BLACKROCK ENHANCED CAPITAL & INCOME FUND, INC.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-21506

Name of Fund:  BlackRock Enhanced Capital and Income Fund, Inc. (CII)

Fund Address:   100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Enhanced Capital

             and Income Fund, Inc., 55 East 52nd Street, New York, NY 10055

Registrant’s telephone number, including area code: (800) 882-0052, Option 4

Date of fiscal year end: 12/31/2014

Date of reporting period: 12/31/2014


Item 1 – Report to Stockholders


DECEMBER 31, 2014        

 

 

ANNUAL REPORT

 

      BLACKROCK®

 

BlackRock Energy and Resources Trust (BGR)

BlackRock Enhanced Capital and Income Fund, Inc. (CII)

BlackRock Enhanced Equity Dividend Trust (BDJ)

BlackRock Global Opportunities Equity Trust (BOE)

BlackRock Health Sciences Trust (BME)

BlackRock International Growth and Income Trust (BGY)

BlackRock Resources & Commodities Strategy Trust (BCX)

BlackRock Science and Technology Trust (BST)

BlackRock Utility and Infrastructure Trust (BUI)

 

 

 

 

Not FDIC Insured ¡ May Lose Value ¡ No Bank Guarantee  

 


      

 

Section 19(a) Notices

BlackRock Energy and Resources Trust’s (BGR), BlackRock Enhanced Capital and Income Fund, Inc.’s (CII), BlackRock Enhanced Equity Dividend Trust’s (BDJ), BlackRock Global Opportunities Equity Trust’s (BOE), BlackRock Health Sciences Trust’s (BME), BlackRock International Growth and Income Trust’s (BGY), BlackRock Resources & Commodities Strategy Trust’s (BCX), BlackRock Science and Technology Trust’s (BST) and BlackRock Utility and Infrastructure Trust’s (BUI) (each, a “Trust” and collectively, the “Trusts”), reported amounts and sources of distributions are estimates and are not being provided for tax reporting purposes. The actual amounts and sources for tax reporting purposes will depend upon each Trust’s investment experience during the period and may be subject to changes based on the tax regulations. Each Trust will provide a Form 1099-DIV each calendar year that will tell you how to report these distributions for federal income tax purposes.

For the two-month period ended December 31, 2014

 

     Total Cumulative Distributions
for the Fiscal Period
   % Breakdown of the Total Cumulative
Distributions for the Fiscal Period
      Net
Investment
Income
   Net Realized
Capital Gains
Short-Term
   Net Realized
Capital Gains
Long-Term
   Return
of
Capital
   Total Per
Common Share
   Net
Investment
Income
  Net Realized
Capital Gains
Short-Term
  Net Realized
Capital Gains
Long-Term
  Return
of
Capital
  Total Per
Common Share

BGR*

     $ 0.079835                 $ 1.308083        $ 0.022081        $ 1.410000          6 %       0 %       93 %       1 %       100 %

CII*

     $ 0.031144                          $ 0.168856        $ 0.200000          16 %       0 %       0 %       84 %       100 %

BDJ*

     $ 0.030852                          $ 0.062548        $ 0.093400          33 %       0 %       0 %       67 %       100 %

BOE*

                                $ 0.200900        $ 0.200900          0 %       0 %       0 %       100 %       100 %

BME

              $ 0.220498        $ 2.475282        $ 0.004220        $ 2.700000          0 %       8 %       92 %       0 %       100 %

BGY*

                                $ 0.105000        $ 0.105000          0 %       0 %       0 %       100 %       100 %

BCX*

     $ 0.014048                          $ 0.140152        $ 0.154200          9 %       0 %       0 %       91 %       100 %

BST*

                                $ 0.100000        $ 0.100000          0 %       0 %       0 %       100 %       100 %

BUI*

     $ 0.093279                 $ 0.034561        $ 0.114160        $ 0.242000          39 %       0 %       14 %       47 %       100 %

 

* Certain Trusts estimate they have distributed more than the amount of earned income and net realized gains; therefore, a portion of the distribution may be a return of capital. A return of capital may occur, for example, when some or all of the shareholder’s investment in a Trust is returned to the shareholder. A return of capital does not necessarily reflect a Trust’s investment performance and should not be confused with ‘yield’ or ‘income.’ When distributions exceed total return performance, the difference will reduce the Trust’s net asset value per share.

Section 19(a) notices for each Trust, as applicable, are available on the BlackRock website http://www.blackrock.com.

 

Section 19(b) Disclosure

The Trusts, acting pursuant to a U.S. Securities and Exchange Commission (“SEC”) exemptive order and with the approval of each Trust’s Board of Trustees/Directors (the “Board”), each have adopted a plan, consistent with its investment objectives and policies to support a level distribution of income, capital gains and/or return of capital (the “Plan”). In accordance with the Plans, the Trusts currently distribute the following fixed amounts per share on a monthly basis as of December 31, 2014:

 

     Exchange Symbol      Amount Per Common Share        
 

  BGR

     $0.1350     
 

CII

     $0.1000     
 

  BDJ

     $0.0467     
 

   BOE

     $0.0970     
 

   BME

     $0.1650     
 

   BGY

     $0.0490     
 

   BCX

     $0.0771     
 

  BST

     $0.1000     
   

 BUI

     $0.1210       

The fixed amounts distributed per share are subject to change at the discretion of each Trust’s Board. Under its Plan, each Trust will distribute all available investment income to its shareholders, consistent with its primary investment objectives and as required by the Internal Revenue Code of 1986, as amended (the “Code”). If sufficient investment income is not available on a monthly basis, the Trusts will distribute long-term capital gains and/or return of capital to shareholders in order to maintain a level distribution. Each monthly distribution to shareholders is expected to be at the fixed amount established by the Board, except for extraordinary distributions and potential distribution rate increases or decreases to enable the Trusts to comply with the distribution requirements imposed by the Code.

Shareholders should not draw any conclusions about each Trust’s investment performance from the amount of these distributions or from the terms of the Plan. Each Trust’s total return performance on net asset value is presented in its financial highlights table.

The Board may amend, suspend or terminate a Trust’s Plan without prior notice if it deems such actions to be in the best interests of the Trust or its shareholders. The suspension or termination of the Plan could have the effect of creating a trading discount (if the Trust’s stock is trading at or above net asset value) or widening an existing trading discount. The Trusts are subject to risks that could have an adverse impact on their ability to maintain level distributions. Examples of potential risks include, but are not limited to, economic downturns impacting the markets, decreased market volatility, companies suspending or decreasing corporate dividend distributions and changes in the Code. Please refer to each Trust’s prospectus for a more complete description of its risks.

 

2    ANNUAL REPORT    DECEMBER 31, 2014     


Table of Contents

 

    
       Page   

Section 19(a) Notices

     2   

Section 19(b) Disclosure

     2   

The Markets in Review

     4   

Annual Report:

  

The Benefits and Risks of Option Over-Writing

     5   

Trust Summaries

     6   

Derivative Financial Instruments

     24   

Financial Statements:

  

Schedules of Investments

     25   

Statements of Assets and Liabilities

     83   

Statements of Operations

     85   

Statements of Changes in Net Assets

     88   

Statements of Cash Flows

     93   

Financial Highlights

     96   

Notes to Financial Statements

     105   

Report of Independent Registered Public Accounting Firm

     126   

Important Tax Information

     127   

Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement

     128   

Automatic Dividend Reinvestment Plans

     132   

Officers and Trustees

     133   

Additional Information

     137   

 

     ANNUAL REPORT    DECEMBER 31, 2014    3


The Markets in Review

Dear Shareholder,

After an extended period of calm, market volatility increased over the course of 2014, driven largely by higher valuations in risk assets (such as equities and high yield bonds), rising geopolitical risks and expectations around global central bank policies. Several key trends drove strong performance in U.S. markets, particularly large-cap stocks, Treasuries and municipal bonds, while markets outside the U.S. were more challenged.

Investors began the year in search of relatively safer assets due to heightened risks in emerging markets, slowing growth in China and weakening U.S. economic data. As a result, equities globally declined in January while bond markets strengthened despite the expectation that interest rates would rise as the U.S. Federal Reserve had begun reducing its asset purchase programs. Strong demand for relatively safer assets pushed U.S. Treasury bond prices higher and thus kept rates low in the United States. This surprising development, as well as increasing evidence that the soft patch in U.S. economic data had been temporary and weather-related, brought equity investors racing back to the market in February.

In the months that followed, interest rates trended lower in a modest growth environment and more investors turned to equities in search of yield. Markets remained relatively calm despite rising tensions in Russia and Ukraine and further signs of decelerating growth in China. Strong corporate earnings, increased merger and acquisition activity and signs of a strengthening recovery in the U.S. and other developed economies kept equity prices moving higher. Not all segments benefited from these trends, however, as investors ultimately became wary of high valuations, resulting in a broad rotation into cheaper assets.

Volatility ticked up in the summer as geopolitical tensions escalated and investors feared that better U.S. economic indicators may compel the Fed to increase short-term interest rates sooner than previously anticipated. Global credit markets tightened as the U.S. dollar strengthened, ultimately putting a strain on investor flows, and financial markets broadly weakened in the third quarter.

Several themes dominated the markets in the fourth quarter, resulting in higher levels of volatility and the outperformance of U.S. markets versus other areas of the world. Economic growth strengthened considerably in the United States while the broader global economy showed signs of slowing. The European Central Bank and the Bank of Japan took aggressive measures to stimulate growth while the Fed moved toward tighter policy. This divergence in central bank policy caused further strengthening in the U.S. dollar versus other currencies. Oil prices, which had been falling gradually since the summer, plummeted in the fourth quarter due to a global supply-and-demand imbalance. Energy stocks sold off sharply and oil-exporting economies suffered, resulting in the poor performance of emerging market stocks.

At BlackRock, we believe investors need to think globally, extend their scope across a broad array of asset classes and be prepared to move freely as market conditions change over time. We encourage you to talk with your financial advisor and visit blackrock.com for further insight about investing in today’s markets.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

Total Returns as of December 31, 2014  
    6-month     12-month  

U.S. large cap equities
(S&P 500® Index)

    6.12     13.69

U.S. small cap equities
(Russell 2000® Index)

    1.65        4.89   

International equities
(MSCI Europe, Australasia, Far East Index)

    (9.24     (4.90

Emerging market equities
(MSCI Emerging Markets Index)

    (7.84     (2.19

3-month Treasury bill
(BofA Merrill Lynch
3-Month Treasury
Bill Index)

    0.01        0.03   

U.S. Treasury securities
(BofA Merrill Lynch
10- Year U.S. Treasury
Index)

    4.33        10.72   

U.S. investment grade
bonds (Barclays U.S.
Aggregate Bond Index)

    1.96        5.97   

Tax-exempt municipal
bonds (S&P Municipal Bond Index)

    3.00        9.25   

U.S. high yield bonds
(Barclays U.S. Corporate
High Yield 2% Issuer
Capped Index)

    (2.84     2.46   
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.     
 

 

4    THIS PAGE NOT PART OF YOUR TRUST REPORT          


The Benefits and Risks of Option Over-Writing     

 

In general, the goal of each of the Trusts is to provide total return through a combination of current income and realized and unrealized gains (capital appreciation). The Trusts seek to pursue this goal primarily by investing in a portfolio of equity securities and utilizing an option over-writing strategy in an effort to enhance distribution yield and total return performance. However, these objectives cannot be achieved in all market conditions.

The Trusts primarily write single stock covered call options, and may also from time to time write single stock put options. When writing (selling) a covered call option, the Trust holds an underlying equity security and enters into an option transaction which allows the counterparty to purchase the equity security at an agreed-upon price (“strike price”) within an agreed-upon time period. The Trusts receive cash premiums from the counterparties upon writing (selling) the option, which along with net investment income and net realized gains, if any, are generally available to support current or future distributions paid by the Trusts. During the option term, the counterparty may elect to exercise the option if the market value of the equity security rises above the strike price, and the Trust is obligated to sell the equity security to the counterparty at the strike price, realizing a gain or loss. Premiums received increase gains or reduce losses realized on the sale of the equity security. If the option remains unexercised upon its expiration, the Trusts realize gains equal to the premiums received. Alternatively, an option may be closed out by an offsetting purchase or sale of an option prior to expiration. The Trust realizes a capital gain from a closing purchase or sale transaction if the premium paid is less than the premium received from writing the option. The Trust realizes a capital loss from a closing purchase or sale transaction if the premium received is less than the premium paid to purchase the option.

Writing covered call options entails certain risks, which include, but are not limited to, the following: an increase in the value of the underlying equity security above the strike price can result in the exercise of a written option (sale by the Trust to the counterparty) when the Trust might not otherwise have sold the security; exercise of the option by the counterparty may result in a sale below the current market value and a gain or loss being realized by the Trust; and writing covered call options limits the potential appreciation that could be realized on the underlying equity security to the extent of the strike price of the option. As such, an option over-writing strategy may outperform the general equity market in flat or falling markets but underperform in rising markets.

Each Trust employs a plan to support a level distribution of income, capital gains and/or return of capital. The goal of the plan is to provide shareholders with consistent and predictable cash flows by setting distribution rates based on expected long-term returns of the Trusts. Such distributions, under certain circumstances, may exceed a Trust’s total return performance. When total distributions exceed total return performance for the period, the difference reduces the Trust’s total assets and net asset value per share (“NAV”) and, therefore, could have the effect of increasing the Trust’s expense ratio and reducing the amount of assets the Trust has available for long term investment. In order to make these distributions, a Trust may have to sell portfolio securities at less than opportune times.

The final tax characterization of distributions is determined after the fiscal year and is reported in the Trust’s annual report to shareholders. Distributions can be characterized as ordinary income, capital gains and/or return of capital. The Trust’s taxable net investment income or net realized capital gains (“taxable income”) may not be sufficient to support the level of distributions paid. To the extent that distributions exceed the Trust’s current and accumulated earnings and profits, the excess may be treated as a non-taxable return of capital. Distributions that exceed a Trust’s taxable income but do not exceed the Trust’s current and accumulated earnings and profits, may be classified as ordinary income which are taxable to shareholders. Such distributions are reported as distributions in excess of net investment income.

A return of capital distribution does not necessarily reflect a Trust’s investment performance and should not be confused with ‘yield’ or ‘income.’ A return of capital is a return of a portion of an investor’s original investment. A return of capital is not taxable, but it reduces a shareholder’s tax basis in his or her shares, thus reducing any loss or increasing any gain on a subsequent disposition by the shareholder of his or her shares. It is possible that a substantial portion of the distributions paid during a calendar year may ultimately be classified as return of capital or as distributions in excess of net investment income for income tax purposes when the final determination of the source and character of the distributions is made.

To illustrate these concepts, assume the following: (1) a common stock purchased at and currently trading at $37.15 per share; (2) a three-month call option is written by a Trust with a strike price of $40 (i.e., 7.7% higher than the current market price); and (3) the Trust receives $2.45, or 6.6% of the common stock’s value, as a premium. If the stock price remains unchanged, the option expires and there would be a 6.6% return for the three-month period. If the stock were to decline in price by 6.6% (i.e., decline to $34.70 per share), the option strategy would “break-even” from an economic perspective resulting in neither a gain nor a loss. If the stock were to climb to a price of $40 or above, the option would be exercised and the stock would return 7.7% coupled with the option premium received of 6.6% for a total return of 14.3%. Under this scenario, the Trust loses the benefit of any appreciation of the stock above $40, and thus is limited to a 14.3% total return. The premium from writing the call option serves to offset some of the unrealized loss on the stock in the event that the price of the stock declines, but if the stock were to decline more than 6.6% under this scenario, the Trust’s downside protection is eliminated and the stock could eventually become worthless.

Each Trust intends to write covered call options to varying degrees depending upon market conditions. Please refer to each Trust’s Schedule of Investments and the Notes to Financial Statements for details of written options.

 

 

     ANNUAL REPORT    DECEMBER 31, 2014    5


Trust Summary as of December 31, 2014      BlackRock Energy and Resources Trust   

 

Trust Overview

BlackRock Energy and Resources Trust’s (BGR) (the “Trust”) investment objective is to provide total return through a combination of current income, current gains and long-term capital appreciation. The Trust seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its total assets in equity securities of energy and natural resources companies and equity derivatives with exposure to the energy and natural resources industry. The Trust may invest directly in such securities or synthetically through the use of derivatives. The Trust seeks to pursue this goal primarily by investing in a portfolio of equity securities and utilizing an option over-writing strategy in an effort to seek total return performance and enhance distributions.

The Board of the Trust approved a change of the fiscal year of the Trust from October 31st to December 31st.

No assurance can be given that the Trust’s investment objective will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the two-month period ended December 31, 2014, the Trust returned (10.18)% based on market price and (9.06)% based on NAV. For the same period, the closed-end Lipper Natural Resources Funds category posted an average return of (6.82)% based on market price and (6.75)% based on NAV. All returns reflect reinvestment of dividends and/or distributions. The Trust’s discount to NAV, which widened during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

The price of oil fell sharply during the two-month period due to the combination of falling demand, weaker economic growth expectations, continued supply strength and OPEC’s announcement that it would not cut production. The Trust’s holding in Encana Corp. was the largest detractor from returns as the company’s growth rate appeared to be at risk from the lower oil price.

 

Ÿ  

The Trust’s investment in the energy distribution company Enbridge, Inc. was the largest contributor to absolute performance. The market reacted favorably to the company’s announcement of a $17 billion restructuring program and a 33% increase in its quarterly dividend.

 

Ÿ  

The Trust’s holding in Cairn Energy PLC also benefited absolute returns, as the company announced a second discovery off the coast of Senegal during the period.

 

Ÿ  

The Trust made use of options, principally written call options on individual stocks, in order to seek enhanced returns while continuing to

   

participate in the performance of the underlying equities. The Trust’s option writing strategy did not have a material impact on performance during the period.

 

Ÿ  

The Trust held an above-average cash balance at the close of the period in order to manage risk in the weak market. Given the decline in the resources sector during the period, the elevated cash position had a positive impact on absolute performance.

Describe recent portfolio activity.

 

Ÿ  

The Trust initiated a position in the U.S.-focused oil producer Marathon Oil Corp. during the period. The Trust sold its positions in the coal producer Consol Energy, Inc. and the energy distribution company TransCanada Corp. based on valuation. It also exited its position in the offshore oil-service company Cameron International Corp. due to concerns that the company’s business model will be particularly challenged by the environment of lower oil prices.

Describe portfolio positioning at period end.

 

Ÿ  

As of period end, the Trust held its largest allocations in the integrated oil & gas and exploration & production sub-industries, with smaller allocations to oil services, distribution, and refining & marketing stocks. The Trust was underweight in the oil services industry, which stands to suffer from producers’ reduced spending on capital expenditures. The Trust continued to emphasize companies with strong balance sheets, high-quality assets and low costs of production.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

6    ANNUAL REPORT    DECEMBER 31, 2014     


          BlackRock Energy and Resources Trust   

 

Trust Information

 

Symbol on NYSE

   BGR

Initial Offering Date

   December 29, 2004

Current Distribution Rate on Closing Market Price as of December 31, 2014 ($19.95)1

   8.12%

Current Monthly Distribution per Common Share2

   $0.135

Current Annualized Distribution per Common Share2

   $1.620

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

Market Price and Net Asset Value Per Share Summary

 

       12/31/14         10/31/14         Change        High         Low   

Market Price

   $ 19.95       $ 23.78         (16.11 )%    $ 23.98       $ 19.66   

Net Asset Value

   $ 21.15       $ 24.90         (15.06 )%    $ 25.06       $ 20.66   

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    12/31/14

Exxon Mobil Corp.

     12

Royal Dutch Shell PLC, A Shares - ADR

     11   

Chevron Corp.

     11   

ConocoPhillips

     7   

Anadarko Petroleum Corp.

     5   

Total SA

     5   

Enbridge, Inc.

     4   

Devon Energy Corp.

     4   

EOG Resources, Inc.

     3   

Schlumberger Ltd.

     3   
Industry Allocation    12/31/14    10/31/14

Oil, Gas & Consumable Fuels

     96%           91

Energy Equipment & Services

     4%           9   

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 

 

     ANNUAL REPORT    DECEMBER 31, 2014    7


Trust Summary as of December 31, 2014      BlackRock Enhanced Capital and Income Fund, Inc.   

 

Trust Overview

BlackRock Enhanced Capital and Income Fund, Inc.’s (CII) (the “Trust”) investment objective is to provide investors with a combination of current income and capital appreciation. The Trust seeks to achieve its investment objective by investing in a portfolio of equity and debt securities of U.S. and foreign issuers. The Trust may invest directly in such securities or synthetically through the use of derivatives. The Trust seeks to pursue this goal primarily by investing in a portfolio of equity securities and utilizing an option over-writing strategy in an effort to seek total return performance and enhance distributions.

The Board of the Trust approved a change of the fiscal year of the Trust from October 31st to December 31st.

No assurance can be given that the Trust’s investment objectives will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the two-month period ended December 31, 2014, the Trust returned (4.88)% based on market price and 2.69% based on NAV. For the same period, the benchmark S&P 500® Value Index returned 2.84%. All returns reflect reinvestment of dividends. The Trust’s discount to NAV, which widened during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

Stock selection across multiple sectors, including consumer discretionary, information technology (“IT”) and energy, detracted from relative returns. Within the consumer discretionary sector, a position in Sinclair Broadcasting Group, Inc. proved costly as the stock could not keep pace with the broader market during the period. In the IT sector, the strategy’s emphasis on higher-growth technology companies such as Google, Inc. and Apple, Inc. detracted from performance as value-oriented stocks, including Intel Corp. and Cisco Systems, Inc., produced strong relative performance. Lastly, the energy stocks Suncor Energy, Inc., Linn Energy LLC and HollyFrontier Corp. posted declines as falling crude oil prices resulted in significant selling pressure across the sector.

 

Ÿ  

The Trust made use of options, principally written call options on individual stocks, in order to seek enhanced returns while continuing to participate in the performance of the underlying equities. The Trust’s option writing strategy detracted from performance during the period.

Ÿ  

Relative to the S&P 500 Value Index, sector allocation decisions made the largest contribution to performance. Underweights in the energy and telecommunications services sectors, combined with overweights in consumer discretionary and IT, had the largest positive impact on relative performance. While overall stock selection detracted from results, gains in several long-term holdings, including Japan Airlines Co. Ltd., the mortgage title insurer FNF Group, Inc. and the technology company Leidos Holdings, Inc. helped overall returns. Like other transportation stocks, Japan Airlines was a direct beneficiary of the recent oil price decline.

Describe recent portfolio activity.

 

Ÿ  

No new positions were initiated, but the Trust did increase exposure to select high conviction holdings, including Orbitz Worldwide, Inc. and FNF Group, Inc. These additions were funded out of portfolio cash as well as reductions in longer-term fund holdings that were approaching the investment manager’s price targets. Positions in American International Group, Inc. and JP Morgan Chase & Co. within financials and Pfizer, Inc. and Johnson & Johnson in health care were sold during the period. These changes did not have meaningful impact on the Trust’s overall positioning.

Describe portfolio positioning at period end.

 

Ÿ  

Relative to the S&P 500® Value Index, the Trust ended the period overweight in the consumer discretionary and information technology sectors, reflecting the investment manager’s highest-conviction ideas. The Trust was underweight in the defensive areas of the market, such as the utilities and consumer staples sectors, due to their high valuations.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

8    ANNUAL REPORT    DECEMBER 31, 2014     


          BlackRock Enhanced Capital and Income Fund, Inc.   

 

Trust Information

 

Symbol on NYSE

   CII

Initial Offering Date

   April 30, 2004

Current Distribution Rate on Closing Market Price as of December 31, 2014 ($13.97)1

   8.59%

Current Monthly Distribution per Common Share2

   $0.10

Current Annualized Distribution per Common Share2

   $1.20

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

Market Price and Net Asset Value Per Share Summary

 

       12/31/14         10/31/14         Change        High         Low   

Market Price

   $ 13.97       $ 14.89         (6.18 )%    $ 15.08       $ 13.97   

Net Asset Value

   $ 15.67       $ 15.47         1.29   $ 15.87       $ 15.13   

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    12/31/14

Japan Airlines Co. Ltd.

     5

UnitedHealth Group, Inc.

     5   

Apple, Inc.

     5   

Sinclair Broadcast Group, Inc., Class A

     4   

Orbitz Worldwide, Inc.

     4   

CF Industries Holdings, Inc.

     4   

FNF Group

     3   

American International Group, Inc.

     3   

Suncor Energy, Inc.

     3   

Samsung Electronics Co. Ltd.

     3   
Sector Allocation    12/31/14    10/31/14

Information Technology

     21%           20

Consumer Discretionary

     20           19   

Financials

     20           21   

Health Care

     14           15   

Industrials

     9           8   

Energy

     6           7   

Materials

     4           4   

Consumer Staples

     3           3   

Telecommunication Services

     3           3   

For Trust compliance purposes, the Trust’s sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 

 

     ANNUAL REPORT    DECEMBER 31, 2014    9


Trust Summary as of December 31, 2014      BlackRock Enhanced Equity Dividend Trust   

 

Trust Overview

BlackRock Enhanced Equity Dividend Trust’s (BDJ) (the “Trust”) primary investment objective is to provide current income and current gains, with a secondary investment objective of long-term capital appreciation. The Trust seeks to achieve its investment objectives by investing in common stocks that pay dividends and have the potential for capital appreciation and by utilizing an option writing (selling) strategy to seek total return performance and enhance distributions. The Trust invests, under normal market conditions, at least 80% of its total assets in dividend paying equities. The Trust may invest directly in such securities or synthetically through the use of derivatives.

On July 30, 2014, the Boards of the Trust and BlackRock Dividend Income Trust (“BQY”) approved the reorganization of BQY with and in to the Trust, with the Trust continuing as the surviving fund after the reorganization. At a special meeting of shareholders on November 10, 2014, the shareholders of BQY approved the reorganization of BQY with and in to the Trust. The reorganization was completed on December 8, 2014.

The Board of the Trust approved a change of the fiscal year of the Trust from October 31st to December 31st.

No assurance can be given that the Trust’s investment objectives will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the two-month period ended December 31, 2014, the Trust returned (1.65)% based on market price and 1.69% based on NAV. For the same period, the Russell 1000® Value Index returned 2.67%. All returns reflect reinvestment of dividends. The Trust’s discount to NAV, which widened during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

The largest contributor to relative performance for the period was the combination of stock selection in, and an underweight to, the energy sector. Notably, the Trust’s large-cap posture and limited exposure to the exploration & production industry assisted relative returns amid the sharp sell-off in crude oil. Stock selection in the industrials sector also added to relative performance as the Trust’s position in 3M Co., which is not held in the benchmark, outperformed on the strength of an upbeat 2015 outlook and an increase to its dividend. Stock selection in materials and an overweight in the consumer discretionary sector also contributed to relative performance.

 

Ÿ  

The largest detractor from relative returns was stock selection in information technology, notably the Trust’s position in the non-benchmark holding QUALCOMM, Inc. and the lack of a position in the benchmark holding Cisco Systems, Inc. Stock selection in the consumer staples and consumer discretionary sectors also hurt relative returns, as did a combination of stock selection and an underweight in the financials sector. Lastly,

   

stock selection in health care modestly dampened relative performance for the period.

 

Ÿ  

The Trust made use of options, principally written call options on individual stocks, in order to seek enhanced returns while continuing to participate in the performance of the underlying equities. The Trust’s option writing strategy detracted from performance during the period.

Describe recent portfolio activity.

 

Ÿ  

Portfolio activity was driven by the merger of the BlackRock Dividend Income Trust into the BlackRock Enhanced Equity Dividend Trust, which took place in December 2014. Relatively few active changes were made to the Trust during the reporting period. Notably, the Trust initiated a position in Kroger Co., the second-largest supermarket chain in the United States. The investment manager believes Kroger stands out from other grocers due to its scale, strong local market positions, broad private brand portfolio and its consistent history of positive same-store sales. Additionally, the Trust initiated a position in Becton, Dickinson & Co. and eliminated its position in Mattel, Inc.

Describe portfolio positioning at period end.

 

Ÿ  

As of the end of the period, the Trust’s largest sector allocations on an absolute basis were in financials, industrials, health care, consumer discretionary and energy. The Trust remained positioned in high-quality stocks with an emphasis on those that provide relative protection and growth of income.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

10    ANNUAL REPORT    DECEMBER 31, 2014     


       BlackRock Enhanced Equity Dividend Trust   

 

Trust Information

 

Symbol on NYSE

   BDJ

Initial Offering Date

   August 31, 2005

Current Distribution Rate on Closing Market Price as of December 31, 2014 ($8.12)1

   6.90%

Current Monthly Distribution per Common Share2

   $0.0467

Current Annualized Distribution per Common Share2

   $0.5604

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

Market Price and Net Asset Value Per Share Summary

 

       12/31/14         10/31/14         Change        High         Low   

Market Price

   $ 8.12       $ 8.35         (2.75 )%    $ 8.47       $ 7.96   

Net Asset Value

   $ 9.24       $ 9.19         0.54   $ 9.35       $ 8.93   

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    12/31/14

Wells Fargo & Co.

     4

JPMorgan Chase & Co.

     3   

The Home Depot, Inc.

     3   

Comcast Corp., Special Class A

     3   

General Electric Co.

     3   

Merck & Co., Inc.

     2   

Pfizer, Inc.

     2   

Raytheon Co.

     2   

The Procter & Gamble Co.

     2   

Microsoft Corp.

     2   
Sector Allocation    12/31/14    10/31/14

Financials

     27        27

Industrials

     15           15   

Health Care

     10           10   

Consumer Discretionary

     10           10   

Energy

     9           10   

Consumer Staples

     9           8   

Information Technology

     7           7   

Utilities

     6           6   

Materials

     5           5   

Telecommunication Services

     2           2   

For Trust compliance purposes, the Trust’s sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 

 

     ANNUAL REPORT    DECEMBER 31, 2014    11


Trust Summary as of December 31, 2014      BlackRock Global Opportunities Equity Trust   

 

Trust Overview

BlackRock Global Opportunities Equity Trust’s (BOE) (the “Trust”) primary investment objective is to provide current income and current gains, with a secondary investment objective of long-term capital appreciation. The Trust seeks to achieve its investment objectives by investing primarily in equity securities issued by companies located in countries throughout the world and utilizing an option writing (selling) strategy to seek total return performance and enhance distributions. The Trust invests, under normal market conditions, at least 80% of its assets in equity securities or options on equity securities or indices or sectors of equity securities. Under normal circumstances, the Trust invests a substantial amount of its total assets in foreign issuers, issuers that primarily trade in a market located outside the United States or issuers that do a substantial amount of business outside the United States. The Trust may invest directly in such securities or synthetically through the use of derivatives.

The Board of the Trust approved a change of the fiscal year of the Trust from October 31st to December 31st.

No assurance can be given that the Trust’s investment objectives will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the two-month period ended December 31, 2014, the Trust returned (4.82)% based on market price and (0.27)% based on NAV. All returns reflect reinvestment of dividends. For the same period, the benchmark MSCI All Country World Index posted a return of (0.29)%. The Trust’s discount to NAV, which widened during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

 

Ÿ  

For financial reporting purposes, the values of Palantir Technologies, Inc. and Uber Technologies, Inc. were updated to incorporate information relative to those investments that became available after the report date. Accordingly, the NAV per share and total return performance presented herein are different than the information previously published on December 31, 2014.

What factors influenced performance?

 

Ÿ  

The most notable contributor to relative performance was stock selection in the health care sector, particularly holdings within the biotechnology segment, which outperformed on strong earnings. Stock selection in the telecommunication services (“telecom”) sector also contributed, particularly exposure to integrated telecom firms that benefited from healthy earnings and several upgrades of earnings forecasts by analysts.

 

Ÿ  

The primary detractor from relative performance was stock selection in the financials sector, particularly within the diversified real estate activities

   

sub-industry. Stock selection in the industrials sector also detracted, specifically exposure to the construction & engineering segment, which was negatively impacted by the significant decline in energy prices over the latter part of 2014.

 

Ÿ  

Also, during the period, the Trust made use of options, principally written call options on individual stocks, in order to seek enhanced returns while continuing to participate in the performance of the underlying equities. The Trust’s options writing strategy detracted from performance during the period.

Describe recent portfolio activity.

 

Ÿ  

During the period, the Trust reduced its exposure to the financials and energy sectors due to interest rate trends and continued downward pressure on the price of oil, respectively. The proceeds were used to increase exposure to more tactical opportunities in information technology and telecom. Regionally, the Trust reduced its exposure to the developed Americas and Japan, and added to its holdings in developed Europe and emerging Asia.

Describe portfolio positioning at period end.

 

Ÿ  

Relative to the MSCI All Country World Index, the Trust ended the period overweight in the Europe and emerging Asia, and underweight in developed Americas. From a sector perspective, the Trust was most notably overweight in technology and healthcare, while the most significant underweights were in materials and industrials services.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

12    ANNUAL REPORT    DECEMBER 31, 2014     


       BlackRock Global Opportunities Equity Trust   

 

Trust Information

 

Symbol on NYSE

   BOE

Initial Offering Date

   May 31, 2005

Current Distribution Rate on Closing Market Price as of December 31, 2014 ($13.13)1

   8.87%

Current Monthly Distribution per Common Share2

   $0.097

Current Annualized Distribution per Common Share2

   $1.164

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

Market Price and Net Asset Value Per Share Summary

 

       12/31/14         10/31/14         Change        High         Low   

Market Price

   $ 13.13       $ 14.00         (6.21 )%    $ 14.23       $ 13.10   

Net Asset Value

   $ 15.27       $ 15.54         (1.74 )%    $ 15.66       $ 14.88   

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    12/31/14

Apple, Inc.

     3

Royal Dutch Shell PLC, A Shares — ADR

     2   

Citigroup, Inc.

     2   

Anheuser-Busch InBev NV

     2   

Comcast Corp., Class A

     2   

The Hartford Financial Services Group, Inc.

     1   

Novartis AG

     1   

AIA Group Ltd.

     1   

Altria Group, Inc.

     1   

Roper Industries, Inc.

     1   
Geographic Allocation    12/31/14    10/31/14

United States

     55        57

United Kingdom

     8           7   

Japan

     5           5   

France

     4           4   

Germany

     3           3   

Switzerland

     3           2   

China

     3           3   

Other3

     19           19   

 

  3   

Other includes a 2% holding or less in each of the following countries; South Korea, India, Netherlands, Hong Kong, Belgium, Spain, Sweden, Ireland, Italy, Canada, Indonesia, South Africa, Peru, Mexico, New Zealand, Taiwan and Greece.

 

 

     ANNUAL REPORT    DECEMBER 31, 2014    13


Trust Summary as of December 31, 2014      BlackRock Health Sciences Trust   

 

Trust Overview

BlackRock Health Sciences Trust’s (BME) (the “Trust”) investment objective is to provide total return through a combination of current income, current gains and long-term capital appreciation. The Trust seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its assets in equity securities of companies engaged in the health sciences and related industries and equity derivatives with exposure to the health sciences industry. The Trust seeks to pursue this goal primarily by investing in a portfolio of equity securities and utilizing an option over-writing strategy in an effort to seek total return performance and enhance distributions.

The Board of the Trust approved a change of the fiscal year of the Trust from October 31st to December 31st.

No assurance can be given that the Trust’s investment objective will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

Ÿ  

For the two-month period ended December 31, 2014, the Trust returned 10.07% based on market price and 2.38% based on NAV. For the same period, the Russell 3000® Healthcare Index returned 2.53%. All returns reflect reinvestment of dividends and/or distributions. The Trust’s premium to NAV, which widened during the two-month period, which accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

The Trust benefited from stock selection in the biotechnology industry during the period. Among the top contributors to performance were Alkermes PLC, which reported solid financial results and benefited from improving expectations regarding its new-product pipeline, and Receptos, Inc., which reported positive clinical data for its multiple sclerosis and ulcerative colitis drugs. Positions in Agios Pharmaceuticals, Inc. and BioMarin Pharmaceutical, Inc. also performed well behind positive clinical developments for drugs focused on cancer and rare diseases, respectively. An underweight position in Gilead Sciences, Inc., which was hampered by increased competition for its Hepatitis-C drug, was an additional positive for relative performance.

 

Ÿ  

Stock selection in the health care providers & services industry was a modest detractor from relative performance. An underweight position in Express Scripts Holding Company detracted as the stock rebounded after reporting solid third quarter results. The Trust’s positions in the life

   

sciences tools industry also detracted from performance, as did its stock selection in the pharmaceuticals industry. In the latter group, the Trust was affected by the weakness in several of its non-U.S. positions, such as Roche Holding AG, Chugai Pharmaceutical Co. Ltd., AstraZeneca PLC, Bayer AG and Novartis AG.

 

Ÿ  

The Trust made use of options, principally written call options on individual stocks, in order to seek enhanced returns while continuing to participate in the performance of the underlying equities. The Trust’s option writing strategy did not have a material impact on performance during the period.

Describe recent portfolio activity.

 

Ÿ  

During the two-month period, the Trust’s industry allocations generally stayed in line with their allocations at the prior fiscal year end on October 31, 2014. The Trust slightly increased its weighting in the biotechnology industry, while its weightings in the remaining health care sub-sectors (health care providers & services, health care equipment & supplies and pharmaceuticals) were unchanged. These allocations were the byproduct of the Trust’s bottom-up, fundamental investment process.

Describe portfolio positioning at period end.

 

Ÿ  

The Trust continues to focus on identifying innovative companies. Accordingly, its three largest allocations at period end were to the biotechnology, health care equipment & supplies and pharmaceuticals industries, where favorable trends in the innovation cycle have supported positive secular growth.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

14    ANNUAL REPORT    DECEMBER 31, 2014     


       BlackRock Health Sciences Trust   

 

Trust Information

 

Symbol on NYSE

   BME

Initial Offering Date

   March 31, 2005

Current Distribution Rate on Closing Market Price as of December 31, 2014 ($42.70)1

   4.64%

Current Monthly Distribution per Common Share2

   $0.165

Current Annualized Distribution per Common Share2

   $1.980

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

Market Price and Net Asset Value Per Share Summary

 

       12/31/14         10/31/14         Change        High         Low   

Market Price

   $ 42.70       $ 41.37         3.21   $ 46.74       $ 39.10   

Net Asset Value

   $ 38.61       $ 40.22         (4.00 )%    $ 41.83       $ 38.25   

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    12/31/14

Celgene Corp.

     3

AbbVie, Inc.

     3   

Biogen Idec, Inc.

     3   

Amgen, Inc.

     3   

Alexion Pharmaceuticals, Inc.

     3   

UnitedHealth Group, Inc.

     3   

Johnson & Johnson

     3   

Novartis AG

     2   

Merck & Co., Inc.

     2   

Actavis PLC

     2   
Industry Allocation    12/31/14    10/31/14

Pharmaceuticals

     34        34

Biotechnology

     30           28   

Health Care Equipment & Supplies

     18           18   

Health Care Providers & Services

     14           14   

Life Sciences Tools & Services

     3           4   

Other3

     1           2   

 

  3   

Other includes a 1% holding or less in each of the following industries; Health Care Technology and Chemicals.

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 

 

     ANNUAL REPORT    DECEMBER 31, 2014    15


Trust Summary as of December 31, 2014      BlackRock International Growth and Income Trust   

 

Trust Overview

BlackRock International Growth and Income Trust’s (BGY) (the “Trust”) primary investment objective is to provide current income and current gains, with a secondary objective of long-term capital appreciation. The Trust seeks to achieve its investment objectives by investing primarily in equity securities issued by companies of any market capitalization located in countries throughout the world and utilizing an option writing (selling) strategy to seek total return performance and enhance distributions. The Trust invests, under normal market conditions, at least 80% of its assets in equity securities issued by non-U.S. companies of any market capitalization located in countries throughout the world. The Trust may invest directly in such securities or synthetically through the use of derivatives.

The Board of the Trust approved a change of the fiscal year of the Trust from October 31st to December 31st.

No assurance can be given that the Trust’s investment objectives will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the two-month period ended December 31, 2014, the Trust returned (5.77)% based on market price and (2.10)% based on NAV. For the same period, the MSCI All Country World Index ex-US returned (2.91)%. All returns reflect reinvestment of dividends. The Trust’s discount to NAV, which widened during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

Stock selection in the life & health insurance segment of the financials sector detracted from performance. In particular, shares of Delta Lloyd Group fell after the Dutch insurance company reported decreased premium income as well as weaker flows into its asset management business. The next largest detractor came from stock selection in the renewable electricity portion of the materials sector, as shares of the Spanish multinational Abengoa Yield plc fell. The Trust sold the position due to management concerns with respect to Abengoa Yield’s parent company.

 

Ÿ  

An underweight position in the oil, gas & consumable fuels segment of the energy sector was the primary contributor to relative performance, as these companies were impacted by falling oil prices. Weakness among these stocks may continue for the short term, but a recovery in energy prices over time is likely, and the Trust will consider adding to the segment once the current downward trend shows signs of reversing. Stock

   

selection in the airlines segment of the industrials sector was the next largest contributor to performance. In particular, shares of Ryanair Holdings plc rallied following a positive earnings revision, an analyst upgrade and a decline in fuel prices that boosted the outlook for the segment.

 

Ÿ  

Also, during the period, the Trust made use of options, principally written call options on individual stocks, in order to seek enhanced returns while continuing to participate in the performance of the underlying equities. The Trust’s option writing strategy did not have a material impact on performance during the period.

Describe recent portfolio activity.

 

Ÿ  

During the period, the Trust trimmed positions in the consumer discretionary and energy sectors, and used the proceeds to add exposure in the health care and financials sectors. Regionally, the Trust reduced its exposure to Japan, and used the proceeds to add to holdings in developed Europe and emerging Asia.

Describe portfolio positioning at period end.

 

Ÿ  

Relative to the MSCI All Country World Index, the Trust ended the period overweight in the United States and Europe, and underweight in Asia. From a sector perspective, the Trust was most notably overweight in consumer discretionary and staples, while the most significant underweights were in utilities and telecommunication services.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

16    ANNUAL REPORT    DECEMBER 31, 2014     


       BlackRock International Growth and Income Trust   

 

Trust Information

 

Symbol on NYSE

   BGY

Initial Offering Date

   May 30, 2007

Current Distribution Rate on Closing Market Price as of December 31, 2014 ($6.74)1

   8.72%

Current Monthly Distribution per Common Share2

   $0.049

Current Annualized Distribution per Common Share2

   $0.588

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

Market Price and Net Asset Value Per Share Summary

 

       12/31/14         10/31/14         Change        High         Low   

Market Price

   $ 6.74       $ 7.26         (7.16 )%    $ 7.47       $ 6.73   

Net Asset Value

   $ 7.61       $ 7.89         (3.55 )%    $ 7.89       $ 7.51   

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    12/31/14

Novartis AG

     4

Roche Holding AG

     3   

Baidu, Inc. — ADR

     3   

Anheuser-Busch InBev NV

     3   

Royal Dutch Shell PLC, A Shares

     2   

Imperial Tobacco Group PLC

     2   

AstraZeneca PLC

     2   

Teva Pharmaceutical Industries Ltd. — ADR

     2   

Qunar Cayman Islands Ltd. — ADR

     2   

Liberty Global PLC, Class A

     2   
Geographic Allocation    12/31/14    10/31/14

United Kingdom

     19        17

Japan

     10           13   

China

     9           8   

Switzerland

     9           10   

France

     6           5   

Canada

     6           5   

Ireland

     5           5   

Other3

     36           37   

 

  3   

Other includes a 4% holding or less in each of the following countries; United States, Germany, India, Hong Kong, Netherlands, Italy, Belgium, Spain, Israel, Taiwan, Sweden, South Africa, Indonesia, Mexico, New Zealand, Peru, South Korea and Norway.

 

 

     ANNUAL REPORT    DECEMBER 31, 2014    17


Trust Summary as of December 31, 2014        BlackRock Resources & Commodities Strategy Trust   

 

Trust Overview

BlackRock Resources & Commodities Strategy Trust’s (BCX) (the “Trust”) primary investment objective is to seek high current income and current gains, with a secondary objective of capital appreciation. The Trust will seek to achieve its investment objectives, under normal market conditions, by investing at least 80% of its total assets in equity securities issued by commodity or natural resources companies, derivatives with exposure to commodity or natural resources companies or investments in securities and derivatives linked to the underlying price movement of commodities or natural resources. While permitted, the Trust does not currently expect to invest in securities and derivatives linked to the underlying price movement of commodities or natural resources. The Trust seeks to pursue this goal primarily by investing in a portfolio of equity securities and utilizing an option overwriting strategy in an effort to seek total return performance and enhance distributions.

On July 30, 2014, the Boards of each of the Trust, BlackRock Real Asset Equity Trust (“BCF”) and BlackRock EcoSolutions Investment Trust (“BQR”) approved the reorganizations of BCF and BQR with and in to the Trust, with the Trust continuing as the surviving fund after the reorganizations. At a special meeting of shareholders on November 10, 2014, the shareholders of the Trust, BCF and BQR approved the reorganizations of BCF and BQR with and in to the Trust. The reorganization was completed on December 8, 2014.

The Board of the Trust approved a change of the fiscal year of the Trust from October 31st to December 31st.

No assurance can be given that the Trust’s investment objectives will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the two-month period ended December 31, 2014, the Trust returned (8.53)% based on market price and (5.20)% based on NAV. For the same period, the closed-end Lipper Natural Resources Funds category posted an average return of (6.82)% based on market price and (6.75)% based on NAV. All returns reflect reinvestment of dividends and/or distributions. The Trust’s discount to NAV, which widened during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

The agribusiness company Archer-Daniels-Midland Co. performed well during the period following the announcement of better-than-expected profits. The company’s earnings were supported by strong margins in its ethanol, seed-crushing and corn sweetener businesses. The company also announced that it expected to repurchase ten million shares on top of its existing 18 million share buyback program. This news was well received by the market, and the stock was a strong contributor to absolute performance during the period.

 

Ÿ  

The price of oil declined sharply during the period, weighing on the performance of mining companies with energy components to their businesses, such as BHP Billiton Ltd. and Freeport-McMoRan Inc. Falling oil prices also negatively impacted the Trust’s position in Canadian Oil Sands Ltd. Canadian Oil Sands Ltd. has relatively high operational costs, which meant that the stock was disproportionately impacted by the

   

weakness in oil. In addition, the market reacted negatively to the company’s release of its 2015 outlook. While the company anticipated increased production growth, its growth estimate was below expectations and it announced a cut to its dividend.

 

Ÿ  

The Trust made use of options, principally written call options on individual stocks, in order to seek enhanced returns while continuing to participate in the performance of the underlying equities. The Trust’s option writing strategy did not have a material impact on performance during the period.

Describe recent portfolio activity.

 

Ÿ  

Within the mining sector, the Trust reduced its exposure to producers of bulk commodities in favor of base metal companies, which reflected the widening gap between the fundamentals of the two commodity groups. The Trust added to MMC Norilsk Nickel within its base metals allocation. The company has benefited from the weakening Russian ruble given that the majority of its costs are based in the currency.

 

Ÿ  

In the agriculture space, the Trust rotated its fertilizer exposure by initiating a position in the nitrogen fertilizer producer Yara International ASA.

Describe portfolio positioning at period end.

 

Ÿ  

The energy sector was the Trust’s largest allocation as of period end, followed by agriculture-related and metals & mining stocks, respectively. This positioning reflects the relative outlooks and valuations for each of these segments.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

18    ANNUAL REPORT    DECEMBER 31, 2014     


          BlackRock Resources & Commodities Strategy Trust   

 

Trust Information

 

Symbol on NYSE

   BCX

Initial Offering Date

   March 30, 2011

Current Distribution Rate on Closing Market Price as of December 31, 2014 ($ 9.71)1

   9.53%

Current Monthly Distribution per Common Share2

   $0.0771

Current Annualized Distribution per Common Share2

   $0.9252

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

Market Price and Net Asset Value Per Share Summary

 

       12/31/14         10/31/14         Change        High         Low   

Market Price

   $ 9.71       $ 10.78         (9.93 )%    $ 10.87       $ 9.18   

Net Asset Value

   $ 11.67       $ 12.50         (6.64 )%    $ 12.66       $ 11.11   

 

Market Price and Net Asset Value History Since Inception

 

LOGO

 

  3 

Commencement of operations.

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    12/31/14

Exxon Mobil Corp.

     6

Chevron Corp.

     6   

Monsanto Co.

     4   

ConocoPhillips

     4   

Royal Dutch Shell PLC, Class A - ADR

     4   

Weyerhaeuser Co.

     3   

Potash Corp. of Saskatchewan, Inc.

     3   

CF Industries Holdings, Inc.

     2   

Syngenta AG

     2   

The Mosaic Co.

     2   
Industry Allocation    12/31/14    10/31/14

Oil, Gas & Consumable Fuels

     35        44

Chemicals

     23           13   

Metals & Mining

     21           23   

Food Products

     9           15   

Other4

     12           5   

 

  4   

Other includes a 3% holding or less in each of the following industries; Paper & Forest Products, Real Estate Investment Trusts (REITs), Water Utilities, Energy Equipment & Services, Food & Staples Retailing, Machinery, Multi-Utilities, Electrical Equipment, Industrial Conglomerates, Electric Utilities, Independent Power and Renewable Electricity Producers, Commercial Services & Supplies, Semiconductors & Semiconductor Equipment, Auto Components, Building Products, Electronic Equipment, Instruments & Components and Construction & Engineering.

 

 

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 

     ANNUAL REPORT    DECEMBER 31, 2014    19


Trust Summary as of December 31, 2014      BlackRock Science and Technology Trust   

 

Trust Overview

BlackRock Science and Technology Trust’s (BST) (the “Trust”) investment objective is to provide income and total return through a combination of current income, current gains and long-term capital appreciation. The Trust seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its assets in equity securities of science and technology companies and equity derivatives with exposure to companies in the science and technology industries. The Trust may invest directly in such securities or synthetically through the use of derivatives. The Trust seeks to pursue this goal primarily by investing in a portfolio of equity securities and utilizing an option over-writing strategy in an effort to seek total return performance and enhance distributions.

No assurance can be given that the Trust’s investment objective will be achieved.

 

Trust Information

 

Symbol on NYSE

   BST

Initial Offering Date

   October 30, 2014

Current Distribution Rate on Closing Market Price as of December 31, 2014 ($17.59)1

   6.82%

Current Monthly Distribution per Common Share2

   $0.10

Current Annualized Distribution per Common Share2

   $1.20

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

Market Price and Net Asset Value Per Share Summary

 

       12/31/14         10/30/14         Change        High         Low   

Market Price

   $ 17.59       $ 20.00         (12.05 )%    $ 20.25       $ 16.50   

Net Asset Value

   $ 19.43       $ 19.10         1.73   $ 19.68       $ 18.87   

 

20    ANNUAL REPORT    DECEMBER 31, 2014     


          BlackRock Science and Technology Trust   

 

Market Price and Net Asset Value History Since Inception

 

LOGO

 

  1 

Commencement of operations.

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    12/31/14

Microsoft Corp.

     7

Apple, Inc.

     5   

Google, Inc., Class A

     4   

Facebook, Inc., Class A

     4   

Alibaba Group Holding - ADR

     3   

Tencent Holdings Ltd.

     2   

Oracle Corp.

     2   

MasterCard, Inc., Class A

     2   

Visa, Inc., Class A

     2   

Intel Corp.

     2   
Industry Allocation    12/31/14

Internet Software & Services

     25

Software

     19   

Semiconductors & Semiconductor Equipment

     17   

Technology Hardware, Storage & Peripherals

     12   

IT Services

     10   

Other2

     17   

 

  2   

Other includes a 4% holding or less in each of the following industries; Internet & Catalog Retail, Media, Electronic Equipment, Instruments & Components, Household Durables, Wireless Telecommunication Services, Real Estate Investment Trust (REITs), Communications Equipment, Commercial Services & Supplies and Diversified Financial Services.

 

 

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 

     ANNUAL REPORT    DECEMBER 31, 2014    21


Trust Summary as of December 31, 2014      BlackRock Utility and Infrastructure Trust   

 

Trust Overview

BlackRock Utility and Infrastructure Trust’s (BUI) (the “Trust”) investment objective is to provide total return through a combination of current income, current gains and long-term capital appreciation. The Trust seeks to achieve its investment objective by investing primarily in equity securities issued by companies that are engaged in the Utilities and Infrastructure business segments anywhere in the world and by utilizing an option writing (selling) strategy in an effort to seek total return performance and enhance distributions. The Trust considers the “Utilities” business segment to include products, technologies and services connected to the management, ownership, operation, construction, development or financing of facilities used to generate, transmit or distribute electricity, water, natural resources or telecommunications and the “Infrastructure” business segment to include companies that own or operate infrastructure assets or that are involved in the development, construction, distribution or financing of infrastructure assets. Under normal circumstances, the Trust invests a substantial amount of its total assets in foreign issuers, issuers that primarily trade in a market located outside the United States or issuers that do a substantial amount of business outside the United States. The Trust may invest directly in such securities or synthetically through the use of derivatives.

The Board of the Trust approved a change of the fiscal year of the Trust from October 31st to December 31st.

No assurance can be given that the Trust’s investment objective will be achieved.

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the two-month period ended December 31, 2014, the Trust returned 4.82% based on market price and 1.50% based on NAV. For the same period, the closed-end Lipper Utility Funds category posted an average return of 0.63% based on market price and (0.32)% based on NAV. All returns reflect reinvestment of dividends. The Trust’s discount to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

 

Ÿ  

Broadly, U.S. utilities continued to benefit from falling U.S. interest rates, investors’ search for yield and strong power demand. These factors led stocks higher over the two-month period. The Trust’s exposure to master limited partnerships (“MLPs”) within the energy sector was the largest contributor to performance, led by Dominion Midstream Partners LP and Shell Midstream Partners LP. Exposure to the electric utilities and multi- utilities industries also added to absolute returns.

 

Ÿ  

Conversely, the largest detractor from performance was the Trust’s exposure to the independent power and renewable energy industry. The industry traded lower given the steep decline in crude oil prices and the potential impact this may have on the cost effectiveness of renewable energy sources. Notable detractors in the space include NRG Energy, Inc., Pattern Energy Group, Inc. and Enel Green Power SpA. Stock selection in both the construction & engineering and diversified telecommunication services industries had a marginally negative impact on returns.

Ÿ  

Also, during the period, the Trust made use of options, principally written call options on individual stocks, in order to seek enhanced returns while continuing to participate in the performance of the underlying equities. The Trust’s option writing strategy did not have a material impact on performance for the period.

Describe recent portfolio activity.

 

Ÿ  

During the two-month period, the Trust increased its electric utilities exposure by adding to existing positions in PPL Corp. and Pinnacle West Capital Corp. Additionally, multi-utilities exposure was increased by initiating a position in Consolidated Edison, Inc. A pair of Japanese transportation infrastructure companies were added to the portfolio, Japan Airport Terminal Co. Ltd. and East Japan Railway Co. Conversely, MLP exposure was selectively reduced during the period, by trimming positions in Enterprise Products Partners LP, Dominion Midstream Partners LP and Magellan Midstream Partners LP.

Describe Trust positioning at period end.

 

Ÿ  

At period end, the utilities sector accounted for approximately one-half of the Trust’s assets, with holdings concentrated in the U.S. electric and multi-utilities industries. The Trust’s second largest exposure was to MLPs, based on attractive fundamentals and healthy dividend yields in the space. The managers remained mindful of the risks presented by the potential for rising U.S. interest rates and changes in the local environments in which the companies held by the Trust operate. As a result, the Trust was positioned with an eye towards diversification across multiple geographic and regulatory environments.

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

22    ANNUAL REPORT    DECEMBER 31, 2014     


          BlackRock Utility and Infrastructure Trust   

 

Trust Information

 

Symbol on NYSE

     BUI   

Initial Offering Date

     November 25, 2011   

Current Distribution Rate on Closing Market Price as of December 31, 2014 ($20.74)1

     7.00

Current Monthly Distribution per Common Share2

   $ 0.121   

Current Annualized Distribution per Common Share2

   $ 1.452   

 

  1   

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the Financial Highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

Market Price and Net Asset Value Per Share Summary

 

       12/31/14         10/31/14         Change        High         Low   

Market Price

   $ 20.74       $ 20.02         3.60   $ 20.97       $ 19.76   

Net Asset Value

   $ 22.47       $ 22.40         0.31   $ 22.71       $ 21.35   

 

Market Price and Net Asset Value History Since Inception

 

 

LOGO

 

  3 

Commencement of operations.

 

Overview of the Trust’s Long-Term Investments

 

Ten Largest Holdings    12/31/14

Shell Midstream Partners LP

     5 %     

NextEra Energy, Inc.

     4   

American Tower Corp.

     4   

CMS Energy Corp.

     4   

National Grid PLC

     4   

Dominion Midstream Partners LP

     4   

Duke Energy Corp.

     4   

Dominion Resources, Inc.

     3   

American Water Works Co., Inc.

     3   

Atlantia SpA

     3   
Industry Allocation    12/31/14      10/31/14

Oil, Gas & Consumable Fuels

     28%           29%     

Multi-Utilities

     22              21        

Electric Utilities

     21              21        

Transportation Infrastructure

     12               12        

Other4

     17              17        

 

  4   

Other includes a 7% holding or less in each of the following industries; Diversified Telecommunication Services, Construction & Engineering, Real Estate Investment Trust (REITs), Water Utilities, Independent Power and Renewable Electricity Producers, Media, Gas Utilities, Road & Rail and Wireless Telecommunication Services.

 

 

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 

     ANNUAL REPORT    DECEMBER 31, 2014    23


Derivative Financial Instruments     

 

The Trusts may invest in various derivative financial instruments. Derivative financial instruments are used to obtain exposure to a security, index and/or market without owning or taking physical custody of securities or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage. Derivative financial instruments also involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative

financial instrument. The Trusts’ ability to use a derivative financial instrument successfully depends on the investment advisor’s ability to predict pertinent market movements accurately, which cannot be assured. The use of derivative financial instruments may result in losses greater than if they had not been used, may limit the amount of appreciation a Trust can realize on an investment and/or may result in lower distributions paid to shareholders. The Trusts’ investments in these instruments are discussed in detail in the Notes to Financial Statements.

 

 

24    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments December 31, 2014      BlackRock Energy and Resources Trust (BGR)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks   

    

Shares

     Value  

Energy Equipment & Services — 3.9%

     

Halliburton Co.

     144,500       $ 5,683,185   

Schlumberger Ltd. (a)

     221,124         18,886,201   
     

 

 

 
                24,569,386   

Oil, Gas & Consumable Fuels — 91.4%

     

Anadarko Petroleum Corp. (a)

     354,333         29,232,472   

BG Group PLC

     425,710         5,696,736   

BP PLC

     1,997,000         12,676,132   

Cabot Oil & Gas Corp. (a)

     486,000         14,390,460   

Cairn Energy PLC (b)

     1,768,600         4,888,340   

Canadian Natural Resources Ltd.

     280,400         8,669,279   

Canadian Oil Sands Ltd.

     301,113         2,700,635   

Chevron Corp. (a)

     603,828         67,737,425   

Cimarex Energy Co. (a)

     109,300         11,585,800   

ConocoPhillips (a)

     570,700         39,412,542   

Devon Energy Corp. (a)

     344,900         21,111,329   

Enbridge, Inc. (a)

     440,100         22,630,034   

Encana Corp.

     1,053,800         14,666,850   

EOG Resources, Inc. (a)

     216,900         19,969,983   

Exxon Mobil Corp. (a)(c)

     754,800         69,781,260   

Imperial Oil Ltd. (a)

     186,800         8,047,289   

Kosmos Energy Ltd. (b)

     1,018,807         8,547,791   

Marathon Oil Corp. (a)

     609,500         17,242,755   

Murphy Oil Corp. (a)

     172,200         8,699,544   

Noble Energy, Inc.

     298,392         14,152,732   

Oil Search Ltd.

     2,127,763         13,644,471   

Phillips 66 (a)

     177,500         12,726,750   

Pioneer Natural Resources Co. (a)

     87,100         12,964,835   
Common Stocks   

    

Shares

     Value  

Oil, Gas & Consumable Fuels (concluded)

     

Range Resources Corp.

     224,500       $ 11,999,525   

Royal Dutch Shell PLC, A Shares — ADR

     1,023,300         68,509,935   

Southwestern Energy Co. (a)(b)

     508,100         13,866,049   

Statoil ASA

     727,626         12,811,192   

Total SA

     532,200         27,265,751   
     

 

 

 
                575,627,896   

Total Long-Term Investments

(Cost — $635,275,403) — 95.3%

  

  

     600,197,282   
     
Short-Term Securities                

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.04% (d)(e)

     35,462,798         35,462,798   

Total Short-Term Securities

(Cost — $35,462,798) — 5.7%

  

  

     35,462,798   

Total Investments Before Options Written

(Cost — $670,738,201) — 101.0%

  

  

     635,660,080   
     
Options Written                

(Premiums Received — $2,703,505) — (0.3)%

  

     (1,574,557

Total Investments Net of Options Written — 100.7%

  

     634,085,523   

Liabilities in Excess of Other Assets — (0.7)%

  

     (4,482,569
     

 

 

 

Net Assets — 100.0%

      $ 629,602,954   
     

 

 

 
 
Notes to Schedule of Investments

 

(a) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(b) Non-income producing security.

 

(c) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(d) Represents the current yield as of report date.

 

(e) During the period ended December 31, 2014, investments in issuers considered to be an affiliate of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate   

Shares Held at

October 31, 2014

    

Net

Activity

    

Shares Held at

December 31, 2014

     Income     

Realized

Gain

 

BlackRock Liquidity Funds, TempFund, Institutional Class

     11,796,554         23,666,244         35,462,798       $ 1,816       $ 2,544   

 

Ÿ  

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

 

Portfolio Abbreviations
ADR    American Depositary Receipts      GBP    British Pound    REIT    Real Estate Investment Trust
AUD    Australian Dollar      GDR    Global Depositary Receipts    SEK    Swedish Krona
BRL    Brazil Real      HKD    Hong Kong Dollar    SGD    Singapore Dollar
CAD    Canadian Dollar      JPY    Japanese Yen    TWD    Taiwan Dollar
CHF    Swiss Franc      KRW    Korean Won    USD    U.S. Dollar
DKK    Danish Krone      NOK    Norwegian Krone    ZAR    South African Rand
EUR    Euro              

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    25


Schedule of Investments (continued)      BlackRock Energy and Resources Trust (BGR)   

 

Ÿ  

As of December 31, 2014, exchange-traded options written as follows:

 

Description   

Put/

Call

    

Strike

Price

    

Expiration

Date

     Contracts     

Market

Value

 

ConocoPhillips

     Call         USD         73.50         1/02/15         948       $ (4,740

Marathon Oil Corp.

     Call         USD         34.00         1/02/15         894         (4,470

Phillips 66

     Call         USD         80.00         1/02/15         327         (4,905

Anadarko Petroleum Corp.

     Call         USD         100.00         1/17/15         649         (7,139

Cabot Oil & Gas Corp.

     Call         USD         36.25         1/17/15         595         (2,975

Chevron Corp.

     Call         USD         120.00         1/17/15         1,000         (9,500

Cimarex Energy Co.

     Call         USD         125.00         1/17/15         383         (6,702

ConocoPhillips

     Call         USD         75.00         1/17/15         948         (17,064

Devon Energy Corp.

     Call         USD         70.00         1/17/15         350         (2,275

Enbridge, Inc.

     Call         CAD         60.00         1/17/15         523         (48,843

EOG Resources, Inc.

     Call         USD         100.00         1/17/15         379         (14,971

Exxon Mobil Corp.

     Call         USD         97.50         1/17/15         692         (10,380

Imperial Oil Ltd.

     Call         CAD         56.00         1/17/15         343         (3,395

Murphy Oil Corp.

     Call         USD         57.50         1/17/15         300         (6,000

Phillips 66

     Call         USD         80.00         1/17/15         325         (4,875

Pioneer Natural Resources Co.

     Call         USD         195.00         1/17/15         100         (3,000

Schlumberger Ltd.

     Call         USD         100.00         1/17/15         150         (450

Chevron Corp.

     Call         USD         111.00         1/23/15         406         (130,935

Exxon Mobil Corp.

     Call         USD         95.00         1/23/15         309         (25,029

Schlumberger Ltd.

     Call         USD         94.00         1/23/15         662         (22,177

Exxon Mobil Corp.

     Call         USD         93.00         1/30/15         782         (152,881

Anadarko Petroleum Corp.

