultant fall off in
demand for oil and gas. We continue to see select opportunities in energy, but
as value investors, we believe other areas of the market offer more attractive
valuations and compelling growth prospects.
One such area is health care. During the past year, we added positions in
Johnson & Johnson, Pfizer, Inc., Schering-Plough Corp., Baxter International
and GlaxoSmithKline Plc. Last year was the first since the mid-1990s that we
have been overweight in health care, a reflection of the attractive
fundamentals in this industry group. In prior years, the healthcare industry
has had to grapple with a lack of new blockbuster products to offset drug
patent expirations and government pressures on pharmaceutical pricing, among
other issues. It offered little value compared to other sectors of the market.
This is no longer the case, as valuations are very appealing and company
managements are taking steps to control costs via restructuring and cost-
saving initiatives. In addition, earnings estimates for pharmaceutical
companies are increasing for the first time in a long time.
Another sector we continue to favor is information technology (IT). Earnings
estimates for the first half of 2007 indicate that IT is expected to be the
fastest-growing sector in the S&P 500. Whereas earnings estimates for energy
companies are down for the first half of the year, IT estimates are up double-
digit percentages. We have seen more disinvestment than investment in IT
companies since the post-Y2K bubble. However, with productivity figures and
the economy slowing somewhat for the first time in several years, we think
that spending on technology will increase. Arguably, there is no better avenue
for the advancement of worker productivity than through IT. Other notable
happenings in the IT industry include a new product cycle from Microsoft Corp.
(that is, Vista), as well as some exciting innovations in home entertainment,
including flat panel technology, high-definition TV and PC on TV. In keeping
with our favorable view of the sector, we increased exposure to Intel Corp.,
Motorola, Inc. and Sony Corp. during the six-month period ended December 31,
2006.
How would you characterize the Fund's position at the close of the period?
At period-end, the portfolio was overweight versus the S&P 500 Citigroup Value
Index in energy, consumer staples, information technology, health care and
consumer discretionary. It had underweights in financials, utilities,
industrials, materials and telecommunication services.
The market enjoyed a very healthy end-of-year rally. We believe the Fed's
policy, to date, has struck the proper balance of fending off inflation while
allowing the economic recovery to continue at a healthy pace. A favorable
economic backdrop has led to healthy corporate profits, strong corporate
balance sheets and robust merger-and-acquisition activity. We believe these
factors should remain in place, but are mindful that weakness in the housing
market could lead to a slower rate of growth for the economy in the future.
Against this backdrop, we continue to find that large-capitalization companies
offer a more compelling value proposition as we enter a potentially slower
phase of the economic recovery.
Overall, we do not expect the first half of 2007 to be very different from the
second half of 2006 and will continue to focus on companies with healthy
balance sheets and the ability to use free cash flow to buy back stock, raise
dividends, participate in merger and acquisition activity and invest in their
businesses. We will pursue this within the context of our value-oriented
investment style, choosing companies that we believe have the potential to
offer shareholders significant value over a three-year time horizon.
Kevin M. Rendino
Vice President and Co-Portfolio Manager
Robert J. Martorelli
Vice President and Co-Portfolio Manager
January 11, 2007
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. Class R Shares did not change their designation.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 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. Class R Shares did not change their designation. 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.
* Class R Shares do not incur a maximum sales charge (front-end load) or
deferred sales charge. These shares are subject to a distribution fee of 0.25%
per year and a service fee of 0.25% per year. Class R Shares are available
only to certain retirement plans. Prior to inception, Class R Share
performance results are those of Institutional Shares (which have no
distribution or service fees) restated for Class R Share fees.
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.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Performance Data (continued)
Recent Performance Results
6-Month 12-Month 10-Year
As of December 31, 2006 Total Return Total Return Total Return
Institutional Shares* +15.86% +22.65% +156.15%
Investor A Shares* +15.74 +22.36 +149.88
Investor B Shares* +15.30 +21.41 +134.96
Investor C Shares* +15.30 +21.42 +131.17
Class R Shares* +15.58 +22.03 +144.63
S&P 500 (R) Index** +12.74 +15.79 +124.47
S&P 500 Citigroup Value Index*** +13.40 +20.80 +146.74
* 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.
** This unmanaged Index covers 500 industrial, utility, transportation and financial companies
of the U.S. markets (mostly NYSE issues), representing about 75% of NYSE market capitalization
and 30% of NYSE issues.
*** This unmanaged Index is designed to provide a comprehensive measure of large-cap U.S. equity
"value" performance. It is an unmanaged float adjusted market capitalization weighted index
comprised of stocks representing approximately half the market capitalization of the S&P 500
Index that have been identified as being on the value end of the growth-value spectrum.
S&P 500 is a registered trademark of the McGraw-Hill Companies.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 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*++, Investor C Shares*++
and Class R Shares*++ compared to a similar investment in S&P 500 Index++++
and S&P 500 Citigroup Value Index++++++. Values illustrated are as follows:
Institutional Shares*++
Date Value
December 1996 $10,000.00
December 1997 $12,948.00
December 1998 $14,458.00
December 1999 $16,058.00
December 2000 $16,567.00
December 2001 $16,483.00
December 2002 $13,715.00
December 2003 $18,200.00
December 2004 $20,107.00
December 2005 $20,884.00
December 2006 $25,615.00
Investor A Shares*++
Date Value
December 1996 $ 9,475.00
December 1997 $12,242.00
December 1998 $13,630.00
December 1999 $15,105.00
December 2000 $15,543.00
December 2001 $15,430.00
December 2002 $12,802.00
December 2003 $16,953.00
December 2004 $18,677.00
December 2005 $19,349.00
December 2006 $23,676.00
Investor B Shares*++
Date Value
December 1996 $10,000.00
December 1997 $12,820.00
December 1998 $14,168.00
December 1999 $15,580.00
December 2000 $15,911.00
December 2001 $15,670.00
December 2002 $12,907.00
December 2003 $16,953.00
December 2004 $18,536.00
December 2005 $19,202.00
December 2006 $23,496.00
Investor C Shares*++
Date Value
December 1996 $10,000.00
December 1997 $12,819.00
December 1998 $14,162.00
December 1999 $15,575.00
December 2000 $15,899.00
December 2001 $15,659.00
December 2002 $12,895.00
December 2003 $16,937.00
December 2004 $18,516.00
December 2005 $19,038.00
December 2006 $23,117.00
Class R Share*++
Date Value
December 1996 $10,000.00
December 1997 $12,884.00
December 1998 $14,315.00
December 1999 $15,819.00
December 2000 $16,240.00
December 2001 $16,076.00
December 2002 $13,310.00
December 2003 $17,646.00
December 2004 $19,392.00
December 2005 $20,048.00
December 2006 $24,463.00
S&P 500 Index++++
Date Value
December 1996 $10,000.00
December 1997 $13,336.00
December 1998 $17,148.00
December 1999 $20,756.00
December 2000 $18,866.00
December 2001 $16,624.00
December 2002 $12,950.00
December 2003 $16,664.00
December 2004 $18,478.00
December 2005 $19,385.00
December 2006 $22,447.00
S&P 500 Citigroup Value Index++++++
Date Value
December 1996 $10,000.00
December 1997 $13,187.00
December 1998 $15,680.00
December 1999 $16,445.00
December 2000 $16,361.00
December 2001 $15,023.00
December 2002 $12,530.00
December 2003 $16,334.00
December 2004 $18,789.00
December 2005 $20,426.00
December 2006 $24,674.00
* Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including advisory fees.
++ The Fund invests all of its assets in Master Basic Value Trust. The
Trust invests in securities, primarily equities, that management of the
Fund believes are undervalued and therefore represent basic investment
value.
++++ This unmanaged Index covers 500 industrial, utility, transportation and
financial companies of the U.S. markets (mostly NYSE issues)
representing about 75% of NYSE market capitalization and 30% of NYSE
issues.
++++++ This unmanaged Index is designed to provide a comprehensive measure of
large-cap U.S. equity "value" performance. It is an unmanaged float
adjusted market capitalization weighted index comprised of stocks
representing approximately half the market capitalization of the S&P
500 Index that have been indentified as being on the value end of the
growth-value spectrum.
Past performance is not indicative of future results.
