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 811-21162
Name of Fund: BlackRock Basic Value Principal Protected Fund of
BlackRock Principal Protected Trust
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: Donald C. Burke, Chief Executive Officer,
BlackRock Basic Value Principal Protected Fund of BlackRock Principal
Protected 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: (800) 441-7762
Date of fiscal year end: 06/30/2008
Date of reporting period: 07/01/2007 - 12/31/2007
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE
LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS
BlackRock Basic Value Principal Protected Fund BLACKROCK
OF BLACKROCK PRINCIPAL PROTECTED TRUST
SEMI-ANNUAL REPORT
DECEMBER 31, 2007 | (UNAUDITED)
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
Table of Contents
================================================================================
Page
- --------------------------------------------------------------------------------
A Letter to Shareholders ................................................. 3
Semi-Annual Report:
Fund Summary ............................................................. 4
About Fund Performance ................................................... 6
Disclosure of Expenses ................................................... 6
Portfolio Summary ........................................................ 7
Financial Statements:
Schedule of Investments ................................................ 8
Statement of Assets and Liabilities .................................... 10
Statement of Operations ................................................ 11
Statements of Changes in Net Assets .................................... 12
Financial Highlights ..................................................... 13
Notes to Financial Statements ............................................ 17
Proxy Results ............................................................ 22
Officers and Trustees .................................................... 23
BlackRock Fund Information ............................................... 24
Mutual Fund Family ....................................................... 26
2 BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007
A Letter to Shareholders
Dear Shareholder
Financial markets endured heightened volatility during 2007, culminating in
mixed results for some of the major benchmark indexes:
Total Returns as of December 31, 2007 6-month 12-month
=============================================================================================================
U.S. equities (S&P 500 Index) -1.37% + 5.49%
- -------------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) -7.53 - 1.57
- -------------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +0.39 +11.17
- -------------------------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers U.S. Aggregate Bond Index) +5.93 + 6.97
- -------------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +3.22 + 3.36
- -------------------------------------------------------------------------------------------------------------
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index) -0.67 + 2.27
- -------------------------------------------------------------------------------------------------------------
Past performance is no guarantee of future results. Index performance shown for
illustrative purposes only. You cannot invest directly in an index.
Subprime mortgage woes dominated headlines for much of 2007, spawning a
widespread liquidity and credit crisis with ramifications across global markets.
The Federal Reserve Board (the "Fed") stepped in to inject liquidity into the
markets and bolster investor confidence, cutting the federal funds rate by 0.50%
in September, 0.25% in October and 0.25% in December, which brought the target
short-term interest rate to 4.25%. In taking action, the central bankers, who
had long deemed themselves inflation fighters, were seeking to stem the fallout
from the credit crunch and forestall a wider economic unraveling.
Amid the volatility, equity markets displayed surprising resilience. Market
fundamentals generally held firm, dividend payouts and share buybacks continued,
and valuations remained attractive. To some extent, the credit turmoil dampened
corporate merger-and-acquisition (M&A) activity, a key source of strength for
equity markets, but 2007 remained a record year for global M&A nonetheless. As
the returns indicate, the most recent six months were more trying, reflecting
the slowing U.S. economy, a troubled housing market and a more difficult
corporate earnings backdrop. Overall, large cap stocks outperformed small caps
as investors grew increasingly risk averse. International markets fared better
than their U.S. counterparts, benefiting from generally stronger economies.
In fixed income markets, mixed economic signals and subprime fallout resulted in
a flight to quality. Investors shunned bonds associated with the housing and
credit markets in favor of higher-quality Treasury issues. The yield on 10-year
Treasury issues, which touched 5.30% in June (its highest level in five years),
fell to 4.04% by year-end, while prices correspondingly rose. The tax-exempt
bond market waffled amid the economic uncertainty and concerns around the credit
worthiness of bond insurers, but set a new-issuance record in 2007. A drop in
municipal bond prices created buying opportunities, and the heightened supply
was generally well absorbed.
As you navigate the uncertainties inherent in the financial markets, we
encourage you to start the year by reviewing your investment goals with your
financial professional and making portfolio changes, as needed. For more
reflection on 2007 and our 10 predictions for 2008, please ask your financial
professional for a copy of "What's Ahead in 2008: An Investment Perspective," or
view it online at www.blackrock.com/funds. As always, we thank you for
entrusting BlackRock with your investment assets, and we look forward to
continuing to serve you in the new year and beyond.
Sincerely,
/s/ Rob Kapito
Rob Kapito
President, BlackRock Advisors, LLC
3
THIS PAGE NOT PART OF YOUR FUND REPORT
Fund Summary
Portfolio Management Commentary
How did the Fund perform?
o Fund returns lagged that of the S&P 500 Citigroup Value Index for the
six-month period ended December 31, 2007.
o Large cap stocks outperformed their smaller counterparts and in terms of
investment style, value trailed growth. Bonds, as measured by the Lehman
Brothers U.S. Aggregate Bond Index, outperformed stocks for the six
months. The Fund was invested 100% in equities throughout the period.
What factors influenced performance?
o Detracting most from relative performance was stock selection in health
care and information technology (IT). Unisys Corp., Micron Technology,
Inc., Alcatel SA and LSI Corp. hindered performance, as did lack of
ownership of Microsoft Corp., Apple, Inc. and Merck & Co. The negative
stock-selection effect was partially offset by positive results from
overweighting these two sectors.
o The Fund benefited from stock selection within financials, particularly
among capital markets names, and from underweighting the sector overall.
Avoiding poor-performing Washington Mutual also aided relative
performance. Stock selection in industrials was positive as well, led by
shares of Raytheon Co. and Deere & Co.
o The combination of good stock selection and underweighting consumer
discretionary and overweighting consumer staples further aided relative
results. One of the largest contributors was Unilever NV. Our avoidance of
poor-performing Comcast Corp. was beneficial as well. Finally, an
overweighting in energy and strong performance from Exxon Mobil Corp.,
Anadarko Petroleum Corp., Peabody Energy Corp. and GlobalSantaFe Corp.
proved advantageous.
Describe recent portfolio activity.
o We increased exposure to IT, health care and telecommunication services by
adding to existing holdings and initiating a position in Covidien Ltd.
Exposure to energy also was increased by adding to existing holdings and
taking profits from the sale of GlobalSantaFe and Consol Energy, Inc. and
introducing positions in Transocean, Inc. and Nabors Industries Ltd.
o We reduced exposure to industrials and consumer discretionary by trimming
existing holdings. Within consumer discretionary, we swapped Citadel
Broadcasting Corp., McDonald's Corp. and Comcast for new positions in
Mattel, Inc., CBS Corp., Macy's, Inc., Harley-Davidson, Inc. and The Gap,
Inc.
Describe Fund positioning at period-end.
o The Fund remained invested 100% in equities. Its largest overweights were
in energy, IT and health care. The largest underweights were in
financials, utilities, consumer discretionary and industrials.
o We anticipate a continued slower rate of economic growth in 2008, as
corporate earnings slow and credit conditions worsen. At this writing,
cyclical industries such as housing, financials, semiconductors, retail
and autos are in a state of recession. We are monitoring this situation
closely to help determine if recession will creep into the broader
economy, as some signs indicate.
o We continue to believe that large-capitalization companies offer more
compelling value propositions in this slower phase of economic growth.
However, for the first time since 2003, we are employing a barbell
approach, slowly increasing our holdings in lower-quality cyclical areas
that have been negatively impacted over the past six months. We believe
many of these names have begun to discount dire economic conditions.
