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 811-04282
Name of Fund: BlackRock Natural Resources 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 Natural Resources 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: 07/31/07
Date of reporting period: 08/01/06 - 01/31/07
Item 1 - Report to Stockholders
ALTERNATIVES BLACKROCK SOLUTIONS EQUITIES
FIXED INCOME LIQUIDITY REAL ESTATE
BlackRock BLACKROCK
Natural Resources Trust
SEMI-ANNUAL REPORT
JANUARY 31, 2007 | (UNAUDITED)
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
BlackRock Natural Resources Trust
Portfolio Information as of January 31, 2007
Percent of
Ten Largest Equity Holdings Net Assets
- --------------------------------------------------------------------------------
EOG Resources, Inc. ......................................... 3.9%
Devon Energy Corp. .......................................... 3.7
Murphy Oil Corp. ............................................ 3.3
Talisman Energy, Inc. ....................................... 2.8
Chevron Corp. ............................................... 2.7
Exxon Mobil Corp. ........................................... 2.6
Apache Corp. ................................................ 2.5
Transocean, Inc. ............................................ 2.4
ConocoPhillips .............................................. 2.3
GlobalSantaFe Corp. ......................................... 2.3
- --------------------------------------------------------------------------------
Percent of
Geographic Allocation Total Investments
- --------------------------------------------------------------------------------
United States ............................................... 67.5%
Canada ...................................................... 22.5
France ...................................................... 2.8
Italy ....................................................... 1.4
China ....................................................... 1.3
Brazil ...................................................... 1.3
Australia ................................................... 1.1
United Kingdom .............................................. 0.8
Hong Kong ................................................... 0.7
Greece ...................................................... 0.3
Cayman Islands .............................................. 0.2
Other* ...................................................... 0.1
- --------------------------------------------------------------------------------
* Includes portfolio holdings in short-term investments.
2 BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007
A Letter to Shareholders
Dear Shareholder
The new year began on a positive note for most financial markets, continuing the
momentum from the fourth quarter of 2006. Returns for the annual and semi-annual
periods ended January 31, 2007 were as follows:
Total Returns as of January 31, 2007 6-month 12-month
===============================================================================================
U.S. equities (Standard & Poor's 500 Index) +13.75% +14.51%
- -----------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) +14.95 +10.44
- -----------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +14.33 +19.84
- -----------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers Aggregate Bond Index) + 3.65 + 4.28
- -----------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 3.06 + 4.29
- -----------------------------------------------------------------------------------------------
High yield bonds (Credit Suisse High Yield Index) + 8.45 +11.76
- -----------------------------------------------------------------------------------------------
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 target rate at 5.25%, where it remained through
period-end. In interrupting its interest rate-hiking campaign, the Fed initially
acknowledged that economic growth was slowing, but maintained a cautionary view
on inflation. Most recently, the central bankers have pointed to a firming in
economic data and moderation in inflation, causing many to believe the Fed will
likely remain on hold for the time being.
Overall, 2006 was a good year for U.S. equities, despite a mid-year correction
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 markets (with the notable
exception of Japan) performed even better, outpacing U.S. stocks for the fifth
consecutive year. European equities and select emerging markets fared
particularly well. This broad equity strength carried into January.
For much of 2006, bond yields moved higher as their prices declined. Prices
began to improve (yields fell) in the summer as the economy showed signs of
weakening and the Fed paused. Notably, the Treasury curve remained inverted for
much of 2006 and into 2007. The 30-year Treasury yield stood at 4.93% at January
31, 2007, while the six-month Treasury offered the highest yield on the curve at
5.16% -- both still below the federal funds rate.
As 2007 began, investors were 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 these and other uncertainties inherent in the financial markets, we
encourage you to review your investment goals with your financial professional
and to make portfolio changes, as needed. For more reflection on 2006 and our 10
predictions for 2007, 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 months
and years ahead.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
Trust President and Trustee
BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007 3
A Discussion With Your Fund's Portfolio Manager
Despite some challenges recently, we retained our focus on North American
natural gas companies and global oil markets, two areas where we believe the
investment case remains compelling.
How did the Trust perform during the period in light of the existing market
conditions?
For the six-month period ended January 31, 2007, BlackRock Natural Resources
Trust's (formerly Merrill Lynch Natural Resources Trust) Institutional, Investor
A, Investor B and Investor C Shares had total returns of --2.39%, --2.51%,
- --2.89% and --2.89%, respectively. (Trust results shown do not reflect sales
charges and would be lower if sales charges were included. Complete performance
information can be found on pages 6 and 7 of this report to shareholders.) For
the same period, the broad market Standard & Poor's 500 (S&P 500) Index returned
+13.75%, while the Trust's comparable Lipper category of Natural Resources Funds
posted an average return of +0.99%. (Funds in this Lipper category invest their
equity assets primarily in natural resources stocks.)
The Trust's underperformance of the broad equity market and its Lipper category
average is attributed to the continuation of the dynamics discussed in our last
report to shareholders. That is, our investments in companies with exposure to
natural gas drilling -- specifically, North American natural gas production and
oil service companies -- underperformed the broader market and the energy
sector. A record warm winter last year left natural gas storage at historically
high levels and raised the risk that storage would reach full capacity prior to
the start of the 2006 -- 2007 winter heating season. A warm start to the current
heating season exacerbated the situation and caused the stocks of companies
leveraged to natural gas production to decline sharply. More than half of the
portfolio had exposure, either directly or indirectly, to this critical North
American natural gas market during the period.
In addition to the challenges faced by oil and gas producers, the Trust's
positions in oil drillers also hindered results. New drill ships and rigs are
being built and are expected to begin operation in 2009, sparking investor fears
that the increased production might translate into depressed prices in the 2009
timeframe. In our view, there is little reason for concern, as the oil companies
have been signing contracts for these new rigs to begin operations starting in
2008, with terms existing for three to five years. It is also worth noting that
while the number of rigs drilling for natural gas has more than doubled since
2003, natural gas production has increased by only a small margin. Under these
circumstances, we believe that any curtailment in drilling activity would result
in reduced supplies, thereby absorbing the current surplus and bringing the
market back into balance. Of course, much of this is contingent on the weather.
Within the S&P 500 Index, energy sector performance was largely driven by strong
results from the large cap integrated oil companies, including Exxon Mobil Corp.
and Marathon Oil Corp. While we own shares of these companies, the Trust is
underweight relative to the benchmark, and this also detracted from relative
performance.
Contributing to Trust results during the period were metals and mining stocks,
including Glamis Gold Ltd., which was acquired by Goldcorp, Inc., HudBay
Minerals, Inc. and Southern Copper Corp.
What changes were made to the portfolio during the period?
As it became clear that natural gas storage would surpass historic levels, we
reduced exposure to natural gas names and shifted our emphasis toward companies
more heavily exposed to oil. This was accomplished through the purchase of Hess
Corp. and Occidental Petroleum Corp. In addition, we shifted investments out of
North American land rigs and into deep-water drilling companies, such as
Transocean, Inc. and Diamond Offshore Drilling, Inc., which we believe should
have a more protected market. These companies have seen rapidly rising prices
for their drilling rigs, with rates for use of their fifth-generation rigs
exceeding $500,000 per day. The valuations for these stocks seem very reasonable
given the companies' ability to sign long-term contracts for their fleets.
Also during the period, we reduced some exposure to Canadian oil and gas
production companies as the Canadian government changed the taxation structure
for investment trusts. The new taxation essentially penalized these companies
while also taking the premium out of many smaller companies that had been
trading well under the assumption that they might be purchased by investment
trusts.
4 BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007
How would you characterize the Trust's position at the close of the period?
At period-end, approximately 88% of the portfolio's net assets was invested in
energy-related companies, with the remaining equity holdings in metals and
mining, utilities, paper and forest products, and chemicals.
We continue to emphasize North American natural gas companies. Despite the warm
weather, we believe the gas markets remain fairly well balanced. Furthermore,
with Canadian production plateauing, we believe normal weather could lead to
more favorable technical conditions in this market.
In the oil markets, another area of emphasis for the Trust, 2007 was expected to
be a year in which production would exceed demand. However, the increased
production was largely due to projects that were deferred from Hurricanes
Katrina and Rita in 2005. Norway already has announced lower production levels
for 2007 and we are seeing a decline in output from Mexico's Cantarell field.
This has brought supplies back to balance with expected demand, leaving the oil
markets exposed to any geopolitical disruptions that could result in shortages.
We continue to believe that oil prices should remain high as demand continues to
increase amid the limits of available world production capacity.
Robert M. Shearer
Vice President and Portfolio Manager
February 15, 2007
- --------------------------------------------------------------------------------
Effective October 2, 2006, the Trust's Class A, Class B, Class C and Class I
Shares were redesignated Investor A, Investor B, Investor C and Institutional
Shares, respectively.
- --------------------------------------------------------------------------------
BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007 5
Performance Data
About Fund Performance
Effective October 2, 2006, the Fund's Class A, Class B, Class C and Class I
Shares were redesignated Investor A, Investor B, Investor C and Institutional
Shares, respectively. As previously communicated to shareholders, new sales
charge schedules came into effect at the same time for certain of these classes.
The Fund has multiple classes of shares:
o 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.
o 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).
o 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.
o Investor C Shares are subject to a distribution fee of 0.75% per year and
a service fee of 0.25% per year. In addition, Investor C Shares are
subject to a 1% contingent deferred sales charge if redeemed within one
year of purchase.