Average Annual Total Return
Return
Institutional Shares
One Year Ended 12/31/06 +22.65%
Five Years Ended 12/31/06 + 9.22
Ten Years Ended 12/31/06 + 9.86
Return Without Return With
Sales Charge Sales Charge*
Investor A Shares
One Year Ended 12/31/06 +22.36% +15.94%
Five Years Ended 12/31/06 + 8.94 + 7.77
Ten Years Ended 12/31/06 + 9.59 + 9.00
Return Return
Without CDSC With CDSC++++++
Investor B Shares++
One Year Ended 12/31/06 +21.41% +16.91%
Five Years Ended 12/31/06 + 8.11 + 7.81
Ten Years Ended 12/31/06 + 8.92 + 8.92
Return Return
Without CDSC With CDSC++++++
Investor C Shares++++
One Year Ended 12/31/06 +21.42% +20.42%
Five Years Ended 12/31/06 + 8.10 + 8.10
Ten Years Ended 12/31/06 + 8.74 + 8.74
Return
Class R Shares
One Year Ended 12/31/06 +22.03%
Five Years Ended 12/31/06 + 8.76
Ten Years Ended 12/31/06 + 9.36
* 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 BASIC VALUE FUND, INC. DECEMBER 31, 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 July 1, 2006 and held
through December 31, 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 July 1, 2006 to
July 1, December 31, December 31,
2006 2006 2006
Actual
Institutional $1,000 $1,158.60 $2.91
Investor A $1,000 $1,157.40 $4.25
Investor B $1,000 $1,153.00 $8.37
Investor C $1,000 $1,153.00 $8.37
Class R $1,000 $1,155.80 $5.59
Hypothetical (5% annual return before expenses)**
Institutional $1,000 $1,022.21 $2.72
Investor A $1,000 $1,020.96 $3.98
Investor B $1,000 $1,017.12 $7.85
Investor C $1,000 $1,017.12 $7.85
Class R $1,000 $1,019.71 $5.24
* For each class of the Fund, expenses are equal to the expense ratio for the class (0.54% for Institutional,
0.79% for Investor A, 1.56% for Investor B, 1.56% for Investor C and 1.04% for Class R), multiplied by
the average account value over the period, multiplied by 182/365 (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 BASIC VALUE FUND, INC. DECEMBER 31, 2006
Statement of Assets and Liabilities BlackRock Basic Value Fund, Inc.
As of December 31, 2006
Assets
Investment in Master Basic Value Trust (the "Trust"), at value
(identified cost--$5,175,238,048) $ 8,229,456,790
Prepaid expenses and other assets 787,329
---------------
Total assets 8,230,244,119
---------------
Liabilities
Payables:
Other affiliates $ 2,196,439
Distributor 1,840,963
Dividends and distributions payable to shareholders 103
---------------
Total liabilities 4,037,505
---------------
Net Assets
Net assets $ 8,226,206,614
===============
Net Assets Consist of
Institutional Shares of Common Stock, $.10 par value, 400,000,000 shares authorized $ 11,862,795
Investor A Shares of Common Stock, $.10 par value, 200,000,000 shares authorized 7,735,355
Investor B Shares of Common Stock, $.10 par value, 400,000,000 shares authorized 2,482,189
Investor C Shares of Common Stock, $.10 par value, 200,000,000 shares authorized 2,710,037
Class R Shares of Common Stock, $.10 par value, 400,000,000 shares authorized 94,686
Paid-in capital in excess of par 5,208,085,658
Undistributed investment income--net $ 2,216,425
Accumulated realized capital losses allocated from the Trust--net (63,199,273)
Unrealized appreciation allocated from the Trust--net 3,054,218,742
---------------
Total undistributed earnings--net 2,993,235,894
---------------
Net Assets $ 8,226,206,614
===============
Net Asset Value
Institutional--Based on net assets of $3,960,644,067 and 118,627,951 shares outstanding $ 33.39
===============
Investor A--Based on net assets of $2,570,246,754 and 77,353,548 shares outstanding $ 33.23
===============
Investor B--Based on net assets of $809,147,914 and 24,821,887 shares outstanding $ 32.60
===============
Investor C--Based on net assets of $855,451,427 and 27,100,372 shares outstanding $ 31.57
===============
Class R--Based on net assets of $30,716,452 and 946,856 shares outstanding $ 32.44
===============
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Statement of Operations BlackRock Basic Value Fund, Inc.
For the Six Months Ended December 31, 2006
Investment Income
Net investment income allocated from the Trust:
Dividends $ 87,179,656
Interest from affiliates 2,668,571
Securities lending--net 442,266
Expenses (16,736,448)
---------------
Total income 73,554,045
---------------
Expenses
Service and distribution fees--Investor B $ 4,088,189
Service and distribution fees--Investor C 3,966,168
Service fees--Investor A 2,967,925
Transfer agent fees--Institutional 2,100,482
Transfer agent fees--Investor A 1,328,698
Transfer agent fees--Investor C 554,793
Transfer agent fees--Investor B 545,786
Printing and shareholder reports 144,771
Service and distribution fees--Class R 72,611
Registration fees 50,081
Professional fees 46,380
Transfer agent fees--Class R 16,249
Directors' fees and expenses 14,825
Other 19,771
---------------
Total expenses 15,916,729
---------------
Investment income--net 57,637,316
---------------
Realized & Unrealized Gain Allocated from the Trust--Net
Realized gain on investments and options written--net 215,020,572
Change in unrealized appreciation on investments and options written--net 876,593,439
---------------
Total realized and unrealized gain--net 1,091,614,011
---------------
Net Increase in Net Assets Resulting from Operations $ 1,149,251,327
===============
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Statements of Changes in Net Assets BlackRock Basic Value Fund, Inc.
For the Six For the
Months Ended Year Ended
December 31, June 30,
Increase (Decrease) in Net Assets: 2006 2006
Operations
Investment income--net $ 57,637,316 $ 97,016,762
Realized gain--net 215,020,572 749,812,072
Change in unrealized appreciation--net 876,593,439 52,424,461
--------------- ---------------
Net increase in net assets resulting from operations 1,149,251,327 899,253,295
--------------- ---------------
Dividends & Distributions to Shareholders
Investment income--net:
Institutional (62,049,611) (57,968,619)
Investor A (33,952,841) (28,120,646)
Investor B (4,580,897) (4,412,874)
Investor C (5,921,567) (4,018,853)
Class R (358,195) (278,358)
Realized gain--net:
Institutional (415,961,684) (190,415,930)
Investor A (266,158,967) (109,263,240)
Investor B (94,244,225) (57,000,078)
Investor C (93,637,581) (37,857,410)
Class R (3,303,543) (1,272,507)
--------------- ---------------
Net decrease in net assets resulting from dividends and distributions to shareholders (980,169,111) (490,608,515)
--------------- ---------------
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions 484,210,232 (1,052,404,332)
--------------- ---------------
Net Assets
Total increase (decrease) in net assets 653,292,448 (643,759,552)
Beginning of period 7,572,914,166 8,216,673,718
--------------- ---------------
End of period* $ 8,226,206,614 $ 7,572,914,166
=============== ===============
* Undistributed investment income--net $ 2,216,425 $ 51,442,220
=============== ===============
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Financial Highlights BlackRock Basic Value Fund, Inc.
Institutional
For the Six
The following per share data and ratios Months Ended
have been derived from information December 31, For the Year Ended June 30,
provided in the financial statements. 2006 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 32.87 $ 31.19 $ 31.89 $ 25.83 $ 27.14 $ 33.77
----------- ----------- ----------- ----------- ----------- -----------
Investment income--net** .29 .48 .46 .40 .35 .35
Realized and unrealized gain (loss)--net 4.57 3.18 .64 6.06 (.65) (3.53)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 4.86 3.66 1.10 6.46 (.30) (3.18)
----------- ----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.55) (.47) (.43) (.40) (.34) (.40)
Realized gain--net (3.79) (1.51) (1.37) -- (.67) (3.05)
----------- ----------- ----------- ----------- ----------- -----------
Total dividends and distributions (4.34) (1.98) (1.80) (.40) (1.01) (3.45)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 33.39 $ 32.87 $ 31.19 $ 31.89 $ 25.83 $ 27.14
=========== =========== =========== =========== =========== ===========
Total Investment Return
Based on net asset value per share 15.86%+++ 12.18%++++ 3.77% 25.23% (.74%) (10.38%)
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets++
Expenses .54%* .57% .57% .56% .60% .56%
=========== =========== =========== =========== =========== ===========
Investment income--net 1.76%* 1.52% 1.49% 1.36% 1.48% 1.19%
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 3,960,644 $ 3,655,602 $ 3,992,702 $ 4,220,353 $ 3,564,283 $ 3,909,901
=========== =========== =========== =========== =========== ===========
Portfolio turnover of the Trust 11.15% 41.60% 45.10% 33.32% 31.92% 38.15%
=========== =========== =========== =========== =========== ===========
* Annualized.