     Call         USD         92.50         2/20/15         236         (38,940

Exxon Mobil Corp.

     Call         USD         95.00         2/20/15         859         (124,555

Imperial Oil Ltd.

     Call         CAD         54.00         2/20/15         310         (24,014

Total

                  $ (670,215
                 

 

 

 

 

Ÿ  

As of December 31, 2014, over-the-counter options written were as follows:

 

Description   Counterparty   

Put/

Call

    

Strike

Price

    

Expiration

Date

     Contracts     

Market

Value

 

BP PLC

  Deutsche Bank AG      Call         GBP         4.46         1/06/15         367,000       $ (62

Oil Search Ltd.

  UBS AG      Call         AUD         8.73         1/06/15         364,000         (110

Cabot Oil & Gas Corp.

  Credit Suisse International      Call         USD         34.89         1/08/15         59,500         (33

Total SA

  Morgan Stanley & Co. International PLC      Call         EUR         47.67         1/08/15         64,000         (36

Enbridge, Inc.

  Deutsche Bank AG      Call         CAD         52.55         1/09/15         83,000         (515,457

Enbridge, Inc.

  Goldman Sachs International      Call         CAD         52.70         1/09/15         26,000         (158,141

Oil Search Ltd.

  UBS AG      Call         AUD         8.73         1/14/15         364,000         (2,558

Statoil ASA

  Goldman Sachs International      Call         NOK         153.67         1/21/15         270,000         (20,676

BP PLC

  Deutsche Bank AG      Call         GBP         4.46         1/22/15         367,000         (7,527

Total SA

  Goldman Sachs International      Call         EUR         42.97         2/03/15         64,000         (102,236

Total SA

  Goldman Sachs International      Call         EUR         43.76         2/13/15         67,400         (97,506

Total

                    $ (904,342
                   

 

 

 

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, refer to Note 2 of the Notes to Financial Statements.

 

See Notes to Financial Statements.

 

26    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (concluded)      BlackRock Energy and Resources Trust (BGR)   

 

As of December 31, 2014, the following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy:

 

      Level 1   Level 2   Level 3    Total

Assets:

                 

Investments:

                 

Long-Term Investments:

                 

Common Stocks:

                 

Energy Equipment & Services

     $ 24,569,386                        $ 24,569,386  

Oil, Gas & Consumable Fuels

       498,645,274       $ 76,982,622                  575,627,896  

Short-Term Securities

       35,462,798                          35,462,798  
    

 

 

 

Total

     $ 558,677,458       $ 76,982,622                $ 635,660,080  
    

 

 

 
                 
      Level 1   Level 2   Level 3    Total

Derivative Financial Instruments1

                 

Liabilities:

                 

Equity contracts

     $ (670,215 )     $ (904,342 )              $ (1,574,557 )
    

 

 

 

1    Derivative financial instruments are options written, which are shown at value.

       

 

 

The Trust may hold assets in which the fair value approximates the carrying amount for financial statement purposes. As of December 31, 2014, such assets are categorized within the disclosure hierarchy as follows:

   

                 
      Level 1   Level 2   Level 3    Total

Assets:

                 

Cash

     $ 6,930                        $ 6,930  

Foreign currency at value

       65,835                          65,835  
    

 

 

 

Total

     $ 72,765                        $ 72,765  
    

 

 

 

During the period ended December 31, 2014, there were no transfers between levels.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    27


Schedule of Investments December 31, 2014      BlackRock Enhanced Capital and Income Fund, Inc. (CII)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Air Freight & Logistics — 0.0%

     

Royal Mail PLC

     11,200       $ 74,636   

Airlines — 6.6%

     

Japan Airlines Co. Ltd.

     1,161,600         34,440,344   

United Continental Holdings, Inc. (a)(b)

     169,100         11,311,099   
     

 

 

 
                45,751,443   

Auto Components — 2.2%

     

The Goodyear Tire & Rubber Co. (b)

     528,600         15,102,102   

Automobiles — 2.6%

     

Bayerische Motoren Werke AG

     53,800         4,416,442   

General Motors Co. (b)

     314,400         10,975,704   

Renault SA

     36,400         2,651,248   
     

 

 

 
                18,043,394   

Banks — 3.4%

     

Citigroup, Inc. (b)(c)

     186,130         10,071,494   

JPMorgan Chase & Co. (b)

     219,790         13,754,458   
     

 

 

 
                23,825,952   

Beverages — 0.5%

     

PepsiCo, Inc. (b)

     36,800         3,479,808   

Biotechnology — 0.4%

     

Gilead Sciences, Inc. (a)(b)

     33,300         3,138,858   

Building Products — 1.6%

     

Owens Corning (b)

     301,100         10,782,391   

Capital Markets — 0.8%

     

Atlas Mara Co-Nvest Ltd. (a)

     359,364         3,006,515   

Legg Mason, Inc. (b)

     50,540         2,697,320   
     

 

 

 
                5,703,835   

Chemicals — 3.6%

     

CF Industries Holdings, Inc. (b)

     91,300         24,882,902   

Communications Equipment — 0.8%

     

QUALCOMM, Inc. (b)

     70,500         5,240,265   

Consumer Finance — 3.9%

     

Ally Financial, Inc. (a)(b)

     502,400         11,866,688   

Discover Financial Services (b)(c)

     161,400         10,570,086   

Springleaf Holdings, Inc. (a)

     134,300         4,857,631   
     

 

 

 
                27,294,405   

Diversified Consumer Services — 0.5%

     

Houghton Mifflin Harcourt Co. (a)

     154,985         3,209,739   

Diversified Financial Services — 2.1%

     

Berkshire Hathaway, Inc., Class B (a)(b)

     74,200         11,141,130   

FNFV Group (a)

     232,710         3,662,855   
     

 

 

 
                14,803,985   

Diversified Telecommunication Services — 1.1%

     

Verizon Communications, Inc. (b)

     161,610         7,560,116   

Energy Equipment & Services — 0.7%

     

Noble Corp PLC (b)

     164,900         2,732,393   

Transocean Ltd. (b)(d)

     117,200         2,148,276   
     

 

 

 
                4,880,669   

Food & Staples Retailing — 2.6%

     

METRO AG (a)

     402,600         12,306,592   

Wal-Mart Stores, Inc. (b)

     18,400         1,580,192   

Whole Foods Market, Inc. (b)

     87,950         4,434,439   
     

 

 

 
                18,321,223   

Health Care Providers & Services — 5.9%

     

Express Scripts Holding Co. (a)(b)

     78,700         6,663,529   
Common Stocks    Shares      Value  

Health Care Providers & Services (concluded)

     

UnitedHealth Group, Inc. (b)

     337,800       $ 34,148,202   
     

 

 

 
                40,811,731   

Industrial Conglomerates — 0.3%

     

3M Co. (b)

     12,900         2,119,728   

Insurance — 7.9%

     

The Allstate Corp. (b)

     112,630         7,912,258   

American International Group, Inc. (b)

     408,110         22,858,241   

FNF Group (b)

     687,700         23,691,265   
     

 

 

 
                54,461,764   

Internet & Catalog Retail — 6.3%

     

Expedia, Inc. (b)

     168,350         14,370,356   

Orbitz Worldwide, Inc. (a)(b)

     3,592,000         29,562,160   
     

 

 

 
                43,932,516   

Internet Software & Services — 4.5%

     

eBay, Inc. (a)(b)

     209,200         11,740,304   

Google, Inc., Class A (a)(b)

     12,001         6,368,451   

Google, Inc., Class C (a)(b)

     10,301         5,422,446   

Yahoo!, Inc. (a)(b)

     150,300         7,591,653   
     

 

 

 
                31,122,854   

IT Services — 5.4%

     

Leidos Holdings, Inc. (b)

     383,500         16,689,920   

Science Applications International Corp.

     169,492         8,394,939   

ServiceSource International, Inc. (a)

     1,377,930         6,448,712   

Visa, Inc., Class A (b)

     22,700         5,951,940   
     

 

 

 
                37,485,511   

Leisure Products — 0.2%

     

Brunswick Corp.

     29,500         1,512,170   

Media — 8.4%

     

CBS Corp., Class B

     28,200         1,560,588   

Comcast Corp., Special Class A (b)

     316,700         18,230,836   

News Corp., Class A (a)

     35,680         559,819   

Nexstar Broadcasting Group, Inc., Class A (b)

     112,500         5,826,375   

Sinclair Broadcast Group, Inc., Class A (b)

     1,094,581         29,947,736   

The Walt Disney Co. (b)

     19,300         1,817,867   
     

 

 

 
                57,943,221   

Metals & Mining — 0.3%

     

Freeport-McMoRan, Inc.

     79,800         1,864,128   

Oil, Gas & Consumable Fuels — 5.7%

     

HollyFrontier Corp. (b)

     159,960         5,995,301   

Linn Energy LLC (b)

     68,000         688,840   

Marathon Petroleum Corp. (b)

     94,000         8,484,440   

PBF Energy, Inc., Class A

     103,100         2,746,584   

Suncor Energy, Inc. (b)

     671,700         21,346,626   
     

 

 

 
                39,261,791   

Paper & Forest Products — 0.3%

     

International Paper Co.

     37,100         1,987,818   

Pharmaceuticals — 7.9%

     

Eli Lilly & Co. (b)

     121,170         8,359,518   

Johnson & Johnson (b)

     126,500         13,228,105   

Merck & Co., Inc. (b)

     237,500         13,487,625   

Novartis AG — ADR (b)

     43,300         4,012,178   

Pfizer, Inc. (b)

     490,430         15,276,896   
     

 

 

 
                54,364,322   

Real Estate Investment Trusts (REITs) — 1.7%

     

American Capital Agency Corp.

     226,000         4,933,580   
 

 

See Notes to Financial Statements.

 

28    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock Enhanced Capital and Income Fund, Inc. (CII)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Real Estate Investment Trusts (REITs) (concluded)

     

Annaly Capital Management, Inc.

     606,100       $ 6,551,941   
     

 

 

 
                11,485,521   

Software — 2.4%

     

Activision Blizzard, Inc. (b)

     432,800         8,720,920   

Oracle Corp. (b)

     169,100         7,604,427   
     

 

 

 
                16,325,347   

Technology Hardware, Storage & Peripherals — 7.4%

  

  

Apple, Inc. (b)(c)

     289,400         31,943,972   

Samsung Electronics Co. Ltd.

     20,200         18,999,524   
     

 

 

 
                50,943,496   

Trading Companies & Distributors — 0.3%

     

AerCap Holdings NV (a)(b)

     56,600         2,197,212   

Wireless Telecommunication Services — 1.7%

     

Vodafone Group PLC — ADR

     342,308         11,696,664   

Total Common Stocks — 100.0%

              691,611,517   
     
Warrants (e)                

Capital Markets — 0.0%

     

Atlas Mara Co-Nvest Ltd., Expires 12/17/17 (a)

     200,000         90,000   

Total Long-Term Investments

(Cost — $576,489,779) — 100.0%

              691,701,517   
                   
     
Short-Term Securities    Shares      Value  

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.04% (f)(g)

     1,879,452       $ 1,879,452   
      Beneficial
Interest
(000)
         

BlackRock Liquidity Series, LLC Money Market Series, 0.20% (f)(g)(h)

   $ 674         673,750   

Total Short-Term Securities

(Cost — $2,553,202) — 0.4%

              2,553,202   

Total Investments Before Options Written

(Cost — $579,042,981) — 100.4%

  

  

     694,254,719   
     
Options Written                

(Premiums Received — $6,426,875) — (1.1)%

  

     (7,478,281

Total Investments Net of Options Written — 99.3%

  

     686,776,438   

Other Assets Less Liabilities — 0.7%

        4,603,082   
     

 

 

 

Net Assets — 100.0%

      $ 691,379,520   
     

 

 

 
 
Notes to Schedule of Investments

 

(a) Non-income producing security.

 

(b) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(c) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(d) Security, or a portion of security, is on loan.

 

(e) Warrants entitle the Trust to purchase a predetermined number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date of the warrants, if any.

 

(f) Represents the current yield as of report date.

 

(g) During the period ended December 31, 2014, investments in issuers considered to be an affiliate of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate   

Shares/

Beneficial Interest
Held at
October 31,

2014

    

Net

Activity

   

Shares/

Beneficial Interest
Held at
December 31,
2014

     Income  

BlackRock Liquidity Funds, TempFund, Institutional Class

     7,658,919         (5,779,467     1,879,452       $ 459   

BlackRock Liquidity Series, LLC Money Market Series

   $ 15,621       $ 658,129      $ 673,750       $ 654   

 

(h) Security was purchased with the cash collateral from loaned securities. The Trust may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

 

Ÿ  

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    29


Schedule of Investments (continued)      BlackRock Enhanced Capital and Income Fund, Inc. (CII)   

 

 

Ÿ  

As of December 31, 2014, forward foreign currency exchange contracts outstanding were as follows:

 

Currency
Purchased

      

Currency
Sold

    Counterparty   Settlement
Date
       Unrealized
Appreciation/
Depreciation
 
EUR        2,574,392           USD           3,296,666      BNP Paribas S.A     1/22/15         $ (180,768
JPY        8,262,000           USD           77,368      Deutsche Bank AG     1/22/15           (8,379
USD        21,806,137           EUR           17,072,763      Goldman Sachs & Co.     1/22/15           1,142,235   
USD        587,827           JPY           69,148,000      BNP Paribas S.A     1/22/15           10,424   
USD        341,383           JPY           39,725,000      BNP Paribas S.A     1/22/15           9,670   
USD        3,685,647           JPY           433,651,658      Goldman Sachs & Co.     1/22/15           64,552   
USD        30,231,734           JPY           3,192,264,881      Morgan Stanley & Co. International PLC     1/22/15           3,575,559   
USD        428,532           JPY           51,481,000      RBS Securities, Inc.     1/22/15           (1,346
USD        149,299           JPY           17,237,000      State Street Bank and Trust Co.     1/22/15           5,366   
USD        1,200,367           JPY           142,436,000      UBS Securities LLC     1/22/15           10,992   
USD        16,582,710           KRW           17,716,470,263      RBS Securities, Inc.     1/22/15           483,701   
Total                         $ 5,112,006   
                       

 

 

 

 

Ÿ  

As of December 31, 2014, exchange-traded options written were as follows:

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Expedia, Inc.

     Call         USD         92.00         1/02/15         260       $ (2,600

Suncor Energy, Inc.

     Call         USD         37.00         1/02/15         900         (5,400

UnitedHealth Group, Inc.

     Call         USD         97.00         1/02/15         1,155         (487,988

3M Co.

     Call         USD         160.00         1/09/15         65         (31,200

American International Group, Inc.

     Call         USD         56.00         1/09/15         825         (46,200

Apple, Inc.

     Call         USD         118.00         1/09/15         203         (1,624

Citigroup, Inc.

     Call         USD         54.50         1/09/15         317         (16,484

Discover Financial Services

     Call         USD         66.00         1/09/15         360         (21,600

eBay, Inc.

     Call         USD         57.50         1/09/15         254         (4,953

Eli Lilly & Co.

     Call         USD         72.50         1/09/15         282         (4,089

Express Scripts Holding Co.

     Call         USD         85.00         1/09/15         180         (15,390

The Goodyear Tire & Rubber Co.

     Call         USD         28.00         1/09/15         736         (60,720

Marathon Petroleum Corp.

     Call         USD         91.00         1/09/15         394         (65,010

Merck & Co., Inc.

     Call         USD         61.50         1/09/15         384         (1,152

Oracle Corp.

     Call         USD         42.00         1/09/15         336         (102,816

PepsiCo, Inc.

     Call         USD         101.00         1/09/15         203         (1,421

Transocean Ltd.

     Call         USD         20.50         1/09/15         264         (2,772

United Continental Holdings, Inc.

     Call         USD         72.00         1/09/15         381         (13,716

Visa, Inc., Class A

     Call         USD         265.00         1/09/15         37         (6,124

Whole Foods Market, Inc.

     Call         USD         48.50         1/09/15         200         (42,700

Yahoo!, Inc.

     Call         USD         52.50         1/09/15         185         (4,162

Activision Blizzard, Inc.

     Call         USD         21.00         1/17/15         455         (10,693

AerCap Holdings NV

     Call         USD         45.00         1/17/15         150         (3,750

The Allstate Corp.

     Call         USD         67.50         1/17/15         670         (200,330

Ally Financial, Inc.

     Call         USD         23.00         1/17/15         750         (73,125

Ally Financial, Inc.

     Call         USD         24.00         1/17/15         800         (32,000

Apple, Inc.

     Call         USD         114.29         1/17/15         280         (25,480

Apple, Inc.

     Call         USD         115.00         1/17/15         280         (20,440

Apple, Inc.

     Call         USD         118.57         1/17/15         204         (4,998

Berkshire Hathaway, Inc., Class B

     Call         USD         150.00         1/17/15         408         (85,884

CF Industries Holdings, Inc.

     Call         USD         285.00         1/17/15         274         (54,663

Citigroup, Inc.

     Call         USD         55.00         1/17/15         325         (23,238

Discover Financial Services

     Call         USD         65.00         1/17/15         447         (63,698

Express Scripts Holding Co.

     Call         USD         82.50         1/17/15         116         (32,248

FNF Group

     Call         USD         30.00         1/17/15         98         (44,590

FNF Group

     Call         USD         31.00         1/17/15         1,686         (598,530

General Motors Co.

     Call         USD         34.00         1/17/15         1,487         (190,336

General Motors Co.

     Call         USD         35.00         1/17/15         242         (16,214

The Goodyear Tire & Rubber Co.

     Call         USD         28.00         1/17/15         1,400         (133,000

Google, Inc., Class C

     Call         USD         560.00         1/17/15         41         (3,485

HollyFrontier Corp.

     Call         USD         41.50         1/17/15         360         (5,400

 

See Notes to Financial Statements.

 

30    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock Enhanced Capital and Income Fund, Inc. (CII)   

 

As of December 31, 2014, exchange-traded options written were as follows: (continued)

 

Description    Put/
Call
     Strike
Price
     Expiration
Date
     Contracts      Market
Value
 

JPMorgan Chase & Co.

     Call         USD         62.50         1/17/15         234       $ (23,517

Legg Mason, Inc.

     Call         USD         55.00         1/17/15         252         (9,450

Leidos Holdings, Inc.

     Call         USD         40.00         1/17/15         300         (108,000

Linn Energy LLC

     Call         USD         17.00         1/17/15         150         (750

Marathon Petroleum Corp.

     Call         USD         92.50         1/17/15         76         (11,780

Merck & Co., Inc.

     Call         USD         60.00         1/17/15         335         (4,355

Nexstar Broadcasting Group, Inc., Class A

     Call         USD         55.00         1/17/15         218         (10,900

Noble Corp PLC

     Call         USD         17.00         1/17/15         367         (20,919

Noble Corp PLC

     Call         USD         18.00         1/17/15         367         (9,358

Noble Corp PLC

     Call         USD         19.00         1/17/15         90         (1,035

Novartis AG — ADR

     Call         USD         95.00         1/17/15         217         (11,935

Oracle Corp.

     Call         USD         42.00         1/17/15         182         (55,237

Oracle Corp.

     Call         USD         45.00         1/17/15         400         (25,000

Owens Corning

     Call         USD         36.00         1/17/15         500         (33,750

Owens Corning

     Call         USD         37.00         1/17/15         156         (4,680

Pfizer, Inc.

     Call         USD         33.00         1/17/15         312         (1,404

Sinclair Broadcast Group, Inc., Class A

     Call         USD         27.00         1/17/15         6         (555

Sinclair Broadcast Group, Inc., Class A

     Call         USD         28.00         1/17/15         1,000         (47,500

Sinclair Broadcast Group, Inc., Class A

     Call         USD         30.00         1/17/15         500         (10,000

Suncor Energy, Inc.

     Call         USD         32.00         1/17/15         1,550         (136,400

Suncor Energy, Inc.

     Call         USD         33.00         1/17/15         450         (22,050

UnitedHealth Group, Inc.

     Call         USD         100.00         1/17/15         702         (162,162

Verizon Communications, Inc.

     Call         USD         47.00         1/17/15         237         (7,940

Wal-Mart Stores, Inc.

     Call         USD         85.00         1/17/15         58         (9,483

The Walt Disney Co.

     Call         USD         90.00         1/17/15         62         (28,365

Yahoo!, Inc.

     Call         USD         55.00         1/17/15         47         (916

Wal-Mart Stores, Inc.

     Call         USD         86.25         1/22/15         22         (2,388

Activision Blizzard, Inc.

     Call         USD         21.00         1/23/15         454         (12,257

American International Group, Inc.

     Call         USD         56.00         1/23/15         850         (79,900

CF Industries Holdings, Inc.

     Call         USD         257.50         1/23/15         180         (316,800

eBay, Inc.

     Call         USD         58.50         1/23/15         396         (27,324

Expedia, Inc.

     Call         USD         91.00         1/23/15         371         (20,405

Express Scripts Holding Co.

     Call         USD         85.00         1/23/15         98         (13,671

Google, Inc., Class A

     Call         USD         552.50         1/23/15         29         (17,545

Google, Inc., Class C

     Call         USD         540.00         1/23/15         11         (10,010

QUALCOMM, Inc.

     Call         USD         74.50         1/23/15         206         (26,883

United Continental Holdings, Inc.

     Call         USD         70.00         1/23/15         233         (42,290

Verizon Communications, Inc.

     Call         USD         47.50         1/23/15         167         (5,094

Visa, Inc., Class A

     Call         USD         265.00         1/23/15         77         (26,758

Yahoo!, Inc.

     Call         USD         53.00         1/23/15         258         (19,092

Activision Blizzard, Inc.

     Call         USD         21.00         1/30/15         455         (14,332

American International Group, Inc.

     Call         USD         57.00         1/30/15         366         (23,058

Apple, Inc.

     Call         USD         115.00         1/30/15         257         (58,339

Citigroup, Inc.

     Call         USD         54.00         1/30/15         289         (43,784

eBay, Inc.

     Call         USD         58.00         1/30/15         396         (37,224

Eli Lilly & Co.

     Call         USD         72.00         1/30/15         324         (21,870

Expedia, Inc.

     Call         USD         88.00         1/30/15         211         (35,342

Gilead Sciences, Inc.

     Call         USD         108.00         1/30/15         123         (6,519

JPMorgan Chase & Co.

     Call         USD         61.50         1/30/15         255         (49,598

Pfizer, Inc.

     Call         USD         32.00         1/30/15         941         (33,406

QUALCOMM, Inc.

     Call         USD         75.00         1/30/15         147         (28,665

United Continental Holdings, Inc.

     Call         USD         70.00         1/30/15         232         (52,316

Verizon Communications, Inc.

     Call         USD         47.00         1/30/15         237         (13,390

Wal-Mart Stores, Inc.

     Call         USD         86.25         1/30/15         22         (2,849

Whole Foods Market, Inc.

     Call         USD         49.50         1/30/15         240         (41,400

Yahoo!, Inc.

     Call         USD         54.50         1/30/15         262         (30,523

Johnson & Johnson

     Call         USD         107.00         2/06/15         316         (38,078

JPMorgan Chase & Co.

     Call         USD         64.00         2/06/15         459         (36,261

Sinclair Broadcast Group, Inc., Class A

     Call         USD         28.50         2/06/15         1,000         (71,809

Johnson & Johnson

     Call         USD         107.00         2/13/15         317         (43,904

Orbitz Worldwide, Inc.

     Call         USD         8.75         2/13/15         500         (19,244

Comcast Corp., Special Class A

     Call         USD         57.25         2/17/15         750         (159,999

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    31


Schedule of Investments (continued)      BlackRock Enhanced Capital and Income Fund, Inc. (CII)   

 

As of December 31, 2014, exchange-traded options written were as follows: (concluded)

 

Description    Put/
Call
     Strike
Price
     Expiration
Date
     Contracts      Market
Value
 

Activision Blizzard, Inc.

     Call         USD         21.00         2/20/15         400       $ (28,800

Apple, Inc.

     Call         USD         115.00         2/20/15         257         (77,357

Gilead Sciences, Inc.

     Call         USD         100.00         2/20/15         44         (13,750

The Goodyear Tire & Rubber Co.

     Call         USD         29.00         2/20/15         507         (63,375

JPMorgan Chase & Co.

     Call         USD         62.50         2/20/15         151         (25,821

Merck & Co., Inc.

     Call         USD         62.50         2/20/15         234         (5,499

Orbitz Worldwide, Inc.

     Call         USD         10.00         2/20/15         2,700         (54,000

Orbitz Worldwide, Inc.

     Call         USD         9.00         2/20/15         2,700         (94,500

Owens Corning

     Call         USD         36.00         2/20/15         850         (125,375

Pfizer, Inc.

     Call         USD         32.00         2/20/15         1,200         (55,800

Verizon Communications, Inc.

     Call         USD         48.00         2/20/15         167         (7,682

The Walt Disney Co.

     Call         USD         92.50         2/20/15         35         (13,825

Merck & Co., Inc.

     Call         USD         60.00         3/20/15         235         (18,682

Total

                  $ (5,384,457
                 

 

 

 

 

Ÿ  

As of December 31, 2014, over-the-counter options written were as follows:

 

Description   Counterparty        Put/
Call
      

Strike
Price

       Expiration
Date
       Contracts        Market
Value
 

Springleaf Holdings, Inc.

    Citibank N.A.           Call           USD         37.67           1/05/15           23,800         $ (2,522

Houghton Mifflin Harcourt Co.

    UBS AG           Call           USD         19.92           1/06/15           37,000           (34,393

Japan Airlines Co. Ltd.

    Citibank N.A.           Call           JPY         3,368.10           1/06/15           160,000           (247,820

Samsung Electronics Co. Ltd.

    Morgan Stanley & Co. International PLC           Call           KRW         960,960.00           1/06/15           2,700           (196,484

PBF Energy, Inc., Class A

    Citibank N.A.           Call           USD         29.74           1/07/15           28,400           (723

Activision Blizzard, Inc.

    Morgan Stanley & Co. International PLC           Call           USD         21.42           1/08/15           40,000           (1,828

Bayerische Motoren Werke AG

    Deutsche Bank AG           Call           EUR         68.45           1/12/15           15,000           (12,833

METRO AG

    Goldman Sachs International           Call           EUR         28.22           1/12/15           108,000           (3,216

Renault SA

    Goldman Sachs International           Call           EUR         64.98           1/12/15           20,000           (3,588

Japan Airlines Co. Ltd.

    Goldman Sachs International           Call           JPY         3,435.05           1/14/15           160,000           (198,287

Samsung Electronics Co. Ltd.

    Morgan Stanley & Co. International PLC           Call           KRW         1,041,400.00           1/14/15           2,100           (60,238

Springleaf Holdings, Inc.

    Credit Suisse International           Call           USD         39.06           1/16/15           25,000           (5,333

Brunswick Corp.

    UBS AG           Call           USD         50.91           1/22/15           16,000           (22,260

Leidos Holdings, Inc.

    Deutsche Bank AG           Call           USD         43.44           1/22/15           100,000           (81,783

Nexstar Broadcasting Group, Inc., Class A

    Goldman Sachs International           Call           USD         52.71           1/22/15           40,000           (56,196

Science Applications International Corp.

    Goldman Sachs International           Call           USD         51.24           1/22/15           60,000           (40,413

Japan Airlines Co. Ltd.

    Morgan Stanley & Co. International PLC           Call           JPY         3,916.80           1/23/15           105,000           (7,933

International Paper Co.

    Citibank N.A.           Call           USD         55.71           1/26/15           18,400           (12,322

Springleaf Holdings, Inc.

    Morgan Stanley & Co. International PLC           Call           USD         36.05           1/26/15           18,400           (24,447

Vodafone Group PLC — ADR

    Credit Suisse International           Call           USD         35.61           1/26/15           133,700           (50,220

Comcast Corp., Special Class A

    Citibank N.A.           Call           USD         57.29           1/27/15           80,300           (127,494

Comcast Corp., Special Class A

    Credit Suisse International           Call           USD         56.99           1/27/15           3,100           (5,447

Samsung Electronics Co. Ltd.

    Morgan Stanley & Co. International PLC           Call           KRW         1,041,400.00           1/27/15           2,100           (84,609

Science Applications International Corp.

    Goldman Sachs International           Call           USD         53.08           1/28/15           30,100           (4,308

Houghton Mifflin Harcourt Co.

    Credit Suisse International           Call           USD         20.50           2/02/15           10,400           (10,064

Bayerische Motoren Werke AG

    Bank of America N.A.           Call           EUR         68.13           2/03/15           11,900           (20,792

Japan Airlines Co. Ltd.

    Morgan Stanley & Co. International PLC           Call           JPY         3,789.30           2/03/15           160,000           (50,526

Samsung Electronics Co. Ltd.

    Morgan Stanley & Co. International PLC           Call           KRW         977,959.96           2/03/15           3,300           (258,839

FNF Group

    Deutsche Bank AG           Call           USD         32.86           2/05/15           63,000           (146,540

FNF Group

    Morgan Stanley & Co. International PLC           Call           USD         32.41           2/17/15           102,600           (322,366

Total

                              $ (2,093,824
                             

 

 

 

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

See Notes to Financial Statements.

 

32    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock Enhanced Capital and Income Fund, Inc. (CII)   

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, refer to Note 2 of the Notes to Financial Statements.

As of December 31, 2014, the following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy:

 

      Level 1    Level 2    Level 3    Total

Assets:

                   

Investments:

                   

Long-Term Investments:

                   

Common Stocks:

                   

Air Freight & Logistics

              $ 74,636                 $ 74,636  

Airlines

     $ 11,311,099          34,440,344                   45,751,443  

Auto Components

       15,102,102                            15,102,102  

Automobiles

       15,392,146          2,651,248                   18,043,394  

Banks

       23,825,952                            23,825,952  

Beverages

       3,479,808                            3,479,808  

Biotechnology

       3,138,858                            3,138,858  

Building Products

       10,782,391                            10,782,391  

Capital Markets

       2,697,320          3,006,515                   5,703,835  

Chemicals

       24,882,902                            24,882,902  

Communications Equipment

       5,240,265                            5,240,265  

Consumer Finance

       27,294,405                            27,294,405  

Diversified Consumer Services

       3,209,739                            3,209,739  

Diversified Financial Services

       14,803,985                            14,803,985  

Diversified Telecommunication Services

       7,560,116                            7,560,116  

Energy Equipment & Services

       4,880,669                            4,880,669  

Food & Staples Retailing

       6,014,631          12,306,592                   18,321,223  

Health Care Providers & Services

       40,811,731                            40,811,731  

Industrial Conglomerates

       2,119,728                            2,119,728  

Insurance

       54,461,764                            54,461,764  

Internet & Catalog Retail

       43,932,516                            43,932,516  

Internet Software & Services

       31,122,854                            31,122,854  

IT Services

       37,485,511                            37,485,511  

Leisure Products

       1,512,170                            1,512,170  

Media

       57,943,221                            57,943,221  

Metals & Mining

       1,864,128                            1,864,128  

Oil, Gas & Consumable Fuels

       39,261,791                            39,261,791  

Paper & Forest Products

       1,987,818                            1,987,818  

Pharmaceuticals

       54,364,322                            54,364,322  

Real Estate Investment Trusts (REITs)

       11,485,521                            11,485,521  

Software

       16,325,347                            16,325,347  

Technology Hardware, Storage & Peripherals

       31,943,972          18,999,524                   50,943,496  

Trading Companies & Distributors

       2,197,212                            2,197,212  

Wireless Telecommunication Services

       11,696,664                            11,696,664  

Warrants

       90,000                            90,000  

Short-Term Securities

       1,879,452          673,750                   2,553,202  
    

 

 

 

Total

     $ 622,102,110        $ 72,152,609                 $ 694,254,719  
    

 

 

 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    33


Schedule of Investments (concluded)      BlackRock Enhanced Capital and Income Fund, Inc. (CII)   

 

      Level 1   Level 2   Level 3    Total

Derivative Financial Instruments1

                 

Assets:

                 

Forward foreign currency exchange contracts

             $ 5,302,499                $ 5,302,499  

Liabilities:

                 

Equity contracts

     $ (5,128,167 )       (2,350,114 )                (7,478,281 )

Forward foreign currency exchange contracts

               (190,493 )                (190,493 )
    

 

 

 

Total

     $ (5,128,167 )     $ 2,761,892                $ (2,366,275 )
    

 

 

 

1     Derivative financial instruments are forward foreign currency exchange contracts and options written. Forward foreign currency exchange contracts are valued at the unrealized appreciation/depreciation on the instrument and options written are shown at value.

        

The Trust may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of December 31, 2014, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:    
                 
      Level 1   Level 2   Level 3    Total

Assets:

                 

Cash

     $ 62,339                        $ 62,339  

Foreign currency at value

       4,170                          4,170  

Cash pledged as collateral for OTC derivatives

       100,000                          100,000  

Liabilities:

                 

Collateral on securities loaned at value

             $ (673,750 )                (673,750 )
    

 

 

 

Total

     $ 166,509       $ (673,750 )              $ (507,241 )
    

 

 

 

During the period ended December 31, 2014, there were no transfers between levels.

 

See Notes to Financial Statements.

 

34    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments December 31, 2014      BlackRock Enhanced Equity Dividend Trust (BDJ)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Aerospace & Defense — 7.1%

     

Honeywell International, Inc. (a)

     226,800       $ 22,661,856   

Lockheed Martin Corp. (a)

     85,330         16,431,998   

Northrop Grumman Corp.

     179,200         26,412,288   

Raytheon Co. (a)

     343,100         37,113,127   

United Technologies Corp. (a)

     182,900         21,033,500   
     

 

 

 
                123,652,769   

Air Freight & Logistics — 1.2%

     

United Parcel Service, Class B (a)

     182,900         20,332,993   

Auto Components — 0.5%

     

Johnson Controls, Inc.

     172,300         8,328,982   

Banks — 15.8%

     

Australia & New Zealand Banking Group Ltd.

     18,000         468,359   

Bank of America Corp. (a)(b)

     1,585,400         28,362,806   

The Bank of Nova Scotia

     11,700         667,780   

Citigroup, Inc. (a)

     501,900         27,157,809   

Fifth Third Bancorp.

     703,500         14,333,812   

Hang Seng Bank Ltd.

     17,500         290,858   

HSBC Holdings PLC — ADR

     24,100         1,138,243   

JPMorgan Chase & Co. (a)(b)

     919,399         57,535,989   

M&T Bank Corp. (a)

     38,300         4,811,246   

National Australia Bank Ltd.

     32,000         872,649   

SunTrust Banks, Inc.

     672,340         28,171,046   

The Toronto-Dominion Bank (a)

     355,500         16,985,790   

U.S. Bancorp. (a)

     656,900         29,527,655   

United Overseas Bank Ltd.

     18,310         337,894   

Wells Fargo & Co. (a)(b)

     1,187,700         65,109,714   
     

 

 

 
                275,771,650   

Beverages — 1.5%

     

The Coca-Cola Co. (a)

     211,500         8,929,530   

Diageo PLC — ADR (b)

     139,800         15,949,782   

PepsiCo, Inc. (a)

     7,500         709,200   

Treasury Wine Estates Ltd.

     35,566         137,277   
     

 

 

 
                25,725,789   

Capital Markets — 1.3%

     

The Goldman Sachs Group, Inc.

     2,600         503,958   

Morgan Stanley (a)

     539,500         20,932,600   

T Rowe Price Group, Inc.

     5,700         489,402   
     

 

 

 
                21,925,960   

Chemicals — 3.1%

     

BASF SE

     9,600         805,259   

The Dow Chemical Co. (a)

     230,200         10,499,422   

EI du Pont de Nemours & Co. (a)

     408,500         30,204,490   

PPG Industries, Inc.

     5,800         1,340,670   

Praxair, Inc. (a)

     91,600         11,867,696   

Solvay SA

     2,300         311,226   
     

 

 

 
                55,028,763   

Commercial Services & Supplies — 0.5%

     

Tyco International PLC (a)

     192,400         8,438,664   

Communications Equipment — 1.7%

     

Motorola Solutions, Inc.

     190,800         12,798,864   

QUALCOMM, Inc. (a)

     220,000         16,352,600   
     

 

 

 
                29,151,464   

Construction & Engineering — 0.0%

     

Vinci SA

     12,100         660,692   

Consumer Finance — 1.5%

     

American Express Co. (a)

     282,900         26,321,016   

Distributors — 0.0%

     

Genuine Parts Co. (a)

     6,100         650,077   
Common Stocks    Shares      Value  

Diversified Financial Services — 0.9%

     

CME Group, Inc. (a)

     171,400       $ 15,194,610   

Diversified Telecommunication Services — 2.1%

     

BCE, Inc.

     115,700         5,306,002   

Frontier Communications Corp.

     194,800         1,299,316   

TeliaSonera AB

     53,400         343,328   

Verizon Communications, Inc. (a)

     627,700         29,363,806   
     

 

 

 
                36,312,452   

Electric Utilities — 2.5%

     

Duke Energy Corp. (a)

     102,400         8,554,496   

ITC Holdings Corp.

     134,000         5,417,620   

NextEra Energy, Inc. (a)

     201,600         21,428,064   

Northeast Utilities (a)

     155,220         8,307,374   

SSE PLC

     35,000         884,350   
     

 

 

 
                44,591,904   

Electrical Equipment — 0.4%

     

Emerson Electric Co. (a)

     26,800         1,654,364   

Rockwell Automation, Inc.

     53,400         5,938,080   
     

 

 

 
                7,592,444   

Energy Equipment & Services — 0.5%

     

Schlumberger Ltd. (a)

     98,300         8,395,803   

Food & Staples Retailing — 1.2%

     

The Kroger Co. (a)

     232,200         14,909,562   

Wal-Mart Stores, Inc. (a)

     76,314         6,553,846   
     

 

 

 
                21,463,408   

Food Products — 1.5%

     

General Mills, Inc. (a)

     82,600         4,405,058   

Kraft Foods Group, Inc. (a)

     85,728         5,371,716   

Mondelez International, Inc., Class A

     249,485         9,062,543   

Nestle SA

     5,700         415,536   

Unilever NV

     191,200         7,464,448   
     

 

 

 
                26,719,301   

Health Care Equipment & Supplies — 1.0%

     

Abbott Laboratories (a)

     156,800         7,059,136   

Becton Dickinson and Co. (a)

     73,200         10,186,512   

Halyard Health, Inc. (a)(c)

     8,567         389,542   
     

 

 

 
                17,635,190   

Health Care Providers & Services — 0.5%

     

Quest Diagnostics, Inc. (a)

     124,800         8,369,088   

Hotels, Restaurants & Leisure — 1.4%

     

McDonald’s Corp. (a)

     252,600         23,668,620   

Household Products — 2.6%

     

Kimberly-Clark Corp. (a)

     77,200         8,919,688   

The Procter & Gamble Co. (a)

     405,920         36,975,253   
     

 

 

 
                45,894,941   

Industrial Conglomerates — 3.9%

     

3M Co. (a)

     132,700         21,805,264   

General Electric Co.

     1,801,000         45,511,270   

Hopewell Holdings Ltd.

     85,684         311,901   

Keppel Corp. Ltd.

     53,800         358,597   

Siemens AG — ADR

     3,700         414,400   
     

 

 

 
                68,401,432   

Insurance — 6.5%

     

ACE Ltd (a)

     171,000         19,644,480   

Aflac, Inc. (a)

     7,100         433,739   

Allianz SE

     3,600         596,256   

The Chubb Corp.

     162,300         16,793,181   

Cincinnati Financial Corp.

     11,400         590,862   
 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    35


Schedule of Investments (continued)      BlackRock Enhanced Equity Dividend Trust (BDJ)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Insurance (concluded)

     

MetLife, Inc. (a)

     486,850       $ 26,333,717   

Prudential Financial, Inc. (a)

     293,100         26,513,826   

The Travelers Cos., Inc. (a)

     212,100         22,450,785   

Zurich Insurance Group AG

     976         305,002   
     

 

 

 
                113,661,848   

IT Services — 1.2%

     

Automatic Data Processing, Inc.

     76,800         6,402,816   

International Business Machines Corp. (a)

     90,230         14,476,501   
     

 

 

 
                20,879,317   

Media — 3.6%

     

Comcast Corp., Special Class A (a)(b)

     859,000         49,448,335   

The Walt Disney Co. (a)

     147,500         13,893,025   
     

 

 

 
                63,341,360   

Metals & Mining — 0.6%

     

BHP Billiton Ltd. — ADR

     130,212         6,161,632   

BHP Billiton PLC

     10,650         228,244   

Southern Copper Corp. (a)

     156,877         4,423,931   
     

 

 

 
                10,813,807   

Multi-Utilities — 2.4%

     

Ameren Corp. (a)

     22,300         1,028,699   

Dominion Resources, Inc. (a)

     277,800         21,362,820   

Sempra Energy

     93,500         10,412,160   

Wisconsin Energy Corp.

     160,100         8,443,674   
     

 

 

 
                41,247,353   

Oil, Gas & Consumable Fuels — 9.0%

     

California Resources Corp. (c)

     68,080         375,121   

Chevron Corp. (a)(b)

     310,400         34,820,672   

ConocoPhillips (a)

     119,860         8,277,532   

Enbridge, Inc.

     262,000         13,472,095   

Exxon Mobil Corp. (a)

     386,600         35,741,170   

Marathon Oil Corp. (a)

     381,300         10,786,977   

Marathon Petroleum Corp. (a)

     104,400         9,423,144   

Occidental Petroleum Corp.

     170,200         13,719,822   

Phillips 66 (a)

     80,350         5,761,095   

Santos Ltd.

     66,600         444,873   

Spectra Energy Corp. (a)

     204,000         7,405,200   

Suncor Energy, Inc.

     3,450         109,576   

Total SA — ADR

     308,400         15,790,080   

TransCanada Corp.

     10,700         525,882   
     

 

 

 
                156,653,239   

Paper & Forest Products — 1.1%

     

International Paper Co.

     370,650         19,859,427   

Pharmaceuticals — 8.6%

     

AbbVie, Inc. (a)

     153,414         10,039,412   

AstraZeneca PLC

     17,700         1,250,167   

Bristol-Myers Squibb Co. (a)

     492,400         29,066,372   

GlaxoSmithKline PLC

     32,425         695,634   

Johnson & Johnson (a)

     311,200         32,542,184   

Merck & Co., Inc. (a)(b)

     665,700         37,805,103   

Pfizer, Inc. (a)

     1,208,900         37,657,235   

Sanofi

     3,400         309,980   

Takeda Pharmaceutical Co. Ltd.

     10,800         447,096   
     

 

 

 
                149,813,183   

Professional Services — 0.4%

     

Nielsen NV (a)

     145,700         6,517,161   

Real Estate Investment Trusts (REITs) — 1.1%

     

American Tower Corp. (a)

     72,500         7,166,625   
Common Stocks    Shares      Value  

Real Estate Investment Trusts (REITs) (concluded)

  

  

Equity Residential

     10,800       $ 775,872   

HCP, Inc. (a)

     12,000         528,360   

Health Care REIT, Inc.

     10,700         809,669   

Keppel REIT

     15,824         14,533   

Liberty Property Trust

     7,200         270,936   

Ventas, Inc. (a)

     11,213         803,972   

Weyerhaeuser Co. (a)

     244,500         8,775,105   
     

 

 

 
                19,145,072   

Road & Rail — 1.7%

     

CSX Corp. (a)

     208,900         7,568,447   

Union Pacific Corp. (a)

     181,400         21,610,182   
     

 

 

 
                29,178,629   

Semiconductors & Semiconductor Equipment — 1.8%

  

  

Intel Corp. (a)

     856,300         31,075,127   

Microchip Technology, Inc. (a)

     19,500         879,645   
     

 

 

 
                31,954,772   

Software — 2.1%

     

Microsoft Corp. (a)

     792,900         36,830,205   

Oracle Corp. Japan

     8,900         362,642   

SAP SE — ADR

     5,450         379,594   
     

 

 

 
                37,572,441   

Specialty Retail — 2.9%

     

Hennes & Mauritz AB, B Shares

     21,500         893,218   

The Home Depot, Inc. (a)

     474,200         49,776,774   
     

 

 

 
                50,669,992   

Technology Hardware, Storage & Peripherals — 0.0%

  

  

Canon, Inc. — ADR

     3,700         117,142   

Ricoh Co. Ltd.

     32,000         323,490   
     

 

 

 
                440,632   

Textiles, Apparel & Luxury Goods — 1.3%

     

VF Corp. (a)

     301,600         22,589,840   

Thrifts & Mortgage Finance — 0.0%

     

Hudson City Bancorp, Inc.

     25,800         261,096   

Tobacco — 1.8%

     

Altria Group, Inc. (a)

     243,300         11,987,391   

British American Tobacco PLC

     17,300         937,505   

Lorillard, Inc.

     136,200         8,572,428   

Philip Morris International, Inc. (a)

     104,500         8,511,525   

Reynolds American, Inc.

     12,800         822,656   
     

 

 

 
                30,831,505   

Transportation Infrastructure — 0.0%

     

Hopewell Highway Infrastructure Ltd.

     4,284         2,147   

Water Utilities — 0.8%

     

American Water Works Co., Inc.

     258,600         13,783,380   

Total Long-Term Investments

(Cost — $1,366,872,730) — 99.6%

              1,739,444,213   
     
Short-Term Securities                

BlackRock Liquidity Funds, TempFund,
Institutional Class, 0.04% (d)(e)

     23,544,648         23,544,648   

Total Short-Term Securities

(Cost — $23,544,648) — 1.3%

              23,544,648   
 

 

See Notes to Financial Statements.

 

36    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock Enhanced Equity Dividend Trust (BDJ)   
     (Percentages shown are based on Net Assets)   

 

      Value  

Total Investments Before Options Written

(Cost — $1,390,417,378) — 100.9%

   $ 1,762,988,861   
          

 

 

 

Options Written

   Value  

(Premiums Received — $14,525,930) — (0.9)%

   $ (16,391,070

Total Investments Net of Options Written — 100.0%

     1,746,597,791   

Other Assets Less Liabilities — 0.0%

     472,597   
  

 

 

 

Net Assets — 100.0%

   $ 1,747,070,388   
  

 

 

 
 
Notes to Schedule of Investments

 

(a) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(b) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(c) Non-income producing security.

 

(d) Represents the current yield as of report date.

 

(e) During the period ended December 31, 2014, investments in companies considered to be an affiliate of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate    Shares Held at
October 31, 2014
     Net
Activity
    Shares Held at
December 31, 2014
     Income      Realized
Gain
 

BlackRock Liquidity Funds, TempFund, Institutional Class

     48,015,351         (24,470,703     23,544,648       $ 2,023       $ 2,835   

 

Ÿ  

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

 

Ÿ  

As of December 31, 2014, exchange-traded options written were as follows:

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

ACE Ltd.

     Call         USD         113.75         1/02/15         602       $ (75,328

American Tower Corp.

     Call         USD         102.00         1/02/15         165         (3,300

Bristol-Myers Squibb Co.

     Call         USD         59.50         1/02/15         792         (13,860

ConocoPhillips

     Call         USD         73.50         1/02/15         390         (1,950

Marathon Oil Corp.

     Call         USD         34.00         1/02/15         872         (4,360

MetLife, Inc.

     Call         USD         57.50         1/02/15         1,080         (6,480

Philip Morris International, Inc.

     Call         USD         87.00         1/02/15         218         (1,308

Phillips 66

     Call         USD         80.00         1/02/15         261         (3,915

United Technologies Corp.

     Call         USD         113.00         1/02/15         406         (90,335

Kraft Foods Group, Inc.

     Call         USD         59.51         1/07/15         492         (156,432

Raytheon Co.

     Call         USD         105.60         1/08/15         472         (121,304

3M Co.

     Call         USD         160.00         1/09/15         290         (139,200

3M Co.

     Call         USD         167.50         1/09/15         374         (15,334

Altria Group, Inc.

     Call         USD         51.50         1/09/15         371         (1,670

American Express Co.

     Call         USD         93.00         1/09/15         342         (35,055

American Express Co.

     Call         USD         94.00         1/09/15         600         (35,400

Bristol-Myers Squibb Co.

     Call         USD         60.50         1/09/15         700         (25,550

Citigroup, Inc.

     Call         USD         54.50         1/09/15         604         (31,408

EI du Pont de Nemours & Co.

     Call         USD         73.00         1/09/15         782         (114,172

Marathon Petroleum Corp.

     Call         USD         91.00         1/09/15         98         (16,170

MetLife, Inc.

     Call         USD         57.00         1/09/15         187         (1,122

Microsoft Corp.

     Call         USD         48.50         1/09/15         1,056         (6,336

PepsiCo, Inc.

     Call         USD         101.00         1/09/15         30         (210

Pfizer, Inc.

     Call         USD         32.00         1/09/15         2,443         (17,101

The Procter & Gamble Co.

     Call         USD         91.00         1/09/15         1,608         (131,856

United Parcel Service, Class B

     Call         USD         111.00         1/09/15         420         (51,450

Wells Fargo & Co.

     Call         USD         55.50         1/09/15         1,650         (42,900

Weyerhaeuser Co.

     Call         USD         37.00         1/09/15         770         (11,550

Abbott Laboratories

     Call         USD         46.00         1/17/15         56         (1,568

AbbVie, Inc.

     Call         USD         67.50         1/17/15         397         (25,805

Ameren Corp.

     Call         USD         45.00         1/17/15         110         (17,325

American Express Co.

     Call         USD         95.00         1/17/15         460         (32,890

Bank of America Corp.

     Call         USD         18.00         1/17/15         1,368         (43,776

Becton Dickinson and Co.

     Call         USD         130.40         1/17/15         200         (183,840

Becton Dickinson and Co.

     Call         USD         140.00         1/17/15         202         (35,350

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    37


Schedule of Investments (continued)      BlackRock Enhanced Equity Dividend Trust (BDJ)   

 

As of December 31, 2014, exchange-traded options written were as follows: (continued)

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Bristol-Myers Squibb Co.

     Call         USD         62.50         1/17/15         700       $ (16,450

Chevron Corp.

     Call         USD         120.00         1/17/15         800         (7,600

Citigroup, Inc.

     Call         USD         55.00         1/17/15         778         (55,627

The Coca-Cola Co.

     Call         USD         43.00         1/17/15         355         (9,408

Comcast Corp., Special Class A

     Call         USD         57.25         1/17/15         1,000         (115,593

ConocoPhillips

     Call         USD         75.00         1/17/15         390         (7,020

CSX Corp.

     Call         USD         37.00         1/17/15         1,050         (57,750

Dominion Resources, Inc.

     Call         USD         72.55         1/17/15         600         (279,564

The Dow Chemical Co.

     Call         USD         49.00         1/17/15         525         (5,775

Duke Energy Corp.

     Call         USD         82.50         1/17/15         512         (98,560

Emerson Electric Co.

     Call         USD         65.00         1/17/15         134         (1,005

Exxon Mobil Corp.

     Call         USD         97.50         1/17/15         505         (7,575

General Mills, Inc.

     Call         USD         52.50         1/17/15         536         (56,816

Genuine Parts Co.

     Call         USD         100.00         1/17/15         24         (16,800

Honeywell International, Inc.

     Call         USD         100.00         1/17/15         615         (83,332

Intel Corp.

     Call         USD         37.00         1/17/15         2,215         (129,578

JPMorgan Chase & Co.

     Call         USD         62.50         1/17/15         1,446         (145,323

Kimberly-Clark Corp.

     Call         USD         115.00         1/17/15         501         (88,928

Kraft Foods Group, Inc.

     Call         USD         64.01         1/17/15         65         (2,482

The Kroger Co.

     Call         USD         62.50         1/17/15         294         (61,740

Lockheed Martin Corp.

     Call         USD         190.00         1/17/15         462         (205,590

M&T Bank Corp.

     Call         USD         130.00         1/17/15         18         (855

Marathon Petroleum Corp.

     Call         USD         92.50         1/17/15         580         (89,900

McDonald’s Corp.

     Call         USD         92.50         1/17/15         690         (183,885

McDonald’s Corp.

     Call         USD         96.00         1/17/15         951         (106,512

Merck & Co., Inc.

     Call         USD         60.00         1/17/15         1,376         (17,888

MetLife, Inc.

     Call         USD         57.50         1/17/15         1,080         (13,500

Microchip Technology, Inc.

     Call         USD         46.00         1/17/15         100         (5,250

Microsoft Corp.

     Call         USD         49.00         1/17/15         1,250         (13,125

NextEra Energy, Inc.

     Call         USD         105.00         1/17/15         380         (95,000

Nielsen NV

     Call         USD         42.75         1/17/15         441         (93,146

Northeast Utilities

     Call         USD         50.00         1/17/15         468         (170,820

Pfizer, Inc.

     Call         USD         31.00         1/17/15         150         (8,250

Pfizer, Inc.

     Call         USD         32.00         1/17/15         200         (3,000

Pfizer, Inc.

     Call         USD         33.00         1/17/15         51         (230

Phillips 66

     Call         USD         80.00         1/17/15         261         (3,915

Praxair, Inc.

     Call         USD         130.00         1/17/15         251         (40,160

Prudential Financial, Inc.

     Call         USD         87.50         1/17/15         719         (262,435

Quest Diagnostics, Inc.

     Call         USD         65.00         1/17/15         437         (110,342

Raytheon Co.

     Call         USD         100.00         1/17/15         471         (388,575

Schlumberger Ltd.

     Call         USD         100.00         1/17/15         500         (1,500

Southern Copper Corp.

     Call         USD         29.00         1/17/15         260         (9,750

Spectra Energy Corp.

     Call         USD         38.00         1/17/15         1,324         (33,100

The Travelers Cos., Inc.

     Call         USD         105.00         1/17/15         1,378         (241,150

Tyco International PLC

     Call         USD         44.00         1/17/15         1,057         (69,762

Union Pacific Corp.

     Call         USD         120.50         1/17/15         500         (79,768

United Technologies Corp.

     Call         USD         115.00         1/17/15         406         (69,629

Verizon Communications, Inc.

     Call         USD         47.00         1/17/15         780         (26,130

VF Corp.

     Call         USD         75.00         1/17/15         560         (57,400

The Walt Disney Co.

     Call         USD         90.00         1/17/15         331         (151,432

Wells Fargo & Co.

     Call         USD         55.00         1/17/15         1,719         (143,536

Wal-Mart Stores, Inc.

     Call         USD         86.25         1/22/15         203         (22,032

AbbVie, Inc.

     Call         USD         69.00         1/23/15         370         (18,500

Altria Group, Inc.

     Call         USD         51.00         1/23/15         583         (12,534

Bank of America Corp.

     Call         USD         17.50         1/23/15         2,231         (146,131

Chevron Corp.

     Call         USD         111.00         1/23/15         501         (161,572

CME Group, Inc.

     Call         USD         93.00         1/23/15         482         (21,690

The Coca-Cola Co.

     Call         USD         43.00         1/23/15         347         (12,318

Exxon Mobil Corp.

     Call         USD         95.00         1/23/15         362         (29,322

General Electric Co.

     Call         USD         26.00         1/23/15         1,475         (28,762

The Home Depot, Inc.

     Call         USD         102.00         1/23/15         1,197         (460,845

Intel Corp.

     Call         USD         37.00         1/23/15         452         (30,736

JPMorgan Chase & Co.

     Call         USD         62.50         1/23/15         250         (29,250

Microsoft Corp.

     Call         USD         48.00         1/23/15         829         (27,772

 

See Notes to Financial Statements.

 

38    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock Enhanced Equity Dividend Trust (BDJ)   

 

As of December 31, 2014, exchange-traded options written were as follows: (continued)

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Morgan Stanley

     Call         USD         37.50         1/23/15         1,083       $ (200,355

The Procter & Gamble Co.

     Call         USD         91.00         1/23/15         1,030         (116,390

QUALCOMM, Inc.

     Call         USD         74.50         1/23/15         400         (52,200

Schlumberger Ltd.

     Call         USD         94.00         1/23/15         138         (4,623

U.S. Bancorp.

     Call         USD         45.00         1/23/15         1,250         (90,000

United Parcel Service, Class B

     Call         USD         113.00         1/23/15         502         (49,698

United Technologies Corp.

     Call         USD         117.00         1/23/15         200         (25,900

Verizon Communications, Inc.

     Call         USD         47.50         1/23/15         789         (24,064

The Walt Disney Co.

     Call         USD         93.00         1/23/15         167         (41,332

Halyard Health, Inc.

     Call         USD         44.00         1/28/15         42         (10,336

ACE Ltd.

     Call         USD         113.10         1/29/15         509         (146,655

Altria Group, Inc.

     Call         USD         51.00         1/30/15         627         (24,140

Bank of America Corp.

     Call         USD         18.50         1/30/15         1,950         (40,950

Citigroup, Inc.

     Call         USD         54.00         1/30/15         375         (56,812

CME Group, Inc.

     Call         USD         93.00         1/30/15         375         (19,688

Exxon Mobil Corp.

     Call         USD         93.00         1/30/15         1,120         (218,960

General Electric Co.

     Call         USD         26.00         1/30/15         1,500         (36,000

HCP, Inc.

     Call         USD         45.50         1/30/15         48         (1,360

Intel Corp.

     Call         USD         38.00         1/30/15         1,615         (68,638

International Business Machines Corp.

     Call         USD         162.50         1/30/15         293         (95,225

JPMorgan Chase & Co.

     Call         USD         61.50         1/30/15         1,449         (281,830

Microsoft Corp.

     Call         USD         48.00         1/30/15         829         (52,227

Morgan Stanley

     Call         USD         38.00         1/30/15         210         (33,600

Pfizer, Inc.

     Call         USD         32.00         1/30/15         1,600         (56,800

QUALCOMM, Inc.

     Call         USD         75.00         1/30/15         370         (72,150

Verizon Communications, Inc.

     Call         USD         47.00         1/30/15         780         (44,070

Wal-Mart Stores, Inc.

     Call         USD         86.25         1/30/15         203         (26,288

Wells Fargo & Co.

     Call         USD         54.50         1/30/15         2,150         (293,475

Weyerhaeuser Co.

     Call         USD         36.00         1/30/15         7         (525

Northeast Utilities

     Call         USD         53.60         2/02/15         309         (33,395

Raytheon Co.

     Call         USD         107.75         2/02/15         302         (71,682

Ventas, Inc.

     Call         USD         73.90         2/02/15         22         (1,464

Aflac, Inc.

     Call         USD         61.30         2/05/15         35         (3,778

Johnson & Johnson

     Call         USD         107.00         2/06/15         779         (93,870

JPMorgan Chase & Co.

     Call         USD         64.00         2/06/15         477         (37,683

U.S. Bancorp.

     Call         USD         46.00         2/06/15         1,780         (78,320

Johnson & Johnson

     Call         USD         107.00         2/13/15         777         (107,614

Comcast Corp., Special Class A

     Call         USD         57.25         2/17/15         425         (90,666

Abbott Laboratories

     Call         USD         46.00         2/20/15         328         (26,076

Abbott Laboratories

     Call         USD         47.00         2/20/15         400         (18,400

The Dow Chemical Co.

     Call         USD         49.00         2/20/15         313         (21,128

Exxon Mobil Corp.

     Call         USD         95.00         2/20/15         526         (76,270

General Electric Co.

     Call         USD         26.00         2/20/15         1,475         (51,625

The Home Depot, Inc.

     Call         USD         105.00         2/20/15         1,174         (328,720

JPMorgan Chase & Co.

     Call         USD         62.50         2/20/15         975         (166,725

Merck & Co., Inc.

     Call         USD         62.50         2/20/15         858         (20,163

MetLife, Inc.

     Call         USD         55.00         2/20/15         88         (11,264

Morgan Stanley

     Call         USD         39.00         2/20/15         596         (73,308

Nielsen NV

     Call         USD         45.00         2/20/15         288         (44,640

Pfizer, Inc.

     Call         USD         32.00         2/20/15         1,600         (74,400

Prudential Financial, Inc.

     Call         USD         89.95         2/20/15         747         (235,644

Raytheon Co.

     Call         USD         108.01         2/20/15         471         (106,683

The Toronto-Dominion Bank

     Call         USD         48.25         2/20/15         710         (49,700

U.S. Bancorp.

     Call         USD         45.00         2/20/15         569         (60,029

U.S. Bancorp.

     Call         USD         46.00         2/20/15         670         (39,530

Union Pacific Corp.

     Call         USD         123.25         2/20/15         498         (113,228

United Technologies Corp.

     Call         USD         120.00         2/20/15         177         (20,620

Verizon Communications, Inc.

     Call         USD         48.00         2/20/15         789         (36,294

VF Corp.

     Call         USD         75.00         2/20/15         950         (211,375

Wal-Mart Stores, Inc.

     Call         USD         87.50         2/20/15         90         (12,330

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    39


Schedule of Investments (continued)      BlackRock Enhanced Equity Dividend Trust (BDJ)   

 

As of December 31, 2014, exchange-traded options written were as follows: (concluded)

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts     

Market

Value

 

The Walt Disney Co.

     Call         USD         92.50         2/20/15         238       $ (94,010

Wells Fargo & Co.

     Call         USD         55.00         2/20/15         2,201         (274,024

Merck & Co., Inc.

     Call         USD         60.00         3/20/15         1,095         (87,052

Total

                  $ (11,395,536
                 

 

 

 

 

Ÿ  

As of December 31, 2014, over-the-counter options written were as follows:

 

Description      Counterparty      Put/
Call
    

Strike

Price

       Expiration
Date
       Contracts       

Market

Value

 

American Water Works Co., Inc.

     UBS AG      Call        USD         53.34           1/05/15           15,400         $ (7,210

ITC Holdings Corp.

     Bank of America N.A.      Call        USD         39.15           1/07/15           18,300           (23,911

SunTrust Banks, Inc.

     Credit Suisse International      Call        USD         39.78           1/07/15           82,400           (182,811

Fifth Third Bancorp.

     Goldman Sachs International      Call        USD         20.42           1/08/15           132,000           (27,170

Sempra Energy

     Goldman Sachs International      Call        USD         111.07           1/08/15           48,700           (80,683

Enbridge, Inc.

     Goldman Sachs International      Call        CAD         52.70           1/09/15           136,700           (831,458

Unilever NV

     Citibank N.A.      Call        USD         40.35           1/09/15           62,500           (6,382

M&T Bank Corp.

     Citibank N.A.      Call        USD         126.00           1/12/15           20,000           (29,122

Praxair, Inc.

     Credit Suisse International      Call        USD         129.28           1/12/15           25,150           (41,695

Fifth Third Bancorp.

     Goldman Sachs International      Call        USD         20.42           1/13/15           132,000           (35,343

American Water Works Co., Inc.

     Morgan Stanley & Co. International PLC      Call        USD         53.03           1/14/15           35,600           (34,431

ITC Holdings Corp.

     Goldman Sachs International      Call        USD         40.45           1/14/15           18,300           (7,803

Motorola Solutions, Inc.

     Credit Suisse International      Call        USD         66.76           1/14/15           66,800           (87,246

The Toronto-Dominion Bank

     Goldman Sachs International      Call        USD         50.95           1/14/15           50,000           (368

Diageo PLC — ADR

     Citibank N.A.      Call        USD         120.83           1/15/15           34,200           (3,409

Health Care REIT, Inc.

     Credit Suisse International      Call        USD         76.09           1/15/15           5,400           (4,397

SunTrust Banks, Inc.

     Credit Suisse International      Call        USD         39.78           1/20/15           82,400           (206,851

American Tower Corp.

     Goldman Sachs International      Call        USD         100.46           1/26/15           19,800           (20,081

Dominion Resources, Inc.

     Morgan Stanley & Co. International PLC      Call        USD         74.66           1/26/15           32,000           (99,318

EI du Pont de Nemours & Co.

     Goldman Sachs International      Call        USD         70.52           1/26/15           62,500           (238,728

SunTrust Banks, Inc.

     Morgan Stanley & Co. International PLC      Call        USD         41.81           1/26/15           62,000           (59,511

SunTrust Banks, Inc.

     UBS AG      Call        USD         41.88           1/26/15           47,400           (46,225

American Water Works Co., Inc.

     Morgan Stanley & Co. International PLC      Call        USD         53.17           1/27/15           42,600           (57,300

Comcast Corp., Special Class A

     Credit Suisse International      Call        USD         56.99           1/27/15           143,000           (251,275

Automatic Data Processing, Inc.

     Citibank N.A.      Call        USD         86.82           1/28/15           38,400           (15,907

The Chubb Corp.