Performance information reflects past performance and does not guarantee future
results. Current performance may be lower or higher than the performance data
quoted. Refer to www.blackrock.com to obtain performance data current to the
most recent month-end. Performance results do not reflect the deduction of taxes
that a shareholder would pay on fund distributions or the redemption of fund
shares. Figures shown in each of the following tables assume reinvestment of all
dividends and capital gain distributions, if any, at net asset value on the
ex-dividend date. Investment return and principal value of shares will fluctuate
so that shares, when redeemed, may be worth more or less than their original
cost. Dividends paid to each class of shares will vary because of the different
levels of service, distribution and transfer agency fees applicable to each
class, which are deducted from the income available to be paid to shareholders.
Recent Performance Results
6-Month 12-Month 10-Year
As of January 31, 2007 Total Return Total Return Total Return
================================================================================
Institutional Shares* - 2.39% - 6.05% +238.91%
- --------------------------------------------------------------------------------
Investor A Shares* - 2.51 - 6.29 +230.58
- --------------------------------------------------------------------------------
Investor B Shares* - 2.89 - 7.00 +210.44
- --------------------------------------------------------------------------------
Investor C Shares* - 2.89 - 7.00 +206.09
- --------------------------------------------------------------------------------
S&P 500(R) Index** +13.75 +14.51 +114.47
- --------------------------------------------------------------------------------
* Investment results shown do not reflect sales charges; results 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 the 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.
S&P 500 is a registered trademark of the McGraw-Hill Companies.
6 BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007
Performance Data (concluded)
BlackRock Natural Resources Trust --Edgar
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Trust's Institutional,
Investor A, Investor B & Investor C Shares compared to growth of an investment
in the S&P 500 Index. Values are from January 1997 to January 2007:
BR Natural BR Natural BR Natural BR Natural
Resources Resources Resources Resources
Trust Trust Trust Trust
Institutional Investor A Investor B Investor C S&P 500
Shares*+ Shares*+ Shares*+ Shares*+ Index++
1/97 $10,000 $ 9,475 $10,000 $10,000 $10,000
1/98 $ 8,643 $ 8,175 $ 8,561 $ 8,564 $12,691
1/99 $ 7,163 $ 6,754 $ 7,017 $ 7,023 $16,814
1/00 $ 9,130 $ 8,588 $ 8,849 $ 8,862 $18,554
1/01 $12,478 $11,708 $11,968 $11,982 $18,387
1/02 $11,514 $10,773 $10,932 $10,944 $15,418
1/03 $11,903 $11,115 $11,189 $11,199 $11,869
1/04 $15,751 $14,666 $14,650 $14,665 $15,972
1/05 $21,515 $19,982 $19,804 $19,825 $16,967
1/06 $36,075 $33,423 $33,126 $32,913 $18,729
1/07 $33,891 $31,322 $31,044 $30,609 $21,447
* Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including advisory fees.
+ The Trust invests primarily in equity securities of domestic and foreign
companies with substantial natural resource assets.
++ This unmanaged Index covers the 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.
Past performance is not indicative of future results.
Average Annual Total Return
Return
================================================================================
Institutional Shares
================================================================================
One Year Ended 1/31/07 - 6.05%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/07 +24.10
- --------------------------------------------------------------------------------
Ten Years Ended 1/31/07 +12.98
- --------------------------------------------------------------------------------
Return Without Return With
Sales Charge Sales Charge*
================================================================================
Investor A Shares
================================================================================
One Year Ended 1/31/07 - 6.29% -11.21%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/07 +23.80 +22.47
- --------------------------------------------------------------------------------
Ten Years Ended 1/31/07 +12.70 +12.09
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC+++
================================================================================
Investor B Shares+
================================================================================
One Year Ended 1/31/07 - 7.00% -10.95%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/07 +22.84 +22.66
- --------------------------------------------------------------------------------
Ten Years Ended1/31/07 +11.99 +11.99
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC+++
================================================================================
Investor C Shares++
================================================================================
One Year Ended 1/31/07 - 7.00% - 7.88%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/07 +22.84 +22.84
- --------------------------------------------------------------------------------
Ten Years Ended 1/31/07 +11.84 +11.84
- --------------------------------------------------------------------------------
* 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 NATURAL RESOURCES TRUST JANUARY 31, 2007 7
Disclosure of Expenses
Shareholders of this Trust 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 Trust expenses. The following example (which is based on a
hypothetical investment of $1,000 invested on August 1, 2006 and held through
January 31, 2007) is intended to assist shareholders both in calculating
expenses based on an investment in the Trust 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 Trust'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 Trust 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 August 1, 2006 to
August 1, 2006 January 31, 2007 January 31, 2007
==========================================================================================================
Actual
==========================================================================================================
Institutional $1,000 $ 976.10 $4.13
- ----------------------------------------------------------------------------------------------------------
Investor A $1,000 $ 974.90 $5.38
- ----------------------------------------------------------------------------------------------------------
Investor B $1,000 $ 971.10 $9.14
- ----------------------------------------------------------------------------------------------------------
Investor C $1,000 $ 971.10 $9.14
==========================================================================================================
Hypothetical (5% annual return before expenses)**
==========================================================================================================
Institutional $1,000 $1,021.02 $4.23
- ----------------------------------------------------------------------------------------------------------
Investor A $1,000 $1,019.76 $5.50
- ----------------------------------------------------------------------------------------------------------
Investor B $1,000 $1,015.92 $9.35
- ----------------------------------------------------------------------------------------------------------
Investor C $1,000 $1,015.92 $9.35
- ----------------------------------------------------------------------------------------------------------
* For each class of shares of the Trust, expenses are equal to the
annualized expense ratio for the class (.83% for Institutional, 1.08% for
Investor A, 1.84% for Investor B and 1.84% for Investor C), multiplied by
the average account value over the period, multiplied by 184/365 (to
reflect the one-half year period shown).
** 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.
8 BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007
Schedule of Investments as of January 31, 2007 (Unaudited) (in U.S. dollars)
Shares
Industry Common Stocks Held Value
===============================================================================
Australia -- 1.1%
Metals & Mining -- 1.1%
Alumina Ltd. 153,800 $ 779,759
BHP Billiton Ltd. 60,500 1,239,131
Newcrest Mining Ltd. 120,000 1,969,273
-------------------------------------------------------------------
Total Common Stocks in Australia 3,988,163
===============================================================================
Brazil -- 1.3%
Metals & Mining -- 0.8%
Companhia Vale do Rio Doce
(Common Shares) (a) 87,000 2,951,910
-------------------------------------------------------------------
Paper & Forest Products -- 0.5%
Votorantim Celulose e Papel SA 100,000 1,805,000
-------------------------------------------------------------------
Total Common Stocks in Brazil 4,756,910
===============================================================================
Canada -- 22.5%
Canadian Independents -- 16.6%
Bear Ridge Resources Ltd. (c) 47,200 149,205
Canadian Natural Resources Ltd. 119,700 5,985,000
Compton Petroleum Corp. (c) 262,100 2,523,448
Crew Energy, Inc. (c) 270,700 2,702,859
Cyries Energy, Inc. (c) 88,928 914,368
Ember Resources, Inc. (c) 74,288 171,706
EnCana Corp. 123,622 5,930,032
Grand Petroleum, Inc. (c) 140,000 398,538
Husky Energy, Inc. 53,200 3,411,798
Kereco Energy Ltd. (c) 221,168 1,261,079
Mission Oil & Gas, Inc. (c) 178,761 1,874,499
Nexen, Inc. 59,300 3,580,273
Niko Resources Ltd. 21,800 1,609,806
Oilexco, Inc. (c) 82,000 574,864
Pan Orient Energy Corp. (c) 224,000 788,035
Paramount Resources Ltd. (c) 75,000 1,255,523
Petro-Canada 126,000 4,900,595
ProEx Energy Ltd. (c) 92,653 1,088,878
Real Resources, Inc. (c) 90,100 1,110,172
Rider Resources Ltd. (c) 116,918 869,334
Suncor Energy, Inc. 101,300 7,506,254
TUSK Energy Corp. (c) 673,096 1,561,482
Talisman Energy, Inc. 601,800 10,601,049
TriStar Oil & Gas Ltd. (c) 279,000 1,299,218
------------
62,068,015
-------------------------------------------------------------------