** Based on average shares outstanding.
++ Includes the Fund's share of the Trust's allocated expenses and/or investment income--net.
++++ For the year ended June 30, 2006, +.10% of the Fund's Institutional Shares' total return
consists of a portion of payments by Fund Asset Management, L.P. to the Trust for compensation
as a result of securities class action entitlement recovery and a result of a corporate action.
Excluding these items, the total return would have been +12.08%.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock Basic Value Fund, Inc.
Investor A
For the Six
The following per share data and ratios Months Ended
have been derived from information December 31, For the Year Ended June 30,
provided in the financial statements. 2006 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 32.69 $ 31.03 $ 31.74 $ 25.72 $ 27.01 $ 33.63
----------- ----------- ----------- ----------- ----------- -----------
Investment income--net*** .25 .40 .38 .33 .29 .27
Realized and unrealized gain (loss)--net 4.55 3.16 .63 6.02 (.63) (3.52)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 4.80 3.56 1.01 6.35 (.34) (3.25)
----------- ----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.47) (.39) (.35) (.33) (.28) (.32)
Realized gain--net (3.79) (1.51) (1.37) -- (.67) (3.05)
----------- ----------- ----------- ----------- ----------- -----------
Total dividends and distributions (4.26) (1.90) (1.72) (.33) (.95) (3.37)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 33.23 $ 32.69 $ 31.03 $ 31.74 $ 25.72 $ 27.01
=========== =========== =========== =========== =========== ===========
Total Investment Return**
Based on net asset value per share 15.74%+++ 11.89%++++ 3.49% 24.90% (.94%) (10.62%)
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets++
Expenses .79%* .82% .82% .81% .85% .81%
=========== =========== =========== =========== =========== ===========
Investment income--net 1.51%* 1.28% 1.24% 1.11% 1.23% .94%
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 2,570,247 $ 2,266,626 $ 2,242,881 $ 2,223,869 $ 1,679,935 $ 1,737,025
=========== =========== =========== =========== =========== ===========
Portfolio turnover of the Trust 11.15% 41.60% 45.10% 33.32% 31.92% 38.15%
=========== =========== =========== =========== =========== ===========
* Annualized.
** Total investment returns exclude the effect of sales charges.
*** Based on average shares outstanding.
++ Includes the Fund's share of the Trust's allocated expenses and/or investment income--net.
++++ For the year ended June 30, 2006, +.10% of the Fund's Investor A Shares' total return
consists of a portion of payments by Fund Asset Management, L.P. to the Trust for compensation
as a result of securities class action entitlement recovery and a result of a corporate action.
Excluding these items, the total return would have been +11.79%.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock Basic Value Fund, Inc.
Investor B
For the Six
The following per share data and ratios Months Ended
have been derived from information December 31, For the Year Ended June 30,
provided in the financial statements. 2006 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 32.00 $ 30.39 $ 31.08 $ 25.19 $ 26.44 $ 32.98
----------- ----------- ----------- ----------- ----------- -----------
Investment income--net*** .12 .15 .14 .10 .11 .05
Realized and unrealized gain (loss)--net 4.45 3.09 .62 5.92 (.63) (3.46)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 4.57 3.24 .76 6.02 (.52) (3.41)
----------- ----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.18) (.12) (.08) (.13) (.06) (.08)
Realized gain--net (3.79) (1.51) (1.37) -- (.67) (3.05)
----------- ----------- ----------- ----------- ----------- -----------
Total dividends and distributions (3.97) (1.63) (1.45) (.13) (.73) (3.13)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 32.60 $ 32.00 $ 30.39 $ 31.08 $ 25.19 $ 26.44
=========== =========== =========== =========== =========== ===========
Total Investment Return**
Based on net asset value per share 15.30%+++ 11.01%++++ 2.72% 23.95% (1.72%) (11.33%)
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets++
Expenses 1.56%* 1.59% 1.59% 1.58% 1.63% 1.58%
=========== =========== =========== =========== =========== ===========
Investment income--net .75%* .50% .47% .35% .45% .17%
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 809,148 $ 860,121 $ 1,212,392 $ 1,594,286 $ 1,626,835 $ 2,099,660
=========== =========== =========== =========== =========== ===========
Portfolio turnover of the Trust 11.15% 41.60% 45.10% 33.32% 31.92% 38.15%
=========== =========== =========== =========== =========== ===========
* Annualized.
** Total investment returns exclude the effect of sales charges.
*** Based on average shares outstanding.
++ Includes the Fund's share of the Trust's allocated expenses and/or investment income--net.
++++ For the year ended June 30, 2006, +.10% of the Fund's Investor B Shares' total return
consists of a portion of payments by Fund Asset Management, L.P. to the Trust for compensation
as a result of securities class action entitlement recovery and a result of a corporate action.
Excluding these items, the total return would have been +10.91%.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock Basic Value Fund, Inc.
Investor C
For the Six
The following per share data and ratios Months Ended
have been derived from information December 31, For the Year Ended June 30,
provided in the financial statements. 2006 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 31.15 $ 29.66 $ 30.42 $ 24.68 $ 25.96 $ 32.47
----------- ----------- ----------- ----------- ----------- -----------
Investment income--net*** .12 .15 .14 .09 .10 .05
Realized and unrealized gain (loss)--net 4.32 3.01 .61 5.79 (.62) (3.39)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 4.44 3.16 .75 5.88 (.52) (3.34)
----------- ----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.23) (.16) (.14) (.14) (.09) (.12)
Realized gain--net (3.79) (1.51) (1.37) -- (.67) (3.05)
----------- ----------- ----------- ----------- ----------- -----------
Total dividends and distributions (4.02) (1.67) (1.51) (.14) (.76) (3.17)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 31.57 $ 31.15 $ 29.66 $ 30.42 $ 24.68 $ 25.96
=========== =========== =========== =========== =========== ===========
Total Investment Return**
Based on net asset value per share 15.30%+++ 11.02%++++ 2.70% 23.93% (1.75%) (11.30%)
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets++
Expenses 1.56%* 1.59% 1.59% 1.59% 1.64% 1.59%
=========== =========== =========== =========== =========== ===========
Investment income--net .74%* .50% .46% .33% .45% .16%
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 855,451 $ 763,451 $ 743,882 $ 679,667 $ 502,623 $ 541,921
=========== =========== =========== =========== =========== ===========
Portfolio turnover of the Trust 11.15% 41.60% 45.10% 33.32% 31.92% 38.15%
=========== =========== =========== =========== =========== ===========
* Annualized.
** Total investment returns exclude the effect of sales charges.
*** Based on average shares outstanding.
++ Includes the Fund's share of the Trust's allocated expenses and/or investment income--net.
++++ For the year ended June 30, 2006, +.10% of the Fund's Investor C Shares' total return
consists of a portion of payments by Fund Asset Management, L.P. to the Trust for compensation
as a result of securities class action entitlement recovery and a result of a corporate action.
Excluding these items, the total return would have been +10.92%.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Financial Highlights (concluded) BlackRock Basic Value Fund, Inc.
