Blackstone. Blackstone Real Estate Income Fund. Semi-Annual Report (Unaudited)

Transcription

1 Blackstone Blackstone Real Estate Income Fund Semi-Annual Report (Unaudited) For the Period Ended June 30, 2015

2 TABLE OF CONTENTS Blackstone Real Estate Income Fund Statement of Assets and Liabilities 1 Statement of Operations 2 Statement of Changes in Net Assets 3 Financial Highlights 4 Notes to Financial Statements 5 Supplemental Information 11 Privacy Notice 12 Blackstone Real Estate Income Master Fund Schedule of Investments 14 Statement of Assets and Liabilities 22 Statement of Operations 23 Statement of Changes in Net Assets 24 Statement of Cash Flows 25 Financial Highlights 26 Notes to Financial Statements 27 Supplemental Information 41 Privacy Notice 42

3 Blackstone Real Estate Income Fund Statement of Assets and Liabilities (Unaudited) As of June 30, 2015 Assets: Investment in Master Fund, at fair value $526,020,604 Receivable from Investment Manager 1,653,725 Other assets 33,763 Total assets 527,708,092 Liabilities: Income distribution payable 1,363,065 Payable for shares repurchased 2,672,504 Payable for distribution fees 639,885 Payable for service fees 319,944 Payable to Investment Manager 671,828 Accrued expenses 259,538 Total liabilities 5,926,764 Net Assets $521,781,328 Components of Net Assets: Paid-in capital $508,540,599 Distributions in excess of net investment income (4,424,461) Accumulated net realized gain 4,776,583 Unrealized appreciation/depreciation 12,888,607 Net Assets $521,781,328 Net Asset Value: Net Assets $521,781,328 Shares of beneficial interest outstanding, $0.001 par value, unlimited shares authorized 503,926 Net asset value per share $ 1, See Notes to Financial Statements. 1

4 Blackstone Real Estate Income Fund Statement of Operations (Unaudited) For the Period Ended June 30, 2015 Investment Income: Interest fund level $ 19,349 Interest allocated from Master Fund 16,423,087 Dividends allocated from Master Fund 927,195 Investment income allocated from Master Fund 17,350,282 Expenses allocated from Master Fund excluding Incentive Fees (6,174,611) Incentive Fees allocated from Master Fund (4,317,466) Expenses allocated from Master Fund including Incentive Fees (10,492,077) Net investment income/loss allocated from Master Fund 6,858,205 Total investment income 6,877,554 Expenses: Distribution fees 1,226,735 Service fees 613,368 Registration fees 174,855 Printing and postage fees 126,728 Professional fees 62,072 Amortization of offering costs 146,282 Miscellaneous 22,992 Total expenses 2,373,032 Less expenses reimbursed by Investment Manager 235,584 Net expenses 2,137,448 Net investment income 4,740,106 Realized and Unrealized Gain (Loss) from Master Fund: Net realized gain (loss): Investments 4,217,064 Securities sold short 111,747 Swap contracts 2,893,083 Net realized gain 7,221,894 Net change in unrealized appreciation (depreciation): Investments 10,794,455 Securities sold short 1,353,633 Swap contracts (1,762,595) Net change in unrealized appreciation 10,385,493 Net realized and unrealized gain 17,607,387 Net increase in net assets resulting from operations $ 22,347,493 See Notes to Financial Statements. 2

5 Blackstone Real Estate Income Fund Statement of Changes in Net Assets Six-Months Ended 6/30/2015 (unaudited) Period Ended 12/31/2014 (1) Increase in Net Assets Operations: Net investment income $ 4,740,106 $ 3,215,129 Net realized gain (loss) on investments, securities sold short and swap contracts 7,221,894 (136,868) Net change in unrealized appreciation (depreciation) from investments, securities sold short and swap contracts 10,385,493 2,503,114 Net increase in net assets resulting from operations 22,347,493 5,581,375 Distribution of net investment income to shareholders (8,571,187) (6,146,189) Capital Transactions: Shareholder subscriptions 64,358, ,525,826 Shareholder reinvestments 6,001,616 4,287,895 Shares repurchased (4,869,146) (844,488) Net increase in net assets from capital transactions 65,490, ,969,233 Early withdrawal fees 10,094 Net increase in net assets 79,276, ,404,419 Net Assets: Beginning of period 442,504, ,000 End of period $521,781,328 $442,504,419 Distributions in excess of net investment income $ (4,424,461) $ (593,380) Share Transactions: Beginning of period 440, Shares issued 62, ,890 Reinvestment in Shares 5,792 4,265 Shares repurchased (4,699) (840) End of period 503, ,415 (1) The Fund commenced investment operations on April 1, See Notes to Financial Statements. 3