Expense Example
Actual Hypothetical**
--------------------------------------------------- ---------------------------------------------------
Beginning Ending Beginning Ending
Account Value Account Value Expenses Paid Account Value Account Value Expenses Paid
July 1, 2007 Dec. 31, 2007 During the Period* July 1, 2007 Dec. 31, 2007 During the Period*
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional ....... $1,000 $932.70 $ 8.52 $1,000 $1,016.48 $ 8.89
Investor A .......... $1,000 $931.50 $ 9.55 $1,000 $1,015.42 $ 9.96
Investor B .......... $1,000 $927.90 $13.29 $1,000 $1,011.51 $13.87
Investor C .......... $1,000 $927.10 $13.28 $1,000 $1,011.51 $13.87
- ------------------------------------------------------------------------------------------------------------------------------------
* For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (1.74% for Institutional, 1.95% for Investor A, 2.72%
for Investor B and 2.72% for Investor C), multiplied by the average
account value over the period, multiplied by 185/365 (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.
See "Disclosure of Expenses" on page 6 for further information on how
expenses were calculated.
4 BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's Institutional
Shares and Investor A Shares compared to growth of an investment in the S&P
500(R) Index, the S&P 500 Citigroup Value Index and the Lehman Brothers U.S.
Aggregate Bond Index. Values are from November 13, 2002 through December 2007.
S&P 500 Lehman Brothers
Institutional Investor A S&P 500(R) Citigroup Value U.S. Aggregate
Shares*+ Shares*+ Index++ Index+++ Bond Index++++
11/13/02** $10,000 $ 9,475 $10,000 $10,000 $10,000
12/02 $10,053 $ 9,525 $ 9,994 $10,227 $10,138
12/03 $11,474 $10,842 $12,860 $13,332 $10,554
12/04 $12,101 $11,406 $14,260 $15,335 $11,012
12/05 $12,339 $11,600 $14,960 $16,671 $11,279
12/06 $14,915 $13,987 $17,323 $20,138 $11,768
12/07 $14,958 $13,986 $18,275 $20,540 $12,588
* Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including advisory fees.
** Commencement of operations.
+ The Fund invests primarily in common stocks and in U.S. Treasury bonds,
including zero coupon bonds.
++ This unmanaged Index covers 500 industrial, utility, transportation and
financial companies of the U.S. markets (mostly NYSE issues) representing
about 75% of NYSE market capitalization and 30% of NYSE issues. S&P 500 is
a registered trademark of the McGraw-Hill Companies.
+++ This unmanaged Index is designed to provide a comprehensive measure of
large-cap U.S. equity "value" performance. It is an unmanaged float
adjusted market capitalization weighted index comprised of stocks
representing approximately half the market capitalization of the S&P 500
Index that have been identified as being on the value end of the
growth-value spectrum.
++++ This unmanaged market-weighted Index is comprised of investment grade
corporate bonds (rated BBB or better), mortgages and U.S. Treasury and
government agency issues with at least one year to maturity.
Performance Summary for the Period Ended December 31, 2007
Average Annual Total Returns*
------------------------------------------------------------------
1 Year 5 Years Since Inception**
------------------- -------------------- --------------------
6-Month w/o sales w/sales w/o sales w/sales w/o sales w/sales
Total Returns charge charge charge charge charge charge
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional .................................. -6.73% +0.29% -- + 8.27% -- + 8.16% --
Investor A ..................................... -6.85 -0.01 -5.26% + 7.99 +6.83% + 7.88 +6.76%
Investor B ..................................... -7.21 -0.78 -4.64 + 7.16 +6.86 + 7.06 +6.91
Investor C ..................................... -7.29 -0.80 -1.66 + 7.15 +7.15 + 7.05 +7.05
Lehman Brothers U.S. Aggregate Bond Index ...... +5.93 +6.97 -- + 4.42 -- + 4.59 --
S&P 500 Index .................................. -1.37 +5.49 -- +12.83 -- +12.47 --
S&P 500 Citigroup Value Index .................. -5.01 +1.99 -- +14.97 -- +15.06 --
- ------------------------------------------------------------------------------------------------------------------------------------
* Assuming maximum sales charges. See "About Fund Performance" on page 6 for
a detailed description of share classes, including any related sales
charges and fees.
** The Fund commenced operations on 11/13/02.
Past performance is not indicative of future results.
BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007 5
About Fund Performance
o Institutional Shares are not subject to any 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.)
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/funds 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 the
performance tables on page 5 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.
Disclosure of Expenses
Shareholders of this Fund may incur the following charges: (a) expenses related
to transactions, including sales charges, redemption fees and exchange fees; and
(b) operating expenses including advisory fees, distribution fees including
12b-1 fees and other Fund expenses. The expense example on page 4 (which is
based on a hypothetical investment of $1,000 invested on July 1, 2007 and held
through December 31, 2007) is intended to assist shareholders both in
calculating expenses based on an investment in the Fund and in comparing these
expenses with similar costs of investing in other mutual funds.
The table 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 corresponding to their share class under the
heading entitled "Expenses Paid During the Period."
The table also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses. In order to assist shareholders
in comparing the ongoing expenses of investing in this Fund and other funds,
compare the 5% hypothetical example with the 5% hypothetical examples that
appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders' ongoing
costs only and do not reflect any transactional expenses, such as sales charges,
redemption fees or exchange fees. Therefore, the hypothetical 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.
6 BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007
Portfolio Summary
As of December 31, 2007
Percent of
Ten Largest Common Stock Holdings Net Assets
- --------------------------------------------------------------------------------
Exxon Mobil Corp. ................................................ 5.5%
American International Group, Inc. ............................... 4.1
JPMorgan Chase & Co. ............................................. 3.0
International Business Machines Corp. ............................ 2.8
Unilever NV ...................................................... 2.8
The Bank of New York Mellon Corp. ................................ 2.6
Verizon Communications, Inc. ..................................... 2.6
General Electric Co. ............................................. 2.5
Time Warner, Inc. ................................................ 2.4
The Travelers Cos., Inc. ......................................... 2.4
- --------------------------------------------------------------------------------
Percent of
Five Largest Industries Net Assets
- --------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels ...................................... 10.6%
Pharmaceuticals .................................................. 6.9
Diversified Financial Services ................................... 6.7
Insurance ........................................................ 7.4
Semiconductors & Semiconductor Equipment ......................... 5.5
- --------------------------------------------------------------------------------
For Fund compliance purposes, the Fund'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 Fund management. This definition may not apply for purposes of
this report, which may combine industry sub-classifications for reporting
ease.