<CAPTTON
Class R
For the Six For the Period
The following per share data and ratios Months Ended For the Year Ended January 3, 2003++
have been derived from information December 31, June 30, to June 30,
provided in the financial statements. 2006 2006 2005 2004 2003
Per Share Operating Performance
Net asset value, beginning of period $ 31.98 $ 30.41 $ 31.17 $ 25.36 $ 23.65
----------- ------------ ----------- ----------- -----------
Investment income--net** .20 .32 .30 .25 .21
Realized and unrealized gain--net 4.44 3.08 .63 5.93 1.50
----------- ------------ ----------- ----------- -----------
Total from investment operations 4.64 3.40 .93 6.18 1.71
----------- ------------ ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.39) (.32) (.32) (.37) --
Realized gain--net (3.79) (1.51) (1.37) -- --
----------- ------------ ----------- ----------- -----------
Total dividends and distributions (4.18) (1.83) (1.69) (.37) --
----------- ------------ ----------- ----------- -----------
Net asset value, end of period $ 32.44 $ 31.98 $ 30.41 $ 31.17 $ 25.36
=========== ============ =========== =========== ===========
Total Investment Return
Based on net asset value per share 15.58%+++ 11.59%++++++ 3.28% 24.58% 7.23%+++
=========== ============ =========== =========== ===========
Ratios to Average Net Assets++++
Expenses 1.04%* 1.07% 1.07% 1.07% 1.10%*
=========== ============ =========== =========== ===========
Investment income--net 1.27%* 1.02% .98% .80% 1.09%*
=========== ============ =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 30,716 $ 27,114 $ 24,817 $ 13,821 $ 1
=========== ============ =========== =========== ===========
Portfolio turnover of the Trust 11.15% 41.60% 45.10% 33.32% 31.92%
=========== ============ =========== =========== ===========
* Annualized.
** Based on average shares outstanding.
++ Commencement of operations.
++++ Includes the Fund's share of the Trust's allocated expenses and/or investment income--net.
++++++ For the year ended June 30, 2006, +.10% of the Fund's Class R Shares' total return
consists of a portion of payments by Fund Asset Management, L.P. to the Trust for compensation
as a result of securities class action entitlement recovery and a result of a corporate action.
Excluding these items, the total return would have been +11.49%.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements BlackRock Basic Value Fund, Inc.
1. Significant Accounting Policies:
On September 29, 2006, Merrill Lynch Basic Value Fund, Inc. was renamed
BlackRock Basic Value Fund, Inc. (the "Fund").The Fund is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund seeks to achieve its investment
objective by investing all of its assets in Master Basic Value 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. These unaudited financial statements reflect all
adjustments, which are, in the opinion of management, necessary to present a
fair statement of the results for the interim period. All such adjustments are
of a normal, recurring nature. The percentage of the Trust owned by the Fund
at December 31, 2006 was 99.9%. 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. Class R Shares did not change their designation. Institutional
Shares are sold without a sales charge and 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. Class R
Shares are sold to certain retirement plans. All classes of shares have
identical voting, dividend, liquidation and other rights and the same terms
and conditions, except that Investor A, Investor B, Investor C and Class R
Shares bear certain expenses related to the account maintenance of such
shares, and Investor B, Investor C and Class R 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 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 the last net asset value calculation in the first required
financial statement reporting period 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.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements (continued) BlackRock Basic Value Fund, Inc.
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, including Fund Asset
Management ("FAM"), 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 15, 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, FAM was the Investment Adviser. The general partner of FAM
is Princeton Services, Inc. ("PSI"), an indirect, wholly owned subsidiary of
Merrill Lynch, which is the limited partner.
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 account maintenance ("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%
Class R .25% .25%
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, Investor C
and Class R shareholders. The on-going distribution fee compensates the
Distributors and the broker-dealers for providing shareholder servicing and
distribution-related services to Investor B, Investor C and Class R
shareholders.
For the six months ended December 31, 2006, FAMD, the Fund's sole Distributor
until September 29, 2006, and BDI earned underwriting discounts and direct
commissions and MLPF&S earned dealer concessions on sales of the Fund's
Institutional and Investor A Shares as follows:
FAMD MLPF&S BDI
Institutional $ 3,679 $ 3,679 --
Investor A $ 33,174 $ 416,539 $496
For the six months ended December 31, 2006, MLPF&S received contingent
deferred sales charges of $92,167 and $13,908 relating to transactions in
Investor B and Investor C Shares, respectively. In addition, BDI received
contingent deferred sales charges of $198 and $748 relating to transactions in
Investor B and Investor C Shares, respectively. Furthermore, MLPF&S received
contingent deferred sales charges of $2,560, 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 December 31, 2006, the following amounts had been
accrued by the Fund to reimburse BlackRock for costs incurred running the call
center, which are a component of the transfer agent fees in the accompanying
Statements of Operations.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements (continued) BlackRock Basic Value Fund, Inc.
Call Center
Fees
Institutional $12,345
Investor A $14,422
Investor B $ 5,963
Investor C $ 3,048
Class R $ 101
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 directors of the Fund
were officers and/or directors of FAM, MLIM, PSI, FAMD, FDS, Merrill Lynch,
and/or Merrill Lynch Investment Managers, LLC.
Commencing September 29, 2006, certain officers and/or directors of the Fund
are officers and/or directors of BlackRock, Inc. or its affiliates.
3. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share transactions
was $484,210,232 and ($1,052,404,332)for the six months ended December 31,
2006 and for the year ended June 30, 2006, respectively.
Transactions in capital shares for each class were as follows:
Institutional Shares for the
Six Months Ended Dollar
December 31, 2006 Shares Amount
Shares sold 7,643,297 $ 252,492,743
Shares issued to shareholders in
reinvestment of dividends and
distributions 13,916,701 440,229,157
-------------- ---------------
Total issued 21,559,998 692,721,900
Shares redeemed (14,156,832) (469,994,700)
-------------- ---------------
Net increase 7,403,166 $ 222,727,200
============== ===============
Institutional Shares for the Year Dollar
Ended June 30, 2006 Shares Amount
Shares sold 12,162,295 $ 388,148,242
Shares issued to shareholders in
reinvestment of dividends and
distributions 7,232,379 224,517,087
-------------- ---------------
Total issued 19,394,674 612,665,329
Shares redeemed (36,187,671) (1,148,235,609)
-------------- ---------------
Net decrease (16,792,997) $ (535,570,280)
============== ===============
Investor A Shares for the
Six Months Ended Dollar
December 31, 2006 Shares Amount
Shares sold 5,327,641 $ 174,155,309
Automatic conversion of shares 1,143,664 37,938,790
Shares issued to shareholders in
reinvestment of dividends and
distributions 8,533,443 268,546,642
-------------- ---------------
Total issued 15,004,748 480,640,741
Shares redeemed (6,982,804) (229,362,676)
-------------- ---------------
Net increase 8,021,944 $ 251,278,065
============== ===============
Investor A Shares for the Year Dollar
Ended June 30, 2006 Shares Amount
Shares sold 5,904,314 $ 186,825,298
Automatic conversion of shares 6,772,815 214,204,975
Shares issued to shareholders in
reinvestment of dividends and
distributions 3,956,309 122,304,905
-------------- ---------------
Total issued 16,633,438 523,335,178
Shares redeemed (19,576,052) (618,742,750)
-------------- ---------------
Net decrease (2,942,614) $ (95,407,572)
============== ===============
Investor B Shares for the
Six Months Ended Dollar
December 31, 2006 Shares Amount
Shares sold 1,248,956 $ 40,130,878
Shares issued to shareholders in
reinvestment of dividends and
distributions 2,913,538 89,696,602
-------------- ---------------
Total issued 4,162,494 129,827,480
-------------- ---------------
Automatic conversion of shares (1,169,338) (37,938,790)
Shares redeemed (5,047,862) (161,565,506)
-------------- ---------------
Total redeemed (6,217,200) (199,504,296)
============== ===============
Net decrease (2,054,706) $ (69,676,816)
============== ===============
Investor B Shares for the Year Dollar
Ended June 30, 2006 Shares Amount
Shares sold 2,714,708 $ 84,109,870
Shares issued to shareholders in
reinvestment of dividends and
distributions 1,817,155 55,133,538
-------------- ---------------
Total issued 4,531,863 139,243,408
-------------- ---------------
Automatic conversion of shares (6,907,670) (214,204,975)
Shares redeemed (10,645,064) (329,435,474)
-------------- ---------------
Total redeemed (17,552,734) (543,640,449)
============== ===============
Net decrease (13,020,871) $ (404,397,041)
============== ===============
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements (concluded) BlackRock Basic Value Fund, Inc.