     Credit Suisse International      Call        USD         105.23           1/28/15           52,500           (39,955

Fifth Third Bancorp.

     Morgan Stanley & Co. International PLC      Call        USD         20.37           1/28/15           87,800           (37,143

Honeywell International, Inc.

     UBS AG      Call        USD         102.44           1/28/15           51,900           (43,700

AstraZeneca PLC

     Deutsche Bank AG      Call        GBP         47.06           1/29/15           9,000           (12,323

International Paper Co.

     Goldman Sachs International      Call        USD         53.33           1/29/15           185,000           (315,984

Wisconsin Energy Corp.

     Credit Suisse International      Call        USD         50.87           1/29/15           23,600           (61,925

The Chubb Corp.

     Credit Suisse International      Call        USD         105.23           2/02/15           52,500           (45,733

Diageo PLC — ADR

     Citibank N.A.      Call        USD         116.75           2/02/15           35,700           (56,674

Northrop Grumman Corp.

     Goldman Sachs International      Call        USD         149.84           2/02/15           89,300           (244,685

SunTrust Banks, Inc.

     Morgan Stanley & Co. International PLC      Call        USD         41.81           2/02/15           62,000           (70,635

Ventas, Inc.

     Credit Suisse International      Call        USD         74.42           2/02/15           3,400           (1,763

Weyerhaeuser Co.

     Credit Suisse International      Call        USD         36.15           2/02/15           44,500           (29,669

The Kroger Co.

     Credit Suisse International      Call        USD         63.79           2/03/15           121,500           (184,848

Equity Residential

     Citibank N.A.      Call        USD         74.14           2/04/15           5,400           (3,359

Comcast Corp., Special Class A

     Credit Suisse International      Call        USD         56.99           2/05/15           144,000           (287,821

EI du Pont de Nemours & Co.

     Goldman Sachs International      Call        USD         70.52           2/05/15           62,500           (268,792

Johnson Controls, Inc.

     Credit Suisse International      Call        USD         48.83           2/05/15           43,000           (52,188

Mondelez International, Inc., Class A

     Morgan Stanley & Co. International PLC      Call        USD         36.87           2/06/15           81,000           (58,593

Wisconsin Energy Corp.

     Credit Suisse International      Call        USD         50.90           2/09/15           56,400           (159,518

American Water Works Co., Inc.

     Citibank N.A.      Call        USD         51.75           2/12/15           35,700           (75,409

NextEra Energy, Inc.

     Deutsche Bank AG      Call        USD         105.56           2/12/15           62,900           (203,881

Dominion Resources, Inc.

     Morgan Stanley & Co. International PLC      Call        USD         75.55           2/13/15           48,000           (146,248

Mondelez International, Inc., Class A

     Morgan Stanley & Co. International PLC      Call        USD         36.87           2/13/15           81,100           (65,706

ITC Holdings Corp.

     UBS AG      Call        USD         38.75           2/19/15           30,400           (62,959

Johnson Controls, Inc.

     Credit Suisse International      Call        USD         48.83           2/25/15           43,000           (67,388

Total

                                 $ (4,995,534
                                

 

 

 

 

See Notes to Financial Statements.

 

40    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock Enhanced Equity Dividend Trust (BDJ)   

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, refer to Note 2 of the Notes to Financial Statements.

As of December 31, 2014, the following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy:

 

      Level 1    Level 2    Level 3    Total

Assets:

                   

Investments:

                   

Long-Term Investments:

                   

Common Stocks:

                   

Aerospace & Defense

     $ 123,652,769                          $ 123,652,769  

Air Freight & Logistics

       20,332,993                            20,332,993  

Auto Components

       8,328,982                            8,328,982  

Banks

       273,801,890        $ 1,969,760                   275,771,650  

Beverages

       25,588,512          137,277                   25,725,789  

Capital Markets

       21,925,960                            21,925,960  

Chemicals

       53,912,278          1,116,485                   55,028,763  

Commercial Services & Supplies

       8,438,664                            8,438,664  

Communications Equipment

       29,151,464                            29,151,464  

Construction & Engineering

                660,692                   660,692  

Consumer Finance

       26,321,016                            26,321,016  

Distributors

       650,077                            650,077  

Diversified Financial Services

       15,194,610                            15,194,610  

Diversified Telecommunication Services

       35,969,124          343,328                   36,312,452  

Electric Utilities

       43,707,554          884,350                   44,591,904  

Electrical Equipment

       7,592,444                            7,592,444  

Energy Equipment & Services

       8,395,803                            8,395,803  

Food & Staples Retailing

       21,463,408                            21,463,408  

Food Products

       26,303,765          415,536                   26,719,301  

Health Care Equipment & Supplies

       17,635,190                            17,635,190  

Health Care Providers & Services

       8,369,088                            8,369,088  

Hotels, Restaurants & Leisure

       23,668,620                            23,668,620  

Household Products

       45,894,941                            45,894,941  

Industrial Conglomerates

       67,730,934          670,498                   68,401,432  

Insurance

       112,760,590          901,258                   113,661,848  

IT Services

       20,879,317                            20,879,317  

Media

       63,341,360                            63,341,360  

Metals & Mining

       10,585,563          228,244                   10,813,807  

Multi-Utilities

       41,247,353                            41,247,353  

Oil, Gas & Consumable Fuels

       156,208,366          444,873                   156,653,239  

Paper & Forest Products

       19,859,427                            19,859,427  

Pharmaceuticals

       147,110,306          2,702,877                   149,813,183  

Professional Services

       6,517,161                            6,517,161  

Real Estate Investment Trusts (REITs)

       19,130,539          14,533                   19,145,072  

Road & Rail

       29,178,629                            29,178,629  

Semiconductors & Semiconductor Equipment

       31,954,772                            31,954,772  

Software

       37,209,799          362,642                   37,572,441  

Specialty Retail

       49,776,774          893,218                   50,669,992  

Technology Hardware, Storage & Peripherals

       117,142          323,490                   440,632  

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    41


Schedule of Investments (concluded)      BlackRock Enhanced Equity Dividend Trust (BDJ)   

 

      Level 1   Level 2   Level 3    Total

Assets: (concluded)

                 

Investments: (concluded)

                 

Long-Term Investments: (concluded)

                 

Common Stocks: (concluded)

                 

Textiles, Apparel & Luxury Goods

     $ 22,589,840                 —           $ 22,589,840  

Thrifts & Mortgage Finance

       261,096                 —             261,096  

Tobacco

       29,894,000       $ 937,505         —             30,831,505  

Transportation Infrastructure

               2,147         —             2,147  

Water Utilities

       13,783,380                 —             13,783,380  

Short-Term Securities

       23,544,648                 —             23,544,648  
    

 

 

 

Total

     $ 1,749,980,148       $ 13,008,713         —           $ 1,762,988,861  
    

 

 

 
                 
      Level 1   Level 2   Level 3    Total

Derivative Financial Instruments1

                 

Liabilities:

                 

Equity contracts

     $ (9,375,171 )     $ (7,015,899 )       —           $ (16,391,070 )
    

 

 

 

1    Derivative financial instruments are options written, which are shown at value.

       

The Trust may hold assets in which the fair value approximates the carrying amount for financial statement purposes. As of December 31, 2014, such assets are categorized within the disclosure hierarchy as follows:    
                 
      Level 1   Level 2   Level 3    Total

Assets:

                 

Cash

     $ 1,242                 —           $ 1,242  

Foreign currency at value

       1,800                 —             1,800  

Cash pledged as collateral for OTC derivatives

       98,000                 —             98,000  
    

 

 

 

Total

     $ 101,042                 —           $ 101,042  
    

 

 

 
During the period ended December 31, 2014, there were no transfers between levels.   

 

See Notes to Financial Statements.

 

42    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments December 31, 2014      BlackRock Global Opportunities Equity Trust (BOE)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Belgium — 1.6%

     

Anheuser-Busch InBev NV

     148,859       $ 16,752,839   

Canada — 1.0%

     

MEG Energy Corp. (a)

     288,000         4,846,273   

Suncor Energy, Inc.

     185,800         5,901,205   
     

 

 

 
                10,747,478   

China — 2.6%

     

Alibaba Group Holding — ADR (a)(b)

     94,870         9,860,788   

Baidu, Inc. — ADR (a)(b)

     45,900         10,463,823   

Beijing Enterprises Water Group Ltd.

     10,224,000         6,908,436   
     

 

 

 
                27,233,047   

France — 3.9%

     

AXA SA

     299,000         6,889,886   

Schneider Electric SE

     115,200         8,389,951   

Societe Generale SA

     193,201         8,085,517   

Unibail-Rodamco SE — REIT

     30,600         7,850,010   

Vivendi SA

     423,850         10,549,878   
     

 

 

 
                41,765,242   

Germany — 3.5%

     

Daimler AG

     145,000         12,042,868   

Henkel AG & Co. KGaA

     98,100         10,567,152   

Infineon Technologies AG

     647,184         6,848,427   

Telefonica Deutschland Holding AG

     1,375,600         7,290,490   
     

 

 

 
                36,748,937   

Greece — 0.3%

     

Alpha Bank AE (a)(c)

     5,723,221         3,214,986   

Hong Kong — 1.7%

     

AIA Group Ltd.

     2,574,700         14,200,675   

Melco Crown Entertainment Ltd. — ADR

     144,800         3,677,920   
     

 

 

 
                17,878,595   

India — 1.8%

     

HDFC Bank Ltd.

     660,372         11,300,261   

ITC Ltd.

     1,419,900         8,293,669   
     

 

 

 
                19,593,930   

Indonesia — 0.9%

     

Global Mediacom Tbk PT

     32,923,100         3,772,265   

Matahari Department Store Tbk PT

     4,651,623         5,605,024   
     

 

 

 
                9,377,289   

Ireland — 1.1%

     

Green REIT PLC (a)

     7,335,137         11,361,159   

Italy — 1.0%

     

Banca Generali SpA (b)

     291,290         8,101,728   

Moncler SpA

     222,400         2,971,646   
     

 

 

 
                11,073,374   

Japan — 4.8%

     

FANUC Corp.

     38,500         6,347,895   

Kenedix Office Investment Corp. — REIT

     778         4,403,594   

Mitsubishi Estate Co. Ltd.

     442,000         9,313,327   

Nabtesco Corp.

     333,400         8,057,828   

Shinsei Bank Ltd.

     4,965,000         8,641,177   

SMC Corp.

     20,900         5,480,483   

SoftBank Corp.

     137,200         8,166,596   
     

 

 

 
                50,410,900   

Mexico — 0.4%

     

Cemex SAB de CV — ADR (a)(c)

     453,592         4,622,103   

Netherlands — 2.0%

     

Royal Dutch Shell PLC, A Shares — ADR

     311,400         20,848,230   
Common Stocks    Shares      Value  

New Zealand — 0.4%

     

Xero Ltd. (Acquired 10/15/13, Cost $5,317,368) (a)(d)

     350,000       $ 4,359,956   

Peru — 0.6%

     

Credicorp Ltd. (b)

     40,700         6,519,326   

South Africa — 0.7%

     

Naspers Ltd., N Shares

     58,600         7,580,217   

South Korea — 2.2%

     

NAVER Corp.

     7,620         4,880,115   

Samsung Electronics Co. Ltd.

     8,200         9,858,405   

SK Hynix, Inc. (a)

     196,900         8,414,605   
     

 

 

 
                23,153,125   

Spain — 1.5%

     

NH Hotel Group SA (a)

     2,256,849         10,782,435   

Sacyr SA (a)

     1,582,242         5,410,595   
     

 

 

 
                16,193,030   

Sweden — 1.1%

     

Nordea Bank AB

     570,858         6,608,129   

Svenska Cellulosa AB SCA, Class B

     236,427         5,097,059   
     

 

 

 
                11,705,188   

Switzerland — 3.0%

     

Novartis AG

     157,200         14,579,275   

Roche Holding AG

     36,270         9,827,074   

UBS Group AG

     422,149         7,256,615   
     

 

 

 
                31,662,964   

Taiwan — 0.4%

     

Hermes Microvision, Inc.

     77,042         3,852,921   

United Kingdom — 7.4%

     

AstraZeneca PLC

     172,700         12,197,954   

BAE Systems PLC

     741,000         5,419,089   

Crest Nicholson Holdings PLC

     1,501,002         9,035,368   

Delphi Automotive PLC

     133,800         9,729,936   

Foxtons Group PLC

     1,664,787         4,153,631   

Lloyds Banking Group PLC (a)

     5,415,100         6,369,579   

Metro Bank PLC (Acquired 1/16/14, Cost
$5,768,771) (a)(d)

     271,008         5,499,570   

Nomad Holdings Ltd. (a)

     556,597         6,037,361   

Polypipe Group PLC

     1,751,039         6,699,899   

Prudential PLC

     352,300         8,145,010   

Vodafone Group PLC — ADR

     157,040         5,366,057   
     

 

 

 
                78,653,454   

United States — 54.3%

     

Abbott Laboratories (b)(e)

     261,600         11,777,232   

AbbVie, Inc. (b)(e)

     190,723         12,480,913   

Actavis PLC (a)(b)

     49,100         12,638,831   

Adobe Systems, Inc. (a)

     98,700         7,175,490   

Alkermes PLC (a)(b)

     171,200         10,025,472   

Altria Group, Inc. (b)

     283,200         13,953,264   

American Airlines Group, Inc. (b)

     197,800         10,608,014   

Apple, Inc. (b)(e)

     294,288         32,483,509   

Applied Materials, Inc. (b)

     260,000         6,479,200   

Aramark

     306,200         9,538,130   

Autodesk, Inc. (a)(b)

     142,400         8,552,544   

BankUnited, Inc.

     415,583         12,039,440   

Becton Dickinson and Co. (b)

     45,600         6,345,696   

Best Buy Co., Inc. (b)

     184,680         7,198,826   

Biogen Idec, Inc. (a)(b)

     18,400         6,245,880   

BioMarin Pharmaceutical, Inc. (a)(b)

     92,276         8,341,750   

Bristol-Myers Squibb Co. (b)

     143,300         8,458,999   
 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    43


Schedule of Investments (continued)      BlackRock Global Opportunities Equity Trust (BOE)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

United States (concluded)

     

Cabot Oil & Gas Corp. (b)(e)

     119,009       $ 3,523,856   

Charles River Laboratories International, Inc. (a)

     140,200         8,922,328   

Citigroup, Inc. (b)

     334,961         18,124,740   

Comcast Corp., Class A (b)(e)

     275,700         15,993,357   

Concho Resources, Inc. (a)

     69,200         6,902,700   

Covidien PLC (b)

     93,500         9,563,180   

Crown Holdings, Inc. (a)(b)

     187,400         9,538,660   

Eastman Chemical Co. (b)

     115,700         8,777,002   

Enterprise Products Partners LP (b)

     172,200         6,219,864   

EOG Resources, Inc. (b)

     105,200         9,685,764   

Facebook, Inc., Class A (a)(b)

     86,900         6,779,938   

Google, Inc., Class A (a)(b)

     23,439         12,438,140   

Google, Inc., Class C (a)(b)

     23,739         12,496,210   

The Hain Celestial Group, Inc. (a)

     230,282         13,423,138   

The Hartford Financial Services Group, Inc. (b)

     379,600         15,825,524   

Hortonworks, Inc. (a)

     84,025         2,268,675   

Hortonworks, Inc. (Acquired 3/21/14, Cost $10,245,987) (a)(d)

     420,362         10,782,285   

JPMorgan Chase & Co. (b)(e)

     205,715         12,873,645   

Kennedy-Wilson Holdings, Inc.

     473,500         11,979,550   

Kinder Morgan, Inc. (b)

     252,500         10,683,275   

Las Vegas Sands Corp. (b)

     77,300         4,495,768   

LendingClub Corp. (a)(b)

     123,000         3,111,900   

LendingClub Corp. (Acquired 12/11/14, Cost $3,435,401) (a)(d)

     337,756         8,117,966   

Lowe’s Cos., Inc. (b)

     145,700         10,024,160   

MasterCard, Inc., Class A (b)

     123,100         10,606,296   

Merck & Co., Inc. (b)

     145,600         8,268,624   

Microsoft Corp. (b)

     266,800         12,392,860   

Mondelez International, Inc., Class A

     348,800         12,670,160   

New Relic Inc. (Acquired 4/15/14, Cost $7,078,515) (a)(d)

     249,772         8,266,954   

New Relic, Inc. (a)

     48,600         1,693,224   

Pfizer, Inc. (b)

     220,900         6,881,035   

Platform Specialty Products Corp. (a)

     443,733         10,303,480   

Public Service Enterprise Group, Inc.

     206,500         8,551,165   

Ralph Lauren Corp.

     49,300         9,128,388   

Roper Industries, Inc. (b)

     86,700         13,555,545   

Samsonite International SA

     2,561,300         7,590,277   

Schlumberger Ltd. (b)

     119,260         10,185,997   

St. Jude Medical, Inc.

     86,600         5,631,598   

Strategic Growth Bancorp. (Acquired 3/10/14, Cost $5,461,691) (a)(d)

     438,690         4,641,340   

U.S. Silica Holdings, Inc.

     104,700         2,689,743   

United Parcel Service, Class B

     113,900         12,662,263   

United Rentals, Inc. (a)(b)

     45,049         4,595,448   

WisdomTree Investments, Inc. (b)

     592,193         9,282,625   
     

 

 

 
                576,491,837   

Total Common Stocks — 98.2%

              1,041,800,127   
                   
Investment Companies    Shares      Value  

United Kingdom — 0.5%

     

Kennedy Wilson Europe Real Estate PLC

     302,475       $ 4,973,677   
     
Preferred Stocks                

India — 0.3%

     

Snapdeal.com, Series F (Acquired 5/7/14, Cost $1,888,464), 0.00% (a)(d)

     266         2,069,573   

Snapdeal.com, Series G (Acquired 10/29/14, Cost $741,913), 0.00% (a)(d)

     88         727,005   
     

 

 

 
                2,796,578   

United States — 1.1%

     

Palantir Technologies, Inc., Series I (Acquired 2/7/14, Cost $3,118,944), 0.00% (a)(d)

     508,800         3,851,616   

Uber Technologies, Inc., Series D (Acquired 6/6/14, Cost $3,845,800), 0.00% (a)(d)

     61,977         8,259,675   
     

 

 

 
                12,111,291   

Total Preferred Stocks — 1.4%

              14,907,869   
     
Warrants (f)                

United Kingdom — 0.0%

     

Nomad Holdings Ltd., Expires 4/18/17 (a)

     556,597         286,647   

Total Long Term Investments

(Cost — $933,641,184) — 100.1%

              1,061,968,320   
     
Short-Term Securities                

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.04% (g)(h)

     5,932,752         5,932,752   
      Beneficial
Interest  
(000)    
         

BlackRock Liquidity Series, LLC Money Market Series, 0.20% (g)(h)(i)

   $ 1,402         1,401,820   

Total Short-Term Securities

(Cost — $7,334,572) — 0.7%

              7,334,572   

Total Investments Before Options Written

(Cost — $940,975,756) — 100.8%

              1,069,302,892   
     
Options Written                

(Premiums Received — $11,403,065) — (1.0)%

              (10,714,090

Total Investments Net of Options Written — 99.8%

  

     1,058,588,802   

Other Assets Less Liabilities — 0.2%

        2,097,923   
     

 

 

 

Net Assets — 100.0%

      $ 1,060,686,725   
     

 

 

 
 
Notes to Schedule of Investments

 

(a) Non-income producing security.

 

(b) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(c) Security, or a portion of security, is on loan.

 

(d) Restricted securities as to resale. As of December 31, 2014 the Trust held 4.9% of its net assets, with current market value of $52,081,865 and original cost of $46,902,854, in these securities.

 

(e) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

See Notes to Financial Statements.

 

44    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock Global Opportunities Equity Trust (BOE)   

 

 

(f) Warrants entitle the Trust to purchase a predetermined number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date of the warrants, if any.

 

(g) Represents the current yield as of report date.

 

(h) During the period ended December 31, 2014, investments in issuers considered to be an affiliate of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate   

Shares/

Beneficial Interest

Held at

October 31,

2014

    

Net

Activity

   

Shares/

Beneficial Interest

Held at

December 31,

2014

     Income  

BlackRock Liquidity Funds, TempFund, Institutional Class

     9,876,038         (3,943,286     5,932,752       $ 1,539   

BlackRock Liquidity Series, LLC Money Market Series

     1,398,320       $ 3,500      $ 1,401,820       $ 10,221   

 

(i) Security was purchased with the cash collateral from loaned securities. The Trust may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

 

Ÿ  

As of December 31, 2014, exchange-traded options written were as follows:

 

Description   

Put/

Call

    

Strike

Price

    

Expiration

Date

     Contracts     

Market

Value

 

The Hartford Financial Services Group, Inc.

     Call         USD         41.00         1/02/15         540       $ (42,660

The Hartford Financial Services Group, Inc.

     Call         USD         42.00         1/02/15         539         (4,851

AbbVie, Inc.

     Call         USD         68.50         1/09/15         650         (17,875

Altria Group, Inc.

     Call         USD         51.50         1/09/15         401         (1,805

Apple, Inc.

     Call         USD         118.00         1/09/15         248         (1,984

Applied Materials, Inc.

     Call         USD         24.50         1/09/15         470         (34,310

Baidu, Inc. — ADR

     Call         USD         237.50         1/09/15         220         (22,550

Biogen Idec, Inc.

     Call         USD         350.00         1/09/15         50         (17,250

Citigroup, Inc.

     Call         USD         54.50         1/09/15         370         (19,240

Facebook, Inc., Class A

     Call         USD         81.00         1/09/15         470         (11,045

Las Vegas Sands Corp.

     Call         USD         61.00         1/09/15         129         (2,516

Lowe’s Cos., Inc.

     Call         USD         63.01         1/09/15         399         (231,517

MasterCard, Inc., Class A

     Call         USD         88.00         1/09/15         407         (14,449

Merck & Co., Inc.

     Call         USD         61.50         1/09/15         288         (864

Microsoft Corp.

     Call         USD         48.50         1/09/15         625         (3,750

Pfizer, Inc.

     Call         USD         32.00         1/09/15         350         (2,450

United Parcel Service, Class B

     Call         USD         111.00         1/09/15         270         (33,075

Abbott Laboratories

     Call         USD         44.00         1/17/15         1,049         (138,993

AbbVie, Inc.

     Call         USD         67.50         1/17/15         399         (25,935

Actavis PLC

     Call         USD         270.00         1/17/15         282         (72,615

Alibaba Group Holding — ADR

     Call         USD         110.00         1/17/15         183         (16,013

Alkermes PLC

     Call         USD         60.00         1/17/15         127         (26,035

American Airlines Group, Inc.

     Call         USD         45.00         1/17/15         540         (465,750

Apple, Inc.

     Call         USD         114.29         1/17/15         265         (24,115

Apple, Inc.

     Call         USD         115.00         1/17/15         265         (19,345

Apple, Inc.

     Call         USD         118.57         1/17/15         246         (6,027

Applied Materials, Inc.

     Call         USD         25.00         1/17/15         470         (31,725

Autodesk, Inc.

     Call         USD         62.50         1/17/15         384         (21,888

Becton Dickinson and Co.

     Call         USD         145.00         1/17/15         230         (12,075

Best Buy Co., Inc.

     Call         USD         38.00         1/17/15         462         (119,427

BioMarin Pharmaceutical, Inc.

     Call         USD         95.00         1/17/15         100         (14,250

Bristol-Myers Squibb Co.

     Call         USD         60.00         1/17/15         360         (31,860

Cabot Oil & Gas Corp.

     Call         USD         36.25         1/17/15         218         (1,090

Citigroup, Inc.

     Call         USD         55.00         1/17/15         143         (10,224

Comcast Corp., Class A

     Call         USD         57.50         1/17/15         637         (83,129

Covidien PLC

     Call         USD         100.00         1/17/15         257         (109,225

Credicorp Ltd.

     Call         USD         165.00         1/17/15         102         (13,005

Crown Holdings, Inc.

     Call         USD         49.00         1/17/15         422         (100,225

Eastman Chemical Co.

     Call         USD         87.50         1/17/15         321         (1,605

Enterprise Products Partners LP

     Call         USD         38.75         1/17/15         473         (8,278

EOG Resources, Inc.

     Call         USD         100.00         1/17/15         263         (10,389

Google, Inc., Class C

     Call         USD         560.00         1/17/15         67         (5,695

The Hartford Financial Services Group, Inc.

     Call         USD         40.00         1/17/15         540         (104,220

The Hartford Financial Services Group, Inc.

     Call         USD         42.00         1/17/15         540         (27,270

JPMorgan Chase & Co.

     Call         USD         62.50         1/17/15         129         (12,964

Kinder Morgan, Inc.

     Call         USD         40.00         1/17/15         700         (178,850

Kinder Morgan, Inc.

     Call         USD         42.50         1/17/15         140         (9,380

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    45


Schedule of Investments (continued)      BlackRock Global Opportunities Equity Trust (BOE)   

 

As of December 31, 2014, exchange-traded options written were as follows: (concluded)

 

Description    Put/
Call
    

Strike

Price

    

Expiration

Date

     Contracts     

Market

Value

 

Las Vegas Sands Corp.

     Call         USD         67.25         1/17/15         130       $ (195

LendingClub Corp.

     Call         USD         27.00         1/17/15         224         (8,960

Lowe’s Cos., Inc.

     Call         USD         67.50         1/17/15         330         (60,225

MasterCard, Inc., Class A

     Call         USD         88.00         1/17/15         91         (5,870

Merck & Co., Inc.

     Call         USD         60.00         1/17/15         211         (2,743

Microsoft Corp.

     Call         USD         49.00         1/17/15         900         (9,450

Pfizer, Inc.

     Call         USD         33.00         1/17/15         90         (405

Roper Industries, Inc.

     Call         USD         160.00         1/17/15         242         (21,175

Schlumberger Ltd.

     Call         USD         100.00         1/17/15         100         (300

United Rentals, Inc.

     Call         USD         115.00         1/17/15         52         (780

WisdomTree Investments, Inc.

     Call         USD         16.00         1/17/15         936         (42,120

Alibaba Group Holding — ADR

     Call         USD         109.00         1/23/15         132         (21,120

Altria Group, Inc.

     Call         USD         51.00         1/23/15         668         (14,362

American Airlines Group, Inc.

     Call         USD         53.00         1/23/15         449         (107,985

Applied Materials, Inc.

     Call         USD         25.00         1/23/15         470         (36,895

Baidu, Inc. — ADR

     Call         USD         247.50         1/23/15         11         (1,348

Best Buy Co., Inc.

     Call         USD         41.50         1/23/15         462         (52,437

Biogen Idec, Inc.

     Call         USD         352.50         1/23/15         50         (42,250

BioMarin Pharmaceutical, Inc.

     Call         USD         83.75         1/23/15         312         (259,847

Google, Inc., Class A

     Call         USD         552.50         1/23/15         54         (32,670

Google, Inc., Class C

     Call         USD         540.00         1/23/15         52         (47,320

JPMorgan Chase & Co.

     Call         USD         62.50         1/23/15         94         (10,998

Kinder Morgan, Inc.

     Call         USD         42.00         1/23/15         450         (54,000

Schlumberger Ltd.

     Call         USD         94.00         1/23/15         496         (16,616

United Parcel Service, Class B

     Call         USD         113.00         1/23/15         328         (32,472

United Rentals, Inc.

     Call         USD         110.00         1/23/15         175         (28,438

Covidien PLC

     Call         USD         103.70         1/26/15         211         (38,951

Alibaba Group Holding — ADR

     Call         USD         112.00         1/30/15         160         (20,400

Altria Group, Inc.

     Call         USD         51.00         1/30/15         347         (13,360

Apple, Inc.

     Call         USD         115.00         1/30/15         235         (53,345

Citigroup, Inc.

     Call         USD         54.00         1/30/15         282         (42,723

Citigroup, Inc.

     Call         USD         54.50         1/30/15         440         (53,680

Comcast Corp., Class A

     Call         USD         57.00         1/30/15         742         (155,449

JPMorgan Chase & Co.

     Call         USD         61.50         1/30/15         128         (24,896

MasterCard, Inc., Class A

     Call         USD         86.00         1/30/15         120         (29,640

Pfizer, Inc.

     Call         USD         32.00         1/30/15         334         (11,857

JPMorgan Chase & Co.

     Call         USD         64.00         2/06/15         306         (24,174

Abbott Laboratories

     Call         USD         46.00         2/20/15         260         (20,670

Alkermes PLC

     Call         USD         55.00         2/20/15         729         (441,045

Apple, Inc.

     Call         USD         115.00         2/20/15         235         (70,735

Banca Generali SpA

     Call         EUR         24.00         2/20/15         33         (1,139

Bristol-Myers Squibb Co.

     Call         USD         60.00         2/20/15         360         (67,860

Citigroup, Inc.

     Call         USD         55.00         2/20/15         440         (61,160

Credicorp Ltd.

     Call         USD         170.00         2/20/15         101         (19,948

Eastman Chemical Co.

     Call         USD         77.00         2/20/15         260         (62,530

JPMorgan Chase & Co.

     Call         USD         62.50         2/20/15         372         (63,612

Las Vegas Sands Corp.

     Call         USD         62.50         2/20/15         129         (12,771

Merck & Co., Inc.

     Call         USD         62.50         2/20/15         436         (10,246

Pfizer, Inc.

     Call         USD         32.00         2/20/15         330         (15,345

Roper Industries, Inc.

     Call         USD         160.00         2/20/15         192         (62,400

Crown Holdings, Inc.

     Call         USD         50.50         2/26/15         335         (67,883

Total

                  $ (4,520,593
                 

 

 

 

 

Ÿ  

As of December 31, 2014, over-the-counter options written were as follows:

 

Description   Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Aramark

 

UBS AG

     Call         USD         29.53         1/05/15         41,900       $ (67,978

AIA Group Ltd.

 

BNP Paribas S.A.

     Call         HKD         45.85         1/06/15         515,000         (504

Kenedix Office Investment Corp. — REIT

 

Bank of America N.A.

     Call         JPY         616,080.00         1/06/15         62         (32,041

Kenedix Office Investment Corp. — REIT

 

Citibank N.A.

     Call         JPY         629,340.00         1/06/15         30         (12,198

Mitsubishi Estate Co. Ltd.

 

Morgan Stanley & Co. International PLC

     Call         JPY         2,718.42         1/06/15         47,000         (587

 

See Notes to Financial Statements.

 

46    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock Global Opportunities Equity Trust (BOE)   

 

As of December 31, 2014, over-the-counter options written were as follows: (continued)

 

Description   Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Nabtesco Corp.

  UBS AG      Call         JPY         2,901.78         1/06/15         40,000       $ (15,100

Nabtesco Corp.

  UBS AG      Call         JPY         2,909.98         1/06/15         52,000         (17,508

NAVER Corp.

  Morgan Stanley & Co. International PLC      Call         KRW         792,848.73         1/06/15         2,600         (79

Novartis AG

  Deutsche Bank AG      Call         CHF         87.77         1/06/15         56,000         (254,233

Samsonite International SA

  Citibank N.A.      Call         HKD         27.54         1/06/15         213,300           

Samsonite International SA

  Morgan Stanley & Co. International PLC      Call         HKD         26.60         1/06/15         185,100           

SMC Corp.

  UBS AG      Call         JPY         31,059.00         1/06/15         6,300         (37,712

BankUnited, Inc.

  Credit Suisse International      Call         USD         30.90         1/07/15         66,000         (235

Henkel AG & Co. KGaA

  Deutsche Bank AG      Call         EUR         84.41         1/07/15         24,000         (136,409

Beijing Enterprises Water Group Ltd.

  Citibank N.A.      Call         HKD         5.55         1/08/15         700,000         (103

Cabot Oil & Gas Corp.

  Credit Suisse International      Call         USD         34.89         1/08/15         21,800         (12

Cemex SAB de CV — ADR

  Deutsche Bank AG      Call         USD         12.72         1/08/15         124,700         (1

Charles River Laboratories International, Inc.

  Morgan Stanley & Co. International PLC      Call         USD         64.61         1/08/15         38,600         (19,589

Lloyds Banking Group PLC

  Morgan Stanley & Co. International PLC      Call         GBP         0.77         1/08/15         745,000         (6,158

NH Hotel Group SA

  Bank of America N.A.      Call         EUR         3.68         1/08/15         75,000         (26,827

Roche Holding AG

  UBS AG      Call         CHF         290.80         1/08/15         21,000         (118

Svenska Cellulosa AB SCA, Class B

  Deutsche Bank AG      Call         SEK         173.53         1/08/15         73,400         (1,378

Telefonica Deutschland Holding AG

  Deutsche Bank AG      Call         EUR         4.05         1/08/15         75,000         (29,900

Vivendi SA

  Bank of America N.A.      Call         EUR         20.15         1/08/15         140,000         (86,872

Kennedy-Wilson Holdings, Inc.

  Deutsche Bank AG      Call         USD         26.76         1/09/15         48,000         (1,471

Anheuser-Busch InBev NV

  Morgan Stanley & Co. International PLC      Call         EUR         93.36         1/12/15         31,000         (50,706

Telefonica Deutschland Holding AG

  Goldman Sachs International      Call         EUR         4.23         1/12/15         250,000         (57,362

Beijing Enterprises Water Group Ltd.

  UBS AG      Call         HKD         5.57         1/14/15         490,000         (240

Kenedix Office Investment Corp. — REIT

  Bank of America N.A.      Call         JPY         616,080.00         1/14/15         62         (32,548

Mitsubishi Estate Co. Ltd.

  Morgan Stanley & Co. International PLC      Call         JPY         2,652.51         1/14/15         99,000         (14,064

Nabtesco Corp.

  Citibank N.A.      Call         JPY         2,944.40         1/14/15         70,000         (28,657

Naspers Ltd., N Shares

  Goldman Sachs International      Call         ZAR         1,504.50         1/14/15         35,400         (141,697

Prudential PLC

  Goldman Sachs International      Call         GBP         15.49         1/14/15         97,000         (8,171

Samsonite International SA

  Morgan Stanley & Co. International PLC      Call         HKD         27.24         1/14/15         183,000         (5

Samsonite International SA

  Morgan Stanley & Co. International PLC      Call         HKD         27.93         1/14/15         241,200         (4

Samsung Electronics Co. Ltd.

  Citibank N.A.      Call         KRW         1,318,720.48         1/14/15         3,500         (116,621

Charles River Laboratories International, Inc.

  Morgan Stanley & Co. International PLC      Call         USD         64.61         1/15/15         38,600         (31,749

The Hain Celestial Group, Inc.

  Morgan Stanley & Co. International PLC      Call         USD         52.38         1/15/15         65,800         (395,990

NH Hotel Group SA

  Goldman Sachs International      Call         EUR         3.91         1/15/15         75,000         (15,805

Public Service Enterprise Group, Inc.

  Credit Suisse International      Call         USD         40.78         1/15/15         52,000         (58,402

Samsonite International SA

  Morgan Stanley & Co. International PLC      Call         HKD         28.20         1/20/15         241,200         (8

Beijing Enterprises Water Group Ltd.

  Goldman Sachs International      Call         HKD         5.36         1/21/15         200,000         (1,375

Beijing Enterprises Water Group Ltd.

  UBS AG      Call         HKD         5.59         1/21/15         1,600,000         (2,397

Kenedix Office Investment Corp. — REIT

  Bank of America N.A.      Call         JPY         662,290.00         1/21/15         92         (19,270

NH Hotel Group SA

  Morgan Stanley & Co. International PLC      Call         EUR         3.94         1/21/15         80,000         (18,066

Daimler AG

  Morgan Stanley & Co. International PLC      Call         EUR         67.25         1/22/15         32,000         (96,425

Delphi Automotive PLC

  Citibank N.A.      Call         USD         74.36         1/22/15         52,000         (45,304

Lloyds Banking Group PLC

  Goldman Sachs International      Call         GBP         0.80         1/22/15         1,490,000         (9,787

Nordea Bank AB

  Goldman Sachs International      Call         SEK         95.14         1/22/15         216,000         (5,349

Public Service Enterprise Group, Inc.

  UBS AG      Call         USD         42.33         1/22/15         10,000         (5,623

Kennedy-Wilson Holdings, Inc.

  Goldman Sachs International      Call         USD         27.31         1/23/15         32,000         (2,523

Samsung Electronics Co. Ltd.

  Goldman Sachs International      Call         KRW         1,368,195.95         1/23/15         600         (13,232

Schneider Electric SE

  Deutsche Bank AG      Call         EUR         62.51         1/23/15         68,000         (58,539

Unibail-Rodamco SE — REIT

  Bank of America N.A.      Call         EUR         203.21         1/26/15         6,800         (90,669

WisdomTree Investments, Inc.

  Morgan Stanley & Co. International PLC      Call         USD         15.58         1/26/15         100,000         (84,300

AIA Group Ltd.

  Citibank N.A.      Call         HKD         44.51         1/27/15         476,000         (30,451

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    47


Schedule of Investments (continued)      BlackRock Global Opportunities Equity Trust (BOE)   

 

As of December 31, 2014, over-the-counter options written were as follows: (continued)

 

Description   Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Aramark

  Deutsche Bank AG      Call         USD         29.02         1/27/15         38,600       $ (84,767

Aramark

  UBS AG      Call         USD         30.46         1/27/15         13,600         (14,152

Delphi Automotive PLC

  Credit Suisse International      Call         USD         73.28         1/27/15         20,900         (29,437

Infineon Technologies AG

  Deutsche Bank AG      Call         EUR         8.53         1/27/15         356,000         (162,816

Mondelez International, Inc., Class A

  Deutsche Bank AG      Call         USD         38.89         1/27/15         109,200         (12,165

NH Hotel Group SA

  Goldman Sachs International      Call         EUR         3.91         1/27/15         75,000         (20,479

SK Hynix, Inc.

  Citibank N.A.      Call         KRW         49,731.12         1/27/15         74,700         (67,210

SK Hynix, Inc.

  UBS AG      Call         KRW         47,914.50         1/27/15         24,000         (37,113

BankUnited, Inc.

  Credit Suisse International      Call         USD         30.90         1/28/15         50,000         (5,755

Beijing Enterprises Water Group Ltd.

  Morgan Stanley & Co. International PLC      Call         HKD         5.47         1/28/15         750,000         (3,606

Henkel AG & Co. KGaA

  Deutsche Bank AG      Call         EUR         87.41         1/28/15         25,000         (85,190

Kenedix Office Investment Corp. — REIT

  Goldman Sachs International      Call         JPY         634,440.00         1/28/15         10         (3,973

NH Hotel Group SA

  Morgan Stanley & Co. International PLC      Call         EUR         3.94         1/28/15         80,000         (20,803

Novartis AG

  UBS AG      Call         CHF         92.11         1/28/15         33,600         (66,228

Samsonite International SA

  Morgan Stanley & Co. International PLC      Call         HKD         25.49         1/28/15         33,000         (398

SoftBank Corp.

  Citibank N.A.      Call         JPY         7,251.18         1/28/15         31,300         (50,562

AstraZeneca PLC

  Deutsche Bank AG      Call         GBP         47.06         1/29/15         70,000         (95,843

Nordea Bank AB

  Goldman Sachs International      Call         SEK         87.64         1/29/15         165,000         (73,204

Telefonica Deutschland Holding AG

  Deutsche Bank AG      Call         EUR         4.25         1/29/15         180,000         (48,630

UBS Group AG

  UBS AG      Call         CHF         16.84         1/29/15         211,000         (120,708

Platform Specialty Products Corp.

  Morgan Stanley & Co. International PLC      Call         USD         23.55         1/30/15         60,000         (56,461

Ralph Lauren Corp.

  UBS AG      Call         USD         184.24         1/30/15         12,300         (60,474

Adobe Systems, Inc.

  Citibank N.A.      Call         USD         75.77         2/02/15         49,500         (40,866

Anheuser-Busch InBev NV

  Morgan Stanley & Co. International PLC      Call         EUR         93.77         2/03/15         39,000         (111,135

Hermes Microvision, Inc.

  Goldman Sachs International      Call         TWD         1,575.90         2/03/15         21,000         (59,371

Mitsubishi Estate Co. Ltd.

  UBS AG      Call         JPY         2,690.88         2/03/15         98,000         (32,256

Nabtesco Corp.

  Citibank N.A.      Call         JPY         2,962.08         2/03/15         6,000         (3,924

NAVER Corp.

  Citibank N.A.      Call         KRW         726,190.00         2/03/15         1,240         (25,033

SMC Corp.

  Citibank N.A.      Call         JPY         31,638.25         2/03/15         4,100         (36,233

Vodafone Group PLC — ADR

  UBS AG      Call         USD         34.05         2/03/15         39,300         (45,773

Royal Dutch Shell PLC, Class A — ADR

  Deutsche Bank AG      Call         USD         62.78         2/04/15         64,000         (305,668

Unibail-Rodamco SE — REIT

  Deutsche Bank AG      Call         EUR         212.00         2/04/15         8,500         (54,842

Beijing Enterprises Water Group Ltd.

  Morgan Stanley & Co. International PLC      Call         HKD         5.27         2/05/15         650,000         (10,238

Beijing Enterprises Water Group Ltd.

  Morgan Stanley & Co. International PLC      Call         HKD         5.47         2/05/15         750,000         (4,872

The Hain Celestial Group, Inc.

  Credit Suisse International      Call         USD         59.25         2/05/15         49,400         (89,302

Kennedy-Wilson Holdings, Inc.

  Deutsche Bank AG      Call         USD         26.05         2/05/15         20,500         (10,496

Kennedy-Wilson Holdings, Inc.

  Deutsche Bank AG      Call         USD         27.90         2/05/15         35,000         (4,320

Lloyds Banking Group PLC

  Bank of America N.A.      Call         GBP         0.76         2/05/15         450,000         (11,204

St. Jude Medical, Inc.

  Credit Suisse International      Call         USD         68.14         2/05/15         47,700         (79,698

AstraZeneca PLC

  Deutsche Bank AG      Call         GBP         44.76         2/06/15         20,000         (59,622

AXA SA

  Deutsche Bank AG      Call         EUR         19.62         2/06/15         149,500         (54,243

BAE Systems PLC

  Morgan Stanley & Co. International PLC      Call         GBP         4.54         2/06/15         370,500         (125,727

FANUC Corp.

  Citibank N.A.      Call         JPY         21,420.00         2/06/15         21,000         (37,351

Kenedix Office Investment Corp. — REIT

  Goldman Sachs International      Call         JPY         670,915.00         2/06/15         92         (19,387

Kenedix Office Investment Corp. — REIT

  Morgan Stanley & Co. International PLC      Call         JPY         684,420.00         2/06/15         40         (6,055

Mondelez International, Inc., Class A

  Morgan Stanley & Co. International PLC      Call         USD         36.87         2/06/15         32,600         (23,582

NH Hotel Group SA

  Morgan Stanley & Co. International PLC      Call         EUR         3.81         2/06/15         75,000         (28,463

Samsonite International SA

  Morgan Stanley & Co. International PLC      Call         HKD         25.49         2/06/15         33,000         (597

Societe Generale SA

  Deutsche Bank AG      Call         EUR         33.79         2/06/15         96,000         (241,619

Telefonica Deutschland Holding AG

  Deutsche Bank AG      Call         EUR         4.25         2/06/15         180,000         (49,343

Vivendi SA

  UBS AG      Call         EUR         19.71         2/06/15         70,000         (89,684

Aramark

  Deutsche Bank AG      Call         USD         29.59         2/09/15         59,000         (105,339

 

See Notes to Financial Statements.

 

48    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock Global Opportunities Equity Trust (BOE)   

 

As of December 31, 2014, over-the-counter options written as were as follows: (concluded)

 

Description   Counterparty    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Daimler AG

  UBS AG      Call         EUR         68.48         2/09/15         40,000       $ (120,274

AIA Group Ltd.

  UBS AG      Call         HKD         44.21         2/10/15         476,000         (48,213

Autodesk, Inc.

  Citibank N.A.      Call         USD         61.50         2/10/15         32,800         (49,830

Crown Holdings, Inc.

  Goldman Sachs International      Call         USD         52.25         2/10/15         18,000         (16,687

Hermes Microvision, Inc.

  Morgan Stanley & Co. International PLC      Call         TWD         1,506.75         2/12/15         18,000         (79,101

Samsonite International SA

  UBS AG      Call         HKD         23.67         2/12/15         159,900         (12,948

Crest Nicholson Holdings PLC

  Morgan Stanley & Co. International PLC      Call         GBP         3.90         2/13/15         75,000         (14,533

Kennedy-Wilson Holdings, Inc.

  Bank of America N.A.      Call         USD         26.20         2/13/15         42,000         (22,780

Mondelez International, Inc., Class A

  Morgan Stanley & Co. International PLC      Call         USD         36.87         2/13/15         32,600         (26,412

NH Hotel Group SA

  Morgan Stanley & Co. International PLC      Call         EUR         3.81         2/13/15         75,000         (30,376

SoftBank Corp.

  Goldman Sachs International      Call         JPY         7,258.83         2/17/15         37,000         (72,745

Kennedy-Wilson Holdings, Inc.

  Morgan Stanley & Co. International PLC      Call         USD         26.57         2/19/15         24,200         (11,732

Prudential PLC

  Goldman Sachs International      Call         GBP         15.49         2/19/15         97,000         (33,325

Ralph Lauren Corp.

  UBS AG      Call         USD         184.24         2/19/15         12,300         (76,280

Public Service Enterprise Group, Inc.

  Credit Suisse International      Call         USD         41.39         2/23/15         52,000         (71,310

Vodafone Group PLC — ADR

  UBS AG      Call         USD         34.05         2/23/15         39,300         (55,425

Royal Dutch Shell PLC, Class A — ADR

  Citibank N.A.      Call         USD         69.42         2/24/15         28,000         (31,560

Royal Dutch Shell PLC, Class A — ADR

  Deutsche Bank AG      Call         USD         62.78         2/24/15         64,000         (318,960

Kennedy-Wilson Holdings, Inc.

  Goldman Sachs International      Call         USD         25.50         2/25/15         35,100         (32,437

Total

                    $ (6,193,497
                   

 

 

 

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets and liabilities or the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, refer to Note 2 of the Notes to Financial Statements.

As of December 31, 2014, the following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy:

 

      Level 1    Level 2    Level 3    Total

Assets:

                 

Investments:

                 

Long-Term Investments:

                 

Common Stocks:

                 

Belgium

              $ 16,752,839           $ 16,752,839  

Canada

     $ 10,747,478                      10,747,478  

China

       20,324,611          6,908,436             27,233,047  

France

                41,765,242             41,765,242  

Germany

                36,748,937             36,748,937  

Greece

                3,214,986             3,214,986  

Hong Kong

       3,677,920          14,200,675             17,878,595  

India

       8,293,669          11,300,261             19,593,930  

Indonesia

                9,377,289             9,377,289  

Ireland

       11,361,159                      11,361,159  

Italy

                11,073,374             11,073,374  

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    49


Schedule of Investments (continued)      BlackRock Global Opportunities Equity Trust (BOE)   

 

      Level 1   Level 2   Level 3    Total

Assets: (concluded)

                 

Investments: (concluded)

                 

Long-Term Investments: (concluded)

                 

Common Stocks: (concluded)

                 

Japan

             $ 50,410,900                $ 50,410,900  

Mexico

     $ 4,622,103                          4,622,103  

Netherlands

       20,848,230                          20,848,230  

New Zealand

               4,359,956                  4,359,956  

Peru

       6,519,326                          6,519,326  

South Africa

               7,580,217                  7,580,217  

South Korea

               23,153,125                  23,153,125  

Spain

               16,193,030                  16,193,030  

Sweden

               11,705,188                  11,705,188  

Switzerland

       7,256,615         24,406,349                  31,662,964  

Taiwan

               3,852,921                  3,852,921  

United Kingdom

       15,095,993         58,057,891       $ 5,499,570          78,653,454  

United States

       537,093,015         34,757,482         4,641,340          576,491,837  

Investment Companies

       4,973,677                          4,973,677  

Preferred Stocks

                       14,907,869          14,907,869  

Warrants

       286,647                          286,647  

Short-Term Securities

       5,932,752         1,401,820                  7,334,572  
    

 

 

 

Total

     $ 657,033,195       $ 387,220,918       $ 25,048,779        $ 1,069,302,892  
    

 

 

 
                 
      Level 1   Level 2   Level 3    Total

Derivative Financial Instruments1

                 

Liabilities:

                 

Equity contracts

     $ (3,858,720 )     $ (6,855,370 )              $ (10,714,090 )
    

 

 

 

1    Derivative financial instruments are options written, which are shown at value.

       

 

The Trust may hold assets in which the fair value approximates the carrying amount for financial statement purposes. As of December 31, 2014, such assets are categorized within the disclosure hierarchy as follows:

   

                 
      Level 1   Level 2   Level 3    Total

Assets:

                 

Cash

     $ 1,045                        $ 1,045  

Foreign currency at value

       1,350,321                          1,350,321  

Liabilities:

                 

Collateral on securities loaned at value

             $ (1,401,820 )                (1,401,820 )
    

 

 

 

Total

     $ 1,351,366       $ (1,401,820 )              $ (50,454 )
    

 

 

 

During the period ended December 31, 2014, there were no transfers between levels.

A reconciliation of Level 3 investments is presented when the Trust had a significant amount of Level 3 investments at the beginning and/or end of the period in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

 

     

Common

Stocks

   

Preferred

Stocks

    Total  

Assets:

      

Opening Balance, as of October 31, 2014

   $ 11,343,915      $ 29,759,869      $ 41,103,784   

Transfers into Level 3

                     

Transfers out of Level 3

     (641,263     (20,209,108     (20,850,371

Accrued discounts/premiums

                     

Net realized gain (loss)

                     

Net change in unrealized appreciation/depreciation

     (561,742     5,339,821        4,778,079   

Purchases

            17,287        17,287   

Sales

                
  

 

 

 

Closing Balance, as of December 31, 2014

   $ 10,140,910      $ 14,907,869      $ 25,048,779   
  

 

 

 

Net change in unrealized appreciation/depreciation on investments still held at December 31, 2014

   $ (561,742   $ 5,339,821      $ 4,778,079   
  

 

 

 

 

See Notes to Financial Statements.

 

50    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (concluded)      BlackRock Global Opportunities Equity Trust (BOE)   

 

The following table summarizes the valuation techniques used and unobservable inputs utilized by the BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) to determine the value of certain of the Trust’s Level 3 investments as of December 31, 2014.

 

      Value      Valuation Techniques  

Unobservable

Inputs

  

Range of

Unobservable

Inputs Utilized

 

Assets:

          

Common Stocks

   $ 10,140,910      

Market Comparable Companies

 

Tangible Book Value Multiple1

     1.51x-1.70x   

Preferred Stocks3

     3,851,616      

Market Comparable Companies

 

2015P Revenue Multiple1

     14.44x   
     

Options Pricing Model

 

Years to IPO2

     2   
       

Risk Free Rate2

     0.57
       

Volatility1

     45.00
       

Discount Rate on Liquidation Preference1

     8.00
     2,796,578      

Market Comparable Companies

 

Current Fiscal Year Revenue Multiple1

     2.28x   
     

Options Pricing Model

 

Years to IPO2

     3.75   
       

Risk Free Rate2

     7.89
       

Volatility1

     60.00
     8,259,675      

Probability-Weighted Expected Return Model

 

Years to IPO2

     1-3   
       

IPO Exit Probability1

     90.00
       

Discount Rate1

     20.11
       

Margin1

     20.00
       

Revenue Multiple1

     10.0x-15.0x   
                  Projected Gross Revenue1    $ 20-$454   

Total

   $ 25,048,779                     

 

  1   

Increase in unobservable input may result in a significant increase to value, while a decrease in the unobservable input may result in a significant decrease to value.

 

  2   

Decrease in unobservable input may result in a significant increase to value, while an increase in the unobservable input may result in a significant decrease to value.

 

  3   

For the period ended December 31, 2014, the valuation technique for certain investments classified as preferred stocks changed to a Probability-Weighted Expected Return Model. The investment was previously valued utilizing a market comparable company approach. A Probability-Weighted Expected Return Model was considered to be a more relevant measure of fair value for this investment which leverages the most recent equity raise pre-money valuation.

 

  4   

Amount is stated in billions.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    51


Schedule of Investments December 31, 2014      BlackRock Health Sciences Trust (BME)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks   Shares     Value  

Biotechnology — 29.9%

   

Acceleron Pharma, Inc. (a)(b)

    23,700      $ 923,352   

Acorda Therapeutics, Inc. (a)(b)

    14,400        588,528   

Actelion Ltd.

    11,500        1,323,893   

Agios Pharmaceuticals, Inc. (a)(b)

    20,498        2,296,596   

Alder Biopharmaceuticals, Inc. (a)

    16,600        482,894   

Alexion Pharmaceuticals, Inc. (a)(b)

    48,960        9,059,069   

Alkermes PLC (a)(b)

    57,100        3,343,776   

Amgen, Inc. (b)

    57,500        9,159,175   

Anacor Pharmaceuticals, Inc. (a)(b)

    10,000        322,500   

Aquinox Pharmaceuticals, Inc. (a)

    6,400        48,000   

Array BioPharma, Inc. (a)(b)

    83,400        394,482   

Avalanche Biotechnologies, Inc. (a)

    3,200        172,800   

BioCryst Pharmaceuticals, Inc. (a)(b)

    16,000        194,560   

Biogen Idec, Inc. (a)(b)

    27,595        9,367,123   

BioMarin Pharmaceutical, Inc. (a)(b)

    38,700        3,498,480   

Bluebird Bio, Inc. (a)(b)

    3,000        275,160   

Celgene Corp. (a)(b)(c)

    94,086        10,524,460   

Celldex Therapeutics, Inc. (a)(b)

    21,400        390,550   

Clovis Oncology, Inc. (a)(b)

    17,900        1,002,400   

Conatus Pharmaceuticals, Inc. (a)

    8,200        57,400   

Concert Pharmaceuticals, Inc. (a)

    4,055        54,012   

Dyax Corp. (a)

    53,027        745,559   

Genomic Health, Inc. (a)

    24,000        767,280   

Gilead Sciences, Inc. (a)(b)

    46,400        4,373,664   

Incyte Corp. (a)(b)

    32,600        2,383,386   

Infinity Pharmaceuticals, Inc. (a)(b)

    49,900        842,811   

Isis Pharmaceuticals, Inc. (a)(b)

    39,000        2,407,860   

Juno Therapeutics, Inc. (a)

    7,300        381,206   

Karyopharm Therapeutics, Inc. (a)(b)

    29,253        1,094,940   

Kite Pharma, Inc. (a)

    2,700        155,709   

Kite Pharma, Inc. (Acquired 6/25/14, cost $222,000) (a)(d)

    14,655        845,154   

Medivation, Inc. (a)(b)

    16,900        1,683,409   

Neurocrine Biosciences, Inc. (a)(b)

    57,162        1,276,999   

Otonomy, Inc. (a)

    6,100        203,313   

ProQR Therapeutics NV (a)

    3,900        84,513   

Protalix BioTherapeutics, Inc. (a)

    115,600        212,704   

PTC Therapeutics, Inc. (a)

    15,700        812,789   

Puma Biotechnology, Inc. (a)(b)

    10,300        1,949,481   

Receptos, Inc. (a)(b)

    24,700        3,025,997   

Regeneron Pharmaceuticals, Inc. (a)(b)

    10,558        4,331,420   

Sage Therapeutics, Inc. (a)

    1,900        69,540   

Sage Therapeutics, Inc. (Acquired 3/10/14, cost $631,483) (a)(d)

    47,342        1,646,081   

Sarepta Therapeutics, Inc. (a)

    20,900        302,423   

Seattle Genetics, Inc. (a)(b)

    13,367        429,482   

Seres Health, Inc. (Acquired 11/24/14, Cost
$251,899) (a)(d)

    20,710        251,899   

Ultragenyx Pharmaceutical, Inc. (a)

    41,849        1,836,334   

uniQure B.V. (a)

    6,600        97,746   

Vertex Pharmaceuticals, Inc. (a)(b)

    39,905        4,740,714   
   

 

 

 
              90,431,623   

Health Care Equipment & Supplies — 18.3%

   

Abbott Laboratories (b)

    155,500        7,000,610   

Align Technology, Inc. (a)(b)

    10,400        581,464   

AtriCure, Inc. (a)

    24,162        482,273   

Baxter International, Inc. (b)

    44,700        3,276,063   

Becton Dickinson and Co. (b)

    25,800        3,590,328   

Boston Scientific Corp. (a)

    237,600        3,148,200   

CareFusion Corp. (a)

    30,500        1,809,870   

Coloplast A/S, Class B

    8,300        694,581   

The Cooper Cos., Inc. (b)

    12,300        1,993,707   

Covidien PLC (b)

    65,600        6,709,568   
Common Stocks   Shares     Value  

Health Care Equipment & Supplies (concluded)

   

Cyberonics, Inc. (a)(b)

    11,200      $ 623,616   

DENTSPLY International, Inc. (b)

    12,100        644,567   

DexCom, Inc. (a)(b)

    21,500        1,183,575   

Edwards Lifesciences Corp. (a)(b)

    35,399        4,509,125   

Insulet Corp. (a)(b)

    8,000        368,480   

Intuitive Surgical, Inc. (a)(b)

    5,800        3,067,852   

Masimo Corp. (a)

    24,200        637,428   

Medtronic, Inc. (b)

    63,400        4,577,480   

PW Medtech Group Ltd. (a)

    490,400        218,308   

St. Jude Medical, Inc.

    41,800        2,718,254   

Stryker Corp. (b)

    60,000        5,659,800   

Thoratec Corp. (a)(b)

    12,000        389,520   

Zimmer Holdings, Inc. (b)

    12,600        1,429,092   
   

 

 

 
              55,313,761   

Health Care Providers & Services — 14.3%

   

Aetna, Inc. (b)

    26,711        2,372,738   

AmerisourceBergen Corp. (b)

    18,500        1,667,960   

Anthem, Inc. (b)

    13,000        1,633,710   

Cardinal Health, Inc. (b)

    57,130        4,612,105   

Cigna Corp. (b)

    47,000        4,836,770   

Envision Healthcare Holdings, Inc. (a)(b)

    55,400        1,921,826   

Express Scripts Holding Co. (a)(b)

    25,176        2,131,652   

HCA Holdings, Inc. (a)(b)

    60,294        4,424,977   

HealthEquity, Inc. (a)

    5,900        150,155   

McKesson Corp. (b)

    33,900        7,036,962   

Premier, Inc., Class A (a)

    18,700        627,011   

UnitedHealth Group, Inc. (b)

    85,634        8,656,741   

Universal Health Services, Inc., Class B (b)

    29,700        3,304,422   
   

 

 

 
              43,377,029   

Health Care Technology — 0.7%

   

Cerner Corp. (a)(b)

    34,400        2,224,304   

Life Sciences Tools & Services — 3.2%

   

Charles River Laboratories International, Inc. (a)

    45,200        2,876,528   

Illumina, Inc. (a)(b)

    17,700        3,267,066   

Thermo Fisher Scientific, Inc. (b)

    29,000        3,633,410   
   

 

 

 
              9,777,004   

Pharmaceuticals — 33.4%

   

AbbVie, Inc. (b)(c)

    150,184        9,828,041   

Achaogen, Inc. (a)

    13,094        170,877   

Actavis PLC (a)(b)

    27,724        7,136,435   

Allergan, Inc. (b)

    29,600        6,292,664   

AstraZeneca PLC

    60,500        4,273,168   

Bayer AG

    21,700        2,957,901   

Bristol-Myers Squibb Co. (b)

    95,900        5,660,977   

Chugai Pharmaceutical Co. Ltd.

    49,900        1,225,212   

Dermira, Inc. (a)

    11,800        213,698   

Eisai Co. Ltd.

    41,000        1,585,600   

Eli Lilly & Co. (b)

    79,100        5,457,109   

Intra-Cellular Therapies, Inc. (a)

    62,681        1,106,320   

Jazz Pharmaceuticals PLC (a)(b)

    6,200        1,015,126   

Johnson & Johnson (b)

    74,970        7,839,613   

Mallinckrodt PLC (a)(b)

    32,700        3,238,281   

Merck & Co., Inc. (b)

    130,000        7,382,700   

Mylan, Inc. (a)(b)

    63,500        3,579,495   

Novartis AG

    79,800        7,400,929   

Perrigo Co. PLC (b)

    25,680        4,292,669   

Pfizer, Inc. (b)

    124,300        3,871,945   

Phibro Animal Health Corp., Class A

    19,900        627,845   

Roche Holding AG

    12,900        3,495,155   

Salix Pharmaceuticals Ltd. (a)(b)

    9,200        1,057,448   

Shire PLC — ADR (b)

    10,700        2,274,178   
 

 

 

52    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock Health Sciences Trust (BME)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Pharmaceuticals (concluded)

     

Teva Pharmaceutical Industries Ltd. — ADR (b)

     80,700       $ 4,641,057   

Valeant Pharmaceuticals International, Inc. (a)(b)

     25,000         3,577,750   

Zoetis, Inc. (b)

     26,100         1,123,083   
     

 

 

 
                101,325,276   

Total Common Stocks — 99.8%

              302,448,997   
     
Preferred Stocks                

ProNAi Therapeutics, Inc., Series D (Acquired 4/15/14, cost $270,735), 0.00% (a)(d)

     386,764         270,735   

Spark Therapeutics (Acquired 5/23/14, cost $154,641), 0.00% (a)(d)

     96,050         154,641   
     

 

 

 
                425,376   

Total Preferred Stocks — 0.1%

              425,376   

Total Long-Term Investments

(Cost — $186,714,603) — 99.9%

              302,874,373   
                   
Short-Term Securities    Shares      Value  

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.04% (e)(f)

     3,271,616       $ 3,271,616   

Total Short-Term Securities

(Cost — $3,271,616) — 1.1%

              3,271,616   

Total Investments Before Options Written

(Cost — $189,986,219) — 101.0%

              306,145,989   
     
Options Written                

(Premiums Received — $3,268,399) — (1.0)%

              (2,914,970

Total Investments Net of Options Written — 100.0%

        303,231,019   

Liabilities in Excess of Other Assets — 0.0%

        (127,755
     

 

 

 

Net Assets — 100.0%

      $ 303,103,264   
     

 

 

 
 
Notes to Schedule of Investments

 

(a) Non-income producing security.

 

(b) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(c) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(d) Restricted securities as to resale. As of December 31, 2014 the Trust held 0.8% of its net assets, with current market value of $2,323,356 and the original cost of $1,308,758, in these securities.

 

(e) Represents the current yield as of report date.

 

(f) During the period ended December 31, 2014, investments in issuers considered to be an affiliate of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliates    Shares Held at
October 31, 2014
     Net
Activity
     Shares Held at
December 31, 2014
     Income  

BlackRock Liquidity Funds, TempFund, Institutional Class

     433,398         2,838,218         3,271,616       $ 534   

BlackRock Liquidity Series, LLC Money Market Series

                           $ 279   

 

Ÿ  

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

 

Ÿ  

As of December 31, 2014, exchange-traded options written were as follows:

 

Description    Put/
Call
     Strike
Price
     Expiration
Date
     Contracts      Market
Value
 

Receptos, Inc.

     Call         USD         96.00         1/02/15         56       $ (148,461

Thermo Fisher Scientific, Inc.

     Call         USD         127.01         1/08/15         107         (9,557

AbbVie, Inc.

     Call         USD         68.50         1/09/15         265         (7,287

Anthem, Inc.

     Call         USD         129.00         1/09/15         47         (2,702

Baxter International, Inc.

     Call         USD         73.50         1/09/15         83         (4,897

Eli Lilly & Co.

     Call         USD         72.50         1/09/15         150         (2,175

Express Scripts Holding Co.

     Call         USD         85.00         1/09/15         37         (3,164

Merck & Co., Inc.

     Call         USD         61.50         1/09/15         317         (951

Teva Pharmaceutical Industries Ltd. — ADR

     Call         USD         59.00         1/09/15         58         (1,943

Teva Pharmaceutical Industries Ltd. — ADR

     Call         USD         59.50         1/09/15         57         (1,340

Align Technology, Inc.

     Call         USD         56.51         1/14/15         38         (3,829

Abbott Laboratories

     Call         USD         44.00         1/17/15         357         (47,302

Abbott Laboratories

     Call         USD         46.00         1/17/15         3         (84

AbbVie, Inc.

     Call         USD         67.50         1/17/15         292         (18,980

Acorda Therapeutics, Inc.