Percent of
Investment Criteria Long-Term Investments
- --------------------------------------------------------------------------------
Above-Average Yield .............................................. 38.2%
Below-Average Price/Earnings Ratio ............................... 24.9
Low Price-to-Book Value .......................................... 21.4
Special Situations ............................................... 11.5
Price-to-Cash Flow ............................................... 4.0
- --------------------------------------------------------------------------------
BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007 7
Schedule of Investments as of December 31, 2007 (Unaudited)
Shares Percent of
Industry Held Common Stocks Value Net Assets
====================================================================================================================================
Above-Average Diversified Telecommunication Services 76,640 AT&T Inc. $ 3,185,158 2.3%
Yield Communications Equipment 179,800 Alcatel SA (b) 1,316,136 0.9
Metals & Mining 61,899 Alcoa, Inc. 2,262,409 1.6
Capital Markets 72,772 The Bank of New York Mellon Corp. 3,548,363 2.6
Pharmaceuticals 109,000 Bristol-Myers Squibb Co. 2,890,680 2.1
Media 8,000 CBS Corp. Class B 218,000 0.2
Oil, Gas & Consumable Fuels 33,000 Chevron Corp. 3,079,890 2.2
Multi-Utilities 3,300 Consolidated Edison, Inc. 161,205 0.1
Multi-Utilities 32,100 Dominion Resources, Inc. 1,523,145 1.1
Chemicals 50,800 E.I. du Pont de Nemours & Co. 2,239,772 1.6
Oil, Gas & Consumable Fuels 82,300 Exxon Mobil Corp. 7,710,687 5.5
Industrial Conglomerates 95,300 General Electric Co. 3,532,771 2.5
Food Products 52,300 General Mills, Inc. 2,981,100 2.1
Pharmaceuticals 32,150 GlaxoSmithKline Plc (b) 1,620,038 1.2
Aerospace & Defense 26,600 Honeywell International, Inc. 1,637,762 1.2
Diversified Financial Services 94,332 JPMorgan Chase & Co. 4,117,592 3.0
Pharmaceuticals 27,500 Johnson & Johnson 1,834,250 1.3
Leisure Equipment & Products 14,800 Mattel, Inc. 281,792 0.2
Pharmaceuticals 96,700 Pfizer, Inc. 2,197,991 1.6
Electric Utilities 44,600 The Southern Co. 1,728,250 1.2
Diversified Telecommunication Services 82,700 Verizon Communications, Inc. 3,613,163 2.6
Pharmaceuticals 30,900 Wyeth 1,365,471 1.0
----------------------
53,045,625 38.1
====================================================================================================================================
Below-Average Insurance 97,500 American International Group, Inc. 5,684,250 4.1
Price/Earnings Diversified Financial Services 53,556 Bank of America Corp. 2,209,721 1.6
Ratio Diversified Financial Services 99,900 Citigroup, Inc. 2,941,056 2.1
Automobiles 3,100 Harley-Davidson, Inc. 144,801 0.1
Computers & Peripherals 43,100 Hewlett-Packard Co. 2,175,688 1.6
Industrial Conglomerates 38,000 Koninklijke Philips Electronics NV 1,624,500 1.2
Food Products 88,200 Kraft Foods, Inc. 2,877,966 2.1
Capital Markets 51,500 Morgan Stanley 2,735,165 2.0
Energy Equipment & Services 5,400 Nabors Industries Ltd. (a) 147,906 0.1
Aerospace & Defense 26,600 Northrop Grumman Corp. 2,091,824 1.5
Insurance 61,134 The Travelers Cos., Inc. 3,289,009 2.4
Food Products 109,100 Unilever NV (b) 3,977,786 2.8
IT Services 308,800 Unisys Corp. (a) 1,460,624 1.0
Office Electronics 200,600 Xerox Corp. 3,247,714 2.3
----------------------
34,608,010 24.9
====================================================================================================================================
Low Oil, Gas & Consumable Fuels 39,400 Anadarko Petroleum Corp. 2,588,186 1.9
Price-to-Book Food Products 16,900 Archer-Daniels-Midland Co. 784,667 0.6
Value Machinery 22,100 Deere & Co. 2,057,952 1.5
Semiconductors & Semiconductor 61,300 Fairchild Semiconductor
Equipment International, Inc. (a) 884,559 0.6
Energy Equipment & Services 63,900 Halliburton Co. 2,422,449 1.7
Insurance 14,200 Hartford Financial Services Group, Inc. 1,238,098 0.9
Household Products 45,100 Kimberly-Clark Corp. 3,127,234 2.2
Semiconductors & Semiconductor 503,800 LSI Corp. (a) 2,675,178 1.9
Equipment
Multiline Retail 4,900 Macy's, Inc. 126,763 0.1
Semiconductors & Semiconductor 285,500 Micron Technology, Inc. (a) 2,069,875 1.5
Equipment
Aerospace & Defense 52,300 Raytheon Co. 3,174,610 2.3
Computers & Peripherals 52,600 Sun Microsystems, Inc. (a) 953,638 0.7
Media 206,900 Time Warner, Inc. 3,415,919 2.4
Industrial Conglomerates 41,525 Tyco International Ltd. 1,646,466 1.2
Media 45,500 Walt Disney Co. 1,468,740 1.0
Commercial Banks 35,500 Wells Fargo & Co. 1,071,745 0.8
----------------------
29,706,079 21.3
====================================================================================================================================
8 BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007
Schedule of Investments (concluded)
Shares Percent of
Industry Held Common Stocks Value Net Assets
====================================================================================================================================
Price-to-Cash Automobiles 50,900 Honda Motor Co., Ltd. (b) $ 1,686,826 1.2%
Flow Oil, Gas & Consumable Fuels 24,900 Peabody Energy Corp. 1,534,836 1.1
Diversified Telecommunication Services 324,300 Qwest Communications
International Inc. 2,273,343 1.6
----------------------
5,495,005 3.9
====================================================================================================================================
Special Energy Equipment & Services 77,500 BJ Services Co. 1,880,150 1.4
Situations Health Care Equipment & Supplies 37,400 Baxter International, Inc. 2,171,070 1.6
Health Care Equipment & Supplies 38,725 Covidien Ltd. 1,715,130 1.2
Specialty Retail 8,300 The Gap, Inc. 176,624 0.1
Semiconductors & Semiconductor 80,200 Intel Corp. 2,138,132 1.5
Equipment
Computers & Peripherals 36,600 International Business Machines Corp. 3,956,460 2.8
Pharmaceuticals 92,200 Schering-Plough Corp. 2,456,208 1.8
Energy Equipment & Services 9,942 Transocean, Inc. (a) 1,423,197 1.0
----------------------
15,916,971 11.4
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Common Stocks
(Cost -- $106,416,719) 138,771,690 99.6
====================================================================================================================================
====================================================================================================================================
Beneficial
Interest Short-Term Securities
====================================================================================================================================
$1,082,417 BlackRock Liquidity Series, LLC
Cash Sweep Series, 5.04% (c)(d) 1,082,417 0.8
- ------------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Securities
(Cost -- $1,082,417) 1,082,417 0.8
====================================================================================================================================
Total Investments Before Options
Written (Cost -- $107,499,136*) 139,854,107 100.4
====================================================================================================================================
Number of
Contracts Options Written
====================================================================================================================================
Call Options Written 100 Chevron Corp., expiring
January 2008 at $90 (43,000) (0.1)
194 Exxon Mobil Corp., expiring
January 2008 at $100 (3,395) 0.0
- ------------------------------------------------------------------------------------------------------------------------------------
Total Options Written
(Premiums Received -- $69,237) (46,395) (0.1)
====================================================================================================================================
Total Investments, Net of Options Written (Cost -- $107,429,899) 139,807,712 100.3
Liabilities in Excess of Other Assets (463,115) (0.3)
-----------------------
Net Assets $139,344,597 100.0%
=======================
* The cost and unrealized appreciation (depreciation) of investments, as of
December 31, 2007, as computed for federal income tax purposes, were as
follows:
Aggregate cost ....................................... $109,860,651
============
Gross unrealized appreciation ........................ $ 35,094,197
Gross unrealized depreciation ........................ (5,100,741)
------------
Net unrealized appreciation .......................... $ 29,993,456
============
(a) Non-income producing security.
(b) Depositary receipts.
(c) Investments in companies considered to be an affiliate of the Fund, 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 $(917,703) $45,540
--------------------------------------------------------------------------
(d) Represents the current yield as of December 31, 2007.
o For Fund compliance purposes, the Fund'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 Fund management. This definition may not apply for purposes of
this report, which may combine industry sub-classifications for reporting
ease. Industries are shown as a percent of net assets.
See Notes to Financial Statements.
BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007 9
Statement of Assets and Liabilities
As of December 31, 2007 (Unaudited)
===================================================================================================================================
Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified cost -- $106,416,719) ............. $ 138,771,690
Investments in affiliated securities, at value (identified cost -- $1,082,417) ................. 1,082,417
Dividends receivable ........................................................................... 182,661
Prepaid expenses and other assets .............................................................. 1,787
-------------
Total assets ................................................................................... 140,038,555
-------------
===================================================================================================================================
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------------
Options written, at value (premiums received -- $69,237) ....................................... 46,395
Payables:
Beneficial interest redeemed ............................................................... 304,564
Distributor ................................................................................ 107,134
Financial warranty fee ..................................................................... 98,407
Investment adviser ......................................................................... 78,645
Other affiliates ........................................................................... 33,745
Securities purchased ....................................................................... 9,579
Distributions to shareholders .............................................................. 135 632,209
-------------
Accrued expenses and other liabilities ......................................................... 15,354
-------------
Total liabilities .............................................................................. 693,958
-------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets ..................................................................................... $ 139,344,597
=============
===================================================================================================================================
Net Assets Consist of
- -----------------------------------------------------------------------------------------------------------------------------------
Paid-in capital, unlimited shares of no par value authorized ................................... $ 109,065,578
Accumulated investment loss -- net ............................................................. (456,070)
Accumulated realized capital losses -- net ..................................................... (1,642,724)
Unrealized appreciation -- net ................................................................. 32,377,813
-------------
Net assets ..................................................................................... $ 139,344,597
=============
===================================================================================================================================
Net Asset Value
- -----------------------------------------------------------------------------------------------------------------------------------
Institutional -- Based on net assets of $5,862,258 and
572,706 beneficial interest outstanding ...................................................... $ 10.24
=============
Investor A -- Based on net assets of $9,462,933 and
924,024 beneficial interest outstanding ...................................................... $ 10.24
=============
Investor B -- Based on net assets of $73,782,651 and
7,189,467 beneficial interest outstanding .................................................... $ 10.26
=============
Investor C -- Based on net assets of $50,236,755 and
4,889,257 beneficial interest outstanding .................................................... $ 10.27
=============
See Notes to Financial Statements.
10 BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007
Statement of Operations
For the Six Months Ended December 31, 2007 (Unaudited)
===================================================================================================================================
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends (net of $7,578 foreign withholding tax) .............................................. $ 1,584,914
Interest from affiliates ....................................................................... 45,540
-------------
Total income ................................................................................... 1,630,454
-------------
===================================================================================================================================
Expenses
- -----------------------------------------------------------------------------------------------------------------------------------
Financial warranty fees ........................................................................ $ 643,881
Investment advisory fees ....................................................................... 514,577
Service and distribution fees -- Investor B .................................................... 417,409
Service and distribution fees -- Investor C .................................................... 286,488
Accounting services ............................................................................ 44,582
Transfer agent fees -- Investor B .............................................................. 37,871
Professional fees .............................................................................. 32,554
Transfer agent fees -- Investor C .............................................................. 25,260
Printing and shareholder reports ............................................................... 24,722
Custodian fees ................................................................................. 20,401
Service fees -- Investor A ..................................................................... 13,471
Trustees' fees and expenses .................................................................... 9,323
Transfer agent fees -- Investor A .............................................................. 3,755
Transfer agent fees -- Institutional ........................................................... 3,589
Pricing fees ................................................................................... 562
Other .......................................................................................... 8,079
-------------
Total expenses ................................................................................. 2,086,524
-------------
Investment loss -- net ......................................................................... (456,070)
-------------
===================================================================================================================================
Realized & Unrealized Gain (Loss) -- Net
- -----------------------------------------------------------------------------------------------------------------------------------
Realized gain on:
Investments -- net ......................................................................... 8,362,734
Options written -- net ..................................................................... 74,749 8,437,483
-------------
Change in unrealized appreciation/depreciation on:
Investments -- net ......................................................................... (19,617,512)
Options written -- net ..................................................................... (31,109) (19,648,621)
-------------------------------
Total realized and unrealized loss -- net ...................................................... (11,211,138)
-------------
Net Decrease in Net Assets Resulting from Operations ........................................... $ (11,667,208)
=============
See Notes to Financial Statements.
BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007 11
Statements of Changes in Net Assets
For the Six
Months Ended For the
December 31, Year Ended
2007 June 30,
Increase (Decrease) in Net Assets: (Unaudited) 2007
===================================================================================================================================
Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Investment loss -- net ......................................................................... $ (456,070) $ (792,734)
Realized gain -- net ........................................................................... 8,437,483 17,252,556
Change in unrealized appreciation/depreciation -- net .......................................... (19,648,621) 20,388,652
-------------------------------
Net increase in net assets resulting from operations ........................................... (11,667,208) 36,848,474
-------------------------------
===================================================================================================================================
Distributions to Shareholders
- -----------------------------------------------------------------------------------------------------------------------------------
Realized gain -- net:
Institutional .............................................................................. (900,099) (670,861)
Investor A ................................................................................. (1,411,747) (1,149,543)
Investor B ................................................................................. (10,517,239) (6,788,916)
Investor C ................................................................................. (7,113,402) (4,676,490)
-------------------------------
Net decrease in net assets resulting from distributions to shareholders ........................ (19,942,487) (13,285,810)
-------------------------------
===================================================================================================================================
Beneficial Interest Transactions
- -----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets derived from beneficial interest transactions ....................... (1,163,895) (30,710,156)
-------------------------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Total decrease in net assets ................................................................... (32,773,590) (7,147,492)
Beginning of period ............................................................................ 172,118,187 179,265,679
-------------------------------
End of period* ................................................................................. $ 139,344,597 $ 172,118,187
===============================
* Accumulated investment loss -- net ......................................................... $ (456,070) --
===============================
See Notes to Financial Statements.
12 BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007
Financial Highlights
Institutional
---------------------------------------------------------------------
For the For the
Six Months Period
Ended Nov. 13,
Dec. 31, For the Year Ended June 30, 2002+ to
The following per share data and ratios have been derived 2007 ----------------------------------------- June 30,
from information provided in the financial statements. (Unaudited) 2007 2006 2005 2004 2003
===================================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ....................... $ 12.87 $ 11.35 $ 10.90 $ 11.53 $ 10.55 $ 10.00
-------------------------------------------------------------------
Investment income -- net ................................... .02* .06* .06* .09* .08* .08
Realized and unrealized gain (loss) -- net ................. (.85) 2.58 .93 .06 1.03 .48
-------------------------------------------------------------------
Total from investment operations ........................... (.83) 2.64 .99 .15 1.11 .56
-------------------------------------------------------------------
Less dividends and distributions:
Investment income -- net ............................... -- -- -- -- (.13) (.01)
Realized gain -- net ................................... (1.80) (1.12) (.54) (.78) -- --
-------------------------------------------------------------------
Total dividends and distributions .......................... (1.80) (1.12) (.54) (.78) (.13) (.01)
-------------------------------------------------------------------
Net asset value, end of period ............................. $ 10.24 $ 12.87 $ 11.35 $ 10.90 $ 11.53 $ 10.55
===================================================================
===================================================================================================================================
Total Investment Return**
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ......................... (6.73%)@@ 24.12% 9.22% 1.22% 10.64% 5.63%@@
===================================================================
===================================================================================================================================
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses ................................................... 1.74%@ 1.70% 1.69% 1.68% 1.75% 1.80%@
===================================================================
Investment income -- net ................................... .31%@ .47% .52% .82% .73% 1.08%@
===================================================================
===================================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ................... $ 5,862 $ 7,393 $ 7,886 $10,503 $15,576 $21,877
===================================================================
Portfolio turnover ......................................... 16% 33% 65% 65% 88% 108%
===================================================================
* Based on average shares outstanding.
** Total investment returns exclude the effect of sales charges.
+ Commencement of operations.
@ Annualized.