Investor C Shares for the
Six Months Ended Dollar
December 31, 2006 Shares Amount
Shares sold 1,855,470 $ 57,975,545
Shares issued to shareholders in
reinvestment of dividends and
distributions 3,037,555 90,742,343
-------------- ---------------
Total issued 4,893,025 148,717,888
Shares redeemed (2,299,161) (71,825,957)
-------------- ---------------
Net increase 2,593,864 $ 76,891,931
============== ===============
Investor C Shares for the Year Dollar
Ended June 30, 2006 Shares Amount
Shares sold 4,570,295 $ 138,125,124
Shares issued to shareholders in
reinvestment of dividends and
distributions 1,267,545 37,460,641
-------------- ---------------
Total issued 5,837,840 175,585,765
Shares redeemed (6,410,804) (193,530,696)
-------------- ---------------
Net decrease (572,964) $ (17,944,931)
============== ===============
Class R Shares for the
Six Months Ended Dollar
December 31, 2006 Shares Amount
Shares sold 146,214 $ 4,666,083
Shares issued to shareholders in
reinvestment of dividends and
distributions 119,009 3,657,227
-------------- ---------------
Total issued 265,223 8,323,310
Shares redeemed (166,178) (5,333,458)
-------------- ---------------
Net increase 99,045 $ 2,989,852
============== ===============
Class R Shares for the Year Dollar
Ended June 30, 2006 Shares Amount
Shares sold 327,779 $ 10,136,303
Shares issued to shareholders in
reinvestment of dividends and
distributions 51,206 1,550,612
-------------- ---------------
Total issued 378,985 11,686,915
Shares redeemed (347,382) (10,771,423)
-------------- ---------------
Net increase 31,603 $ 915,492
============== ===============
Portfolio Information Master Basic Value Trust
As of December 31, 2006
Percent of
Ten Largest Common Stock Holdings Net Assets
Exxon Mobil Corp. 4.9%
JPMorgan Chase & Co. 3.6
International Business Machines Corp. 3.3
Citigroup, Inc. 2.9
Wells Fargo & Co. 2.8
American International Group, Inc. 2.8
Morgan Stanley 2.6
Tyco Internaional Ltd. 2.5
The St. Paul Travelers Cos., Inc. 2.4
Time Warner, Inc. 2.4
Percent of
Total
Investment Criteria Investments
Above-Average Yield 28.6%
Below-Average Price/Earnings Ratio 26.9
Low Price-to-Book Value 25.0
Special Situations 5.8
Price-to-Cash Flow 1.4
Low Price-to-Earnings Per Share 0.9
Other* 11.4
* Includes portfolio holdings in short-term investments
and options.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Schedule of Investments as of December 31, 2006 Master Basic Value Trust
Percent of
Industry Shares Held Common Stocks Value Net Assets
Above-Average Yield
Diversified Telecommunication 3,524,700 AT&T, Inc. (d) $ 126,008,025 1.5%
Services
Metals & Mining 4,508,000 Alcoa, Inc. (d) 135,285,080 1.6
Capital Markets 4,595,900 The Bank of New York Co., Inc. 180,940,583 2.2
Diversified Telecommunication 2,708,300 BellSouth Corp. 127,588,013 1.6
Services
Oil, Gas & Consumable Fuels 1,712,900 Chevron Corp. (d) 125,949,537 1.5
Multi-Utilities 786,700 Dominion Resources, Inc. (d) 65,956,928 0.8
Chemicals 2,890,300 E.I. du Pont de Nemours & Co. (d) 140,786,513 1.7
Oil, Gas & Consumable Fuels 5,288,300 Exxon Mobil Corp. (d) 405,242,429 4.9
Industrial Conglomerates 4,544,800 General Electric Co. (d) 169,112,008 2.1
Food Products 2,847,600 General Mills, Inc. 164,021,760 2.0
Pharmaceuticals 2,311,700 GlaxoSmithKline Plc (b) 121,965,292 1.5
Aerospace & Defense 2,605,100 Honeywell International, Inc. 117,854,724 1.4
Diversified Financial 6,200,892 JPMorgan Chase & Co. 299,503,084 3.6
Services
Pharmaceuticals 1,486,600 Johnson & Johnson 98,145,332 1.2
Pharmaceuticals 6,519,500 Pfizer, Inc. 168,855,050 2.1
Electric Utilities 2,126,900 The Southern Co. (d) 78,397,534 1.0
Diversified Telecommunication 3,513,600 Verizon Communications, Inc. 130,846,464 1.6
Services
Pharmaceuticals 168,400 Wyeth 8,574,928 0.1
---------------- ------
2,665,033,284 32.4
Below-Average Price/
Earnings Ratio
Insurance 1,381,100 The Allstate Corp. (d) 89,923,421 1.1
Insurance 3,212,100 American International Group, Inc. 230,179,086 2.8
Diversified Financial Services 3,120,300 Bank of America Corp. 166,592,817 2.0
Health Care Equipment & Supplies 3,898,600 Baxter International, Inc. 180,856,054 2.2
Food Products 396,300 Cadbury Schweppes Plc (b) 17,013,159 0.2
Diversified Financial Services 4,346,600 Citigroup, Inc. 242,105,620 2.9
Beverages 5,085,100 Coca-Cola Enterprises, Inc. (d) 103,837,742 1.3
Oil, Gas & Consumable Fuels 497,300 Consol Energy, Inc. 15,978,249 0.2
Oil, Gas & Consumable Fuels 489,800 Devon Energy Corp. 32,855,784 0.4
Media 1,011,200 Gannett Co., Inc. (d) 61,137,152 0.7
Insurance 1,745,600 Genworth Financial, Inc. Class A (d) 59,716,976 0.7
Computers & Peripherals 2,632,800 Hewlett-Packard Co. 108,445,032 1.3
Media 224,720 Idearc Inc. (a) 6,438,228 0.1
Semiconductors & Semiconductor 3,931,000 Intel Corp. (d) 79,602,750 1.0
Equipment
Household Durables 2,649,400 Koninklijke Philips Electronics NV 99,564,452 1.2
Food Products 1,554,200 Kraft Foods, Inc. (d) 55,484,940 0.7
Hotels, Restaurants & Leisure 1,706,800 McDonald's Corp. 75,662,444 0.9
Capital Markets 2,634,300 Morgan Stanley 214,511,049 2.6
Aerospace & Defense 2,148,400 Northrop Grumman Corp. 145,446,680 1.8
Pharmaceuticals 5,181,500 Schering-Plough Corp. 122,490,660 1.5
Food Products 5,790,200 Unilever NV (b) 157,782,950 1.9
IT Services 16,067,875 Unisys Corp. (a) 125,972,140 1.5
Office Electronics 6,609,900 Xerox Corp. (a)(d) 112,037,805 1.4
---------------- ------
2,503,635,190 30.4
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Schedule of Investments (continued) Master Basic Value Trust
Percent of
Industry Shares Held Common Stocks Value Net Assets
Low Price-to-Book Value
Media 3,446,300 Comcast Corp. Special Class A (a)(d) $ 144,331,044 1.8%
Machinery 901,100 Deere & Co. (d) 85,667,577 1.0
Semiconductors & Semiconductor 5,463,300 Fairchild Semiconductor International,
Equipment Inc. (a) 91,838,073 1.1
Energy Equipment & Services 2,584,400 GlobalSantaFe Corp. (d) 151,911,032 1.9
Energy Equipment & Services 1,813,600 Halliburton Co. (d) 56,312,280 0.7
Insurance 1,362,500 Hartford Financial Services Group,
Inc. (d) 127,134,875 1.5
Household Products 2,472,700 Kimberly-Clark Corp. 168,019,965 2.0
Semiconductors & Semiconductor 11,757,515 LSI Logic Corp. (a)(d) 105,817,635 1.3
Equipment
Insurance 2,075,700 Marsh & McLennan Cos., Inc. 63,640,962 0.8
Communications Equipment 3,216,900 Motorola, Inc. 66,139,464 0.8
Aerospace & Defense 3,471,500 Raytheon Co. 183,295,200 2.2
Household Durables 1,438,500 Sony Corp. (b) 61,610,955 0.8
Insurance 3,620,076 The St. Paul Travelers Cos., Inc. 194,361,880 2.4
Computers & Peripherals 16,983,800 Sun Microsystems, Inc. (a)(d) 92,052,196 1.1
Media 8,872,700 Time Warner, Inc. (d) 193,247,406 2.4
Industrial Conglomerates 6,796,300 Tyco International Ltd. 206,607,520 2.5
Media 3,217,300 Walt Disney Co. (d) 110,256,871 1.3
Commercial Banks 6,511,600 Wells Fargo & Co. (d) 231,552,496 2.8
---------------- ------
2,333,797,431 28.4
Low Price-to-Earnings
Per Share
Insurance 1,186,300 XL Capital Ltd. Class A (d) 85,437,326 1.0
Price-to-Cash Flow
Food & Staples Retailing 1,440,300 The Kroger Co. 33,227,721 0.4
Communications Equipment 368,700 Nortel Networks Corp. (a) 9,855,351 0.1
Oil, Gas & Consumable Fuels 999,900 Peabody Energy Corp. 40,405,959 0.5
Wireless Telecommunication 2,612,000 Sprint Nextel Corp. (d) 49,340,680 0.6
Services
---------------- ------
132,829,711 1.6
Special Situations
Semiconductors & Semiconductor 1,475,900 Applied Materials, Inc. 27,230,355 0.3
Equipment
Energy Equipment & Services 1,706,800 BJ Services Co. (d) 50,043,376 0.6
