BlackRock Enhanced Global Dividend Trust

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: 811-21729

Name of Fund:  BlackRock Enhanced Global Dividend Trust (BOE)

Fund Address:  100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service:  John M. Perlowski, Chief Executive Officer, BlackRock Enhanced Global Dividend Trust, 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: 12/31/2018

Date of reporting period: 12/31/2018

 


Item 1 – Report to Stockholders

 


DECEMBER 31, 2018

 

ANNUAL REPORT

  LOGO

 

BlackRock Energy and Resources Trust (BGR)

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

BlackRock Enhanced Equity Dividend Trust (BDJ)

BlackRock Enhanced Global Dividend Trust (BOE)

BlackRock Enhanced International Dividend Trust (BGY)

BlackRock Health Sciences Trust (BME)

BlackRock Resources & Commodities Strategy Trust (BCX)

BlackRock Science and Technology Trust (BST)

BlackRock Utilities, Infrastructure & Power Opportunities Trust (BUI)

 

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of each Trust’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from BlackRock or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

You may elect to receive all future reports in paper free of charge. If you hold accounts directly with BlackRock, you can call Computershare at 1-800-699-1236 to request that you continue receiving paper copies of your shareholder reports. If you hold accounts through a financial intermediary, you can follow the instructions included with this disclosure, if applicable, or contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. Please note that not all financial intermediaries may offer this service. Your election to receive reports in paper will apply to all funds advised by BlackRock Advisors, LLC or its affiliates, or all funds held with your financial intermediary, as applicable.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive electronic delivery of shareholder reports and other communications by contacting your financial intermediary, if you hold accounts through a financial intermediary. Please note that not all financial intermediaries may offer this service.

 

 

Not FDIC Insured • May Lose Value • No Bank Guarantee


The Markets in Review

Dear Shareholder,

In the 12 months ended December 31, 2018, concerns about a variety of political risks and a modest slowdown in global growth worked against the equity market despite solid corporate earnings, while rising interest rates constrained bond returns. Though the market’s appetite for risk remained healthy for most of the reporting period, risk-taking declined sharply later in the reporting period. As a result, bonds held their value better than stocks, which posted negative returns across the globe. Shorter-term, higher-quality securities led the bond market, and U.S. equities outperformed most international stock markets.

Volatility rose in emerging market stocks, as the rising U.S. dollar and higher interest rates in the U.S. disrupted economic growth abroad. U.S.-China trade relations and debt concerns adversely affected the Chinese stock market, while Turkey and Argentina became embroiled in currency crises, largely due to hyperinflation in both countries. An economic slowdown in Europe also led to negative performance for European equities.

In fixed income markets, short-term U.S. Treasury interest rates rose the fastest, while longer-term rates slightly increased. This led to a negative return for long-term U.S. Treasuries and a substantial flattening of the yield curve. Many investors are concerned with the flattening yield curve as a harbinger of recession. However, given the extraordinary monetary measures in the last decade, we believe a more accurate barometer for the economy is the returns along the risk spectrums in stock and bond markets. Although the fundamentals in credit markets remained relatively solid, investment-grade bonds posted flat returns, and high-yield bonds declined slightly. Recent sell-offs in risk assets have flattened asset returns along the risk spectrum somewhat, which bears further scrutiny in the months ahead.

In response to rising growth and inflation, the U.S. Federal Reserve (the “Fed”) increased short-term interest rates four times during the reporting period. The Fed also continued to reduce its balance sheet, gradually reversing the unprecedented stimulus measures it enacted after the financial crisis. By our estimation, the Fed’s neutral interest rate, or the theoretical rate that is neither stimulative nor restrictive to the economy, is approximately 3.0%. With that perspective, the Fed’s current policy is still mildly stimulative to the U.S. economy, which leaves room for further Fed rate hikes to arrive at monetary policy that is a neutral factor for economic growth.

Volatility in the U.S. equity market spiked in October, as a wide range of risks were brought to bear on markets, ranging from rising interest rates and slowing global growth to heightened trade tensions and political turmoil in several countries, including the United States. This was accompanied by a broad based risk-off in December — which was the worst December performance on record since 1931. Although fears of recession drove equity volatility higher at the end of 2018, we continue to believe the probability of recession in 2019 remains relatively low.

Economic growth and global earnings are likely to slow somewhat in 2019 — the tax cut stimulus will be less pronounced, and the Fed’s rate hikes in 2018 will gain traction in 2019. Trade frictions look more baked into asset prices than a year ago, but markets may be overlooking European political risks. Consequently, we are cautious on European equities, as European unity remains tenuous with a history of flare-ups. We continue to prefer to take risk in U.S. and emerging market equities. Within U.S. equities, we believe that companies with high-quality earnings and strong balance sheets offer the most attractive risk/reward trade-off. Going into 2019, we also favor short-term bonds over long-term bonds because they offer nearly equivalent yields with far lower volatility.

In this environment, investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. 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, 2018
     6-month   12-month

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

  (6.85)%   (4.38)%

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

  (17.35)   (11.01)

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

  (11.35)   (13.79)

Emerging market equities
(MSCI Emerging Markets Index)

  (8.48)   (14.57)

3-month Treasury bills
(ICE BofAML 3-Month
U.S. Treasury Bill Index)

  1.06   1.87

U.S. Treasury securities
(ICE BofAML 10-Year
U.S. Treasury Index)

  2.72   (0.03)

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

  1.65   0.01

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

  1.38   1.36

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

  (2.24)   (2.08)
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.
 

 

 

2    THIS PAGE IS NOT PART OF YOUR FUND REPORT


Supplemental Information  (unaudited)

 

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 Enhanced Global Dividend Trust’s (BOE), BlackRock Enhanced International Dividend Trust’s (BGY), BlackRock Health Sciences Trust’s (BME), BlackRock Resources & Commodities Strategy Trust’s (BCX), BlackRock Science and Technology Trust’s (BST) and BlackRock Utilities, Infrastructure & Power Opportunities Trust’s (BUI) (each, a “Trust” and collectively, the “Trusts”), amounts and sources of distributions reported are estimates and are being provided to you pursuant to regulatory requirements 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 its fiscal year and may be subject to changes based on tax regulations. Each Trust will provide a Form 1099-DIV each calendar year that will tell you how to report these distributions for U.S. federal income tax purposes.

December 31, 2018

 

     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*

  $ 0.272552     $     $     $ 0.658648     $ 0.931200       29             71     100

CII*

    0.165678             0.128622       0.699300       0.993600       17             13       70       100  

BDJ

    0.177394             0.383006             0.560400       32             68             100  

BOE*

    0.295560                   0.550440       0.846000       35                   65       100  

BGY

    0.162370             0.281030             0.443400       37             63             100  

BME*

    0.069995             1.590526       0.739479       2.400000       3             66       31       100  

BCX*

    0.209697                   0.409503       0.619200       34                   66       100  

BST

                1.760278             1.760278                   100             100  

BUI*

    0.474884                   0.977116       1.452000       33                   67       100  

 

  *

Certain Trusts estimate that 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 the Trusts, as applicable, are available on the BlackRock website at 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 distribute the following fixed amounts per share on a monthly basis as of December 31, 2018:

 

Exchange Symbol   Amount Per
Common Share
 

BGR

  $ 0.0776  

CII

    0.0828  

BDJ

    0.0467  

BOE

    0.0630  

BGY

    0.0338  

BME

    0.2000  

BCX

    0.0516  

BST

    0.1500  

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 at any time without prior notice to the Trust’s shareholders 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 BME’s prospectus for a more complete description of its risks.

 

 

SUPPLEMENTAL INFORMATION      3  


Table of Contents

 

      Page   

The Markets in Review

     2  

Section 19(a) Notices

     3  

Section 19(b) Disclosure

     3  

Annual Report:

  

The Benefits and Risks of Option Over-Writing

     5  

Trust Information

     6  

Derivative Financial Instruments

     24  

Financial Statements:

  

Schedules of Investments

     25  

Statements of Assets and Liabilities

     96  

Statements of Operations

     98  

Statements of Changes in Net Assets

     100  

Statements of Cash Flows

     105  

Financial Highlights

     107  

Notes to Financial Statements

     116  

Report of Independent Registered Public Accounting Firm

     128  

Important Tax Information

     129  

Automatic Dividend Reinvestment Plans

     130  

Trustee and Officer Information

     131  

Additional Information

     134  

Glossary of Terms Used in this Report

     137  

 

 

4        


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 the Trusts’ distribution rate 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 limiting 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 U.S. federal 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.

 

 

THE BENEFITS AND RISKS OF OPTION OVER-WRITING      5  


Trust Information  as of December 31, 2018    BlackRock Energy and Resources Trust

 

Investment Objective

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.

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

Trust Information

 

Symbol on New York Stock Exchange (“NYSE”)

  BGR

Initial Offering Date

  December 29, 2004

Current Distribution Rate on Closing Market Price as of December 31, 2018 ($10.45)(a)

  8.91%

Current Monthly Distribution per Common Share(b)

  $0.0776

Current Annualized Distribution per Common Share(b)

  $0.9312

 

  (a) 

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.

 
  (b) 

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.

 

Performance and Portfolio Management Commentary

Returns for the 12-month period ended December 31, 2018 were as follows:

 

    Returns Based On  
     Market Price      Net Asset Value  

BGR(a)(b)

    (21.16 )%       (18.84 )% 

Lipper Natural Resources Funds(c)

    (24.64      (19.04

 

  (a) 

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b) 

The Trust’s discount to NAV widened during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 
  (c)

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date as calculated by Lipper.

 

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

The following discussion relates to the Trust’s absolute performance based on NAV:

What factors influenced performance?

Energy stocks fell sharply in 2018. After moving sideways in a range through the first nine months of the year, the combination of a downturn in oil prices and a broad-based decline in global equities caused the sector to post a sizable loss in the fourth quarter.

Although many U.S.-based exploration and production (“E&P”) companies demonstrated improving fundamentals in 2018, the industry was hit particularly hard in the fourth quarter selloff. Encana Corp, which was penalized for its acquisition of Newfield Exploration, was the Trust’s largest detractor in the E&P industry. Devon Energy Corp., Cimarex Energy Co., Canadian Natural Resources Ltd. and EQT Corp. were also notable detractors in the period.

Companies demonstrating capital discipline, including ConocoPhillips, generally performed well despite the broadly challenging environment. The stock, which posted a gain even as the sector as a whole lost ground, was one of the leading contributors to the Trust’s performance. A position in the U.S. refining company Andeavor was another top contributor. Early in the period, Marathon Petroleum Corp. launched a bid for Andeavor at a substantial premium to its price at the time, causing the stock to rally.

The Trust made use of options, principally written call options on individual stocks, in order to seek enhanced income returns while continuing to participate in the performance of the underlying equities. The option overlay strategy contributed to performance.

Describe recent portfolio activity

Consistent with the investment adviser’s long-term approach, there was a relatively low amount of portfolio turnover in 2018. However, the investment adviser was active in selling stocks that reached its price targets and rotating into those that offered more attractive valuations. Late in the year, the investment adviser sought to take advantage of the selloff in the refining stocks by increasing its allocation to this area. The Trust also continued to increase its allocation to non-U.S. energy stocks. While the Trust remains overweight to the E&P sub-sector, it reduced the position and increased its weighting in the integrated oil & gas industry to capitalize on its attractive valuations.

Describe portfolio positioning at period end.

The integrated energy subsector represented the Trust’s largest allocation, followed by the E&P, distribution, oil services, and refining & marketing industries, respectively.

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    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Trust Information  as of December 31, 2018 (continued)    BlackRock Energy and Resources Trust

 

Market Price and Net Asset Value Per Share Summary

 

     12/31/18     

12/31/17

     Change      High      Low  

Market Price

  $ 10.45      $ 14.18        (26.30 )%     $ 15.76      $ 9.89  

Net Asset Value

    11.98        15.79        (24.13      16.54        11.35  

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

 

LOGO

Overview of the Trust’s Total Investments *

 

TEN LARGEST HOLDINGS

 

Security   12/31/18  

Royal Dutch Shell PLC — ADR

    12

Exxon Mobil Corp.