Energy Equipment &
Services -- 0.2%
Trican Well Service Ltd. 56,500 932,865
-------------------------------------------------------------------
Gold -- 1.0%
Barrick Gold Corp. 51,800 1,532,695
Eldorado Gold Corp. (c) 404,500 2,309,857
------------
3,842,552
-------------------------------------------------------------------
Metals & Mining -- 3.7%
Alcan, Inc. 30,200 1,540,200
Aur Resources Inc. 50,000 964,905
Goldcorp, Inc. 114,582 3,167,363
HudBay Minerals, Inc. (c) 195,000 3,612,339
Northern Orion Resources, Inc. (c) 211,000 806,849
Teck Cominco Ltd. Class B 49,500 3,649,405
------------
13,741,061
-------------------------------------------------------------------
Oil & Gas Equipment &
Services -- 0.6%
Tesco Corp. (c) 106,300 2,222,111
-------------------------------------------------------------------
Oil, Gas & Consumable
Fuels -- 0.4%
MGM Energy Corp. (c) 3,000 15,729
SXR Uranium One, Inc. (c) 120,000 1,577,498
------------
1,593,227
-------------------------------------------------------------------
Total Common Stocks in Canada 84,399,831
===============================================================================
Cayman Islands -- 0.3%
Oil, Gas & Consumable
Fuels -- 0.3%
Coastal Energy Co. (c) 2,000,000 934,738
-------------------------------------------------------------------
Total Common Stocks in the Cayman Islands 934,738
===============================================================================
China -- 1.3%
Metals & Mining -- 1.3%
Aluminum Corp. of China Ltd. (a) 216,800 4,886,672
-------------------------------------------------------------------
Total Common Stocks in China 4,886,672
===============================================================================
France -- 2.8%
Integrated Oil & Gas -- 1.7%
Total SA (a) 90,800 6,178,940
-------------------------------------------------------------------
Oil & Gas Equipment &
Services -- 1.1%
Technip SA (a) 64,975 4,194,136
-------------------------------------------------------------------
Total Common Stocks in France 10,373,076
===============================================================================
Greece -- 0.3%
Marine -- 0.3%
Aegean Marine Petroleum Network, Inc. (c) 72,300 1,242,114
-------------------------------------------------------------------
Total Common Stocks in Greece 1,242,114
===============================================================================
Hong Kong -- 0.7%
Oil & Gas Exploration &
Production -- 0.7%
CNOOC Ltd. (a) 31,400 2,693,178
-------------------------------------------------------------------
Total Common Stocks in Hong Kong 2,693,178
===============================================================================
Italy -- 1.4%
Integrated Oil & Gas -- 0.3%
ENI SpA (a) 19,250 1,241,048
-------------------------------------------------------------------
Oil & Gas Drilling -- 1.1%
Saipem SpA 164,500 4,066,973
-------------------------------------------------------------------
Total Common Stocks in Italy 5,308,021
===============================================================================
United Kingdom -- 0.7%
Energy Equipment &
Services -- 0.4%
Acergy SA (a)(c) 85,000 1,660,900
-------------------------------------------------------------------
Integrated Oil & Gas -- 0.3%
BP Plc (a) 18,600 1,181,286
-------------------------------------------------------------------
Total Common Stocks in the United Kingdom 2,842,186
===============================================================================
BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007 9
Schedule of Investments (continued) (in U.S. dollars)
Shares
Industry Common Stocks Held Value
===============================================================================
United States -- 67.8%
Chemicals -- 0.8%
E.I. du Pont de Nemours & Co. 33,400 $ 1,655,304
Praxair, Inc. 18,000 1,135,080
Tronox, Inc. Class B 2,478 35,336
------------
2,825,720
-------------------------------------------------------------------
Energy Equipment &
Services -- 5.2%
Cameron International Corp. (c) 93,100 4,887,750
Dresser-Rand Group, Inc. (c) 179,800 4,667,608
Dril-Quip, Inc. (c) 56,000 2,083,200
Hanover Compressor Co. (c) 1,605 31,057
National Oilwell Varco, Inc. (c) 109,433 6,636,017
PHI, Inc. (c) 34,200 1,028,736
------------
19,334,368
-------------------------------------------------------------------
Independent Power Producers &
Energy Traders -- 0.0%
Dynegy, Inc. Class A (c) 2,656 18,725
-------------------------------------------------------------------
Integrated Oil & Gas -- 14.0%
Chevron Corp. 139,591 10,173,392
ConocoPhillips 127,675 8,478,897
Exxon Mobil Corp. 129,328 9,583,205
Hess Corp. 48,200 2,602,318
Marathon Oil Corp. 71,200 6,432,208
Murphy Oil Corp. 247,400 12,298,254
Williams Cos., Inc. 100,500 2,712,495
------------
52,280,769
-------------------------------------------------------------------
Metals & Mining -- 3.2%
Alcoa, Inc. 22,900 739,670
Consol Energy, Inc. 68,200 2,348,126
Newmont Mining Corp. 9,100 410,410
Peabody Energy Corp. 139,200 5,683,536
Southern Copper Corp. 45,800 2,862,500
------------
12,044,242
-------------------------------------------------------------------
Oil & Gas Drilling -- 12.2%
Diamond Offshore Drilling, Inc. 21,800 1,840,792
ENSCO International, Inc. 107,300 5,458,351
GlobalSantaFe Corp. 145,022 8,412,726
Helmerich & Payne, Inc. 95,200 2,554,216
Hercules Offshore, Inc. (c) 115,000 3,040,600
Nabors Industries Ltd. (c) 67,600 2,046,928
Noble Corp. 70,900 5,313,955
Pride International, Inc. (c) 70,700 2,036,867
Rowan Cos., Inc. 50,000 1,644,500
TODCO Class A (c) 123,000 4,259,490
Transocean, Inc. (c) 117,100 9,060,027
------------
45,668,452
-------------------------------------------------------------------
Oil & Gas Equipment &
Services -- 11.9%
BJ Services Co. 201,600 5,576,256
Baker Hughes, Inc. 113,400 7,828,002
Complete Production Services, Inc. (c) 62,100 1,233,927
FMC Technologies, Inc. (c) 71,300 4,415,609
Grant Prideco, Inc. (c) 34,000 1,332,120
Halliburton Co. 145,400 4,295,116
Lone Star Technologies, Inc. (c) 24,600 1,189,410
Oil States International, Inc. (c) 95,800 2,760,956
Schlumberger Ltd. 75,800 4,812,542
Smith International, Inc. 97,400 3,864,832
Superior Well Services, Inc. (c) 10,300 234,222
Weatherford International Ltd. (c) 174,726 7,055,436
------------
44,598,428
-------------------------------------------------------------------
Oil & Gas Exploration &
Production -- 16.9%
Apache Corp. 126,760 9,249,677
Bill Barrett Corp. (c) 10,600 327,540
Cabot Oil & Gas Corp. Class A 44,100 2,860,326
CanArgo Energy Corp. (c) 235,500 268,470
Carrizo Oil & Gas, Inc. (c) 59,100 1,696,170
Cimarex Energy Co. 21,094 790,603
Devon Energy Corp. 196,898 13,800,581
EOG Resources, Inc. 210,900 14,579,517
Forest Oil Corp. (c) 45,800 1,461,936
Mariner Energy, Inc. (c) 37,065 745,377
Newfield Exploration Co. (c) 69,000 2,953,890
Noble Energy, Inc. 63,800 3,407,558
Occidental Petroleum Corp. 104,600 4,849,256
Range Resources Corp. 156,900 4,815,261
Southwestern Energy Co. (c) 31,000 1,192,260
------------
62,998,422
-------------------------------------------------------------------
Oil, Gas & Consumable
Fuels -- 0.3%
Arch Coal, Inc. 36,000 1,069,920
-------------------------------------------------------------------
Refining, Marketing &
Transportation -- 2.1%
Holly Corp. 28,000 1,475,320
Sunoco, Inc. 25,400 1,603,502
Valero Energy Corp. 89,000 4,830,920
------------
7,909,742
-------------------------------------------------------------------
Utilities -- 1.2%
Equitable Resources, Inc. 102,000 4,411,500
-------------------------------------------------------------------
Total Common Stocks in the United States 253,160,288
-------------------------------------------------------------------
Total Common Stocks
(Cost -- $185,618,665) -- 100.2% 374,585,177
===============================================================================
10 BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007
Schedule of Investments (concluded) (in U.S. dollars)
Shares
Industry Warrants (e) Held Value
===============================================================================
Canada -- 0.0%
Oil, Gas & Consumable Fuels -- 0.0%
MGM Energy Corp. (expires 2/16/2007) 15,000 $ 23,581
-------------------------------------------------------------------
Total Warrants (Cost -- $12,644) -- 0.0% 23,581
===============================================================================
Short-Term Beneficial
Securities Interest Value
===============================================================================
BlackRock Liquidity Series, LLC
Cash Sweep Series, 5.29% (b)(d) $311,467 $ 311,467
-------------------------------------------------------------------
Total Short-Term Securities
(Cost -- $311,467) -- 0.1% 311,467
===============================================================================
Total Investments
(Cost -- $185,942,776*) -- 100.3% 374,920,225
Liabilities in Excess of Other Assets -- (0.3%) (1,253,509)
------------
Net Assets -- 100.0% $373,666,716
============
* The cost and unrealized appreciation (depreciation) of investments as of
January 31, 2007, as computed for federal income tax purposes, were as
follows:
Aggregate cost $186,045,660
============
Gross unrealized appreciation $191,507,963
Gross unrealized depreciation (2,633,398)
------------
Net unrealized appreciation $188,874,565
============
(a) Depositary receipts.
(b) 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 $(37,731,423) $393,046
BlackRock Liquidity Series, LLC
Money Market Series $ (2,597,400) $ 13,421
--------------------------------------------------------------------------
(c) Non-income producing security.
(d) Represents the current yield as of January 31, 2007.
(e) Warrants entitle the Trust to purchase a predetermined number of shares of
common stock and are non-income producing. The purchase price and number
of shares are subject to adjustment under certain conditions until the
expiration date.
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 such industry sub-classifications for
reporting ease. Industries are shown as a percentage of net assets.