Specialty Retail 4,015,000 The Gap, Inc. (d) 78,292,500 0.9
Computers & Peripherals 2,779,800 International Business Machines Corp. 270,057,570 3.3
Media 9,225,400 Interpublic Group of Cos., Inc. (a)(d) 112,918,896 1.4
---------------- ------
538,542,697 6.5
Total Common Stocks
(Cost--$5,198,095,634) 8,259,275,639 100.3
Beneficial Interest Short-Term Securities
$ 51,818,871 BlackRock Liquidity Series, LLC
Cash Sweep Series, 5.26% (c)(e) 51,818,871 0.6
1,019,033,650 BlackRock Liquidity Series, LLC
Money Market Series, 5.29% (c)(e)(f) 1,019,033,650 12.4
Total Short-Term Securities
(Cost--$1,070,852,521) 1,070,852,521 13.0
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Schedule of Investments (concluded) Master Basic Value Trust
Number of Percent of
Contracts Options Purchased Value Net Assets
Put Options Purchased 9,800 Baxter International, Inc., expiring
January 2007 at USD 45 $ 294,000 0.0%
2,000 Deere & Co., expiring March 2007
at USD 85 200,000 0.0
10,800 The Gap, Inc., expiring January 2007
at USD 20 972,000 0.0
4,000 International Business Machines Corp.,
expiring January 2007 at USD 85 20,000 0.0
Total Options Purchased
(Premiums Paid--$3,674,697) 1,486,000 0.0
Total Investments
(Cost--$6,272,622,852) 9,331,614,160 113.3
Options Written
Call Options Written 9,800 Baxter International, Inc., expiring
May 2007 at USD 50 (1,087,800) 0.0
15,064 Comcast Corp. Special Class A, expiring
January 2007 at USD 40 (3,419,528) (0.1)
2,000 Deere & Co., expiring June 2007 at
USD 95 (1,520,000) 0.0
10,800 The Gap, Inc., expiring March 2007 at
USD 22.5 (324,000) 0.0
4,500 Hartford Financial Services Group, Inc.,
expiring March 2007 at USD 95 (1,102,500) 0.0
4,000 International Business Machines Corp.,
expiring January 2007 at USD 90 (3,080,000) 0.0
3,090 Northrop Grumman Corp., expiring
February 2007 at USD 70 (247,200) 0.0
20,000 Wells Fargo & Co., expiring January
2007 at USD 35 (1,818,000) 0.0
Total Options Written
(Premiums Received--$10,965,482) (12,599,028) (0.1)
Total Investments, Net of Options Written (Cost--$6,261,657,370*) 9,319,015,132 113.2
Liabilities in Excess of Other Assets (1,085,408,666) (13.2)
---------------- ------
Net Assets $ 8,233,606,466 100.0%
================ ======
* The cost and unrealized appreciation (depreciation) of investments,
net of options written, as of December 31, 2006, as computed for
federal income tax purposes, were as follows:
Aggregate cost $ 6,287,033,894
=================
Gross unrealized appreciation $ 3,060,931,119
Gross unrealized depreciation (28,949,881)
-----------------
Net unrealized appreciation $ 3,031,981,238
=================
(a) Non-income producing security.
(b) Depositary receipts.
(c) 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 $51,818,871 $2,670,129
BlackRock Liquidity Series, LLC
Money Market Series $36,471,050 $ 442,532
(d) Security, or a portion of security, is on loan.
(e) Represents the current yield as of December 31, 2006.
(f) Security was purchased with the cash proceeds from securities loans.
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.
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Statement of Assets and Liabilities Master Basic Value Trust
As of December 31, 2006
Assets
Investments in unaffiliated securities, at value (including securities
loaned of $984,527,823) (identified cost--$5,198,095,634) $ 8,259,275,639
Investments in affiliated securities, at value (identified cost--$1,070,852,521) 1,070,852,521
Options purchased, at value (premiums paid--$3,674,697) 1,486,000
Cash 327,977
Receivables:
Dividends $ 14,167,064
Securities sold 9,079,834
Contributions 6,896,685
Securities lending 60,154 30,203,737
---------------
Prepaid expenses and other assets 45,247
---------------
Total assets 9,362,191,121
---------------
Liabilities
Collateral on securities loaned, at value 1,019,033,650
Options written, at value (premiums received--$10,965,482) 12,599,028
Payables:
Withdrawals 72,061,538
Securities purchased 21,929,709
Investment adviser 2,651,335
Other affiliates 74,445 96,717,027
---------------
Accrued expenses and other liabilities 234,950
---------------
Total liabilities 1,128,584,655
---------------
Net Assets
Net assets $ 8,233,606,466
===============
Net Assets Consist of
Investors' capital $ 5,176,248,704
Unrealized appreciation--net 3,057,357,762
---------------
Net Assets $ 8,233,606,466
===============
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Statement of Operations Master Basic Value Trust
For the Six Months Ended December 31, 2006
Investment Income
Dividends (net of $563,747 foreign withholding tax) $ 87,232,502
Interest from affiliates 2,670,129
Securities lending--net 442,532
---------------
Total income 90,345,163
---------------
Expenses
Investment advisory fees $ 15,867,719
Accounting services 511,075
Custodian fees 162,375
Professional fees 105,483
Trustees' fees and expenses 22,816
Printing and shareholder reports 1,063
Pricing fees 580
Other 75,497
---------------
Total expenses 16,746,608
---------------
Investment income--net 73,598,555
---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain (loss) on:
Investments--net 215,488,984
Options written--net (333,006) 215,155,978
---------------
Change in unrealized appreciation/depreciation on:
Investments--net 879,729,670
Options written--net (2,629,540) 877,100,130
--------------- ---------------
Total realized and unrealized gain--net 1,092,256,108
---------------
Net Increase in Net Assets Resulting from Operations $ 1,165,854,663
===============
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Statements of Changes in Net Assets Master Basic Value Trust
For the Six For the
Months Ended Year Ended
December 31, June 30,
Increase (Decrease) in Net Assets: 2006 2006
Operations
Investment income--net $ 73,598,555 $ 132,432,086
Realized gain--net 215,155,978 750,790,613
Change in unrealized appreciation/depreciation--net 877,100,130 52,228,027
--------------- ---------------
Net increase in net assets resulting from operations 1,165,854,663 935,450,726
--------------- ---------------
Capital Transactions
Proceeds from contributions 730,065,755 807,530,243
Fair value of withdrawals (1,243,628,615) (2,390,594,118)
--------------- ---------------
Net decrease in net assets derived from capital transactions (513,562,860) (1,583,063,875)
--------------- ---------------
Net Assets
Total increase (decrease) in net assets 652,291,803 (647,613,149)
Beginning of period 7,581,314,663 8,228,927,812
--------------- ---------------
End of period $ 8,233,606,466 $ 7,581,314,663
=============== ===============
See Notes to Financial Statements.
Financial Highlights Master Basic Value Trust
For the Six
The following per share data and ratios Months Ended
have been derived from information December 31, For the Year Ended June 30,
provided in the financial statements. 2006 2006 2005 2004 2003 2002
Total Investment Return
Total investment return 15.93%++ 12.32%** 3.91% 25.38% (.09%) (9.93%)
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses .43%* .43% .43% .43% .43% .42%
=========== =========== =========== =========== =========== ===========
Investment income--net 1.87%* 1.66% 1.63% 1.50% 1.66% 1.33%
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 8,233,606 $ 7,581,315 $ 8,228,928 $ 8,747,240 $ 7,388,495 $ 8,307,176
=========== =========== =========== =========== =========== ===========
Portfolio turnover 11.15% 41.60% 45.10% 33.32% 31.92% 38.15%
=========== =========== =========== =========== =========== ===========
* Annualized.