    10  

BP PLC

    8  

TOTAL SA

    7  

ConocoPhillips

    5  

Suncor Energy, Inc.

    5  

Chevron Corp.

    4  

Valero Energy Corp.

    4  

Marathon Petroleum Corp.

    4  

Williams Cos., Inc.

    3  

 

  *

Excludes option positions and money market funds.

 

INDUSTRY ALLOCATION

 

Industry   12/31/18    

12/31/17

 

Oil, Gas & Consumable Fuels

    94     90

Energy Equipment & Services

    6       10  

 

 

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 adviser. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 
 

 

 

TRUST INFORMATION      7  


Trust Information  as of December 31, 2018    BlackRock Enhanced Capital and Income Fund, Inc.

 

Investment Objective

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 securities of U.S. and foreign issuers. The Trust may invest directly in such securities or synthetically through the use of derivatives. The Trust also seeks to achieve its investment policy by employing a strategy of writing (selling) call and put options.

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

Trust Information

 

Symbol on NYSE

  CII

Initial Offering Date

  April 30, 2004

Current Distribution Rate on Closing Market Price as of December 31, 2018 ($14.08)(a)

  7.06%

Current Monthly Distribution per Common Share(b)

  $0.0828

Current Annualized Distribution per Common Share(b)

  $0.9936

 

  (a) 

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.

 
  (b) 

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.

 

The following discussion relates to the Trust’s relative performance based on the index cited above:

Performance and Portfolio Management Commentary

Returns for the 12 months period ended December 31, 2018 were as follows:

 

    Returns Based On  
     Market Price      Net Asset Value  

CII(a)(b)

    (8.56 )%       (5.44 )% 

S&P 500® Index

    N/A        (4.38

 

  (a) 

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b) 

The Trust’s discount to NAV widened during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 

N/A — Not applicable as the index does not have a market price.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

What factors influenced performance?

In the equity allocation of the Trust, the largest detractor from relative performance for the 12-month period was stock selection in the consumer discretionary sector. Most notably, positioning across homebuilders and underweight exposure to internet and direct marketing retail challenged relative performance. This was followed by positioning in materials, where packaging and chemical holdings produced weakness. Finally, exposure to the electric utility industry hurt relative results in the utilities sector.

In the equity allocation of the Trust, the largest contributor to performance for the 12-month period was stock selection in the information technology (“IT”) sector. Specifically, selection decisions in software names provided strong relative returns. In industrials, positioning in machinery and rail roads enhanced relative performance. Finally, stock selection within energy provided outperformance, most notably avoiding energy equipment and services names.

The Trust utilized an options overlay strategy in which calls are written on a portion of the portfolio’s holdings. Premiums generated are recognized as current gains which are intended to enhance distributions payable to shareholders in the form of dividends. The use of options contributed to relative performance during the period.

Describe recent portfolio activity.

During the 12-month period, the Trust significantly boosted exposure to the health care sector. Holdings within consumer staples and energy also were increased. Conversely, the Trust significantly reduced exposure to the financials sector. The Trust also reduced exposure to consumer discretionary and materials stocks.

Describe portfolio positioning at period end.

The Trust’s largest allocations were in the IT, health care and financials sectors. Relative to the benchmark, the Trust’s largest overweight positions were in the health care, materials, energy and financials sectors. Conversely, the Trust’s largest relative underweights were in the real estate, industrials, and consumer staples sectors.

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    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Trust Information  as of December 31, 2018 (continued)    BlackRock Enhanced Capital and Income Fund, Inc.

 

Market Price and Net Asset Value Per Share Summary

 

     12/31/18     

12/31/17

     Change      High      Low  

Market Price

  $ 14.08      $ 16.38        (14.04 )%     $ 17.36      $ 13.13  

Net Asset Value

    15.28        17.19        (11.11      18.07        14.40  

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

 

LOGO

Overview of the Trust’s Total Investments *

 

TEN LARGEST HOLDINGS

 

Security   12/31/18  

Microsoft Corp.

    6

Apple, Inc.

    5  

Alphabet, Inc.

    5  

Pfizer, Inc.

    3  

JPMorgan Chase & Co.

    3  

Cisco Systems, Inc.

    3  

Bank of America Corp.

    3  

Comcast Corp.

    3  

Walmart, Inc.

    3  

UnitedHealth Group, Inc.

    3  

 

  *

Excludes option positions and money market funds.

 

SECTOR ALLOCATION

 

Sector   12/31/18    

12/31/17

 

Information Technology

    20     26

Health Care

    18       16  

Financials

    15       17  

Consumer Discretionary

    10       14  

Communication Services

    9        

Industrials

    7       7  

Consumer Staples

    7       6  

Energy

    6       6  

Materials

    5       5  

Utilities

    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 adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 
 

 

 

TRUST INFORMATION      9  


Trust Information  as of December 31, 2018    BlackRock Enhanced Equity Dividend Trust

 

Investment Objective

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.

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

Trust Information

 

Symbol on NYSE

  BDJ

Initial Offering Date

  August 31, 2005

Current Distribution Rate on Closing Market Price as of December 31, 2018 ($7.77)(a)

  7.21%

Current Monthly Distribution per Common Share(b)

  $0.0467

Current Annualized Distribution per Common Share(b)

  $0.5604

 

  (a) 

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.

 
  (b) 

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.

 

Performance and Portfolio Management Commentary

Returns for the 12-month period ended December 31, 2018 were as follows:

 

    Returns Based On  
     Market Price      Net Asset Value  

BDJ(a)(b)

    (10.39 )%       (6.59 )% 

Russell 1000® Value Index

    N/A        (8.27

 

  (a) 

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b)

The Trust’s discount to NAV widened during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 

N/A — Not applicable as the index does not have a market price.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

The following discussion relates to the Trust’s relative performance based on the index cited above:

What factors influenced performance?

The largest contributor to relative performance for the 12-month period came from an overweight position and stock selection within the health care sector. Notably, stock selection within and an overweight to the pharmaceuticals industry proved beneficial, as did an overweight to the health care providers & services industry. Within information technology (“IT”), a combination of stock selection and an overweight to the software industry boosted relative return, as did stock selection in the electronic equipment industry. Other notable contributors included stock selection within communication services and consumer staples.

The largest detractor from relative performance derived from a combination of stock selection and allocation decisions within financials. In particular, stock selection in the insurance and capital markets industries detracted, as did an overweight to banks and an underweight to the diversified financial services industry. Within utilities, stock selection in the electric utilities segment was particularly weak due to the impact on portfolio holdings from severe California wildfires. The portfolio’s lack of exposure to real estate also hindered relative return as the sector outperformed the broader U.S. equity market. Lastly, an overweight to construction materials as well as stock selection in the containers & packaging industry constrained results within the materials sector.

The Trust utilized an options overlay strategy in which calls are written on a portion of the portfolio’s holdings. Premiums generated are recognized as current gains that are intended to enhance distributions payable to shareholders in the form of dividends. The use of options had a positive effect on performance.

Describe recent portfolio activity.

During the 12-month period, a combination of portfolio trading activity and market price changes resulted in increased exposure to the communication services, health care and IT sectors. Conversely, exposures to financials, industrials and utilities were reduced.

Describe portfolio positioning at period end.

The Trust’s largest allocations were in the financials, health care and IT sectors. Relative to the benchmark, the Trust’s largest overweight positions were in the health care, IT and financials sectors. Conversely, the Trust’s largest relative underweights were in the real estate, consumer discretionary and utilities sectors.

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    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Trust Information  as of December 31, 2018 (continued)    BlackRock Enhanced Equity Dividend Trust

 

Market Price and Net Asset Value Per Share Summary

 

     12/31/18     

12/31/17

     Change      High      Low  

Market Price

  $ 7.77      $ 9.23        (15.82 )%     $ 9.64      $ 7.24  

Net Asset Value

    8.74        9.96        (12.25      10.42        8.30  

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

 

LOGO

Overview of the Trust’s Total Investments *

 

TEN LARGEST HOLDINGS

 

Security   12/31/18  

Verizon Communications, Inc.

    4

Pfizer, Inc.

    4  

JPMorgan Chase & Co.

    4  

Wells Fargo & Co.

    4  

Citigroup, Inc.

    3  

Bank of America Corp.

    3  

Anthem, Inc.

    3  

Oracle Corp.

    3  

Microsoft Corp.

    2  

AstraZeneca PLC

    2  

 

  *

Excludes option positions and money market funds.

 
   

SECTOR ALLOCATION

 

Sector   12/31/18    

12/31/17

 

Financials

    25     29

Health Care

    23       19  

Information Technology

    12       10  

Energy

    11       12  

Consumer Staples

    7       7  

Communication Services

    7       3  

Industrials

    6       8  

Utilities

    4       5  

Consumer Discretionary

    3       4  

Materials

    2       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 adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 
 

 

 

TRUST INFORMATION      11  


Trust Information  as of December 31, 2018    BlackRock Enhanced Global Dividend Trust

 

Investment Objective

BlackRock Enhanced Global Dividend 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. Under normal circumstances, the Trust invests at least 80% of its net assets in dividend-paying equity securities and at least 40% of its assets outside of the U.S. (unless market conditions are not deemed favorable by Trust management, in which case the Trust would invest at least 30% of its assets outside of the U.S.). The Trust may invest in securities of companies of any market capitalization, but intends to invest primarily in securities of large capitalization companies. The Trust may invest directly in such securities or synthetically through the use of derivatives.

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

Trust Information

 

Symbol on NYSE

  BOE

Initial Offering Date

  May 31, 2005

Current Distribution Rate on Closing Market Price as of December 31, 2018 ($9.37)(a)

  8.07%

Current Monthly Distribution per Common Share(b)

  $0.0630

Current Annualized Distribution per Common Share(b)

  $0.7560

 

  (a) 

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.

 
  (b) 

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.

 

Performance and Portfolio Management Commentary

Returns for the 12-month period ended December 31, 2018 were as follows:

 

    Returns Based On  
     Market Price      Net Asset Value  

BOE(a)(b)

    (19.16 )%       (9.63 )% 

MSCI All Country World Index

    N/A        (9.41

 

  (a)

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b)

The Trust’s discount to NAV widened during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 

N/A — Not applicable as the index does not have a market price.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

The following discussion relates to the Trust’s relative performance based on the index cited above:

What factors influenced performance?

Positioning with respect to consumer staples was the largest detractor from performance, as both security selection within and an overweight to the sector weighed on returns. Stock selection in industrials, mainly within the air freight and logistics industry, also detracted, as did a lack of exposure to the utilities sector. In terms of individual stocks, a position in British American Tobacco PLC was the most significant detractor from returns. Tobacco stocks have suffered from negative sentiment driven by the FDA’s announcement that it would be looking to limit nicotine levels in traditional cigarettes along with questions about “Next Generation” smoking products. Positions in the postal and international courier companies Deutsche Post AG (Germany) and Bpost SA (Belgium) detracted due to higher costs for European postal companies. The investment adviser remains positive with respect to the longer-term prospects for both companies based on double-digit parcel growth domestically, driven by e-commerce.

During the 12-month period, the Trust’s significant overweight to and stock selection within the health care sector contributed to returns, particularly among pharmaceutical stocks. Stock selection in the newly created communication services sector also contributed, mostly due to the portfolio’s positioning in wireless telecommunication services names. Additionally, stock selection in consumer discretionary added value. On an individual security basis, the Trust’s position in the technology conglomerate Cisco Systems, Inc. was the top contributor to performance as the company reported earnings that exceeded analysts’ expectations and announced a share buyback plan that was viewed favorably by investors. In addition, holdings in the consumer goods firm Procter & Gamble Co. contributed to relative performance as the company’s internally generated revenue growth gained positive momentum throughout the year. The Trust’s position in the beverage firm Coca-Cola Co. also was a top contributor for the period, based on strong financial results and signs of accelerating growth.

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

 

 

12    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Trust Information  as of December 31, 2018 (continued)    BlackRock Enhanced Global Dividend Trust

 

Describe recent portfolio activity.