     Call         USD         37.00         1/17/15         50         (21,500

Actavis PLC

     Call         USD         270.00         1/17/15         102         (26,265

Alkermes PLC

     Call         USD         60.00         1/17/15         211         (43,255

 

 

     ANNUAL REPORT    DECEMBER 31, 2014    53


Schedule of Investments (continued)      BlackRock Health Sciences Trust (BME)   

 

As of December 31, 2014, exchange-traded options written were as follows: (continued)

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts     

Market

Value

 

Allergan, Inc.

     Call         USD         200.00         1/17/15         116       $ (168,200

AmerisourceBergen Corp.

     Call         USD         92.50         1/17/15         68         (4,250

Array BioPharma, Inc.

     Call         USD         5.00         1/17/15         300         (6,000

Baxter International, Inc.

     Call         USD         72.50         1/17/15         82         (12,013

Becton Dickinson and Co.

     Call         USD         130.40         1/17/15         50         (45,960

Becton Dickinson and Co.

     Call         USD         140.00         1/17/15         50         (8,750

BioCryst Pharmaceuticals, Inc.

     Call         USD         12.00         1/17/15         60         (4,320

Biogen Idec, Inc.

     Call         USD         355.00         1/17/15         57         (30,780

Cardinal Health, Inc.

     Call         USD         82.50         1/17/15         207         (12,420

Celldex Therapeutics, Inc.

     Call         USD         22.00         1/17/15         80         (1,000

Cerner Corp.

     Call         USD         65.00         1/17/15         127         (12,700

Cigna Corp.

     Call         USD         105.00         1/17/15         173         (15,137

Clovis Oncology, Inc.

     Call         USD         60.00         1/17/15         66         (7,920

The Cooper Cos., Inc.

     Call         USD         170.00         1/17/15         46         (5,750

Covidien PLC

     Call         USD         100.00         1/17/15         122         (51,850

DENTSPLY International, Inc.

     Call         USD         55.00         1/17/15         45         (1,350

Edwards Lifesciences Corp.

     Call         USD         135.00         1/17/15         131         (5,240

Envision Healthcare Holdings, Inc.

     Call         USD         35.00         1/17/15         205         (14,350

Express Scripts Holding Co.

     Call         USD         82.50         1/17/15         37         (10,286

Illumina, Inc.

     Call         USD         195.00         1/17/15         90         (36,000

Incyte Corp.

     Call         USD         72.50         1/17/15         20         (6,400

Infinity Pharmaceuticals, Inc.

     Call         USD         17.50         1/17/15         185         (16,187

Insulet Corp.

     Call         USD         45.00         1/17/15         30         (6,825

Isis Pharmaceuticals, Inc.

     Call         USD         65.00         1/17/15         133         (24,272

Jazz Pharmaceuticals PLC

     Call         USD         175.00         1/17/15         25         (4,875

Mallinckrodt PLC

     Call         USD         95.00         1/17/15         117         (67,275

McKesson Corp.

     Call         USD         210.00         1/17/15         126         (28,665

Merck & Co., Inc.

     Call         USD         60.00         1/17/15         88         (1,144

Mylan, Inc.

     Call         USD         57.50         1/17/15         235         (19,387

Neurocrine Biosciences, Inc.

     Call         USD         20.00         1/17/15         212         (102,820

Pfizer, Inc.

     Call         USD         31.00         1/17/15         350         (19,250

Puma Biotechnology, Inc.

     Call         USD         225.00         1/17/15         38         (9,880

Receptos, Inc.

     Call         USD         140.00         1/17/15         35         (2,888

Regeneron Pharmaceuticals, Inc.

     Call         USD         410.00         1/17/15         40         (55,200

Salix Pharmaceuticals Ltd.

     Call         USD         120.00         1/17/15         34         (11,730

Seattle Genetics, Inc.

     Call         USD         35.00         1/17/15         50         (2,375

Stryker Corp.

     Call         USD         90.00         1/17/15         102         (52,530

Stryker Corp.

     Call         USD         95.00         1/17/15         120         (21,900

Teva Pharmaceutical Industries Ltd. — ADR

     Call         USD         60.00         1/17/15         115         (4,198

Thoratec Corp.

     Call         USD         33.00         1/17/15         50         (2,625

Valeant Pharmaceuticals International, Inc.

     Call         USD         140.00         1/17/15         52         (34,320

Valeant Pharmaceuticals International, Inc.

     Call         USD         150.00         1/17/15         40         (8,000

Vertex Pharmaceuticals, Inc.

     Call         USD         120.00         1/17/15         71         (29,110

Zoetis, Inc.

     Call         USD         45.00         1/17/15         96         (3,840

Aetna, Inc.

     Call         USD         92.00         1/23/15         99         (6,386

Agios Pharmaceuticals, Inc.

     Call         USD         85.25         1/23/15         64         (174,150

Amgen, Inc.

     Call         USD         172.50         1/23/15         125         (10,125

BioMarin Pharmaceutical, Inc.

     Call         USD         83.75         1/23/15         200         (166,568

Celgene Corp.

     Call         USD         120.00         1/23/15         347         (44,242

Express Scripts Holding Co.

     Call         USD         86.00         1/23/15         20         (1,910

Intuitive Surgical, Inc.

     Call         USD         540.00         1/23/15         22         (40,370

Medivation, Inc.

     Call         USD         112.00         1/23/15         63         (8,032

Shire PLC — ADR

     Call         USD         217.50         1/23/15         52         (24,700

Covidien PLC

     Call         USD         103.70         1/26/15         121         (22,337

Alexion Pharmaceuticals, Inc.

     Call         USD         195.00         1/30/15         180         (75,600

Amgen, Inc.

     Call         USD         170.00         1/30/15         88         (14,872

Biogen Idec, Inc.

     Call         USD         352.50         1/30/15         45         (49,725

Bristol-Myers Squibb Co.

     Call         USD         62.50         1/30/15         350         (23,450

Eli Lilly & Co.

     Call         USD         72.00         1/30/15         143         (9,652

Gilead Sciences, Inc.

     Call         USD         108.00         1/30/15         100         (5,300

HCA Holdings, Inc.

     Call         USD         76.00         1/30/15         217         (27,125

Medtronic, Inc.

     Call         USD         73.50         1/30/15         235         (30,550

 

54    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock Health Sciences Trust (BME)   

 

As of December 31, 2014, exchange-traded options written were as follows: (concluded)

 

Description    Put/
Call
     Strike
Price
     Expiration
Date
     Contracts      Market
Value
 

Pfizer, Inc.

     Call         USD         32.00         1/30/15         55       $ (1,952

Teva Pharmaceutical Industries Ltd. — ADR

     Call         USD         58.50         1/30/15         70         (8,295

UnitedHealth Group, Inc.

     Call         USD         103.00         1/30/15         317         (58,962

Vertex Pharmaceuticals, Inc.

     Call         USD         118.00         1/30/15         51         (38,505

Johnson & Johnson

     Call         USD         107.00         2/06/15         10         (1,205

Zimmer Holdings, Inc.

     Call         USD         115.00         2/06/15         47         (16,733

Johnson & Johnson

     Call         USD         107.00         2/13/15         11         (1,524

Universal Health Services, Inc., Class B

     Call         USD         109.75         2/13/15         110         (55,713

Abbott Laboratories

     Call         USD         47.00         2/20/15         215         (9,890

Acceleron Pharma, Inc.

     Call         USD         45.00         2/20/15         36         (5,670

Anacor Pharmaceuticals, Inc.

     Call         USD         35.00         2/20/15         37         (4,810

Bluebird Bio, Inc.

     Call         USD         85.00         2/20/15         11         (16,995

Cyberonics, Inc.

     Call         USD         60.00         2/20/15         41         (5,842

Gilead Sciences, Inc.

     Call         USD         100.00         2/20/15         63         (19,687

Johnson & Johnson

     Call         USD         110.00         2/20/15         242         (15,125

Karyopharm Therapeutics, Inc.

     Call         USD         45.00         2/20/15         108         (9,720

Merck & Co., Inc.

     Call         USD         62.50         2/20/15         48         (1,128

Perrigo Co. PLC

     Call         USD         165.00         2/20/15         95         (79,325

Pfizer, Inc.

     Call         USD         32.00         2/20/15         55         (2,558

Vertex Pharmaceuticals, Inc.

     Call         USD         125.00         2/20/15         25         (16,875

Acceleron Pharma, Inc.

     Call         USD         40.50         3/05/15         51         (17,395

DexCom, Inc.

     Call         USD         60.00         3/20/15         80         (21,800

Total

                  $ (2,478,467
                 

 

 

 

 

Ÿ  

As of December 31, 2014, over-the-counter options written were as follows:

 

Description   Counterparty      Put/
Call
       Strike
Price
       Expiration
Date
       Contracts        Market
Value
 

Novartis AG

  Deutsche Bank AG        Call           CHF         87.77           1/06/15           15,500         $ (70,368

PW Medtech Group Ltd.

  Citibank N.A.        Call           HKD         4.79           1/06/15           175,000             

Actelion Ltd.

  Deutsche Bank AG        Call           CHF         113.63           1/07/15           1,200           (2,731

Boston Scientific Corp.

  Goldman Sachs International        Call           USD         13.25           1/08/15           40,100           (10,606

Coloplast A/S, Class B

  Deutsche Bank AG        Call           DKK         518.16           1/08/15           5,200           (4,181

Roche Holding AG

  UBS AG        Call           CHF         290.80           1/08/15           5,000           (28

St. Jude Medical, Inc.

  Morgan Stanley & Co. International PLC        Call           USD         68.05           1/08/15           15,500           (5,948

Dyax Corp.

  Credit Suisse International        Call           USD         13.43           1/14/15           19,700           (19,870

Alder Biopharmaceuticals, Inc.

  Credit Suisse International        Call           USD         29.16           1/22/15           7,000           (18,883

Intra-Cellular Therapies, Inc.

  Barclays Bank PLC        Call           USD         18.06           1/22/15           23,100           (16,939

Incyte Corp.

  UBS AG        Call           USD         69.75           1/23/15           10,000           (51,738

Charles River Laboratories International, Inc.

  Morgan Stanley & Co. International PLC        Call           USD         63.75           1/26/15           18,000           (42,582

Novartis AG

  UBS AG        Call           CHF         92.11           1/28/15           16,500           (32,523

AstraZeneca PLC

  Deutsche Bank AG        Call           GBP         47.06           1/29/15           12,500           (17,115

Bayer AG

  Goldman Sachs International        Call           EUR         110.43           2/03/15           8,500           (48,289

Chugai Pharmaceutical Co. Ltd.

  UBS AG        Call           JPY         3,345.60           2/03/15           20,000           (3,115

PW Medtech Group Ltd.

  UBS AG        Call           HKD         3.66           2/03/15           78,000           (742

Actelion Ltd.

  Deutsche Bank AG        Call           CHF         114.42           2/04/15           3,400           (15,200

Boston Scientific Corp.

  Goldman Sachs International        Call           USD         13.45           2/05/15           47,700           (25,339

AstraZeneca PLC

  Deutsche Bank AG        Call           GBP         44.76           2/06/15           11,500           (34,283

Eisai Co. Ltd.

  Goldman Sachs International        Call           JPY         4,946.24           2/06/15           15,000           (5,913

Genomic Health, Inc.

  Deutsche Bank AG        Call           USD         33.84           2/12/15           8,000           (10,110

Total

                              $ (436,503
                             

 

 

 

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value

 

     ANNUAL REPORT    DECEMBER 31, 2014    55


Schedule of Investments (concluded)      BlackRock Health Sciences Trust (BME)   

 

 

measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, refer to Note 2 of the Notes to Financial Statements.

As of December 31, 2014, the following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy:

 

      Level 1   Level 2   Level 3    Total

Assets:

                 

Investments:

                 

Long-Term Investments:

                 

Common Stocks:

                 

Biotechnology

     $ 86,364,596       $ 3,815,128       $ 251,899        $ 90,431,623  

Health Care Equipment & Supplies

       54,400,872         912,889                  55,313,761  

Health Care Providers & Services

       43,377,029                          43,377,029  

Health Care Technology

       2,224,304                          2,224,304  

Life Sciences Tools & Services

       9,777,004                          9,777,004  

Pharmaceuticals

       80,387,311         20,937,965                  101,325,276  

Preferred Stocks

                       425,376          425,376  

Short-Term Securities

       3,271,616                          3,271,616  
    

 

 

 

Total

     $ 279,802,732       $ 25,665,982       $ 677,275        $ 306,145,989  
    

 

 

 
                 
      Level 1   Level 2   Level 3    Total

Derivative Financial Instruments1

                 

Liabilities:

                 

Equity contracts

     $ (1,817,767 )     $ (1,097,203 )              $ (2,914,970 )
    

 

 

 

1    Derivative financial instruments are options written, which are shown at value.

       

During the period ended December 31, 2014, there were no transfers between levels.

 

 

56    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments December 31, 2014      BlackRock International Growth and Income Trust (BGY)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Belgium — 2.6%

     

Anheuser-Busch InBev NV

     195,346       $ 21,984,564   

Canada — 5.4%

     

Element Financial Corp. (a)

     936,300         11,395,491   

Enbridge, Inc.

     103,800         5,337,418   

Gildan Activewear, Inc. (b)

     107,800         6,096,109   

Lundin Mining Corp. (a)

     1,907,300         9,390,391   

MEG Energy Corp. (a)

     302,100         5,083,538   

Suncor Energy, Inc.

     122,500         3,890,730   

Tourmaline Oil Corp. (a)

     109,072         3,633,230   
     

 

 

 
                44,826,907   

China — 8.9%

     

Alibaba Group Holding — ADR (a)(b)

     150,074         15,598,692   

Anhui Conch Cement Co. Ltd., Class H

     1,068,440         3,955,755   

Baidu, Inc. — ADR (a)(b)

     99,120         22,596,386   

Beijing Enterprises Water Group Ltd.

     8,542,000         5,771,895   

CSR Corp Ltd., Class H (Acquired 7/29/14, cost $6,077,241) (c)

     3,013,000         4,056,369   

Qunar Cayman Islands Ltd. — ADR (a)(b)

     581,700         16,537,731   

Tencent Holdings Ltd.

     407,800         5,916,128   
     

 

 

 
                74,432,956   

France — 5.7%

     

AXA SA

     584,300         13,464,082   

BNP Paribas SA

     157,500         9,297,891   

Orange SA

     562,400         9,564,601   

Schneider Electric SE

     108,600         7,909,277   

Unibail-Rodamco SE — REIT

     29,100         7,465,206   
     

 

 

 
                47,701,057   

Germany — 3.7%

     

Bayer AG

     93,900         12,799,397   

Continental AG

     28,200         5,948,038   

DMG MORI SEIKI AG

     133,254         3,747,212   

Henkel AG & Co. KGaA

     26,700         2,876,075   

Infineon Technologies AG

     522,485         5,528,876   
     

 

 

 
                30,899,598   

Hong Kong — 2.6%

     

AIA Group Ltd.

     1,955,152         10,783,578   

Melco Crown Entertainment Ltd. — ADR

     242,100         6,149,340   

MTR Corp. Ltd.

     1,192,000         4,876,789   
     

 

 

 
                21,809,707   

India — 3.0%

     

HDFC Bank Ltd.

     578,202         9,894,171   

ITC Ltd.

     873,700         5,103,302   

Tata Motors Ltd. — ADR (b)(d)

     240,200         10,155,656   
     

 

 

 
                25,153,129   

Indonesia — 0.9%

     

Global Mediacom Tbk PT

     23,528,302         2,695,827   

Matahari Department Store Tbk PT

     3,998,580         4,818,133   
     

 

 

 
                7,513,960   

Ireland — 5.2%

     

Dalata Hotel Group PLC (a)

     1,128,668         4,015,300   

Green REIT PLC (a)

     5,880,126         9,107,539   

Kingspan Group PLC

     303,813         5,126,262   

Ryanair Holdings PLC — ADR (a)

     182,886         13,034,285   

Shire PLC — ADR (b)

     56,900         12,093,526   
     

 

 

 
                43,376,912   

Israel — 2.1%

     

Teva Pharmaceutical Industries Ltd. — ADR (b)

     304,300         17,500,293   

Italy — 2.0%

     

Banca Generali SpA (b)

     321,400         8,939,186   
Common Stocks    Shares      Value  

Italy (concluded)

     

UniCredit SpA

     1,247,700       $ 7,992,303   
     

 

 

 
                16,931,489   

Japan — 9.5%

     

FANUC Corp.

     63,400         10,453,417   

Japan Tobacco, Inc.

     317,800         8,746,742   

Kenedix Office Investment Corp. — REIT

     937         5,303,557   

Makita Corp.

     130,900         5,988,746   

Mitsubishi Estate Co. Ltd.

     485,000         10,219,375   

Nabtesco Corp.

     313,500         7,576,872   

ORIX Corp.

     453,900         5,711,332   

Shinsei Bank Ltd.

     4,147,000         7,217,515   

SMC Corp.

     25,200         6,608,047   

Toyota Motor Corp.

     185,600         11,566,108   
     

 

 

 
                79,391,711   

Mexico — 0.6%

     

Cemex SAB de CV — ADR (a)

     503,848         5,134,211   

Netherlands — 4.2%

     

Aalberts Industries NV

     215,052         6,342,124   

ASML Holding NV

     83,900         9,065,206   

Royal Dutch Shell PLC, A Shares

     599,700         19,987,548   
     

 

 

 
                35,394,878   

New Zealand — 0.7%

     

Xero Ltd. (a)(e)

     164,700         2,051,671   

Xero Ltd. (Acquired 10/15/13, cost $4,566,935) (a)(c)

     300,605         3,744,641   
     

 

 

 
                5,796,312   

Norway — 0.9%

     

Statoil ASA

     436,500         7,685,384   

Peru — 0.7%

     

Credicorp Ltd. (b)

     33,500         5,366,030   

South Africa — 1.2%

     

Naspers Ltd., N Shares

     79,200         10,244,935   

South Korea — 2.1%

     

Coway Co. Ltd.

     57,300         4,369,219   

Samsung Electronics Co. Ltd.

     6,600         7,934,814   

SK Hynix, Inc. (a)

     119,700         5,115,430   
     

 

 

 
                17,419,463   

Spain — 1.9%

     

NH Hotel Group SA (a)

     2,109,078         10,076,437   

Sacyr SA (a)

     1,781,450         6,091,802   
     

 

 

 
                16,168,239   

Sweden — 1.4%

     

Nordea Bank AB

     1,004,536         11,628,293   

Switzerland — 8.3%

     

Actelion Ltd.

     42,515         4,894,373   

Novartis AG

     337,200         31,273,100   

Roche Holding AG

     84,323         22,846,661   

UBS Group AG

     587,300         10,095,511   
     

 

 

 
                69,109,645   

Taiwan — 0.7%

     

Hermes Microvision, Inc.

     114,437         5,723,070   

United Kingdom — 17.1%

     

ARM Holdings PLC

     812,300         12,478,887   

AstraZeneca PLC

     254,100         17,947,308   

BAE Systems PLC

     589,100         4,308,212   

Crest Nicholson Holdings PLC

     1,615,546         9,724,872   

Foxtons Group PLC

     2,172,418         5,420,166   

Hargreaves Lansdown PLC

     215,177         3,366,858   
 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    57


Schedule of Investments (continued)      BlackRock International Growth and Income Trust (BGY)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

United Kingdom (concluded)

     

Imperial Tobacco Group PLC

     432,300       $ 19,029,661   

Liberty Global PLC, Class A (a)(b)

     311,700         15,648,899   

Lloyds Banking Group PLC (a)

     5,364,900         6,310,530   

Metro Bank PLC (Acquired 1/15/14, cost $4,917,700) (a)(c)

     231,026         4,688,215   

Nomad Holdings Ltd. (a)

     475,571         5,158,479   

Polypipe Group PLC

     1,451,940         5,555,474   

Prudential PLC

     397,200         9,183,076   

SABMiller PLC

     117,200         6,109,785   

Vodafone Group PLC

     2,409,900         8,262,667   

Whitbread PLC

     133,700         9,894,651   
     

 

 

 
                143,087,740   

United States — 2.7%

     

Euronet Worldwide, Inc. (a)(b)(d)

     141,793         7,784,436   

Las Vegas Sands Corp. (b)

     69,000         4,013,040   

Samsonite International SA

     3,602,100         10,674,632   
     

 

 

 
                22,472,108   

Total Common Stocks — 94.1%

              786,752,591   
     
Investment Companies                

United Kingdom — 0.8%

     

Kennedy Wilson Europe Real Estate PLC

     429,439         7,061,380   
     
Preferred Stocks                

India — 0.5%

     

Snapdeal.com, Series F (Acquired 5/07/14, cost $2,799,733), 0.00% (a)(c)

     398         3,096,579   

Snapdeal.com, Series G (Acquired 10/31/14, cost $1,112,870), 0.00% (a)(c)

     132         1,090,507   

Total Preferred Stocks — 0.5%

              4,187,086   
                   
Warrants (f)    Shares      Value  

United Kingdom — 0.0%

     

Nomad Holdings Ltd., Expires 4/18/17 (a)

     475,571       $ 244,919   

Total Long-Term Investments

(Cost — $763,526,599) — 95.4%

              798,245,976   
     
Short-Term Securities                

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.04% (g)(h)

     38,787,564         38,787,564   
      Beneficial
Interest  
(000)    
         

BlackRock Liquidity Series, LLC Money Market Series, 0.20% (g)(h)(i)

   $ 870         870,139   

Total Short-Term Securities

(Cost — $39,657,703) — 4.8%

              39,657,703   

Total Investments Before Options Written

(Cost — $803,184,302) — 100.2%

              837,903,679   
     
Options Written                

(Premiums Received — $9,784,983) — (1.3)%

  

     (10,585,312

Total Investments Net of Options Written — 98.9%

  

     827,318,367   

Other Assets Less Liabilities — 1.1%

        9,233,387   
     

 

 

 

Net Assets — 100.0%

      $ 836,551,754   
     

 

 

 

 

 
Notes to Schedule of Investments

 

(a) Non-income producing security.

 

(b) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(c) Restricted securities as to resale. As of December 31, 2014 the Trust held 2.0% of its net assets, with a current market value of $16,676,311 and its original cost of $19,474,479, in the security.

 

(d) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(e) Security, or a portion of security, is on loan.

 

(f) Warrants entitle the Trust to purchase a predetermined number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date of the warrants, if any.

 

(g) During the period ended December 31, 2014, Investments in issuers considered to be an affiliate of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliates   

Shares/
Beneficial Interest
Held at
October 31,

2014

    

Net

Activity

    Shares/
Beneficial Interest
Held at
December  31,
2014
     Income      Realized
Gain
 

BlackRock Liquidity Funds, TempFund, Institutional Class

     19,071,027         19,716,537        38,787,564       $ 926       $ 1,296   

BlackRock Liquidity Series, LLC, Money Market Series

   $ 1,854,728       $ (984,589   $ 870,139       $ 4,290           

 

See Notes to Financial Statements.

 

58    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock International Growth and Income Trust (BGY)   

 

 

(h) Represents the current yield as of report date.

 

(i) Security was purchased with the cash collateral from loaned securities. The Trust may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

 

Ÿ  

As of December 31, 2014 , exchange-traded options written were as follows:

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Baidu, Inc. — ADR

     Call         USD         237.50         1/09/15         400       $ (41,000

Las Vegas Sands Corp.

     Call         USD         61.00         1/09/15         83         (1,619

Teva Pharmaceutical Industries Ltd. — ADR

     Call         USD         59.00         1/09/15         336         (11,256

Teva Pharmaceutical Industries Ltd. — ADR

     Call         USD         59.50         1/09/15         336         (7,896

Alibaba Group Holding — ADR

     Call         USD         110.00         1/17/15         174         (15,225

Credicorp Ltd.

     Call         USD         165.00         1/17/15         83         (10,583

Euronet Worldwide, Inc.

     Call         USD         55.00         1/17/15         132         (18,480

Gildan Activewear, Inc.

     Call         CAD         68.00         1/17/15         300         (11,878

Las Vegas Sands Corp.

     Call         USD         67.25         1/17/15         180         (270

Liberty Global PLC, Class A

     Call         USD         47.50         1/17/15         541         (171,769

Qunar Cayman Islands Ltd. — ADR

     Call         USD         30.00         1/17/15         500         (23,750

Tata Motors Ltd. — ADR

     Call         USD         47.00         1/17/15         373         (5,595

Teva Pharmaceutical Industries Ltd. — ADR

     Call         USD         60.00         1/17/15         672         (24,528

Alibaba Group Holding — ADR

     Call         USD         109.00         1/23/15         296         (47,360

Baidu, Inc. — ADR

     Call         USD         247.50         1/23/15         100         (12,250

Shire PLC — ADR

     Call         USD         217.50         1/23/15         124         (58,900

Alibaba Group Holding — ADR

     Call         USD         112.00         1/30/15         300         (38,250

Shire PLC — ADR

     Call         USD         222.50         1/30/15         170         (68,850

Teva Pharmaceutical Industries Ltd. — ADR

     Call         USD         58.50         1/30/15         215         (25,479

Tata Motors Ltd. — ADR

     Call         USD         44.00         2/06/15         184         (17,480

Banca Generali SpA

     Call         EUR         24.00         2/20/15         37         (1,278

Credicorp Ltd.

     Call         USD         170.00         2/20/15         84         (16,590

Euronet Worldwide, Inc.

     Call         USD         60.00         2/20/15         260         (23,400

Las Vegas Sands Corp.

     Call         USD         62.50         2/20/15         83         (8,217

Total

                  $ (661,903
                 

 

 

 

 

Ÿ  

As of December 31, 2014 , over-the-counter options written were as follows:

 

Description   Counterparty      Put/
Call
      

Strike

Price

       Expiration
Date
       Contracts        Market
Value
 

AIA Group Ltd.

  BNP Paribas S.A.        Call           HKD         45.85           1/06/15           570,000         $ (558

ARM Holdings PLC

  Goldman Sachs International        Call           GBP         8.88           1/06/15           167,000           (255,178

Euronet Worldwide, Inc.

  Goldman Sachs International        Call           USD         57.07           1/06/15           31,700           (7,030

Kenedix Office Investment Corp. — REIT

  Bank of America N.A.        Call           JPY         616,080.00           1/06/15           72           (37,209

Kenedix Office Investment Corp. — REIT

  Citibank N.A.        Call           JPY         629,340.00           1/06/15           130           (52,860

Mitsubishi Estate Co. Ltd.

  UBS AG        Call           JPY         2,871.03           1/06/15           57,000           (14

MTR Corp. Ltd.

  UBS AG        Call           HKD         32.03           1/06/15           162,000           (2,490

Nabtesco Corp.

  UBS AG        Call           JPY         2,901.78           1/06/15           116,000           (43,789

Nabtesco Corp.

  UBS AG        Call           JPY         2,909.98           1/06/15           20,000           (6,734

Novartis AG

  Deutsche Bank AG        Call           CHF         87.77           1/06/15           94,000           (426,747

Ryanair Holdings PLC — ADR

  Credit Suisse International        Call           USD         63.08           1/06/15           42,000           (344,215

Samsonite International SA

  Citibank N.A.        Call           HKD         27.54           1/06/15           210,000             

Samsonite International SA

  Morgan Stanley & Co. International PLC        Call           HKD         26.60           1/06/15           126,000             

Shinsei Bank Ltd.

  UBS AG        Call           JPY         223.18           1/06/15           682,000           (583

SMC Corp.

  UBS AG        Call           JPY         31,059.00           1/06/15           13,500           (80,811

Toyota Motor Corp.

  Morgan Stanley & Co. International PLC        Call           JPY         7,108.38           1/06/15           25,000           (75,646

Actelion Ltd.

  Deutsche Bank AG        Call           CHF         113.63           1/07/15           35,000           (79,645

DMG MORI SEIKI AG

  Deutsche Bank AG        Call           EUR         20.84           1/07/15           23,500           (69,301

Henkel AG & Co. KGaA

  Deutsche Bank AG        Call           EUR         84.41           1/07/15           12,000           (68,205

Imperial Tobacco Group PLC

  Bank of America N.A.        Call           GBP         29.20           1/07/15           68,000           (4,894

Lundin Mining Corp.

  Deutsche Bank AG        Call           CAD         5.20           1/07/15           524,500           (240,391

Nordea Bank AB

  Bank of America N.A.        Call           SEK         92.97           1/07/15           242,000           (4,047

Qunar Cayman Islands Ltd. — ADR

  Morgan Stanley & Co. International PLC        Call           USD         26.78           1/07/15           147,000           (259,745

Aalberts Industries NV

  Morgan Stanley & Co. International PLC        Call           EUR         21.28           1/08/15           25,000           (94,132

Beijing Enterprises Water Group Ltd.

  Citibank N.A.        Call           HKD         5.55           1/08/15           400,000           (59

Cemex SAB de CV — ADR

  Deutsche Bank AG        Call           USD         12.72           1/08/15           138,300           (1

Continental AG

  Deutsche Bank AG        Call           EUR         159.49           1/08/15           15,500           (278,267

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    59


Schedule of Investments (continued)      BlackRock International Growth and Income Trust (BGY)   

 

As of December 31, 2014 , over-the-counter options written were as follows: (continued)

 

Description   Counterparty      Put/
Call
      

Strike

Price

       Expiration
Date
       Contracts        Market
Value
 

Element Financial Corp.

  Deutsche Bank AG        Call           CAD         14.23           1/08/15           84,000         $ (11,867

Hargreaves Lansdown PLC

  Bank of America N.A.        Call           GBP         10.06           1/08/15           94,000           (22,190

Lloyds Banking Group PLC

  Morgan Stanley & Co. International PLC        Call           GBP         0.77           1/08/15           982,000           (8,117

NH Hotel Group SA

  Bank of America N.A.        Call           EUR         3.68           1/08/15           75,000           (26,827

Orange SA

  Deutsche Bank AG        Call           EUR         13.29           1/08/15           180,000           (176,906

Prudential PLC

  Bank of America N.A.        Call           GBP         14.77           1/08/15           59,500           (23,329

Roche Holding AG

  UBS AG        Call           CHF         290.80           1/08/15           80,000           (451

Vodafone Group PLC

  Deutsche Bank AG        Call           GBP         2.33           1/08/15           662,000           (2,142

Whitbread PLC

  Morgan Stanley & Co. International PLC        Call           GBP         44.72           1/08/15           46,000           (200,778

Anheuser-Busch InBev NV

  Morgan Stanley & Co. International PLC        Call           EUR         93.36           1/12/15           61,200           (100,103

ARM Holdings PLC

  Goldman Sachs International        Call           GBP         9.18           1/12/15           217,000           (238,149

SABMiller PLC

  Goldman Sachs International        Call           GBP         34.19           1/13/15           37,500           (22,936

Aalberts Industries NV

  Morgan Stanley & Co. International PLC        Call           EUR         21.92           1/14/15           24,300           (72,276

Beijing Enterprises Water Group Ltd.

  Morgan Stanley & Co. International PLC        Call           HKD         5.45           1/14/15           1,000,000           (2,448

Beijing Enterprises Water Group Ltd.

  UBS AG        Call           HKD         5.57           1/14/15           1,330,000           (652

Element Financial Corp.

  Deutsche Bank AG        Call           CAD         14.74           1/14/15           215,500           (13,850

Japan Tobacco, Inc.

  Goldman Sachs International        Call           JPY         3,733.20           1/14/15           174,500           (1,929

Kenedix Office Investment Corp. — REIT

  Bank of America N.A.        Call           JPY         616,080.00           1/14/15           72           (37,797

Makita Corp.

  Citibank N.A.        Call           JPY         6,109.80           1/14/15           20,500           (832

Mitsubishi Estate Co. Ltd.

  Morgan Stanley & Co. International PLC        Call           JPY         2,652.51           1/14/15           84,000           (11,933

MTR Corp. Ltd.

  UBS AG        Call           HKD         31.16           1/14/15           167,500           (15,278

Nabtesco Corp.

  Citibank N.A.        Call           JPY         2,944.40           1/14/15           65,000           (26,610

Naspers Ltd., N Shares

  Goldman Sachs International        Call           ZAR         1,504.50           1/14/15           33,500           (134,091

Prudential PLC

  Goldman Sachs International        Call           GBP         15.49           1/14/15           47,000           (3,959

Samsonite International SA

  Morgan Stanley & Co. International PLC        Call           HKD         27.24           1/14/15           126,000           (3

Samsonite International SA

  Morgan Stanley & Co. International PLC        Call           HKD         27.93           1/14/15           189,000           (3

NH Hotel Group SA

  Goldman Sachs International        Call           EUR         3.91           1/15/15           75,000           (15,805

Shinsei Bank Ltd.

  UBS AG        Call           JPY         223.18           1/16/15           673,000           (3,905

Anhui Conch Cement Co. Ltd., Class H

  BNP Paribas S.A.        Call           HKD         27.64           1/17/15           530,000           (119,488

Samsonite International SA

  Morgan Stanley & Co. International PLC        Call           HKD         28.20           1/20/15           189,000           (6

Aalberts Industries NV

  Goldman Sachs International        Call           EUR         23.15           1/21/15           23,000           (38,219

Beijing Enterprises Water Group Ltd.

  Morgan Stanley & Co. International PLC        Call           HKD         5.45           1/21/15           1,000,000           (4,140

Beijing Enterprises Water Group Ltd.

  UBS AG        Call           HKD         5.59           1/21/15           250,000           (375

DMG MORI SEIKI AG

  UBS AG        Call           EUR         21.87           1/21/15           24,900           (48,597

Element Financial Corp.

  Deutsche Bank AG        Call           CAD         14.74           1/21/15           215,500           (22,483

Hargreaves Lansdown PLC

  Morgan Stanley & Co. International PLC        Call           GBP         9.87           1/21/15           25,000           (13,304

Kenedix Office Investment Corp. — REIT

  Bank of America N.A.        Call           JPY         662,290.00           1/21/15           88           (18,433

NH Hotel Group SA

  Morgan Stanley & Co. International PLC        Call           EUR         3.94           1/21/15           80,000           (18,066

ORIX Corp.

  Morgan Stanley & Co. International PLC        Call           JPY         1,567.65           1/21/15           100,000           (18,763

Statoil ASA

  Goldman Sachs International        Call           NOK         123.73           1/21/15           83,200           (110,555

Tencent Holdings Ltd.

  UBS AG        Call           HKD         115.44           1/21/15           205,000           (51,373

Toyota Motor Corp.

  Morgan Stanley & Co. International PLC        Call           JPY         7,593.22           1/21/15           8,000           (9,380

ASML Holding NV

  Bank of America N.A.        Call           EUR         86.65           1/22/15           12,200           (60,467

Gildan Activewear, Inc.

  Deutsche Bank AG        Call           CAD         66.86           1/22/15           30,000           (35,259

Lloyds Banking Group PLC

  Goldman Sachs International        Call           GBP         0.80           1/22/15           987,000           (6,483

Naspers Ltd., N Shares

  UBS AG        Call           ZAR         1,465.75           1/22/15           8,000           (54,302

Nordea Bank AB

  Goldman Sachs International        Call           SEK         95.14           1/22/15           138,000           (3,417

Qunar Cayman Islands Ltd. — ADR

  Goldman Sachs International        Call           USD         29.70           1/22/15           50,000           (34,753

Samsung Electronics Co. Ltd.

  Goldman Sachs International        Call           KRW         1,368,195.95           1/23/15           3,300           (72,776

Schneider Electric SE

  Deutsche Bank AG        Call           EUR         62.51           1/23/15           54,000           (46,487

Liberty Global PLC, Class A

  Goldman Sachs International        Call           USD         48.81           1/26/15           105,000           (272,302

Unibail-Rodamco SE — REIT

  Bank of America N.A.        Call           EUR         203.21           1/26/15           6,500           (86,669

AIA Group Ltd.

  Citibank N.A.        Call           HKD         44.51           1/27/15           273,000           (17,465

Infineon Technologies AG

  Deutsche Bank AG        Call           EUR         8.53           1/27/15           287,500           (131,488

MTR Corp. Ltd.

  UBS AG        Call           HKD         31.16           1/27/15           167,500           (17,605

NH Hotel Group SA

  Goldman Sachs International        Call           EUR         3.91           1/27/15           75,000           (20,479

 

See Notes to Financial Statements.

 

60    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock International Growth and Income Trust (BGY)   

 

As of December 31, 2014 , over-the-counter options written were as follows: (continued)

 

Description    Counterparty    Put/
Call
      

Strike

Price

       Expiration
Date
     Contracts      Market
Value
 

Ryanair Holdings PLC — ADR

   UBS AG      Call           USD         62.32           1/27/15         47,000       $ (443,901

SK Hynix, Inc.

   Citibank N.A.      Call           KRW         49,731.12           1/27/15         59,800         (53,804

Aalberts Industries NV

   Bank of America N.A.      Call           EUR         23.15           1/28/15         23,000         (40,040

Beijing Enterprises Water Group Ltd.

   Morgan Stanley & Co. International PLC      Call           HKD         5.47           1/28/15         124,000         (596

Enbridge, Inc.

   Goldman Sachs International      Call           CAD         56.49           1/28/15         26,000         (85,745

FANUC Corp.

   Morgan Stanley & Co. International PLC      Call           JPY         20,418.00           1/28/15         3,800         (11,463

Henkel AG & Co. KGaA

   Deutsche Bank AG      Call           EUR         87.41           1/28/15         1,400         (4,771

Kenedix Office Investment Corp. — REIT

   Goldman Sachs International      Call           JPY         634,440.00           1/28/15         53         (21,058

Kingspan Group PLC

   Bank of America N.A.      Call           EUR         13.50           1/28/15         5,000         (3,912

NH Hotel Group SA

   Morgan Stanley & Co. International PLC      Call           EUR         3.94           1/28/15         80,000         (20,803

Novartis AG

   UBS AG      Call           CHF         92.11           1/28/15         95,000         (187,252

Royal Dutch Shell PLC, A Shares

   Deutsche Bank AG      Call           EUR         28.11           1/28/15         37,000         (20,710

Royal Dutch Shell PLC, A Shares

   Goldman Sachs International      Call           EUR         26.29           1/28/15         60,000         (117,088

Samsonite International SA

   Morgan Stanley & Co. International PLC      Call           HKD         25.49           1/28/15         232,500         (2,804

AstraZeneca PLC

   Deutsche Bank AG      Call           GBP         47.06           1/29/15         19,000         (26,015

Nordea Bank AB

   Goldman Sachs International      Call           SEK         87.64           1/29/15         140,000         (62,112

Qunar Cayman Islands Ltd. — ADR

   Credit Suisse International      Call           USD         31.27           1/29/15         50,000         (22,458

SABMiller PLC

   Goldman Sachs International      Call           GBP         33.07           1/29/15         21,000         (40,457

UBS Group AG

   UBS AG      Call           CHF         16.84           1/29/15         305,800         (174,941

Whitbread PLC

   Morgan Stanley & Co. International PLC      Call           GBP         45.19           1/29/15         21,000         (85,950

Anheuser-Busch InBev NV

   Morgan Stanley & Co. International PLC      Call           EUR         93.77           2/03/15         39,000         (111,135

ASML Holding NV

   UBS AG      Call           EUR         88.14           2/03/15         29,500         (136,639

Bayer AG

   Goldman Sachs International      Call           EUR         110.43           2/03/15         48,000         (272,690

Coway Co. Ltd.

   Morgan Stanley & Co. International PLC      Call           KRW         88,988.34           2/03/15         14,400         (26,122

Hermes Microvision, Inc.

   Goldman Sachs International      Call           TWD         1,575.90           2/03/15         31,000         (87,642

Makita Corp.

   Goldman Sachs International      Call           JPY         5,726.24           2/03/15         45,000         (36,430

Mitsubishi Estate Co. Ltd.

   UBS AG      Call           JPY         2,690.88           2/03/15         135,000         (44,434

ORIX Corp.

   Citibank N.A.      Call           JPY         1,524.71           2/03/15         125,000         (51,243

Vodafone Group PLC

   Morgan Stanley & Co. International PLC      Call           GBP         2.29           2/03/15         662,000         (42,399

Kingspan Group PLC

   Bank of America N.A.      Call           EUR         13.50           2/04/15         5,000         (4,122

Unibail-Rodamco SE — REIT

   Deutsche Bank AG      Call           EUR         212.00           2/04/15         8,000         (51,616

Beijing Enterprises Water Group Ltd.

   Morgan Stanley & Co. International PLC      Call           HKD         5.47           2/05/15         124,000         (806

DMG MORI SEIKI AG

   Bank of America N.A.      Call           EUR         21.23           2/05/15         18,300         (51,884

Imperial Tobacco Group PLC

   Morgan Stanley & Co. International PLC      Call           GBP         28.79           2/05/15         68,000         (20,458

Lloyds Banking Group PLC

   Bank of America N.A.      Call           GBP         0.76           2/05/15         700,000         (17,428

Orange SA

   Morgan Stanley & Co. International PLC      Call           EUR         14.33           2/05/15         150,000         (85,731

Toyota Motor Corp.

   Morgan Stanley & Co. International PLC      Call           JPY         7,322.50           2/05/15         64,000         (173,737

AstraZeneca PLC

   Deutsche Bank AG      Call           GBP         44.76           2/06/15         111,000         (330,903

AXA SA

   Deutsche Bank AG      Call           EUR         19.62           2/06/15         112,300         (40,745

AXA SA

   UBS AG      Call           EUR         18.33           2/06/15         188,700         (231,368

BAE Systems PLC

   Morgan Stanley & Co. International PLC      Call           GBP         4.54           2/06/15         294,500         (99,937

BNP Paribas SA

   Bank of America N.A.      Call           EUR         48.05           2/06/15         62,300         (173,790

Kenedix Office Investment Corp. — REIT

   Goldman Sachs International      Call           JPY         670,915.00           2/06/15         88         (18,544

NH Hotel Group SA

   Morgan Stanley & Co. International PLC      Call           EUR         3.81           2/06/15         75,000         (28,463

Samsonite International SA

   Morgan Stanley & Co. International PLC      Call           HKD         25.49           2/06/15         232,500         (4,204

Aalberts Industries NV

   Bank of America N.A.      Call           EUR         23.15           2/10/15         23,000         (41,478

AIA Group Ltd.

   UBS AG      Call           HKD         44.21           2/10/15         273,000         (27,652

Coway Co. Ltd.

   Morgan Stanley & Co. International PLC      Call           KRW         88,988.34           2/10/15         14,400         (30,602

MTR Corp. Ltd.

   Morgan Stanley & Co. International PLC      Call           HKD         31.16           2/10/15         100,000         (12,277

Royal Dutch Shell PLC, A Shares

   Deutsche Bank AG      Call           EUR         25.93           2/10/15         71,000         (168,783

Statoil ASA

   Deutsche Bank AG      Call           NOK         123.92           2/10/15         64,000         (91,971

ARM Holdings PLC

   UBS AG      Call           GBP         9.49           2/12/15         40,000         (35,844

Enbridge, Inc.

   Goldman Sachs International      Call           CAD         56.49           2/12/15         26,000         (86,186

FANUC Corp.

   Citibank N.A.      Call           JPY         20,069.67           2/12/15         29,000         (163,578

Hermes Microvision, Inc.

   Morgan Stanley & Co. International PLC      Call           TWD         1,533.02           2/12/15         28,000         (108,639

Samsonite International SA

   UBS AG      Call           HKD         23.67           2/12/15         229,800         (18,608

Crest Nicholson Holdings PLC

   Morgan Stanley & Co. International PLC      Call           GBP         3.90           2/13/15         80,000         (15,501

Lundin Mining Corp.

   Deutsche Bank AG      Call           CAD         5.60           2/13/15         425,000         (165,329

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    61


Schedule of Investments (continued)      BlackRock International Growth and Income Trust (BGY)   

 

Ÿ  

As of December 31, 2014, over-the-counter options written were as follows: (concluded)

 

Description    Counterparty    Put/
Call
      

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

NH Hotel Group SA

   Morgan Stanley & Co. International PLC      Call           EUR         3.81         2/13/15         75,000       $ (30,376

Royal Dutch Shell PLC, A Shares

   Goldman Sachs International      Call           EUR         26.29         2/17/15         60,000         (104,307

Samsonite International SA

   Goldman Sachs International      Call           HKD         24.44         2/18/15         250,200         (14,614

Imperial Tobacco Group PLC

   Goldman Sachs International      Call           GBP         29.24         2/19/15         56,000         (24,735

Prudential PLC

   Goldman Sachs International      Call           GBP         15.49         2/19/15         47,000         (16,147

Imperial Tobacco Group PLC

   UBS AG      Call           GBP         27.42         2/24/15         52,000         (66,599

Prudential PLC

   Goldman Sachs International      Call           GBP         14.72         2/24/15         47,000         (43,764

Royal Dutch Shell PLC, A Shares

   Deutsche Bank AG      Call           EUR         25.93         2/24/15         71,000         (147,218

Total

                       $ (9,923,409
                      

 

 

 

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, refer to Note 2 of the Notes to Financial Statements.

As of December 31, 2014, the following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy:

 

      Level 1      Level 2      Level 3    Total  

Assets:

           

Investments:

           

Long-Term Investments:

           

Common Stocks:

           

Belgium

           $ 21,984,564          $ 21,984,564   

Canada

   $ 44,826,907                    44,826,907   

China

     60,648,937         13,784,019            74,432,956   

France

             47,701,057            47,701,057   

Germany

             30,899,598            30,899,598   

Hong Kong

     6,149,340         15,660,367            21,809,707   

India

     15,258,958         9,894,171            25,153,129   

Indonesia

             7,513,960            7,513,960   

Ireland

     38,250,650         5,126,262            43,376,912   

Israel

     17,500,293                    17,500,293   

Italy

             16,931,489            16,931,489   

Japan

     5,988,746         73,402,965            79,391,711   

Mexico

     5,134,211                    5,134,211   

Netherlands

             35,394,878            35,394,878   

New Zealand

             5,796,312            5,796,312   

Norway

             7,685,384            7,685,384   

Peru

     5,366,030                    5,366,030   

South Africa

             10,244,935            10,244,935   

South Korea

             17,419,463            17,419,463   

Spain

             16,168,239            16,168,239   

Sweden

             11,628,293            11,628,293   

Switzerland

     10,095,511         59,014,134            69,109,645   

 

See Notes to Financial Statements.

 

62    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock International Growth and Income Trust (BGY)   

 

      Level 1   Level 2   Level 3    Total

Assets: (concluded)

                 

Investments: (concluded)

                 

Long-Term Investments: (concluded)

                 

Common Stocks: (concluded)

                 

Taiwan

             $ 5,723,070                $ 5,723,070  

United Kingdom

     $ 15,648,899         122,750,626       $ 4,688,215          143,087,740  

United States

       11,797,476         10,674,632                  22,472,108  

Investment Companies

       7,061,380                          7,061,380  

Preferred Stocks

                       4,187,086          4,187,086  

Warrants

       244,919                          244,919  

Short-Term Securities

       38,787,564         870,139                  39,657,703  
    

 

 

 

Total

     $ 282,759,821       $ 546,268,557       $ 8,875,301        $ 837,903,679  
    

 

 

 
                 
      Level 1   Level 2   Level 3    Total

Derivative Financial Instruments1

                 

Liabilities:

                 

Equity contracts

     $ (660,621 )     $ (9,924,691 )              $ (10,585,312 )
    

 

 

 

1    Derivative financial instruments are options written, which are shown at value.

       

The Trust may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of December 31, 2014, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:    
                 
      Level 1   Level 2   Level 3    Total

Assets:

                 

Cash

     $ 2,003                        $ 2,003  

Foreign currency at value

       4,686,314                          4,686,314  

Cash pledged as collateral for OTC derivatives

       7,893,000                          7,893,000  

Cash pledged as collateral for exchange-traded options written

       359,000                          359,000  

Liabilities:

                 

Collateral on securities loaned at value

             $ (870,139 )                (870,139 )
    

 

 

 

Total

     $ 12,940,317       $ (870,139 )              $ 12,070,178  
    

 

 

 
During the period ended December 31, 2014 there were no transfers between Level 1 and Level 2.   
A reconciliation of Level 3 investments is presented when the Trust had a significant amount of Level 3 investments at the beginning and/or end of the period in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:    

 

      Common
Stocks
    Preferred
Stocks
     Total  

Assets:

       

Opening Balance, as of October 31, 2014

   $ 4,811,810      $ 3,849,866       $ 8,661,676   

Transfers into Level 3

                      

Transfers out of Level 3

                      

Accrued discounts/premiums

                      

Net realized gain (loss)

                      

Net change in unrealized appreciation/depreciation

     (123,595     311,373         187,778   

Purchases

            25,847         25,847   
Sales              
  

 

 

 

Closing Balance, as of December 31, 2014

   $ 4,688,215      $ 4,187,086       $ 8,875,301   
  

 

 

 

Net change in unrealized appreciation/depreciation on investments still held at December 31, 2014

                      
  

 

 

 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    63


Schedule of Investments (concluded)      BlackRock International Growth and Income Trust (BGY)   

 

The following table summarizes the valuation techniques used and unobservable inputs utilized by the BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) to determine the value of certain of the Trust’s Level 3 investments as of December 31, 2014.

 

      Value      Valuation Techniques   

Unobservable

Inputs

  Range of
Unobservable Inputs
Utilized
 

Assets:

          

Common Stocks

   $ 4,688,215       Market Comparable Companies    Tangible Book Value Multiple1     1.70x   

Preferred Stocks

     4,187,086       Market Comparable Companies    Current Fiscal Year Revenue Multiple1     2.28x   
      Options Pricing Model    Years to IPO2     3.75   
         Risk Free Rate2     7.89
                   Volatility1     60.00

Total

   $ 8,875,301                     

 

  1   

Increase in unobservable input may result in a significant increase to value, while a decrease in the unobservable input may result in a significant decrease to value.

 

  2   

Decrease in unobservable input may result in a significant increase to value, while an increase in the unobservable input may result in a significant decrease to value.

 

See Notes to Financial Statements.

 

64    ANNUAL REPORT    DECEMBER 31, 2014     


Consolidated Schedule of Investments December 31, 2014      BlackRock Resources & Commodities Strategy Trust (BCX)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Auto Components — 0.1%

     

Johnson Controls, Inc. (a)

     23,200       $ 1,121,488   

Building Products — 0.1%

     

Kingspan Group PLC

     31,800         551,388   

Chemicals — 22.5%

     

Agrium, Inc. (a)

     67,900         6,431,488   

Air Liquide SA

     4,730         585,290   

Air Products & Chemicals, Inc. (a)

     88,600         12,778,778   

Celanese Corp., Series A (a)

     89,300         5,354,428   

CF Industries Holdings, Inc. (a)

     103,863         28,306,822   

The Dow Chemical Co. (a)

     154,325         7,038,763   

EI du Pont de Nemours & Co. (a)

     347,700         25,708,938   

Israel Chemicals Ltd.

     625,000         4,496,990   

Johnson Matthey PLC

     17,304         910,379   

Linde AG

     2,900         534,188   

Monsanto Co. (a)

     419,034         50,061,993   

The Mosaic Co. (a)

     599,989         27,389,498   

Novozymes A/S, B Shares

     27,900         1,174,410   

Potash Corp. of Saskatchewan, Inc. (a)

     816,000         28,821,120   

Praxair, Inc. (a)

     157,600         20,418,656   

Syngenta AG

     86,600         27,855,552   

Umicore SA

     5,400         217,298   

Uralkali OJSC — GDR

     293,500         3,460,365   

Wacker Chemie AG

     5,600         614,296   

Yara International ASA

     185,000         8,238,495   
     

 

 

 
                260,397,747   

Commercial Services & Supplies — 0.2%

     

Covanta Holding Corp. (a)

     9,900         217,899   

Tetra Tech, Inc.

     63,500         1,695,450   
     

 

 

 
                1,913,349   

Construction & Engineering — 0.0%

     

Quanta Services, Inc. (b)

     11,200         317,968   

Electric Utilities — 0.2%

     

Fortum OYJ

     16,900         366,926   

ITC Holdings Corp.

     29,300         1,184,599   

NextEra Energy, Inc.

     10,100         1,073,529   
     

 

 

 
                2,625,054   

Electrical Equipment — 0.3%

     

ABB Ltd.

     25,400         537,417   

Eaton Corp PLC (a)

     8,700         591,252   

Gamesa Corp. Tecnologica SA (b)

     29,200         263,585   

Regal-Beloit Corp.

     11,300         849,760   

Schneider Electric SE

     10,700         779,275   

Vestas Wind Systems A/S (b)

     13,933         506,001   
     

 

 

 
                3,527,290   

Electronic Equipment, Instruments & Components — 0.0%

  

Azbil Corp.

     9,800         225,775   

Itron, Inc. (a)(b)

     6,800         287,572   
     

 

 

 
                513,347   

Energy Equipment & Services — 1.0%

     

Halliburton Co.

     88,000         3,461,040   

Schlumberger Ltd. (a)

     99,983         8,539,548   
     

 

 

 
                12,000,588   

Food & Staples Retailing — 0.9%

     

The Andersons, Inc.

     161,200         8,566,168   

Total Produce PLC

     990,000         1,281,809   
     

 

 

 
                9,847,977   

Food Products — 8.5%

     

Archer-Daniels-Midland Co. (a)

     470,000         24,440,000   

BRF SA — ADR (a)

     342,000         7,985,700   
Common Stocks    Shares      Value  

Food Products (concluded)

     

Bunge Ltd.

     162,116       $ 14,737,966   

First Resources Ltd.

     4,942,000         6,976,590   

Ingredion, Inc. (a)

     187,895         15,941,012   

Origin Enterprises PLC (b)

     230,000         2,351,738   

Scandi Standard AB (b)

     1,065,000         6,482,427   

Select Harvests Ltd.

     250,000         1,343,898   

Tyson Foods, Inc., Class A (a)

     439,000         17,599,510   

Wynnstay Group PLC

     24,600         210,112   
     

 

 

 
                98,068,953   

Independent Power and Renewable Electricity Producers — 0.2%

  

China Longyuan Power Group Corp. Ltd., Class H

     488,000         503,226   

EDP Renovaveis SA

     119,300         776,366   

Enel Green Power SpA

     223,400         468,060   

Greenko Group PLC (b)

     59,000         132,246   

Ormat Technologies, Inc.

     11,000         298,980   
     

 

 

 
                2,178,878   

Industrial Conglomerates — 0.3%

     

Danaher Corp. (a)

     16,800         1,439,928   

Roper Industries, Inc. (a)

     12,840         2,007,534   
     

 

 

 
                3,447,462   

Machinery — 0.6%

     

IDEX Corp.

     9,150         712,236   

Pall Corp. (a)

     9,300         941,253   

Pentair PLC

     23,960         1,591,423   

Watts Water Technologies, Inc., Class A (a)

     27,300         1,731,912   

Xylem, Inc. (a)

     59,500         2,265,165   
     

 

 

 
                7,241,989   

Metals & Mining — 20.4%

     

Alcoa, Inc. (a)

     450,100         7,107,079   

Allegheny Technologies, Inc.

     35,000         1,216,950   

Alumina Ltd. (b)

     5,770,946         8,337,283   

BHP Billiton Ltd. — ADR

     463,580         21,936,606   

BHP Billiton PLC

     750,530         16,084,899   

Eldorado Gold Corp. (a)

     1,096,107         6,679,667   

First Quantum Minerals Ltd.

     837,200         11,897,204   

Freeport-McMoRan, Inc. (c)

     1,160,083         27,099,539   

Fresnillo PLC

     1,038,700         12,344,906   

Glencore PLC

     4,383,438         20,233,242   

Lundin Mining Corp. (b)

     2,115,762         10,416,732   

MMC Norilsk Nickel OJSC — ADR

     936,313         13,389,159   

Nevsun Resources Ltd. (a)

     4,693,982         18,100,395   

Platinum Group Metals Ltd. (b)

     888,518         420,627   

Rio Tinto PLC

     370,659         17,086,324   

Rio Tinto PLC — ADR (a)

     479,800         22,099,588   

Southern Copper Corp. (a)

     492,979         13,902,008   

United States Steel Corp.

     38,200         1,021,468   

Vedanta Resources PLC

     734,488         6,515,150   
     

 

 

 
                235,888,826   

Multi-Utilities — 0.3%

     

Hera SpA

     361,600         851,485   

National Grid PLC

     33,700         478,180   

Veolia Environnement SA

     126,000         2,231,824   
     

 

 

 
                3,561,489   

Oil, Gas & Consumable Fuels — 34.7%

     

AltaGas Ltd.

     15,500         578,215   

Anadarko Petroleum Corp. (a)

     92,200         7,606,500   

BP PLC — ADR (c)

     380,000         14,485,600   

Cairn Energy PLC (b)

     2,448,000         6,766,175   

Canadian Oil Sands Ltd.

     1,257,000         11,273,834   
 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    65


Consolidated Schedule of Investments (continued)      BlackRock Resources & Commodities Strategy Trust (BCX)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Oil, Gas & Consumable Fuels (concluded)

     

Chevron Corp. (a)(c)

     588,000       $ 65,961,840   

China Shenhua Energy Co. Ltd., Class H

     9,012,000         26,593,620   

ConocoPhillips (a)(c)

     653,000         45,096,180   

Enbridge, Inc. (a)

     525,800         27,036,746   

Encana Corp.

     254,100         3,536,579   

Eni SpA — ADR

     176,000         6,144,160   

EOG Resources, Inc. (a)

     58,700         5,404,509   

Exxon Mobil Corp. (a)(c)

     742,000         68,597,900   

Imperial Oil Ltd. (a)

     249,300         10,739,770   

Inpex Corp.

     897,900         9,996,295   

Noble Energy, Inc.

     80,700         3,827,601   

Pioneer Natural Resources Co.

     28,000         4,167,800   

Royal Dutch Shell PLC, A Shares — ADR (c)

     644,324         43,137,492   

Southwestern Energy Co. (b)

     271,000         7,395,590   

Statoil ASA

     680,551         11,982,350   

Total SA

     144,200         7,387,676   

Total SA — ADR

     148,900         7,623,680   

Ultra Petroleum Corp. (b)(d)

     441,100         5,804,876   

Veresen, Inc.

     12,000         189,637   
     

 

 

 
                401,334,625   

Paper & Forest Products — 3.0%

     

Canfor Corp. (a)(b)

     259,500         6,620,399   

Interfor Corp. (b)

     494,000         9,333,190   

International Paper Co.

     341,900         18,319,002   

Precious Woods Holding AG (b)

     20,000         53,913   
     

 

 

 
                34,326,504   

Real Estate Investment Trusts (REITs) — 2.6%

     

Weyerhaeuser Co. (a)

     826,700         29,670,263   

Semiconductors & Semiconductor Equipment — 0.1%

  

Aixtron SE (b)

     7,600         85,432   

SMA Solar Technology AG (b)

     2,600         47,059   

Trina Solar Ltd. — ADR (b)

     64,800         600,048   

Veeco Instruments, Inc. (a)(b)

     11,200         390,656   
     

 

 

 
                1,123,195   

Water Utilities — 1.7%

     

American States Water Co.

     75,800         2,854,628   

American Water Works Co., Inc.

     51,600         2,750,280   

Aqua America, Inc.

     116,525         3,111,218   
Common Stocks    Shares      Value  

Water Utilities (concluded)

     

California Water Service Group

     86,200       $ 2,121,382   

Pennon Group PLC

     215,200         3,074,499   

Severn Trent PLC

     113,500         3,539,987   

United Utilities Group PLC

     158,381         2,249,636   
     

 

 

 
                19,701,630   

Total Common Stocks — 97.7%

              1,129,360,010   
     
Preferred Stocks                

Food Products — 0.4%

     

Tyson Foods, Inc. (b)

     99,842         5,026,046   

Total Long-Term Investments

(Cost — $1,111,234,690) — 98.1%

 

  

     1,134,386,056   
     
Short-Term Securities                

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.04% (e)(f)

     29,478,327         29,478,327   
      Beneficial
Interest  
(000)    
         

BlackRock Liquidity Series, LLC Money Market Series, 0.20% (e)(f)(g)

   $ 2,374         2,373,800   

Total Short-Term Securities

(Cost — $31,852,127) — 2.7%

              31,852,127   

Total Investments Before Options Written

(Cost — $1,143,086,817) — 100.8%

 

  

     1,166,238,183   
     
Options Written                

(Premiums Received — $6,119,364) — (0.6)%

  

     (7,461,454

Total Investments Net of Options Written — 100.2%

  

     1,158,776,729   

Liabilities in Excess of Other Assets — (0.2)%

  

     (2,278,193
     

 

 

 

Net Assets — 100.0%

      $ 1,156,498,536   
     

 

 

 
 
Notes to Schedule of Investments

 

(a) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(b) Non-income producing security.

 

(c) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(d) Security, or a portion of security, is on loan.

 

(e) During the period ended December 31, 2014, Investments in issuers considered to be an affiliate of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliates   

Shares/
Beneficial Interest
Held at
October 31,

2014

    

Net

Activity

    Shares/
Beneficial Interest
Held at
December 31,
2014
     Income      Realized
Gain
 

BlackRock Liquidity Funds, TempFund, Institutional Class

     9,369,900         20,108,427        29,478,327       $ 1,091       $ 1,529   

BlackRock Liquidity Series, LLC Money Market Series

   $ 4,137,800       $ (1,764,000   $ 2,373,800       $ 33,328           

 

(f) Represents the current yield as of report date.

 

(g) Security was purchased with the cash collateral from loaned securities. The Trust may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

 

See Notes to Financial Statements.

 

66    ANNUAL REPORT    DECEMBER 31, 2014     


Consolidated Schedule of Investments (continued)      BlackRock Resources & Commodities Strategy Trust (BCX)   

 

 

Ÿ  

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

 

Ÿ  

As of December 31, 2014, exchange-traded options written were as follows:

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Agrium, Inc.

     Call         USD         103.00         1/02/15         118       $ (2,360

ConocoPhillips

     Call         USD         73.50         1/02/15         360         (1,800

Alcoa, Inc.

     Call         USD         17.50         1/09/15         220         (220

Archer-Daniels-Midland Co.

     Call         USD         52.50         1/09/15         550         (25,850

ConocoPhillips

     Call         USD         67.50         1/09/15         1,064         (249,508

EI du Pont de Nemours & Co.

     Call         USD         72.00         1/09/15         250         (55,250

EI du Pont de Nemours & Co.

     Call         USD         73.00         1/09/15         202         (29,492

Monsanto Co.

     Call         USD         122.00         1/09/15         800         (61,600

Weyerhaeuser Co.

     Call         USD         37.00         1/09/15         950         (14,250

Air Products & Chemicals, Inc.

     Call         USD         150.00         1/17/15         155         (12,400

BRF SA — ADR

     Call         USD         25.00         1/17/15         250         (4,375

Canfor Corp.

     Call         CAD         29.00         1/17/15         202         (17,387

Celanese Corp., Series A

     Call         USD         62.50         1/17/15         312         (9,360

CF Industries Holdings, Inc.

     Call         USD         285.00         1/17/15         28         (5,586

Chevron Corp.

     Call         USD         120.00         1/17/15         800         (7,600

ConocoPhillips

     Call         USD         75.00         1/17/15         360         (6,480

Covanta Holding Corp.

     Call         USD         25.00         1/17/15         45         (900

Danaher Corp.

     Call         USD         85.00         1/17/15         75         (12,750

The Dow Chemical Co.

     Call         USD         49.00         1/17/15         540         (5,940

Eldorado Gold Corp.

     Call         CAD         9.00         1/17/15         1,920         (9,089

Enbridge, Inc.

     Call         CAD         60.00         1/17/15         534         (49,870

EOG Resources, Inc.

     Call         USD         100.00         1/17/15         102         (4,029

Exxon Mobil Corp.

     Call         USD         97.50         1/17/15         325         (4,875

Imperial Oil Ltd.

     Call         CAD         54.00         1/17/15         182         (3,681

Imperial Oil Ltd.

     Call         CAD         56.00         1/17/15         345         (3,415

Johnson Controls, Inc.

     Call         USD         48.00         1/17/15         82         (8,610

Nevsun Resources Ltd.

     Call         CAD         5.00         1/17/15         5,410         (20,955

Pall Corp.

     Call         USD         100.00         1/17/15         33         (8,002

Potash Corp. of Saskatchewan, Inc.

     Call         USD         35.00         1/17/15         540         (40,770

Praxair, Inc.

     Call         USD         130.00         1/17/15         275         (44,000

Rio Tinto PLC — ADR

     Call         USD         47.50         1/17/15         750         (48,750

Rio Tinto PLC — ADR

     Call         USD         52.50         1/17/15         200         (2,000

Roper Industries, Inc.