** For the year ended June 30, 2006, +.10% of the Trust's total return consists of payments
by Fund Asset Management, L.P. for compensation as a result of a securities class action
entitlement recovery and a result of a corporate action. Excluding these items the total
return would have been +12.22%.
++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements Master Basic Value Trust
1. Significant Accounting Policies:
Master Basic Value 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 nontransferable
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. These unaudited financial
statements reflect all adjustments, which are, in the opinion of management,
necessary to present a fair statement of the results for the interim period.
All such adjustments are of a normal, recurring nature. The following is a
summary of significant accounting policies followed by the Trust.
(a) Valuation of investments--Equity securities that are held by the Trust
that 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 over-the-counter ("OTC")
market, 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 market are valued at the last available asked
price. Portfolio securities that are traded both in the OTC market and on a
stock exchange are valued according to the broadest and most representative
market.
Options written are valued at the last sale price in the case of exchange-
traded options or, in the case of options traded in the OTC market, the last
asked price. Options purchased are valued at their last sale price in the case
of exchange-traded options or, in the case of options traded in the OTC
market, the last bid price. Swap agreements are valued based upon quoted fair
valuations received daily by the Trust from a pricing service or counterparty.
Financial futures contracts and options thereon, which are traded on
exchanges, are valued at their last sale price as of the close of such
exchanges. Obligations with remaining maturities of 60 days or less are valued
at amortized cost unless BlackRock Advisors, LLC (the "Manager"), an indirect,
wholly owned subsidiary of BlackRock, Inc. believes that this method no longer
produces fair valuations. Valuation of other short-term investment vehicles is
generally based on 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 use a matrix system for
valuations. The procedures of a pricing service and its valuations are
reviewed by the officers of the Trust under the general supervision of the
Trust's Board of Trustees. Such valuations and procedures will be reviewed
periodically by the Board of Trustees of the Trust.
Generally, trading in foreign securities, as well as U.S. government
securities and money market instruments, 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 are
generally 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 will 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 markets. Losses may arise due to changes in the value of the
contract or if the counterparty does not perform under the contract.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements (continued) Master Basic Value Trust
* 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.
(c) Foreign currency transactions--Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized.
Assets and liabilities denominated in foreign currencies are valued at the
exchange rate at the end of the period. Foreign currency transactions are the
result of settling (realized) or valuing (unrealized) assets or liabilities
expressed in foreign currencies into U.S. dollars. Realized and unrealized
gains or losses on investments include the effects of foreign exchange rates
on investments. The Trust invests in foreign securities, which may involve a
number of risk factors and special considerations not present with investments
in securities of U.S. corporations.
(d) 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. Under the applicable foreign tax law, a withholding tax
may be imposed on interest, dividends and capital gains at various rates. 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.
(e) 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.
(f) 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 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.
(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 the last net asset value calculation in the first required
financial statement reporting period for fiscal years beginning after December
15, 2006. The impact on the Portfolio'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.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements (continued) Master Basic Value Trust
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, including Fund Asset
Management, L.P. ("FAM"), 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 15, 2006, shareholders of the investors of the Trust approved a new
Investment Advisory Agreement with the Manager. 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,
FAM was the Investment Adviser. The general partner of FAM 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 following annual rates: .60% of the Trust's average net
assets not exceeding $100 million; .50% of average daily net assets in excess
of $100 million but not exceeding $200 million; and .40% of average daily net
assets in excess of $200 million.
In addition, the Manager has entered into a Sub-Advisory Agreement with
BlackRock Investment Management, LLC an affiliate of the Manager, under which
the Manager pays the sub-advisor for services it provides a fee that is a
percentage of the management fee paid by the Trust to the Manager.
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. As of
December 31, 2006, the Trust lent securities with a value of $334,287,091 to
MLPF&S or its affiliates. Pursuant to that order, the Trust has retained
BlackRock Investment Management, LLC ("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 Merrill Lynch Investment Managers, LLC ("MLIM, LLC"), an affiliate of FAM,
and MLIM, LLC was the securities lending agent. BIM may, on behalf of the
Fund, invest cash collateral received by the Fund 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. For
the six months ended December 31, 2006, BIM received $192,091 in securities
lending agent fees.
In addition, MLPF&S received $711,453 in commissions on the execution of
portfolio security transactions for the Trust for the six months ended
December 31, 2006.
For the six months ended December 31, 2006, the Trust reimbursed FAM and the
Manager $39,089 and $39,089 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, FAM, 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 of investments, excluding short-term securities, for the
six months ended December 31, 2006 were $872,743,955 and $1,219,388,151,
respectively.
Transactions in call options written for the six months ended December 31,
2006 were as follows:
Number of Premiums
Contracts Received
Outstanding call options written,
beginning of period 20,000 $ 2,439,994
Options written 111,254 15,410,723
Options exercised (12,000) (1,230,441)
Options closed (50,000) (5,654,794)
-------------- ---------------
Outstanding call options written,
end of period 69,254 $ 10,965,482
============== ===============
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements (concluded) Master Basic Value Trust
4. Short-Term Borrowings:
The Trust, along with certain other funds managed by the Manager and its
affiliates (or FAM 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. On November
22, 2006, the credit agreement was renewed for one year under substantially
the same terms. 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 six months ended December 31, 2006.
Disclosure of Investment Advisory Agreement
BlackRock Investment Advisory Agreement--Matters Considered by the Boards
The following disclosure appeared in the June 30, 2006 Annual Report of the
Trust and the Fund and is the discussion referred to in "New BlackRock Sub-
Advisory Agreement - Matters Considered by the Boards" below. The term
"Investment Adviser" as used herein refers to Fund Asset Management, L.P.
Merrill Lynch Basic Value Fund, Inc. is a "feeder" fund that invests all of
its assets in the Master Basic Value Trust, which has the same investment
objectives and strategies as the Fund. All investments are made at the Trust
level.
In connection with the Transaction between Merrill Lynch and BlackRock, the
Board of Trustees of the Trust considered a new investment advisory agreement
between the Trust and BlackRock Advisors, Inc. or its successor ("BlackRock
Advisors"). If the Trust's New Investment Advisory Agreement is approved by
shareholders of the Fund and the Trust's other feeder fund, then that
agreement will become effective upon the closing of the Transaction, which is
expected in the third quarter of 2006.
In addition, in connection with the Transaction, the Board of Directors of the
Fund considered a new investment advisory agreement (together with the new
advisory agreement for the Trust, the "New Investment Advisory Agreements")
between the Fund and BlackRock Advisors. If the Fund's New Investment Advisory
Agreement is approved by shareholders of the Fund, then that agreement will
become effective upon the closing of the Transaction. Under a contractual
arrangement between the Fund and BlackRock Advisors, however, no management/
advisory fee will be charged to the Fund so long as the Fund remains invested
in the Trust.
The Boards discussed the New Investment Advisory Agreements at telephonic and
in-person meetings held during April and May 2006. The Boards, including the
independent directors/trustees, approved the New Investment Advisory
Agreements at meetings held on May 8, 2006.
To assist the Boards in their consideration of the New Investment Advisory
Agreements, 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 directors/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 Agreements. The additional information was provided in
advance of the May 8, 2006 meetings. In addition, the independent directors/
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 the Board meetings, the directors/trustees discussed with Merrill Lynch
management and certain BlackRock representatives the Transaction, its
strategic rationale and BlackRock'sgeneral plans and intentions regarding the
Fund and the Trust. 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 directors/ 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 directors/trustees met in executive sessions with
their counsel to consider the New Investment Advisory Agreements.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Disclosure of Investment Advisory Agreement (continued)
In connection with the Boards' review of the New Investment Advisory
Agreements, Merrill Lynch and/or BlackRock advised the Boards 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 or 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;
* that the Fund will have access to BlackRock's network of third party
brokers, retirement plan platforms and registered investment advisers;
* that in connection with the Transaction, 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 Agreements,
including the fact that the schedule of the Fund's/Trust's total advisory
and administrative fees will not increase by virtue of the New Investment
Advisory Agreements, but will remain the same;
* that in November 2005, each Board performed a full annual review of each
investment advisory agreement currently in effect for the Fund and Trust
(each a "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 directors/trustees
have considered relevant in the exercise of their reasonable judgment; and
* that Merrill Lynch agreed to pay all expenses of the Fund and Trust in
connection with the Boards' consideration of the New Investment Advisory
Agreements and related agreements and all costs of shareholder approval of
the New Investment Advisory Agreements and as a result neither the Fund nor
Trust would bear costs in obtaining shareholder approval of the New
Investment Advisory Agreements.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Certain of these considerations are discussed in more detail below.