The Trust’s allocation to tobacco stocks was reduced in May, with the proceeds reinvested in high quality, dividend-paying names where the investment adviser has high conviction. These areas included health care, consumer staples and industrials stocks.

Describe portfolio positioning at period end.

At period end, the Trust’s largest sector overweight positions were in the consumer staples and health care sectors, with an emphasis on the tobacco and pharmaceuticals industries, respectively. The largest underweights were to financials and energy. The Trust had no exposure to real estate, utilities or energy at the end of the period. From a regional perspective, a majority of portfolio assets was invested either within the United States or Europe, with significant exposure in the United Kingdom and Switzerland.

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.

Market Price and Net Asset Value Per Share Summary

 

     12/31/18     

12/31/17

     Change      High      Low  

Market Price

  $ 9.37      $ 12.51        (25.10 )%     $ 13.08      $ 9.10  

Net Asset Value

    11.07        13.22        (16.26      13.71        10.70  

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

 

LOGO

Overview of the Trust’s Total Investments *

 

TEN LARGEST HOLDINGS

 

Security  

12/31/18

 

TELUS Corp.

    3

Rogers Communications, Inc., Class B

    3  

Cisco Systems, Inc.

    3  

Kone OYJ, Class B

    3  

Johnson & Johnson

    3  

Amcor Ltd.

    3  

Altria Group, Inc.

    3  

Genuine Parts Co.

    3  

Coca-Cola Co.

    3  

PepsiCo, Inc.

    3  

 

  *

Excludes option positions and money market funds.

 
   
   
   

GEOGRAPHIC ALLOCATION

 

Country   12/31/18     12/31/17  

United States

    43     42

United Kingdom

    16       16  

Canada

    7       6  

Switzerland

    6       10  

Australia

    6       4  

France

    4       3  

Finland

    3       2  

Singapore

    3        

Netherlands

    2        

Germany

    2       3  

Taiwan

    2       3  

Sweden

    1       2  

Ireland

    1        

Denmark

    1        

India

    1       (a)  

Japan

    (a)       2  

Belgium

          2  

Other

    2 (b)       5 (c)  

 

  (a) 

Representing less than 1% of the Trust’s total investments.

 
  (b) 

Other includes a 1% holding or less in each of the following countries:

 
  China

and Japan.

 
  (c) 

Other includes a 1% holding or less in each of the following countries: Denmark, Hong Kong, India, Italy, Netherlands and Spain.

 
 

 

 

TRUST INFORMATION      13  


Trust Information  as of December 31, 2018    BlackRock Enhanced International Dividend Trust

 

Investment Objective

BlackRock Enhanced International Dividend 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 circumstances, at least 80% of its net assets in dividend-paying equity securities issued by non-U.S. companies of any market capitalization, but intends to invest primarily in securities of large capitalization companies. The Trust may invest directly in such securities or synthetically through the use of derivatives.

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

Trust Information

 

Symbol on NYSE

  BGY

Initial Offering Date

  May 30, 2007

Current Distribution Rate on Closing Market Price as of as of December 31, 2018 ($4.98)(a)

  8.14%

Current Monthly Distribution per Common Share(b)

  $0.0338

Current Annualized Distribution per Common Share(b)

  $0.4056

 

  (a) 

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.

 
  (b) 

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.

 

Performance and Portfolio Management Commentary

Returns for the 12-month period ended December 31, 2018 were as follows:

 

    Returns Based On  
     Market Price      Net Asset Value  

BGY(a)(b)

    (17.55 )%       (11.48 )% 

MSCI All Country World Index ex-USA

    N/A        (14.20

 

  (a)

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b)

The Trust’s discount to NAV widened during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 

N/A — Not applicable as the index does not have a market price.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

The following discussion relates to the Trust’s relative performance based on the index cited above:

What factors influenced performance?

The largest contribution to the Trust’s relative performance during the 12-month period came from stock selection within information technology (“IT”), led by a position in the multinational IT company Microsoft Corp. Performance was also helped by stock selection within and an overweight to the health care sector. The largest contributor to performance by region was the Trust’s exposure to Canadian equities.

Conversely, security selection within consumer staples, in particular tobacco companies, detracted from performance. Stock selection in industrials and a lack of exposure to utility stocks also weighed on returns. The largest detractor by region came from exposure to U.K. securities.

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

Describe recent portfolio activity.

The Trust reduced exposure to the tobacco industry during the period, and added exposure to industrials.

Describe portfolio positioning at period end.

At period end, the Trust held large absolute positions within the consumer staples, industrials and health care industries. The Trust had no holdings within the real estate, utilities or energy sectors.

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    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Trust Information  as of December 31, 2018 (continued)    BlackRock Enhanced International Dividend Trust

 

Market Price and Net Asset Value Per Share Summary

 

     12/31/18     

12/31/17

     Change      High      Low  

Market Price

  $ 4.98      $ 6.52        (23.62 )%     $ 6.85      $ 4.78  

Net Asset Value

    5.79        7.06        (17.99      7.32        5.65  

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

 

 

LOGO

Overview of the Trust’s Total Investments *

 

TEN LARGEST HOLDINGS

 

Security   12/31/18  

TELUS Corp.

    5

Rogers Communications, Inc., Class B

    5  

Kone OYJ, Class B

    5  

Imperial Brands PLC

    5  

Amcor Ltd.

    5  

Nestle SA

    4  

GlaxoSmithKline PLC

    4  

Novartis AG, Registered Shares

    4  

Deutsche Post AG, Registered Shares

    4  

Unilever PLC

    4  

 

  *

Excludes option positions and money market funds.

 

GEOGRAPHIC ALLOCATION

 

Country   12/31/18     12/31/17  

United Kingdom

    28     19

Canada

    11       7  

Switzerland

    10       12  

Australia

    9       5  

France

    6       6  

Finland

    5       2  

United States

    5       6  

Netherlands

    4       6  

Germany

    4       5  

Taiwan

    3       3  

Singapore

    3        

Sweden

    3       3  

China

    3       6  

Denmark

    2       2  

India

    2       2  

Japan

    2       5  

Belgium

          3  

Hong Kong

          2  

South Africa

          2  

South Korea

          2  

Other

          2 (a)  

 

  (a) 

Other includes a 1% holding or less in each of the following countries: Ireland and Portugal.

 
 

 

 

TRUST INFORMATION      15  


Trust Information  as of December 31, 2018    BlackRock Health Sciences Trust

 

Investment Objective

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 total 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.

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

Trust Information

 

Symbol on NYSE

  BME

Initial Offering Date

  March 31, 2005

Current Distribution Rate on Closing Market Price as of December 31, 2018 ($36.45)(a)

  6.58%

Current Monthly Distribution per Common Share(b)

  $0.2000

Current Annualized Distribution per Common Share(b)

  $2.4000

 

  (a) 

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.

 
  (b) 

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.

 

Performance and Portfolio Management Commentary

Returns for the 12 months period ended December 31, 2018 were as follows:

 

    Returns Based On  
     Market Price      Net Asset Value  

BME(a)(b)

    6.57      7.26

Russell 3000® Healthcare Index

    N/A        5.63  

 

  (a) 

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b) 

The Trust’s premium to NAV narrowed during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 

N/A — Not applicable as the index does not have a market price.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

The following discussion relates to the Trust’s relative performance based on the index cited above:

What factors influenced performance?

Although the broader global equity markets lost ground in 2018, health care stocks registered a gain. The sector performed well late in the year, as its defensive qualities and solid earnings prospects helped it hold up well in a time of elevated volatility.

Stock selection across all four of the underlying sub-sectors was the primary contributor to the Trust’s strong relative performance in 2018. An underweight position in Johnson & Johnson was the largest individual contributor in both the pharmaceuticals industry and the portfolio as a whole. The stock came under pressure late in the year after a report suggested that Johnson & Johnson knew about asbestos in its baby powder for decades.

An overweight position in Boston Scientific Corp. was a key contributor in the medical devices & supplies sub-sector. The company raised guidance regarding its growth outlook for 2019 and 2020, reflecting rising demand for its products. The investment advisor increased its weighting in Boston Scientific during the course of the year due to its promising and diversified pipeline of new products.

The Trust’s overweight in the home health care and hospice services provider Amedisys, Inc. was a top contributor in the health care providers & services area. The stock appreciated after the company’s third quarter earnings came in well above expectations.

Within the pharmaceuticals sub-sector, an underweight in Merck & Co., Inc. was among the largest detractors from performance. The company’s progress in its immuno-oncology clinical program surpassed the competition, lifting its stock. In addition, the approval of Merck’s flagship lung cancer drug for a variety of new indications increased the addressable market for the treatment. The investment advisor reduced the extent of the underweight in response to the company’s improving pipeline and fundamentals.

An overweight in the biotechnology firm Alnylam Pharmaceuticals, Inc., which was adversely affected by competitive pressure from Pfizer, was a further detractor. The uncertainty regarding Alnylam’s market share prompted the investment advisor to reduce the position from an overweight to a neutral weighting by the close of the year. Other detractors of note included off-benchmark positions in Insmed, Inc. and Novo-Nordisk A/S.

The Trust made use of options, principally written call options on individual stocks, in order to seek enhanced income returns while continuing to participate in the performance of the underlying equities. The option overlay strategy detracted from performance in 2018.

 

 

16    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Trust Information  as of December 31, 2018 (continued)    BlackRock Health Sciences Trust

 

Describe recent portfolio activity.

The Trust increased its allocation to the medical devices & supplies and pharmaceuticals sub-sectors over the course of the year. It reduced its weighting in biotechnology, while its weighting in health care providers and services was unchanged.

The Trust held an above-average position in cash at the end of December, reflecting the investment advisor’s decision to adopt a more defensive posture once market volatility increased in the fourth quarter. The Trust’s cash position had a marginally positive impact on results.

Describe portfolio positioning at period end.

The Trust continued to employ a bottom-up, fundamental investment process in an effort to construct a balanced, diversified portfolio of healthcare stocks. The portfolio continues to reflect two broad themes: innovation and value-based healthcare.

Innovation in medical technology remains a secular growth driver for the health care sector, as companies continue to develop new therapies or products that are either fulfilling an unmet medical need or that represent an improvement over current treatments. This encompasses not only the biotechnology industry, but also the pharmaceuticals and medical devices & supplies sub-sectors.

With respect to value-based health care, the Trust has an above-benchmark weighting in the health care providers & services sub-sector due to its sizable overweight in managed care stocks. The investment advisor continues to find a number of companies in this area that it believes are well positioned to reduce health care costs by leveraging their scale and analytical capabilities. Additionally, select holdings in the health care services industry feature business models that are benefiting from the shift to lower-cost options such as home health care.

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.

Market Price and Net Asset Value Per Share Summary

 

    

12/31/18

    

12/31/17

     Change      High      Low  

Market Price

  $ 36.45      $ 36.50        (0.14 )%     $ 44.00      $ 32.00  

Net Asset Value

    35.87        35.69        0.50        40.03        33.61  

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

 

 

LOGO

Overview of the Trust’s Total Investments *

 

TEN LARGEST HOLDINGS

 

Security  

12/31/18

 

UnitedHealth Group, Inc.

    8

Pfizer, Inc.

    6  

Abbott Laboratories

    5  

Boston Scientific Corp.

    4  

Merck & Co., Inc.

    4  

Medtronic PLC

    4  

Stryker Corp.

    3  

Anthem, Inc.

    3  

Cigna Corp.

    2  

Bristol-Myers Squibb Co.

    2  

 

  *

Excludes option positions and money market funds.

 

INDUSTRY ALLOCATION

 

Industry   12/31/18     12/31/17  

Health Care Equipment & Supplies

    27     23

Pharmaceuticals

    25       24  

Health Care Providers & Services

    23       25  

Biotechnology

    18       25  

Life Sciences Tools & Services

    5       2  

Diversified Consumer Services

    1       1  

Health Care Technology

    1        

 

 

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 adviser. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 
 

 

 

TRUST INFORMATION      17  


Trust Information  as of December 31, 2018    BlackRock Resources & Commodities Strategy Trust

 

Investment Objective

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.