     Call         USD         160.00         1/17/15         45         (3,938

Southern Copper Corp.

     Call         USD         29.00         1/17/15         575         (21,562

Tyson Foods, Inc., Class A

     Call         USD         43.00         1/17/15         363         (6,352

Veeco Instruments, Inc.

     Call         USD         38.00         1/17/15         50         (1,000

Watts Water Technologies, Inc., Class A

     Call         USD         65.00         1/17/15         96         (7,440

Xylem, Inc.

     Call         USD         40.00         1/17/15         210         (4,200

Agrium, Inc.

     Call         USD         99.00         1/23/15         120         (9,600

Archer-Daniels-Midland Co.

     Call         USD         51.50         1/23/15         547         (78,494

CF Industries Holdings, Inc.

     Call         USD         257.50         1/23/15         165         (290,400

CF Industries Holdings, Inc.

     Call         USD         260.00         1/23/15         170         (266,050

Chevron Corp.

     Call         USD         111.00         1/23/15         464         (149,640

Eaton Corp PLC

     Call         USD         69.50         1/23/15         31         (2,325

Exxon Mobil Corp.

     Call         USD         95.00         1/23/15         466         (37,746

The Mosaic Co.

     Call         USD         46.50         1/23/15         1,015         (67,498

Potash Corp. of Saskatchewan, Inc.

     Call         USD         36.00         1/23/15         1,425         (53,438

Schlumberger Ltd.

     Call         USD         94.00         1/23/15         184         (6,164

Alcoa, Inc.

     Call         USD         16.50         1/30/15         920         (34,040

Archer-Daniels-Midland Co.

     Call         USD         52.00         1/30/15         547         (70,836

Exxon Mobil Corp.

     Call         USD         93.00         1/30/15         191         (37,340

The Mosaic Co.

     Call         USD         45.00         1/30/15         1,085         (169,260

Potash Corp. of Saskatchewan, Inc.

     Call         USD         36.00         1/30/15         892         (50,398

Weyerhaeuser Co.

     Call         USD         36.00         1/30/15         444         (33,300

Alcoa, Inc.

     Call         USD         17.00         2/20/15         440         (15,840

Anadarko Petroleum Corp.

     Call         USD         92.50         2/20/15         161         (26,565

Canfor Corp.

     Call         CAD         29.00         2/20/15         707         (95,845

Exxon Mobil Corp.

     Call         USD         95.00         2/20/15         1,615         (234,175

Imperial Oil Ltd.

     Call         CAD         54.00         2/20/15         345         (26,726

Itron, Inc.

     Call         USD         45.00         2/20/15         23         (2,588

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    67


Consolidated Schedule of Investments (continued)      BlackRock Resources & Commodities Strategy Trust (BCX)   

 

As of December 31, 2014, exchange-traded options written were as follows: (concluded)

 

Description    Put/
Call
    

Strike

Price

     Expiration
Date
     Contracts      Market
Value
 

Ingredion, Inc.

     Call         USD         83.50         2/26/15         252       $ (98,441

Air Products & Chemicals, Inc.

     Call         USD         150.00         3/20/15         155         (66,650

Total

                  $ (2,739,005
                 

 

 

 

 

Ÿ  

As of December 31, 2014, over-the-counter options written were as follows:

 

Description   Counterparty      Put/
Call
    

Strike

Price

       Expiration
Date
       Contracts        Market
Value
 

American States Water Co.

  Deutsche Bank AG      Call        USD         35.14           1/05/15           9,500         $ (24,871

American States Water Co.

  Morgan Stanley & Co. International PLC      Call        USD         36.06           1/05/15           17,100           (31,537

American Water Works Co., Inc.

  UBS AG      Call        USD         53.34           1/05/15           5,800           (2,715

Monsanto Co.

  Credit Suisse International      Call        USD         118.37           1/05/15           68,100           (120,515

China Longyuan Power Group Corp. Ltd., Class H

  BNP Paribas S.A.      Call        HKD         8.72           1/06/15           110,000           (4

China Shenhua Energy Co. Ltd., Class H

  Morgan Stanley & Co. International PLC      Call        HKD         21.63           1/06/15           230,000           (37,174

First Resources Ltd.

  UBS AG      Call        SGD         2.03           1/06/15           150,000           (11

Glencore PLC

  Goldman Sachs International      Call        GBP         3.37           1/06/15           257,500           (691

Glencore PLC

  Morgan Stanley & Co. International PLC      Call        GBP         3.40           1/06/15           110,000           (2

BRF SA — ADR

  UBS AG      Call        USD         27.87           1/07/15           37,500             

EDP Renovaveis SA

  UBS AG      Call        EUR         5.23           1/07/15           32,500           (6,786

Interfor Corp.

  Citibank N.A.      Call        CAD         17.68           1/07/15           50,000           (184,099

ITC Holdings Corp.

  Bank of America N.A.      Call        USD         39.15           1/07/15           3,600           (4,704

Lundin Mining Corp.

  Deutsche Bank AG      Call        CAD         5.20           1/07/15           80,600           (36,941

Fresnillo PLC

  Bank of America N.A.      Call        GBP         7.26           1/08/15           53,500           (33,594

Glencore PLC

  Deutsche Bank AG      Call        GBP         3.38           1/08/15           544,000           (25

Israel Chemicals Ltd.

  UBS AG      Call        ILS         28.19           1/08/15           116,000           (10,290

Scandi Standard AB

  Goldman Sachs International      Call        SEK         59.74           1/08/15           65,000             

Total SA

  Morgan Stanley & Co. International PLC      Call        EUR         47.67           1/08/15           16,500           (9

Enbridge, Inc.

  Goldman Sachs International      Call        CAD         52.70           1/09/15           44,500           (270,665

California Water Service Group

  Morgan Stanley & Co. International PLC      Call        USD         25.00           1/12/15           14,600           (3,926

MMC Norilsk Nickel OJSC — ADR

  Morgan Stanley & Co. International PLC      Call        USD         18.86           1/12/15           209,800           (2

Praxair, Inc.

  Credit Suisse International      Call        USD         129.28           1/12/15           27,550           (45,674

American Water Works Co., Inc.

  Morgan Stanley & Co. International PLC      Call        USD         53.03           1/14/15           2,800           (2,708

China Shenhua Energy Co. Ltd., Class H

  UBS AG      Call        HKD         20.76           1/14/15           410,000           (112,816

Israel Chemicals Ltd.

  UBS AG      Call        ILS         28.19           1/14/15           116,000           (13,609

ITC Holdings Corp.

  Goldman Sachs International      Call        USD         40.45           1/14/15           2,000           (853

Select Harvests Ltd.

  UBS AG      Call        AUD         6.37           1/16/15           13,500           (3,209

Aqua America, Inc.

  Credit Suisse International      Call        USD         26.70           1/21/15           6,400           (8,182

Fresnillo PLC

  Goldman Sachs International      Call        GBP         7.62           1/21/15           57,700           (21,843

Pennon Group PLC

  UBS AG      Call        GBP         8.83           1/21/15           75,000           (45,554

Select Harvests Ltd.

  UBS AG      Call        AUD         6.37           1/21/15           13,500           (3,358

Statoil ASA

  Goldman Sachs International      Call        NOK         153.67           1/21/15           239,000           (18,302

Interfor Corp.

  Deutsche Bank AG      Call        CAD         17.93           1/22/15           58,900           (205,210

Johnson Matthey PLC

  Morgan Stanley & Co. International PLC      Call        GBP         32.33           1/22/15           6,100           (16,256

Severn Trent PLC

  UBS AG      Call        GBP         20.06           1/22/15           14,200           (8,331

Syngenta AG

  Morgan Stanley & Co. International PLC      Call        CHF         316.09           1/22/15           13,000           (102,987

Schneider Electric SE

  Deutsche Bank AG      Call        EUR         62.51           1/23/15           3,700           (3,185

Bunge Ltd.

  Morgan Stanley & Co. International PLC      Call        USD         92.59           1/26/15           57,000           (57,769

EI du Pont de Nemours & Co.

  Goldman Sachs International      Call        USD         70.52           1/26/15           38,500           (147,057

International Paper Co.

  Citibank N.A.      Call        USD         55.71           1/26/15           59,800           (40,048

Lundin Mining Corp.

  Deutsche Bank AG      Call        CAD         5.24           1/27/15           252,000           (128,731

NextEra Energy, Inc.

  Citibank N.A.      Call        USD         105.03           1/27/15           2,700           (7,955

Enbridge, Inc.

  Goldman Sachs International      Call        CAD         58.03           1/28/15           86,100           (192,281

Ingredion, Inc.

  Citibank N.A.      Call        USD         82.92           1/28/15           40,600           (142,357

Novozymes A/S, B Shares

  Morgan Stanley & Co. International PLC      Call        DKK         259.28           1/28/15           9,700           (13,355

Select Harvests Ltd.

  UBS AG      Call        AUD         6.37           1/28/15           13,500           (3,638

Interfor Corp.

  Morgan Stanley & Co. International PLC      Call        CAD         19.32           1/29/15           35,600           (86,171

International Paper Co.

  Goldman Sachs International      Call        USD         53.33           1/29/15           59,800           (102,140

Scandi Standard AB

  UBS AG      Call        SEK         50.48           1/29/15           15,000           (1,296

Syngenta AG

  UBS AG      Call        CHF         304.92           1/29/15           17,000           (302,909

United Utilities Group PLC

  Goldman Sachs International      Call        GBP         9.12           1/29/15           55,500           (17,321

 

See Notes to Financial Statements.

 

68    ANNUAL REPORT    DECEMBER 31, 2014     


Consolidated Schedule of Investments (continued)      BlackRock Resources & Commodities Strategy Trust (BCX)   

 

 

As of December 31, 2014, over-the-counter options written were as follows: (concluded)

 

Description    Counterparty      Put/
Call
      

Strike

Price

       Expiration
Date
       Contracts       

Market

Value

 

Veolia Environnement SA

   Morgan Stanley & Co. International PLC        Call           EUR         14.17           1/29/15           44,000         $ (36,700

Aqua America, Inc.

   Deutsche Bank AG        Call           USD         25.88           2/02/15           34,400           (70,572

Tetra Tech, Inc.

   Deutsche Bank AG        Call           USD         26.87           2/02/15           22,000           (12,506

Tyson Foods, Inc., Class A

   Goldman Sachs International        Call           USD         41.28           2/02/15           64,900           (56,762

Weyerhaeuser Co.

   Credit Suisse International        Call           USD         36.15           2/02/15           150,000           (100,008

Alumina Ltd.

   Goldman Sachs International        Call           AUD         1.76           2/03/15           680,000           (47,787

China Shenhua Energy Co. Ltd., Class H

   Barclays Bank PLC        Call           HKD         23.08           2/03/15           1,000,000           (102,335

First Resources Ltd.

   UBS AG        Call           SGD         1.81           2/03/15           150,000           (9,974

Fresnillo PLC

   Bank of America N.A.        Call           GBP         7.85           2/03/15           70,000           (21,703

Inpex Corp.

   Morgan Stanley & Co. International PLC        Call           JPY         1,285.44           2/03/15           315,000           (240,889

Rio Tinto PLC

   Morgan Stanley & Co. International PLC        Call           GBP         29.35           2/03/15           40,000           (79,069

Total SA

   Goldman Sachs International        Call           EUR         42.97           2/03/15           34,000           (54,313

Glencore PLC

   Deutsche Bank AG        Call           GBP         2.91           2/04/15           590,000           (118,982

Select Harvests Ltd.

   UBS AG        Call           AUD         6.37           2/04/15           13,500           (3,874

Severn Trent PLC

   Morgan Stanley & Co. International PLC        Call           GBP         19.40           2/04/15           25,500           (34,449

Yara International ASA

   UBS AG        Call           NOK         316.86           2/04/15           32,500           (86,746

EI du Pont de Nemours & Co.

   Goldman Sachs International        Call           USD         70.52           2/05/15           38,500           (165,576

Uralkali OJSC — GDR

   Deutsche Bank AG        Call           USD         12.05           2/05/15           103,000           (64,618

Interfor Corp.

   Citibank N.A.        Call           CAD         19.09           2/06/15           28,400           (75,268

National Grid PLC

   Bank of America N.A.        Call           GBP         8.95           2/06/15           12,000           (5,148

China Shenhua Energy Co. Ltd., Class H

   Morgan Stanley & Co. International PLC        Call           HKD         22.80           2/10/15           1,500,000           (212,854

MMC Norilsk Nickel OJSC — ADR

   Bank of America N.A.        Call           USD         17.82           2/10/15           119,000           (3,571

Alumina Ltd.

   Citibank N.A.        Call           AUD         1.70           2/11/15           670,000           (70,988

American Water Works Co., Inc.

   Citibank N.A.        Call           USD         51.75           2/12/15           9,400           (19,856

Lundin Mining Corp.

   Deutsche Bank AG        Call           CAD         5.60           2/13/15           400,000           (155,603

Select Harvests Ltd.

   UBS AG        Call           AUD         6.28           2/13/15           16,700           (5,883

Tyson Foods, Inc., Class A

   UBS AG        Call           USD         41.31           2/13/15           52,500           (56,543

ITC Holdings Corp.

   UBS AG        Call           USD         38.75           2/19/15           4,700           (9,734

Yara International ASA

   UBS AG        Call           NOK         316.86           2/24/15           32,500           (96,698

EDP Renovaveis SA

   Bank of America N.A.        Call           EUR         5.38           2/25/15           9,000           (2,140

Select Harvests Ltd.

   UBS AG        Call           AUD         6.28           2/25/15           16,700           (6,293

Alumina Ltd.

   Goldman Sachs International        Call           AUD         1.71           12/17/15           670,000           (71,341

Total

                               $ (4,722,449
                              

 

 

 

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, refer to Note 2 of the Notes to Financial Statements.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    69


Consolidated Schedule of Investments (concluded)      BlackRock Resources & Commodities Strategy Trust (BCX)   

 

 

As of December 31, 2014, the following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy:

 

      Level 1     Level 2     Level 3    Total  

Assets:

         

Investments:

         

Long-Term Investments:

         

Common Stocks:

         

Auto Components

   $ 1,121,488                $ 1,121,488   

Building Products

          $ 551,388           551,388   

Chemicals

     215,770,849        44,626,898           260,397,747   

Commercial Services & Supplies

     1,913,349                  1,913,349   

Construction & Engineering

     317,968                  317,968   

Electric Utilities

     2,258,128        366,926           2,625,054   

Electrical Equipment

     1,441,012        2,086,278           3,527,290   

Electronic Equipment, Instruments & Components

     287,572        225,775           513,347   

Energy Equipment & Services

     12,000,588                  12,000,588   

Food & Staples Retailing

     9,847,977                  9,847,977   

Food Products

     90,242,628        7,826,325           98,068,953   

Independent Power and Renewable Electricity Producers

     298,980        1,879,898           2,178,878   

Industrial Conglomerates

     3,447,462                  3,447,462   

Machinery

     7,241,989                  7,241,989   

Metals & Mining

     141,897,863        93,990,963           235,888,826   

Multi-Utilities

            3,561,489           3,561,489   

Oil, Gas & Consumable Fuels

     338,608,509        62,726,116           401,334,625   

Paper & Forest Products

     34,272,591        53,913           34,326,504   

Real Estate Investment Trusts (REITs)

     29,670,263                  29,670,263   

Semiconductors & Semiconductor Equipment

     990,704        132,491           1,123,195   

Water Utilities

     10,837,508        8,864,122           19,701,630   

Preferred Stocks

     5,026,046                  5,026,046   

Short-Term Securities

     29,478,327        2,373,800           31,852,127   
  

 

 

 

Total

   $ 936,971,801      $ 229,266,382         $ 1,166,238,183   
  

 

 

 
         
      Level 1     Level 2     Level 3    Total  

Derivative Financial Instruments1

         

Liabilities:

         

Equity contracts

   $ (2,640,565   $ (4,820,889      $ (7,461,454
  

 

 

 

1    Derivative financial instruments are options written, which are shown at value.

  
The Trust may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of December 31, 2014, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:    
         
      Level 1     Level 2     Level 3    Total  

Assets:

         

Cash

   $ 67,179                $ 67,179   

Foreign currency at value

     41,296                  41,296   

Liabilities:

         

Collateral on securities loaned at value

          $ (2,373,800        (2,373,800
  

 

 

 

Total

   $ 108,475      $ (2,373,800      $ (2,265,325
  

 

 

 

During the period ended December 31, 2014, there were no transfers between levels.

 

See Notes to Financial Statements.

 

70    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments December 31, 2014      BlackRock Science and Technology Trust (BST)   
     (Percentages shown are based on Net Assets)   

 

Common Stocks    Shares      Value  

Commercial Services & Supplies — 0.5%

     

Atento SA (a)

     220,462       $ 2,303,828   

Communications Equipment — 0.5%

     

CommScope Holding Co., Inc. (a)(b)

     103,300         2,358,339   

Diversified Financial Services — 0.3%

     

On Deck Capital, Inc. (a)

     65,400         1,466,922   

Electronic Equipment, Instruments & Components — 2.4%

  

  

CDW Corp. (b)

     102,400         3,601,408   

Largan Precision Co. Ltd.

     51,000         3,865,103   

PAX Global Technology Ltd. (a)

     2,993,000         3,087,696   
     

 

 

 
                10,554,207   

Household Durables — 1.6%

     

Sony Corp.

     336,300         6,863,631   

Internet & Catalog Retail — 3.9%

     

MakeMyTrip Ltd. (a)(b)

     109,800         2,853,702   

Netflix, Inc. (a)(b)

     7,300         2,493,753   

The Priceline Group, Inc. (a)(b)

     3,400         3,876,714   

Qunar Cayman Islands Ltd. — ADR (a)(b)

     108,100         3,073,283   

Vipshop Holdings Ltd. — ADR (a)(b)

     237,000         4,630,980   
     

 

 

 
                16,928,432   

Internet Software & Services — 22.1%

     

Alibaba Group Holding — ADR (a)(b)

     110,100         11,443,794   

Baidu, Inc. — ADR (a)(b)

     23,400         5,334,498   

comScore, Inc. (a)(b)

     55,000         2,553,650   

Cvent, Inc. (a)

     86,400         2,405,376   

Facebook, Inc., Class A (a)(b)

     207,900         16,220,358   

Google, Inc., Class A (a)(b)

     31,700         16,821,922   

Gurunavi, Inc.

     85,900         1,186,996   

Hortonworks, Inc. (a)

     124,135         3,351,645   

LendingClub Corp. (a)(b)

     152,000         3,845,600   

Linkedin Corp., Class A (a)(b)

     15,000         3,445,650   

NAVER Corp.

     4,000         2,561,740   

New Relic, Inc. (a)

     69,200         2,410,928   

Qihoo 360 Technology Co. Ltd. — ADR (a)(b)

     53,400         3,057,684   

Telecity Group PLC

     304,100         3,798,153   

Tencent Holdings Ltd.

     633,500         9,190,453   

Twitter, Inc. (a)(b)

     96,300         3,454,281   

Uber Technologies, Inc., Series E (Acquired 12/05/2014, Cost $3,000,048) (a)(c)

     22,511         3,000,048   

YY, Inc. — ADR (a)(b)

     40,900         2,549,706   
     

 

 

 
                96,632,482   

IT Services — 8.7%

     

Alliance Data Systems Corp. (a)(b)

     17,800         5,091,690   

Euronet Worldwide, Inc. (a)(b)

     48,600         2,668,140   

Fidelity National Information Services, Inc. (b)

     56,600         3,520,520   

Jack Henry & Associates, Inc. (b)

     43,200         2,684,448   

Luxoft Holding, Inc. (a)

     86,700         3,338,817   

MasterCard, Inc., Class A (b)

     85,900         7,401,144   

Verifone Systems, Inc. (a)(b)

     89,300         3,321,960   

Visa, Inc., Class A (b)

     28,000         7,341,600   

Xerox Corp. (b)

     184,500         2,557,170   
     

 

 

 
                37,925,489   

Media — 3.0%

     

Eros International PLC (a)

     97,405         2,061,090   

Naspers Ltd., N Shares

     28,500         3,686,624   

Rentrak Corp. (a)(b)

     43,100         3,138,542   

Time Warner, Inc. (b)

     46,800         3,997,656   
     

 

 

 
                12,883,912   

Real Estate Investment Trusts (REITs) — 0.7%

     

DuPont Fabros Technology, Inc.

     94,200         3,131,208   
Common Stocks    Shares      Value  

Semiconductors & Semiconductor Equipment — 15.2%

  

  

ARM Holdings PLC

     216,700       $ 3,329,035   

ASML Holding NV

     39,900         4,311,105   

Avago Technologies Ltd. (b)

     41,500         4,174,485   

Broadcom Corp., Class A (b)

     64,400         2,790,452   

Cavium, Inc. (a)(b)

     41,600         2,571,712   

Chipbond Technology Corp.

     1,383,000         2,514,379   

Hermes Microvision, Inc.

     61,000         3,050,650   

Hua Hong Semiconductor Ltd. (a)(d)

     1,895,000         2,502,344   

Intel Corp. (b)

     201,800         7,323,322   

Lam Research Corp. (b)

     43,500         3,451,290   

Maxim Integrated Products, Inc. (b)

     117,200         3,735,164   

Micron Technology, Inc. (a)(b)

     110,400         3,865,104   

Novatek Microelectronics Corp.

     500,000         2,816,277   

NXP Semiconductors NV (a)(b)

     42,000         3,208,800   

Samsung Electronics Co. Ltd.

     2,831         3,403,554   

Siliconware Precision Industries Co. Ltd.

     3,596,000         5,456,243   

SK Hynix, Inc. (a)

     61,000         2,606,861   

Taiwan Semiconductor Manufacturing Co. Ltd.

     1,182,000         5,207,267   
     

 

 

 
                66,318,044   

Software — 17.1%

     

Activision Blizzard, Inc. (b)

     205,700         4,144,855   

Adobe Systems, Inc. (a)(b)

     73,800         5,365,260   

Autodesk, Inc. (a)(b)

     78,500         4,714,710   

Electronic Arts, Inc. (a)(b)

     67,000         3,150,005   

Imperva, Inc. (a)(b)

     68,300         3,376,069   

King Digital Entertainment PLC (b)

     149,100         2,290,176   

Microsoft Corp. (b)

     616,400         28,631,780   

Oracle Corp. (b)

     189,500         8,521,815   

Proofpoint, Inc. (a)(b)

     52,700         2,541,721   

PTC, Inc. (a)(b)

     102,900         3,771,285   

salesforce.com, Inc. (a)(b)

     52,400         3,107,844   

ServiceNow, Inc. (a)(b)

     45,900         3,114,315   

Zendesk, Inc. (a)(b)

     90,700         2,210,359   
     

 

 

 
                74,940,194   

Technology Hardware, Storage & Peripherals — 10.5%

  

  

Apple, Inc. (b)

     183,000         20,199,540   

Asustek Computer, Inc.

     341,000         3,738,893   

Hewlett-packard Co. (b)

     123,900         4,972,107   

Nimble Storage, Inc. (a)(b)

     86,600         2,381,500   

Pegatron Corp.

     1,813,000         4,144,044   

SanDisk Corp. (b)

     30,700         3,007,986   

Seagate Technology PLC (b)

     46,500         3,092,250   

Western Digital Corp. (b)

     40,300         4,461,210   
     

 

 

 
                45,997,530   

Wireless Telecommunication Services — 1.4%

     

RingCentral, Inc., Class A (a)

     181,300         2,704,996   

SoftBank Corp.

     56,300         3,351,161   
     

 

 

 
                6,056,157   

Total Long-Term Investments

     

(Cost — $373,293,664) — 87.9%

              384,360,375   
     
                  
 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    71


Schedule of Investments (continued)      BlackRock Science and Technology Trust (BST)   
     (Percentages shown are based on Net Assets)   

 

 

Short-Term Securities    Shares      Value  

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.04% (e)(f)

     43,173,790       $ 43,173,790   

Total Short-Term Securities

     

(Cost — $43,173,790) — 9.8%

              43,173,790   

Total Investments Before Options Written

     

(Cost — $416,467,454) — 97.7%

              427,534,165   
     
                   
Options Written          Value  

(Premiums Received — $3,826,396) — (0.7)%

        $ (3,180,904

Total Investments Net of Options Written — 97.0%

        424,353,261   

Other Assets Less Liabilities — 3.0%

        13,027,202   
     

 

 

 

Net Assets — 100.0%

      $ 437,380,463   
     

 

 

 
 
Notes to Schedule of Investments

 

(a) Non-income producing security.

 

(b) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(c) Restricted securities as to resale. As of December 31, 2014 the Trust held 0.7% of its net assets, with current market value of $3,000,048 and the original cost of $3,000,048, in these securities.

 

(d) Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. This security may be resold in transactions exempt from registration to qualified institutional investors.

 

(e) Represents the current yield as of report date.

 

(f) During the period ended December 31, 2014, investments in issuers considered to be an affiliate of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliates    Shares Held at
October 31, 2014
    

Net

Activity

     Shares Held at
December 31, 2014
     Income      Realized
Gain
 

BlackRock Liquidity Funds, TempFund, Institutional Class

             43,173,790         43,173,790       $ 4,943       $ 6,925   

 

Ÿ  

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

 

Ÿ  

As of December 31, 2014, exchange-traded options written were as follows:

 

Description      Put/
Call
      

Strike

Price

       Expiration
Date
       Contracts        Market
Value
 

salesforce.com, Inc.

       Call           USD         60.50           1/02/15           28         $ (238

salesforce.com, Inc.

       Call           USD         62.50           1/02/15           50           (250

Seagate Technology PLC

       Call           USD         66.50           1/02/15           52           (2,600

Euronet Worldwide, Inc.

       Call           USD         57.00           1/06/15           80           (1,872

MakeMyTrip Ltd.

       Call           USD         29.80           1/06/15           160           (111

Apple, Inc.

       Call           USD         118.00           1/09/15           90           (720

Baidu, Inc. — ADR

       Call           USD         237.50           1/09/15           27           (2,768

Facebook, Inc., Class A

       Call           USD         81.00           1/09/15           28           (658

Google, Inc., Class A

       Call           USD         545.00           1/09/15           50           (8,875

Hewlett-packard Co.

       Call           USD         39.50           1/09/15           125           (11,938

Linkedin Corp., Class A

       Call           USD         232.50           1/09/15           30           (10,125

MasterCard, Inc., Class A

       Call           USD         89.00           1/09/15           136           (2,788

Micron Technology, Inc.

       Call           USD         37.50           1/09/15           79           (3,278

Microsoft Corp.

       Call           USD         48.50           1/09/15           400           (2,400

Oracle Corp.

       Call           USD         42.00           1/09/15           160           (48,960

SanDisk Corp.

       Call           USD         103.00           1/09/15           108           (5,940

Seagate Technology PLC

       Call           USD         66.00           1/09/15           79           (10,428

Seagate Technology PLC

       Call           USD         70.50           1/09/15           23           (172

Vipshop Holdings Ltd. — ADR

       Call           USD         23.00           1/09/15           375           (1,875

Visa, Inc., Class A

       Call           USD         265.00           1/09/15           80           (13,240

Imperva, Inc.

       Call           USD         43.65           1/12/15           163           (98,383

Adobe Systems, Inc.

       Call           USD         75.00           1/17/15           52           (2,704

Alliance Data Systems Corp.

       Call           USD         300.00           1/17/15           58           (5,945

Apple, Inc.

       Call           USD         114.29           1/17/15           95           (8,645

Apple, Inc.

       Call           USD         115.00           1/17/15           95           (6,935

Apple, Inc.

       Call           USD         118.57           1/17/15           89           (2,180

Autodesk, Inc.

       Call           USD         62.50           1/17/15           133           (7,581

Avago Technologies Ltd.

       Call           USD         100.00           1/17/15           55           (17,462

Avago Technologies Ltd.

       Call           USD         105.00           1/17/15           23           (2,530

 

See Notes to Financial Statements.

 

72    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock Science and Technology Trust (BST)   

 

 

As of December 31, 2014, exchange-traded options written were as follows: (continued)

 

Description      Put/
Call
      

Strike

Price

       Expiration
Date
       Contracts        Market
Value
 

Avago Technologies Ltd.

       Call           USD         90.00           1/17/15           55         $ (60,775

Baidu, Inc. — ADR

       Call           USD         242.50           1/17/15           19           (2,242

Broadcom Corp., Class A

       Call           USD         43.00           1/17/15           152           (16,112

Broadcom Corp., Class A

       Call           USD         44.00           1/17/15           60           (3,450

CDW Corp.

       Call           USD         35.00           1/17/15           188           (14,570

CommScope Holding Co., Inc.

       Call           USD         22.50           1/17/15           210           (16,800

CommScope Holding Co., Inc.

       Call           USD         23.35           1/17/15           130           (5,280

comScore, Inc.

       Call           USD         45.00           1/17/15           53           (11,925

Electronic Arts, Inc.

       Call           USD         44.00           1/17/15           154           (50,435

Electronic Arts, Inc.

       Call           USD         47.00           1/17/15           33           (3,712

Fidelity National Information Services, Inc.

       Call           USD         60.00           1/17/15           186           (45,849

Hewlett-packard Co.

       Call           USD         40.00           1/17/15           158           (12,877

Imperva, Inc.

       Call           USD         45.00           1/17/15           24           (12,360

Imperva, Inc.

       Call           USD         50.00           1/17/15           48           (8,760

Imperva, Inc.

       Call           USD         55.00           1/17/15           40           (2,100

King Digital Entertainment PLC

       Call           USD         18.54           1/17/15           485           (16,975

Lam Research Corp.

       Call           USD         82.50           1/17/15           145           (9,062

LendingClub Corp.

       Call           USD         27.00           1/17/15           165           (6,600

Linkedin Corp., Class A

       Call           USD         240.00           1/17/15           19           (4,722

MasterCard, Inc., Class A

       Call           USD         88.00           1/17/15           197           (12,706

Maxim Integrated Products, Inc.

       Call           USD         30.00           1/17/15           46           (9,200

Maxim Integrated Products, Inc.

       Call           USD         31.00           1/17/15           340           (40,800

Micron Technology, Inc.

       Call           USD         36.00           1/17/15           100           (9,900

Microsoft Corp.

       Call           USD         49.00           1/17/15           562           (5,901

Netflix, Inc.

       Call           USD         360.00           1/17/15           14           (2,520

Nimble Storage, Inc.

       Call           USD         30.00           1/17/15           120           (3,900

NXP Semiconductors NV

       Call           USD         75.00           1/17/15           46           (13,570

NXP Semiconductors NV

       Call           USD         77.50           1/17/15           50           (7,875

NXP Semiconductors NV

       Call           USD         80.00           1/17/15           50           (3,750

Oracle Corp.

       Call           USD         45.00           1/17/15           290           (18,125

The Priceline Group, Inc.

       Call           USD         1,150.00           1/17/15           6           (7,890

Proofpoint, Inc.

       Call           USD         50.00           1/17/15           38           (4,085

Qihoo 360 Technology Co. Ltd. — ADR

       Call           USD         75.00           1/17/15           56           (280

Qunar Cayman Islands Ltd. — ADR

       Call           USD         30.00           1/17/15           250           (11,875

Rentrak Corp.

       Call           USD         80.00           1/17/15           22           (1,705

SanDisk Corp.

       Call           USD         100.00           1/17/15           14           (2,380

ServiceNow, Inc.

       Call           USD         70.00           1/17/15           152           (17,100

Time Warner, Inc.

       Call           USD         85.00           1/17/15           154           (28,798

Twitter, Inc.

       Call           USD         41.00           1/17/15           105           (1,418

Verifone Systems, Inc.

       Call           USD         38.00           1/17/15           295           (16,962

Vipshop Holdings Ltd. — ADR

       Call           USD         22.50           1/17/15           407           (4,070

Xerox Corp.

       Call           USD         14.00           1/17/15           128           (2,432

YY, Inc. — ADR

       Call           USD         70.00           1/17/15           67           (3,015

Zendesk, Inc.

       Call           USD         25.00           1/17/15           177           (11,505

Alibaba Group Holding — ADR

       Call           USD         109.00           1/23/15           167           (26,720

Apple, Inc.

       Call           USD         115.00           1/23/15           47           (5,852

Baidu, Inc. — ADR

       Call           USD         247.50           1/23/15           37           (4,532

Google, Inc., Class A

       Call           USD         552.50           1/23/15           6           (3,630

Intel Corp.

       Call           USD         37.00           1/23/15           309           (21,012

Intel Corp.

       Call           USD         37.50           1/23/15           330           (16,665

Microsoft Corp.

       Call           USD         48.00           1/23/15           399           (13,366

Twitter, Inc.

       Call           USD         41.00           1/23/15           162           (4,131

Visa, Inc., Class A

       Call           USD         265.00           1/23/15           13           (4,518

Euronet Worldwide, Inc.

       Call           USD         56.50           1/26/15           80           (9,870

Alibaba Group Holding — ADR

       Call           USD         112.00           1/30/15           200           (25,500

Apple, Inc.

       Call           USD         115.00           1/30/15           134           (30,418

Electronic Arts, Inc.

       Call           USD         47.50           1/30/15           34           (6,256

Facebook, Inc., Class A

       Call           USD         85.00           1/30/15           293           (30,326

Intel Corp.

       Call           USD         38.00           1/30/15           26           (1,105

Micron Technology, Inc.

       Call           USD         38.00           1/30/15           186           (10,974

Microsoft Corp.

       Call           USD         48.00           1/30/15           399           (25,137

salesforce.com, Inc.

       Call           USD         56.00           1/30/15           94           (40,655

Twitter, Inc.

       Call           USD         41.00           1/30/15           87           (5,264

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    73


Schedule of Investments (continued)      BlackRock Science and Technology Trust (BST)   

 

 

As of December 31, 2014, exchanged traded options written were as follows: (concluded)

 

Description      Put/
Call
      

Strike

Price

       Expiration
Date
       Contracts        Market
Value
 

Western Digital Corp.

       Call           USD         113.00           1/30/15           83         $ (23,696

CDW Corp.

       Call           USD         35.05           2/06/15           148           (15,841

Xerox Corp.

       Call           USD         14.50           2/11/15           610           (14,682

Facebook, Inc., Class A

       Call           USD         80.00           2/13/15           183           (56,272

Microsoft Corp.

       Call           USD         48.00           2/13/15           275           (22,275

Activision Blizzard, Inc.

       Call           USD         21.00           2/20/15           510           (36,720

Apple, Inc.

       Call           USD         115.00           2/20/15           87           (26,187

Cavium, Inc.

       Call           USD         61.00           2/20/15           137           (59,281

Facebook, Inc., Class A

       Call           USD         80.00           2/20/15           182           (59,150

Hewlett-packard Co.

       Call           USD         41.00           2/20/15           125           (11,500

MakeMyTrip Ltd.

       Call           USD         30.00           2/20/15           202           (16,665

Netflix, Inc.

       Call           USD         350.00           2/20/15           15           (28,950

Nimble Storage, Inc.

       Call           USD         30.00           2/20/15           166           (15,770

Oracle Corp.

       Call           USD         42.00           2/20/15           177           (57,968

Proofpoint, Inc.

       Call           USD         46.50           2/20/15           36           (15,966

Rentrak Corp.

       Call           USD         75.50           2/20/15           120           (54,626

Rentrak Corp.

       Call           USD         80.00           2/20/15           30           (9,000

Western Digital Corp.

       Call           USD         115.00           2/20/15           50           (14,450

YY, Inc. — ADR

       Call           USD         70.00           2/20/15           67           (13,568

Broadcom Corp., Class A

       Put           USD         41.50           1/09/15           104           (1,352

Microsoft Corp.

       Put           USD         46.00           1/09/15           277           (11,080

Visa, Inc., Class A

       Put           USD         250.00           1/09/15           34           (1,020

CDW Corp.

       Put           USD         33.25           1/15/15           63           (584

Apple, Inc.

       Put           USD         109.00           1/17/15           117           (20,416

Autodesk, Inc.

       Put           USD         57.50           1/17/15           147           (7,130

Avago Technologies Ltd.

       Put           USD         92.50           1/17/15           88           (4,400

Baidu, Inc. — ADR

       Put           USD         220.00           1/17/15           19           (5,254

Cavium, Inc.

       Put           USD         55.00           1/17/15           74           (2,590

CDW Corp.

       Put           USD         35.00           1/17/15           62           (3,875

Electronic Arts, Inc.

       Put           USD         44.00           1/17/15           97           (2,425

Electronic Arts, Inc.

       Put           USD         45.00           1/17/15           92           (3,956

Fidelity National Information Services, Inc.

       Put           USD         60.00           1/17/15           36           (684

Hewlett-packard Co.

       Put           USD         39.00           1/17/15           110           (3,630

Intel Corp.

       Put           USD         36.00           1/17/15           118           (8,968

Jack Henry & Associates, Inc.

       Put           USD         60.00           1/17/15           36           (720

Lam Research Corp.

       Put           USD         75.00           1/17/15           56           (2,940

Lam Research Corp.

       Put           USD         77.50           1/17/15           54           (5,805

MasterCard, Inc., Class A

       Put           USD         85.50           1/17/15           76           (9,082

NXP Semiconductors NV

       Put           USD         70.00           1/17/15           59           (2,065

The Priceline Group, Inc.

       Put           USD         1,100.00           1/17/15           4           (1,740

PTC, Inc.

       Put           USD         35.00           1/17/15           60           (5,400

Qunar Cayman Islands Ltd. — ADR

       Put           USD         25.00           1/17/15           161           (4,830

SanDisk Corp.

       Put           USD         92.50           1/17/15           44           (3,674

Time Warner, Inc.

       Put           USD         84.00           1/17/15           51           (5,126

Apple, Inc.

       Put           USD         107.00           1/23/15           79           (12,916

Visa, Inc., Class A

       Put           USD         255.00           1/23/15           16           (3,424

Fidelity National Information Services, Inc.

       Put           USD         62.00           1/26/15           69           (6,896

Total

                            $ (1,808,449
                           

 

 

 

 

Ÿ  

As of December 31, 2014, over-the-counter options written were as follows:

 

Description    Counterparty      Put/
Call
      

Strike

Price

       Expiration
Date
       Contracts        Market
Value
 

Eros International PLC

   Goldman Sachs International        Call           USD         21.00           1/05/15           8,000         $ (4,119

ARM Holdings PLC

   Morgan Stanley & Co. International PLC        Call           GBP         9.46           1/06/15           45,000           (29,355

Asustek Computer, Inc.

   JPMorgan Chase Bank N.A.        Call           TWD         323.94           1/06/15           68,000           (48,685

Chipbond Technology Corp.

   Citibank N.A.        Call           TWD         61.31           1/06/15           195,000           (400

Chipbond Technology Corp.

   UBS AG        Call           TWD         60.85           1/06/15           29,000           (93

Gurunavi, Inc.

   Bank of America N.A.        Call           JPY         1,716.77           1/06/15           18,100           (2,968

Hermes Microvision, Inc.

   Bank of America N.A.        Call           TWD         1,549.60           1/06/15           12,000           (24,024

NAVER Corp.

   Citibank N.A.        Call           KRW         782,747.68           1/06/15           600           (54

NAVER Corp.

   Morgan Stanley & Co. International PLC        Call           KRW         792,848.73           1/06/15           100           (3

Novatek Microelectronics Corp.

   Bank of America N.A.        Call           TWD         176.51           1/06/15           66,000           (7,016

Novatek Microelectronics Corp.

   UBS AG        Call           TWD         172.21           1/06/15           15,000           (3,022

 

See Notes to Financial Statements.

 

74    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock Science and Technology Trust (BST)   

 

 

As of December 31, 2014, over-the-counter options written were as follows: (continued)

 

Description   Counterparty      Put/
Call
      

Strike

Price

       Expiration
Date
       Contracts        Market
Value
 

PAX Global Technology Ltd.

  Goldman Sachs International        Call           HKD         8.74           1/06/15           375,000         $ (1,262

PAX Global Technology Ltd.

  Goldman Sachs International        Call           HKD         8.90           1/06/15           125,000           (243

Pegatron Corp.

  Goldman Sachs International        Call           TWD         76.53           1/06/15           210,000           (1,976

Siliconware Precision Industries Co. Ltd.

  JPMorgan Chase Bank N.A.        Call           TWD         44.64           1/06/15           480,000           (50,376

Siliconware Precision Industries Co. Ltd.

  UBS AG        Call           TWD         45.49           1/06/15           47,000           (3,678

SoftBank Corp.

  Bank of America N.A.        Call           JPY         8,406.13           1/06/15           7,000           (2

Sony Corp.

  Bank of America N.A.        Call           JPY         2,457.67           1/06/15           35,000           (13,597

Sony Corp.

  UBS AG        Call           JPY         2,488.29           1/06/15           12,000           (3,419

Tencent Holdings Ltd.

  Bank of America N.A.        Call           HKD         130.26           1/06/15           84,200             

Tencent Holdings Ltd.

  Goldman Sachs International        Call           HKD         133.15           1/06/15           8,000             

Activision Blizzard, Inc.

  Morgan Stanley & Co. International PLC        Call           USD         21.42           1/08/15           16,500           (754

Eros International PLC

  Goldman Sachs International        Call           USD         21.00           1/15/15           21,000           (17,384

PAX Global Technology Ltd.

  Goldman Sachs International        Call           HKD         7.97           1/15/15           277,000           (11,997

Sony Corp.

  Bank of America N.A.        Call           JPY         2,525.60           1/21/15           38,000           (17,291

Tencent Holdings Ltd.

  UBS AG        Call           HKD         115.44           1/21/15           95,000           (23,807

Naspers Ltd., N Shares

  Goldman Sachs International        Call           ZAR         1,399.13           1/22/15           6,500           (68,913

Proofpoint, Inc.

  Goldman Sachs International        Call           USD         47.55           1/22/15           13,700           (35,580

Qunar Cayman Islands Ltd. — ADR

  Goldman Sachs International        Call           USD         29.70           1/22/15           5,500           (3,823

Asustek Computer, Inc.

  Bank of America N.A.        Call           TWD         346.43           1/23/15           68,000           (17,622

Chipbond Technology Corp.

  Bank of America N.A.        Call           TWD         56.51           1/23/15           230,000           (17,705

Gurunavi, Inc.

  UBS AG        Call           JPY         1,748.39           1/23/15           16,200           (5,753

Hermes Microvision, Inc.

  Bank of America N.A.        Call           TWD         1,614.38           1/23/15           12,000           (21,643

Largan Precision Co. Ltd.

  Morgan Stanley & Co. International PLC        Call           TWD         2,376.98           1/23/15           13,000           (48,480

NAVER Corp.

  Goldman Sachs International        Call           KRW         711,040.00           1/23/15           600           (12,870

Novatek Microelectronics Corp.

  UBS AG        Call           TWD         175.15           1/23/15           86,000           (17,521

PAX Global Technology Ltd.

  Goldman Sachs International        Call           HKD         8.75           1/23/15           420,000           (8,227

Pegatron Corp.

  Citibank N.A.        Call           TWD         75.39           1/23/15           65,000           (3,457

Samsung Electronics Co. Ltd.

  Goldman Sachs International        Call           KRW         1,368,195.95           1/23/15           900           (19,848

Siliconware Precision Industries Co. Ltd.

  UBS AG        Call           TWD         46.97           1/23/15           650,000           (32,461

Taiwan Semiconductor Manufacturing Co. Ltd.

  UBS AG        Call           TWD         136.86           1/23/15           340,000           (59,092

Luxoft Holding, Inc.

  Goldman Sachs International        Call           USD         40.22           1/26/15           28,600           (33,183

RingCentral, Inc., Class A

  Credit Suisse International        Call           USD         13.33           1/27/15           33,400           (61,412

SK Hynix, Inc.

  Citibank N.A.        Call           KRW         49,731.12           1/27/15           10,100           (9,087

SK Hynix, Inc.

  UBS AG        Call           KRW         47,914.50           1/27/15           10,000           (15,464

SoftBank Corp.

  Bank of America N.A.        Call           JPY         7,419.17           1/28/15           10,500           (9,236

Qunar Cayman Islands Ltd. — ADR

  Credit Suisse International        Call           USD         31.27           1/29/15           5,500           (2,470

Telecity Group PLC

  Morgan Stanley & Co. International PLC        Call           GBP         7.96           1/29/15           45,500           (15,391

Adobe Systems, Inc.

  Citibank N.A.        Call           USD         75.77           2/02/15           24,300           (20,061

ASML Holding NV

  UBS AG        Call           EUR         88.14           2/03/15           16,000           (74,109

NAVER Corp.

  Citibank N.A.        Call           KRW         726,190.00           2/03/15           60           (1,211

Pegatron Corp.

  Morgan Stanley & Co. International PLC        Call           TWD         72.58           2/03/15           260,000           (27,999

Telecity Group PLC

  Morgan Stanley & Co. International PLC        Call           GBP         8.16           2/03/15           26,100           (6,118

comScore, Inc.

  UBS AG        Call           USD         47.96           2/04/15           16,700           (25,855

DuPont Fabros Technology, Inc.

  Morgan Stanley & Co. International PLC        Call           USD         33.75           2/04/15           15,500           (10,877

Jack Henry & Associates, Inc.

  Goldman Sachs International        Call           USD         61.70           2/05/15           14,200           (24,043

Largan Precision Co. Ltd.

  Morgan Stanley & Co. International PLC        Call           TWD         2,346.00           2/05/15           11,800           (60,002

RingCentral, Inc., Class A

  Credit Suisse International        Call           USD         13.72           2/09/15           26,000           (42,370

Autodesk, Inc.

  Citibank N.A.        Call           USD         61.50           2/10/15           12,600           (19,142

Zendesk, Inc.

  UBS AG        Call           USD         25.19           2/10/15           18,500           (27,080

Cvent, Inc.

  Morgan Stanley & Co. International PLC        Call           USD         28.72           2/11/15           28,500           (39,439

ARM Holdings PLC

  Morgan Stanley & Co. International PLC        Call           GBP         9.90           2/12/15           27,100           (14,394

PTC, Inc.

  UBS AG        Call           USD         37.25           2/12/15           26,400           (20,357

Telecity Group PLC

  Morgan Stanley & Co. International PLC        Call           GBP         7.91           2/13/15           50,000           (22,793

DuPont Fabros Technology, Inc.

  Morgan Stanley & Co. International PLC        Call           USD         33.75           2/24/15           15,500           (14,513

Hermes Microvision, Inc.

  Citibank N.A.        Put           TWD         1,430.80           1/08/15           4,000           (127

Taiwan Semiconductor Manufacturing Co. Ltd.

  UBS AG        Put           TWD         136.92           1/23/15           100,000           (5,051

Largan Precision Co. Ltd.

  Morgan Stanley & Co. International PLC        Put           TWD         2,270.87           2/05/15           12,000           (30,615

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    75


Schedule of Investments (continued)      BlackRock Science and Technology Trust (BST)   

 

 

As of December 31, 2014, over-the-counter options written, were as follows: (concluded)

 

Description   Counterparty      Put/
Call
      

Strike

Price

       Expiration
Date
       Contracts        Market
Value
 

Eros International PLC

  UBS AG        Put           USD         20.80           1/05/15           61,000         $ (16,562

Gurunavi, Inc.

  UBS AG        Put           JPY         1,749.52           1/08/15           15,000           (13,886

Hua Hong Semiconductor Ltd.

  Morgan Stanley & Co. International PLC        Put           HKD         10.77           1/08/15           150,000           (12,290

Sony Corp.

  Citibank N.A.        Put           JPY         2,605.82           1/08/15           10,000           (14,293

Eros International PLC

  Citibank N.A.        Put           USD         19.26           1/15/15           11,000           (1,441

PAX Global Technology Ltd.

  Goldman Sachs International        Put           HKD         8.39           1/15/15           375,000           (29,771

Sony Corp.

  Morgan Stanley & Co. International PLC        Put           JPY         2,390.08           1/15/15           20,000           (8,832

Tencent Holdings Ltd.

  Citibank N.A.        Put           HKD         106.80           1/21/15           30,000           (4,461

Total

                              $ (1,372,455
                             

 

 

 

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, refer to Note 2 of the Notes to Financial Statements.

As of December 31, 2014, the following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy:

 

      Level 1      Level 2      Level 3      Total  

Assets:

           

Investments:

           

Long-Term Investments:

           

Common Stocks:

           

Commercial Services & Supplies

   $ 2,303,828                       $ 2,303,828   

Communications Equipment

     2,358,339                         2,358,339   

Diversified Financial Services

     1,466,922                         1,466,922   

Electronic Equipment, Instruments & Components

     10,554,207                         10,554,207   

Household Durables

           $ 6,863,631                 6,863,631   

Internet & Catalog Retail

     16,928,432                         16,928,432   

Internet Software & Services

     86,085,545         7,546,889       $ 3,000,048         96,632,482   

IT Services

     37,925,489                         37,925,489   

Media

     9,197,288         3,686,624                 12,883,912   

Real Estate Investment Trusts (REITs)

     3,131,208                         3,131,208   

Semiconductors & Semiconductor Equipment

     41,895,193         24,422,851                 66,318,044   

Software

     74,940,194                         74,940,194   

Technology Hardware, Storage & Peripherals

     41,853,486         4,144,044                 45,997,530   

Wireless Telecommunication Services

     2,704,996         3,351,161                 6,056,157   

Short-Term Securities

     43,173,790                         43,173,790   
  

 

 

 

Total

   $ 374,518,917       $ 50,015,200       $ 3,000,048       $ 427,534,165   
  

 

 

 

 

See Notes to Financial Statements.

 

76    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (concluded)      BlackRock Science and Technology Trust (BST)   

 

 

 

      Level 1     Level 2     Level 3    Total  

Derivative Financial Instruments1

         

Liabilities:

         

Equity contracts

   $ (1,525,058   $ (1,655,846      $ (3,180,904
  

 

 

 

Total

   $ (1,525,058   $ (1,655,846      $ (3,180,904
  

 

 

 

1    Derivative financial instruments are options written, which are shown at value.

  

The Trust may hold assets in which the fair value approximates the carrying amount for financial statement purposes. As of December 31, 2014, such assets are categorized within the disclosure hierarchy as follows:

 

   

      Level 1     Level 2     Level 3    Total  

Assets:

         

Foreign currency at value

   $ 235,704                $ 235,704   

Cash pledged as collateral for exchange-traded options written

     15,055,661                  15,055,661   
  

 

 

 

Total

   $ 15,291,365                $ 15,291,365   
  

 

 

 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    77


Schedule of Investments December 31, 2014     
BlackRock Utility and Infrastructure Trust (BUI)
  
     (Percentages shown are based on Net Assets)   

 

 

Common Stocks    Shares      Value  

Construction & Engineering — 2.0%

     

Ferrovial SA

     393,500       $ 7,778,793   

Diversified Telecommunication Services — 1.0%

     

Verizon Communications, Inc. (a)

     79,500         3,719,010   

Electric Utilities — 21.1%

     

American Electric Power Co., Inc.

     36,300         2,204,136   

Cleco Corp.

     36,400         1,985,256   

Duke Energy Corp. (a)

     157,868         13,188,293   

Edison International (a)

     127,600         8,355,248   

Enel SpA

     236,200         1,052,868   

Exelon Corp. (a)

     192,700         7,145,316   

Iberdrola SA

     182,200         1,228,167   

ITC Holdings Corp.

     144,600         5,846,178   

NextEra Energy, Inc. (a)

     150,400         15,986,016   

Northeast Utilities (a)

     74,000         3,960,480   

NRG Yield, Inc., Class A (a)

     154,500         7,283,130   

OGE Energy Corp.

     52,400         1,859,152   

Pinnacle West Capital Corp. (a)

     41,900         2,862,189   

PPL Corp. (a)

     102,800         3,734,724   

Spark Infrastructure Group

     670,800         1,161,927   

Xcel Energy, Inc.

     59,900         2,151,608   
     

 

 

 
                80,004,688   

Gas Utilities — 1.3%

     

New Jersey Resources Corp.

     25,400         1,554,480   

Snam SpA

     691,900         3,424,375   
     

 

 

 
                4,978,855   

Independent Power and Renewable Electricity Producers — 4.4%

  

Calpine Corp. (b)

     41,700         922,821   

EDP Renovaveis SA

     313,900         2,042,759   

Enel Green Power SpA

     822,500         1,723,275   

NextEra Energy Partners LP

     65,500         2,210,625   

NRG Energy, Inc. (a)

     143,401         3,864,657   

Pattern Energy Group, Inc.

     92,200         2,273,652   

TerraForm Power, Inc., Class A

     120,700         3,727,216   
     

 

 

 
                16,765,005   

Media — 0.3%

     

Comcast Corp., Special Class A (a)(c)

     20,100         1,157,058   

Multi-Utilities — 21.2%

     

CenterPoint Energy, Inc.

     106,600         2,497,638   

CMS Energy Corp. (c)

     397,600         13,816,600   

Consolidated Edison, Inc. (a)

     16,900         1,115,569   

Dominion Resources, Inc. (a)(c)

     152,400         11,719,560   

DTE Energy Co. (a)

     25,100         2,167,887   

E.ON SE

     39,300         671,705   

MDU Resources Group, Inc.

     71,500         1,680,250   

National Grid PLC

     956,000         13,564,984   

NiSource, Inc. (a)

     119,300         5,060,706   

NorthWestern Corp.

     67,000         3,790,860   

Public Service Enterprise Group, Inc.

     188,656         7,812,245   

RWE AG

     49,100         1,515,459   

Sempra Energy

     75,300         8,385,408   

Veolia Environnement SA

     55,000         974,209   

Wisconsin Energy Corp. (a)(c)

     113,000         5,959,620   
     

 

 

 
                80,732,700   
Common Stocks    Shares      Value  

Oil, Gas & Consumable Fuels — 27.7%

     

Access Midstream Partners LP

     29,476       $ 1,597,599   

Antero Midstream Partners LP (b)

     82,500         2,268,750   

Delek Logistics Partners LP (a)

     32,900         1,166,963   

Dominion Midstream Partners LP (b)

     339,300         13,300,560   

Enable Midstream Partners LP

     40,500         785,295   

Enbridge, Inc. (a)

     154,700         7,953,127   

Energy Transfer Partners LP

     26,096         1,696,240   

Enterprise Products Partners LP (a)

     205,154         7,410,162   

EQT Midstream Partners LP (a)

     43,300         3,810,400   

GasLog Partners LP

     5,700         144,039   

Genesis Energy LP (a)

     127,069         5,390,267   

Magellan Midstream Partners LP (a)

     65,600         5,422,496   

MarkWest Energy Partners LP (a)

     68,453         4,599,357   

MPLX LP (a)

     53,500         3,931,715   

ONEOK Partners LP

     69,245         2,744,179   

PBF Logistics LP

     28,600         610,610   

Phillips 66 Partners LP (a)

     46,800         3,225,924   

Plains All American Pipeline LP (a)

     96,970         4,976,500   

QEP Midstream Partners LP

     28,903         485,281   

Rose Rock Midstream LP

     18,300         831,735   

Shell Midstream Partners LP (a)(b)

     448,000         18,359,039   

Sunoco Logistics Partners LP

     87,200         3,643,216   

Tesoro Logistics LP

     58,058         3,416,713   

TransCanada Corp. (a)

     71,300         3,504,243   

Valero Energy Partners LP (a)

     40,100         1,734,325   

Western Gas Partners LP (a)

     20,814         1,520,463   

Williams Partners LP

     14,790         661,854   
     

 

 

 
                105,191,052   

Real Estate Investment Trusts (REITs) — 4.2%

     

American Tower Corp. (a)(c)

     153,400         15,163,590   

Crown Castle International Corp. (a)

     11,300         889,310   
     

 

 

 
                16,052,900   

Road & Rail — 0.2%

     

East Japan Railway Co.

     9,600         731,182   

Transportation Infrastructure — 11.9%

     

Abertis Infraestructuras SA

     390,900         7,751,485   

Aeroports de Paris

     29,300         3,543,106   

Atlantia SpA (a)

     418,084         9,717,119   

CCR SA

     223,900         1,297,983   

Flughafen Zuerich AG

     6,300         4,213,198   

Fraport AG Frankfurt Airport Services Worldwide

     49,600         2,862,017   

Groupe Eurotunnel SA

     348,800         4,503,081   

Japan Airport Terminal Co. Ltd.

     33,500         1,317,354   

Sydney Airport

     597,666         2,288,162   

Transurban Group

     1,090,300         7,597,999   
     

 

 

 
                45,091,504   

Water Utilities — 2.6%

     

American Water Works Co., Inc.

     184,600         9,839,180   

Wireless Telecommunication Services — 0.7%

     

SBA Communications Corp., Class A (a)(b)

     22,800         2,525,328   

Total Long-Term Investments

(Cost — $285,403,570) — 98.6%

              374,567,255   
     
                  
 

 

See Notes to Financial Statements.

 

78    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock Utility and Infrastructure Trust (BUI)   
     (Percentages shown are based on Net Assets)   

 

 

Short-Term Securities    Shares      Value  

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.04% (d)(e)

     10,776,191       $ 10,776,191   

Total Short-Term Securities

(Cost — $10,776,191) — 2.8%

  

  

     10,776,191   

Total Investments Before Options Written

(Cost — $296,179,761) — 101.4%

  

  

     385,343,446   
     
                   
Options Written          Value  

(Premiums Received — $2,256,661) — (0.8)%

        $ (3,104,982

Total Investments Net of Options Written — 100.6%

        382,238,464   

Liabilities in Excess of Other Assets — (0.6)%

        (2,408,167
     

 

 

 

Net Assets — 100.0%

      $ 379,830,297   
     

 

 

 
 
Notes to Schedule of Investments

 

(a) All or a portion of security has been pledged/segregated as collateral in connection with outstanding options written.

 

(b) Non-income producing security.

 

(c) All or a portion of security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(d) During the period ended December 31, 2014, Investments in issuers considered to be an affiliate of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliates    Shares Held at
October 31, 2014
     Net
Activity
    Shares Held at
December 31, 2014
     Income  

BlackRock Liquidity Funds, TempFund, Institutional Class

     14,980,589         (4,204,398     10,776,191       $ 861   

 

(e) Represents the current yield as of report date.

 

Ÿ  

For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

 

Ÿ  

As of December 31, 2014, exchange-traded options written were as follows:

 

Description    Put/
Call
    

Strike

Price

    

Expiration

Date

     Contracts     

Market

Value

 

American Tower Corp.

     Call         USD         102.00         1/02/15         268       $ (5,360

DTE Energy Co.

     Call         USD         80.25         1/05/15         87         (53,272

Genesis Energy LP

     Call         USD         50.50         1/13/15         230         (93

Atlantia SpA

     Call         EUR         20.00         1/16/15         70         (5,155

Atlantia SpA

     Call         EUR         21.00         1/16/15         70         (1,657

Crown Castle International Corp.

     Call         USD         85.00         1/17/15         39         (390

Dominion Resources, Inc.

     Call         USD         72.55         1/17/15         100         (46,594

Duke Energy Corp.

     Call         USD         82.50         1/17/15         553         (106,453

Enterprise Products Partners LP

     Call         USD         38.75         1/17/15         101         (1,768

EQT Midstream Partners LP

     Call         USD         80.00         1/17/15         88         (73,920

Exelon Corp.

     Call         USD         38.00         1/17/15         677         (23,695

Magellan Midstream Partners LP

     Call         USD         90.00         1/17/15         327         (7,358

MarkWest Energy Partners LP

     Call         USD         77.50         1/17/15         96         (2,880

NextEra Energy, Inc.

     Call         USD         105.00         1/17/15         354         (88,500

NiSource, Inc.

     Call         USD         42.00         1/17/15         273         (27,300

Northeast Utilities

     Call         USD         50.00         1/17/15         196         (71,540

NRG Energy, Inc.

     Call         USD         33.00         1/17/15         250         (3,750

NRG Yield, Inc., Class A

     Call         USD         47.75         1/17/15         269         (24,154

Phillips 66 Partners LP

     Call         USD         68.50         1/17/15         99         (24,796

Plains All American Pipeline LP

     Call         USD         55.00         1/17/15         45         (1,012

PPL Corp.

     Call         USD         35.00         1/17/15         288         (45,360

SBA Communications Corp., Class A

     Call         USD         115.00         1/17/15         80         (5,200

Shell Midstream Partners LP

     Call         USD         40.00         1/17/15         155         (30,613

TransCanada Corp.

     Call         CAD         58.00         1/17/15         250         (10,759

Verizon Communications, Inc.

     Call         USD         47.00         1/17/15         66         (2,211

Verizon Communications, Inc.

     Call         USD         47.50         1/23/15         73         (2,227

Verizon Communications, Inc.

     Call         USD         47.00         1/30/15         66         (3,729

Northeast Utilities

     Call         USD         53.60         2/02/15         63         (6,809

Comcast Corp., Special Class A

     Call         USD         57.25         2/17/15         70         (14,933

Consolidated Edison, Inc.

     Call         USD         70.00         2/20/15         50         (1,625

Delek Logistics Partners LP

     Call         USD         40.00         2/20/15         115         (7,475

Edison International

     Call         USD         67.50         2/20/15         216         (22,680

 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    79


Schedule of Investments (continued)      BlackRock Utility and Infrastructure Trust (BUI)   

 

 

As of December 31, 2014, exchange-traded options written were as follows: (concluded)

 

Description    Put/
Call
    

Strike

Price

    

Expiration

Date

     Contracts     

Market

Value

 

MarkWest Energy Partners LP

     Call         USD         77.50         2/20/15         96       $ (6,240

Pinnacle West Capital Corp.

     Call         USD         70.00         2/20/15         36         (2,970

PPL Corp.

     Call         USD         38.00         2/20/15         71         (2,662

Shell Midstream Partners LP

     Call         USD         40.00         2/20/15         155         (46,113

Valero Energy Partners LP

     Call         USD         55.00         2/20/15         73         (7,300

Verizon Communications, Inc.

     Call         USD         48.00         2/20/15         73         (3,358

Western Gas Partners LP

     Call         USD         75.00         2/20/15         75         (16,875

MPLX LP

     Call         USD         70.00         3/20/15         100         (67,000

Total

                  $ (875,786
                 

 

 

 

 

Ÿ  

As of December 31, 2014, over-the-counter options written were as follows:

 

Description    Counterparty      Put/
Call
      

Strike

Price

      

Expiration

Date

       Contracts        Market
Value
 

American Water Works Co., Inc.

   UBS AG        Call           USD         53.34           1/05/15           16,000         $ (7,491

CMS Energy Corp.

   Credit Suisse International        Call           USD         33.45           1/05/15           33,600           (44,420

Enterprise Products Partners LP

   Credit Suisse International        Call           USD         38.44           1/05/15           67,400           (1,406

OGE Energy Corp.

   Citibank N.A.        Call           USD         38.16           1/05/15           9,100           (1

Edison International

   Morgan Stanley & Co. International PLC        Call           USD         62.00           1/06/15           23,000           (80,270

Ferrovial SA

   Bank of America N.A.        Call           EUR         16.28           1/06/15           29,000           (7,644

NorthWestern Corp.

   Morgan Stanley & Co. International PLC        Call           USD         51.12           1/06/15           21,400           (116,875

Sydney Airport

   Citibank N.A.        Call           AUD         4.58           1/06/15           105,000           (10,219

Transurban Group

   Citibank N.A.        Call           AUD         8.46           1/06/15           95,000           (9,415

Williams Partners LP

   Credit Suisse International        Call           USD         53.14           1/06/15           5,800             

Access Midstream Partners LP

   Deutsche Bank AG        Call           USD         66.90           1/07/15           5,600             

Aeroports de Paris

   Morgan Stanley & Co. International PLC        Call           EUR         98.00           1/07/15           3,900           (11,002

EDP Renovaveis SA

   UBS AG        Call           EUR         5.23           1/07/15           28,100           (5,867

Iberdrola SA

   Bank of America N.A.        Call           EUR         5.65           1/07/15           63,500           (2,955

ITC Holdings Corp.

   Bank of America N.A.        Call           USD         39.15           1/07/15           12,600           (16,463

Enbridge, Inc.

   Citibank N.A.        Call           USD         47.14           1/08/15           27,000           (120,520

Groupe Eurotunnel SA

   Morgan Stanley & Co. International PLC        Call           EUR         10.47           1/08/15           44,000           (14,068

NiSource, Inc.