See Notes to Financial Statements.
BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007 11
Statement of Assets and Liabilities
As of January 31, 2007 (Unaudited)
==============================================================================================================================
Assets
- ------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified cost -- $185,631,309) $374,608,758
Investments in affiliated securities, at value (identified cost -- $311,467) ..... 311,467
Cash ............................................................................. 3,954
Foreign cash (cost -- $5) ........................................................ 6
Receivables:
Beneficial interest sold ...................................................... $ 834,174
Dividends ..................................................................... 204,779
Securities lending ............................................................ 1,305 1,040,258
------------
Prepaid expenses and other assets ................................................ 19,004
------------
Total assets ..................................................................... 375,983,447
------------
==============================================================================================================================
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------
Payables:
Beneficial interest redeemed .................................................. 1,832,545
Investment adviser ............................................................ 185,422
Distributor ................................................................... 141,924
Other affiliates .............................................................. 88,230
Securities purchased .......................................................... 25,365
Distributions to shareholders ................................................. 188 2,273,674
------------
Accrued expenses and other liabilities ........................................... 43,057
------------
Total liabilities ................................................................ 2,316,731
------------
==============================================================================================================================
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
Net assets ....................................................................... $373,666,716
============
==============================================================================================================================
Net Assets Consist of
- ------------------------------------------------------------------------------------------------------------------------------
Institutional Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized .............................................................. $ 117,488
Investor AShares of beneficial interest, $.10 par value, unlimited number of
shares authorized .............................................................. 372,541
Investor B Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized .............................................................. 88,574
Investor CShares of beneficial interest, $.10 par value, unlimited number of
shares authorized .............................................................. 173,404
Paid-in capital in excess of par ................................................. 178,791,438
Accumulated investment loss -- net ............................................... $ (334,408)
Undistributed realized capital gains -- net ...................................... 5,479,332
Unrealized appreciation -- net ................................................... 188,978,347
------------
Total accumulated earnings -- net ................................................ 194,123,271
------------
Net Assets ....................................................................... $373,666,716
============
==============================================================================================================================
Net Asset Value
- ------------------------------------------------------------------------------------------------------------------------------
Institutional -- Based on net assets of $60,504,430 and 1,174,879 shares of
beneficial interest outstanding ................................................ $ 51.50
============
Investor A -- Based on net assets of $188,815,097 and 3,725,408 shares of
beneficial interest outstanding ................................................ $ 50.68
============
Investor B -- Based on net assets of $42,420,604 and 885,738 shares of
beneficial interest outstanding ................................................ $ 47.89
============
Investor C -- Based on net assets of $81,926,585 and 1,734,044 shares of
beneficial interest outstanding ................................................ $ 47.25
============
See Notes to Financial Statements.
12 BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007
Statement of Operations
For the Six Months Ended January 31, 2007 (Unaudited)
==============================================================================================================================
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------
Dividends (net of $94,836 foreign withholding tax) ............................... $ 1,811,250
Interest from affiliates ......................................................... 393,046
Securities lending -- net ........................................................ 13,421
------------
Total income ..................................................................... 2,217,717
------------
==============================================================================================================================
Expenses
- ------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ......................................................... $ 1,181,001
Service and distribution fees -- Investor C ...................................... 429,953
Service fees -- Investor A ....................................................... 240,718
Service and distribution fees -- Investor B ...................................... 234,762
Transfer agent fees -- Investor A ................................................ 99,873
Accounting services .............................................................. 90,530
Transfer agent fees -- Investor C ................................................ 52,674
Transfer agent fees -- Institutional ............................................. 33,751
Custodian fees ................................................................... 33,090
Printing and shareholder reports ................................................. 31,355
Professional fees ................................................................ 29,112
Transfer agent fees -- Investor B ................................................ 28,205
Registration fees ................................................................ 27,869
Trustees' fees and expenses ...................................................... 21,660
Pricing fees ..................................................................... 2,034
Other ............................................................................ 15,538
------------
Total expenses ................................................................... 2,552,125
------------
Investment loss -- net ........................................................... (334,408)
------------
==============================================================================================================================
Realized & Unrealized Gain (Loss) -- Net
- ------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on:
Investments -- net ............................................................ 12,509,170
Foreign currency transactions -- net .......................................... (20,245) 12,488,925
------------
Change in unrealized appreciation on:
Investments -- net ............................................................ (26,190,658)
Foreign currency transactions -- net .......................................... 346 (26,190,312)
-----------------------------
Total realized and unrealized loss -- net ........................................ (13,701,387)
------------
Net Decrease in Net Assets Resulting from Operations ............................. $(14,035,795)
============
See Notes to Financial Statements.
BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007 13
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
January 31, 2007 July 31,
Increase (Decrease) in Net Assets: (Unaudited) 2006
==============================================================================================================================
Operations
- ------------------------------------------------------------------------------------------------------------------------------
Investment loss -- net ........................................................... $ (334,408) $ (698,363)
Realized gain -- net ............................................................. 12,488,925 17,283,340
Change in unrealized appreciation -- net ......................................... (26,190,312) 59,900,534
-----------------------------
Net increase (decrease) in net assets resulting from operations .................. (14,035,795) 76,485,511
-----------------------------
==============================================================================================================================
Distributions to Shareholders
- ------------------------------------------------------------------------------------------------------------------------------
Realized gain -- net:
Institutional ................................................................. (3,514,828) (415,609)
Investor A .................................................................... (10,107,516) (1,128,384)
Investor B .................................................................... (2,529,507) (386,717)
Investor C .................................................................... (4,757,650) (529,184)
-----------------------------
Net decrease in net assets resulting from distributions to shareholders .......... (20,909,501) (2,459,894)
-----------------------------
==============================================================================================================================
Beneficial Interest Transactions
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets derived from beneficial interest
transactions ................................................................... (30,425,999) 67,397,447
-----------------------------
==============================================================================================================================
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets .......................................... (65,371,295) 141,423,064
Beginning of period .............................................................. 439,038,011 297,614,947
-----------------------------
End of period* ................................................................... $373,666,716 $439,038,011
=============================
* Accumulated investment loss -- net .......................................... $ (334,408) --
=============================
See Notes to Financial Statements.
14 BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007
Financial Highlights
Institutional
----------------------------------------------------------------------
For the Six
Months Ended
January 31, For the Year Ended July 31,
The following per share data and ratios have been derived 2007 -------------------------------------------------------
from information provided in the financial statements. (Unaudited) 2006 2005 2004 2003 2002
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............. $ 55.85 $ 44.93 $ 29.22 $ 21.25 $ 18.34 $ 19.42
--------------------------------------------------------------------
Investment income -- net** ....................... .08 .16 .02 --+ .01 .02
Realized and unrealized gain (loss) -- net ....... (1.59) 11.09 15.69 7.97 2.90 (1.10)
--------------------------------------------------------------------
Total from investment operations ................. (1.51) 11.25 15.71 7.97 2.91 (1.08)
--------------------------------------------------------------------
Less distributions from realized gain -- net ..... (2.84) (.33) -- -- -- --
--------------------------------------------------------------------
Net asset value, end of period ................... $ 51.50 $ 55.85 $ 44.93 $ 29.22 $ 21.25 $ 18.34
====================================================================
==================================================================================================================================
Total Investment Return
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ............... (2.39%)@ 25.10% 53.76% 37.51% 15.87% (5.56%)
====================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses ......................................... .83%* .82% .91% 1.00% 1.12% 1.20%
====================================================================
Investment income -- net ......................... .30%* .31% .05% .02% .07% .12%
====================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ......... $ 60,504 $ 75,429 $ 52,148 $ 35,088 $ 23,981 $ 18,405
====================================================================
Portfolio turnover ............................... 4.18% 10.39% 11.14% 10.96% 18.26% 49.77%
====================================================================
* Annualized.
** Based on average shares outstanding.
+ Amount is less than $.01 per share.
@ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007 15
Financial Highlights (continued)
Investor A
----------------------------------------------------------------------
For the Six
Months Ended
January 31, For the Year Ended July 31,
The following per share data and ratios have been derived 2007 -------------------------------------------------------
from information provided in the financial statements. (Unaudited) 2006 2005 2004 2003 2002
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............. $ 54.94 $ 44.32 $ 28.89 $ 21.06 $ 18.22 $ 19.35
--------------------------------------------------------------------
Investment income (loss) -- net*** ............... .01 .03 (.07) (.06) (.03) (.03)
Realized and unrealized gain (loss) -- net ....... (1.55) 10.92 15.50 7.89 2.87 (1.10)
--------------------------------------------------------------------
Total from investment operations ................. (1.54) 10.95 15.43 7.83 2.84 (1.13)
--------------------------------------------------------------------
Less distributions from realized gain -- net ..... (2.72) (.33) -- -- -- --
--------------------------------------------------------------------
Net asset value, end of period ................... $ 50.68 $ 54.94 $ 44.32 $ 28.89 $ 21.06 $ 18.22
====================================================================
==================================================================================================================================
Total Investment Return**
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ............... (2.51%)+ 24.77% 53.41% 37.18% 15.59% (5.84%)
====================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses ......................................... 1.08%* 1.07% 1.16% 1.25% 1.38% 1.45%
====================================================================
Investment income (loss) -- net .................. .04%* .05% (.20%) (.23%) (.17%) (.14%)
====================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ......... $188,815 $208,789 $136,740 $ 77,035 $ 56,094 $ 52,946
====================================================================
Portfolio turnover ............................... 4.18% 10.39% 11.14% 10.96% 18.26% 49.77%
====================================================================
* Annualized.