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

Trust Information

 

Symbol on NYSE

  BCX

Initial Offering Date

  March 30, 2011

Current Distribution Rate on Closing Market Price as of December 31, 2018 ($7.06)(a)

  8.77%

Current Monthly Distribution per Common Share(b)

  $0.0516

Current Annualized Distribution per Common Share(b)

  $0.6192

 

  (a) 

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.

 
  (b) 

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.

 

Performance and Portfolio Management Commentary

Returns for the 12-month period ended December 31, 2018 were as follows:

 

    Returns Based On  
     Market Price      Net Asset Value  

BCX(a)(b)

    (22.47 )%       (14.90 )% 

Lipper Natural Resources Funds(c)

    (24.64      (19.04

 

  (a) 

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b) 

The Trust’s discount to NAV widened during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 
  (c)

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date as calculated by Lipper.

 

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

The following discussion relates to the Trust’s absolute performance based on NAV:

What factors influenced performance?

Concerns about slowing global growth fueled significant weakness in both commodity prices and the broader world equity markets in late 2018, weighing heavily on natural resources stocks.

The Trust’s allocation to the energy sector was the largest detractor from performance. Although many energy companies demonstrated fundamental improvements, highlighted by better capital discipline and a focus on cash flows, the sector posted a weak 12-month return due to the extent of its fourth quarter selloff. The exploration and production industry was hit particularly hard, causing the Trust’s investments in stocks such as Encana Corp. and Devon Energy Corp. to finish among its most significant individual detractors.

The Trust’s positions in mining stocks also detracted from results. Although the sector experienced a strong rally in the first half of January, the gains proved short lived as escalating trade tensions between the United States and China began to weigh on both commodity prices and investor sentiment as the year progressed. China, which consumes approximately half of the world’s mined commodities, is by far the most important driver of demand for the mining sector. However, the investment adviser believes that underlying physical supply and demand conditions remain solid and that much of the weakness was driven by speculation. Against this backdrop, the Trust’s positions in copper producers had a negative impact on performance, with First Quantum Minerals Ltd. finishing as one of the largest detractors. Fresnillo PLC and Neo Lithium Corp. were also notable detractors in the broader mining industry.

On the positive side, the Trust’s allocation to gold stocks contributed to absolute performance. Gold bullion rallied amid the financial market volatility that occurred the latter part of 2018, as investors who are nervous about other assets often look to gold as a “safe haven.” The investment adviser believes this indicated the potential value of gold as a source of diversification. In this environment, the Trust’s position in Randgold Resources Ltd. was one of the top contributors to performance. The stock’s strong return reflected both rising gold prices and the announcement of a merger with Barrick Gold Corp.

Vale SA, which benefited from the strong pricing environment for higher-grade iron ore, was another notable contributor. Other contributors of note include Nevsun Resources, Ltd., Agrium, Inc., and Hormel Foods Corp.

The Trust made use of options, principally written call options on individual stocks, in order to seek enhanced income returns while continuing to participate in the performance of the underlying equities. The option overlay strategy contributed to performance.

 

 

18    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Trust Information  as of December 31, 2018 (continued)    BlackRock Resources & Commodities Strategy Trust

 

Describe recent portfolio activity.

The Trust exited some its positions in the agricultural industry, including Wilmar International, Ltd., where the investment adviser saw less room for earnings upside compared to other holdings, and Brasil Foods SA, which was pressured by a criminal investigation into members of its management team.

The Trust also rotated some of its positions in the mining industry by selling stocks that reached its price targets and rotating into those that offered more attractive valuations. In addition, the Trust raised its allocation to the sector through additions to large mining companies such as BHP Billiton Ltd. and Glencore PLC.

In the energy sector, the Trust increased its allocation to the refining industry and non-U.S. energy stocks, while reducing its weighting in U.S. onshore producers.

Describe portfolio positioning at period end.

The mining industry represented the Trust’s largest allocation, followed by energy and agriculture, respectively.

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.

Market Price and Net Asset Value Per Share Summary

 

    

12/31/18

    

12/31/17

     Change      High      Low  

Market Price

  $ 7.06      $ 9.77        (27.74 )%     $ 10.49      $ 6.66  

Net Asset Value

    8.44        10.64        (20.68      11.05        8.10  

Market Price and Net Asset Value History For Past Five Years

 

 

LOGO

Overview of the Trust’s Total Investments *

 

TEN LARGEST HOLDINGS

 

Security   12/31/18  

Royal Dutch Shell PLC — ADR

    6

TOTAL SA

    6  

BP PLC — ADR

    5  

BHP Group PLC

    4  

Glencore PLC

    4  

Nutrien Ltd.

    3  

Vale SA

    3  

Suncor Energy, Inc.

    3  

Nutrien Ltd.

    3  

Exxon Mobil Corp.

    3  

 

  *

Excludes option positions and money market funds.

 

INDUSTRY ALLOCATION

 

Industry   12/31/18     12/31/17  

Metals & Mining

    38     34

Oil, Gas & Consumable Fuels

    33       34  

Chemicals

    14       13  

Food Products

    7       11  

Containers & Packaging

    3       3  

Paper & Forest Products

    1       1  

Energy Equipment & Services

    1       3  

Electronic Equipment, Instruments & Components

    1        

Pharmaceuticals

    1        

Machinery

    1       1  

 

 

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 adviser. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 
 

 

 

TRUST INFORMATION      19  


Trust Information  as of December 31, 2018     BlackRock Science and Technology Trust

 

Investment Objective

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 total assets in equity securities of science and technology companies. 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, 2018 ($27.48)(a)

  6.55%

Current Monthly Distribution per Common Share(b)

  $0.1500

Current Annualized Distribution per Common Share(b)

  $1.8000

 

  (a) 

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.

 
  (b) 

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.

 

Performance and Portfolio Management Commentary

Returns for the 12-month period ended December 31, 2018 were as follows:

 

    Returns Based On  
     Market Price      Net Asset Value  

BST(a)(b)

    9.18      0.24

MSCI World Information Technology Index

    N/A        (2.60

 

  (a)

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b)

The Trust moved from a discount to NAV to a premium during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 

N/A — Not applicable as the index does not have a market price.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

The following discussion relates to the Trust’s relative performance based on the index cited above:

What factors influenced performance?

The Trust’s overweight position in software companies represented the largest contributor to performance return during the period, driven by the strong performance of enterprise software firms. On a stock specific basis, the Trust’s non-benchmark position in the online retailer Amazon.com, Inc. was the largest contributor as the company’s strong e-commerce and cloud services sales surpassed first- and second-quarter earnings expectations. The second largest contributor to relative return was the mobile payment company Square, Inc., which was rewarded by investors for continuing to diversify its product set and revenue stream beyond payments. The third largest contributor over the period was a non-benchmark position in the enterprise software firm Zuora, Inc., which benefited from the tailwind of increased movement toward subscription models for automated commerce.

The largest detractor from performance at a sub-sector level was stock selection within semiconductors, followed by selection within hardware. In terms of individual securities, an underweight to the consumer and enterprise software firm Microsoft Corp. was the most significant detractor. The Trust holds a structural underweight in Microsoft on the view that there are better growth opportunities elsewhere. The next largest detractors were underweight positions in the semiconductor company Broadcom, Inc. and the networking hardware firm Cisco Systems, Inc., as investors flocked to more defensive stocks amid market volatility, particularly in the latter part of the year.

The Trust made use of options, principally written call options on individual stocks, in order to seek enhanced income returns while continuing to participate in the performance of the underlying equities. The Trust’s options writing strategy had a marginally positive effect on returns.

Describe recent portfolio activity.

During the 12-month period, the Trust’s exposures to software and internet companies were increased, on the view that these firms are positioned to benefit from innovation while featuring low sensitivity to late cycle macroeconomics. Exposure to cyclical Chinese technology firms was decreased early in the period amid an emerging market sell-off. However, the Trust added back exposure to high-conviction names in the segment later in 2018 based on attractive valuations. Lastly, exposure to 5G component companies was raised based on their attractive growth prospects as the latest generation of cellular mobile communications technology is increasingly adopted.

Describe portfolio positioning at period end.

The Trust’s investment process aims to provide a balance of legacy technology firms that can continually innovate and newer, disruptive entrants that displace those that fail to innovate, with approximately 40% of the portfolio consisting of “core” legacy companies and 60% making up the “opportunistic,” high-growth portion. At period end,

 

 

20    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Trust Information  as of December 31, 2018 (continued)    BlackRock Science and Technology Trust

 

the Trust held its largest allocations in internet and software companies, which are supported by the longer-term tailwinds of innovation and the transition to cloud computing. The Trust’s software exposure was characterized by companies that offer enterprise software solutions, cloud computing services, and software-as-a-service, which are less cyclical in nature. The Trust also held a substantial investment in the 5G supply chain as this emerging technology is on track to disrupt the internet and communications space.

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.

Market Price and Net Asset Value Per Share Summary

 

     12/31/18      12/31/17      Change      High      Low  

Market Price

  $ 27.48      $ 26.69        2.96    $ 36.00      $ 24.00  

Net Asset Value

    26.21        27.73        (5.48      33.18        24.25  

Market Price and Net Asset Value History Since Inception

 

 

LOGO

 

(a) 

Commencement of operations.

Overview of the Trust’s Total Investments *

 

TEN LARGEST HOLDINGS

 

Security   12/31/18  

Microsoft Corp.

    6

Tencent Holdings Ltd.

    5  

Alphabet, Inc.

    5  

Amazon.com, Inc.

    5  

Mastercard, Inc.

    3  

Apple, Inc.

    3  

Alibaba Group Holding Ltd. — ADR

    3  

Visa, Inc.

    3  

salesforce. com, Inc.

    2  

Adobe, Inc.

    2  

 

  *

Excludes option positions and money market funds.

 

INDUSTRY ALLOCATION

 

Industry   12/31/18     12/31/17  

Software

    28     22

IT Services

    18       10  

Interactive Media & Services

    16        

Semiconductors & Semiconductor Equipment

    11       18  

Internet & Direct Marketing Retail

    11       6  

Entertainment

    6        

Technology Hardware, Storage & Peripherals

    3       7  

Electronic Equipment, Instruments & Components

    2       2  

Health Care Technology

    1       (a)  

Automobiles

    1       (a)  

Diversified Consumer Services

    1       (a)  

Diversified Telecommunication Services

    1        

Communications Equipment

    1        

Internet Software & Services

          28  

Media

          1  

Other

    (b)       6 (c)  

 

  (a) 

Representing less than 1% of the Trust’s total investments.

 
  (b) 

Other includes a 1% holding or less in each of the following industries:

 

Household Durables and Wireless Telecommunication Services

  (c) 

Other includes a 1% holding or less in each of the following industries: Automobiles, Chemicals, Consumer Finance, Household Durables, Health Care Technology, Professional Services and Diversified Consumer 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 adviser. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 
 

 

 

TRUST INFORMATION      21  


Trust Information  as of December 31, 2018   

BlackRock Utilities, Infrastructure & Power Opportunities Trust

 

Investment Objective

BlackRock Utilities, Infrastructure & Power Opportunities 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, Infrastructure and Power Opportunities 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, 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 and the “Power Opportunities” business segment to include companies with a significant involvement in, supporting, or necessary to renewable energy technology and development, alternative fuels, energy efficiency, automotive and sustainable mobility and technologies that enable or support the growth and adoption of new power and energy sources. 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.

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

Trust Information

 

Symbol on NYSE

  BUI

Initial Offering Date

  November 25, 2011

Current Distribution Rate on Closing Market Price as of December 31, 2018 ($19.76)(a)

  7.35%

Current Monthly Distribution per Common Share(b)

  $0.1210

Current Annualized Distribution per Common Share(b)

  $1.4520

 

  (a) 

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.

 
  (b) 

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.