   Goldman Sachs International        Call           USD         41.93           1/08/15           14,500           (12,332

Sempra Energy

   Goldman Sachs International        Call           USD         111.07           1/08/15           19,700           (32,638

TerraForm Power, Inc., Class A

   Credit Suisse International        Call           USD         32.80           1/08/15           26,200           (7,834

TerraForm Power, Inc., Class A

   Deutsche Bank AG        Call           USD         34.80           1/08/15           16,000           (2,561

CMS Energy Corp.

   Credit Suisse International        Call           USD         32.99           1/12/15           35,900           (65,244

Fraport AG Frankfurt Airport Services Worldwide

   Goldman Sachs International        Call           EUR         50.41           1/12/15           4,500           (289

CCR SA

   Credit Suisse International        Call           BRL         17.73           1/13/15           30,000           (609

ONEOK Partners LP

   Credit Suisse International        Call           USD         50.50           1/13/15           13,000           (5

Aeroports de Paris

   Morgan Stanley & Co. International PLC        Call           EUR         98.00           1/14/15           3,900           (12,725

American Water Works Co., Inc.

   Morgan Stanley & Co. International PLC        Call           USD         53.03           1/14/15           8,100           (7,834

E.ON SE

   Goldman Sachs International        Call           EUR         15.10           1/14/15           13,700           (478

Ferrovial SA

   Deutsche Bank AG        Call           EUR         15.98           1/14/15           77,000           (46,028

ITC Holdings Corp.

   Goldman Sachs International        Call           USD         40.45           1/14/15           12,600           (5,373

Transurban Group

   UBS AG        Call           AUD         8.70           1/14/15           95,600           (3,297

EDP Renovaveis SA

   Goldman Sachs International        Call           EUR         5.38           1/15/15           12,500           (1,571

Enbridge, Inc.

   Citibank N.A.        Call           USD         47.14           1/15/15           27,000           (128,816

Public Service Enterprise Group, Inc.

   Credit Suisse International        Call           USD         40.46           1/15/15           35,200           (46,977

Spark Infrastructure Group

   Morgan Stanley & Co. International PLC        Call           AUD         1.97           1/21/15           117,000           (15,569

CenterPoint Energy, Inc.

   Deutsche Bank AG        Call           USD         24.15           1/22/15           23,000           (4,133

Dominion Midstream Partners LP

   Goldman Sachs International        Call           USD         35.68           1/22/15           21,000           (86,152

Energy Transfer Partners LP

   Deutsche Bank AG        Call           USD         66.91           1/22/15           9,900           (9,394

Groupe Eurotunnel SA

   Goldman Sachs International        Call           EUR         10.64           1/22/15           34,000           (9,819

Public Service Enterprise Group, Inc.

   UBS AG        Call           USD         42.33           1/22/15           31,000           (17,432

American Electric Power Co., Inc.

   Credit Suisse International        Call           USD         57.20           1/23/15           12,700           (46,466

Veolia Environnement SA

   UBS AG        Call           EUR         14.54           1/23/15           19,200           (9,390

American Tower Corp.

   Goldman Sachs International        Call           USD         100.46           1/26/15           26,800           (27,181

Dominion Resources, Inc.

   Morgan Stanley & Co. International PLC        Call           USD         74.66           1/26/15           43,300           (134,390

Pinnacle West Capital Corp.

   UBS AG        Call           USD         62.02           1/26/15           11,000           (69,586

American Water Works Co., Inc.

   Morgan Stanley & Co. International PLC        Call           USD         53.17           1/27/15           16,200           (21,790

 

See Notes to Financial Statements.

 

80    ANNUAL REPORT    DECEMBER 31, 2014     


Schedule of Investments (continued)      BlackRock Utility and Infrastructure Trust (BUI)   

 

 

As of December 31, 2014, over-the-counter options written were as follows: (concluded)

 

Description    Counterparty      Put/
Call
      

Strike

Price

      

Expiration

Date

       Contracts       

Market

Value

 

EDP Renovaveis SA

   Goldman Sachs International        Call           EUR         5.38           1/27/15           12,500         $ (2,091

NorthWestern Corp.

   Deutsche Bank AG        Call           USD         53.35           1/27/15           2,100           (7,182

East Japan Railway Co.

   Morgan Stanley & Co. International PLC        Call           JPY         8,771.29           1/28/15           3,400           (10,287

Fraport AG Frankfurt Airport Services Worldwide

   Goldman Sachs International        Call           EUR         48.21           1/28/15           2,200           (2,406

Fraport AG Frankfurt Airport Services Worldwide

   UBS AG        Call           EUR         49.39           1/28/15           3,700           (2,042

Groupe Eurotunnel SA

   Bank of America N.A.        Call           EUR         10.43           1/28/15           44,000           (20,442

National Grid PLC

   Bank of America N.A.        Call           GBP         9.16           1/28/15           169,000           (35,178

NextEra Energy Partners LP

   Goldman Sachs International        Call           USD         36.50           2/02/15           23,000           (7,200

Xcel Energy, Inc.

   Goldman Sachs International        Call           USD         34.86           2/02/15           21,000           (35,453

Ferrovial SA

   Morgan Stanley & Co. International PLC        Call           EUR         16.29           2/03/15           32,000           (17,304

Spark Infrastructure Group

   Morgan Stanley & Co. International PLC        Call           AUD         2.00           2/03/15           117,000           (12,515

Transurban Group

   Morgan Stanley & Co. International PLC        Call           AUD         8.75           2/03/15           191,000           (12,643

Abertis Infraestructuras SA

   Morgan Stanley & Co. International PLC        Call           EUR         15.77           2/04/15           136,800           (143,790

Aeroports de Paris

   Goldman Sachs International        Call           EUR         100.04           2/04/15           2,500           (7,806

EDP Renovaveis SA

   UBS AG        Call           EUR         5.37           2/04/15           21,000           (4,028

Japan Airport Terminal Co. Ltd.

   UBS AG        Call           JPY         4,802.97           2/04/15           11,700           (18,545

MPLX LP

   Goldman Sachs International        Call           USD         69.50           2/06/15           10,200           (50,114

National Grid PLC

   Bank of America N.A.        Call           GBP         8.95           2/06/15           169,000           (72,498

RWE AG

   Bank of America N.A.        Call           EUR         26.48           2/06/15           17,200           (11,930

Sempra Energy

   UBS AG        Call           USD         107.89           2/09/15           6,600           (35,319

Wisconsin Energy Corp.

   Credit Suisse International        Call           USD         50.90           2/09/15           39,500           (111,719

New Jersey Resources Corp.

   Morgan Stanley & Co. International PLC        Call           USD         59.60           2/11/15           9,000           (26,251

American Water Works Co., Inc.

   Citibank N.A.        Call           USD         51.75           2/12/15           24,300           (51,329

NextEra Energy, Inc.

   Deutsche Bank AG        Call           USD         105.56           2/12/15           17,200           (55,751

Sydney Airport

   Morgan Stanley & Co. International PLC        Call           AUD         4.76           2/13/15           105,000           (7,072

Genesis Energy LP

   Goldman Sachs International        Call           USD         46.12           2/18/15           21,400           (16,259

CMS Energy Corp.

   Credit Suisse International        Call           USD         33.31           2/19/15           69,600           (116,645

EDP Renovaveis SA

   UBS AG        Call           EUR         5.37           2/19/15           21,000           (4,736

ITC Holdings Corp.

   UBS AG        Call           USD         38.75           2/19/15           25,400           (52,604

EDP Renovaveis SA

   UBS AG        Call           EUR         5.35           3/05/15           13,200           (3,528

Total

                               $ (2,229,196
                              

 

 

 

 

Ÿ  

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows:

 

  Ÿ  

Level 1 — unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  Ÿ  

Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

  Ÿ  

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Trust’s policy regarding valuation of investments and derivative financial instrument, refer to Note 2 of the Notes to Financial Statements.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    81


Schedule of Investments (concluded)      BlackRock Utility and Infrastructure Trust (BUI)   

 

 

As of December 31, 2014, the following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy:

 

      Level 1   Level 2   Level 3    Total

Assets:

                 

Investments:

                 

Long-Term Investments:

                 

Common Stocks:

                 

Construction & Engineering

             $ 7,778,793                $ 7,778,793  

Diversified Telecommunication Services

     $ 3,719,010                          3,719,010  

Electric Utilities

       76,561,726         3,442,962                  80,004,688  

Gas Utilities

       1,554,480         3,424,375                  4,978,855  

Independent Power and Renewable Electricity Producers

       12,998,971         3,766,034                  16,765,005  

Media

       1,157,058                          1,157,058  

Multi-Utilities

       64,006,343         16,726,357                  80,732,700  

Oil, Gas & Consumable Fuels

       105,191,052                          105,191,052  

Real Estate Investment Trusts (REITs)

       16,052,900                          16,052,900  

Road & Rail

       731,182                          731,182  

Transportation Infrastructure

       1,297,983         43,793,521                  45,091,504  

Water Utilities

       9,839,180                          9,839,180  

Wireless Telecommunication Services

       2,525,328                          2,525,328  

Short-Term Securities

       10,776,191                          10,776,191  
    

 

 

 

Total

     $ 306,411,404       $ 78,932,042                $ 385,343,446  
    

 

 

 
                 
      Level 1   Level 2   Level 3    Total

Derivative Financial Instruments1

                 

Liabilities:

                 

Equity contracts

     $ (698,321 )     $ (2,406,661 )              $ (3,104,982 )
    

 

 

 

1    Derivative financial instruments are options written, which are shown at value.

       

The Trust may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of December 31, 2014, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:    
                 
      Level 1   Level 2   Level 3    Total

Assets:

                 

Foreign currency at value

     $ 2,175                        $ 2,175  

Liabilities:

                 

Bank overdraft

             $ (9,288 )                (9,288 )
    

 

 

 

Total

     $ 2,175       $ (9,288 )              $ (7,113 )
    

 

 

 

During the period ended December 31, 2014, there were no transfers between levels.

 

See Notes to Financial Statements.

 

82    ANNUAL REPORT    DECEMBER 31, 2014     


Statements of Assets and Liabilities     

 

 

December 31, 2014   

BlackRock

Energy and

Resources

Trust (BGR)

   

BlackRock

Enhanced

Capital and

Income

Fund, Inc. (CII)

   

BlackRock

Enhanced

Equity

Dividend

Trust (BDJ)

   

BlackRock

Global

Opportunities

Equity

Trust (BOE)

   

BlackRock

Health

Sciences

Trust (BME)

 
          
Assets                                         

Investments at value — unaffiliated1,2

   $     600,197,282      $     691,701,517      $     1,739,444,213      $     1,061,968,320      $     302,874,373   

Investments at value — affiliated3

     35,462,798        2,553,202        23,544,648        7,334,572        3,271,616   

Cash

     6,930        62,339        1,242        1,045          

Cash pledged as collateral for OTC derivatives

            100,000        98,000                 

Foreign currency at value4

     65,835        4,170        1,800        1,350,321          

Investments sold receivable

                          2,662,304          

Options written receivable

     22,965        511,592        1,049,326        77,181        27,328   

Dividends receivable — affiliated

     2,856        134        2,057        472        178   

Unrealized appreciation on forward foreign currency exchange contracts

            5,302,499                        

Dividends receivable

     200,405        914,685        3,240,805        1,399,913        345,002   

Securities lending income receivable — affiliated

            290               3,948        88   

Other assets

     18,004        15,776        45,716        39,312        8,636   
  

 

 

 

Total assets

     635,977,075        701,166,204        1,767,427,807        1,074,837,388        306,527,221   
  

 

 

 
          
Liabilities                                         

Options written at value5

     1,574,557        7,478,281        16,391,070        10,714,090        2,914,970   

Collateral on securities loaned at value

            673,750               1,401,820          

Investments purchased payable

                                 139,031   

Options written payable

     900        351,607        1,270,250        45,824        757   

Income dividends payable

     3,627,616        339,390        433,396        286,702          

Investment advisory fees payable

     657,241        498,716        1,184,655        899,158        267,145   

Reorganization costs payable

                   151,484                 

Officer’s and Trustees’ fees payable

     385,598        97,332        699,384        543,420        23,597   

Unrealized depreciation on forward foreign currency exchange contracts

            190,493                        

Other accrued expenses payable

     128,209        157,115        227,180        259,649        78,457   
  

 

 

 

Total liabilities

     6,374,121        9,786,684        20,357,419        14,150,663        3,423,957   
  

 

 

 

Net Assets

   $ 629,602,954      $ 691,379,520      $ 1,747,070,388      $ 1,060,686,725      $ 303,103,264   
  

 

 

 
          
Net Assets Consist of                                         

Paid-in capital

   $ 671,744,850      $ 689,310,753      $ 1,573,389,926      $ 1,039,979,883      $ 185,065,815   

Distributions in excess of net investment income

     (322,565     (4,844,799     (588,821     (3,681,733     (16,686

Accumulated net realized gain (loss)

     (7,863,996     (112,350,071     (196,434,121     (104,550,382     1,552,002   

Net unrealized appreciation/depreciation

     (33,955,335     119,263,637        370,703,404        128,938,957        116,502,133   
  

 

 

 

Net Assets

   $ 629,602,954      $ 691,379,520      $ 1,747,070,388      $ 1,060,686,725      $ 303,103,264   
  

 

 

 

Net asset value6,7

   $ 21.15      $ 15.67      $ 9.24      $ 15.27      $ 38.61   
  

 

 

 

1       Investments at cost — unaffiliated

   $ 635,275,403      $ 576,489,779      $ 1,366,872,730      $ 933,641,184      $ 186,714,603   

2       Securities loaned at value

          $ 641,550             $ 1,317,350          

3       Investments at cost — affiliated

   $ 35,462,798      $ 2,553,202      $ 23,544,648      $ 7,334,572      $ 3,271,616   

4       Foreign currency at cost

   $ 65,767      $ 10,035      $ 1,812      $ 1,365,120          

5       Premiums received

   $ 2,703,505      $ 6,426,875      $ 14,525,930      $ 11,403,065      $ 3,268,399   

6       Shares outstanding, unlimited number of shares authorized, $0.001 par value

     29,766,217               188,978,322        69,483,161        7,850,447   

7       Shares outstanding, 200 million shares authorized, $0.10 par value

            44,121,400                        

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    83


Statements of Assets and Liabilities     

 

 

December 31, 2014   

BlackRock

International

Growth and

Income

Trust (BGY)

   

BlackRock

Resources &
Commodities

Strategy

Trust (BCX)1

   

BlackRock

Science and

Technology
Trust (BST)

   

BlackRock

Utility and

Infrastructure
Trust (BUI)

 
        
Assets                                 

Investments at value — unaffiliated2,3

   $     798,245,976      $     1,134,386,056      $     384,360,375      $     374,567,255   

Investments at value — affiliated4

     39,657,703        31,852,127        43,173,790        10,776,191   

Cash

     2,003        67,179                 

Cash pledged as collateral for OTC derivatives

     7,893,000                        

Cash pledged as collateral for exchange-traded options written

     359,000               15,055,661          

Foreign currency at value5

     4,686,314        41,296        235,704        2,175   

Investments sold receivable

     95,778                        

Options written receivable

     17,595        129,357        218,327        12,059   

Dividends receivable — affiliated

     1,479        2,340        3,414        429   

Dividends receivable

     1,407,201        2,241,548        126,490        853,965   

Securities lending income receivable — affiliated

     1,347        12,375                 

Other assets

     23,234        38,154        9,372        9,527   
  

 

 

 

Total assets

     852,390,630        1,168,770,432        443,183,133        386,221,601   
  

 

 

 
        
Liabilities                                 

Bank overdraft

                          9,288   

Options written at value6

     10,585,312        7,461,454        3,180,904        3,104,982   

Collateral on securities loaned at value

     870,139        2,373,800                 

Investments purchased payable

     2,589,558               1,994,711        2,670,841   

Options written payable

     1,417        1,357        173,837          

Income dividends payable

     361,997        380,190               169,588   

Reorganization costs payable

            469,615                 

Investment advisory fees payable

     680,413        998,072        293,966        317,508   

Officer’s and Trustees’ fees payable

     483,245        314,273        6,254        8,636   

Other accrued expenses payable

     266,795        273,135        152,998        110,461   
  

 

 

 

Total liabilities

     15,838,876        12,271,896        5,802,670        6,391,304   
  

 

 

 

Net Assets

   $ 836,551,754      $ 1,156,498,536      $ 437,380,463      $ 379,830,297   
  

 

 

 
        
Net Assets Consist of                                 

Paid-in capital

   $ 1,342,987,967      $ 1,444,461,402      $ 426,792,306      $ 296,406,367   

Undistributed (distributions in excess of) net investment income

     (3,482,256     (302,805            1,332,581   

Accumulated net realized loss

     (536,737,948     (309,449,047     (1,125,330     (6,212,828

Net unrealized appreciation/depreciation

     33,783,991        21,788,986        11,713,487        88,304,177   
  

 

 

 

Net Assets

   $ 836,551,754      $ 1,156,498,536      $ 437,380,463      $ 379,830,297   
  

 

 

 

Net asset value7

   $ 7.61      $ 11.67      $ 19.43      $ 22.47   
  

 

 

 

1       Consolidated Statement of Assets and Liabilities

        

2       Investments at cost — unaffiliated

   $ 763,526,599      $ 1,111,234,690      $ 373,293,664      $ 285,403,570   

3       Securities loaned at value

   $ 816,608      $ 2,321,424                 

4       Investments at cost — affiliated

   $ 39,657,703      $ 31,852,127      $ 43,173,790      $ 10,776,191   

5       Foreign currency at cost

   $ 4,726,377      $ 43,064      $ 235,554      $ 2,194   

6       Premiums received

   $ 9,784,983      $ 6,119,364      $ 3,826,396      $ 2,256,661   

7       Shares outstanding, unlimited number of shares authorized, $0.001 par value

     109,989,277        99,059,784        22,507,592        16,906,964   

 

See Notes to Financial Statements.

 

84    ANNUAL REPORT    DECEMBER 31, 2014     


Statements of Operations     

 

 

     BlackRock
Energy and  Resources
Trust (BGR)
    BlackRock
Enhanced Capital  and
Income Fund, Inc. (CII)
    BlackRock
Enhanced Equity
Dividend Trust (BDJ)
 
     Period
November 1, 2014
to
December 31, 2014
    Year Ended
October 2014
    Period
November 1, 2014
to
December 31, 2014
    Year Ended
October 2014
    Period
November 1, 2014
to
December 31, 2014
    Year Ended
October 2014
 
            
Investment Income                                                 

Dividends — unaffiliated

   $     3,703,386      $     18,845,035      $     2,796,719      $     31,067,597      $     8,972,747      $     44,084,322   

Foreign taxes withheld

     (163,088     (1,129,834     (66,957     (316,626     (72,489     (504,357

Dividends — affiliated

     1,816        14,208        459        5,601        2,023        15,143   

Securities lending — affiliated — net

            16,642        654        51               524   

Other income — affiliated

            7,901               843               7,663   
  

 

 

 

Total income

     3,542,114        17,753,952        2,730,875        30,757,466        8,902,281        43,603,295   
  

 

 

 
            
Expenses                                                 

Investment advisory

     1,379,025        9,919,201        978,402        5,829,083        2,279,450        13,220,957   

Reorganization

                                        148,630   

Professional

     46,523        61,629        66,311        187,816        60,132        107,725   

Transfer agent

     30,981        114,477        21,890        76,709        63,316        201,901   

Custodian

     16,905        124,995        31,283        117,798        15,614        192,148   

Officer and Trustees

     (734     98,729        2,277        67,463        (12,825     178,176   

Printing

     11,547        34,479        24,124        26,474        24,298        53,307   

Insurance

     2,423        41,588        2,565        20,473        5,389        59,038   

Registration

     1,704        9,203        2,554        15,230        10,346        62,300   

Miscellaneous

     3,259        28,633        5,615        33,663        2,486        32,605   
  

 

 

 

Total expenses

     1,491,633        10,432,934        1,135,021        6,374,709        2,448,206        14,256,787   

Less fees waived by Manager

     (4,155     (25,351     (456     (10,357     (4,544     (30,697

Less expenses reimbursed by Manager

     (41,372            (38,480            (62,940       

Less reorganization costs reimbursed by Manager

                                        (148,630
  

 

 

 

Total expenses after fees waived and/or reimbursed by Manager

     1,446,106        10,407,583        1,096,085        6,364,352        2,380,722        14,077,460   
  

 

 

 

Net investment income

     2,096,008        7,346,369        1,634,790        24,393,114        6,521,559        29,525,835   
  

 

 

 
            
Realized and Unrealized Gain (Loss)                                                 

Net realized gain (loss) from:

            

Investments — unaffiliated

     (6,164,501     83,707,986        3,476,390        3,344,991        (56,444     (2,870,394

Capital gain distributions received from affiliated investment companies

     2,544                             2,835          

Options written

     4,363,915        (460,975     (9,880,652     11,842,946        (18,870,786     1,156,503   

Foreign currency transactions

     (34,427     (44,762     (3,265     2,226,609        (3,365     7,870   
  

 

 

 
     (1,832,469     83,202,249        (6,407,527     17,414,546        (18,927,760     (1,706,021
  

 

 

 

Net change in unrealized appreciation/depreciation on:

            

Investments — unaffiliated

     (69,284,443     (118,599,960     16,257,667        20,474,136        29,311,271        138,772,116   

Options written

     (512,392     (815,532     3,291,051        (45,982     10,205,956        (3,221,974

Foreign currency translations

     (2,433     (3,694     2,942,763        2,135,043        1,968        (4
  

 

 

 
     (69,799,268     (119,419,186     22,491,481        22,563,197        39,519,195        135,550,138   
  

 

 

 

Net realized and unrealized gain (loss)

     (71,631,737     (36,216,937     16,083,954        39,977,743        20,591,435        133,844,117   
  

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   $ (69,535,729   $ (28,870,568   $ 17,718,744      $ 64,370,857      $ 27,112,994      $ 163,369,952   
  

 

 

 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    85


Statements of Operations     

 

 

     BlackRock
Global  Opportunities
Equity Trust (BOE)
    BlackRock
Health Sciences
Trust (BME)
    BlackRock
International  Growth
and Income Trust (BGY)
 
    

Period

November 1, 2014

to

December 31, 2014

    Year Ended
October 2014
   

Period

November 1, 2014

to

December 31, 2014

    Year Ended
October 2014
   

Period

November 1, 2014

to

December 31, 2014

    Year Ended
October 2014
 
            
Investment Income                                                 

Dividends — unaffiliated

   $     1,952,185      $     22,545,655      $     537,623      $     3,185,700      $     1,470,117      $     22,804,892   

Foreign taxes withheld

     (53,519     (965,168     (7,551     (92,618     (182,100     (1,603,832

Dividends — affiliated

     1,539        9,513        534        2,339        926        10,701   

Securities lending — affiliated — net

     10,221        110,061        279        8,206        4,290        145,293   

Other income — affiliated

            7,530               2,267               7,166   
  

 

 

 

Total income

     1,910,426        21,707,591        530,885        3,105,894        1,293,233        21,364,220   
  

 

 

 
            
Expenses                                                 

Investment advisory

     1,786,272        11,371,765        526,495        2,825,619        1,426,979        9,635,153   

Professional

     73,996        97,714        45,145        62,725        79,738        98,824   

Custodian

     36,847        351,000        13,741        112,489        33,605        348,227   

Transfer agent

     40,095        152,385        10,988        39,667        36,803        135,267   

Officer and Trustees

     (10,939     136,624        3,169        29,845        (9,757     121,821   

Printing

     16,071        40,295        4,919        15,226        13,445        35,761   

Registration

     4,022        23,985        1,557        9,281        6,367        37,969   

Insurance

     3,530        42,426        1,025        11,433        2,837        60,162   

Miscellaneous

     9,364        82,365        5,512        27,176        9,874        116,345   
  

 

 

 

Total expenses

     1,959,258        12,298,559        612,551        3,133,461        1,599,891        10,589,529   

Less fees waived by Manager

     (1,424     (18,678     (510     (4,244     (73,388     (502,491

Less expenses reimbursed by Manager

     (53,790            (28,900            (50,217       
  

 

 

 

Total expenses after fees waived and/or reimbursed by Manager

     1,904,044        12,279,881        583,141        3,129,217        1,476,286        10,087,038   
  

 

 

 

Net investment income (loss)

     6,382        9,427,710        (52,256     (23,323     (183,053     11,277,182   
  

 

 

 
            
Realized and Unrealized Gain (Loss)                                                 

Net realized gain (loss) from:

            

Investments — unaffiliated

     (9,915,902     4,233,379        7,811,968        35,691,906        (5,964,982     23,435,384   

Capital gain distributions received from affiliated investment companies

                                 1,296          

Options written

     (11,353,918     23,107,432        (1,966,358     (2,802,215     (5,584,407     13,684,874   

Foreign currency transactions

     92,806        (103,568     13,829        39,589        (178,855     262,487   
  

 

 

 
     (21,177,014     27,237,243        5,859,439        32,929,280        (11,726,948     37,382,745   
  

 

 

 

Net change in unrealized appreciation/depreciation on:

            

Investments — unaffiliated

     6,626,048        (17,402,999     1,080,885            40,043,542        (14,964,665     (92,525,089

Options written

     9,339,874        (4,401,165     1,506,360        (1,797,104     7,044,744        (3,743,858

Foreign currency translations

     (10,906     (231,065     (2,995     (11,979     (55,320     (117,975
  

 

 

 
     15,955,016        (22,035,229     2,584,250        38,234,459        (7,975,241     (96,386,922
  

 

 

 

Net realized and unrealized gain (loss)

     (5,221,998     5,202,014        8,443,689        71,163,739        (19,702,189     (59,004,177
  

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   $ (5,215,616   $     14,629,724      $     8,391,433      $ 71,140,416      $ (19,885,242   $ (47,726,995
  

 

 

 

 

See Notes to Financial Statements.

 

86    ANNUAL REPORT    DECEMBER 31, 2014     


Statements of Operations

 

 

    
     BlackRock
Resources & Commodities
Strategy Trust (BCX)1
    BlackRock
Science and
Technology Trust (BST)
    BlackRock
Utility and Infrastructure
Trust (BUI)
 
    

Period
November 1, 2014

to
December 31, 2014

    Year Ended
October 2014
   

Period

October 30, 20142

to

December 31, 2014

   

Period
November 1, 2014

to

December 31, 2014

    Year Ended
October 2014
 
          
Investment Income                                         

Dividends — unaffiliated

   $       4,489,816      $     18,888,539      $ 534,594      $     2,555,852      $     13,123,311   

Foreign taxes withheld

     (331,257     (1,502,728     (6,313     (72,419     (497,713

Dividends — affiliated

     1,091        9,059        4,943        861        3,509   

Securities lending — affiliated — net

     33,328        31,751                      547   

Other income — affiliated

            21,128                      3,288   
  

 

 

 

Total income

     4,192,978        17,447,749        533,224        2,484,294        12,632,942   
  

 

 

 
          
Expenses                                         

Investment advisory

     1,483,987        7,592,061        725,296        629,827        3,646,598   

Reorganization

            522,264                        

Custodian

     3,137        112,620        27,258        20,905        125,875   

Professional

     52,596        78,185        69,856        51,905        66,225   

Transfer agent

     19,863        82,221        9,558        14,112        51,369   

Officer and Trustees

     (4,273     62,226        6,254        5,637        35,823   

Printing

     18,240        3,000        10,089        6,311        15,213   

Insurance

     1,903        17,502        1,326        1,238        9,581   

Registration

     30        16,079        1,534        1,559        9,279   

Miscellaneous

     10,063        32,535        10,679        3,248        58,000   
  

 

 

 

Total expenses

     1,585,546        8,518,693        861,850        734,742        4,017,963   

Less fees waived by Manager

     (112,980     (1,283,483     (156,351     (798     (6,623

Less expenses reimbursed by Manager

     (41,480                   (34,977       

Less reorganization costs reimbursed by Manager

            (522,264                     
  

 

 

 

Total expenses after fees waived and/or reimbursed by Manager

     1,431,086        6,712,946        705,499        698,967        4,011,340   
  

 

 

 

Net investment income (loss)

     2,761,892        10,734,803        (172,275     1,785,327        8,621,602   
  

 

 

 
          
Realized and Unrealized Gain (Loss)                                         

Net realized gain (loss) from:

          

Investments — unaffiliated

     (7,346,272     (9,395,919     (2,158,455     816,193        9,106,272   

Capital gain distributions received from affiliated investment companies

     1,529               6,925                 

Options written

     (119,699     (196,096     1,026,200        (1,653,983     (3,029,227

Foreign currency transactions

     36,365        (52,301     220,333        (12,111     (39,186
  

 

 

 
     (7,428,077     (9,644,316     (904,997     (849,901     6,037,859   
  

 

 

 

Net change in unrealized appreciation/depreciation on:

          

Investments — unaffiliated

     (38,823,734     (3,231,843     11,066,711        3,041,775        39,522,788   

Options written

     1,282,920        425,446        645,492        1,186,181        (186,639

Foreign currency translations

     10,759        (13,584     1,284        (3,570     10,366   
  

 

 

 
     (37,530,055     (2,819,981     11,713,487        4,224,386        39,346,515   
  

 

 

 

Net realized and unrealized gain (loss)

     (44,958,132     (12,464,297     10,808,490        3,374,485        45,384,374   
  

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   $ (42,196,240   $ (1,729,494   $     10,636,215      $ 5,159,812      $ 54,005,976   
  

 

 

 

 

  1   

Consolidated Statement of Changes in Net Assets.

  2   

Commencement of Operations.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    87


Statements of Changes in Net Assets     

 

 

     BlackRock
Energy and
Resources Trust (BGR)
    BlackRock
Enhanced Capital and
Income Fund, Inc. (CII)
 
    

Period
November 1, 2014
to

December 31,

    Year Ended October 31,    

Period
November 1, 2014
to

December 31,

    Year Ended October 31,  
Increase (Decrease) in Net Assets:    2014     2014     2013     2014     2014     2013  
            
Operations                                                 

Net investment income

   $ 2,096,008      $ 7,346,369      $ 3,487,794      $ 1,634,790      $ 24,393,114      $ 13,662,033   

Net realized gain (loss)

     (1,832,469     83,202,249        137,486,490        (6,407,527     17,414,546        41,586,734   

Net change in unrealized appreciation/depreciation

     (69,799,268     (119,419,186     31,425,100        22,491,481        22,563,197        50,511,787   
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     (69,535,729     (28,870,568     172,399,384        17,718,744        64,370,857        105,760,554   
  

 

 

   

 

 

 
            
Distributions to Shareholders1                                                 

Net investment income

     (13,897,363     (13,106,479            (4,539,117     (28,519,674     (13,908,365

Net realized gains

     (28,073,003     (113,548,774     (48,221,272                     

Return of capital

                          (4,285,163     (28,838,146     (39,037,315
  

 

 

   

 

 

 

Decrease in net assets resulting from distributions to shareholders

     (41,970,366     (126,655,253     (48,221,272     (8,824,280     (57,357,820     (52,945,680
  

 

 

   

 

 

 
            
Net Assets                                                 

Total increase (decrease) in net assets

     (111,506,095     (155,525,821     124,178,112        8,894,464        7,013,037        52,814,874   

Beginning of period

     741,109,049        896,634,870        772,456,758        682,485,056        675,472,019        622,657,145   
  

 

 

   

 

 

 

End of period

   $     629,602,954      $     741,109,049      $     896,634,870      $     691,379,520      $     682,485,056      $     675,472,019   
  

 

 

   

 

 

 

Undistributed (distributions in excess of) net investment income, end of period

   $ (322,565   $ 11,513,217      $ (2,782,487   $ (4,844,799   $ (1,937,207   $ (1,937,207
  

 

 

   

 

 

 

 

  1   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

See Notes to Financial Statements.

 

88    ANNUAL REPORT    DECEMBER 31, 2014     


Statements of Changes in Net Assets     

 

 

     BlackRock
Enhanced Equity
Dividend Trust (BDJ)
    BlackRock
Global Opportunities
Equity Trust (BOE)
 
    

Period
November 1, 2014
to

December 31,

    Year Ended October 31,    

Period
November 1, 2014
to

December 31,

    Year Ended October 31,  
Increase (Decrease) in Net Assets:    2014     2014     2013     2014     2014     2013  
            
Operations                                                 

Net investment income

   $ 6,521,559      $ 29,525,835      $ 32,816,080      $ 6,382      $ 9,427,710      $ 8,382,978   

Net realized gain (loss)

     (18,927,760     (1,706,021     117,623,639        (21,177,014     27,237,243        109,951,890   

Net change in unrealized appreciation/depreciation

     39,519,195        135,550,138        54,197,961        15,955,016        (22,035,229     86,145,100   
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     27,112,994        163,369,952        204,637,680        (5,215,616     14,629,724        204,479,968   
  

 

 

   

 

 

 
            
Distributions to Shareholders1                                                 

Net investment income

     (6,490,341     (29,340,373     (32,582,758            (11,495,722     (11,468,669

Distributions in excess of net investment income

                   (35,787,362            (19,478,198     (63,152,174

Net realized gains

                   (32,140,223                     

Return of capital

     (10,716,791     (79,569,763            (13,959,167     (62,866,563     (11,996,866
  

 

 

   

 

 

 

Decrease in net assets resulting from distributions to shareholders

     (17,207,132     (108,910,136     (100,510,343     (13,959,167     (93,840,483     (86,617,709
  

 

 

   

 

 

 
            
Capital Share Transactions                                                 

Net proceeds from the issuance of shares due to reorganization

     88,481,334                                      
  

 

 

   

 

 

 
            
Net Assets                                                 

Total increase (decrease) in net assets

     98,387,196        54,459,816        104,127,337        (19,174,783     (79,210,759     117,862,259   

Beginning of period

     1,648,683,192        1,594,223,376        1,490,096,039        1,079,861,508        1,159,072,267        1,041,210,008   
  

 

 

   

 

 

 

End of period

   $     1,747,070,388      $     1,648,683,192      $     1,594,223,376      $     1,060,686,725      $     1,079,861,508      $     1,159,072,267   
  

 

 

   

 

 

 

Distributions in excess of net investment income, end of period

   $ (588,821   $ (691,062   $ (600,773   $ (3,681,733   $ (4,181,410   $ (2,479,284
  

 

 

   

 

 

 

 

  1   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    89


Statements of Changes in Net Assets     

 

     BlackRock
Health Sciences Trust (BME)
    BlackRock
International Growth and
Income Trust (BGY)
 
    

Period
November 1, 2014
to

December 31,

    Year Ended October 31,    

Period
November 1, 2014
to

December 31,

    Year Ended October 31,  
Increase (Decrease) in Net Assets:    2014     2014     2013     2014     2014     2013  
            
Operations                                                 

Net investment income (loss)

   $ (52,256   $ (23,323   $ 923,733      $ (183,053   $ 11,277,182      $ 14,055,907   

Net realized gain (loss)

     5,859,439        32,929,280        24,717,008        (11,726,948     37,382,745        72,629,297   

Net change in unrealized appreciation/depreciation

     2,584,250        38,234,459        43,710,073        (7,975,241     (96,386,922     72,416,478   
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     8,391,433        71,140,416        69,350,814        (19,885,242     (47,726,995     159,101,682   
  

 

 

   

 

 

 
            
Distributions to Shareholders1                                                 

Net investment income

     (97,279     (806,862     (446,759            (13,975,718     (18,226,947

Distributions in excess of net investment income2

                                 (8,305,169       

Net realized gains

     (20,982,505     (28,969,492     (17,987,036                     

Return of capital

                          (11,548,874     (57,741,812     (55,619,854
  

 

 

   

 

 

 

Decrease in net assets resulting from distributions to shareholders

     (21,079,784     (29,776,354     (18,433,795     (11,548,874     (80,022,699     (73,846,801
  

 

 

   

 

 

 
            
Capital Share Transactions                                                 

Reinvestment of dividends

     1,858,610        2,407,444        867,486                        
  

 

 

   

 

 

 
            
Net Assets                                                 

Total increase (decrease) in net assets

     (10,829,741     43,771,506        51,784,505        (31,434,116     (127,749,694     85,254,881   

Beginning of period

     313,933,005        270,161,499        218,376,994        867,985,870        995,735,564        910,480,683   
  

 

 

   

 

 

 

End of period

   $     303,103,264      $     313,933,005      $     270,161,499      $     836,551,754      $     867,985,870      $     995,735,564   
  

 

 

   

 

 

 

Undistributed (distributions in excess of) net investment income, end of period

   $ (16,686   $ 80,023      $ 466,794      $ (3,482,256   $ (3,848,440   $ (2,109,861
  

 

 

   

 

 

 

 

  1   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  2   

Tax distribution.

 

See Notes to Financial Statements.

 

90    ANNUAL REPORT    DECEMBER 31, 2014     


Statements of Changes in Net Assets     

 

     BlackRock
Resources & Commodities
Strategy Trust (BCX)1
    BlackRock
Science and
Technology  Trust (BST)
 
    

Period
November 1, 2014
to

    Year Ended October 31,    

Period

October 30, 20142

to

 
Increase (Decrease) in Net Assets:    December 31, 2014     2014     2013     December 31, 2014  
        
Operations                                 

Net investment income (loss)

   $ 2,761,892      $ 10,734,803      $ 11,454,960      $ (172,275

Net realized loss

     (7,428,077     (9,644,316     (65,371,790     (904,997

Net change in unrealized appreciation/depreciation

     (37,530,055     (2,819,981     20,545,737        11,713,487   
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     (42,196,240     (1,729,494     (33,371,093     10,636,215   
  

 

 

   

 

 

 
        
Distributions to Shareholders3                                 

Net investment income

     (2,386,991     (14,352,994     (6,452,839     (48,058

Net realized gains

                            

Return of capital

     (8,841,474     (32,315,467     (47,574,521     (2,202,701
  

 

 

   

 

 

 

Decrease in net assets resulting from distributions to shareholders

     (11,228,465     (46,668,461     (54,027,360     (2,250,759
  

 

 

   

 

 

 
        
Capital Share Transactions                                 

Net proceeds from the issuance of shares due to reorganization

     627,703,703                        

Net proceeds from the issuance of shares

                          400,245,000   

Net proceeds from the underwriters’ over allotment option exercised

                          28,650,000   
  

 

 

   

 

 

 

Net increase in net assets derived from shares transactions

     627,703,703                      428,895,000   
  

 

 

   

 

 

 
        
Net Assets                                 

Total increase (decrease) in net assets

     574,278,998        (48,397,955     (87,398,453     437,280,456   

Beginning of period

     582,219,538        630,617,493        718,015,946        100,007   
  

 

 

   

 

 

 

End of period

   $     1,156,498,536      $     582,219,538      $     630,617,493      $     437,380,463   
  

 

 

   

 

 

 

Undistributed (distributions in excess of) net investment income, end of period

   $ (302,805   $ (398,604   $ (4,416,905       
  

 

 

   

 

 

 

 

  1   

Consolidated Statement of Changes in Net Assets.

 

  2   

Commencement of Operations.

 

  3   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    91


Statements of Changes in Net Assets     

 

     BlackRock Utility and
Infrastructure
Trust (BUI)
 
    

Period
November 1, 2014
to

    Year Ended October 31,  
Increase (Decrease) in Net Assets:    December 31, 2014     2014     2013  
      
Operations                         

Net investment income

   $ 1,785,327      $ 8,621,602      $ 9,640,424   

Net realized gain (loss)

     (849,901     6,037,859        6,418,044   

Net change in unrealized appreciation/depreciation

     4,224,386        39,346,515        17,842,699   
  

 

 

 

Net increase in net assets resulting from operations

     5,159,812        54,005,976        33,901,167   
  

 

 

 
      
Distributions to Shareholders1                         

Net investment income

     (1,712,370     (8,667,652     (8,709,264

Net realized gains

            (6,308,640     (7,173,603

Return of capital

     (2,379,115     (11,593,002     (8,632,231
  

 

 

 

Decrease in net assets resulting from distributions to shareholders

     (4,091,485     (26,569,294     (24,515,098
  

 

 

 
      
Net Assets                         

Total increase in net assets

     1,068,327        27,436,682        9,386,069   

Beginning of period

     378,761,970        351,325,288        341,939,219   
  

 

 

 

End of period

   $     379,830,297      $     378,761,970      $     351,325,288   
  

 

 

 

Undistributed net investment income, end of period

   $ 1,332,581      $ 1,271,735      $ 1,564,553   
  

 

 

 

 

  1   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

See Notes to Financial Statements.

 

92    ANNUAL REPORT    DECEMBER 31, 2014     


Statements of Cash Flows     

 

Period November 1, 2014 to December 31, 2014    BlackRock
Energy and
Resources
Trust (BGR)
   

BlackRock
Enhanced
Capital and
Income

Fund, Inc. (CII)

   

BlackRock
Enhanced
Equity
Dividend

Trust (BDJ)

 
      
Cash Provided by Operating Activities                         

Net increase (decrease) in net assets resulting from operations

   $ (69,535,729   $ 17,718,744      $ 27,112,994   

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities:

      

Decrease in cash pledged as collateral for OTC derivatives

                   2,000   

Decrease (increase) in dividends receivable

     337,967        (587,458     (1,436,911

Decrease (increase) in dividends receivable — affiliated

     (2,299     304        (717

Decrease (increase) in securities lending income receivable — affiliated

            (208     524   

Increase in other assets

     (15,422     (11,948     (29,959

Increase (decrease) in investment advisory fees payable

     (92,569     25,101        21,902   

Increase in collateral on securities loaned at value

            658,129          

Decrease in reorganization costs payable

                   (78,648

Increase (decrease) in Officer’s and Trustees’ fees payable

     (1,370     1,735        (14,209

Decrease in other accrued expenses payable

     (22,768     (25,007     (46,140

Net realized loss on investments and options written

     1,798,042        6,404,262        18,924,395   

Net unrealized (gain) loss on investments, options written and foreign currency translations

     69,796,903            (22,492,461         (39,517,283

Premiums received from options written

     3,611,449        9,227,228        18,681,617   

Premiums paid on closing options written

     (342,795     (18,479,385     (36,228,799

Proceeds from sales of long-term investments

     83,044,764        26,435,647        10,929,532   

Purchases of long-term investments

     (25,558,783     (14,413,789     (6,773,297

Net (purchases) sales of short-term securities

     (23,663,700     5,121,338        26,144,894   
  

 

 

 

Cash provided by operating activities

     39,353,690        9,582,232        17,691,895   
  

 

 

 
      
Cash Used for Financing Activities                         

Foreign currency received from reorganization

                   48,235   

Decrease in bank overdraft/bank overdraft on foreign currency at value

            (15,877       

Cash dividends paid to shareholders

     (39,473,540     (9,504,029     (17,946,877
  

 

 

 

Cash used for financing activities

         (39,473,540     (9,519,906     (17,898,642
  

 

 

 
      
Cash Impact from Foreign Exchange Fluctuations                         

Cash impact from foreign exchange fluctuations

     (68     7        56   
  

 

 

 
      
Cash and Foreign Currency                         

Net increase (decrease) in cash and foreign currency at value

     (119,918     62,333        (206,691

Cash and foreign currency at value beginning of year

     192,683        4,176        209,733   
  

 

 

 

Cash and foreign currency at value end of year

   $ 72,765      $ 66,509      $ 3,042   
  

 

 

 
      
Non-Cash Financing Activities                         

Net proceeds from the issuance of shares due to reorganization

                 $ 88,481,334   
  

 

 

 

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    93


Statements of Cash Flows (continued)     

 

Period November 1, 2014 to December 31, 2014    BlackRock
Global
Opportunities
Equity
Trust (BOE)
    BlackRock
Health
Sciences
Trust (BME)
    BlackRock
International
Growth and
Income
Trust (BGY)
 
      
Cash Provided by Operating Activities                         

Net increase (decrease) in net assets resulting from operations

   $ (5,215,616   $ 8,391,433      $ (19,885,242

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities:

      

Decrease in cash pledged as collateral for OTC derivatives

            961,801        (3,234,816

Increase in cash pledged as collateral for exchange traded options written

                   400,000   

Decrease (increase) in dividends receivable

     (238,287     (70,447     (95,678

Decrease (increase) in dividends receivable — affiliated

     858        (69     254   

Increase in securities lending income receivable — affiliated

     1,852        60        5,460   

Increase in other assets

     (20,933     (6,304     (13,692

Increase (decrease) in investment advisory fees payable

     9,074        14,037        (6,199

Increase (decrease) in collateral on securities loaned at value

     3,500               (984,589

Increase (decrease) in Officer’s and Trustees’ fees payable

     (11,805     2,928        (10,473

Increase (decrease) in other accrued expenses payable

     (3,306     (25,838     24,601   

Net realized (gain) loss on investments and options written

     21,269,820        (5,845,610     11,548,093   

Net unrealized (gain) loss on investments, options written and foreign currency translations

     (15,965,491     (2,587,241     7,897,464   

Premiums received from options written

     16,284,062        4,460,155        13,666,485   

Premiums paid on closing options written

     (25,789,087     (6,184,828     (17,586,750

Proceeds from sales of long-term investments

     193,564,920        41,902,763        172,708,353   

Purchases of long-term investments

         (173,225,185         (18,957,970         (131,513,948

Net sales of short-term securities

     3,939,786        (2,838,218     (18,730,652
  

 

 

 

Cash provided by operating activities

     14,604,162        19,216,652        14,188,671   
  

 

 

 
      
Cash Used for Financing Activities                         

Cash dividends paid to shareholders

     (14,254,081     (19,221,174     (12,420,404
  

 

 

 

Cash used for financing activities

     (14,254,081     (19,221,174     (12,420,404
  

 

 

 
      
Cash Impact from Foreign Exchange Fluctuations                         

Cash impact from foreign exchange fluctuations

     (431     (4     22,457   
  

 

 

 
      
Cash and Foreign Currency                         

Net increase (decrease) in cash and foreign currency at value

     349,650        (4,526     1,790,724   

Cash and foreign currency at value beginning of year

     1,001,716        4,526        2,897,593   
  

 

 

 

Cash and foreign currency at value end of year

   $ 1,351,366             $ 4,688,317   
  

 

 

 

 

See Notes to Financial Statements.

 

94    ANNUAL REPORT    DECEMBER 31, 2014     


Statements of Cash Flows (concluded)     

 

Period November 1, 2014 to December 31, 2014   

BlackRock
Resources &
Commodities
Strategy

Trust (BCX)1

    BlackRock
Science and
Technology
Trust (BST)2
    BlackRock
Utility and
Infrastructure
Trust (BUI)
 
      
Cash Provided by Operating Activities                         

Net increase (decrease) in net assets resulting from operations

   $ (42,196,240   $ 10,636,215      $ 5,159,812   

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities:

      

Increase in cash pledged as collateral for exchange-traded options written

            (15,055,661       

Decrease (increase) in dividends receivable — affiliated

     (1,496     (3,414     95   

Increase in dividends receivable

     162,800        (126,490     (29,058

Increase in securities lending income receivable — affiliated

     2,787                 

Increase in other assets

     (24,207     (9,372     (7,195

Increase in collateral on securities on loaned at value

     (1,764,000              

Decrease in cash pledged as collateral for OTC derivatives

     100,000                 

Increase in investment advisory fees payable

     (227,016     293,966        10,115   

Decrease in reorganization costs payable

     (165,023     (45,000       

Increase in Officer’s and Trustees’ fees payable

     (5,297     6,254        5,343   

Increase (decrease) in other accrued expenses payable

     (63,640     152,998        (39,074

Net realized loss on investments and options written

     7,464,319        1,125,330        837,790   

Net unrealized gain on investments, options written and foreign currency translations

     37,500,751        (11,712,053     (4,227,966

Premiums received from options written

     6,779,700        6,824,973        2,801,173   

Premiums paid on closing options written

     (7,375,570     (2,016,867     (4,328,427

Proceeds from sales of long-term investments

     14,805,462        20,165,462        14,727,223   

Purchases of long-term investments

     (16,734,727     (393,622,870         (14,892,884

Net (purchases) sales of short-term securities

     13,009,391        (43,166,865     4,204,398   
  

 

 

 

Cash provided by operating activities

     11,267,994            (426,553,394     4,221,345   
  

 

 

 
      
Cash Used for Financing Activities                         

Foreign currency received from reorganization

     244,250                 

Cash received from reorganization

     15,014                 

Decrease in bank overdraft on foreign currency at value

                   9,288   

Proceeds from issuance of capital shares

            428,895,000          

Shares redeemed

      

Cash dividends paid to shareholders

     (11,520,607     (2,250,759     (4,257,491
  

 

 

 

Cash used for financing activities

     (11,261,343     426,644,241        (4,248,203
  

 

 

 
      
Cash Impact from Foreign Exchange Fluctuations                         

Cash impact from foreign exchange fluctuations

      
  

 

 

 
      
Cash Impact from Foreign Exchange Fluctuations                         

Cash impact from foreign exchange fluctuations

     40,063        (150     10   
  

 

 

 
      
Cash and Foreign Currency                         

Net decrease in cash and foreign currency at value

     46,714        90,697        (26,848

Cash and foreign currency at value beginning of year

     61,761        145,007        29,023   
  

 

 

 

Cash and foreign currency at value end of year

   $ 108,475      $ 235,704      $ 2,175   
  

 

 

 
      
Non-Cash Financing Activities                         

Net proceeds from the issuance of shares due to reorganization

   $     627,703,703                 
  

 

 

 

 

  1   

Consolidated Statement of Cash Flows.

  2   

Commenced operations on October 30, 2014.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    95


Financial Highlights      BlackRock Energy and Resources Trust (BGR)   

 

    

Period
November 1, 2014
to

December 31, 2014

    Year Ended October 31,  
     2014     2013     2012     2011     2010  
Per Share Operating Performance                                                 

Net asset value, beginning of period

   $ 24.90      $ 30.12      $ 25.95      $ 28.33      $ 25.87      $ 23.81   
  

 

 

 

Net investment income1

     0.07        0.25        0.12        0.13        0.06        0.26   

Net realized and unrealized gain (loss)

     (2.41     (1.21     5.67        (0.74     4.02        3.42   
  

 

 

 

Net increase (decrease) from investment operations

     (2.34     (0.96     5.79        (0.61     4.08        3.68   
  

 

 

 

Distributions:2

            

Net investment income

     (0.47     (0.44            (0.03     (0.24     (0.17

Net realized gain

     (0.94     (3.82     (1.62     (1.44     (1.38     (1.45

Return of capital

                          (0.30              
  

 

 

 

Total distributions

     (1.41     (4.26     (1.62     (1.77     (1.62     (1.62
  

 

 

 

Net asset value, end of period

   $ 21.15      $ 24.90      $ 30.12      $ 25.95      $ 28.33      $ 25.87   
  

 

 

 

Market price, end of period

   $ 19.95      $ 23.78      $ 26.82      $ 24.28      $ 26.54      $ 25.36   
  

 

 

 
            
Total Return3                                                 

Based on net asset value

     (9.06 )%4      (2.36 )%      23.68     (1.76 )%      16.09     15.89
  

 

 

 

Based on market price

     (10.18 )%4      4.73     17.70     (1.88 )%      10.95     21.95
  

 

 

 
            
Ratios to Average Net Assets                                                 

Total expenses

     1.30 %5      1.26     1.26     1.28     1.26     1.27
  

 

 

 

Total expenses after fees waived and/or reimbursed

     1.26 %5      1.26     1.25     1.22     1.15     1.11
  

 

 

 

Net investment income

     1.82 %5      0.89     0.42     0.50     0.19     1.04
  

 

 

 
            
Supplemental Data                                                 

Net assets, end of period (000)

   $ 629,603      $ 741,109      $ 896,635      $ 772,457      $ 843,328      $ 769,976   
  

 

 

 

Portfolio turnover rate

     4     85     132     86     111     80
  

 

 

 

 

  1   

Based on average shares outstanding.

 

  2   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  3   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

  4   

Aggregate total return.

 

  5   

Annualized.

 

See Notes to Financial Statements.

 

96    ANNUAL REPORT    DECEMBER 31, 2014     


Financial Highlights      BlackRock Enhanced Capital and Income Fund, Inc. (CII)   

 

    

Period
November 1, 2014
to

December 31, 2014

    Year Ended October 31,  
       2014     2013     2012     2011     2010  
Per Share Operating Performance                                                 

Net asset value, beginning of period

   $ 15.47      $ 15.31      $ 14.11      $ 13.87      $ 14.53      $ 14.40   
  

 

 

 

Net investment income1

     0.04        0.55        0.31        0.33        0.35        0.31   

Net realized and unrealized gain

     0.36        0.91        2.09        1.29        0.68        1.76   
  

 

 

 

Net increase from investment operations

     0.40        1.46        2.40        1.62        1.03        2.07   
  

 

 

 

Distributions:2

            

Net investment income

     (0.10     (0.65     (0.32     (0.33 )3      (0.35 )3      (0.31

Distributions in excess of net investment income4

                          (0.20 )3      (0.23 )3        

Net realized gain

                          (0.13     (1.11     (1.33

Return of capital

     (0.10     (0.65     (0.88     (0.72            (0.30
  

 

 

 

Total distributions

     (0.20     (1.30     (1.20     (1.38     (1.69     (1.94
  

 

 

 

Net asset value, end of period

   $ 15.67      $ 15.47      $ 15.31      $ 14.11      $ 13.87      $ 14.53   
  

 

 

 

Market price, end of period

   $ 13.97      $ 14.89      $ 13.52      $ 12.99      $ 12.39      $ 15.03   
  

 

 

 
            
Total Return5                                                 

Based on net asset value

     2.69 %6      10.49     18.97     12.94     7.56     15.22
  

 

 

 

Based on market price

     (4.88 )%6      20.43     14.11     16.39     (7.11 )%      24.73
  

 

 

 
            
Ratios to Average Net Assets                                                 

Total expenses

     0.99 %7      0.93     0.93     0.94     0.94     0.93
  

 

 

 

Total expenses after fees waived and/or reimbursed

     0.95 %7      0.93     0.93     0.94     0.93     0.93
  

 

 

 

Net investment income

     1.42 %7      3.56     2.15     2.34     2.40     2.14
  

 

 

 
            
Supplemental Data                                                 

Net assets, end of period (000)

   $ 691,380      $ 682,485      $ 675,472      $ 622,657      $ 612,145      $ 635,849   
  

 

 

 

Portfolio turnover rate

     2     80     218     205     190     210
  

 

 

 

 

  1   

Based on average shares outstanding.

 

  2   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  3   

The amount of distributions to shareholders from net investment income reported in October 31, 2012 and October 31, 2011 has been reclassified to allocate the amount between distributions from net investment income and distributions in excess of net investment income; both of which were included in the prior year net investment income in the amount of $0.53 and $0.58, respectively.

 

  4   

Taxable distribution.

 

  5   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

  6   

Aggregate total return.

 

  7   

Annualized.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    97


Financial Highlights      BlackRock Enhanced Equity Dividend Trust (BDJ)   

 

     Period
November 1, 2014
to
December 31, 2014
    Year Ended October 31,  
     2014     2013     2012     2011     2010  
Per Share Operating Performance                                                 

Net asset value, beginning of period

   $ 9.19      $ 8.88      $ 8.30      $ 8.03      $ 8.32      $ 8.13   
  

 

 

 

Net investment income1

     0.04        0.16        0.18        0.18        0.16        0.17   

Net realized and unrealized gain

     0.10        0.76        0.96        0.77        0.38        1.00   
  

 

 

 

Net increase from investment operations

     0.14        0.92        1.14        0.95        0.54        1.17   
  

 

 

 

Distributions:2

            

Net investment income

     (0.03     (0.17     (0.18     (0.18 )3      (0.16 )3      (0.17

Distributions in excess of net investment income4

                   (0.20     (0.22 )3      (0.35 )3        

Net realized gain

                   (0.18                     

Return of capital

     (0.06     (0.44            (0.28     (0.32     (0.81
  

 

 

 

Total distributions

     (0.09     (0.61     (0.56     (0.68     (0.83     (0.98
  

 

 

 

Net asset value, end of period

   $ 9.24      $ 9.19      $ 8.88      $ 8.30      $ 8.03      $ 8.32   
  

 

 

 

Market price, end of period

   $ 8.12      $ 8.35      $ 7.72      $ 7.41      $ 7.29      $ 8.99   
  

 

 

 
            
Total Return5                                                 

Based on net asset value

     1.69 %6      11.40     15.11     13.22     6.88     15.23
  

 

 

 

Based on market price

     (1.65 )%6      16.42     12.09     11.34     (10.20 )%      28.30
  

 

 

 
            
Ratios to Average Net Assets                                                 

Total expenses

     0.87 %7      0.87 %8      0.87     0.95     1.15     1.16
  

 

 

 

Total expenses after fees waived and/or reimbursed

     0.84 %7      0.86 %8      0.87     0.95     1.14     1.16
  

 

 

 

Net investment income

     2.30 %7      1.81     2.13     2.16     1.92     2.06
  

 

 

 
            
Supplemental Data                                                 

Net assets, end of period (000)

   $ 1,747,070      $ 1,648,683      $ 1,594,223      $ 1,490,096      $ 575,712      $ 592,328   
  

 

 

 

Portfolio turnover rate

     0 %9      63     180     185     231     232
  

 

 

 

 

  1   

Based on average shares outstanding.

 

  2   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  3   

The amount of distributions to shareholders from net investment income reported in October 31, 2012 and October 31, 2011 has been reclassified to allocate the amount between distributions from net investment income and distributions in excess of net investment income; both of which were included in the prior year net investment income in the amount of $0.40 and $0.51, respectively.

 

  4   

Taxable distribution.

 

  5   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

  6   

Aggregate total return.

 

  7   

Annualized.

 

  8   

Includes reorganization costs associated with the Trust’s merger. Without these costs, total expenses and total expenses after fees waived would have been 0.86% and 0.86%, respectively

 

  9   

Amount is less than 0.5%.

 

See Notes to Financial Statements.

 

98    ANNUAL REPORT    DECEMBER 31, 2014     


Financial Highlights      BlackRock Global Opportunities Equity Trust (BOE)   

 

     Period
November 1, 2014
to
December 31, 2014
    Year Ended October 31,  
     2014     2013     2012     2011     2010  
Per Share Operating Performance                                                 

Net asset value, beginning of period

   $ 15.54      $ 16.68      $ 14.99      $ 16.03      $ 18.68      $ 18.64   
  

 

 

 

Net investment income1

     0.00 2      0.14        0.12        0.20        0.17        0.19   

Net realized and unrealized gain (loss)

     (0.07     0.07        2.82        0.72        (0.54     2.13   
  

 

 

 

Net increase (decrease) from investment operations

     (0.07     0.21        2.94        0.92        (0.37     2.32   
  

 

 

 

Distributions:3

            

Net investment income

            (0.17     (0.17     (0.22     (0.17 )4      (0.18 )4 

Distributions in excess of net investment income5

            (0.28     (0.91            (0.68 )4      (1.26 )4 

Net realized gain

                                 (0.61     (0.25

Return of capital

     (0.20     (0.90     (0.17     (1.74     (0.82     (0.59
  

 

 

 

Total distributions

     (0.20     (1.35     (1.25     (1.96     (2.28     (2.28
  

 

 

 

Net asset value, end of period

   $ 15.27      $ 15.54      $ 16.68      $ 14.99      $ 16.03      $ 18.68   
  

 

 

 

Market price, end of period

   $ 13.13      $ 14.00      $ 14.74      $ 13.24      $ 14.95      $ 19.06   
  

 

 

 
            
Total Return6                                                 

Based on net asset value

     (0.27 )%7      2.10     21.93     7.36     (2.55 )%      13.76
  

 

 

 

Based on market price

     (4.82 )%7      4.09     21.99     1.68     (10.93 )%      17.58
  

 

 

 
            
Ratios to Average Net Assets                                                 

Total expenses

     1.10 %8      1.08     1.08     1.10     1.10     1.11
  

 

 

 

Total expenses after fees waived and/or reimbursed

     1.07 %8      1.08     1.08     1.10     1.09     1.10
  

 

 

 

Net investment income

     0.00 %8,9      0.83     0.77     1.34     0.96     1.03
  

 

 

 
            
Supplemental Data                                                 

Net assets, end of period (000)

   $ 1,060,687      $ 1,079,862      $ 1,159,072      $ 1,041,210      $ 1,113,920      $ 1,290,105   
  

 

 

 

Portfolio turnover rate

     16     150     279     298     253     264
  

 

 

 

 

  1   

Based on average shares outstanding.

 

  2   

Amount is less than $0.005 per share.

 

  3   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  4   

The amount of distributions to shareholders from net investment income reported in October 31, 2011 and October 31, 2010 has been reclassified to allocate the amount between distributions from net investment income and distributions in excess of net investment income; both of which were included in the prior year net investment income in the amount of $0.85 and $1.44, respectively.

 

  5   

Taxable distribution.

 

  6   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

  7   

Aggregate total return.

 

  8   

Annualized.

 

  9   

Less than 0.01%.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    99


Financial Highlights      BlackRock Health Sciences Trust (BME)   

 

     Period
November 1, 2014
to
December 31, 2014
    Year Ended October 31,  
     2014     2013     2012     2011     2010  
Per Share Operating Performance                                                 

Net asset value, beginning of period

   $ 40.22      $ 34.92      $ 28.34      $ 26.65      $ 27.19      $ 25.37   
  

 

 

 

Net investment income (loss)1

     (0.01     (0.00 )2      0.12        0.08        (0.01     0.02   

Net realized and unrealized gain

     1.10        9.14        8.85        4.11        1.71        3.34   
  

 

 

 

Net increase from investment operations

     1.09        9.14        8.97        4.19        1.70        3.36   
  

 

 

 

Distributions:3

            

Net investment income

     (0.01     (0.10     (0.06     (0.09            (0.02

Net realized gain

     (2.69     (3.74     (2.33     (2.41     (2.24     (1.52
  

 

 

 

Total distributions

     (2.70     (3.84     (2.39     (2.50     (2.24     (1.54
  

 

 

 

Net asset value, end of period

   $ 38.61      $ 40.22      $ 34.92      $ 28.34      $ 26.65      $ 27.19   
  

 

 

 

Market price, end of period

   $ 42.70      $ 41.37      $ 33.56      $ 27.86      $ 25.81      $ 27.14   
  

 

 

 
            
Total Return4                                                 

Based on net asset value

     2.38 %5      28.00     33.37     16.42     6.43     13.69
  

 

 

 

Based on market price

     10.07 %5      36.99     30.38     18.17     3.26     27.33
  

 

 

 
            
Ratios to Average Net Assets                                                 

Total expenses

     1.16 %6      1.11     1.12     1.13     1.14     1.15
  

 

 

 

Total expenses after fees waived and/or reimbursed

     1.11 %6      1.11     1.12     1.13     1.13     1.15
  

 

 

 

Net investment income (loss)

     (0.10 )%6      (0.01 )%      0.38     0.29     (0.02 )%      0.09
  

 

 

 
            
Supplemental Data                                                 

Net assets, end of period (000)

   $ 303,103      $ 313,933      $ 270,161      $ 218,377      $ 202,675      $ 206,392   
  

 

 

 

Portfolio turnover rate

     6     74     155     209     226     239
  

 

 

 

 

  1   

Based on average shares outstanding.

 

  2   

Amount is greater than $(0.005) per share.

 

  3   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  4   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

  5   

Aggregate total return.

 

  6   

Annualized.

 

See Notes to Financial Statements.