@@ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007 13
Financial Highlights (continued)
Investor A
---------------------------------------------------------------------
For the For the
Six Months Period
Ended Nov. 13,
Dec. 31, For the Year Ended June 30, 2002+ to
The following per share data and ratios have been derived 2007 ----------------------------------------- June 30,
from information provided in the financial statements. (Unaudited) 2007 2006 2005 2004 2003
===================================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ....................... $ 12.85 $ 11.34 $ 10.88 $ 11.52 $ 10.53 $ 10.00
-------------------------------------------------------------------
Investment income -- net ................................... .01* .03* .03* .06* .06* .05
Realized and unrealized gain (loss) -- net ................. (.86) 2.57 .93 .06 1.03 .49
-------------------------------------------------------------------
Total from investment operations ........................... (.85) 2.60 .96 .12 1.09 .54
-------------------------------------------------------------------
Less dividends and distributions:
Investment income -- net ............................... -- -- -- -- (.10) (.01)
Realized gain -- net ................................... (1.76) (1.09) (.50) (.76) -- --
-------------------------------------------------------------------
Total dividends and distributions .......................... (1.76) (1.09) (.50) (.76) (.10) (.01)
-------------------------------------------------------------------
Net asset value, end of period ............................. $ 10.24 $ 12.85 $ 11.34 $ 10.88 $ 11.52 $ 10.53
===================================================================
===================================================================================================================================
Total Investment Return**
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ......................... (6.85%)@@ 23.74% 8.93% .96% 10.44% 5.43%@@
===================================================================
===================================================================================================================================
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses ................................................... 1.95%@ 1.95% 1.94% 1.93% 2.00% 2.05%@
===================================================================
Investment income -- net ................................... .10%@ .21% .27% .57% .51% .83%@
===================================================================
===================================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ................... $ 9,463 $12,145 $ 6,637 $ 8,735 $13,022 $22,090
===================================================================
Portfolio turnover ......................................... 16% 33% 65% 65% 88% 108%
===================================================================
* Based on average shares outstanding.
** Total investment returns exclude the effect of sales charges.
+ Commencement of operations.
@ Annualized.
@@ Aggregate total investment return.
See Notes to Financial Statements.
14 BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007
Financial Highlights (continued)
Investor B
---------------------------------------------------------------------
For the For the
Six Months Period
Ended Nov. 13,
Dec. 31, For the Year Ended June 30, 2002+ to
The following per share data and ratios have been derived 2007 ----------------------------------------- June 30,
from information provided in the financial statements. (Unaudited) 2007 2006 2005 2004 2003
===================================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ....................... $ 12.81 $ 11.23 $ 10.77 $ 11.45 $ 10.48 $ 10.00
-------------------------------------------------------------------
Investment income (loss) -- net ............................ (.04)* (.06)* (.05)* (.02)* (.03)* --++
Realized and unrealized gain (loss) -- net ................. (.85) 2.54 .91 .05 1.03 .49
-------------------------------------------------------------------
Total from investment operations ........................... (.89) 2.48 .86 .03 1.00 .49
-------------------------------------------------------------------
Less dividends and distributions:
Investment income -- net ............................... -- -- -- -- (.03) (.01)
Realized gain -- net ................................... (1.66) (.90) (.40) (.71) -- --
-------------------------------------------------------------------
Total dividends and distributions .......................... (1.66) (.90) (.40) (.71) (.03) (.01)
-------------------------------------------------------------------
Net asset value, end of period ............................. $ 10.26 $ 12.81 $ 11.23 $ 10.77 $ 11.45 $ 10.48
===================================================================
===================================================================================================================================
Total Investment Return**
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ......................... (7.21%)@@ 22.78% 8.12% .19% 9.58% 4.93%@@
===================================================================
===================================================================================================================================
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses ................................................... 2.72%@ 2.71% 2.70% 2.70% 2.76% 2.82%@
===================================================================
Investment income (loss) -- net ............................ (.67%)@ (.54%) (.49%) (.20%) (.30%) .07%@
===================================================================
===================================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ................... $73,783 $90,268 $100,584 $117,140 $144,787 $159,057
===================================================================
Portfolio turnover ......................................... 16% 33% 65% 65% 88% 108%
===================================================================
* Based on average shares outstanding.
** Total investment returns exclude the effect of sales charges.
+ Commencement of operations.
++ Amount is less than $.01 per share.
@ Annualized.
@@ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007 15
Financial Highlights (concluded)
Investor C
---------------------------------------------------------------------
For the For the
Six Months Period
Ended Nov. 13,
Dec. 31, For the Year Ended June 30, 2002+ to
The following per share data and ratios have been derived 2007 ----------------------------------------- June 30,
from information provided in the financial statements. (Unaudited) 2007 2006 2005 2004 2003
===================================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ....................... $ 12.83 $ 11.25 $ 10.78 $ 11.45 $ 10.48 $ 10.00
-------------------------------------------------------------------
Investment income (loss) -- net ............................ (.04)* (.07)* (.05)* (.02)* (.03)* --++
Realized and unrealized gain (loss) -- net ................. (.86) 2.56 .92 .06 1.03 .49
-------------------------------------------------------------------
Total from investment operations ........................... (.90) 2.49 .87 .04 1.00 .49
-------------------------------------------------------------------
Less dividends and distributions:
Investment income -- net ............................... -- -- -- -- (.03) (.01)
Realized gain -- net ................................... (1.66) (.91) (.40) (.71) -- --
-------------------------------------------------------------------
Total dividends and distributions .......................... (1.66) (.91) (.40) (.71) (.03) (.01)
-------------------------------------------------------------------
Net asset value, end of period ............................. $ 10.27 $ 12.83 $ 11.25 $ 10.78 $ 11.45 $ 10.48
===================================================================
===================================================================================================================================
Total Investment Return**
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ......................... (7.29%)@@ 22.83% 8.15% .23% 9.54% 4.93%@@
===================================================================
===================================================================================================================================
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses ................................................... 2.72%@ 2.71% 2.72% 2.70% 2.76% 2.82%@
===================================================================
Investment income (loss) -- net ............................ (.67)@ (.54%) (.49%) (.20%) (.29%) .06%@
===================================================================
===================================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ................... $50,237 $62,312 $64,159 $78,110 $104,840 $129,392
===================================================================
Portfolio turnover ......................................... 16% 33% 65% 65% 88% 108%
===================================================================
* Based on average shares outstanding.
** Total investment returns exclude the effect of sales charges.
+ Commencement of operations.
++ Amount is less than $.01 per share.
@ Annualized.
@@ Aggregate total investment return.
See Notes to Financial Statements.
16 BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007
Notes to Financial Statements (Unaudited)
1. Significant Accounting Policies:
BlackRock Basic Value Principal Protected Fund (the "Fund") and BlackRock
Principal Protected Trust (the "Trust") are registered under the Investment
Company Act of 1940, as amended. The Fund is diversified and the Trust is
registered as an open-end management investment company. The Fund's financial
statements are prepared in conformity with U.S. generally accepted accounting
principles, which may require the use of management accruals and estimates.
Actual results may differ from these estimates. These unaudited financial
statements reflect all adjustments, which are, in the opinion of management,
necessary to present a fair statement of the results for the interim period. All
such adjustments are of a normal, recurring nature. The Fund offers multiple
classes of shares. Shares of the Fund were offered during the initial offering
period but will not be offered during the Guarantee Period from November 13,
2002 through November 13, 2009 (the "Guarantee Maturity Date"), except in
connection with reinvestment of dividends and distributions. The Fund will be
offered on a continuous basis after this date. During the Guarantee Period, the
Fund will seek long-term growth of capital to the extent permitted by a strategy
that seeks to use investments in common stocks, U.S. Treasury bonds, including
zero coupon bonds, and other fixed income instruments, to protect the original
principal value of the Fund (less redemptions, cash distributions and dividends
and extraordinary expenses) at the Guarantee Maturity Date.
The Trust, on behalf of the Fund, has entered into a Financial Warranty
Agreement with Main Place Funding, LLC (the "Warranty Provider"). The Financial
Warranty Agreement is intended to make sure that on the Guarantee Maturity Date,
each shareholder of the Fund will be entitled to redeem his or her shares for an
amount no less than the initial value of that shareholder's account (less
expenses and sales charges not covered by the Financial Warranty Agreement),
provided that all dividends and distributions received from the Fund have been
reinvested and no shares have been redeemed (the "Guaranteed Amount"). The Fund
will pay to the Warranty Provider, under the Financial Warranty Agreement, an
annual fee equal to .80% of the Fund's average daily net assets during the
Guarantee Period. If the value of the Fund's assets on the Guarantee Maturity
Date is insufficient to result in the value of each shareholder's account being
at least equal to the shareholder's Guaranteed Amount, the Warranty Provider
will pay the Fund an amount sufficient to make sure that each shareholder's
account can be redeemed for an amount equal to his or her Guaranteed Amount.