** Total investment returns exclude the effect of sales charges.
*** Based on average shares outstanding.
+ Aggregate total investment return.
See Notes to Financial Statements.
16 BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007
Financial Highlights (continued)
Investor B
----------------------------------------------------------------------
For the Six
Months Ended
January 31, For the Year Ended July 31,
The following per share data and ratios have been derived 2007 -------------------------------------------------------
from information provided in the financial statements. (Unaudited) 2006 2005 2004 2003 2002
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............. $ 52.23 $ 42.47 $ 27.90 $ 20.49 $ 17.87 $ 19.12
--------------------------------------------------------------------
Investment loss -- net*** ........................ (.17) (.35) (.32) (.25) (.18) (.17)
Realized and unrealized gain (loss) -- net ....... (1.49) 10.44 14.89 7.66 2.80 (1.08)
--------------------------------------------------------------------
Total from investment operations ................. (1.66) 10.09 14.57 7.41 2.62 (1.25)
--------------------------------------------------------------------
Less distributions from realized gain -- net ..... (2.68) (.33) -- -- -- --
--------------------------------------------------------------------
Net asset value, end of period ................... $ 47.89 $ 52.23 $ 42.47 $ 27.90 $ 20.49 $ 17.87
====================================================================
==================================================================================================================================
Total Investment Return**
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ............... (2.89%)+ 23.82% 52.22% 36.16% 14.66% (6.54%)
====================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses ......................................... 1.84%* 1.84% 1.93% 2.02% 2.16% 2.23%
====================================================================
Investment loss -- net ........................... (.69%)* (.71%) (.97%) (1.00%) (.96%) (.91%)
====================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ......... $ 42,421 $ 57,926 $ 52,595 $ 35,399 $ 23,829 $ 24,468
====================================================================
Portfolio turnover ............................... 4.18% 10.39% 11.14% 10.96% 18.26% 49.77%
====================================================================
* Annualized.
** Total investment returns exclude the effect of sales charges.
*** Based on average shares outstanding.
+ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007 17
Financial Highlights (concluded)
Investor C
----------------------------------------------------------------------
For the Six
Months Ended
January 31, For the Year Ended July 31,
The following per share data and ratios have been derived 2007 -------------------------------------------------------
from information provided in the financial statements. (Unaudited) 2006 2005 2004 2003 2002
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............. $ 51.57 $ 41.93 $ 27.55 $ 20.23 $ 17.65 $ 18.88
--------------------------------------------------------------------
Investment loss -- net*** ........................ (.17) (.35) (.32) (.25) (.18) (.17)
Realized and unrealized gain (loss) -- net ....... (1.47) 10.32 14.70 7.57 2.76 (1.06)
--------------------------------------------------------------------
Total from investment operations ................. (1.64) 9.97 14.38 7.32 2.58 (1.23)
--------------------------------------------------------------------
Less distributions from realized gain -- net ..... (2.68) (.33) -- -- -- --
--------------------------------------------------------------------
Net asset value, end of period ................... $ 47.25 $ 51.57 $ 41.93 $ 27.55 $ 20.23 $ 17.65
====================================================================
==================================================================================================================================
Total Investment Return**
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ............... (2.89%)+ 23.84% 52.20% 36.18% 14.62% (6.51%)
====================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses ......................................... 1.84%* 1.84% 1.93% 2.02% 2.16% 2.24%
====================================================================
Investment loss -- net ........................... (.71%)* (.71%) (.97%) (1.01%) (.96%) (.93%)
====================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ......... $ 81,927 $ 96,895 $ 56,131 $ 29,695 $ 11,789 $ 8,129
====================================================================
Portfolio turnover ............................... 4.18% 10.39% 11.14% 10.96% 18.26% 49.77%
====================================================================
* Annualized.
** Total investment returns exclude the effect of sales charges.
*** Based on average shares outstanding.
+ Aggregate total investment return.
See Notes to Financial Statements.
18 BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007
Notes to Financial Statements (Unaudited)
1. Significant Accounting Policies:
On September 29, 2006, Merrill Lynch Natural Resources Trust was renamed
BlackRock Natural Resources Trust (the "Trust") and is registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end
management investment company. 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 Trust offers multiple classes of shares. Effective October
2, 2006, Class I, Class A, Class B and Class C Shares were redesignated
Institutional, Investor A, Investor B and Investor C Shares, respectively.
Institutional Shares are sold 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. All classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that Investor A,
Investor B and Investor C Shares bear certain expenses related to the
shareholder servicing of such shares, and Investor B and Investor C Shares also
bear certain expenses related to the distribution of such shares. Each class has
exclusive voting rights with respect to matters relating to its shareholder
servicing and distribution expenditures (except that Investor B shareholders may
vote on material 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 Trust.
(a) Valuation of investments -- Equity securities 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 or purchased are valued at the last sale price in the case of
exchange-traded options. Options traded in the OTC market are valued at the last
asked price (options written) or the last bid price (options purchased). Swap
agreements are valued based upon quoted fair valuations received daily by the
Trust from a pricing service or counterparty. 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,
money market instruments and certain fixed income securities, is substantially
completed each day at various times prior to the close of business on the New
York Stock Exchange ("NYSE"). The values of such securities used in computing
the net asset value of the Trust's shares are determined as of such times.
Foreign currency exchange rates will generally be determined as of the close of
business on the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which they are
determined and the close of business on the NYSE that may not be reflected in
the computation of the Trust's net asset value. If events (for example, a
company
BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007 19
Notes to Financial Statements (Unaudited)
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
due to an unfavorable change in the price of the underlying security or index or
if the counterparty does not perform under the contract.
o Forward foreign exchange contracts -- The Trust may enter into forward
foreign exchange contracts as a hedge against either specific transactions
or portfolio positions. The contract is marked-to-market daily and the
change in market value is recorded by the Trust as an unrealized gain or
loss. When the contract is closed, the Trust records a realized gain or
loss equal to the difference between the value at the time it was opened
and the value at the time it was closed.
o Options -- The Trust may purchase and write covered call options 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 is less than or greater than the premiums
paid or received).
Written and purchased options are non-income producing investments.
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 from
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 -- It is the Trust's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required. Under the applicable
foreign tax law, a withholding tax may be imposed on interest, dividends and
capital gains at various rates.
(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.
Dividends from foreign securities where the ex-dividend date may have passed are
subsequently recorded when the Trust has determined the ex-dividend dates.
Interest income is recognized on the accrual basis.
(f) Prepaid registration fees -- Prepaid registration fees are charged to
expenses as the related shares are issued.
(g) Dividends and distributions -- Dividends and distributions paid by the Trust
are recorded on the ex-dividend dates.
(h) 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
20 BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007
Notes to Financial Statements (continued)
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.
(i) Recent accounting pronouncement -- 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 Trust
will adopt FIN 48 during the fiscal 2008 year and the impact on the Trust's
financial statements, if any, is currently being assessed.
In addition, in September 2006, Statement of Financial Accounting Standards No.
157, "Fair Value Measurements" ("FAS 157"), was issued and is effective for
fiscal years beginning after November 15, 2007. FAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the implications of
FAS 157. At this time, its impact on the Trust's financial statements has not
been determined.
2. Investment Advisory Agreement and Transactions with Affiliates:
On September 29, 2006, BlackRock, Inc. and Merrill Lynch & Co., Inc. ("Merrill
Lynch") combined Merrill Lynch's investment management business, Merrill Lynch
Investment Managers, L.P. ("MLIM"), and its affiliates, with BlackRock, Inc. to
create a new independent company. Merrill Lynch has a 49.8% economic interest
and a 45% voting interest in the combined company and The PNC Financial Services
Group, Inc. ("PNC") has approximately a 34% economic and voting interest. The
new company operates under the BlackRock name and is governed by a board of
directors with a majority of independent members.
On August 31, 2006, shareholders of the 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, MLIM was the Trust's
Manager. The general partner of MLIM is Princeton Services, Inc. ("PSI"), an
indirect, wholly owned subsidiary of Merrill Lynch, which is the limited
partner. The Trust 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.
The Manager is responsible for the management of the Trust's portfolio 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 at an annual rate of .60% of the average daily value of the
Trust's net assets.
In addition, the Manager has entered into a Sub-Advisory Agreement with
BlackRock Investment Management, LLC ("BIM"), an affiliate of the Manager, under
which the Manager pays the Sub-Adviser for services it provides a monthly fee at
an annual rate that is a percentage of the management fee paid by the Trust to
the Manager. Prior to September 29, 2006, MLIM had a Sub-Advisory Agreement with
Merrill Lynch Asset Management U.K. Limited ("MLAM U.K."), an affiliate of MLIM.