 

100    ANNUAL REPORT    DECEMBER 31, 2014     


Financial Highlights      BlackRock International Growth and Income Trust (BGY)   

 

    

Period
November 1, 2014

to

December 31, 2014

    Year Ended October 31,  
       2014     2013     2012     2011     2010  
Per Share Operating Performance                                                 

Net asset value, beginning of period

   $ 7.89      $ 9.05      $ 8.28      $ 8.72      $ 10.52      $ 10.92   
  

 

 

 

Net investment income (loss)1

     (0.00 )2      0.10        0.13        0.16        0.14        0.14   

Net realized and unrealized gain (loss)

     (0.17     (0.53     1.31        0.35        (0.58     1.05   
  

 

 

 

Net increase (decrease) from investment operations

     (0.17     (0.43     1.44        0.51        (0.44     1.19   
  

 

 

 

Distributions:3

            

Net investment income

            (0.13     (0.17     (0.18     (0.14 )4      (0.12

Distributions in excess of net investment income5

            (0.08                   (0.53 )4        

Return of capital

     (0.11     (0.52     (0.50     (0.77     (0.69     (1.47
  

 

 

 

Total distributions

     (0.11     (0.73     (0.67     (0.95     (1.36     (1.59
  

 

 

 

Net asset value, end of period

   $ 7.61      $ 7.89      $ 9.05      $ 8.28      $ 8.72      $ 10.52   
  

 

 

 

Market price, end of period

   $ 6.74      $ 7.26      $ 8.14      $ 7.41      $ 7.88      $ 10.56   
  

 

 

 
            
Total Return6                                                 

Based on net asset value

     (2.10 )%7      (4.49 )%      19.25     7.65     (4.55 )%      12.06
  

 

 

 

Based on market price

     (5.77 )%7      (2.29 )%      19.86     6.61     (14.07 )%      12.49
  

 

 

 
            
Ratios to Average Net Assets                                                 

Total expenses

     1.12 %8      1.10     1.09     1.11     1.10     1.13
  

 

 

 

Total expenses after fees waived and/or reimbursed

     1.03 %8      1.05     1.07     1.11     1.10     1.13
  

 

 

 

Net investment income (loss)

     (0.13 )%8      1.17     1.49     1.97     1.37     1.40
  

 

 

 
            
Supplemental Data                                                 

Net assets, end of period (000)

   $ 836,552      $ 867,986      $ 995,736      $ 910,481      $ 959,153      $ 1,156,583   
  

 

 

 

Portfolio turnover rate

     14     195     266     226     217     247
  

 

 

 

 

  1   

Based on average shares outstanding.

 

  2   

Amount is greater than $(0.005) per share.

 

  3   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  4   

The amount of distributions to shareholders from net investment income reported in October 31, 2011 has been reclassified to allocate the amount between distributions from net investment income and distributions in excess of net investment income; both of which were included in the prior year net investment income in the amount of $0.67.

 

  5   

Taxable distribution.

 

  6   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

  7   

Aggregate total return.

 

  8   

Annualized.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    101


Consolidated Financial Highlights      BlackRock Resources & Commodities Strategy Trust (BCX)   

 

    

Period
November 1, 2014

to

December 31, 2014

    Year Ended October 31    

Period
March 30,
20111
through
October 31,
2011

 
     2014     2013     2012    
Per Share Operating Performance                                         

Net asset value, beginning of period

   $ 12.50      $ 13.54      $ 15.42      $ 16.83      $ 19.10 2 
  

 

 

 

Net investment income3

     0.04        0.23        0.25        0.18        0.03   

Net realized and unrealized loss

     (0.72     (0.27     (0.97     (0.19     (1.57
  

 

 

 

Net decrease from investment operations

     (0.68     (0.04     (0.72     (0.01     (1.54
  

 

 

 

Distributions:4

          

Net investment income

     (0.02     (0.31     (0.14     (0.26       

Net realized gain

                          (0.01     (0.24

Return of capital

     (0.13     (0.69     (1.02     (1.13     (0.46
  

 

 

 

Total distributions

     (0.15     (1.00     (1.16     (1.40     (0.70
  

 

 

 

Capital charges with respect to the issuance of shares

                                 (0.03
  

 

 

 

Net asset value, end of period

   $ 11.67      $ 12.50      $ 13.54      $ 15.42      $ 16.83   
  

 

 

 

Market price, end of period

   $ 9.71      $ 10.78      $ 11.68      $ 14.12      $ 14.95   
  

 

 

 
          
Total Return5                                         

Based on net asset value

     (5.20 )%6      0.61     (3.61 )%7      0.90     (7.80 )%6 
  

 

 

 

Based on market price

     (8.53 )%6      0.58     (9.19 )%      4.02     (21.79 )%6 
  

 

 

 
          
Ratios to Average Net Assets                                         

Total expenses

     1.15 %8      1.35 %9      1.27     1.25     1.35 %8 
  

 

 

 

Total expenses after fees waived and/or reimbursed

     1.04 %9      1.06 %9      1.07     1.05     1.13 %8 
  

 

 

 

Net investment income

     2.01 %8      1.70     1.76     1.14     0.27 %8 
  

 

 

 
          
Supplemental Data                                         

Net assets, end of period (000)

   $ 1,156,499      $ 582,220      $ 630,617      $ 718,016      $ 783,792   
  

 

 

 

Portfolio turnover rate

     2     62     156     100     27
  

 

 

 

 

  1   

Commencement of investment operations. This information includes the initial investment by BlackRock HoldCo2, Inc.

 

  2   

Net asset value, beginning of period, reflects a deduction of $0.8975 per share sales charge from initial offering price of $20.00 per share.

 

  3   

Based on average shares outstanding.

 

  4   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  5   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

  6   

Aggregate total return.

 

  7   

Includes a payment from an affiliate to compensate for foregone securities lending revenue which impacted the Trust’s total return. Not including this payment the Trust’s total return would have been (3.68)%.

 

  8   

Annualized.

 

  9   

Includes reorganization costs associated with the Trust’s merger. Without these costs, total expenses and total expenses after fees waived would have been 1.26% and 1.06%, respectively.

 

See Notes to Financial Statements.

 

102    ANNUAL REPORT    DECEMBER 31, 2014     


Financial Highlights      BlackRock Science and Technology Trust (BST)   

 

    

Period
October 30, 20141

to

December 31, 2014

 
  
Per Share Operating Performance         

Net asset value, beginning of period

   $ 19.10 2 
  

 

 

 

Net investment loss3

     (0.01

Net realized and unrealized gain

     0.48   
  

 

 

 

Net increase from investment operations

     0.47   
  

 

 

 

Distributions:4

  

Net investment income

     (0.00 )5 

Return of capital

     (0.10
  

 

 

 

Total distributions

     (0.10
  

 

 

 

Capital Charges with respect to the issuance of Shares

     (0.04
  

 

 

 

Net asset value, end of period

   $ 19.43   
  

 

 

 

Market price, end of period

   $ 17.59   
  

 

 

 
  
Total Return6         

Based on net asset value

     2.31 %7 
  

 

 

 

Based on market price

     (11.55 )%7 
  

 

 

 
  
Ratios to Average Net Assets         

Total expenses

     1.19 %8 
  

 

 

 

Total expenses after fees waived and paid indirectly

     0.97 %8 
  

 

 

 

Net investment loss

     (0.24 )%8 
  

 

 

 
  
Supplemental Data         

Net assets, end of period (000)

   $ 437,380   
  

 

 

 

Portfolio turnover rate

     7
  

 

 

 

 

  1   

Commencement of investment operations. This information includes the initial investment by BlackRock HoldCo2, Inc.

 

  2   

Net asset value, beginning of period, reflects a deduction of $0.8975 per share sales charge from the initial offering price of $20.00 per share.

 

  3   

Based on average shares outstanding.

 

  4   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  5   

Amount is greater than $(0.005) per share.

 

  6   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

  7   

Aggregate total return.

 

  8   

Annualized.

 

See Notes to Financial Statements.

 

     ANNUAL REPORT    DECEMBER 31, 2014    103


Financial Highlights      BlackRock Utility and Infrastructure Trust (BUI)   

 

 

    

Period
November 1, 2014
to

December 31, 2014

    Year Ended October 31,    

Period
November 25, 20111
through

October 31, 2012

 
       2014     2013    
Per Share Operating Performance                                 

Net asset value, beginning of period

   $ 22.40      $ 20.78      $ 20.22      $ 19.10 2 
  

 

 

 

Net investment income3

     0.11        0.51        0.57        0.54   

Net realized and unrealized gain

     0.20        2.68        1.44        1.71   
  

 

 

 

Net increase from investment operations

     0.31        3.19        2.01        2.25   
  

 

 

 

Distributions:4

        

Net investment income

     (0.10     (0.51     (0.52     (0.49

Net realized gain

            (0.37     (0.42     (0.41

Return of capital

     (0.14     (0.69     (0.51     (0.19
  

 

 

 

Total distributions

     (0.24     (1.57     (1.45     (1.09
  

 

 

 

Capital charges with respect to the issuance of shares

                          (0.04
  

 

 

 

Net asset value, end of period

   $ 22.47      $ 22.40      $ 20.78      $ 20.22   
  

 

 

 

Market price, end of period

   $ 20.74      $ 20.02      $ 18.36      $ 19.03   
  

 

 

 
        
Total Return5                                 

Based on net asset value

     1.50 %6      16.94     11.18     12.05 %6 
  

 

 

 

Based on market price

     4.82 %6      18.29     4.37     0.71 %6 
  

 

 

 
        
Ratios to Average Net Assets                                 

Total expenses

     1.17 %7      1.10     1.11     1.12 %7 
  

 

 

 

Total expenses after fees waived and/or reimbursed

     1.11 %7      1.10     1.10     1.11 %7 
  

 

 

 

Total expenses after fees waived and/or reimbursed and excluding excise tax

     1.11 %7      1.10     1.10     1.10 %7 
  

 

 

 

Net investment income

     2.83 %7      2.36     2.83     2.94 %7 
  

 

 

 
        
Supplemental Data                                 

Net assets, end of period (000)

   $ 379,830      $ 378,762      $ 351,325      $ 341,939   
  

 

 

 

Portfolio turnover rate

     2     41     133     90
  

 

 

 

 

  1   

Commencement of investment operations. This information includes the initial investment by BlackRock HoldCo2, Inc.

 

  2   

Net asset value, beginning of period, reflects a deduction of $0.8975 per share sales charge from initial offering price of $20.00 per share.

 

  3   

Based on average shares outstanding.

 

  4   

Distributions for annual periods determined in accordance with federal income tax regulations.

 

  5   

Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.

 

  6   

Aggregate total return.

 

  7   

Annualized.

 

See Notes to Financial Statements.

 

104    ANNUAL REPORT    DECEMBER 31, 2014     


Notes to Financial Statements     

 

1. Organization:

The following are registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as closed-end management investment companies and are referred to herein individually as a “Trust” and collectively as the “Trusts”:

 

Fund Name      Herin
Referred
To As
       Organized      Diversification
Classification
 

BlackRock Energy and Resources Trust

       BGR         Delaware        Non-diversified   

BlackRock Enhanced Capital and Income Fund, Inc.

       CII         Maryland        Diversified   

BlackRock Enhanced Equity Dividend Trust

       BDJ         Delaware        Diversified   

BlackRock Global Opportunities Equity Trust

       BOE         Delaware        Diversified   

BlackRock Health Sciences Trust

       BME         Delaware        Non-diversified   

BlackRock International Growth and Income Trust

       BGY         Delaware        Non-diversified   

BlackRock Resources & Commodities Strategy Trust

       BCX         Delaware        Non-diversified   

BlackRock Science and Technology Trust

       BST         Delaware        Non-diversified   

BlackRock Utility and Infrastructure Trust

       BUI         Delaware        Non-diversified   

The Board of Directors and Board of Trustees of the Trusts are collectively referred to throughout this report as the “Board of Trustees” or the “Board”, and the directors/trustees thereof are collectively referred to throughout this report as “Trustees.” The Trusts determine and make available for publication the NAVs of their shares on a daily basis.

Prior to commencement of operations on October 30, 2014, BST had no operations other than those relating to organizational matters and the sale of 7,592 Common Shares on October 30, 2014 to BlackRock HoldCo. 2, Inc. for $145,007. Investment operations for BST commenced on October 30, 2014.

The Trusts, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of closed-end funds referred to as the Closed-End Complex.

Reorganizations: The Board of BDJ, the Board and shareholders of BCX and the Board and shareholders of each of BlackRock Dividend Income Trust (BQY), BlackRock EcoSolutions Investment Trust (BQR) and BlackRock Real Asset Equity Trust (BCF) (individually a “Target Trust” and collectively the “Target Trusts”) approved separate plans of reorganization pursuant to which BDJ would acquire substantially all of the assets and assume substantially all of the liabilities of BQY in exchange for an equal aggregate value of newly issued shares of BDJ and BCX would acquire substantially all of the assets and assume substantially all of the liabilities of BQR and BCF in exchange for an equal aggregate value of newly issued shares of BCX in separate merger transactions.

Each shareholder of BQY received shares of BDJ in an amount equal to the aggregate NAV of such shareholder’s shares, as determined at the close of business on December 5, 2014 less the costs of the Target Trust’s reorganization. Cash was distributed for any fractional shares.

Each shareholder of BQR and BCF received shares of BCX in an amount equal to the aggregate NAV of such shareholder’s shares, as determined at the close of business on December 5, 2014 less the costs of the Target Trust’s reorganization. Cash was distributed for any fractional shares.

The reorganizations were accomplished by a tax-free exchange of shares of BDJ and BCX in the following amounts and at the following conversion ratios:

 

Target Trust    Shares Prior to
Reorganizations
     Conversion
Ratio
     Shares of
BDJ
 

BQY

     6,033,028         1.57393059         9,495,566   
        
Target Trusts    Shares Prior to
Reorganizations
     Conversion
Ratio
     Shares of
BCX
 

BQR

     12,564,457         0.73620796         9,250,050   

BCF

     57,173,280         0.75619994         43,234,424   

 

     ANNUAL REPORT    DECEMBER 31, 2014    105


Notes to Financial Statements (continued)     

 

Each Target Trust’s net assets and composition of net assets on December 5, 2014, the date of the reorganization, were as follows:

 

Target Trusts    Paid-In
Capital
     Distributions in
Excess of Net
Investment
Income
   

Realized

Loss

    Net Unrealized
Appreciation
     Net Assets  

BQY

   $ 82,012,845       $ 74,388      $ (4,394,868   $ 10,788,969       $ 88,481,334   
            
Target Trusts    Paid-In
Capital
     Distributions in
Excess of Net
Investment
Income
   

Realized

Loss

    Net Unrealized
Appreciation
     Net Assets  

BQR

   $ 163,163,281       $      $ (64,418,338   $ 11,883,961       $ 110,628,904   

BCF

   $ 581,405,775       $ (315,467   $ (112,655,107   $ 48,639,598       $ 517,074,799   

For financial reporting purposes, assets received and shares issued by BDJ and BCX were recorded at fair value. However, the cost basis of the investments being received from the respective Target Trusts were carried forward to align ongoing reporting of BDJ’s and BCX’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.

The net assets of BDJ and BCX before the acquisitions were $1,672,452,880 and $557,033,644, respectively.

The aggregate net assets of BDJ and BCX immediately after the acquisitions amounted to $1,760,934,213 and $1,184,737,348, respectively. Each Target Trust’s fair value and cost of investments prior to the reorganizations were as follows:

 

Target Trust    Fair Value
of Investments
     Cost
of Investments
 

BQY

   $ 88,510,430       $ 77,716,510   
     
Target Trust    Fair Value
of Investments
     Cost
of Investments
 

BQR

   $ 110,216,946       $ 98,315,757   

BCF

   $ 517,114,717       $ 468,473,614   

The purpose of these transactions was to combine five funds managed by the Manager with the same or substantially similar (but not identical) investment objectives, investment policies, strategies, risks and restrictions into two funds. Each reorganization was a tax-free event and was effective on December 8, 2014.

Assuming the acquisition had been completed on November 1, 2014 the beginning of the fiscal reporting period of BDJ, the pro forma results of operations for the period ended, December 31, 2014, are as follows:

 

Ÿ  

Net investment income/loss: $6,739,981

 

Ÿ  

Net realized and change in unrealized gain/loss on investments: $20,388,852

 

Ÿ  

Net increase in net assets resulting from operations: $27,128,833

Assuming the acquisition had been completed on December 8, 2014 the beginning of the fiscal reporting period of BCX, the pro forma results of operations for the period ended, December 31, 2014, are as follows:

 

Ÿ  

Net investment income/loss: $3,796,955

 

Ÿ  

Net realized and change in unrealized gain/loss on investments: $(56,054,826)

 

Ÿ  

Net increase in net assets resulting from operations: $(52,257,871)

Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of BQY, BQR and BCF that have been included in BDJ and BCX Statement of Operations since December 8, 2014.

 

106    ANNUAL REPORT    DECEMBER 31, 2014     


Notes to Financial Statements (continued)

 

    

Reorganization costs incurred by BDJ and BCX in connection with their respective reorganizations were expensed by BCX and BDJ. The Manager reimbursed BDJ in the amount of $148,630 and BCX in the amount of $522,264, which are shown as reorganization costs reimbursed by Manager in the Statements of Operations.

Basis of Consolidation: The accompanying consolidated financial statements of BCX include the accounts of BlackRock Cayman Resources & Commodities Strategy Fund, Ltd. (the “Subsidiary”), which is a wholly owned subsidiary of BCX and primarily invests in commodity-related instruments. The Subsidiary enables BCX to hold these commodity-related instruments and satisfy regulated investment company tax requirements. BCX may invest up to 25% of its total assets in the Subsidiary. As of December 31, 2014, the Subsidiary did not hold any assets. Intercompany accounts and transactions, if any, have been eliminated. The Subsidiary is subject to the same investment policies and restrictions that apply to BCX, except that the Subsidiary may invest without limitation in commodity-related instruments.

2. Significant Accounting Policies:

The Trusts’ financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Trust is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Trusts.

Valuation: The Trusts’ investments are valued at fair value as of the close of trading on the New York Stock Exchange (“NYSE”) (generally 4:00 p.m., Eastern time). U.S. GAAP defines fair value as the price the Trusts would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Trusts determine the fair values of their financial instruments at market value using independent dealers or pricing services under policies approved by the Board. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to provide oversight of the pricing function for the Trusts for all financial instruments.

Equity investments traded on a recognized securities exchange are valued at the official close each day, if available. For equity investments traded on more than one exchange, the official close price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day may be valued at the last available bid. Investments in open-end registered investment companies are valued at the NAV each business day.

Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of business on the NYSE. Forward foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of business on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

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. An exchange-traded option for which there is no mean price is valued at the last bid (long positions) or ask (short positions) price. If no bid or ask price is available, the prior day’s price will be used, unless it is determined that the prior day’s price no longer reflects the fair value of the option. Over-the-counter (“OTC”) options are valued by an independent pricing service using a mathematical model which incorporates a number of market data factors, such as the trades and prices of the underlying instruments.

The Trusts value their investments in BlackRock Liquidity Series, LLC Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon each Trust’s pro rata ownership in the underlying fund’s net assets. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments will follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act. The Trusts may withdraw up to 25% of their investment daily, although the manager of the Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

In the event that the application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Investments”). When determining the price for Fair Value Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Trust might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant consistent with the principles of fair value measurement, which include the market approach, income approach and/or in the case of recent investments, the cost approach, as appropriate. The market approach generally

 

     ANNUAL REPORT    DECEMBER 31, 2014    107


Notes to Financial Statements (continued)

 

    

consists of using comparable market transactions. The income approach generally is used to discount future cash flows to present value and is adjusted for liquidity as appropriate. These factors include but are not limited to: (i) attributes specific to the investment or asset; (ii) the principal market for the investment or asset; (iii) the customary participants in the principal market for the investment or asset; (iv) data assumptions by market participants for the investment or asset, if reasonably available; (v) quoted prices for similar investments or assets in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates. Due to the inherent uncertainty of valuations of such investments, the fair values may differ from the values that would have been used had an active market existed. The Global Valuation Committee, or its delegate, employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Trusts’ pricing vendors, regular reviews of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values and reviews of any market related activity. The pricing of all Fair Value Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of business on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of business on the NYSE that may not be reflected in the computation of each Trust’s net assets. If events (e.g., a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such instruments, those instruments may be Fair Value Assets and valued at their fair value, as determined in good faith by the Global Valuation Committee, or it’s delegate, using a pricing service and/or policies approved by the Board. Each business day, each Trust uses a pricing service to assist with the valuation of certain foreign exchange-traded equity securities and foreign exchange-traded and OTC options (the “Systematic Fair Value Price”). Using current market factors, the Systematic Fair Value Price is designed to value such foreign securities and foreign options at fair value as of the close of business on the NYSE, which follows the close of the local markets.

Foreign Currency: The Trusts’ books and records are maintained in U.S. dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the respective date of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the Trusts’ investments denominated in that currency will lose value because that currency is worth fewer U.S. dollars; the opposite effect occurs if the U.S. dollar falls in relative value.

The Trusts do not isolate the portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of investments held or sold for financial reporting purposes. Accordingly, the effects of changes in foreign currency exchange rates on investments are not segregated in the Statements of Operations from the effects of changes in market prices of those investments but are included as a component of net realized and unrealized gain (loss) from investments. The Trusts report realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for federal income tax purposes.

Segregation and Collateralization: In cases where a Trust enters into certain investments (e.g., options written and forward foreign currency exchange contracts), that would be “senior securities” for 1940 Act purposes, such Trust may segregate or designate on its books and records cash or liquid securities having a market value at least equal to the amount of a Trust’s future obligations under such investments or borrowings. Doing so allows the investment to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, each Trust may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.

Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when a Trust is informed of the ex-dividend date. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be redesignated as a reduction of cost of the related investment and/or realized gain. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on the accrual basis.

Distributions: Distributions paid by the Trusts are recorded on the ex-dividend date. Subject to each Trust’s level distribution plan, each Trust intends to make monthly distributions to shareholders, which may consist of net investment income, net options premium, net realized and unrealized gains on investments, and/or return of capital.

On June 5, 2014, the Board approved a change to the frequency of regular Trust distributions from quarterly to monthly. As a result of the change, beginning in August 2014 (with respect to BOE and BUI) or September 2014 (with respect to BGR, CII, BDJ, BME, BGY, and BCX) shareholders of each Trust began receiving distributions on a monthly basis.

 

108    ANNUAL REPORT    DECEMBER 31, 2014     


Notes to Financial Statements (continued)

 

    

Portions of return of capital distributions under U.S. GAAP may be taxed at ordinary income rates.

The character of distributions is determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. The portion of distributions that exceeds a Trust’s current and accumulated earnings and profits, which are measured on a tax basis, will constitute a non-taxable return of capital. Realized net capital gains can be offset by capital losses carried forward from prior years. However, certain Trusts have capital loss carry-forwards from pre-2012 tax years that offset realized net capital gains but do not offset current and accumulated earnings and profits. Consequently, if distributions in any tax year are less than a Trust’s current earnings and profits but greater than net investment income and net realized capital gains (taxable income), distributions in excess of taxable income are not treated as non-taxable return of capital, but rather may be taxable to shareholders at ordinary income rates. Under certain circumstances, taxable excess distributions could be significant. See Note 7, Income Tax Information, for the tax character of each Trust’s distributions paid during the period.

Net income and realized gains from investments held by the Subsidiary are treated as ordinary income for tax purposes. Accordingly, the net investment income (loss) and realized gains (losses) reported in the Trust’s financial statements presented under U.S. GAAP for such investments held by the Subsidiary may differ significantly from distributions. As such, any net gain will pass through to the Trust as ordinary income for federal income tax purposes. If a net loss is realized by the Subsidiary in any taxable year, the loss will generally not be available to offset the Trust’s ordinary income and/or capital gains for that year.

Deferred Compensation Plan: Under the Deferred Compensation Plan (the “Plan”) approved by each Trust’s Board, the independent Trustees (“Independent Trustees”) may defer a portion of their annual complex-wide compensation. Deferred amounts earn an approximate return as though equivalent dollar amounts had been invested in common shares of certain other BlackRock Closed-End Funds selected by the Independent Trustees. This has the same economic effect for the Independent Trustees as if the Independent Trustees had invested the deferred amounts directly in certain other BlackRock Closed-End Funds.

The Plan is not funded and obligations thereunder represent general unsecured claims against the general assets of each Trust. Deferred compensation liabilities are included in officer’s and trustees fees payable in the Statements of Assets and Liabilities and will remain as a liability of the Trusts until such amounts are distributed in accordance with the Plan.

Recent Accounting Standard: In June 2014, the Financial Accounting Standards Board issued guidance to improve the financial reporting of reverse repurchase agreements and other similar transactions. The guidance will require expanded disclosure for entities that enter into reverse repurchase agreements and similar transactions accounted for as secured borrowings. It is effective for financial statements with fiscal years beginning on or after December 15, 2014 and interim periods within those fiscal years. Management is evaluating the impact, if any, of this guidance on the Trusts’ financial statement disclosures.

Other: Expenses directly related to a Trust are charged to that Trust. Other operating expenses shared by several Trusts are prorated among those Trusts on the basis of relative net assets or other appropriate methods.

The Trusts have an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which, if applicable, are shown as fees paid indirectly in the Statements of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

3. Securities and Other Investments:

Preferred Stock: The Trusts may invest in preferred stock. Preferred stock has a preference over common stock in liquidation (and generally in receiving dividends as well) but is subordinated to the liabilities of the issuer in all respects. As a general rule, the market value of preferred stock with a fixed dividend rate and no conversion element varies inversely with interest rates and perceived credit risk, while the market price of convertible preferred stock generally also reflects some element of conversion value. Because preferred stock is junior to debt securities and other obligations of the issuer, deterioration in the credit quality of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similar stated yield characteristics. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions.

Securities Lending: Each Trust may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Trusts collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. government. The initial collateral received by each Trust is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter, at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Trust and any additional required collateral is delivered to the Trust on the next business day. During the term of the loan,

 

     ANNUAL REPORT    DECEMBER 31, 2014    109


Notes to Financial Statements (continued)

 

    

the Trust is entitled to all distributions made on or in respect of the loaned securities. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

The market value of securities on loan and the value of the related collateral are shown separately in the Statements of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of December 31, 2014, any securities on loan were collateralized by cash. The cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedules of Investments.

Securities lending transactions are entered into by the Trusts under Master Securities Lending Agreements (each an “MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Trust, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, the borrower can resell or re-pledge the loaned securities, and the Trusts can reinvest cash collateral, or, upon an event of default, resell or re-pledge the collateral.

As of December 31, 2014, the following table is a summary of the Trusts’ securities lending agreements by counterparty which are subject to offset under an MSLA:

 

CII

                         
Counterparty    Securities Loaned
at Value
     Cash  Collateral
Received1
    Net
Amount
 

Deutsche Bank Securities, Inc.

   $ 641,550       $ (641,550       
                               

BOE

                         
Counterparty    Securities Loaned
at Value
     Cash Collateral
Received1
    Net
Amount
 

Credit Suisse Securities (USA) LLC

   $ 567,326       $ (567,326       

UBS Securities LLC

     750,024         (750,024       

Total

   $ 1,317,350       $ (1,317,350       
  

 

 

 
       

BGY

                         
Counterparty    Securities Loaned
at Value
     Cash  Collateral
Received1
    Net
Amount
 

Credit Suisse Securities (USA) LLC

   $ 192,519       $ (192,519       

Deutsche Bank Securities, Inc.

     624,089         (624,089       

Total

   $ 816,608       $ (816,608       
  

 

 

 
       

BCX

                         
Counterparty    Securities Loaned
at Value
     Cash Collateral
Received1
    Net
Amount
 

Barclays Capital, Inc.

   $ 829,080       $ (829,080       

Goldman Sachs & Co.

     1,000,160         (1,000,160       

JP Morgan Clearing Corp.

     492,184         (492,184       

Total

   $ 2,321,424       $ (2,321,424       
  

 

 

 

 

  1   

Collateral with a value of $673,750, $1,401,820, 870,139 and $2,373,800 has been received in connection with securities lending agreements for CII, BOE, BGY and BCX, respectively. Excess of collateral received from the individual counterparty is not shown for financial reporting purposes.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Trusts benefit from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities lent if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Trusts could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received.

 

110    ANNUAL REPORT    DECEMBER 31, 2014     


Notes to Financial Statements (continued)

 

    

4. Derivative Financial Instruments:

The Trusts engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Trusts and/or to economically hedge, their exposure to certain risks such as equity risk. These contracts may be transacted on an exchange or OTC.

Forward Foreign Currency Exchange Contracts: The Trusts enter into forward foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to obtain exposure to, or hedge exposure away from, foreign currencies (foreign currency exchange rate risk). A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Forward foreign currency exchange contracts, when used by the Trust, help to manage the overall exposure to the currencies in which some of the investments held by the Trust are denominated. The contract is marked-to-market daily and the change in market value is recorded by the Trust as an unrealized gain or loss. When the contract is closed, the Trusts record a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of forward foreign currency exchange contracts involves the risk that the value of a forward foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies.

Options: The Trusts purchase and write call and put options to increase or decrease their exposure to underlying instruments (including equity risk and/or commodity price risk) and/or, in the case of options written, to generate gains from options premiums. A call option gives the purchaser (holder) of the option the right (but not the obligation) to buy, and obligates the seller (writer) to sell (when the option is exercised), the underlying instrument at the exercise or strike price at any time or at a specified time during the option period. A put option gives the holder the right to sell and obligates the writer to buy the underlying instrument at the exercise or strike price at any time or at a specified time during the option period. When the Trusts purchase (write) an option, an amount equal to the premium paid (received) by the Trusts is reflected as an asset (liability). The amount of the asset (liability) is subsequently marked-to-market to reflect the current market value of the option purchased (written). When an instrument 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 instrument acquired or deducted from (or added to) the proceeds of the instrument sold. When an option expires (or the Trusts enter into a closing transaction), the Trusts realize 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 premiums received or paid). When the Trusts write a call option, such option is “covered,” meaning that the Trusts hold the underlying instrument subject to being called by the option counterparty. When the Trusts write a put option, such option is covered by cash in an amount sufficient to cover the obligation.

In purchasing and writing options, the Trusts bear the risk of an unfavorable change in the value of the underlying instrument or the risk that the Trusts may not be able to enter into a closing transaction due to an illiquid market. Exercise of a written option could result in the Trusts purchasing or selling a security when it otherwise would not, or at a price different from the current market value.

For the period ended December 31, 2014, transactions in options written were as follows:

 

      Calls     Puts  
     Contracts     Premiums
Received
    Contracts      Premiums
Received
 

BGR

                                 

Outstanding options at beginning of period

     1,968,995      $ 3,776,701                  

Options written

     2,184,288        3,634,414                  

Options expired

     (1,903,781     (3,688,391               

Options closed

     (141,132     (1,019,219               

Options exercised

                             
  

 

 

 

Outstanding options at end of period

     2,108,370      $ 2,703,505                  
  

 

 

 

 

     ANNUAL REPORT    DECEMBER 31, 2014    111


Notes to Financial Statements (continued)     

 

      Calls           Puts  
      Contracts    

Premiums

Received

          Contracts    

Premiums

Received

 

CII

                                     

Outstanding options at beginning of period

     2,060,803      $ 5,698,691           1,500      $ 58,441   

Options written

     2,028,912        9,711,936                    

Options expired

     (448,396     (2,465,325                 

Options closed

     (2,011,388     (6,424,609        (1,500     (58,441

Options exercised

     (1,538     (93,818                 
  

 

 

      

 

 

 

Outstanding options at end of period

     1,628,393      $ 6,426,875                    
  

 

 

      

 

 

 
           

BDJ

                                     

Outstanding options at beginning of period

     3,787,613      $ 12,597,822                    

Options written

     4,315,576        20,063,025                    

Options expired

     (1,263,409     (3,724,240                 

Options closed

     (3,806,780     (14,338,299                 

Options exercised

     (661     (72,378                 
  

 

 

      

 

 

 

Outstanding options at end of period

     3,032,339      $ 14,525,930                    
  

 

 

      

 

 

 
           

BOE

                                     

Outstanding options at beginning of period

     19,890,120      $ 10,021,049                    

Options written

     21,367,042        15,969,385                    

Options expired

     (10,537,480     (4,361,458                 

Options closed

     (13,827,920     (10,005,702                 

Options exercised

     (568     (220,209                 
  

 

 

      

 

 

 

Outstanding options at end of period

     16,891,194      $ 11,403,065                    
  

 

 

      

 

 

 
           

BME

                                     

Outstanding options at beginning of period

     705,258      $ 2,976,376           20,608      $ 77,354   

Options written

     814,803        4,487,483                    

Options expired

     (325,421     (998,609        (20,608     (77,354

Options closed

     (609,636     (3,143,264                 

Options exercised

     (17,649     (53,587                 
  

 

 

      

 

 

 

Outstanding options at end of period

     567,355      $ 3,268,399                    
  

 

 

      

 

 

 
           

BGY

                                     

Outstanding options at beginning of period

     27,449,975      $ 8,525,170           51,600      $ 90,686   

Options written

     29,196,013        13,253,063                    

Options expired

     (17,206,055     (3,955,234        (51,600     (90,686

Options closed

     (13,327,603     (7,946,547                 

Options exercised

     (3,670,064     (91,469                 
  

 

 

      

 

 

 

Outstanding options at end of period

     22,442,266      $ 9,784,983                    
  

 

 

      

 

 

 

 

112    ANNUAL REPORT    DECEMBER 31, 2014     


Notes to Financial Statements (continued)     

 

      Calls           Puts  
      Contracts    

Premiums

Received

          Contracts    

Premiums

Received

 

BCX

                                   

Outstanding options at beginning of period

     5,845,538      $ 2,646,767                    

Options written

     18,866,016        10,634,353                    

Options expired

     (8,194,946     (3,383,552                 

Options closed

     (5,508,476     (3,778,204                 

Options exercised

                               
  

 

 

      

 

 

 

Outstanding options at end of period

     11,008,132      $ 6,119,364                    
  

 

 

      

 

 

 
           

BST1

                                     

Outstanding options at beginning of period

                               

Options written

     9,877,592      $ 5,699,985           2,009,105      $ 1,343,315   

Options expired

     (2,015,672     (1,103,820        (497,090     (571,087

Options closed

     (2,899,021     (1,197,810        (10,528     (124,957

Options exercised

                      (711,284     (219,230
  

 

 

      

 

 

 

Outstanding options at end of period

     4,962,899      $ 3,398,355           790,203      $ 428,041   
  

 

 

      

 

 

 
           

BUI

                                     

Outstanding options at beginning of period

     2,843,128      $ 2,019,971                    

Options written

     3,873,862        2,765,642                    

Options expired

     (1,074,589     (922,401                 

Options closed

     (2,893,998     (1,603,931                 

Options exercised

     (40     (2,620                 
  

 

 

      

 

 

 

Outstanding options at end of period

     2,748,363      $ 2,256,661                    
  

 

 

      

 

 

 

 

  1   

Commenced operations on October 30, 2014.

As of December 31, 2014, the value of portfolio securities subject to covered call options written was as follows:

 

      Value  

BGR

   $ 126,150,662   

CII

   $ 302,562,059   

BDJ

   $ 841,564,708   

BOE

   $ 432,089,403   

BME

   $ 109,053,278   

BGY

   $ 347,438,525   

BCX

   $ 275,848,442   

BST

   $ 120,028,424   

BUI

   $ 104,065,663   

 

     ANNUAL REPORT    DECEMBER 31, 2014    113


Notes to Financial Statements (continued)     

 

The following is a summary of the Trusts’ derivative financial instruments categorized by risk exposure:

 

Fair Values of Derivative Financial Instruments as of December 31, 2014  
           Value  
           BGR           CII           BDJ  
      Statements of Assets and Liabilities Location   

Derivative

Assets

    

Derivative

Liabilities

          

Derivative

Assets

    

Derivative

Liabilities

          

Derivative

Assets

    

Derivative

Liabilities

 

Foreign currency exchange contracts

   Unrealized appreciation/depreciation on
forward foreign currency exchange  contracts
                      $ 5,302,499       $ 190,493                      

Equity contracts

   Options written at value            $ 1,574,557                    7,478,281                  $ 16,391,070   

Total

              $ 1,574,557          $ 5,302,499       $ 7,668,774                  $ 16,391,070   
     

 

 

       

 

 

       

 

 

 
                          
            Value  
           BOE           BME           BGY  
      Statements of Assets and Liabilities Location    Derivative
Assets
     Derivative
Liabilities
           Derivative
Assets
     Derivative
Liabilities
           Derivative
Assets
     Derivative
Liabilities
 

Equity contracts

   Options written at value            $ 10,714,090                  $ 2,914,970                  $ 10,585,312   
                          
            Value  
           BCX           BST           BUI  
      Statements of Assets and Liabilities Location    Derivative
Assets
     Derivative
Liabilities
           Derivative
Assets
     Derivative
Liabilities
           Derivative
Assets
     Derivative
Liabilities
 

Equity contracts

   Options written at value            $ 7,461,454                  $ 3,180,904                  $ 3,104,982   

 

The Effect of Derivative Financial Instruments in the Statements of Operations  
Period Ended December 31, 2014  
     BGR     CII     BDJ          BGR     CII      BDJ  
     

Net Realized Gain (Loss) From

         Net Change in
Unrealized Appreciation/Depreciation on
 

Foreign currency exchange contracts:

                

Foreign currency transactions/translations

                                  $ 2,943,736           

Equity contracts:

                

Options1

   $ 4,359,325      $ (9,885,718   $ (18,870,786        $ (507,808     3,289,468       $ 9,214,259   

Total

   $ 4,359,325      $ (9,885,718   $ (18,870,786      $ (507,808   $ 6,233,204       $ 9,214,259   
  

 

 

 
                
      BOE     BME     BGY           BOE     BME      BGY  
      Net Realized Gain (Loss) From         

Net Change in

Unrealized Appreciation/Depreciation on

 

Equity contracts:

                

Options1

   $ (11,353,918   $ (1,966,358   $ (5,584,407        $ 9,339,874      $ 1,506,360       $ 7,044,744   
                
      BCX2     BST     BUI           BCX     BST      BUI  
     

Net Realized Gain (Loss) From

        

Net Change in

Unrealized Appreciation/Depreciation on

 

Equity contracts:

                

Options1

   $ (119,699   $ 1,023,757      $ (1,653,983        $ (1,520,545   $ 645,492       $ 1,186,181   

 

  1   

Options purchased are included in the net realized gain (loss) from investments — unaffiliated and net change in unrealized appreciation/depreciation on investments.

 

  2   

Consolidated Statement of Operations.

 

114    ANNUAL REPORT    DECEMBER 31, 2014     


Notes to Financial Statements (continued)     

 

For the period ended December 31, 2014, the average quarterly balances of outstanding derivative financial instruments were as follows:

 

      BGR      CII      BDJ      BOE      BME  

Forward foreign currency exchange contracts:

              

Average USD amounts purchased

           $ 75,013,636                           

Average USD amounts sold

           $ 3,374,034                           

Options:

              

Average market value of options contracts written

   $ 1,574,557       $ 7,478,281       $ 16,391,070       $ 10,714,090       $ 2,914,970   

 

      BGY      BCX      BST      BUI  

Options:

           

Average market value of options contracts written

   $ 10,585,312       $ 7,461,454       $ 3,180,904       $ 3,104,982   

Counterparty Credit Risk: A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

A Trust’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by such Trust.

For OTC options purchased, each Trust bears the risk of loss of the amount of the premiums paid plus the positive change in market values net of any collateral held by such Trust should the counterparty fail to perform under the contracts. Options written by the Trusts do not typically give rise to counterparty credit risk, as options written generally obligate the Trusts, and not, the counterparty to perform.

With exchange traded options purchased, there is less counterparty credit risk to the Trusts since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Trust does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency) of the clearing broker or clearinghouse. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Trusts.

In order to better define its contractual rights and to secure rights that will help the Trusts mitigate their counterparty risk, the Trusts may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its counterparties. An ISDA Master Agreement is a bilateral agreement between each Trust and a counterparty that governs certain OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, each Trust may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. Bankruptcy or insolvency laws of a particular jurisdiction may restrict or prohibit the right of offset in bankruptcy, insolvency or other events. In addition, certain ISDA Master Agreements allow counterparties to terminate derivative contracts prior to maturity in the event the Trusts’ net assets decline by a stated percentage or the Trusts fail to meet the terms of its ISDA Master Agreements. The result would cause the Trusts to accelerate payment of any net liability owed to the counterparty.

Collateral Requirements: For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the mark-to-market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by a Trust and the counterparty.

Cash collateral that has been pledged to cover obligations of a Trust and cash collateral received from the counterparty, if any, is reported separately on the Statements of Assets and Liabilities as cash pledged as collateral and cash received as collateral, respectively. Non-cash collateral pledged by a Trust, if any, is noted in the Schedules of Investments. Generally, the amount of collateral due from or to a party has to exceed a minimum transfer amount threshold (typically either $250,000 or $500,000) before a transfer is required, which is determined at the close of business of the Trusts. Any additional required collateral is delivered to/pledged by the Trusts on the next business day. Typically, the Trusts and counterparties are not permitted to sell, re-pledge or use the collateral they receive. To the extent amounts due to a Trust from its counterparties are not fully collateralized, a Trust bears the risk of loss from counterparty non-performance. Likewise, to the extent the Trust has delivered collateral to a counterparty and stands ready to perform under the terms of its agreement with such counterparty, the Trust bears the risk of loss from a counterparty in the amount of the value of the collateral in the event the counterparty fails to return such collateral.

 

     ANNUAL REPORT    DECEMBER 31, 2014    115


Notes to Financial Statements (continued)     

 

For financial reporting purposes, the Trusts do not offset derivative assets and derivative liabilities that are subject to netting arrangements, if any, in the Statements of Assets and Liabilities.

As of December 31, 2014, the Trusts’ derivative assets and liabilities (by type) are as follows:

 

      BGR           CII           BDJ  
      Assets      Liabilities           Assets      Liabilities           Assets      Liabilities  

Derivative Financial Instruments:

                     

Forward foreign currency exchange contracts

                     $ 5,302,499       $ 190,493                     

Options

           $ 1,574,557                   7,478,281                 $ 16,391,070   
  

 

 

      

 

 

      

 

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

             (670,215                (5,384,457                (11,395,536
  

 

 

      

 

 

      

 

 

 

Total derivative assets and liabilities subject to an MNA

           $ 904,342         $ 5,302,499       $ 2,284,317                 $ 4,995,534   
  

 

 

      

 

 

      

 

 

 
                     
      BOE           BME           BGY  
      Assets      Liabilities           Assets      Liabilities           Assets      Liabilities  

Derivative Financial Instruments:

                     

Options

           $ 10,714,090                 $ 2,914,970                 $ 10,585,312   
  

 

 

      

 

 

      

 

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

             (4,520,593                (2,478,467                (661,903
  

 

 

      

 

 

      

 

 

 

Total derivative assets and liabilities subject to an MNA

           $ 6,193,497                 $ 436,503                 $ 9,923,409   
  

 

 

      

 

 

      

 

 

 
                     
      BCX           BST           BUI  
      Assets      Liabilities           Assets      Liabilities           Assets      Liabilities  

Derivative Financial Instruments:

                     

Options

           $ 7,461,454                 $ 3,180,904                 $ 3,104,982   
  

 

 

      

 

 

      

 

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

             (2,739,005                (1,808,449                (875,786
  

 

 

      

 

 

      

 

 

 

Total derivative assets and liabilities subject to an MNA

           $ 4,722,449                 $ 1,372,455                 $ 2,229,196   
  

 

 

      

 

 

      

 

 

 

As of December 31, 2014, the following tables present the Trusts’ derivative assets and liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral received and pledged by the Trusts.

 

BGR

                                           
Counterparty   

Derivative Liabilities

Subject to an MNA by

Counterparty

    

Derivatives Available

for Offset

    

Non-cash

Collateral

Pledged1

   

Cash

Collateral

Pledged

    

Net Amount of

Derivative Liabilities2

 

Credit Suisse International

   $ 33                              $ 33   

Deutsche Bank AG

     523,046               $ (443,760             79,286   

Goldman Sachs International

     378,559                                378,559   

Morgan Stanley & Co. International PLC

     36                                36   

UBS AG

     2,668                                2,668   
  

 

 

 

Total

   $ 904,342               $ (443,760           $ 460,582   
  

 

 

 

 

  1   

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 

  2   

Net amount represents the net amount payable due to the counterparty in the event of default. Net Amount may be offset further by the net options written receivable/payable on the Statements of Assets and Liabilities.

 

116    ANNUAL REPORT    DECEMBER 31, 2014     


Notes to Financial Statements (continued)     

 

CII

                                         
     Gross Amounts Not Offset in the Statements of Assets and  Liabilities
and Subject to MNA
 
Counterparty   

Derivative Assets

Subject to an MNA by

Counterparty

    

Derivatives Available

for Offset1

   

Non-cash

Collateral

Received

   

Cash

Collateral

Received

   

Net Amount of

Derivative Assets2

 

BNP Paribas S.A.

   $ 20,094       $ (20,094                     

Goldman Sachs & Co.

     1,206,787                              1,206,787   

Morgan Stanley & Co. International PLC

     3,575,559         (1,007,270                   2,568,289   

RBS Securities, Inc.

     483,701         (1,346                   482,355   

State Street Bank and Trust Co.

     5,366                              5,366   

UBS Securities LLC

     10,992                              10,992   
  

 

 

 

Total

   $ 5,302,499       $ (1,028,710                 $ 4,273,789   
  

 

 

 
           

CII

                                         
Counterparty    Derivative Liabilities
Subject to an MNA by
Counterparty
     Derivatives Available
for Offset1
    Non-cash
Collateral
Pledged3
    Cash
Collateral
Pledged
    Net Amount of
Derivative Liabilities2
 

Bank of America N.A.

   $ 20,792                            $ 20,792   

BNP Paribas S.A.

     180,768       $ (20,094                   160,674   

Citibank N.A.

     390,881              $ (390,881              

Credit Suisse International

     71,064                              71,064   

Deutsche Bank AG

     249,535                     $ (100,000     149,535   

Goldman Sachs International

     306,008                (306,008              

Morgan Stanley & Co. International PLC

     1,007,270         (1,007,270                     

RBS Securities, Inc.

     1,346         (1,346                     

UBS AG

     56,653                (56,653              
  

 

 

 

Total

   $ 2,284,317       $ (1,028,710   $ (753,542   $ (100,000   $ 402,065   
  

 

 

 
           

BDJ

                                         
Counterparty    Derivative Liabilities
Subject to an MNA by
Counterparty
     Derivatives Available
for Offset
    Non-cash
Collateral
Pledged3
    Cash
Collateral
Pledged
   

Net Amount of

Derivative Liabilities2

 

Bank of America N.A.

   $ 23,911                            $ 23,911   

Citibank N.A.

     190,262              $ (92,262   $ (98,000       

Credit Suisse International

     1,705,083                (1,705,083              

Deutsche Bank AG

     216,204                (216,204              

Goldman Sachs International

     2,071,095                (2,071,095              

Morgan Stanley & Co. International PLC

     628,885                (628,885              

UBS AG

     160,094                              160,094   
  

 

 

 

Total

   $ 4,995,534              $ (4,713,529   $ (98,000   $ 184,005   
  

 

 

 
           

BOE

                                         
Counterparty    Derivative Liabilities
Subject to an MNA by
Counterparty
     Derivatives Available
for Offset
    Non-cash
Collateral
Pledged3
    Cash
Collateral
Pledged
   

Net Amount of

Derivative Liabilities2

 

Bank of America N.A.

   $ 322,211              $ (322,211              

BNP Paribas S.A.

     504                            $ 504   

Citibank N.A.

     575,903                (575,903              

Credit Suisse International

     334,151                (334,151              

Deutsche Bank AG

     2,175,794                (2,175,794              

Goldman Sachs International

     586,909                (586,909              

Morgan Stanley & Co. International PLC

     1,271,821                (1,271,821              

UBS AG

     926,204                (926,204              
  

 

 

 

Total

   $ 6,193,497              $ (6,192,993          $ 504   
  

 

 

 

 

  1   

The amount of derivatives available for offset is limited to the amount of derivative assets and /or liabilities that are subject to an MNA.

 

  2   

Net amount represents the net amount payable due to the counterparty in the event of default. Net Amount may be offset further by the net options written receivable/payable on the Statements of Assets and Liabilities.

 

  3   

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 

     ANNUAL REPORT    DECEMBER 31, 2014    117


Notes to Financial Statements (continued)     

 

BME

                                          
Counterparty   

Derivative Liabilities

Subject to an MNA by

Counterparty

    

Derivatives Available

for Offset

    

Non-cash

Collateral

Pledged1

   

Cash

Collateral

Pledged

   

Net Amount of

Derivative Liabilities2

 

Barclays Bank PLC

   $ 16,939                             $ 16,939   

Credit Suisse International

     38,753                               38,753   

Deutsche Bank AG

     153,988                               153,988   

Goldman Sachs International

     90,147                               90,147   

Morgan Stanley & Co. International PLC

     48,530               $ (48,530              

UBS AG

     88,146                 (88,146              
  

 

 

 

Total

   $ 436,503               $ (136,676          $ 299,827   
  

 

 

 
            

BGY

                                          
Counterparty    Derivative Liabilities
Subject to an MNA by
Counterparty
     Derivatives Available
for Offset
     Non-cash
Collateral
Pledged1
    Cash
Collateral
Pledged
   

Net Amount of

Derivative Liabilities2

 

Bank of America N.A.

   $ 654,516               $ (571,516   $ (83,000       

BNP Paribas S.A.

     120,046                             $ 120,046   

Citibank N.A.

     366,451                        (366,451       

Credit Suisse International

     366,673                               366,673   

Deutsche Bank AG

     2,651,100                        (2,651,100       

Goldman Sachs International

     2,269,580                        (2,269,580       

Morgan Stanley & Co. International PLC

     1,800,846                 (1,800,846              

UBS AG

     1,694,197                        (1,694,197       
  

 

 

 

Total

   $ 9,923,409               $ (2,372,362   $ (7,064,328   $ 486,719   
  

 

 

 
            

BCX

                                          
Counterparty    Derivative Liabilities
Subject to an MNA by
Counterparty
     Derivatives Available
for Offset
     Non-cash
Collateral
Pledged1
    Cash
Collateral
Pledged
   

Net Amount of

Derivative Liabilities2

 

Bank of America N.A.

   $ 70,860                             $ 70,860   

Barclays Bank PLC

     102,335                               102,335   

BNP Paribas S.A.

     4                               4   

Citibank N.A.

     540,571               $ (540,571              

Credit Suisse International

     274,379                 (274,379              

Deutsche Bank AG

     821,244                 (704,412            116,832   

Goldman Sachs International

     1,166,932                 (1,166,932              

Morgan Stanley & Co. International PLC

     955,857                 (955,857              

UBS AG

     790,267                 (790,267              
  

 

 

 

Total

   $ 4,722,449               $ (4,432,418          $ 290,031   
  

 

 

 
            

BST

                                          
Counterparty    Derivative Liabilities
Subject to an MNA by
Counterparty
     Derivatives Available
for Offset
     Non-cash
Collateral
Pledged
    Cash
Collateral
Pledged
   

Net Amount of

Derivative Liabilities2

 

Bank of America N.A.

   $ 131,104                             $ 131,104   

Citibank N.A.

     73,734                               73,734   

Credit Suisse International

     106,252                               106,252   

Goldman Sachs International

     273,239                               273,239   

JPMorgan Chase Bank N.A.

     99,061                               99,061   

Morgan Stanley & Co. International PLC

     341,855                               341,855   

UBS AG

     347,210                               347,210   
  

 

 

 

Total

   $ 1,372,455                             $ 1,372,455   
  

 

 

 

 

  1   

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 

  2   

Net amount represents the net amount payable due to the counterparty in the event of default. Net Amount may be offset further by the net options written receivable/payable on the Statements of Assets and Liabilities.

 

118    ANNUAL REPORT    DECEMBER 31, 2014     


Notes to Financial Statements (continued)     

 

BUI

                                           
Counterparty    Derivative Liabilities
Subject to an MNA by
Counterparty
     Derivatives Available
for Offset
     Non-cash
Collateral
Pledged1
    Cash
Collateral
Pledged
     Net Amount of
Derivative Liabilities2
 

Bank of America N.A.

   $ 167,110                              $ 167,110   

Citibank N.A.

     320,300               $ (320,300               

Credit Suisse International

     441,325                 (441,325               

Deutsche Bank AG

     125,049                 (125,049               

Goldman Sachs International

     297,162                 (297,162               

Morgan Stanley & Co. International PLC

     644,385                 (644,385               

UBS AG

     233,865                                233,865   
  

 

 

 

Total

   $ 2,229,196               $ (1,828,221           $ 400,975   
  

 

 

 

 

  1   

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 

  2   

Net amount represents the net amount payable due to the counterparty in the event of default. Net Amount may be offset further by the net options written receivable/payable on the Statements of Assets and Liabilities.

5. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate, for 1940 Act purposes, of BlackRock.

Each Trust entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Trusts’ investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of each Trust’s portfolio and provides the necessary personnel, facilities, equipment and certain other services to the operations of each Trust. For such services, each Trust pays the Manager a monthly fee at the following annual rates:

 

          

Average weekly value of each Trust’s net assets:

  

BGR

     1.20

BDJ

     0.80

BOE

     1.00

BME

     1.00

    

        
          

Average daily value of each Trust’s net assets:

  

CII

     0.85

BGY

     1.00

BCX

     1.00

BST

     1.00

BUI

     1.00
 

 

Prior to December 8, 2014, the monthly fee at an annual rate as a percentage of average weekly net assets of BDJ was 0.81% and as a percentage of average daily net assets of BCX was 1.20%.

The Manager has agreed to waive a portion of the investment advisory fees on BST as a percentage of its average daily net assets as follows:

 

             Expiration Date  

BST

     0.20     October 31, 2018   
     0.15     October 31, 2019   
     0.10     October 31, 2020   
       0.05     October 31, 2021   

The Manager has voluntarily agreed to waive 0.05% of the investment advisory fees on BGY as a percentage of its average daily net assets.

Prior to December 8, 2014, the Manager had agreed to waive 0.20% of the investment advisory fees on BCX as a percentage of its average daily net assets. Subsequent to December 8, 2014, the waiver was discontinued.

The Manager provides investment management and other services to the Subsidiary. The Manager does not receive separate compensation from the Subsidiary for providing investment management or administrative services. However, BCX pays the Manager based on the Trust’s net assets which includes the assets of the Subsidiary.

 

 

     ANNUAL REPORT    DECEMBER 31, 2014    119


Notes to Financial Statements (continued)     

 

The Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees each Trust pays to the Manager indirectly through its investment in affiliated money market funds. However, the Manager does not waive its investment advisory fees by the amount of investment advisory fees paid in connection with each Trust’s investment in other affiliated investment companies, if any. These amounts are included in fees waived by Manager in the Statements of Operations. For the period ended December 31, 2014, the amounts waived were as follows:

 

          

BGR

   $ 4,155   

CII

   $ 456   

BDJ

   $ 4,544   

BOE

   $ 1,424   

BME

   $ 510   

BGY

   $ 2,038   

BCX

   $ 2,483   

BST

   $ 11,291   

BUI

   $ 798   

The Manager entered into separate sub-advisory agreements with BlackRock International Limited (“BIL”), an affiliate of the Manager, to serve as sub-advisor for BGR and BCX. The Manager pays BIL for services it provides to a Trust, a monthly fee that is a percentage of the investment advisory fees paid by the Trust to the Manager. Prior to July 1, 2014, the Manager entered into separate sub-advisory agreements with BlackRock Financial Management, Inc. (“BFM”) for BGR, CII, BDJ and BUI, BlackRock Investment Management, LLC (“BIM”) for CII and BUI and BlackRock Capital Management, Inc. (“BCM”) for BGY and BCX, each an affiliate of the Manager. Each sub-advisor received for services it provides to a Trust a monthly fee from the Manager at an annual rate equal to a percentage of the investment advisory fees paid by the Trust to the Manager. Effective July 1, 2014, each sub-advisory agreement between the Manager and BFM, BIM and BCM, with respect to each Trust, expired.

The U.S. Securities and Exchange Commission has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Trusts, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Trusts are responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment advisor to the private investment company will not charge any advisory fees with respect to shares purchased by the Trusts.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. Each Trust retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent. Pursuant to a securities lending agreement effective February 1, 2014, BIM may lend securities only when the difference between the borrower rebate rate and the risk free rate exceeds a certain level (such securities, the “specials only securities”).

Pursuant to such agreement, each Trust retains 80% of securities lending income. In addition, commencing the business day following the date that the aggregate securities lending income earned across the Closed-End Complex in a calendar year exceeds the breakpoint dollar threshold applicable in the given year as set forth in the securities lending agreement, each Trust, pursuant to the securities lending agreement, will retain for the remainder of the calendar year securities lending income in an amount equal to 85% of securities lending income. Prior to February 1, 2014, each Trust retained 65% of securities lending income and paid a fee to BIM equal to 35% of such income.

The share of securities lending income earned by each Trust is shown as securities lending — affiliated — net in the Statements of Operations. For the period ended December 31, 2014, each Trust paid BIM the following amounts for securities lending agent services:

 

          

CII

   $ 257   

BOE

   $ 2,681   

BME

   $ 63   

BGY

   $ 826   

BCX

   $ 8,294   

The Manager reimbursed each Trust, with the exception of BST, for a portion of the costs associated with a fiscal year end change. These amounts are shown as expenses reimbursed by Manager in the Statements of Operations.

Certain officers and/or trustees of the Trusts are officers and/or trustees of BlackRock or its affiliates. The Trusts reimburse the Manager for a portion of the compensation paid to the Trusts’ Chief Compliance Officer, which is included in officer and trustees in the Statements of Operations.

 

 

120    ANNUAL REPORT    DECEMBER 31, 2014     


Notes to Financial Statements (continued)     

 

The Trusts may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment advisor, common officers, or common trustees. For the period ended December 31, 2014, the purchase and sale transactions with an affiliated fund in compliance with Rule 17a-7 under the 1940 Act were as follows:

 

      Purchases      Sales  

BME

   $ 1,813,396           

6. Purchases and Sales:

For the period ended December 31, 2014, purchases and sales of investments, excluding short-term securities, were as follows:

 

      Purchases      Sales  

BGR

   $ 25,558,783       $ 83,044,764   

CII

   $ 13,923,041       $ 26,435,647   

BDJ

   $ 6,673,187       $ 9,611,708   

BOE

   $ 171,391,247       $ 189,448,343   

BME

   $ 18,390,399       $ 41,631,908   

BGY

   $ 117,742,647       $ 164,490,783   

BCX

   $ 16,734,726       $ 14,426,798   

BST

   $ 395,834,367       $ 20,165,463   

BUI

   $ 7,259,725       $ 14,644,234   

7. Income Tax Information:

It is the Trusts’ policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of their taxable income to their shareholders. Therefore, no federal income tax provision is required.

The Trusts file U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on each Trust’s U.S. federal tax returns remains open for the period ended December 31, 2014 and each of the four years ended October 31, 2014 with the exception of BCX, BST and BUI. The statutes of limitations on BCX’s U.S. federal tax returns remains open for the period ended December 31, 2014, the three years ended October 31, 2014 and the period ended October 31, 2011. The statutes of limitations on BUI’s U.S. federal tax returns remains open for period ended December 31, 2014, the two years ended October 31, 2014 and the period ended October 31, 2012. The statutes of limitations on BST’s U.S. federal tax returns remains open for the period ended December 31, 2014. The statute of limitations on each Trust’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Trusts’ facts and circumstances and does not believe that there are any uncertain tax positions that require recognition of a tax liability.

U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share. As of December 31, 2014, the following permanent differences attributable to foreign currency transactions, the sale of stock of passive foreign investment companies, net operating losses, non-deductible expenses, income recognized from investments in partnerships, limitations on the utilization of capital loss carryforwards and the accounting for real estate investment trusts were reclassified to the following accounts:

 

      BGR     CII     BDJ     BOE     BME  

Paid-in capital

                 $ (16,165,167   $ (18,023,664       

Undistributed (distributions in excess of) net investment income

   $ (34,427   $ (3,265   $ (3,365   $ 493,295      $ 52,826   

Accumulated net realized gain (loss)

   $ 34,427      $ 3,265      $ 16,168,532      $ 17,530,369      $ (52,826

 

      BGY     BCX     BST     BUI  

Paid-in capital

   $ (417,601   $ (24,711,866   $ (45,000       

Undistributed (distributions in excess of) net investment income

   $ 549,237      $ 36,365      $ 265,333      $ (12,111

Accumulated net realized gain (loss)

   $ (131,636   $ 24,675,501      $ (220,333   $ 12,111   

 

 

     ANNUAL REPORT    DECEMBER 31, 2014    121


Notes to Financial Statements (continued)     

 

The tax character of distributions paid were as follows:

 

      BGR      CII      BDJ      BOE      BME  

Ordinary income

              

12/31/14

   $ 20,473,130       $ 4,539,117       $ 6,490,341               $ 10,151,557   

10/31/14

   $ 44,116,137       $ 28,519,674       $ 29,340,373       $ 30,973,920       $ 16,767,193   

10/31/13

   $ 13,788,843       $ 13,908,365       $ 68,370,120       $ 74,620,843       $ 6,308,117   

Long-term capital gains

              

12/31/14

   $ 21,497,236                               $ 10,928,227   

10/31/14

   $ 82,539,116                               $ 13,009,161   

10/31/13

   $ 34,432,429               $ 32,140,223               $ 12,125,678   

Return of capital

              

12/31/14

           $ 4,285,163       $ 10,716,791       $ 13,959,167           

10/31/14

           $ 28,838,146       $ 79,569,763       $ 62,866,563           

10/31/13

           $ 39,037,315               $ 11,996,866           
  

 

 

 

Total

              

12/31/14

   $ 41,970,366       $ 8,824,280       $ 17,207,132       $ 13,959,167       $ 21,079,784   
  

 

 

 

10/31/14

   $ 126,655,253       $ 57,357,820       $ 108,910,136       $ 93,840,483       $ 29,776,354   
  

 

 

 

10/31/13

   $ 48,221,272       $ 52,945,680       $ 100,510,343       $ 86,617,709       $ 18,433,795   
  

 

 

 

 

      BGY      BCX      BST      BUI  

Ordinary income

           

12/31/14

           $ 2,386,991       $ 48,058       $ 1,712,370   

10/31/14

   $ 22,280,887       $ 14,352,994               $ 8,735,252   

10/31/13

   $ 18,226,947       $ 6,452,839               $ 14,081,651   

Long-term capital gains

           

12/31/14

                               

10/31/14

                             6,241,040   

10/31/13

                             1,801,216   

Return of capital

           

12/31/14

     11,548,874         8,841,474         2,202,701         2,379,115   

10/31/14

     57,741,812         32,315,467                 11,593,002   

10/31/13

     55,619,854         47,574,521                 8,632,231   
  

 

 

 

Total

           

12/31/14

   $ 11,548,874       $ 11,228,465       $ 2,250,759       $ 4,091,485   
  

 

 

 

10/31/14

   $ 80,022,699       $ 46,668,461               $ 26,569,294   
  

 

 

 

10/31/13

   $ 73,846,801       $ 54,027,360               $ 24,515,098   
  

 

 

 

As of December 31, 2014, the tax components of accumulated net earnings (losses) were as follows:

 

      BGR     CII     BDJ     BOE     BME  

Undistributed ordinary income

   $ 52,576                           $ 2,925,818   

Undistributed long-term capital gains

                                 2,957,704   

Capital loss carryforwards

     (2,254,065   $ (84,536,896   $ (131,444,825   $ (92,334,368       

Net unrealized gains (losses)1

     (39,940,407     86,605,663        305,125,287        113,041,210        112,153,927   
  

 

 

 

Total

   $ (42,141,896   $ 2,068,767      $ 173,680,462      $ 20,706,842      $ 118,037,449   
  

 

 

 

 

      BGY     BCX     BST     BUI  

Capital loss carryforwards

   $ (526,539,406   $ (243,589,241   $ (750,064   $ (819,024

Net unrealized gains (losses)1

     20,103,193        (44,373,625     11,338,221        84,242,954   
  

 

 

 

Total

   $ (506,436,213   $ (287,962,866   $ 10,588,157      $ 83,423,930   
  

 

 

 

 

  1   

The difference between book-basis and tax-basis net unrealized gains (losses) was attributable primarily to the tax deferral of losses on wash sales and straddles, the realization for tax purposes of unrealized gains/losses on certain foreign currency contracts, the realization for tax purposes of unrealized gains on investments in passive foreign investment companies, the timing and recognition of partnership income, the deferral of compensation to Trustees and the accounting for real estate investment trusts.

 

 

122    ANNUAL REPORT    DECEMBER 31, 2014     


Notes to Financial Statements (continued)     

 

As of December 31, 2014, the Trusts had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:

 

Expires December 31,    BGR      CII      BDJ      BOE      BGY      BCX      BST      BUI  

2015

           $ 2,664,939       $ 29,846,203       $ 34,833,935          $ 2,849,098                   

2016

             70,040,876         61,470,173         38,148,041       $ 458,843,935         2,659,644                   

2017

             2,615,197         8,526,748                 55,605,462         1,795,201                   

No expiration date1

   $ 2,254,065         9,215,884         31,601,701         19,352,392         12,090,009         236,285,298       $ 750,064       $ 819,024   
  

 

 

 

Total

   $ 2,254,065       $ 84,536,896       $ 131,444,825       $ 92,334,368       $ 526,539,406       $ 243,589,241       $ 750,064       $ 819,024   
  

 

 

 

 

  1   

Must be utilized prior to losses subject to expiration.