All classes of shares have identical voting, dividend, liquidation and other
rights and the same terms and conditions, except that Investor A, Investor B and
Investor C Shares bear certain expenses related to the account maintenance of
such shares, and Investor B and Investor C Shares also bear certain expenses
related to the distribution of such shares. Each class has exclusive voting
rights with respect to matters relating to its account maintenance and
distribution expenditures (except that Investor B shareholders may vote on
certain changes to the Investor A distribution plan). Income, expenses (other
than expenses attributable to a specific class), and realized and unrealized
gains and losses are allocated daily to each class based on its relative net
assets. The following is a summary of significant accounting policies followed
by the Fund.
(a) Valuation of investments -- Equity securities that are held by the Fund 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.
Debt securities are traded primarily in the OTC markets and are valued at the
last available bid price in the OTC market or on the basis of values obtained by
a pricing service. Pricing services use valuation matrixes that incorporate both
dealer-supplied valuations and valuation models. The procedures of the pricing
service and its valuations are reviewed by the officers of the Fund under the
general direction of the Board of Trustees. Such valuations and procedures will
be reviewed periodically by the Board of Trustees.
Effective September 4, 2007, exchange-traded options are valued at the mean
between the last bid and ask prices at the close of the options market in which
the options trade and previously were valued at the last sales price as of the
close of options on applicable exchanges. Options traded in the OTC market are
valued at the last asked price (options written) and the last bid price (options
purchased). Swap agreements are valued based upon quoted fair valuations by the
Portfolio 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. Valuation of 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 Fund.
Securities and assets for which market quotations are not readily available
BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007 17
Notes to Financial Statements (continued)
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 Fund'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 Fund's net asset value. If events (for example, a company
announcement, market volatility or a natural disaster) occur during such periods
that are expected to materially affect the value of such securities, those
securities will be valued at their fair value as determined in good faith by the
Trust's Board of Trustees or by BlackRock Advisors, LLC (the "Manager"), an
indirect, wholly owned subsidiary of BlackRock, Inc., using a pricing service
and/or procedures approved by the Trust's Board of Trustees.
(b) Derivative financial instruments -- The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movements and movements in the securities
markets. Losses may arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
o Financial futures contracts -- The Fund may purchase or sell financial
futures contracts and options on such financial futures contracts.
Financial futures contracts are contracts for delayed delivery of
securities at a specific future date and at a specific price or yield.
Upon entering into a contract, the Fund deposits, and maintains as
collateral, such initial margin as required by the exchange on which the
transaction is effected. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known
as variation margin and are recorded by the Fund as unrealized gains or
losses. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the value of the contract at the time
it was opened and the value at the time it was closed.
o Options -- The Fund may write and purchase call and put options. When the
Fund writes an option, an amount equal to the premium received by the Fund
is reflected as an asset and an equivalent liability. The amount of the
liability is subsequently marked-to-market to reflect the current 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 Fund enters into a closing transaction), the Fund realizes a gain or
loss on the option to the extent of the premiums received or paid (or gain
or loss to the extent the cost of the closing transaction exceeds the
premium paid or received).
Written and purchased options are non-income producing investments.
(c) Foreign currency transactions -- Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized. Assets
and liabilities denominated in foreign currencies are valued at the exchange
rate at the end of the period. Foreign currency transactions are the result of
settling (realized) or valuing (unrealized) assets or liabilities expressed in
foreign currencies into U.S. dollars. Realized and unrealized gains or losses
from investments include the effects of foreign exchange rates on investments.
The Fund 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 Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required. 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 deter-mined 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 Fund has determined the ex-dividend date.
Interest income is recognized on the accrual basis.
(f) Dividends and distributions -- Dividends and distributions paid by the Fund
are recorded on the ex-dividend dates.
(g) Securities lending -- The Fund 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 Fund and any
additional required collateral is delivered
18 BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007
Notes to Financial Statements (continued)
to the Fund on the next business day. Where the Fund receives securities as
collateral for the loaned securities, it collects a fee from the borrower. The
Fund typically receives the income on the loaned securities but does not receive
the income on the collateral. Where the Fund receives cash collateral, it may
invest such collateral and retain the amount earned on such investment, net of
any amount rebated to the borrower. Loans of securities are terminable at any
time and the borrower, after notice, is required to return borrowed securities
within five business days. The Fund may pay reasonable 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 Fund could experience delays
and costs in gaining access to the collateral. The Fund 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.
(h) Recent accounting pronouncements -- Effective June 29, 2007, the Fund
implemented Financial Accounting Standards Board ("FASB") Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes -- an interpretation of FASB
Statement No. 109" ("FIN 48"). FIN 48 prescribes the minimum recognition
threshold a tax position must meet in connec-tion with accounting for
uncertainties in income tax positions taken or expected to be taken by an
entity, including investment companies, before being measured and recognized in
the financial statements. Management has evaluated the application of FIN 48 to
the Fund, and has determined that the adoption of FIN 48 does not have a
material impact on the Fund's financial statements. The Fund files U.S. federal
and various state and local tax returns. No income tax returns are currently
under examination. The statute of limitations on the Fund's U.S. federal tax
returns remains open for the years ended June 30, 2004 through June 30, 2007.
The statute of limitations on the Fund's state and local tax returns may remain
open for an additional year depending upon the jurisdiction.
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. At this time, management is evaluating the implications of FAS 157
and its impact on the Fund's financial statements, if any, has not been
determined.
In addition, in February 2007, Statement of Financial Accounting Standards No.
159, "The Fair Value Option for Financial Assets and Financial Liabilities"
("FAS 159"), was issued and is effective for fiscal years beginning after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the provisions of FAS 157. FAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value. FAS 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. At this time, management is evaluating
the implications of FAS 159 and its impact on the Fund's financial statements,
if any, has not been determined.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with the Manager. The
Fund has also entered into separate Distribution Agreements with FAM
Distributors, Inc. ("FAMD") and BlackRock Distributors, Inc. ("BDI")
(collectively, the "Distributor") and has adopted separate Distribution Plans
with respect to its Investor A, Investor B and Investor C Shares. FAMD is a
wholly owned subsidiary of Merrill Lynch Group, Inc., and BDI is an affiliate of
BlackRock, Inc. Merrill Lynch and Co., Inc. ("Merrill Lynch") and The PNC
Financial Services Group, Inc. ("PNC") are the principal owners of BlackRock,
Inc.
The Manager is responsible for the management of the Company's investments and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Fund. For such services, the Fund
pays a monthly fee at the annual rate of .65% of the average daily value of the
Fund'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 Fund to the Manager.
Pursuant to Distribution Plans adopted by the Fund in accordance with Rule 12b-1
under the Investment Company Act of 1940, the Fund pays the Distributor ongoing
service and distribution fees. The fees are accrued daily and paid monthly at
annual rates based upon the average daily net assets of the shares as follows:
- --------------------------------------------------------------------------------
Service Distribution
Fee Fee
- --------------------------------------------------------------------------------
Investor A ................................... .25% --
Investor B ................................... .25% .75%
Investor C ................................... .25% .75%
- --------------------------------------------------------------------------------
Pursuant to sub-agreements with each Distributor, broker-dealers, including
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a wholly owned
subsidiary of Merrill Lynch, and the Distributor, provide shareholder servicing
and distribution services to the Fund. The ongoing service fee compensates the
Distributor and each broker-dealer (including MLPF&S) for providing shareholder
servicing to Investor A, Investor B and Investor C shareholders. The ongoing
distribution fee compensates the Distributor and broker-dealers for providing
shareholder servicing to Investor B and Investor C shareholders.
BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007 19
Notes to Financial Statements (continued)
For the six months ended December 31, 2007, MLPF&S received contingent deferred
sales charges of $88,019 and $84 relating to transactions in Investor B and
Investor C Shares, respectively.
The Fund 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 Fund has retained BIM, as the securities
lending agent for a fee based on a share of the returns on investment of cash
collateral. BIM, may, on behalf of the Fund, invest cash collateral received by
the Fund for such loans, among other things, in a private investment company
managed by the Manager or in registered money market funds advised by the
Manager or its affiliates. For the six months ended December 31, 2007, there
were no securities lending agent fees paid to BIM.
In addition, MLPF&S received $10,796 in commissions on the execution of
portfolio security transactions for the Fund for the six months ended December
31, 2007.
For the six months ended December 31, 2007, the Fund reimbursed the Manager
$1,608 for certain accounting services.
PFPC Inc., an indirect, wholly owned subsidiary of PNC and an affiliate of the
Manager, is the Fund's transfer agent.
Certain officers and/or directors of the Company are officers and/or directors
of BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended December 31, 2007 were $24,206,071 and $44,256,300, respectively.
Transactions in call options written for the six months ended December 31, 2007
were as follows:
- -------------------------------------------------------------------------------
Shares Subject Premiums
Call Options Written to Options Received
- -------------------------------------------------------------------------------
Outstanding call options written, beginning
of year ...................................... 522 $ 158,871
Options written ................................ 707 89,385
Options closed ................................. (895) (170,426)
Options exercised .............................. (40) (8,593)
--------------------------
Outstanding call options written, end of year .. 294 $ 69,237
==========================
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest transactions were
$1,163,895 for the six months ended December 31, 2007 and $30,710,156 for the
year ended June 30, 2007, respectively.
Transactions in beneficial interest for each class were as follows:
- -------------------------------------------------------------------------------
Institutional Shares for the Six Months Dollar
Ended December 31, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions ................ 80,130 $ 834,956
Shares redeemed ................................ (81,908) (1,002,169)
--------------------------
Net decrease ................................... (1,778) $ (167,213)
==========================
- -------------------------------------------------------------------------------
Institutional Shares for the Year Dollar
Ended June 30, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions ................ 51,343 $ 607,387
Shares redeemed ................................ (171,369) (2,071,214)
--------------------------
Net decrease ................................... (120,026) $ (1,463,827)
==========================
- -------------------------------------------------------------------------------
Investor A Shares for the Six Months Dollar
Ended December 31, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions ................ 124,048 $ 1,293,577
Shares redeemed ................................ (145,030) (1,817,898)
--------------------------
Net decrease ................................... (20,982) $ (524,321)
==========================
- -------------------------------------------------------------------------------
Investor A Shares for the Year Dollar
Ended June 30, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions ................ 90,723 $ 1,073,378
Shares converted* .............................. 663,179 7,911,721
--------------------------
Total issued ................................... 753,902 8,985,099
Shares redeemed ................................ (394,164) (4,817,911)
--------------------------
Net increase ................................... 359,738 $ 4,167,188
==========================
20 BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007
Notes to Financial Statements (concluded)
- -------------------------------------------------------------------------------
Investor B Shares for the Six Months Dollar
Ended December 31, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions ................ 915,325 $ 9,573,641
Shares redeemed ................................ (769,991) (9,346,358)
--------------------------
Net increase ................................... 145,334 $ 227,283
==========================
- -------------------------------------------------------------------------------
Investor B Shares for the Year Dollar
Ended June 30, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions ................ 521,839 $ 6,178,577
Shares redeemed or converted* .................. (2,434,140) (29,282,378)
--------------------------
Net decrease ................................... (1,912,301) $(23,103,801)
==========================
* In September 2006, certain brokerages, including a wholly owned subsidiary
of Merrill Lynch, entered into a remediation agreement with a regulatory
organization, which among other things, permitted certain shareholders of
Investor B Shares to convert their shares into the Fund's Investor A
Shares.
- -------------------------------------------------------------------------------
Investor C Shares for the Six Months Dollar
Ended December 31, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions ................ 628,571 $ 6,582,001
Shares redeemed ................................ (597,677) (7,281,645)
--------------------------
Net increase (decrease) ........................ 30,894 $ (699,644)
==========================
- -------------------------------------------------------------------------------
Investor C Shares for the Year Dollar
Ended June 30, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of distributions ................ 368,117 $ 4,362,187
Shares redeemed ................................ (1,214,511) (14,671,903)
--------------------------
Net decrease ................................... (846,394) $(10,309,716)
==========================
BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007 21
Proxy Results
During the six-month period ended December 31, 2007, the shareholders of
BlackRock Basic Value Principal Protected Fund of BlackRock Principal Protected
Trust voted on the following proposal, which was approved at a special
shareholders' meeting on September 7, 2007. This proposal was a part of the
reorganization of the Fund's Board of Trustees that took effect on November 1,
2007. A description of the proposal and number of shares voted are as follows:
- --------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
- --------------------------------------------------------------------------------------------------
To elect the Fund's Board of Trustees: James H. Bodurtha 13,126,383 216,673
Bruce R. Bond 13,117,523 225,533
Donald W. Burton 13,122,858 220,198
Richard S. Davis 13,113,654 229,402
Stuart E. Eizenstat 13,121,195 221,861
Laurence D. Fink 12,122,858 220,198
Kenneth A. Froot 13,124,720 218,336
Henry Gabbay 13,118,989 224,067
Robert M. Hernandez 13,117,523 225,533
John F. O'Brien 13,122,858 220,198
Roberta Cooper Ramo 13,126,383 216,673
Jean Margo Reid 13,126,383 216,673
David H. Walsh 13,126,383 216,673
Fred G. Weiss 13,121,195 221,861
Richard R. West 13,122,858 220,198
- --------------------------------------------------------------------------------------------------
22 BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007
Officers and Trustees
James H. Bodurtha, Trustee
Bruce R. Bond, Trustee
Donald W. Burton, Trustee
Richard S. Davis, Trustee
Stuart E. Eizenstat, Trustee
Laurence D. Fink, Trustee
Kenneth A. Froot, Trustee
Henry Gabbay, Trustee
Robert M. Hernandez, Trustee
John F. O'Brien, Trustee
Roberta Cooper Ramo, Trustee
Jean Margo Reid, Trustee
David H. Walsh, Trustee
Fred G. Weiss, Trustee
Richard R. West, Trustee
Joe Grills, Advisory Board Member*
Donald C. Burke, Fund President and Chief Executive Officer
Anne F. Ackerley, Vice President
Neal J. Andrews, Chief Financial Officer
Jay M. Fife, Treasurer
Brian P. Kindelan, Chief Compliance Officer
Howard Surloff, Secretary
* Joe Grills resigned from the Advisory Board of the Fund, effective
December 31, 2007.
Custodian
Brown Brothers Harriman & Co.
Boston, MA 02109
Transfer Agent
PFPC Inc.
Wilmington, DE 19809
Accounting Agent
State Street Bank and Trust Company
Princeton, NJ 08540
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Princeton, NJ 08540
Legal Counsel
Willkie Farr & Gallagher LLP
New York, NY 10019
- --------------------------------------------------------------------------------
If you would like a copy, free of charge, of the most recent annual or quarterly
report of Main Place Funding, LLC, the Fund's Warranty Provider, or its parent
corporation, Bank of America Corporation, please contact the Fund at (800)
441-7762.