 

Performance and Portfolio Management Commentary

Returns for the 12-month period ended December 31, 2018:

 

    Returns Based On  
     Market Price      Net Asset Value  

BUI(a)(b)

    (1.68 )%       (4.40 )% 

Lipper Utility Funds(c)

    (9.66      (8.10

 

  (a)

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b) 

The Trust’s premium to NAV widened during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 
  (c)

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date as calculated by Lipper.

 

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

The following discussion relates to the Trust’s absolute performance based on NAV.

What factors influenced performance?

The largest detractor from performance was the Trust’s position in the industrials sector, which was negatively affected by weak investor sentiment toward China. The Trust’s position in the transportation infrastructure industry detracted from performance, with positions in Italian tollway operator Atlantia SpA and Australia’s Transurban Group among the most notable within this sub sector.

The largest contributor to performance was the Trust’s exposure to utilities, which proved to be more defensive amid the volatile market environment. From an industry standpoint, stock selection in electric utilities was the most noteworthy contributor to performance. Within the electric utilities industry, the Trust’s performance benefited from positions in major U.S. players NextEra Energy, Inc., Exelon Corp., and FirstEnergy Corp.

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

Describe recent portfolio activity.

During the period, the Trust reduced exposure to airports as well as midstream energy companies, selling its positions in Shell Midstream Partners LP and Plains All American Pipeline LP. The Trust used the proceeds to invest in energy distribution companies such as The Williams Companies and TransCanada Corp., as well as companies that have exposure to the electric vehicle industry, such as Switzerland’s ABB Ltd.

 

 

22    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Trust Information  as of December 31, 2018 (continued)   

BlackRock Utilities, Infrastructure & Power Opportunities Trust

 

Describe portfolio positioning at period end.

At period end, the utilities sector accounted for approximately 64% of the Trust’s assets. The Trust had approximately 15% and 13% of its assets invested in the industrials and energy sectors, respectively, with the remainder invested in other infrastructure- and power-related sectors.

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.

Market Price and Net Asset Value Per Share Summary

 

    

12/31/18

    

12/31/17

     Change      High      Low  

Market Price

  $ 19.76      $ 21.62        (8.60 )%     $ 21.73      $ 17.40  

Net Asset Value

    18.77        21.12        (11.13      21.27        18.26  

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

 

 

LOGO

Overview of the Trust’s Total Investments *

 

TEN LARGEST HOLDINGS

 

Security   12/31/18  

NextEra Energy, Inc.

    9

Enel SpA

    6  

EDP Renovaveis SA

    4  

Duke Energy Corp.

    4  

Williams Cos., Inc.

    4  

Dominion Energy, Inc.

    4  

National Grid PLC

    4  

Exelon Corp.

    4  

Public Service Enterprise Group, Inc.

    3  

Transurban Group

    3  

 

  *

Excludes option positions and money market funds.

 

INDUSTRY ALLOCATION

 

Industry  

12/31/18

   

12/31/17

 

Electric Utilities

    39     33

Multi-Utilities

    20       20  

Oil, Gas & Consumable Fuels

    13       12  

Independent Power and Renewable Electricity Producers

    7       8  

Transportation Infrastructure

    6       15  

Electrical Equipment

    6       3  

Chemicals

    4       3  

Semiconductors & Semiconductor Equipment

    2        

Building Products

    2       (a)  

Machinery

    1        

Construction & Engineering

          3  

Gas Utilities

          1  

Water Utilities

          1  

Other

          1 (b)  

 

  (a) 

Representing less than 1% of the Trust’s total investments.

 
  (b) 

Other includes a 1% holding or less in each of the following industries: Building Products and Semiconductors & Semiconductor Equipment.

 

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 adviser. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 

 

 

TRUST INFORMATION      23  


Derivative Financial Instruments

 

The Trusts may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other assets without owning or taking physical custody of securities, commodities and/or other referenced assets 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 and 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 instrument. The Trusts’ successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these 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, if any, are discussed in detail in the Notes to Financial Statements.

 

 

24    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments

December 31, 2018

  

BlackRock Energy and Resources Trust (BGR)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Common Stocks — 99.0%  
Energy Equipment & Services — 6.0%  

Baker Hughes a GE Co.(a)

    266,300     $ 5,725,450  

Halliburton Co.(a)

    320,150       8,509,587  

Patterson-UTI Energy, Inc.(a)

    212,407       2,198,412  

Schlumberger Ltd.(a)

    142,924       5,156,698  
   

 

 

 
      21,590,147  
Oil, Gas & Consumable Fuels — 93.0%  

Anadarko Petroleum Corp.(a)

    176,783       7,750,167  

BP PLC

    4,696,550       29,690,121  

Cairn Energy PLC

    2,269,195       4,329,938  

Canadian Natural Resources Ltd.

    420,840       10,154,168  

Chevron Corp.(a)(b)

    133,435       14,516,394  

CNOOC Ltd.

    2,465,000       3,796,895  

Concho Resources, Inc.(a)(c)

    97,487       10,020,689  

ConocoPhillips(a)

    276,850       17,261,597  

Devon Energy Corp.(a)

    313,350       7,062,909  

Encana Corp.

    317,804       1,834,380  

EOG Resources, Inc.(a)

    138,800       12,104,748  

EQT Corp.

    179,750       3,395,477  

Equitrans Midstream Corp.(c)

    135,110       2,704,902  

Exxon Mobil Corp.(a)

    542,452       36,989,802  

Galp Energia SGPS SA

    322,300       5,074,879  

Kosmos Energy Ltd.(c)

    1,016,390       4,136,707  

Marathon Petroleum Corp.(a)

    212,985       12,568,245  

Noble Energy, Inc.(a)

    272,642       5,114,764  

Oil Search Ltd.

    877,163       4,418,276  

Pioneer Natural Resources Co.(a)

    79,426       10,446,108  

Royal Dutch Shell PLC — ADR, Class A(a)

    727,400       42,385,598  

Royal Dutch Shell PLC, Class A

    216,398       6,369,206  

Suncor Energy, Inc.

    582,050       16,256,641  

TOTAL SA

    509,103       26,852,693  

TransCanada Corp.

    299,050       10,678,792  
Security   Shares     Value  
Oil, Gas & Consumable Fuels (continued)  

Valero Energy Corp.(a)

    186,438     $ 13,977,257  

Williams Cos., Inc.(a)

    561,750       12,386,588  
   

 

 

 
      332,277,941  
   

 

 

 

Total Long-Term Investments — 99.0%
(Cost — $409,330,083)

 

    353,868,088  
   

 

 

 

Short-Term Securities — 1.4%

 

BlackRock Liquidity Funds, T-Fund, Institutional Class, 2.32%(d)(e)

    5,006,975       5,006,975  
   

 

 

 

Total Short-Term Securities — 1.4%
(Cost — $5,006,975)

 

    5,006,975  
   

 

 

 

Options Purchased — 0.0%
(Cost — $2,157)

 

    8,755  
   

 

 

 

Total Investments Before Options Written — 100.4%
(Cost — $414,339,215)

 

    358,883,818  
   

 

 

 

Options Written — (0.3)%
(Premiums Received — $3,557,927)

 

    (1,051,873
   

 

 

 

Total Investments, Net of Options Written — 100.1%
(Cost — $410,781,288)

 

    357,831,945  

Liabilities in Excess of Other Assets — (0.1)%

 

    (441,371
   

 

 

 

Net Assets — 100.0%

 

  $ 357,390,574  
   

 

 

 

 

(a) 

All or a portion of the security has been pledged and/or segregated as collateral in connection with outstanding exchange-traded options written.

(b) 

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

(c) 

Non-income producing security.

(d) 

Annualized 7-day yield as of period end.

 
(e) 

During the year ended December 31, 2018, 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
12/31/17
     Net
Activity
     Shares
Held at
12/31/18
     Value at
12/31/18
     Income      Net
Realized
Gain (Loss) (a)
     Change in
Unrealized
Appreciation
(Depreciation)
 

BlackRock Liquidity Funds, T-Fund, Institutional Class

     3,870,844        1,136,131        5,006,975      $ 5,006,975      $ 78,939      $      $  
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Includes net capital gain distributions, if applicable.

 

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

Derivative Financial Instruments Outstanding as of Period End

Exchange-Traded Options Purchased

 

Description    Number of
Contracts
       Expiration
Date
       Exercise
Price
       Notional
Amount (000)
       Value  
Call                                                   

Exxon Mobil Corp.

     206          01/04/19        USD     77.00        USD     1,405        $ 7,725  

Exxon Mobil Corp.

     206          01/11/19        USD     78.00        USD     1,405          1,030  
                          

 

 

 
                           $ 8,755  
                          

 

 

 

 

 

SCHEDULES OF INVESTMENTS      25  


Schedule of Investments  (continued)

December 31, 2018

  

BlackRock Energy and Resources Trust (BGR)

 

Exchange-Traded Options Written

 

Description    Number of
Contracts
       Expiration
Date
      

Exercise

Price

       Notional
Amount (000)
       Value  
Call                                                   

Anadarko Petroleum Corp.

     159          01/04/19        USD     55.00        USD     697        $ (954

ConocoPhillips

     355          01/04/19        USD     68.00        USD     2,213          (1,065

Devon Energy Corp.

     343          01/04/19        USD     28.50        USD     773          (1,372

EOG Resources, Inc.

     111          01/04/19        USD     105.00        USD     968          (444

Exxon Mobil Corp.

     206          01/04/19        USD     80.00        USD     1,405          (412

Marathon Petroleum Corp.

     26          01/04/19        USD     67.00        USD     153          (104

Pioneer Natural Resources Co.

     47          01/04/19        USD     152.50        USD     618          (2,350

Royal Dutch Shell PLC — ADR, Class A

     764          01/04/19        USD     61.50        USD     4,452          (30,560

Schlumberger Ltd.

     114          01/04/19        USD     42.50        USD     411          (114

Valero Energy Corp.

     135          01/04/19        USD     84.00        USD     1,012          (540

Williams Cos., Inc.

     61          01/04/19        USD     25.50        USD     135          (305

Williams Cos., Inc.

     137          01/04/19        USD     27.25        USD     302           

Chevron Corp.

     138          01/11/19        USD     119.00        USD     1,501          (690

ConocoPhillips

     37          01/11/19        USD     71.00        USD     231          (148

EOG Resources, Inc.

     91          01/11/19        USD     112.00        USD     794          (546

Exxon Mobil Corp.

     206          01/11/19        USD     80.00        USD     1,405          (618

Halliburton Co.

     195          01/11/19        USD     32.00        USD     518          (585

Halliburton Co.

     285          01/11/19        USD     33.53        USD     758          (1

Marathon Petroleum Corp.

     97          01/11/19        USD     65.00        USD     572          (1,164

Marathon Petroleum Corp.

     136          01/11/19        USD     65.50        USD     803          (1,156

Pioneer Natural Resources Co.

     84          01/11/19        USD     143.00        USD     1,105          (5,670

Royal Dutch Shell PLC — ADR, Class A

     359          01/11/19        USD     60.00        USD     2,092          (11,668

Schlumberger Ltd.

     114          01/11/19        USD     42.50        USD     411          (342

Valero Energy Corp.

     135          01/11/19        USD     84.01        USD     1,012          (1,560

Williams Cos., Inc.

     45          01/11/19        USD     26.00        USD     99          (945

Williams Cos., Inc.

     163          01/11/19        USD     25.01        USD     359          (23

Williams Cos., Inc.

     61          01/11/19        USD     25.18        USD     135          (6

Anadarko Petroleum Corp.

     248          01/18/19        USD     60.00        USD     1,087          (1,240

Anadarko Petroleum Corp.

     32          01/18/19        USD     55.00        USD     140          (144

Baker Hughes a GE Co.

     580          01/18/19        USD     26.00        USD     1,247          (14,500

Chevron Corp.

     121          01/18/19        USD     120.00        USD     1,316          (1,815

Concho Resources, Inc.

     151          01/18/19        USD     135.00        USD     1,552          (2,265

ConocoPhillips

     108          01/18/19        USD     67.50        USD     673          (3,834

Devon Energy Corp.

     267          01/18/19        USD     30.00        USD     602          (267

Encana Corp.