As of December 31, 2014, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:

 

      BGR     CII     BDJ     BOE     BME  

Tax cost

   $ 676,027,849      $ 600,788,865      $ 1,449,972,170      $ 948,688,030      $ 191,452,747   
  

 

 

 

Gross unrealized appreciation

   $ 31,021,550      $ 135,435,579      $ 380,718,589      $ 162,068,949      $ 116,879,104   

Gross unrealized depreciation

     (71,389,319     (41,969,725     (67,701,898     (41,454,087     (2,185,862
  

 

 

 

Net unrealized appreciation (depreciation)

   $ (40,367,769   $ 93,465,854      $ 313,016,691      $ 120,614,862      $ 114,693,242   
  

 

 

 

 

      BGY     BCX     BST     BUI  

Tax cost

   $ 809,546,956      $ 1,200,594,063      $ 416,515,059      $ 293,496,579   
  

 

 

 

Gross unrealized appreciation

   $ 71,562,295      $ 117,482,636      $ 18,756,791      $ 93,067,737   

Gross unrealized depreciation

     (43,205,572     (151,838,516     (7,737,685     (1,220,870
  

 

 

 

Net unrealized appreciation (depreciation)

   $ 28,356,723      $ (34,355,880   $ 11,019,106      $ 91,846,867   
  

 

 

 

8. Principal Risks:

In the normal course of business, the Trusts invest in securities and enter into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Trusts may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Trusts; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Trusts may be exposed to counterparty credit risk, or the risk that an entity with which the Trusts have unsettled or open transactions may fail to or be unable to perform on its commitments. The Trusts manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Trusts to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Trusts’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded in the Statements of Assets and Liabilities, less any collateral held by the Trusts.

As of December 31, 2014, the Trusts listed below invested a significant portion of their assets in securities in the following sectors:

 

Utilities

   BUI

Energy

   BGR, BCX, BUI

Health Care

   BME

Financials

   CII, BDJ, BGY

Information Technology

   CII, BST

Materials

   BCX

Consumer Discretionary

   CII

Changes in economic conditions affecting these sectors would have a greater impact on these Trusts and could affect the value, income and/or liquidity of positions in such securities.

BOE and BGY invest a substantial amount of their assets in issuers located in a single country or a limited number of countries. When a Trust concentrates its investments in this manner, it assumes the risk that economic, political and social conditions in those countries may have a significant impact on their investment performance. Foreign issuers may not be subject to the same uniform accounting, auditing and financial

 

     ANNUAL REPORT    DECEMBER 31, 2014    123


Notes to Financial Statements (continued)     

 

reporting standards and practices as used in the U.S. Foreign securities markets may also be less liquid, more volatile, and less subject to governmental supervision not typically associated with investing in United States securities. Please see the Schedule of Investments for concentrations in specific countries.

As of December 31, 2014, the Trusts’ investments listed below had the following industry classifications:

 

Industry    BOE     BGY  

Banks

     9     8

Pharmaceuticals

     8     14

Oil, Gas & Consumable Fuels

     7     6

Software

     7     1

Internet Software & Services

     5     6

Semiconductors & Semiconductor Equipment

     3     6

Machinery

     2     6

 

  *   All other industries held were each less than 5%.

9. Capital Share Transactions:

There are an unlimited number of $0.001 par value common shares of beneficial interest authorized for each Trust, with the exception of CII. CII is authorized to issue 200 million shares of $0.10 par value shares, all of which were initially classified as Common Shares. The Board is authorized, however, to reclassify any unissued Common Shares to Preferred Shares without approval of Common Shareholders.

Prior to commencement of operations, organization costs associated with the establishment of BST were expensed by BST. Offering costs incurred in connection with the Trust’s offering of Common Shares have been charged against the proceeds from the initial Common Share offering in the amount of $795,000.

Transactions in common shares of beneficial interest during the period ended December 31, 2014 were as follows:

 

Trust   

Commencement

of Investment

Operations

  

Initial

Public

Offering

    

Underwriters’

Exercising the

Over-allotment

Option

 

BST

   10/30/2014      21,007,592         1,500,000   

For the periods shown, shares issued and outstanding increased by the following amounts as a result of reorganizations:

 

     

Period Ended

December 31,

2014

 

BDJ

     9,495,566   

BCX

     52,484,474   

Shares issued and outstanding during the period ended December 31, 2014 and the year ended October 31, 2014 increased by the following amounts as a result of dividend reinvestments:

 

     

Period Ended

December 31,

2014

    

Year Ended

October 31, 2014

 

BME

     45,589         67,810   

Shares issued and outstanding remained constant for BGR, CII, BOE, BGY and BUI for the period ended December 31, 2014 and for BGR, CII, BDJ, BOE, BGY, BCX, and BUI for the year ended October 31, 2014.

At December 31, 2014, 7,592 shares of BST were owned by affiliates.

 

124    ANNUAL REPORT    DECEMBER 31, 2014     


Notes to Financial Statements (concluded)     

 

10. Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Trusts’ financial statements was completed through the date the financial statements were issued and the following items were noted:

The Trusts paid a distribution on January 30, 2015 to shareholders of record on January 15, 2015 as follows:

 

     

Common Dividend

Per Share

 

BGR

   $ 0.13500   

CII

   $ 0.10000   

BDJ

   $ 0.04670   

BOE

   $ 0.09700   

BME

   $ 0.16500   

BGY

   $ 0.04900   

BCX

   $ 0.07710   

BST

   $ 0.10000   

BUI

   $ 0.12100   

Additionally, certain Trusts declared a distribution in the following amounts per share on February 2, 2015 payable to shareholders of record on February 13, 2015 as follows:

 

     

Common Dividend

Per Share

 

BGR

   $ 0.13500   

CII

   $ 0.10000   

BDJ

   $ 0.04670   

BOE

   $ 0.09700   

BME

   $ 0.16500   

BGY

   $ 0.04900   

BCX

   $ 0.07710   

BST

   $ 0.10000   

BUI

   $ 0.12100   

 

     ANNUAL REPORT    DECEMBER 31, 2014    125


Report of Independent Registered Public Accounting Firm     

 

To the Board of Trustees and Shareholders of BlackRock Energy and Resources Trust, BlackRock Enhanced Equity Dividend Trust, BlackRock Global Opportunities Equity Trust, BlackRock Health Sciences Trust, BlackRock International Growth and Income Trust, BlackRock Resources & Commodities Strategy Trust, BlackRock Science and Technology Trust, BlackRock Utility and Infrastructure Trust, and the Board of Directors and Shareholders of BlackRock Enhanced Capital and Income Fund, Inc.:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments of BlackRock Energy and Resources Trust, BlackRock Enhanced Capital and Income Fund, Inc., BlackRock Enhanced Equity Dividend Trust, BlackRock Global Opportunities Equity Trust, BlackRock Health Sciences Trust, BlackRock International Growth and Income Trust, BlackRock Science and Technology Trust, and BlackRock Utility and Infrastructure Trust, as of December 31, 2014, and the related statements of operations and cash flows for the period then ended, the statements of changes in net assets for each of the periods presented, and the financial highlights for each of the periods presented (as to BlackRock Science and Technology Trust, for the period from commencement of operations through December 31, 2014). We have also audited the consolidated statement of assets and liabilities, including the consolidated schedule of investments of BlackRock Resources & Commodities Strategy Trust (collectively with BlackRock Energy and Resources Trust, BlackRock Enhanced Capital and Income Fund, Inc., BlackRock Enhanced Equity Dividend Trust, BlackRock Global Opportunities Equity Trust, BlackRock Health Sciences Trust, BlackRock International Growth and Income Trust, BlackRock Science and Technology Trust, and BlackRock Utility and Infrastructure Trust, the “Trusts”), as of December 31, 2014, and the related consolidated statements of operations and cash flows for the period then ended, the consolidated statements of changes in net assets for each of the periods presented, and the consolidated financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Trusts’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trusts are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trusts’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2014, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of BlackRock Energy and Resources Trust, BlackRock Enhanced Capital and Income Fund, Inc., BlackRock Enhanced Equity Dividend Trust, BlackRock Global Opportunities Equity Trust, BlackRock Health Sciences Trust, BlackRock International Growth and Income Trust, BlackRock Science and Technology Trust, and BlackRock Utility and Infrastructure Trust as of December 31, 2014, the results of their operations and their cash flows for the period then ended, the changes in their net assets for each of the periods presented, and the financial highlights for each of the periods presented, and the consolidated financial position of BlackRock Resources & Commodities Strategy Trust as of December 31, 2014, the consolidated results of its operations and cash flows for the period then ended, the consolidated changes in its net assets for each of the periods presented, and its consolidated financial highlights in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Philadelphia, Pennsylvania

February 24, 2015

 

126    ANNUAL REPORT    DECEMBER 31, 2014     


Important Tax Information (Unaudited)     

 

The following information is provided with respect to the distributions paid during the taxable period ended December 31, 2014.

 

      Payable Date   

Long-Term

Capital Gains

   

Non-Taxable

Return of

Capital

   

Qualified

Dividend

Income for

Individuals1

   

Dividends

Qualifying for

the Dividends

Received

Deduction for

Corporations1

   

Short-Term

Capital Gain

Dividends for

Non-U.S.

Residents2

 

BGR

   11/28/14 - 12/31/14      51.22            25.14     13.45     15.67

CII

   11/28/14 - 12/31/14             48.56     24.43     19.26       

BDJ

   11/28/14 - 12/31/14             62.28     37.72     37.72       

BOE

   11/28/14 - 12/31/14             100.00                     

BME

   11/28/14 - 12/31/14      51.84            8.81     6.70     47.70

BGY

   11/28/14 - 12/31/14             100.00                     

BCX

   11/28/14 - 12/31/14             78.74     21.26     20.95       

BST

   12/31/14             97.86     2.14     2.14       

BUI

   11/28/14 - 12/31/14             58.15     41.85     24.02       

 

  1   

The Trusts hereby designate the percentages indicated above to the maximum amount allowable by law.

 

  2   

Represents the portion of the dividends eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations.

The following information is provided with respect to the distributions paid during the taxable period ended December 8, 2014.

 

      Payable Date   

Long-Term

Capital Gains

    

Non-Taxable

Return of

Capital

   

Qualified

Dividend

Income for

Individuals1

   

Dividends

Qualifying for

the Dividends

Received

Deduction for

Corporations1

   

Short-Term

Capital Gain

Dividends for

Non-U.S.

Residents2

 

BQY

   11/3/14 - 11/28/14              72.04     27.96     27.50       

BQR

   11/28/14              80.19     19.81     19.81       

BCF

   11/3/14 - 11/28/14              88.89     11.11     11.11       

 

  1   

The Trusts hereby designate the percentages indicated above to the maximum amount allowable by law.

 

  2   

Represents the portion of the dividends eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations.

 

     ANNUAL REPORT    DECEMBER 31, 2014    127


Disclosure of Investment Advisory Agreement and Fee Waiver Letter     

 

The Board of Trustees (the “Board,” the members of which are referred to as “Board Members”) of BlackRock Science and Technology Trust (the “Trust”) met on September 5, 2014 to consider the approval of the investment advisory agreement (the “Advisory Agreement”) between the Trust and BlackRock Advisors, LLC, the Trust’s investment advisor (the “Manager”). The Board also considered the approval of the Investment Advisory Fee Waiver letter (the “Fee Waiver Letter”) between the Trust and the Manager. The Manager is referred to herein as “BlackRock.” The Advisory Agreement and the Fee Waiver Letter are referred to herein as the “Agreements.”

Activities and Composition of the Board

At the time the Board considered the Agreements on September 5, 2014, the Board consisted of eleven individuals, six of whom were not “interested persons” of the Trust as defined in the Investment Company Act of 1940 (the “1940 Act”) (the “Independent Board Members”), and an additional three of whom would be Independent Board Members after the completion of the Trust’s initial public offering. The Board Members are responsible for the oversight of the operations of the Trust and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chairman of the Board is an Independent Board Member. The Board has established six standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee, an Executive Committee and a Leverage Committee, each of which is currently chaired by an Independent Board Member and composed of Independent Board Members (except for the Executive Committee and the Leverage Committee, each of which also has one interested Board Member).

The Agreements

Pursuant to the 1940 Act, the Board is required to consider the initial approval of the Agreements. In connection with this process, the Board assessed, among other things, the nature, scope and quality of the services to be provided to the Trust by BlackRock, its personnel and its affiliates, including, applicable, investment management, administrative and shareholder services; oversight of fund service providers; marketing services; risk oversight; compliance and assistance in meeting applicable legal and regulatory requirements.

Board Considerations in Approving the Agreements

The Approval Process: Prior to the September 5, 2014 meeting, the Board received materials specifically relating to the Agreements. The materials provided in connection with the September 5, 2014 meeting included information regarding (i) the investment objectives and policies of the Trust; (ii) the team of investment advisory personnel assigned to the Trust; (iii) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on the Trust’s management fee and estimated total operating expenses as compared with a peer group of funds as determined by Lipper (“Expense Peers”) and a customized peer group selected by BlackRock; and (iv) certain anticipated direct and indirect “fallout” benefits to BlackRock from its relationship with the Trust. Periodically, the Board Members, in connection with their duties as trustees or directors of other funds in the BlackRock family of closed-end funds, have received other information including general information regarding BlackRock’s management of such funds (including the investment performance of BlackRock portfolio management in general), BlackRock’s management of relationships with service providers to such funds, resources devoted to compliance with such funds’ investment objectives and policies, the structure and expertise of BlackRock and BlackRock’s parent companies, information on the profits realized by BlackRock and its affiliates as a result of its relationships with such funds, general analysis provided by BlackRock concerning investment management fees charged to other clients, such as institutional clients and open-end funds, under similar investment mandates, as applicable, BlackRock’s policies and procedures in respect of execution of portfolio transactions, the existence, impact and sharing of potential economies of scale and other matters.

At the in person meeting held on September 5, 2014, the Board, including the Independent Board Members, reviewed materials relating to its consideration of the Agreements and unanimously approved the Advisory Agreement between the Manager and the Trust and unanimously approved the Fee Waiver Letter between the Manager and the Trust. In approving the Agreements, the Board considered: (a) the nature, extent and quality of the services to be provided by BlackRock; (b) the investment performance of BlackRock portfolio management in general; (c) the advisory fee and the cost of the services and profits to be realized by BlackRock and its affiliates from their relationship with the Trust; (d) the Trust’s estimated costs to investors compared to the costs of Expense Peers; (e) economies of scale; (f) fall-out benefits to BlackRock and its affiliates as a result of their relationship with the Trust; and (g) other factors deemed relevant by the Board Members.

The Board also considered other matters it deemed important to the approval process, such as payments made to BlackRock or its affiliates relating to securities lending, services related to the valuation and pricing of Trust portfolio holdings, direct and indirect benefits to BlackRock and its affiliates from their relationship with the Trust and advice from independent legal counsel with respect to the review process and materials submitted for the Board’s review. The Board noted the willingness of BlackRock personnel to engage in open, candid discussions with the Board. The Board did not identify any particular information as determinative, and each Board Member may have attributed different weights to the various items considered.

 

128    ANNUAL REPORT    DECEMBER 31, 2014     


Disclosure of Investment Advisory Agreement and Fee Waiver Letter (continued)     

 

A. Nature, Extent and Quality of the Services Provided by BlackRock: The Board, including the Independent Board Members, reviewed the nature, extent and quality of services to be provided by BlackRock to the Trust, including investment advisory services. The Board met with BlackRock’s senior management personnel responsible for investment operations, including senior investment officers. The Board also reviewed the materials provided by the Trust’s portfolio management team discussing the Trust’s investment objectives, strategies and outlook.

The Board considered, among other factors, with respect to BlackRock: the number, education and experience of investment personnel generally and the Trust’s portfolio management team, investments by portfolio managers in the funds they manage, portfolio trading capabilities, use of technology, commitment to compliance, credit analysis capabilities, risk analysis and oversight capabilities and the approach to training and retaining portfolio managers and other research, advisory and management personnel. The Board also engaged in a review of BlackRock’s compensation structure with respect to the Trust’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent and create performance incentives.

In addition to advisory services, the Board considered the quality of the administrative and other non-investment advisory services to be provided to the Trust. BlackRock and its affiliates will provide the Trust with certain services (in addition to any such services provided to the Trust by third parties) and officers and other personnel as are necessary for the operations of the Trust. In particular, BlackRock and its affiliates will provide the Trust with the following administrative services including, among others: (i) preparing disclosure documents, such as the prospectus and the statement of additional information in connection with the initial public offering and periodic shareholder reports; (ii) preparing communications with analysts to support secondary market trading of the Trust; (iii) oversight of daily accounting and pricing; (iv) preparing periodic filings with regulators and stock exchanges; (v) overseeing and coordinating the activities of other service providers; (vi) organizing Board meetings and preparing the materials for such Board meetings; (vii) providing legal and compliance support; and (viii) performing other administrative functions necessary for the operation of the Trust, such as tax reporting, fulfilling regulatory filing requirements and call center services. The Board reviewed the structure and duties of BlackRock’s fund administration, shareholder services, legal and compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.

B. The Investment Performance of the Funds and BlackRock: In their capacity as members of the boards of directors or trustees of certain other BlackRock-advised funds, the Board Members, including the Independent Board Members, previously received and considered information about BlackRock’s investment performance for other BlackRock-advised funds. The Board, however, could not consider the performance history of the Trust because the Trust was newly organized and had not yet commenced operations as of the meeting.

C. Consideration of the Advisory/Management Fees and the Cost of the Services and Profits to be Realized by BlackRock and its Affiliates from their Relationship with the Trust: The Board, including the Independent Board Members, reviewed five sub-categories of fees and expenses for the Trust compared with the other funds in its Lipper expense group: (i) contractual management fees; (ii) total expenses, including investment-related expenses and taxes; (iii) total expenses, excluding investment-related expenses and taxes; (iv) management fees based on common shares; and (v) non-management expenses. The Board also considered the services provided and the fees charged by BlackRock and its affiliates to other types of clients with similar investment mandates, as applicable, including institutional accounts.

The Board discussed that the Trust’s contractual management fee was proposed to be 1% of managed assets. The Board then acknowledged that, pursuant to the Fee Waiver Letter, the Manager had offered to contractually waive a portion of the Trust’s management fee through 2021 as follows: waive 0.20% for 2014 through 2018, 0.15% in 2019, 0.10% in 2020 and 0.05% in 2021, with no waiver beginning in 2022. The Board noted that, relative to the other funds in its Lipper expense group, the Trust fell in the first quartile for all fees where adequate Lipper information was provided. The Board recognized that, within contractual management fees and management fees based on common shares, two Lipper-selected comparison funds did not have a stated contractual management fee and that, in both of these categories, the Trust had the lowest management fee of the funds that have stated management fees. The Board also reviewed a separate peer group of five other funds selected by BlackRock, based on similarity of strategy or sector equity representation. The Board noted that the Trust had the lowest net total expenses and lowest gross total expenses of this peer group, that the Trust’s net management fees would be the lowest or second-lowest of this peer group (depending on the amount of the year’s waiver) and that the Trust’s gross management fee was the second-lowest of this peer group.

The Board Members noted that they had previously received and reviewed statements relating to BlackRock’s financial condition in connection with their duties as trustees or directors of other funds in the BlackRock family of closed-end funds. The Board Members also noted that they had previously received information on BlackRock’s costs of services and profitability with respect to the other funds the Board currently oversees, as described above, including funds pursuing equity-based and options strategies similar to those proposed for the Trust, for the year ended December 31, 2013 compared to available aggregate profitability data provided for the prior two years. The Board acknowledged the Manager’s representation that it expected the Trust’s costs of services and profitability to be broadly in line with those of other similar funds managed by the Manager. The Board Members then noted their previous review of BlackRock’s costs of services and profitability with respect to certain other fund complexes managed by the Manager and/or its affiliates. The Board Members considered their prior review of BlackRock’s assumptions and methodology of

 

     ANNUAL REPORT    DECEMBER 31, 2014    129


Disclosure of Investment Advisory Agreement and Fee Waiver Letter (continued)     

 

allocating expenses in the profitability analysis, noting the inherent limitations in allocating costs among various advisory products. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Manager, the types of funds managed, precision of expense allocations and business mix. The Board noted that, as a result, calculating and comparing profitability at individual fund levels is difficult.

The Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. The Board Members then noted their previous review, as described above, of BlackRock’s overall operating margin, in general, compared to that of certain other publicly-traded asset management firms. The Board Members reviewed their previous consideration of the differences between BlackRock and these other firms, including the contribution of technology at BlackRock, BlackRock’s expense management, and the relative product mix.

The Board also considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Advisory Agreement and to provide the high quality of services that is expected by the Board. The Board further considered factors including but not limited to BlackRock’s commitment of time, assumption of risk and liability profile in servicing the Trust in contrast to what is required of BlackRock with respect to other products with similar investment objectives across the open-end fund, ETF, closed-end fund and institutional account product channels, as applicable.

Following consideration of this information, the Board, including the Independent Board Members, concluded that the fees to be paid pursuant to the Agreements were fair and reasonable in light of the services to be provided.

D. Economies of Scale: The Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of the Trust increase. The Board also considered the extent to which the Trust may benefit from such economies and whether there should be changes in the advisory fee rate or breakpoint structure in order to enable the Trust to participate in these economies of scale, for example through the use of breakpoints in the advisory fee based upon the asset level of the Trust.

Based on the Board’s review and consideration of the issue, the Board concluded that most closed-end funds do not have fund level breakpoints because closed-end funds generally do not experience substantial growth after the initial public offering. They are typically priced at scale at a fund’s inception.

E. Other Factors Deemed Relevant by the Board Members: The Board, including the Independent Board Members, also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates may derive from their respective relationships with the Trust, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios and risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to the Trust, including securities lending and cash management services. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Board also noted that BlackRock may use and benefit from third party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or a number of its other client accounts. The Board further noted that it had considered the investment by BlackRock’s funds in exchange traded funds (i.e., ETFs) without any offset against the management fees payable by the funds to BlackRock.

In connection with its consideration of the Advisory Agreement, the Board also received information regarding BlackRock’s brokerage and soft dollar practices, including reports from BlackRock, which included information on brokerage commissions, and trade execution practices for BlackRock closed-end funds, throughout the year.

The Board noted the competitive nature of the closed-end fund marketplace, and that shareholders are able to sell their Trust shares in the secondary market if they believe that the Trust’s fees and expenses are too high or if they are dissatisfied with the performance of the Trust.

The Board also considered the various notable initiatives and projects BlackRock performed in connection with its closed-end fund product line. These initiatives included the refinancing of auction rate preferred securities for certain BlackRock closed-end funds; developing equity shelf programs; efforts to eliminate product overlap with fund reorganizations; ongoing services to manage leverage that has become increasingly complex; share repurchases and other support initiatives for certain BlackRock funds; and continued communications efforts with shareholders, fund analysts and financial advisers. With respect to the latter, the Independent Board Members noted BlackRock’s continued commitment to supporting the secondary market for the common shares of its closed-end funds through a comprehensive secondary market communication program designed to raise investor and analyst awareness and understanding of closed-end funds. BlackRock’s support services included, among other things: continuing communications concerning the refinancing efforts related to auction rate preferred securities; sponsoring and participating in conferences; communicating with closed-end fund analysts covering the BlackRock funds throughout the year; providing marketing and product updates for the closed-end funds; and maintaining and enhancing its closed-end fund website.

 

130    ANNUAL REPORT    DECEMBER 31, 2014     


Disclosure of Investment Advisory Agreement and Fee Waiver Letter (concluded)     

 

The Board, including all of the Independent Board Members, concluded that the ancillary benefits that BlackRock and its affiliates could receive with regard to providing investment advisory and other services to the Trust were consistent with those generally available to other fund sponsors.

Conclusion

Based upon its evaluation of all of the aforementioned factors in their totality, the Board, including the Independent Board Members, was satisfied that the terms of the Advisory Agreement were fair and reasonable and in the best interest of the Trust and its shareholders. In arriving at its decision to approve the Advisory Agreement, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination.

 

     ANNUAL REPORT    DECEMBER 31, 2014    131


Automatic Dividend Reinvestment Plans     

 

Pursuant to each Trust’s Dividend Reinvestment Plan (the “Reinvestment Plan”), Common Shareholders are automatically enrolled, to have all distributions of dividends and capital gains reinvested by Computershare Trust Company, N.A. (the “Reinvestment Plan Agent”) in the respective Trust’s shares pursuant to the Reinvestment Plan. Shareholders who do not participate in the Reinvestment Plan will receive all distributions in cash paid by check and mailed directly to the shareholders of record (or if the shares are held in street or other nominee name, then to the nominee) by the Reinvestment Plan Agent, which serves as agent for the shareholders in administering the Reinvestment Plan.

After the Trusts declare a dividend or determines to make a capital gain distribution, the Reinvestment Plan Agent will acquire shares for the participants’ account, depending upon the following circumstances, either (i) through receipt of unissued but authorized shares from the Trust (“newly issued shares”) or (ii) by purchase of outstanding shares on the open market, on a Trust’s primary exchange (“open market purchases”). If, on the dividend payment date, the net asset value per share (“NAV”) is equal to or less than the market price per share plus estimated brokerage commissions (such condition being referred to herein as “market premium”), the Reinvestment Plan Agent will invest the dividend amount in newly issued shares acquired on behalf of the participants. The number of newly issued shares to be credited to each participant’s account will be determined by dividing the dollar amount of the dividend by the NAV on the date the shares are issued. However, if the NAV is less than 95% of the market price on the dividend payment date, the dollar amount of the dividend will be divided by 95% of the market price on the dividend payment date. If, on the dividend payment date, the NAV is greater than the market price per share plus estimated brokerage commissions (such condition being referred to herein as “market discount”), the Reinvestment Plan Agent will invest the dividend amount in shares acquired on behalf of the participants in open-market purchases. If the Reinvestment Plan Agent is unable to invest the full dividend amount in open market purchases, or if the market discount shifts to a market premium during the purchase period, the Reinvestment Plan Agent will invest any un-invested portion in newly issued shares. Investments in newly issued shares made in this manner would be made pursuant to the same process described above and the date of issue for such newly issued shares will substitute for the dividend payment date.

Participation in the Reinvestment Plan is completely voluntary and may be terminated or resumed at any time without penalty by notice if received and processed by the Reinvestment Plan Agent prior to the dividend record date. Additionally, the Reinvestment Plan Agent seeks to process notices received after the record date but prior to the payable date and such notices often will become effective by the payable date. Where late notices are not processed by the applicable payable date, such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution.

The Reinvestment Plan Agent’s fees for the handling of the reinvestment of all distributions will be paid by each Trust. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Reinvestment Plan Agent’s open market purchases in connection with the reinvestment of all distributions. The automatic reinvestment of all distributions will not relieve participants of any federal income tax that may be payable on such dividends or distributions.

Each Trust reserves the right to amend or terminate the Reinvestment Plan. There is no direct service charge to participants in the Reinvestment Plan; however, each Trust reserves the right to amend the Reinvestment Plan to include a service charge payable by the participants. Participants that request a sale of shares are subject to a $0.02 per share sold brokerage commission. All correspondence concerning the Reinvestment Plan should be directed to Computershare Trust Company, N.A. through the internet at http://www.computershare.com/blackrock, or in writing to Computershare, P.O. Box 30170, College Station, TX 77842-3170, Telephone: (800) 699-1236. Overnight correspondence should be directed to the Reinvestment Plan Agent at Computershare, 211 Quality Circle, Suite 210, College Station, TX 77845.

 

132    ANNUAL REPORT    DECEMBER 31, 2014     


Officers and Trustees     

 

Name, Address1,

and Year of Birth

 

Position(s)

Held with

the Trusts

 

Length

of Time

Served as

a Trustee3

   Principal Occupation(s) During Past Five Years  

Number of BlackRock-

Advised Registered

Investment Companies

(“RICs”) Consisting of

Investment Portfolios

(“Portfolios”) Overseen

 

Public

Directorships

Independent Trustees2                     

Richard E. Cavanagh

1946

  Chairman of the Board and Trustee  

Since

2007

   Trustee, Aircraft Finance Trust from 1999 to 2009; Director, The Guardian Life Insurance Company of America since 1998; Director, Arch Chemical (chemical and allied products) from 1999 to 2011; Trustee, Educational Testing Service from 1997 to 2009 and Chairman thereof from 2005 to 2009; Senior Advisor, The Fremont Group since 2008 and Director thereof since 1996; Faculty Member/Adjunct Lecturer, Harvard University since 2007; President and Chief Executive Officer, The Conference Board, Inc. (global business research organization) from 1995 to 2007.  

79 RICs consisting of

79 Portfolios

  None

Karen P. Robards

1950

  Vice Chairperson of the Board, Chairperson of the Audit Committee and Trustee  

Since

2007

   Partner of Robards & Company, LLC (financial advisory firm) since 1987; Co-founder and Director of the Cooke Center for Learning and Development (a not-for-profit organization) since 1987; Director of Care Investment Trust, Inc. (health care real estate investment trust) from 2007 to 2010; Investment Banker at Morgan Stanley from 1976 to 1987.  

79 RICs consisting of

79 Portfolios

  AtriCure, Inc. (medical devices); Greenhill & Co., Inc.

Michael J. Castellano

1946

  Trustee and Member of the Audit Committee  

Since

2011

   Chief Financial Officer of Lazard Group LLC from 2001 to 2011; Chief Financial Officer of Lazard Ltd from 2004 to 2011; Director, Support Our Aging Religious (non-profit) since 2009; Director, National Advisory Board of Church Management at Villanova University since 2010. Trustee, Domestic Church Media Foundation since 2012.  

79 RICs consisting of

79 Portfolios

  None

Frank J. Fabozzi4

1948

  Trustee and Member of the Audit Committee  

Since

2007

   Editor of and Consultant for The Journal of Portfolio Management since 2006; Professor of Finance, EDHEC Business School since 2011; Visiting Professor, Princeton University from 2013 to 2014; Professor in the Practice of Finance and Becton Fellow, Yale University School of Management from 2006 to 2011.  

112 RICs consisting of

232 Portfolios

  None

Kathleen F. Feldstein

1941

  Trustee  

Since

2007

   President of Economics Studies, Inc. (private economic consulting firm) since 1987; Chair, Board of Trustees, McLean Hospital from 2000 to 2008 and Trustee Emeritus thereof since 2008; Member of the Board of Partners Community Healthcare, Inc. from 2005 to 2009; Member of the Corporation of Partners HealthCare since 1995; Trustee, Museum of Fine Arts, Boston since 1992; Member of the Visiting Committee to the Harvard University Art Museum since 2003; Director, Catholic Charities of Boston since 2009.  

79 RICs consisting of

79 Portfolios

  The McClatchy Company (publishing)

James T. Flynn

1939

  Trustee and Member of the Audit Committee  

Since

2007

   Chief Financial Officer of JPMorgan & Co., Inc. from 1990 to 1995.  

79 RICs consisting of

79 Portfolios

  None

Jerrold B. Harris

1942

  Trustee  

Since

2007

   Trustee, Ursinus College from 2000 to 2012; Director, Waterfowl Chesapeake (conservation) since 2014; Director, Ducks Unlimited, Inc. (conservations) since 2013; Director, Troemner LLC (scientific equipment) since 2000; Director of Delta Waterfowl Foundation from 2010 to 2012; President and Chief Executive Officer, VWR Scientific Products Corporation from 1990 to 1999.  

79 RICs consisting of

79 Portfolios

  BlackRock Kelso Capital Corp. (business development company)

R. Glenn Hubbard

1958

  Trustee  

Since

2007

   Dean, Columbia Business School since 2004; Faculty member, Columbia Business School since 1988.  

79 RICs consisting of

79 Portfolios

  ADP (data and information services), Metropolitan Life Insurance Company (insurance)

 

     ANNUAL REPORT    DECEMBER 31, 2014    133


Officers and Trustees (continued)     

 

Name, Address1,

and Year of Birth

 

Position(s)
Held with

the Trusts

 

Length

of Time

Served as

a Trustee3

   Principal Occupation(s) During Past Five Years  

Number of BlackRock-

Advised Registered

Investment Companies

(“RICs”) Consisting of

Investment Portfolios

(“Portfolios”) Overseen

 

Public

Directorships

Independent Trustees2 (concluded)    

W. Carl Kester

1951

 

Trustee and

Member of the

Audit Committee

 

Since

2007

   George Fisher Baker Jr. Professor of Business Administration, Harvard Business School since 2008. Deputy Dean for Academic Affairs from 2006 to 2010; Chairman of the Finance Unit, 2005 to 2006; Senior Associate Dean and Chairman of the MBA Program from 1999 to 2005; Member of the faculty of Harvard Business School since 1981.  

79 RICs consisting of

79 Portfolios

  None
 

1    The address of each Trustee is c/o BlackRock, Inc., Park Avenue Plaza, 55 East 52nd Street, New York, NY 10055.

 

2    Independent Trustees serve until their resignation, removal or death, or until December 31 of the year in which they turn 74. The maximum age limitation may be waived as to any Trustee by action of a majority of the Trustees upon finding of good cause thereof. In 2013, the Board of Trustees unanimously approved further extending the mandatory retirement age for James T. Flynn by one additional year which the Board believed would be in the best interest of shareholders. Mr. Flynn can serve until December 31 of the year in which he turns 75. Mr Flynn turns 75 in 2014.

 

3    Date shown is the earliest date a person has served for the Trusts covered by this annual report. Following the combination of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. (“BlackRock”) in September 2006, the various legacy MLIM and legacy BlackRock fund boards were realigned and consolidated into three new fund boards in 2007. As a result, although the chart shows certain Trustees as joining the Trust’s board in 2007, those Trustees first became members of the boards of other legacy MLIM or legacy BlackRock funds as follows: Richard E. Cavanagh, 1994; Frank J. Fabozzi, 1988; Kathleen F. Feldstein, 2005; James T. Flynn, 1996; Jerrold B. Harris, 1999; R. Glenn Hubbard, 2004; W. Carl Kester, 1995 and Karen P. Robards, 1998.

 

4    Dr. Fabozzi is also a board member of the BlackRock Equity-Liquidity Complex.

Interested Trustees5    

Paul L. Audet

1953

  Trustee  

Since

2011

   Senior Managing Director of BlackRock and Head of U.S. Mutual Funds since 2011; Head of BlackRock’s Real Estate business from 2008 to 2011; Member of BlackRock’s Global Operating and Corporate Risk Management Committees since 2008; Head of BlackRock’s Global Cash Management business from 2005 to 2010; Acting Chief Financial Officer of BlackRock from 2007 to 2008; Chief Financial Officer of BlackRock from 1998 to 2005.  

141 RICs consisting of

329 Portfolios

  None

Henry Gabbay

1947

  Trustee  

Since

2007

   Consultant, BlackRock from 2007 to 2008; Managing Director, BlackRock from 1989 to 2007; Chief Administrative Officer, BlackRock Advisors, LLC from 1998 to 2007; President of BlackRock Funds and BlackRock Bond Allocation Target Shares from 2005 to 2007; Treasurer of certain closed-end funds in the BlackRock fund complex from 1989 to 2006.  

29 RICs consisting of

97 Portfolios

  None
 

5    Mr. Audet is an “interested person,” as defined in the 1940 Act, of the Trusts based on his position with BlackRock and its affiliates as well as his ownership of BlackRock securities. Mr. Gabbay is an “interested person” of the Trusts based on his former positions with BlackRock and its affiliates as well as his ownership of BlackRock and The PNC Financial Services Group, Inc. securities. Mr. Audet and Mr. Gabbay are also Directors of two complexes of BlackRock registered open-end funds, the BlackRock Equity-Liquidity Complex and the BlackRock Equity-Bond Complex. Interested Trustees of the BlackRock Closed-End Complex serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. The maximum age limitation may be waived as to any Trustee by action of a majority of the Trustees upon finding good cause thereof.

 

134    ANNUAL REPORT    DECEMBER 31, 2014     


Officers and Trustees (continued)     

 

Name, Address1,

and Year of Birth

 

Position(s)

Held with

the Trusts

 

Length

of Time

Served as

a Trustee

   Principal Occupation(s) During Past Five Years
Officers2             

John M. Perlowski

1964

  President and Chief Executive Officer  

Since

2011

   Managing Director of BlackRock since 2009; Global Head of BlackRock Fund Services since 2009; Managing Director and Chief Operating Officer of the Global Product Group at Goldman Sachs Asset Management, L.P. from 2003 to 2009; Treasurer of Goldman Sachs Mutual Funds from 2003 to 2009 and Senior Vice President thereof from 2007 to 2009; Director of Goldman Sachs Offshore Funds from 2002 to 2009; Director of Family Resource Network (charitable foundation) since 2009.

Robert W. Crothers

1981

  Vice President  

Since

2012

   Director of BlackRock since 2011; Vice President of BlackRock from 2008 to 2010.

Neal Andrews

1966

  Chief Financial Officer  

Since

2007

   Managing Director of BlackRock since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. from 1992 to 2006.

Jay Fife

1970

  Treasurer  

Since

2007

   Managing Director of BlackRock since 2007; Director of BlackRock in 2006; Assistant Treasurer of the MLIM and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.

Charles Park

1967

  Chief Compliance Officer and Anti-Money Laundering Officer  

Since

2014

   Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the Equity-Bond Complex, the Equity-Liquidity Complex and the Closed-End Complex since 2014; Principal of and Chief Compliance Officer for iShares® Delaware Trust Sponsor LLC since 2012 and BlackRock Fund Advisors (“BFA”) since 2006; Chief Compliance Officer for the BFA-advised iShares exchange traded funds since 2006; Chief Compliance Officer for BlackRock Asset Management International Inc. since 2012.

Janey Ahn

1975

  Secretary  

Since

2012

   Director of BlackRock since 2009; Vice President of BlackRock from 2008 to 2009; Assistant Secretary of the Funds from 2008 to 2012.
 

1    The address of each Officer is c/o BlackRock, Inc., Park Avenue Plaza, 55 East 52nd Street, New York, NY 10055.

 

2    Officers of the Trusts serve at the pleasure of the Board.

 

Effective September 19, 2014, Brendan Kyne resigned as Vice President of each Trust.

Effective December 31, 2014, Paul L. Audet and Henry Gabbay resigned as a Trustees of each Trust. Effective December 31, 2014, Barbara G. Novick and John M. Perlowski were appointed to serve as a Trustees of each Trust.

 

     ANNUAL REPORT    DECEMBER 31, 2014    135


Officers and Trustees (concluded)     

 

Investment Advisor   Custodians
BlackRock Advisors, LLC   The Bank of New York Mellon
Wilmington, DE 19809   New York, NY 102862
 
Sub-Advisors  
BlackRock International LTD.1   Brown Brothers, Harriman & Co.
Edinburgh, EH3 8JB   Boston, MA 021093
United Kingdom  
 
Accounting Agent   Transfer Agent
The Bank of New York Mellon   Computershare Trust Company, N.A.
Brooklyn, NY 11217   Canton, MA 02021
 
  Independent Registered Public Accounting Firm
  Deloitte & Touche LLP
  Philadelphia, PA 19103
 
  Legal Counsel
  Skadden, Arps, Slate, Meagher & Flom LLP
  New York, NY 10036
 
  Address of the Trusts
  100 Bellevue Parkway
  Wilmington, DE 19809

 

  1   

For BGR and BCX.

 

  2   

For all Trusts except CII.

 

  3   

For CII.

 

Effective February 5, 2015, Simon McGeough became a portfolio manager of BGY and BOE. The other portfolio managers of BGY and BOE are Thomas Callan, Kyle McClements, Christopher Accettella, Ian Jamieson and Erin Xie.

Effective February 23, 2015, Peter Stournaras became a portfolio manager of CII. The other portfolio managers of CII are Kyle McClements and Christopher Accettella.

 

 

136    ANNUAL REPORT    DECEMBER 31, 2014     


Additional Information     

 

Proxy Results

At a special meeting of all shareholders of BlackRock Resources & Commodities Strategy Trust (the “Fund”) held on Monday, November 10, 2014, the results were as follows:

The shareholders of the Fund are being asked to approve the issuance of additional common shares of the Fund in connection with the Agreement and Plan of Reorganization between BlackRock Real Asset Equity Trust and the Fund.

With respect to the Proposal, the shares of the Fund were voted as follows:

 

For   Votes Against   Abstain

22,364,011

  1,055,038   379,440

The shareholders of the Fund are being asked to approve the issuance of additional common shares of the Fund in connection with the Agreement and Plan of Reorganization between BlackRock EcoSolutions Investment Trust and the Fund.

With respect to the Proposal, the shares of the Fund were voted as follows:

 

For   Votes Against   Abstain

19,187,246

  4,218,329   392,922

 

Trust Certification

All Trusts are listed for trading on the NYSE. All Trusts have filed with the relevant exchange their annual chief executive officer certification regarding compliance with such exchange’s listing standards. The Trusts filed with the SEC the certification of its chief executive officer and chief financial officer required by section 302 of the Sarbanes-Oxley Act.

 

General Information

During the period, there were no material changes in the Trusts’ investment objectives or policies or to the Trusts’ charters or by-laws that would delay or prevent a change of control of the Trusts that were not approved by the shareholders or in the principal risk factors associated with investment in the Trusts. Other than as disclosed on page 136, there have been no changes in the persons who are primarily responsible for the day-to-day management of the Trusts’ portfolios.

Quarterly performance, semi-annual and annual reports and other information regarding the Trusts may be found on BlackRock’s website, which can be accessed at http://www.blackrock.com. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Trusts and does not, and is not intended to, incorporate BlackRock’s website in this report.

Electronic Delivery

Shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual shareholder reports by enrolling in the electronic delivery program. Electronic copies of shareholder reports are available on BlackRock’s website.

To enroll in electronic delivery:

Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:

Please contact your financial advisor. Please note that not all investment advisors, banks or brokerages may offer this service.

Householding

The Trusts will mail only one copy of shareholder documents, including annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call the Trusts at (800) 882-0052.

Availability of Quarterly Schedule of Investments

The Trusts file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Trusts’ Forms N-Q are available on the SEC’s website at http://www.sec.gov. and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on how to access documents on the SEC’s website without charge may be obtained by calling (800) SEC-0330. The Trusts’ Forms N-Q may also be obtained upon request and without charge by calling (800) 882-0052.

 

     ANNUAL REPORT    DECEMBER 31, 2014    137


Additional Information (concluded)     

 

General Information (concluded)

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Trusts use to determine how to vote proxies relating to portfolio securities is available (1) without charge, upon request, by calling (800) 882-0052; (2) at http://www.blackrock.com; and (3) on the SEC’ at http://www.sec.gov.

Availability of Proxy Voting Record

Information about how the Trusts’ voted proxies relating to securities held in the Trusts’ portfolio during the most recent 12-month period ended June 30 is available upon request and without charge (1) at http://www.blackrock.com or by calling (800) 882-0052 and (2) on the SEC’s website at http://www.sec.gov.

Availability of Trust Updates

BlackRock will update performance and certain other data for the Trusts on a monthly basis on its website in the “Closed-end Funds” section of http://www.blackrock.com. Investors and others are advised to periodically check the website for updated performance information and the release of other material information about the Trusts. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Trusts and does not, and is not intended to, incorporate BlackRock’s website in this report.

 

Dividend Policy

Each Trust’s dividend policy is to distribute all or a portion of its net investment income to its shareholders on a monthly basis. In order to provide shareholders with a more stable level of dividend distributions, the dividends paid by the Trusts for any particular month may be more or less than the amount of net investment income earned by the Trusts during such month. The portion of dividend distributions that exceeds a Trust’s current and accumulated earnings and profits, which are measured on a tax basis, will constitute a nontaxable return of capital. Dividend distributions in excess of a Trust’s taxable income and net capital gains, but not in excess of a Trust’s earnings and profits, will be taxable to shareholders as ordinary income and will not constitute a nontaxable return of capital. The Trusts’ current accumulated but undistributed net investment income, if any, is disclosed in the Statements of Assets and Liabilities, which comprises part of the financial information included in this report.

 

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.

 

138    ANNUAL REPORT    DECEMBER 31, 2014     


 

 

 

 

 

 

This report is intended for existing current holders. It is not a prospectus. Past performance results shown in this report should not be considered a representation of future performance. The Trusts have leveraged their Common Shares, which creates risks for Common Shareholders, including the likelihood of greater volatility of net asset value and market price of the Common Shares, and the risk that fluctuations in short-term interest rates may reduce the Common Shares’ yield. Statements and other information herein are as dated and are subject to change.

 

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Item 2 – Code of Ethics – The registrant (or the “Fund”) has adopted a code of ethics, as of the end of the period covered by this report, applicable to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. During the period covered by this report, there have been no amendments to or waivers granted under the code of ethics. A copy of the code of ethics is available without charge at www.blackrock.com.
Item 3 – Audit Committee Financial Expert – The registrant’s board of directors (the “board of directors”), has determined that (i) the registrant has the following audit committee financial experts serving on its audit committee and (ii) each audit committee financial expert is independent:

Michael Castellano

Frank J. Fabozzi

James T. Flynn

W. Carl Kester

Karen P. Robards

 

The registrant’s board of directors has determined that W. Carl Kester and Karen P. Robards qualify as financial experts pursuant to Item 3(c)(4) of Form N-CSR.

 

Prof. Kester has a thorough understanding of generally accepted accounting principles, financial statements and internal control over financial reporting as well as audit committee functions. Prof. Kester has been involved in providing valuation and other financial consulting services to corporate clients since 1978. Prof. Kester’s financial consulting services present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrant’s financial statements.

 

Ms. Robards has a thorough understanding of generally accepted accounting principles, financial statements and internal control over financial reporting as well as audit committee functions. Ms. Robards has been President of Robards & Company, a financial advisory firm, since 1987. Ms. Robards was formerly an investment banker for more than 10 years where she was responsible for evaluating and assessing the performance of companies based on their financial results. Ms. Robards has over 30 years of experience analyzing financial statements. She also is a member of the audit committee of one publicly held company and a non-profit organization.

 

Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification. The designation or identification of a person as an audit committee financial expert does not affect the duties, obligations, or liability of any other member of the audit committee or board of directors.

 

2


Item 4 – Principal Accountant Fees and Services

The following table presents fees billed by Deloitte & Touche LLP (“D&T”) in each of the last two fiscal years for the services rendered to the Fund:

 

      (a) Audit Fees    (b) Audit-Related Fees1    (c) Tax Fees2    (d) All Other Fees3
Entity Name    Current
Fiscal  Year
End
12/31/2014
4
   Previous
Fiscal Year
End
10/31/2014
   Current
Fiscal  Year
End
12/31/2014
4
   Previous
Fiscal Year
End
10/31/2014
   Current
Fiscal  Year
End
12/31/2014
4
   Previous
Fiscal Year
End
10/31/2014
   Current
Fiscal  Year
End
12/31/2014
4
   Previous
Fiscal Year
End
10/31/2014
BlackRock Enhanced Capital and Income Fund, Inc.    $36,583    $43,039    $0    $0    $4,000    $14,850    $0    $0

The following table presents fees billed by D&T that were required to be approved by the registrant’s audit committee (the “Committee”) for services that relate directly to the operations or financial reporting of the Fund and that are rendered on behalf of BlackRock Advisors, LLC (“Investment Adviser” or “BlackRock”) and entities controlling, controlled by, or under common control with BlackRock (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Fund (“Fund Service Providers”):

 

     Current Fiscal Year End 12/31/20144   Previous Fiscal Year End 10/31/2014

(b) Audit-Related Fees1

  $0   $0

(c) Tax Fees2

  $0   $0

(d) All Other Fees3

  $2,555,000   $2,555,000

1 The nature of the services includes assurance and related services reasonably related to the performance of the audit of financial statements not included in Audit Fees.

2 The nature of the services includes tax compliance, tax advice and tax planning.

3 Aggregate fees borne by BlackRock in connection with the review of compliance procedures and attestation thereto performed by D&T with respect to all of the registered closed-end funds and some of the registered open-end funds advised by BlackRock.

4 The registrant changed its fiscal year end from October to December in 2014 so this fiscal year consists of the two months ended December 31, 2014.

(e)(1) Audit Committee Pre-Approval Policies and Procedures:

The Committee has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the Investment Adviser and Fund Service Providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are (a) consistent with the SEC’s auditor independence rules and (b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis (“general pre-approval”). The term of any general pre-approval is 12 months from the date of the pre-approval, unless the Committee provides for a different period. Tax or other non-audit services provided to the registrant which have a direct impact on the operations or financial reporting of the registrant will only be deemed pre-approved provided that any individual project does not exceed $10,000 attributable to the registrant or $50,000 per project. For this purpose, multiple projects will be aggregated to determine if they exceed the previously mentioned cost levels.

 

3


Any proposed services exceeding the pre-approved cost levels will require specific pre-approval by the Committee, as will any other services not subject to general pre-approval (e.g., unanticipated but permissible services). The Committee is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting. At this meeting, an analysis of such services is presented to the Committee for ratification. The Committee may delegate to the Committee Chairman the authority to approve the provision of and fees for any specific engagement of permitted non-audit services, including services exceeding pre-approved cost levels.

(e)(2) None of the services described in each of Items 4(b) through (d) were approved by the Committee pursuant to the de minimis exception in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not Applicable

(g) The aggregate non-audit fees paid to the accountant for services rendered by the accountant to the registrant, the Investment Adviser and the Fund Service Providers were:

 

Entity Name    Current Fiscal Year  
End 12/31/20141  
   Previous Fiscal Year  
End 10/31/2014  
    
BlackRock Enhanced Capital and Income Fund, Inc.    $4,000    $14,850   

1 The registrant changed its fiscal year end from October to December in 2014 so this fiscal year consists of two months ended December 31, 2014.

Additionally, SSAE 16 Review (Formerly, SAS No. 70) fees for the current and previous fiscal years of $2,555,000 and $2,555,000, respectively, were billed by D&T to the Investment Adviser.

(h) The Committee has considered and determined that the provision of non-audit services that were rendered to the Investment Adviser, and the Fund Service Providers that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

 

Item 5 – Audit Committee of Listed Registrants

 

  (a) The following individuals are members of the registrant’s separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(58)(A)):

Michael Castellano

Frank J. Fabozzi

James T. Flynn

W. Carl Kester

Karen P. Robards

 

  (b) Not Applicable

 

4


Item 6 – Investments

(a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this Form.

(b) Not Applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing.

 

Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – The board of directors has delegated the voting of proxies for the Fund’s portfolio securities to the Investment Adviser pursuant to the Investment Adviser’s proxy voting guidelines. Under these guidelines, the Investment Adviser will vote proxies related to Fund securities in the best interests of the Fund and its stockholders. From time to time, a vote may present a conflict between the interests of the Fund’s stockholders, on the one hand, and those of the Investment Adviser, or any affiliated person of the Fund or the Investment Adviser, on the other. In such event, provided that the Investment Adviser’s Equity Investment Policy Oversight Committee, or a sub-committee thereof (the “Oversight Committee”) is aware of the real or potential conflict or material non-routine matter and if the Oversight Committee does not reasonably believe it is able to follow its general voting guidelines (or if the particular proxy matter is not addressed in the guidelines) and vote impartially, the Oversight Committee may retain an independent fiduciary to advise the Oversight Committee on how to vote or to cast votes on behalf of the Investment Adviser’s clients. If the Investment Adviser determines not to retain an independent fiduciary, or does not desire to follow the advice of such independent fiduciary, the Oversight Committee shall determine how to vote the proxy after consulting with the Investment Adviser’s Portfolio Management Group and/or the Investment Adviser’s Legal and Compliance Department and concluding that the vote cast is in its client’s best interest notwithstanding the conflict. A copy of the Fund’s Proxy Voting Policy and Procedures are attached as Exhibit 99.PROXYPOL. Information on how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, (i) at www.blackrock.com and (ii) on the SEC’s website at http://www.sec.gov.

 

Item 8 – Portfolio Managers of Closed-End Management Investment Companies – as of December 31, 2014.

 

  (a)(1) The registrant is managed by a team of investment professionals comprised of Peter Stournaras, CFA, Managing Director at BlackRock, Kyle G. McClements, CFA, Managing Director at BlackRock and Christopher Accettella, Director at BlackRock. Messrs. Stournaras, McClements and Accettella are the Fund’s portfolio managers and responsible for the day-to-day management of the Fund’s portfolio and the selection of its investments. Mr. McClements has been a member of the Fund’s portfolio management team since 2009. Mr. Accettella has been a member of the Fund’s portfolio management team since 2012. Mr. Stournaras has been a member of the Fund’s portfolio management team since 2015.

 

Portfolio Manager Biography

Peter Stournaras, CFA

 

Managing Director of BlackRock, Inc. since 2010.

Kyle G. McClements, CFA 

Managing Director of BlackRock since 2009; Director of BlackRock, Inc. from 2006 to 2008; Vice President of BlackRock, Inc. in 2005; Vice President of State Street Research & Management from 2004 to 2005.

 

5


Christopher Accettella        

  Director of BlackRock since 2008; Vice President of BlackRock, Inc. from 2005 to 2008.

(a)(2) As of December 31, 2014:

 

     

(ii) Number of Other Accounts Managed

and Assets by Account Type

  

(iii) Number of Other Accounts and

Assets for Which Advisory Fee is

Performance-Based

(i) Name of

Portfolio Manager

  

Other

Registered

Investment

Companies

  

Other Pooled

Investment

Vehicles

  

Other

Accounts

  

Other

Registered

Investment

Companies

  

Other Pooled

Investment

Vehicles

  

Other

Accounts

 

Peter Stournaras, CFA

 

  

 

14

 

  

 

6

 

  

 

2

 

  

 

0

 

  

 

0

 

  

 

0

 

    

 

$7.41 Billion

 

  

 

$1.62 Billion

 

  

 

$280.3 Million

 

  

 

$0

 

  

 

$0

 

  

 

$0

 

 

Kyle McClements, CFA

 

  

 

8

 

  

 

3

 

  

 

0

 

  

 

0

 

  

 

0

 

  

 

0

 

    

 

$6.54 Billion

 

  

 

$1.47 Billion

 

  

 

$0

 

  

 

$0

 

  

 

$0

 

  

 

$0

 

 

Christopher Accettella

 

  

 

8

 

  

 

3

 

  

 

0

 

  

 

0

 

  

 

0

 

  

 

0

 

    

 

$6.54 Billion

 

  

 

$1.47 Billion

 

  

 

$0

 

  

 

$0

 

  

 

$0

 

  

 

$0

 

(iv)     Portfolio Manager Potential Material Conflicts of Interest

BlackRock has built a professional working environment, firm-wide compliance culture and compliance procedures and systems designed to protect against potential incentives that may favor one account over another. BlackRock has adopted policies and procedures that address the allocation of investment opportunities, execution of portfolio transactions, personal trading by employees and other potential conflicts of interest that are designed to ensure that all client accounts are treated equitably over time. Nevertheless, BlackRock furnishes investment management and advisory services to numerous clients in addition to the Fund, and BlackRock may, consistent with applicable law, make investment recommendations to other clients or accounts (including accounts which are hedge funds or have performance or higher fees paid to BlackRock, or in which portfolio managers have a personal interest in the receipt of such fees), which may be the same as or different from those made to the Fund. In addition, BlackRock, Inc., its affiliates and significant shareholders and any officer, director, shareholder or employee may or may not have an interest in the securities whose purchase and sale BlackRock recommends to the Fund. BlackRock, Inc., or any of its affiliates or significant shareholders, or any officer, director, shareholder, employee or any member of their families may take different actions than those recommended to the Fund by BlackRock with respect to the same securities. Moreover, BlackRock may refrain from rendering any advice or services concerning securities of companies of which any of BlackRock, Inc.’s (or its affiliates’ or significant shareholders’) officers, directors or employees are directors or officers, or companies as to which BlackRock, Inc. or any of its affiliates or significant shareholders or the officers, directors and employees of any of them has any substantial economic interest or possesses material non-public information. Certain portfolio managers also may manage accounts whose investment strategies may at times be opposed to the strategy utilized for a fund. It should also be noted that a portfolio manager may be managing hedge fund and/or long only accounts, or may be part of a team managing hedge fund and/or long only accounts, subject to incentive fees. Such portfolio manager may therefore be entitled to receive a portion of any incentive fees earned on such accounts. Currently, the portfolio managers on this Fund are not entitled to receive a portion of incentive fees of other accounts.

 

6


As a fiduciary, BlackRock owes a duty of loyalty to its clients and must treat each client fairly. When BlackRock purchases or sells securities for more than one account, the trades must be allocated in a manner consistent with its fiduciary duties. BlackRock attempts to allocate investments in a fair and equitable manner among client accounts, with no account receiving preferential treatment. To this end, BlackRock, Inc. has adopted policies that are intended to ensure reasonable efficiency in client transactions and provide BlackRock with sufficient flexibility to allocate investments in a manner that is consistent with the particular investment discipline and client base, as appropriate.

 

  (a)(3) As of December 31, 2014:

  Portfolio Manager Compensation Overview

 The discussion below describes the portfolio managers’ compensation as of December 31, 2014.

BlackRock’s financial arrangements with its portfolio managers, its competitive compensation and its career path emphasis at all levels reflect the value senior management places on key resources. Compensation may include a variety of components and may vary from year to year based on a number of factors. The principal components of compensation include a base salary, a performance-based discretionary bonus, participation in various benefits programs and one or more of the incentive compensation programs established by BlackRock.

Base compensation. Generally, portfolio managers receive base compensation based on their position with the firm.

Discretionary Incentive Compensation

Mr. Stournaras

Generally, discretionary incentive compensation for Fundamental Equity portfolio managers is based on a formulaic compensation program. BlackRock’s formulaic portfolio manager compensation program is based on team revenue and pre-tax investment performance relative to appropriate competitors or benchmarks over 1-, 3- and 5-year performance periods, as applicable. In most cases, these benchmarks are the same as the benchmark or benchmarks against which the performance of the Funds or other accounts managed by the portfolio managers are measured. BlackRock’s Head of Alpha Strategies determine the benchmarks or rankings against which the performance of funds and other accounts managed by each portfolio management team is compared and the period of time over which performance is evaluated. With respect to the portfolio manager, such benchmarks for the Fund and other accounts are: Lipper Large-Cap Core, Lipper Large-Cap Growth and Lipper Large-Cap Value Fund Classifications.

A smaller element of portfolio manager discretionary compensation may include consideration of: financial results, expense control, profit margins, strategic planning and implementation, quality of client service, market share, corporate reputation, capital allocation, compliance and risk control, leadership, technology and innovation. These factors are considered collectively by BlackRock management and BlackRock’s Head of Alpha Strategies.

Discretionary Incentive Compensation

 

7


Messrs. Accettella and McClements

Discretionary incentive compensation is a function of several components: the performance of BlackRock, Inc., the performance of the portfolio manager’s group within BlackRock, the investment performance, including risk-adjusted returns, of the firm’s assets or strategies under management or supervision by that portfolio manager, and/or the individual’s performance and contribution to the overall performance of these portfolios and BlackRock. Among other things, BlackRock’s Chief Investment Officers make a subjective determination with respect to each portfolio manager’s compensation based on the performance of the Funds, other accounts or strategies managed by each portfolio manager. Performance is generally measured on a pre-tax basis over various time periods including 1-, 3- and 5- year periods, as applicable. The performance of some Funds, other accounts or strategies may not be measured against a specific benchmark.

Distribution of Discretionary Incentive Compensation. Discretionary incentive compensation is distributed to portfolio managers in a combination of cash and BlackRock, Inc. restricted stock units which vest ratably over a number of years. For some portfolio managers, discretionary incentive compensation is also distributed in deferred cash awards that notionally track the returns of select BlackRock investment products they manage and that vest ratably over a number of years. The BlackRock, Inc. restricted stock units, upon vesting, will be settled in BlackRock, Inc. common stock. Typically, the cash portion of the discretionary incentive compensation, when combined with base salary, represents more than 60% of total compensation for the portfolio managers. Paying a portion of discretionary incentive compensation in BlackRock, Inc. stock puts compensation earned by a portfolio manager for a given year “at risk” based on BlackRock’s ability to sustain and improve its performance over future periods. Providing a portion of discretionary incentive compensation in deferred cash awards that notionally track the BlackRock investment products they manage provides direct alignment with investment product results.

Long-Term Incentive Plan Awards — From time to time long-term incentive equity awards are granted to certain key employees to aid in retention, align their interests with long-term shareholder interests and motivate performance. Equity awards are generally granted in the form of BlackRock, Inc. restricted stock units that, once vested, settle in BlackRock, Inc. common stock. Messrs. Stournaras, McClements and Accettella do not have unvested long-term incentive awards.

Deferred Compensation Program — A portion of the compensation paid to eligible United States-based BlackRock employees may be voluntarily deferred at their election for defined periods of time into an account that tracks the performance of certain of the firm’s investment products. Any portfolio manager who is either a managing director or director at BlackRock with compensation above a specified threshold is eligible to participate in the deferred compensation program.

Other Compensation Benefits. In addition to base salary and discretionary incentive compensation, portfolio managers may be eligible to receive or participate in one or more of the following:

Incentive Savings Plans — BlackRock, Inc. has created a variety of incentive savings plans in which BlackRock, Inc. employees are eligible to participate, including a 401(k) plan, the BlackRock Retirement Savings Plan (RSP), and the BlackRock Employee Stock Purchase Plan (ESPP). The employer contribution components of the RSP include a company match equal to 50% of the first 8% of eligible pay contributed to the plan capped at $5,000 per year, and a company retirement contribution

 

8


equal to 3-5% of eligible compensation up to the Internal Revenue Service limit ($260,000 for 2014). The RSP offers a range of investment options, including registered investment companies and collective investment funds managed by the firm. BlackRock, Inc. contributions follow the investment direction set by participants for their own contributions or, absent participant investment direction, are invested into a target date fund that corresponds to, or is closest to, the year in which the participant attains age 65. The ESPP allows for investment in BlackRock, Inc. common stock at a 5% discount on the fair market value of the stock on the purchase date. Annual participation in the ESPP is limited to the purchase of 1,000 shares of common stock or a dollar value of $25,000 based on its fair market value on the purchase date. All of the eligible portfolio managers are eligible to participate in these plans.

(a)(4) Beneficial Ownership of Securities – As of December 31, 2014.

 

Portfolio Manager

Dollar Range of Equity Securities

of the Fund Beneficially Owned

Peter Stournaras, CFA

None
Kyle G. McClements, CFA $10,001 - $50,000

Christopher Accettella

None

(b) Not Applicable

 

Item 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable due to no such purchases during the period covered by this report.
Item 10 – Submission of Matters to a Vote of Security Holders – There have been no material changes to these procedures.
Item 11 – Controls and Procedures

 

(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 13a-15(b) under the Securities Exchange Act of 1934, as amended.

 

(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

 

(a)(1) – Code of Ethics – See Item 2

 

(a)(2) – Certifications – Attached hereto

 

(a)(3) – Not Applicable

 

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(b) – Certifications – Attached hereto

 

12(c) – Notices to the registrant’s common shareholders in accordance with the order under Section 6(c) of the 1940 Act granting an exemption from Section 19(b) of the 1940 Act and Rule 19b-1 under the 1940 Act, dated May 9, 20091

 

 

 

1 The Fund has received exemptive relief from the Securities and Exchange Commission permitting it to make periodic distributions of long-term capital gains with respect to its outstanding common stock as frequently as twelve times each year, and as frequently as distributions are specified by or in accordance with the terms of its outstanding preferred stock. This relief is conditioned, in part, on an undertaking by the Fund to make the disclosures to the holders of the Fund’s common shares, in addition to the information required by Section 19(a) of the 1940 Act and Rule 19a-1 thereunder. The Fund is likewise obligated to file with the SEC the information contained in any such notice to shareholders and, in that regard, has attached hereto copies of each such notice made during the period.

 

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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 Enhanced Capital and Income Fund, Inc.

 

By:   /s/ John M. Perlowski            
John M. Perlowski
Chief Executive Officer (principal executive officer) of
BlackRock Enhanced Capital and Income Fund, Inc.

Date: February 27, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By:   /s/ John M. Perlowski            
John M. Perlowski
Chief Executive Officer (principal executive officer) of
BlackRock Enhanced Capital and Income Fund, Inc.

Date: February 27, 2015

 

By:   /s/ Neal J. Andrews            
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock Enhanced Capital and Income Fund, Inc.

Date: February 27, 2015

 

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