In their review of the New Investment Advisory Agreements, the Boards 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 Agreements, the
Boards 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.
In the period prior to the Board meetings to consider renewal of the Current
Investment Advisory Agreements, the Boards had requested and received
materials specifically relating to the Current Investment Advisory Agreements.
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 Agreements 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 their deliberations, the Boards considered information received in
connection with their most recent continuation of the Current Investment
Advisory Agreements, in addition to information provided by BlackRock and
BlackRock Advisors in connection with their evaluation of the terms and
conditions of the New Investment Advisory Agreements. The directors/trustees
did not identify any particular information that was all-important or
controlling, and each director/trustee attributed different weights to the
various factors. The directors/trustees made their determinations separately
in respect of the Fund and the Trust. Each Board, including a majority of the
Board's independent directors/trustees, concluded that the terms of the New
Investment Advisory Agreements 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 Agreements 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 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 attaches 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 under the New Investment Advisory Agreements, 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 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.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Disclosure of Investment Advisory Agreement (continued)
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 directors/
trustees determined that the nature and quality of services to be provided to
the Fund/Trust under the New Investment Advisory Agreements were expected to
be as good or better than that provided under the Current Investment Advisory
Agreements. 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
Agreements.
Costs of Services Provided and Profitability--It was noted that, in
conjunction with the recent review of the Current Investment Advisory
Agreements, the Boards 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 and
administrative service 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 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 Agreements, the Boards considered, among
other things, whether advisory and administrative fees or other expenses would
change as a result of the Transaction. Based on its review of the materials
provided and the fact that each New Investment Advisory Agreement, as well as
a new administrative agreement between the Fund and BlackRock Advisors as
administrator, is substantially similar to its corresponding current 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 BlackRock Advisors 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 and administrative fees or other expenses would change as a
result of the Transaction. Based on the fact that the New Investment Advisory
Agreements and new administrative agreement are substantially similar to the
Current Investment Advisory Agreements and current administrative agreement in
all material respects, including the rates of compensation, each Board
determined that as a result of the Transaction, the Fund's/Trust's total
advisory and administrative fees would be no higher than the fees under the
Current Investment Advisory Agreements and current administrative agreement.
Each Board noted that in conjunction with the Board's most recent deliberations
concerning the Current Investment Advisory Agreements, 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
Agreements, 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
and administrative fees for the Fund/Trust would be no higher than current fee
rates, the proposed management fee structures, including any fee waivers, were
reasonable and that no additional changes were currently necessary.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Fall-Out Benefits--In evaluating the fall-out benefits to be received by
BlackRock Advisors under the New Investment Advisory Agreements, 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 Agreements. 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 Agreements, and
their discussions with management of the Investment Adviser and BlackRock, the
directors/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 directors/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 - 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 the Investment Adviser's
investment goals, the Board attaches more importance over relatively long
periods of time, typically three to five years. Each Board believed the Fund'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 was unable to predict what effect, if any, consummation of the Transaction
would have on the future performance of the Fund.
Conclusion--After the independent directors of the Fund and independent
trustees of the Trust deliberated in executive session, each entire Board,
including the independent directors/trustees, approved the New Investment
Advisory Agreements, concluding that the advisory fee rate was reasonable in
relation to the services provided and that each New Investment Advisory
Agreement was in the best interests of the Fund's/Trust's shareholders. In
approving the New Investment Advisory Agreements, each Board noted that it
anticipated reviewing the continuance of the agreements in advance of the
expiration of the initial two-year period.
Contingent BlackRock Sub-Advisory Agreements--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
Agreements, each Board, including the independent directors/trustees, also
discussed and approved contingent sub-advisory agreements (each a "Contingent
Sub-Advisory Agreement") between the Investment Adviser and BlackRock Advisors
(the "BlackRock Sub-Adviser"). The Contingent Sub-Advisory Agreements are
intended to ensure that the Fund/Trust operate with efficient portfolio
management services until the closing of the Transaction, in the event that
the Boards deem it necessary and in the best interests of the Fund/Trust and
their shareholders that the BlackRock Sub-Adviser assist in managing the
operations of the Fund/Trust during the interim period until the closing of
the Transaction. If shareholders approve the Contingent Sub-Advisory
Agreements, they will take effect only upon recommendation from the Investment
Adviser and upon subsequent approval of the Boards in the period up to the
closing of the Transaction. The effectiveness of the Contingent Sub-Advisory
Agreements, therefore, would be contingent on further Board approval after
shareholders approve them. Pursuant to a 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/Trust expenses as a result of
the Contingent Sub-Advisory Agreements.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 2006
Disclosure of Investment Advisory Agreement (concluded)
In making its approval at the May in-person meeting, the Boards considered the
Contingent Sub-Advisory Agreements in conjunction with the New Investment
Advisory Agreements and reviewed the same information and factors discussed
above. Each Board also considered in conjunction with the Contingent Sub-
Advisory Agreements the necessity of ensuring that the Fund/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
Agreements, the Boards 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 under the
Contingent Sub-Advisory Agreements. 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 Agreements. 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 Fund/Trust to the Investment Adviser.
After the independent directors/trustees deliberated in executive session,
each entire Board, including the independent directors/trustees, approved the
Contingent Sub-Advisory Agreements, concluding that the advisory fees were
reasonable in relation to the services provided and that the Contingent Sub-
Advisory Agreements were in the best interests of shareholders.
Disclosure of Sub-Advisory Agreement
New BlackRock Sub-Advisory Agreement--Matters Considered by the Boards
At an in-person meeting held on August 16 - 17, 2006, the Board of Directors
of the Fund and the Board of Trustees of the Trust, including the independent
directors/trustees, discussed and approved the sub-advisory agreement with
respect to the Trust between BlackRock Advisors, LLC (previously organized as
BlackRock Advisors, Inc.) ("BlackRock Advisors") and its affiliate BlackRock
Investment Management LLC (the "Sub-Adviser") (the "BlackRock Sub-Advisory
Agreement"). The BlackRock Sub-Advisory Agreement 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 BlackRock Sub-Advisory Agreement, the Sub-Adviser receives a
monthly fee from BlackRock Advisors at an annual rate equal to 74% 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 Agreement.
In approving the BlackRock Sub-Advisory Agreement at the August 2006 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 Agreement, the Boards noted the fact that both
BlackRock Advisors and the 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 the BlackRock Sub-Advisory Agreement, the
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 Agreement. Based
on its considerations, each Board concluded that it was a reasonable
allocation of fees for the Sub-Adviser to receive a fee at an annual rate
equal to 74% of the advisory fee paid by the Trust to BlackRock Advisors.
After the independent directors/trustees deliberated in executive session, the
entire Board of the Fund and the entire Board of the Trust, including the
independent directors/trustees, approved the BlackRock Sub-Advisory Agreement,
concluding that the sub-advisory fee was reasonable in relation to the
services provided and that the BlackRock Sub-Advisory Agreement was in the
best interests of Fund shareholders.
BLACKROCK BASIC VALUE FUND, INC. DECEMBER 31, 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 advisor. 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 BASIC VALUE FUND, INC. DECEMBER 31, 2006
BlackRock Funds (concluded)
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 Directors/
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 BASIC VALUE FUND, INC. DECEMBER 31, 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 Capital Appreciation 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 BASIC VALUE FUND, INC. DECEMBER 31, 2006
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this semi-
annual report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - 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 - Not Applicable to this semi-annual report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock Basic Value Fund, Inc. and Master Basic Value Trust
By: /s/ Robert C. Doll, Jr.
-----------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock Basic Value Fund, Inc. and Master Basic Value Trust
Date: February 20, 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 Basic Value Fund, Inc. and Master Basic Value Trust
Date: February 20, 2007
By: /s/ Donald C. Burke
-------------------
Donald C. Burke,
Chief Financial Officer of
BlackRock Basic Value Fund, Inc. and Master Basic Value Trust
Date: February 20, 2007