     1,466          01/18/19        CAD     12.00        CAD     1,155          (4,295

EOG Resources, Inc.

     89          01/18/19        USD     100.00        USD     776          (2,314

Halliburton Co.

     195          01/18/19        USD     33.00        USD     518          (487

Halliburton Co.

     287          01/18/19        USD     35.45        USD     763          (1

Marathon Petroleum Corp.

     26          01/18/19        USD     67.50        USD     153          (325

Noble Energy, Inc.

     564          01/18/19        USD     27.50        USD     1,058          (2,820

Patterson-UTI Energy, Inc.

     399          01/18/19        USD     14.00        USD     413          (3,990

Pioneer Natural Resources Co.

     95          01/18/19        USD     160.00        USD     1,249          (3,800

Royal Dutch Shell PLC — ADR, Class A

     343          01/18/19        USD     62.50        USD     1,999          (4,287

Schlumberger Ltd.

     150          01/18/19        USD     50.00        USD     541          (450

Suncor Energy, Inc.

     230          01/18/19        CAD     48.00        CAD     877          (842

Suncor Energy, Inc.

     7,500          01/18/19        CAD     46.00        CAD     286          (302

TransCanada Corp.

     535          01/18/19        CAD     54.00        CAD     2,608          (2,939

Valero Energy Corp.

     87          01/18/19        USD     90.00        USD     652          (391

Valero Energy Corp.

     208          01/18/19        USD     87.50        USD     1,559          (1,352

Williams Cos., Inc.

     244          01/18/19        USD     26.00        USD     538          (854

Williams Cos., Inc.

     163          01/18/19        USD     25.00        USD     359          (815

Anadarko Petroleum Corp.

     80          01/25/19        USD     50.50        USD     351          (2,480

Baker Hughes a GE Co.

     53          01/25/19        USD     23.12        USD     114          (1,233

Chevron Corp.

     70          01/25/19        USD     119.00        USD     762          (3,325

ConocoPhillips

     154          01/25/19        USD     68.00        USD     960          (5,929

Devon Energy Corp.

     243          01/25/19        USD     27.50        USD     548          (1,822

EOG Resources, Inc.

     82          01/25/19        USD     108.00        USD     715          (2,132

Exxon Mobil Corp.

     522          01/25/19        USD     79.00        USD     3,560          (2,871

Halliburton Co.

     158          01/25/19        USD     30.50        USD     420          (3,002

Marathon Petroleum Corp.

     273          01/25/19        USD     65.50        USD     1,611          (10,511

Royal Dutch Shell PLC — ADR, Class A

     360          01/25/19        USD     60.50        USD     2,098          (20,700

Schlumberger Ltd.

     136          01/25/19        USD     45.00        USD     491          (612

 

 

26    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (continued)

December 31, 2018

  

BlackRock Energy and Resources Trust (BGR)

 

Exchange-Traded Options Written (continued)

 

Description    Number of
Contracts
       Expiration
Date
      

Exercise

Price

       Notional
Amount (000)
       Value  
Call                                                   

Valero Energy Corp.

     107          01/25/19        USD     78.00        USD     802        $ (18,404

Williams Cos., Inc.

     363          01/25/19        USD     25.00        USD     800          (2,359

Williams Cos., Inc.

     46          01/25/19        USD     26.02        USD     101          (350

Anadarko Petroleum Corp.

     32          02/01/19        USD     51.00        USD     140          (1,232

Baker Hughes a GE Co.

     53          02/01/19        USD     23.12        USD     114          (1,422

ConocoPhillips

     162          02/01/19        USD     65.00        USD     1,010          (23,085

Devon Energy Corp.

     243          02/01/19        USD     27.50        USD     548          (3,159

EOG Resources, Inc.

     112          02/01/19        USD     99.00        USD     977          (6,664

Exxon Mobil Corp.

     380          02/01/19        USD     71.00        USD     2,591          (49,020

Exxon Mobil Corp.

     205          02/01/19        USD     70.00        USD     1,398          (34,235

Marathon Petroleum Corp.

     187          02/01/19        USD     60.50        USD     1,103          (39,364

Pioneer Natural Resources Co.

     51          02/01/19        USD     138.00        USD     671          (20,400

Royal Dutch Shell PLC — ADR, Class A

     359          02/01/19        USD     58.50        USD     2,092          (60,133

Royal Dutch Shell PLC — ADR, Class A

     360          02/06/19        USD     58.51        USD     2,098          (55,452

Exxon Mobil Corp.

     205          02/08/19        USD     70.01        USD     1,398          (24,206

Anadarko Petroleum Corp.

     67          02/15/19        USD     55.00        USD     294          (1,742

Canadian Natural Resources Ltd.

     792          02/15/19        CAD     34.00        CAD     2,609          (78,608

Chevron Corp.

     138          02/15/19        USD     111.00        USD     1,501          (40,433

Concho Resources, Inc.

     36          02/15/19        USD     105.00        USD     370          (19,800

Concho Resources, Inc.

     154          02/15/19        USD     112.00        USD     1,583          (47,341

ConocoPhillips

     101          02/15/19        USD     67.50        USD     630          (12,423

ConocoPhillips

     51          02/15/19        USD     65.00        USD     318          (10,634

Exxon Mobil Corp.

     379          02/15/19        USD     80.00        USD     2,584          (4,358

Exxon Mobil Corp.

     207          02/15/19        USD     70.00        USD     1,412          (39,434

Noble Energy, Inc.

     390          02/15/19        USD     21.75        USD     732          (12,929

Patterson-UTI Energy, Inc.

     344          02/15/19        USD     15.00        USD     356          (3,440

Williams Cos., Inc.

     320          02/15/19        USD     26.00        USD     706          (7,840

Williams Cos., Inc.

     363          02/15/19        USD     25.00        USD     800          (8,530
                          

 

 

 
                           $ (799,285
                          

 

 

 

OTC Options Written

 

Description    Counterparty    Number of
Contracts
     Expiration
Date
     Exercise
Price
     Notional
Amount (000)
     Value  
Call                                                

Galp Energia SGPS SA

   Goldman Sachs International      36,800        01/03/19      EUR     14.70      EUR     506      $ (8

Suncor Energy, Inc.

   Goldman Sachs International      11,600        01/03/19      CAD     46.20      CAD     442         

BP PLC

   Barclays Bank PLC      311,000        01/04/19      GBP     5.52      GBP     1,543         

BP PLC

   UBS AG      255,500        01/04/19      GBP     5.38      GBP     1,267        (26

Suncor Energy, Inc.

   Goldman Sachs International      27,600        01/04/19      CAD     44.18      CAD     1,052         

Suncor Energy, Inc.

   Credit Suisse International      11,200        01/07/19      CAD     46.00      CAD     427        (8

CNOOC Ltd.

   UBS AG      407,000        01/08/19      HKD     14.23      HKD     4,908        (233

BP PLC

   Morgan Stanley & Co. International PLC      270,000        01/09/19      GBP     5.28      GBP     1,339        (4,129

TOTAL SA

   Morgan Stanley & Co. International PLC      40,000        01/09/19      EUR     53.35      EUR     1,842        (12

Oil Search Ltd.

   UBS AG      190,000        01/10/19      AUD     7.56      AUD     1,359        (3,822

Suncor Energy, Inc.

   Credit Suisse International      11,300        01/11/19      CAD     45.48      CAD     431        (2

CNOOC Ltd.

   UBS AG      407,000        01/15/19      HKD     14.23      HKD     4,908        (775

Suncor Energy, Inc.

   Goldman Sachs International      27,700        01/15/19      CAD     44.39      CAD     1,056        (676

BP PLC

   Morgan Stanley & Co. International PLC      270,000        01/16/19      GBP     5.33      GBP     1,339        (6,916

Galp Energia SGPS SA

   Credit Suisse International      36,800        01/16/19      EUR     14.92      EUR     506        (1,125

TOTAL SA

   Credit Suisse International      46,400        01/16/19      EUR     48.97      EUR     2,136        (6,368

Canadian Natural Resources Ltd.

   Credit Suisse International      34,000        01/23/19      CAD     37.51      CAD     1,120        (4,310

Encana Corp.

   Credit Suisse International      34,300        01/23/19      CAD     8.33      CAD     270        (6,793

Suncor Energy, Inc.

   Credit Suisse International      25,400        01/23/19      CAD     42.56      CAD     969        (2,870

TOTAL SA

   UBS AG      28,200        01/23/19      EUR     50.27      EUR     1,298        (2,315

Royal Dutch Shell PLC — ADR, Class A

   Goldman Sachs International      40,700        01/24/19      GBP     24.16      GBP     940        (11,593

TOTAL SA

   Credit Suisse International      27,900        01/29/19      EUR     48.58      EUR     1,285        (10,950

BP PLC — ADR

   UBS AG      300,000        01/31/19      GBP     5.36      GBP     1,488        (15,459

TransCanada Corp.

   Deutsche Bank AG      26,800        01/31/19      CAD     51.91      CAD     1,307        (4,379

Suncor Energy, Inc.

   Goldman Sachs International      19,800        02/01/19      CAD     43.81      CAD     755        (2,131

CNOOC Ltd.

   JPMorgan Chase Bank N.A.      50,000        02/04/19      HKD     12.88      HKD     603        (1,746

 

 

SCHEDULES OF INVESTMENTS      27  


Schedule of Investments  (continued)

December 31, 2018

  

BlackRock Energy and Resources Trust (BGR)

 

OTC Options Written (continued)

 

Description    Counterparty    Number of
Contracts
     Expiration
Date
     Exercise
Price
     Notional
Amount (000)
     Value  
Call                                                

BP PLC — ADR

   Credit Suisse International      237,200        02/06/19      GBP     5.13      GBP     1,177      $ (34,253

Canadian Natural Resources Ltd.

   Credit Suisse International      34,000        02/06/19      CAD     37.51      CAD     1,120        (9,398

Galp Energia SGPS SA

   Credit Suisse International      39,200        02/06/19      EUR     14.15      EUR     539        (12,520

Oil Search Ltd.

   UBS AG      124,300        02/06/19      AUD     7.49      AUD     889        (13,311

Suncor Energy, Inc.

   Goldman Sachs International      23,100        02/07/19      CAD     37.66      CAD     881        (32,427

Baker Hughes a GE Co.

   Deutsche Bank AG      24,500        02/08/19      USD     22.01      USD     527        (16,318

TOTAL SA

   UBS AG      35,600        02/12/19      EUR     48.21      EUR     1,639        (25,175

Royal Dutch Shell PLC — ADR, Class A

   Goldman Sachs International      40,700        02/13/19      GBP     24.39      GBP     940        (15,705

Suncor Energy, Inc.

   Goldman Sachs International      15,500        02/14/19      CAD     41.73      CAD     591        (6,835
                     

 

 

 
   $ (252,588
  

 

 

 

Balances Reported in the Statements of Assets and Liabilities for Options Written

 

     

Swap

Premiums

Paid

     Swap
Premiums
Received
     Unrealized
Appreciation
     Unrealized
Depreciation
     Value  

Options Written

     N/A        N/A      $ 2,540,288      $ (34,234    $ (1,051,873

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

      Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Assets — Derivative Financial Instruments

 

              

Options purchased

                    

Investments at value — unaffiliated(a)

   $      $      $ 8,755      $      $      $      $ 8,755  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities — Derivative Financial Instruments

 

              

Options written

                    

Options written at value

   $      $      $ 1,051,873      $      $      $      $ 1,051,873  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Includes options purchased at value as reported in the Schedule of Investments.

 

For the period ended December 31, 2018, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

      Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Net Realized Gain (Loss) from:

 

              

Options purchased(a)

   $      $      $ 6,138      $      $      $      $ 6,138  

Options written

                   (5,634,691                           (5,634,691
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $      $      $ (5,628,553    $      $      $      $ (5,628,553
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(a) Options purchased are included in net realized gain (loss) from investments.

  

Net Change in Unrealized Appreciation (Depreciation) on:

 

           

Options purchased(a)

   $      $      $ 6,598      $      $      $      $ 6,598  

Options written

                   6,855,978                             6,855,978  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $      $      $ 6,862,576      $      $      $      $ 6,862,576  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Options purchased are included in net change in unrealized appreciation (depreciation) on investments.