Pursuant to the Distribution Plans adopted by the Trust in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Trust pays the Distributor
ongoing service and distribution fees. The fees are accrued daily and paid
monthly at annual rates based upon the average daily net assets of the shares as
follows:
- --------------------------------------------------------------------------------
Service Distribution
Fee Fee
- --------------------------------------------------------------------------------
Investor A ...................................... .25% --
Investor B ...................................... .25% .75%
Investor C ...................................... .25% .75%
- --------------------------------------------------------------------------------
BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007 21
Notes to Financial Statements (continued)
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 each Distributor provide shareholder servicing
and distribution services to the Trust. The ongoing service fee compensates the
Distributor and each broker-dealer (including MLPF&S) for providing shareholder
services to Investor A, Investor B and Investor C shareholders. The ongoing
distribution fee compensates the Distributor and MLPF&S for providing
distribution-related services to Investor B and Investor C shareholders.
For the six months ended January 31, 2007, FAMD, the Trust's sole Distributor
until September 29, 2006, and BDI earned underwriting discounts and direct
commissions and MLPF&S and BDI earned dealer concessions on sales of the Trust's
Institutional and Investor A Shares as follows:
- --------------------------------------------------------------------------------
FAMD BDI MLPF&S
- --------------------------------------------------------------------------------
Institutional ............... $ 62 $ -- $ 62
Investor A .................. $ 2,693 $ 11 $33,924
- --------------------------------------------------------------------------------
For the six months ended January 31, 2007, MLPF&S received contingent deferred
sales charges of $20,618 and $10,188 relating to transactions in Investor B and
Investor C Shares, respectively.
Furthermore, MLPF&S received contingent deferred sales charges of $4,482
relating to transactions subject to front-end sales charge waivers in Investor A
Shares.
The Manager maintains a call center, which is responsible for providing certain
shareholder services to the Trust such as responding to shareholder inquiries
and processing transactions based upon instructions from shareholders with
respect to the subscription and redemption of Trust shares. During the period
September 29, 2006 to January 31, 2007, the following amounts have been accrued
by the Trust to reimburse the Manager for costs incurred running the call
center, which are a component of the transfer agent fees in the accompanying
Statement of Operations.
- --------------------------------------------------------------------------------
Call
Center Fees
- --------------------------------------------------------------------------------
Institutional .......................................... $ 277
Investor A ............................................. $2,200
Investor B ............................................. $ 508
Investor C ............................................. $ 765
- --------------------------------------------------------------------------------
Trust has received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to MLPF&S or its
affiliates. Pursuant to that order, the Trust has retained BIM 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 MLIM, and MLIM, LLC was
the securities lending agent. BIM may, on behalf of the Trust, invest cash
collateral received by the Trust for such loans, among other things, in a
private investment company managed by the Manager or in registered money market
funds advised by the Manager or its affiliates. For the six months ended January
31, 2007, BIM received $5,700 in securities lending agent fees.
In addition, MLPF&S received $4,281 in commissions on the execution of portfolio
security transactions for the Trust for the six months ended January 31, 2007.
For the six months ended January 31, 2007, the Trust reimbursed MLIM and the
Manager $1,468 and $2,937, respectively, for certain accounting services.
Effective September 29, 2006, PFPC Inc., an indirect, wholly owned subsidiary of
PNC and an affiliate of the Manager, became the Trust's transfer agent. Prior to
September 29, 2006, the Trust's transfer agent was Financial Data Services, Inc.
("FDS"), a wholly owned subsidiary of Merrill Lynch.
Prior to September 29, 2006, certain officers and/or trustees of the Trust were
officers and/or directors of PSI, MLAM U.K., FDS, FAMD, Merrill Lynch, MLIM,
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 January 31, 2007 were $15,949,231 and $28,954,196, respectively.
4. Beneficial Interest Transactions:
Net increase (decrease) in net assets derived from beneficial interest
transactions was $(30,425,999) and $67,397,447 for the six months ended January
31, 2007 and the year ended July 31, 2006, respectively.
22 BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007
Notes to Financial Statements (concluded)
Transactions in shares of beneficial interest for each class were as follows:
- -------------------------------------------------------------------------------
Institutional Shares for the Six Months Dollar
Ended January 31, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 82,647 $ 4,221,112
Shares issued to shareholders in
reinvestment of distributions .......... 64,368 3,159,602
-------------------------------
Total issued ............................. 147,015 7,380,714
Shares redeemed .......................... (322,652) (16,539,895)
-------------------------------
Net decrease ............................. (175,637) $ (9,159,181)
===============================
- -------------------------------------------------------------------------------
Institutional Shares for the Year Dollar
Ended July 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 652,585 $ 34,313,325
Shares issued to shareholders in
reinvestment of distributions .......... 7,457 383,896
-------------------------------
Total issued ............................. 660,042 34,697,221
Shares redeemed .......................... (470,102) (24,640,128)
-------------------------------
Net increase ............................. 189,940 $ 10,057,093
===============================
- -------------------------------------------------------------------------------
Investor A Shares for the Six Months Dollar
Ended January 31, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 499,104 $ 25,239,432
Automatic conversion of shares ........... 5,311 270,101
Shares issued to shareholders in
reinvestment of distributions .......... 112,856 5,470,223
-------------------------------
Total issued ............................. 617,271 30,979,756
Shares redeemed .......................... (691,902) (34,680,382)
-------------------------------
Net decrease ............................. (74,631) $ (3,700,626)
===============================
- -------------------------------------------------------------------------------
Investor A Shares for the Year Dollar
Ended July 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 1,528,514 $ 78,148,165
Automatic conversion of shares ........... 91,386 4,530,597
Shares issued to shareholders in
reinvestment of distributions .......... 17,894 907,754
-------------------------------
Total issued ............................. 1,637,794 83,586,516
Shares redeemed .......................... (923,188) (46,739,124)
-------------------------------
Net increase ............................. 714,606 $ 36,847,392
===============================
- -------------------------------------------------------------------------------
Investor B Shares for the Six Months Dollar
Ended January 31, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 61,845 $ 2,994,580
Shares issued to shareholders in
reinvestment of distributions .......... 44,642 2,048,240
-------------------------------
Total issued ............................. 106,487 5,042,820
-------------------------------
Automatic conversion of shares ........... (5,590) (270,101)
Shares redeemed .......................... (324,162) (15,450,486)
-------------------------------
Total redeemed ........................... (329,752) (15,720,587)
-------------------------------
Net decrease ............................. (223,265) $(10,677,767)
===============================
- -------------------------------------------------------------------------------
Investor B Shares for the Year Dollar
Ended July 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 379,178 $ 18,366,346
Shares issued to shareholders in
reinvestment of distributions .......... 6,962 337,481
-------------------------------
Total issued ............................. 386,140 18,703,827
-------------------------------
Automatic conversion of shares ........... (95,720) (4,530,597)
Shares redeemed .......................... (419,900) (20,018,647)
-------------------------------
Total redeemed ........................... (515,620) (24,549,244)
-------------------------------
Net decrease ............................. (129,480) $ (5,845,417)
===============================
- -------------------------------------------------------------------------------
Investor C Shares for the Six Months Dollar
Ended January 31, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 196,334 $ 9,245,998
Shares issued to shareholders in
reinvestment of distributions .......... 91,134 4,130,134
-------------------------------
Total issued ............................. 287,468 13,376,132
Shares redeemed .......................... (432,450) (20,264,557)
-------------------------------
Net decrease ............................. (144,982) $ (6,888,425)
===============================
- -------------------------------------------------------------------------------
Investor C Shares for the Year Dollar
Ended July 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 1,006,111 $ 48,795,773
Shares issued to shareholders in
reinvestment of distributions .......... 10,006 478,791
-------------------------------
Total issued ............................. 1,016,117 49,274,564
Shares redeemed .......................... (475,718) (22,936,185)
-------------------------------
Net increase ............................. 540,399 $ 26,338,379
===============================
5. Short-Term Borrowings:
The Trust, along with certain other funds managed by the Manager and its
affiliates (or MLIM and its affiliates), is 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 each fund'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 January 31, 2007.
BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007 23
Disclosure of Investment Advisory Agreement
BlackRock Investment Advisory Agreement -- Matters Considered by the Board
The following disclosure appeared in the July 31, 2006 Annual Report of the
Trust and is the discussion referred to in "New BlackRock Sub-Advisory Agreement
- -- Matters Considered by the Board" below. The term "Investment Adviser" as used
herein refers to Merrill Lynch Investment Managers, L.P.
In connection with the Transaction between Merrill Lynch and BlackRock, the
Trust's Board of Trustees considered a new investment advisory agreement (the
"New Investment Advisory Agreement") between the Trust and BlackRock Advisors,
Inc. or its successor ("BlackRock Advisors"). The New Investment Advisory
Agreement has been approved by the Fund's shareholders and is expected to become
effective upon the closing of the Transaction in the third quarter of 2006.
The Board discussed the New Investment Advisory Agreement at telephonic and
in-person meetings held during April and May 2006. The Board, including the
independent trustees, approved the New Investment Advisory Agreement at a
meeting held on May 8, 2006.
To assist the Board in its consideration of the New Investment Advisory
Agreement, BlackRock provided materials and information about BlackRock,
including its financial condition and asset management capabilities and
organization, and Merrill Lynch provided materials and information about the
Transaction. The independent trustees, through their independent legal counsel,
also requested and received additional information from Merrill Lynch and
BlackRock in connection with their consideration of the New Investment Advisory
Agreement. The additional information was provided in advance of the May 8, 2006
meeting. In addition, the independent trustees consulted with their counsel and
Trust counsel on numerous occasions, discussing, among other things, the legal
standards and certain other considerations relevant to the trustees'
deliberations.