- --------------------------------------------------------------------------------
BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007 23
BlackRock Fund Information
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former fund
investors and individual clients (collectively, "Clients") and to safeguarding
their non-public personal information. The following information is provided to
help you understand what personal information BlackRock collects, how we protect
that information and why in certain cases we share such information with select
parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you
from different sources, including the following: (i) information we receive from
you or, if applicable, your financial intermediary, on applications, forms or
other documents; (ii) information about your transactions with us, our
affiliates, or others; (iii) information we receive from a consumer reporting
agency; and (iv) from visits to our websites.
BlackRock does not sell or disclose to non-affiliated third parties any
non-public personal information about its Clients, except as permitted by law or
as is necessary to respond to regulatory requests or to service Client accounts.
These non-affiliated third parties are required to protect the confidentiality
and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that may
be of interest to you. In addition, BlackRock restricts access to non-public
personal information about its Clients to those BlackRock employees with a
legitimate business need for the information. BlackRock maintains physical,
electronic and procedural safeguards that are designed to protect the non-public
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
Availability of Additional Information
Electronic copies of most financial reports and prospectuses are available on
the Fund's website or shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Fund's electronic delivery program.
To enroll:
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor. Please note that not all investment
advisers, banks or brokerages may offer this service.
Shareholders Who Hold Accounts Directly with BlackRock:
1) Access the BlackRock website at http://www.blackrock.com/edelivery
2) Select "eDelivery" under the "More Information" section
3) Log into your account
The Fund will mail only one copy of shareholder documents, including
prospectuses, annual and semi-annual reports and proxy statements, to
shareholders with multiple accounts at the same address. This practice is
commonly called "householding" and it is intended to reduce expenses and
eliminate duplicate mailings of shareholder documents. Mailings of your
shareholder documents may be householded indefinitely unless you instruct us
otherwise. If you do not want the mailing of these documents to be combined with
those for other members of your household, please contact the Fund at (800)
441-7762.
24 BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007
Availability of Additional Information (concluded)
Availability of Proxy Voting Policies and Procedures
The Fund has delegated proxy voting responsibilities to BlackRock and its
affiliates, subject to the general oversight of the Fund's Board of Directors. 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 website at www.blackrock.com, by calling
(800) 441-7762, or on the website of the Securities and Exchange Commission (the
"Commission") at http://www.sec.gov.
Availability of Proxy Voting Record
Information on how proxies relating to the Fund's voting securities were voted
(if any) by BlackRock during the most recent 12-month period ended June 30 is
available, upon request and without charge, on our website at www.blackrock.com,
by calling (800) 441-7762 or on the website of the Commission at
http://www.sec.gov.
Availability of Quarterly Portfolio Schedule
The Fund files its complete schedule of portfolio holdings for the first and
third quarters of its fiscal year with the Commission on Form N-Q. The Fund's
Forms N-Q are available on the Commission's website at http://www.sec.gov and
may be reviewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330. The Fund's Forms N-Q may also be
obtained upon request, without charge, by calling (800) 441-7762.
Shareholder Privileges
Account Information
Call us at (800) 441-7762 8:00 AM - 6:00 PM EST to get information about your
account balances, recent transactions and share prices. You can also reach us on
the Web at www.blackrock.com/funds.
Automatic Investment Plans
Investor Class shareholders who want to invest regularly can arrange to have $50
or more automatically deducted from their checking or savings account and
invested in any of the BlackRock funds.
Systematic Withdrawal Plans
Investor Class shareholders can establish a systematic withdrawal plan and
receive periodic payments of $50 or more from their BlackRock funds, as long as
their account is at least $10,000.
Retirement Plans
Shareholders may make investments in conjunction with Traditional, Rollover,
Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans.
BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007 25
A World-Class Mutual Fund Family
BlackRock offers a diverse lineup of open-end mutual funds crossing all
investment styles and managed by experts in equity, fixed income and tax-exempt
investing.
Equity Funds
BlackRock All-Cap Global Resources Portfolio
BlackRock Aurora Portfolio
BlackRock Asset Allocation Portfolio+
BlackRock Balanced Capital Fund+
BlackRock Basic Value Fund
BlackRock Capital Appreciation Portfolio
BlackRock Developing Capital Markets Fund
BlackRock Equity Dividend Fund
BlackRock EuroFund
BlackRock Focus Growth 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 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 Large Cap Core Fund
BlackRock Large Cap Growth Fund
BlackRock Large Cap Value Fund
BlackRock Latin America Fund
BlackRock Mid-Cap Growth Equity Portfolio
BlackRock Mid-Cap Value Equity Portfolio
BlackRock Mid Cap Value Opportunities Fund
BlackRock Natural Resources Trust
BlackRock Pacific Fund
BlackRock 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 Technology Fund
BlackRock U.S. Opportunities Portfolio
BlackRock Utilities and Telecommunications Fund
BlackRock Value Opportunities Fund
Fixed Income Funds
BlackRock Commodity Strategies 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 II
BlackRock Intermediate Government Bond Portfolio
BlackRock International Bond Portfolio
BlackRock Low Duration Bond Portfolio
BlackRock Managed Income Portfolio
BlackRock Short-Term Bond Fund
BlackRock Total Return Fund
BlackRock Total Return Portfolio II
BlackRock World Income Fund
Municipal Bond Funds
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
Target Risk & Target Date Funds
BlackRock Prepared Portfolios
Conservative Prepared Portfolio
Moderate Prepared Portfolio
Growth Prepared Portfolio
Aggressive Growth Prepared Portfolio
BlackRock Lifecycle Prepared Portfolios
Prepared Portfolio 2010
Prepared Portfolio 2015
Prepared Portfolio 2020
Prepared Portfolio 2025
Prepared Portfolio 2030
Prepared Portfolio 2035
Prepared Portfolio 2040
Prepared Portfolio 2045
Prepared Portfolio 2050
* See the prospectus for information on specific limitations on investments
in the fund.
+ Mixed asset 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.
26 BLACKROCK BASIC VALUE PRINCIPAL PROTECTED FUND DECEMBER 31, 2007
This report is for shareholders of BlackRock Basic Value Principal Protected
Fund. Past performance results shown in this report should not be considered a
representation of future performance. Investment returns and principal value of
shares will fluctuate so that shares, when redeemed, may be worth more or less
than their original cost. Statements and other information herein are as dated
and are subject to change.
BlackRock Basic Value Principal Protected Fund of
BlackRock Principal Protected Trust
100 Bellevue Parkway
Wilmington, DE 19809
BLACKROCK
#BVPP-12/07
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 - The registrant's Schedule of Investments
is included as part of the Report to Stockholders filed under Item 1
of this form.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating and Governance Committee will consider
nominees to the Board recommended by shareholders when a vacancy
becomes available. Shareholders who wish to recommend a nominee
should send nominations which include biographical information and
set forth the qualifications of the proposed nominee to the
registrant's Secretary. There have been no material changes to these
procedures.
Item 11 - Controls and Procedures
11(a) - The registrant's principal executive and principal financial
officers or persons performing similar functions have concluded that
the registrant's disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940, as amended
(the "1940 Act")) are effective as of a date within 90 days of the
filing of this report based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act and Rule
15d-15(b) under the Securities Exchange Act of 1934, as amended.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act)
that occurred during the second fiscal quarter of the period covered
by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock Basic Value Principal Protected Fund of BlackRock Principal Protected
Trust
By: /s/ Donald C. Burke
-------------------
Donald C. Burke
Chief Executive Officer of
BlackRock Basic Value Principal Protected Fund of
BlackRock Principal Protected Trust
Date: February 21, 2008
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/ Donald C. Burke
-------------------
Donald C. Burke
Chief Executive Officer (principal executive officer) of
BlackRock Basic Value Principal Protected Fund of
BlackRock Principal Protected Trust
Date: February 21, 2008
By: /s/ Neal J. Andrews
-------------------
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock Basic Value Principal Protected Fund of
BlackRock Principal Protected Trust
Date: February 21, 2008