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Options:

        

Average value of option contracts purchased

   $ 2,189  

Average value of option contracts written

   $ 2,947,718  

For more information about the Trust’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

 

 

28    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (continued)

December 31, 2018

  

BlackRock Energy and Resources Trust (BGR)

 

Derivative Financial Instruments — Offsetting as of Period End

The Trust’s derivative assets and liabilities (by type) are as follows:

 

      Assets      Liabilities  

Options

   $ 8,755 (a)      $ 1,051,873  

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

     (8,755      (799,285
  

 

 

    

 

 

 

Total derivative assets and liabilities subject to an MNA

   $      $ 252,588  
  

 

 

    

 

 

 

 

  (a) 

Includes options purchased at value which is included in Investments at value — unaffiliated in the Statements of Assets and Liabilities and reported in the Schedule of Investments.

 

The following table presents the Trust’s 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 Trust:

 

Counterparty    Derivative
Liabilities
Subject to
an MNA by
Counterparty
       Derivatives
Available
for Offset
       Non-cash
Collateral
Pledged (a)
       Cash
Collateral
Pledged
       Net Amount
of Derivative
Liabilities (b)
 

Credit Suisse International

   $ 88,597        $        $        $        $ 88,597  

Deutsche Bank AG

     20,697                                     20,697  

Goldman Sachs International

     69,375                   (69,375                  

JPMorgan Chase Bank N.A.

     1,746                                     1,746  

Morgan Stanley & Co. International PLC

     11,057                                     11,057  

UBS AG

     61,116                                     61,116  
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 
   $ 252,588        $        $ (69,375      $        $ 183,213  
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 
  (b) 

Net amount represents the net amount payable due to counterparty in the event of default. Net amount may be offset further by the options written receivable/payable on the Statements of Assets and Liabilities.

 

Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of investments and derivative financial instruments. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, refer to the Notes to Financial Statements.

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:

                 

Common Stocks:

                 

Energy Equipment & Services

   $ 21,590,147        $        $        $ 21,590,147  

Oil, Gas & Consumable Fuels

     251,745,933          80,532,008                   332,277,941  

Short-Term Securities

     5,006,975                            5,006,975  

Options Purchased:

                 

Equity contracts

     8,755                            8,755  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 278,351,810        $ 80,532,008        $        $ 358,883,818  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(a)

                 

Liabilities:

                 

Equity contracts

   $ (614,328      $ (437,545      $        $ (1,051,873
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

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

 

During the year ended December 31, 2018, there were no transfers between levels.

See notes to financial statements.

 

 

SCHEDULES OF INVESTMENTS      29  


Schedule of Investments

December 31, 2018

  

BlackRock Enhanced Capital and Income Fund (CII)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Common Stocks — 99.9%  
Airlines — 1.5%  

Delta Air Lines, Inc.

    206,296     $ 10,294,170  
   

 

 

 
Banks — 10.0%  

Bank of America Corp.(a)

    794,984       19,588,406  

JPMorgan Chase & Co.(b)

    224,576       21,923,109  

Regions Financial Corp.

    323,165       4,323,948  

SunTrust Banks, Inc.

    183,682       9,264,920  

U.S. Bancorp

    266,869       12,195,913  
   

 

 

 
      67,296,296  
Biotechnology — 3.1%  

Biogen, Inc.(c)

    45,057       13,558,553  

Gilead Sciences, Inc.

    117,633       7,357,944  
   

 

 

 
      20,916,497  
Capital Markets — 1.1%  

E*Trade Financial Corp.

    172,462       7,567,633  
   

 

 

 
Chemicals — 2.0%  

DowDuPont, Inc.

    247,850       13,255,018  
   

 

 

 
Commercial Services & Supplies — 1.1%  

KAR Auction Services, Inc.

    152,455       7,275,153  
   

 

 

 
Communications Equipment — 3.0%  

Cisco Systems, Inc.

    475,156       20,588,509  
   

 

 

 
Consumer Finance — 1.7%  

Ally Financial, Inc.

    303,695       6,881,729  

SLM Corp.(c)

    529,692       4,401,740  
   

 

 

 
      11,283,469  
Containers & Packaging — 1.3%  

Packaging Corp. of America

    103,230       8,615,576  
   

 

 

 
Electric Utilities — 1.7%  

FirstEnergy Corp.

    306,003       11,490,413  
   

 

 

 
Electrical Equipment — 1.3%  

Emerson Electric Co.

    151,192       9,033,722  
   

 

 

 
Electronic Equipment, Instruments & Components — 1.7%  

CDW Corp.

    139,609       11,315,309  
   

 

 

 
Food & Staples Retailing — 2.8%  

Walmart, Inc.

    203,846       18,988,255  
   

 

 

 
Food Products — 1.1%  

J.M. Smucker Co.

    82,071       7,672,818  
   

 

 

 
Health Care Equipment & Supplies — 1.5%  

Baxter International, Inc.

    152,346       10,027,414  
   

 

 

 
Health Care Providers & Services — 8.1%  

Centene Corp.(c)

    75,344       8,687,163  

Humana, Inc.

    50,551       14,481,851  

Laboratory Corp. of America Holdings(c)

    100,804       12,737,593  

UnitedHealth Group, Inc.

    75,532       18,816,532  
   

 

 

 
      54,723,139  
Hotels, Restaurants & Leisure — 1.5%  

Carnival Corp.

    203,087       10,012,189  
   

 

 

 
Household Durables — 2.2%  

D.R. Horton, Inc.

    336,895       11,676,781  

Lennar Corp., Class A

    87,906       3,441,520  
   

 

 

 
      15,118,301  
Independent Power and Renewable Electricity Producers — 1.2%  

AES Corp.

    540,639       7,817,640  
   

 

 

 
Security   Shares     Value  
Insurance — 1.6%  

Assured Guaranty Ltd.

    186,691     $ 7,146,532  

Hartford Financial Services Group, Inc.

    77,656       3,451,809  
   

 

 

 
      10,598,341  
Interactive Media & Services — 5.2%  

Alphabet, Inc., Class A(c)

    32,634       34,101,225  

Alphabet, Inc., Class C(c)

    1,038       1,074,963  
   

 

 

 
      35,176,188  
IT Services — 2.8%  

Amdocs Ltd.

    84,510       4,950,596  

Cognizant Technology Solutions Corp., Class A

    223,174       14,167,085  
   

 

 

 
      19,117,681  
Machinery — 1.3%  

Fortive Corp.

    130,341       8,818,872  
   

 

 

 
Media — 3.9%  

Comcast Corp., Class A(a)

    561,018       19,102,663  

DISH Network Corp., Class A(c)

    284,678       7,108,409  
   

 

 

 
      26,211,072  
Metals & Mining — 1.2%  

Freeport-McMoRan, Inc.

    522,764       5,389,697  

Rio Tinto PLC — ADR

    57,596       2,792,254  
   

 

 

 
      8,181,951  
Multiline Retail — 1.5%  

Dollar General Corp.

    91,112       9,847,385  
   

 

 

 
Oil, Gas & Consumable Fuels — 6.6%  

BP PLC — ADR

    338,059       12,819,197  

Chevron Corp.

    133,428       14,515,632  

Marathon Oil Corp.

    277,252       3,975,794  

Suncor Energy, Inc.

    464,851       13,001,882  
   

 

 

 
      44,312,505  
Pharmaceuticals — 5.8%  

Novartis AG — ADR

    87,887       7,541,583  

Novo Nordisk A/S — ADR

    192,710       8,878,150  

Pfizer, Inc.

    527,634       23,031,224  
   

 

 

 
      39,450,957  
Road & Rail — 2.2%  

Norfolk Southern Corp.

    97,974       14,651,032  
   

 

 

 
Semiconductors & Semiconductor Equipment — 1.2%  

Taiwan Semiconductor Manufacturing Co. Ltd. — ADR

    211,805       7,817,722  
   

 

 

 
Software — 5.6%  

Microsoft Corp.(a)

    372,626       37,847,623  
   

 

 

 
Specialty Retail — 4.8%  

Lowe’s Cos., Inc.(a)

    166,904       15,415,253  

O’Reilly Automotive, Inc.(c)

    35,072       12,076,342  

Urban Outfitters, Inc.(c)

    149,938       4,977,942  
   

 

 

 
      32,469,537  
Technology Hardware, Storage & Peripherals — 6.1%  

Apple, Inc.

    231,686       36,546,150  

Dell Technologies, Inc., Class C(c)

    91,033       4,448,776  
   

 

 

 
      40,994,926  
Tobacco — 2.2%  

Altria Group, Inc.(a)(b)

    305,108       15,069,284  
   

 

 

 

Total Long-Term Investments — 99.9%
(Cost — $578,306,710)

 

    673,856,597  
   

 

 

 
 

 

 

30    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (continued)

December 31, 2018

  

BlackRock Enhanced Capital and Income Fund (CII)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Short-Term Securities — 2.2%  

BlackRock Liquidity Funds, T-Fund, Institutional Class, 2.32%(d)(e)

    14,789,354     $ 14,789,354  
   

 

 

 

Total Short-Term Securities — 2.2%
(Cost — $14,789,354)

 

    14,789,354  
   

 

 

 

Options Purchased — 0.0%
(Cost — $10,371)

 

    2,522  
   

 

 

 

Total Investments Before Options Written — 102.1%
(Cost — $593,106,435)

 

    688,648,473  
   

 

 

 

Options Written — (0.5)%
(Premiums Received — $8,128,325)

 

    (3,567,851
   

 

 

 

Total Investments, Net of Options Written — 101.6%
(Cost — $584,978,110)

 

    685,080,622  

Liabilities in Excess of Other Assets — (1.6)%

 

    (11,003,676
   

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 674,076,946  
   

 

 

 

 

(a) 

All or a portion of the security has been pledged and/or segregated as collateral in connection with outstanding exchange-traded options written.

(b) 

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

(c) 

Non-income producing security.

(d) 

Annualized 7-day yield as of period end.

 
(e) 

During the year ended December 31, 2018, investments in issuers considered to be affiliates of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate   Shares
Investment
Value Held at
12/31/17
    Net
Activity
    Shares
Investment
Value Held at
12/31/18
    Value at
12/31/18
    Income     Net
Realized
Gain (Loss) (a)
    Change in
Unrealized
Appreciation
(Depreciation)
 

BlackRock Liquidity Funds, T-Fund, Institutional Class

    3,142,974       11,646,380       14,789,354     $ 14,789,354     $ 80,954     $     $  

SL Liquidity Series, LLC, Money Market Series

                            13,698 (b)       (97      
       

 

 

   

 

 

   

 

 

   

 

 

 
        $ 14,789,354     $ 94,652     $ (97   $  
       

 

 

   

 

 

   

 

 

   

 

 

 

 

  (a) 

Includes net capital gain distributions, if applicable.

 
  (b) 

Represents securities lending income earned from the reinvestments of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

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

Derivative Financial Instruments Outstanding as of Period End

Exchange-Traded Options Purchased

 

Description    Number of
Contracts
       Expiration
Date
       Exercise
Price
       Notional
Amount (000)
       Value  
Call                                                   

Bank of America Corp.

     181          01/04/19        USD     28.00        USD     446        $ 272  

Altria Group, Inc.

     309          01/18/19        USD     62.50        USD     1,526          1,390  

Bank of America Corp.

     344          01/18/19        USD     29.00        USD     848          860  
                          

 

 

 
                           $ 2,522  
                          

 

 

 

Exchange-Traded Options Written

 

Description    Number of
Contracts
       Expiration
Date
      

Exercise

Price

       Notional
Amount (000)
       Value  
Call                                                   

U. S. Bancorp

     61          01/03/19        USD     55.50        USD     279        $  

Altria Group, Inc.

     430          01/04/19        USD     55.50        USD     2,214          (16,770

Bank of America Corp.

     363          01/04/19        USD     29.00        USD     894          (363

Baxter International, Inc.