At the Board meetings, the trustees discussed with Merrill Lynch management and
certain BlackRock representatives the Transaction, its strategic rationale and
BlackRock's general plans and intentions regarding the Trust. At these Board
meetings, representatives of Merrill Lynch and BlackRock made presentations to
and responded to questions from the Board. The trustees also inquired about the
plans for and anticipated roles and responsibilities of certain employees and
officers of the Investment Adviser and certain affiliates being transferred to
BlackRock in connection with the Transaction. The independent trustees of the
Board also conferred separately and with their counsel about the Transaction and
other matters related to the Transaction on a number of occasions, including in
connection with the April and May 2006 meetings. After the presentations and
after reviewing the written materials provided, the independent trustees met in
executive sessions with their counsel to consider the New Investment Advisory
Agreement.
In connection with the Board's review of the New Investment Advisory Agreement,
Merrill Lynch and/or BlackRock advised the trustees about a variety of matters.
The advice included the following, among other matters:
o that there is not expected to be any diminution in the nature, quality and
extent of services provided to the Trust and its shareholders by BlackRock
Advisors, including compliance services;
o that operation of New BlackRock as an independent investment management
firm will enhance its ability to attract and retain talented
professionals;
o that the 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;
o 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 the Board
before making any changes;
o 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 Trust as an
investment product;
o that BlackRock Advisors will have substantially the same access to the
Merrill Lynch sales force when distributing shares of the Trust as is
currently provided to the Investment Adviser and that other arrangements
between the Investment Adviser and Merrill Lynch sales channels will be
preserved;
24 BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007
o that the Trust will have access to BlackRock's network of third party
brokers, retirement plan platforms and registered investment advisers;
o 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
o 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 Trust
shareholders.
The trustees considered the information provided by Merrill Lynch and BlackRock
above, and, among other factors, the following:
o the potential benefits to Trust shareholders from being part of a combined
fund family with BlackRock-sponsored funds, including possible economies
of scale and access to investment opportunities;
o the potential for expanding distribution of Trust shares through improved
access to third party distribution;
o the reputation, financial strength and resources of BlackRock and its
investment advisory subsidiaries and the anticipated financial strength
and resources of New BlackRock;
o the compliance policies and procedures of BlackRock Advisors;
o the terms and conditions of the New Investment Advisory Agreement,
including the fact that the schedule of the Trust's total advisory fees
will not increase by virtue of the New Investment Advisory Agreement, but
will remain the same;
o that in March 2006, the Board performed a full annual review of the
investment advisory agreement currently in effect for the Trust (the
"Current Investment Advisory Agreement") as required by the 1940 Act and
has determined that the Investment Adviser has the capabilities, resources
and personnel necessary to provide the advisory and administrative
services currently provided to the Trust; and that the advisory and/or
management fees paid by the Trust, taking into account any applicable
agreed-upon fee waivers and breakpoints, represent reasonable compensation
to the Investment Adviser in light of the services provided, the costs to
the Investment Adviser of providing those services, economies of scale,
the fees and other expenses paid by similar funds (including information
provided by Lipper Inc. ["Lipper"]), and such other matters as the
trustees have considered relevant in the exercise of their reasonable
judgment; and
o that Merrill Lynch agreed to pay all expenses of the Trust in connection
with the Board's consideration of the New Investment Advisory Agreement
and related agreements and all costs of shareholder approval of the New
Investment Advisory Agreement and as a result the Trust would bear no
costs in obtaining shareholder approval of the New Investment Advisory
Agreement.
Certain of these considerations are discussed in more detail below.
In its review of the New Investment Advisory Agreement, the Board assessed the
nature, scope and quality of the services to be provided to the Trust by the
personnel of BlackRock Advisors and its affiliates, including administrative
services, shareholder services, oversight of fund accounting, marketing services
and assistance in meeting legal and regulatory requirements. In its review of
the New Investment Advisory Agreement, the Board also considered a range of
information in connection with its oversight of the services to be provided by
BlackRock Advisors and its affiliates. Among the matters considered were: (a)
fees (in addition to management fees) to be paid to BlackRock Advisors and its
affiliates by the Trust; (b) Trust operating expenses paid to third parties; (c)
the resources devoted to and compliance reports relating to the Trust's
investment objective, policies and restrictions, and its compliance with its
Code of Ethics and BlackRock Advisors' compliance policies and procedures; and
(d) the nature, cost and character of non-investment management services to be
provided by BlackRock Advisors and its affiliates.
BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007 25
Disclosure of Investment Advisory Agreement (continued)
In the period prior to the Board meetings to consider renewal of the Current
Investment Advisory Agreement, the Board had requested and received materials
specifically relating to the Current Investment Advisory Agreement. These
materials included (a) information compiled by Lipper on the fees and expenses
and the investment performance of the Trust as compared to a comparable group of
funds as classified by Lipper; (b) a discussion by the Trust's portfolio
management team on investment strategies used by the Trust during its most
recent fiscal year; (c) information on the profitability to the Investment
Adviser of the Current Investment Advisory Agreement and other payments received
by the Investment Adviser and its affiliates from the Trust; and (d) information
provided by the Investment Adviser concerning services related to the valuation
and pricing of the Trust's portfolio holdings, allocation of 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 Trust.
In their deliberations, the trustees considered information received in
connection with their most recent continuation of the Current Investment
Advisory Agreement, 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 Agreement. The trustees did not
identify any particular information that was all-important or controlling, and
each trustee attributed different weights to the various factors. The trustees,
including a majority of the independent trustees, concluded that the terms of
the New Investment Advisory Agreement are appropriate, that the fees to be paid
are reasonable in light of the services to be provided to the Trust, and that
the New Investment Advisory Agreement should be approved and recommended to
Trust shareholders.
Nature, Quality and Extent of Services Provided -- The 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
Trust, as well as the nature, quality and extent of services expected to be
provided by BlackRock Advisors. The Board focused primarily on the Investment
Adviser's investment advisory services and the Trust's investment performance,
but also considered certain areas in which both the Investment Adviser and the
Trust receive services as part of the Merrill Lynch complex. The Board compared
the Trust's performance -- both including and excluding the effects of the
Trust's fees and expenses -- to the performance of a comparable group of mutual
funds, and the performance of a relevant index or combination of indexes. While
the 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 Agreement, the trustees
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 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 Trust.
The trustees were given information with respect to the potential benefits to
the Trust and its 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.
The trustees were advised that, as a result of Merrill Lynch's equity interest
in BlackRock after the Transaction, the 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. The trustees were 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.
26 BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007
Based on their review of the materials provided and the assurances they had
received from the management of Merrill Lynch and of BlackRock, the trustees
determined that the nature and quality of services to be provided to the Trust
under the New Investment Advisory Agreement were expected to be as good as or
better than that provided under the Current Investment Advisory Agreement. It
was noted, however, that it is expected that there will be changes in personnel
following the Transaction and the combination of the operations of the
Investment Adviser and its affiliates with those of BlackRock. The trustees
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, the trustees concluded that, overall, they were 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 Trust
under the New Investment Advisory Agreement.
Costs of Services Provided and Profitability -- It was noted that, in
conjunction with the recent review of the Current Investment Advisory Agreement,
the trustees had received, among other things, a report from Lipper comparing
the Trust'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. The Board reviewed the Trust's contractual management fee
rate and actual management fee rate as a percentage of total assets at common
asset levels -- the actual rate includes advisory fees and the effects of any
fee waivers -- compared to the other funds in its Lipper category. They also
compared the Trust's total expenses to those of other comparable funds. The
information showed that the Trust had fees and expenses within the range of fees
and expenses of comparable funds. The Board considered the services to be
provided by and the fees to be charged by BlackRock Advisors to other funds with
similar investment mandates and noted that the fees charged by BlackRock
Advisors in those cases, including fee waivers and expense reimbursements, were
generally comparable to those being charged to the Trust. The Board also noted
that, as a general matter, according to the information provided by BlackRock,
fees charged to institutional clients were lower than the fees charged to the
Trust, but BlackRock Advisors provided less extensive services to such clients.
The Board concluded that the Trust's management fee and fee rate and overall
expense ratio are reasonable compared to those of other comparable funds.
In evaluating the costs of the services to be provided by BlackRock Advisors
under the New Investment Advisory Agreement, the trustees considered, among
other things, whether advisory fees or other expenses would change as a result
of the Transaction. Based on their review of the materials provided and the fact
that the New Investment Advisory Agreement is substantially similar to the
Current Investment Advisory Agreement in all material respects, including the
rate of compensation, the trustees determined that the Transaction should not
increase the total fees payable, including any fee waivers and expense
reimbursements, for advisory and administrative services. The trustees noted
that it was not possible to predict with certainty New BlackRock's future
profitability from its relationship with the Trust.
The trustees discussed with BlackRock Advisors its general methodology to be
used in determining New BlackRock's profitability with respect to its
relationship with the Trust. The trustees noted that they expect to receive
profitability information from New BlackRock on at least an annual basis and
thus be in a position to evaluate whether any adjustments in the Trust's fees
and/or fee breakpoints would be appropriate.
Fees and Economies of Scale -- The Board considered the extent to which
economies of scale might be realized as the assets of the Trust increase and
whether there should be changes in the management fee rate or structure in order
to enable the Trust to participate in these economies of scale. The Board
determined that changes were not currently necessary and that the Trust
appropriately participated in these economies of scale.
BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007 27
Disclosure of Investment Advisory Agreement (concluded)
In reviewing the Transaction, the trustees considered, among other things,
whether advisory fees or other expenses would change as a result of the
Transaction. Based on the fact that the New Investment Advisory Agreement is
substantially similar to the Current Investment Advisory Agreement in all
material respects, including the rate of compensation, the trustees determined
that as a result of the Transaction, the Trust's total advisory fees would be no
higher than the fees under its Current Investment Advisory Agreement. The
trustees noted that in conjunction with their most recent deliberations
concerning the Current Investment Advisory Agreement, the trustees had
determined that the total fees for advisory and administrative services for the
Trust were reasonable in light of the services provided. It was noted that in
conjunction with the recent review of the Current Investment Advisory Agreement,
the trustees had received, among other things, a report from Lipper comparing
the Trust'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.
The trustees concluded that, because the rates for advisory fees for the Trust
would be no higher than its current fee rates, the proposed management fee
structure, including any fee waivers, was reasonable and that no additional
changes were currently necessary.
Fall-Out Benefits -- In evaluating the fall-out benefits to be received by
BlackRock Advisors under the New Investment Advisory Agreement, the trustees
considered whether the Transaction would have an impact on the fall-out benefits
received by the Investment Adviser by virtue of the Current Investment Advisory
Agreement. Based on their review of the materials provided, including materials
received in connection with their most recent approval or continuance of the
Current Investment Advisory Agreement, and their discussions with management of
the Investment Adviser and BlackRock, the trustees determined that those
benefits could include increased ability for BlackRock to distribute shares of
its funds and other investment products and to obtain research services using
the Trust's portfolio transaction brokerage commissions. The trustees also
considered possible benefits stemming from the proposal that PFPC Financial
Services, an affiliate of BlackRock, serve as transfer agent for the Trust
following the Transaction. The trustees noted that any benefits were difficult
to quantify with certainty at this time, and indicated that they would continue
to evaluate them going forward.
Investment Performance -- The trustees considered investment performance for the
Trust. The trustees compared the Trust's performance -- both including and
excluding the effects of the Trust's fees and expenses -- to the performance of
a comparable group of mutual funds, and the performance of a relevant index or
combination of indexes. The comparative information received from Lipper showed
Trust performance at various levels within the range of performance of
comparable funds over different time periods. While the 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. The trustees believed the
Trust's performance was satisfactory. Also, the trustees took into account the
investment performance of funds currently advised by BlackRock Advisors. The
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. The Board noted
BlackRock's considerable investment management experience and capabilities, but
were unable to predict what effect, if any, consummation of the Transaction
would have on the future performance of the Trust.
Conclusion -- After the independent trustees of the Trust deliberated in
executive session, the entire Board, including the independent trustees,
approved the New Investment Advisory Agreement, concluding that the advisory fee
rate was reasonable in relation to the services provided and that the New
Investment Advisory Agreement was in the best interests of the shareholders. In
approving the New Investment Advisory Agreement, the Board noted that it
anticipated reviewing the continuance of the agreement in advance of the
expiration of the initial two-year period.
28 BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007
Contingent BlackRock Sub-Advisory Agreement -- Matters Considered by the Board
At the telephonic and in-person meetings held during April and May 2006 at which
the Board of Trustees discussed and approved the New Investment Advisory
Agreement, the Board, including the independent trustees, also considered a
contingent sub-advisory agreement (the "Contingent Sub-Advisory Agreement")
between the Investment Adviser and BlackRock Advisors (the "BlackRock
Sub-Adviser"). The Contingent Sub-Advisory Agreement is intended to ensure that
the Trust operates with efficient portfolio management services until the
closing of the Transaction, in the event that the Board deems it necessary and
in the best interests of the Trust and its shareholders that the BlackRock
Sub-Adviser assist in managing the operations of the Trust during the interim
period until the closing of the Transaction. The Contingent Sub-Advisory
Agreement would take effect only upon recommendation from the Investment Adviser
and upon subsequent approval of the Board in the period up to the closing of the
Transaction. The effectiveness of the Contingent Sub-Advisory Agreement,
therefore, is contingent on further Board approval. Pursuant to the Contingent
Sub-Advisory Agreement, the BlackRock Sub-Adviser would receive a monthly fee
from the Investment Adviser equal to 50% of the advisory fee received by the
Investment Adviser. The Investment Adviser would pay the BlackRock Sub-Adviser
out of its own resources. There would be no increase in the Trust's expenses as
a result of the Contingent Sub-Advisory Agreement.
In making its approval at the May in-person meeting, the Board considered the
Contingent Sub-Advisory Agreement in conjunction with the New Investment
Advisory Agreement and reviewed the same information and factors discussed
above. The Board also considered in conjunction with the Contingent Sub-Advisory
Agreement the necessity of ensuring that the Trust operates with effective
management services until the closing of the Transaction. In reviewing the
sub-advisory fee rate provided in the Contingent Sub-Advisory Agreement, the
Board took note of the fact that both the Investment Adviser and the BlackRock
Sub-Adviser would have significant responsibilities under their respective
advisory agreements. The Investment Adviser would remain responsible for
oversight of the Trust's operations and administration and the BlackRock
Sub-Adviser would provide advisory services to the Trust under the Contingent
Sub-Advisory Agreement. The 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 Trust would not increase as a result of the
Contingent Sub-Advisory Agreement. Under all of the circumstances, the Board
concluded that it was a reasonable allocation of fees for the BlackRock
Sub-Adviser to receive 50% of the advisory fee paid by the Trust to the
Investment Adviser.
After the independent trustees deliberated in executive session, the entire
Board, including the independent trustees, approved the Contingent Sub-Advisory
Agreement, concluding that the advisory fee was reasonable in relation to the
services provided and that the Contingent Sub-Advisory Agreement was in the best
interests of shareholders.
BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007 29
Disclosure of Sub-Advisory Agreement
New BlackRock Sub-Advisory Agreement -- Matters Considered by the Board
At an in-person meeting held on August 16-17, 2006, the Board of Trustees,
including the independent 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 Trust'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 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 Board reviewed its considerations in connection with its approval
of the New Investment Advisory Agreement in May 2006. The Board 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. The Board
considered all relevant factors and did not identify any particular information
that was all-important or controlling. In reviewing the sub-advisory fee rate
provided for in the BlackRock Sub-Advisory Agreement, the Board 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 Trust and for oversight of 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 Board also took into account the fact
that there is no increase in total advisory fees paid by the Trust as a result
of the BlackRock Sub-Advisory Agreement. Based on its considerations, the 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 trustees deliberated in executive session, the entire
Board, including the independent 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 the Trust's shareholders.
30 BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007
Proxy Results
During the six-month period ended January 31, 2007, BlackRock Natural Resources
Trust's shareholders voted on the following proposals. On July 31, 2006, a
special shareholders' meeting was adjourned with respect to the proposals until
August 31, 2006, at which time they were approved. 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. 3,993,001 123,635 115,654
- ---------------------------------------------------------------------------------------------------
To approve a contingent sub-advisory agreement
with BlackRock Advisors, Inc. 3,922,489 134,774 115,027
- ---------------------------------------------------------------------------------------------------
To approve a change in Fundamental
Investment Restriction. 3,868,213 185,450 118,627
- ---------------------------------------------------------------------------------------------------
Officers and Trustees
Robert C. Doll, Jr., President and Trustee
Donald W. Burton, Trustee
John Francis O'Brien, Trustee
David H. Walsh, Trustee
Fred G. Weiss, Trustee
Donald C. Burke, Vice President and Treasurer
Robert M. Shearer, Vice President and 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 NATURAL RESOURCES TRUST JANUARY 31, 2007 31
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 Trust'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 Trust'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 Trust 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 Trust at (800)
441-7762.
32 BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007
Availability of Additional Information (concluded)
Availability of Proxy Voting Policies and Procedures
The Trust has delegated proxy voting responsibilities to BlackRock and its
affiliates, subject to the general oversight of the Trust's Board of Trustees. A
description of the policies and procedures that BlackRock and its affiliates use
to determine how to vote proxies relating to portfolio securities is available
without charge, upon request, on our Web site at www.blackrock.com, by calling
(800) 441-7762, or on the Web site of the Securities and Exchange Commission
(the"Commission") at http://www.sec.gov.
Availability of Proxy Voting Record
Information on how proxies relating to the Trust'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 Trust 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 Trust'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 Trust'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 NATURAL RESOURCES TRUST JANUARY 31, 2007 33
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.
34 BLACKROCK NATURAL RESOURCES TRUST JANUARY 31, 2007
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 Trust unless
accompanied or preceded by the Trust's current prospectus. Past performance
results shown in this report should not be considered a representation of future
performance. Investment return and principal value of shares will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject to change.
BlackRock Natural Resources Trust
P.O. Box 9011
Princeton, NJ 08543-9011
BLACKROCK
#10303-1/07
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 Natural Resources Trust
By: /s/ Robert C. Doll, Jr.
---------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock Natural Resources Trust
Date: March 26, 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 Natural Resources Trust
Date: March 26, 2007
By: /s/ Donald C. Burke
---------------------------------
Donald C. Burke,
Chief Financial Officer of
BlackRock Natural Resources Trust
Date: March 26, 2007