     141          01/04/19        USD     68.50        USD     928          (3,102

Biogen, Inc.

     46          01/04/19        USD     337.50        USD     1,384          (9,890

Carnival Corp.

     410          01/04/19        USD     63.50        USD     2,021          (2,050

Chevron Corp.

     177          01/04/19        USD     118.00        USD     1,926          (531

 

 

SCHEDULES OF INVESTMENTS      31  


Schedule of Investments  (continued)

December 31, 2018

  

BlackRock Enhanced Capital and Income Fund (CII)

 

Exchange-Traded Options Written (continued)

 

Description    Number of
Contracts
       Expiration
Date
      

Exercise

Price

       Notional
Amount (000)
       Value  
Call (continued)                                                   

Cognizant Technology Solutions Corp., Class A

     162          01/04/19        USD     72.00        USD     1,028        $ (8,100

D.R. Horton, Inc.

     371          01/04/19        USD     39.00        USD     1,286          (4,823

Delta Air Lines, Inc.

     234          01/04/19        USD     58.00        USD     1,168          (11,700

Delta Air Lines, Inc.

     234          01/04/19        USD     61.00        USD     1,168          (11,700

DowDuPont, Inc.

     212          01/04/19        USD     58.50        USD     1,134          (1,060

Emerson Electric Co.

     215          01/04/19        USD     67.00        USD     1,285          (12,900

Freeport-McMoRan, Inc.

     71          01/04/19        USD     12.50        USD     73          (71

Gilead Sciences, Inc.

     224          01/04/19        USD     69.50        USD     1,401          (448

Hartford Financial Services Group, Inc.

     316          01/04/19        USD     45.00        USD     1,405          (8,374

Humana, Inc.

     67          01/04/19        USD     342.50        USD     1,919          (1,005

JPMorgan Chase & Co.

     118          01/04/19        USD     112.00        USD     1,152          (5,900

Marathon Oil Corp.

     202          01/04/19        USD     17.50        USD     290          (3,636

O’Reilly Automotive, Inc.

     34          01/04/19        USD     355.00        USD     1,171          (3,032

Pfizer, Inc.

     377          01/04/19        USD     43.50        USD     1,646          (19,793

Pfizer, Inc.

     94          01/04/19        USD     44.50        USD     410          (1,598

Pfizer, Inc.

     94          01/04/19        USD     46.50        USD     410          (376

Pfizer, Inc.

     220          01/04/19        USD     45.00        USD     960          (1,540

U. S. Bancorp

     61          01/04/19        USD     55.50        USD     279           

Urban Outfitters, Inc.

     38          01/04/19        USD     40.00        USD     126          (1,900

Urban Outfitters, Inc.

     224          01/04/19        USD     39.00        USD     744          (11,200

Alphabet, Inc., Class A

     4          01/11/19        USD     1,100.00        USD     418          (1,840

Altria Group, Inc.

     430          01/11/19        USD     55.01        USD     2,124          (141

Apple, Inc.

     280          01/11/19        USD     180.96        USD     4,417          (956

BP PLC — ADR

     360          01/11/19        USD     42.00        USD     1,365          (1,080

Bank of America Corp.

     92          01/11/19        USD     29.00        USD     227          (276

Bank of America Corp.

     377          01/11/19        USD     27.00        USD     929          (754

Bank of America Corp.

     334          01/11/19        USD     26.50        USD     823          (1,336

Bank of America Corp.

     98          01/11/19        USD     25.00        USD     241          (3,822

Bank of America Corp.

     166          01/11/19        USD     28.23        USD     409          (52

Biogen, Inc.

     13          01/11/19        USD     327.50        USD     391          (1,787

Carnival Corp.

     221          01/11/19        USD     60.00        USD     1,090          (1,105

Chevron Corp.

     125          01/11/19        USD     119.00        USD     1,360          (625

Comcast Corp., Class A

     512          01/11/19        USD     38.00        USD     1,743          (2,560

D.R. Horton, Inc.

     395          01/11/19        USD     39.00        USD     1,369          (4,345

DISH Network Corp., Class A

     235          01/11/19        USD     34.00        USD     587          (2,350

Delta Air Lines, Inc.

     169          01/11/19        USD     58.00        USD     843          (1,014

DowDuPont, Inc.

     145          01/11/19        USD     58.50        USD     775          (870

DowDuPont, Inc.

     163          01/11/19        USD     55.00        USD     872          (9,535

Emerson Electric Co.

     162          01/11/19        USD     66.00        USD     968          (2,430

FirstEnergy Corp.

     100          01/11/19        USD     39.23        USD     376          (975

Fortive Corp.

     136          01/11/19        USD     74.00        USD     920          (17,000

Freeport-McMoRan, Inc.

     516          01/11/19        USD     11.00        USD     532          (6,450

Freeport-McMoRan, Inc.

     482          01/11/19        USD     11.93        USD     497          (520

Freeport-McMoRan, Inc.

     71          01/11/19        USD     12.20        USD     73          (38

Gilead Sciences, Inc.

     80          01/11/19        USD     72.00        USD     500          (480

Hartford Financial Services Group, Inc.

     316          01/11/19        USD     45.00        USD     1,405          (18,012

Lowe’s Cos., Inc.

     94          01/11/19        USD     96.00        USD     868          (6,157

Marathon Oil Corp.

     202          01/11/19        USD     17.50        USD     290          (808

Microsoft Corp.

     319          01/11/19        USD     112.00        USD     3,240          (3,828

Pfizer, Inc.

     95          01/11/19        USD     46.50        USD     415          (855

Pfizer, Inc.

     220          01/11/19        USD     45.00        USD     960          (5,280

U.S. Bancorp

     179          01/11/19        USD     54.50        USD     818          (716

U.S. Bancorp

     98          01/11/19        USD     54.00        USD     448          (392

Urban Outfitters, Inc.

     224          01/11/19        USD     39.00        USD     744          (10,080

Walmart, Inc.

     378          01/11/19        USD     99.00        USD     3,521          (5,481

AES Corp.

     400          01/18/19        USD     16.00        USD     578          (2,000

AES Corp.

     380          01/18/19        USD     15.40        USD     549          (2,564

Ally Financial, Inc.

     642          01/18/19        USD     27.00        USD     1,455          (9,630

Ally Financial, Inc.

     124          01/18/19        USD     24.00        USD     281          (3,720

Alphabet, Inc., Class A

     4          01/18/19        USD     1,130.00        USD     418          (1,660

Alphabet, Inc., Class A

     21          01/18/19        USD     1,100.00        USD     2,194          (20,790

Altria Group, Inc.

     309          01/18/19        USD     67.50        USD     1,526          (927

 

 

32    2018 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (continued)

December 31, 2018

  

BlackRock Enhanced Capital and Income Fund (CII)

 

Exchange-Traded Options Written (continued)

 

Description    Number of
Contracts
       Expiration
Date
      

Exercise

Price

       Notional
Amount (000)
       Value  
Call (continued)                                                   

Altria Group, Inc.

     465          01/18/19        USD     55.00        USD     2,297        $ (5,115

Amdocs Ltd.

     235          01/18/19        USD     65.00        USD     1,377          (15,275

Assured Guaranty Ltd.

     200          01/18/19        USD     42.00        USD     766          (900

Assured Guaranty Ltd.

     387          01/18/19        USD     39.00        USD     1,481          (25,155

BP PLC — ADR

     334          01/18/19        USD     42.00        USD     1,267          (1,002

BP PLC — ADR

     221          01/18/19        USD     41.00        USD     838          (1,547

Bank of America Corp.

     688          01/18/19        USD     30.00        USD     1,695          (688

Baxter International, Inc.

     121          01/18/19        USD     65.40        USD     796          (20,961

Biogen, Inc.

     30          01/18/19        USD     340.00        USD     903          (2,025

CDW Corp.

     332          01/18/19        USD     90.00        USD     2,691          (5,810

CDW Corp.

     108          01/18/19        USD     85.00        USD     875          (13,230

Carnival Corp.

     120          01/18/19        USD     60.00        USD     592          (600

Centene Corp.

     234          01/18/19        USD     135.00        USD     2,698          (1,170

Chevron Corp.

     124          01/18/19        USD     120.00        USD     1,349          (1,860

Chevron Corp.

     209          01/18/19        USD     125.00        USD     2,274          (731

Cisco Systems, Inc.

     407          01/18/19        USD     46.00        USD     1,764          (9,361

Cognizant Technology Solutions Corp., Class A

     20          01/18/19        USD     67.50        USD     127          (550

Cognizant Technology Solutions Corp., Class A

     163          01/18/19        USD     71.00        USD     1,035          (917

Comcast Corp., Class A

     273          01/18/19        USD     38.75        USD     930          (682

DISH Network Corp., Class A

     277          01/18/19        USD     35.00        USD     692          (2,770

DISH Network Corp., Class A

     182          01/18/19        USD     32.50        USD     454          (1,365

Delta Air Lines, Inc.

     231          01/18/19        USD     57.50        USD     1,153          (2,541

Dollar General Corp.

     129          01/18/19        USD     115.00        USD     1,394          (7,740

DowDuPont, Inc.

     365          01/18/19        USD     60.00        USD     1,952          (3,285

DowDuPont, Inc.

     163          01/18/19        USD     55.00        USD     872          (15,893

E*Trade Financial Corp.

     412          01/18/19        USD     50.00        USD     1,808          (3,914

Emerson Electric Co.

     215          01/18/19        USD     67.50        USD     1,285          (1,612

FirstEnergy Corp.

     104          01/18/19        USD     40.00        USD     391          (1,040

Fortive Corp.

     320          01/18/19        USD     80.00        USD     2,165          (56,000

Freeport-McMoRan, Inc.

     71          01/18/19        USD     13.00        USD     73          (106

Freeport-McMoRan, Inc.

     482          01/18/19        USD     12.00        USD     497          (2,410

Freeport-McMoRan, Inc.

     516          01/18/19        USD     11.00        USD     532          (10,578

Gilead Sciences, Inc.

     167          01/18/19        USD     75.00        USD     1,045          (334

Humana, Inc.

     33          01/18/19        USD     320.00        USD     945          (3,300

J.M. Smucker Co.

     62          01/18/19        USD     110.00        USD     580          (310

J.M. Smucker Co.

     154          01/18/19        USD     105.00        USD     1,440          (2,310

JPMorgan Chase & Co.

     270          01/18/19        USD     110.00        USD     2,636          (2,160

JPMorgan Chase & Co.

     83          01/18/19        USD     100.00        USD     810          (13,114

KAR Auction Services, Inc.

     260          01/18/19        USD     60.00        USD     1,241          (1,300

Laboratory Corp. of America Holdings

     301          01/18/19        USD     150.00        USD     3,803          (10,535

Lennar Corp., Class A

     157          01/18/19        USD     45.00        USD     615          (4,553

Lowe’s Cos., Inc.

     131          01/18/19        USD     92.50        USD     1,210          (34,322

Marathon Oil Corp.

     48          01/18/19        USD     18.00        USD     69          (120

Marathon Oil Corp.

     320          01/18/19        USD     15.00        USD     459          (12,800

Microsoft Corp.

     345          01/18/19        USD     110.00        USD     3,504          (16,215

Microsoft Corp.

     33          01/18/19        USD     112.00        USD     335          (1,588

Norfolk Southern Corp.

     160          01/18/19        USD     160.00        USD     2,393          (18,000

Novartis AG — ADR

     130          01/18/19        USD     90.00        USD     1,116          (3,575

Novo Nordisk A/S — ADR

     324          01/18/19        USD     45.00        USD     1,493          (56,700

O’Reilly Automotive, Inc.

     67          01/18/19        USD     360.00        USD     2,307          (30,150

O’Reilly Automotive, Inc.

     33          01/18/19        USD     370.00        USD     1,136          (7,095

Packaging Corp. of America

     17          01/18/19        USD     105.00        USD     142          (510

Packaging Corp. of America

     53          01/18/19        USD     100.00        USD     442          (1,590

Packaging Corp. of America

     283          01/18/19        USD     95.00        USD     2,362          (8,490