6 Blackstone Real Estate Income Fund Financial Highlights (For a Share Outstanding Throughout Each Period) Six-Months Ended 6/30/2015 (unaudited) Period Ended 12/31/2014 (1) Net Asset Value, Beginning of Period $1, $1, Income From Investment Operations: Net investment income (2) Net realized and unrealized gain from investments Net income from investment operations Distribution of net investment income to shareholders (17.59) (15.67) Early Withdrawal Fees 0.00 (3) Net Asset Value, End of Period $1, $1, Total Return on Net Asset Value (4) 4.81% 2.04% Ratios to Average Net Assets (5) : Expenses to average net assets for the Fund before reimbursement from Investment Manager and allocated Incentive Fees 4.57% 4.28% Allocated Incentive Fees to average net assets of the Fund 1.75% 0.52% Expenses to average net assets for the Fund before reimbursement from Investment Manager (6) 6.32% 4.80% Reimbursement from Investment Manager (7) (1.20)% (0.57)% Total expenses to average net assets for the Fund after reimbursement from Investment Manager (6) 5.12% 4.23% Net investment income gross of Incentive Fees to average net assets for the Fund 3.67% 1.89% Net investment income to average net assets of the Fund 1.92% 1.37% Supplementary Data: Net assets, end of period (000 omitted) $ 521,781 $ 442,504 Portfolio turnover (8) 42% 31% (1) For the period April 1, 2014 (commencement of investment operations) through December 31, (2) Calculated using average shares outstanding during the period. (3) Represents less than $0.01. (4) Total Return has not been annualized. (5) Financial ratios have been annualized. (6) Includes the Fund s share of the Master Fund s allocated expenses. (7) The reimbursement includes expenses incurred by the Fund and the Master Fund. See Note 5. (8) The Fund is invested solely in the Master Fund, therefore this ratio reflects the portfolio turnover for the Master Fund and has not been annualized. See Notes to Financial Statements. 4

7 1. Organization Blackstone Real Estate Income Fund Notes to Financial Statements For the Period Ended June 30, 2015 (Unaudited) Blackstone Real Estate Income Fund (the Fund ), a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the 1940 Act ), is a continuously offered non-diversified, closed-end management investment company. The Fund s investment objective is to seek long-term total return, with an emphasis on current income, by primarily investing in a broad range of real estate-related debt investments. The Fund pursues its investment objective by investing substantially all of its assets in Blackstone Real Estate Income Master Fund (the Master Fund ), a Delaware statutory trust registered under the 1940 Act as a closed-end management investment company with the same investment objective and substantially the same investment policies as the Fund. The investment manager of the Master Fund and the Fund is Blackstone Real Estate Income Advisors L.L.C. (the Investment Manager ), an investment advisor registered under the Investment Advisers Act of 1940, as amended. The Board of Trustees (the Board and each member thereof, a Trustee ) of the Master Fund and the Fund supervises the conduct of the Master Fund s and the Fund s affairs and, pursuant to their investment management agreements, has engaged the Investment Manager to manage the Master Fund s and the Fund s day-to-day investment activities and operations. The Master Fund s financial statements, which are attached hereto, are an integral part of these financial statements and should be read in conjunction with the Fund s financial statements. At June 30, 2015, the Fund held an 80% ownership interest in the Master Fund. 2. Basis of Presentation The Fund is an investment company that applies the accounting and reporting guidance issued in Topic 946 by the U.S. Financial Accounting Standards Board. The Fund s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ( U.S. GAAP ) and are stated in U.S. dollars. The preparation of the financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the amount of reported assets, liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of income and expenses during the reporting period. Actual results could differ from these estimates and these differences could be material. 3. Significant Accounting Policies Investment in Master Fund The Fund s investment in the Master Fund is recorded at fair value and is based upon the Fund s percentage ownership of the net assets of the Master Fund. The performance of the Fund is directly affected by the performance of the Master Fund. See Note 3 to the Master Fund s financial statements for the determination of fair value of the Master Fund s investments. Investment Transactions and Related Investment Income and Expense Investment transactions are accounted for on a trade date basis. The Fund s net investment income or loss consists of the Fund s pro rata share of the net investment income or loss of the Master Fund, less all expenses of the Fund. Realized and unrealized gains and losses from security transactions consist of the Fund s pro rata share of the Master Fund s realized and unrealized gains and losses. 5

8 Blackstone Real Estate Income Fund Notes to Financial Statements (Continued) For the Period Ended June 30, 2015 (Unaudited) Contingencies Under the Fund s Amended and Restated Agreement and Declaration of Trust (the Declaration of Trust ), the Fund s officers and each Trustee are indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund may enter into contracts that contain a variety of representations and indemnification obligations and expects the risk of loss to be remote. Income Taxes The Fund s policy is to comply with the provisions of Subchapter M of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies and to distribute all of its investment company net taxable investment income and net capital gain realized on investments to its shareholders. Therefore, no federal income tax provision is expected to be required. The Fund plans to file U.S. Federal and various state and local tax returns. At December 31, 2014, the Fund had approximately $2,445,311 of net tax basis capital loss carryforwards, which may be applied against realized net taxable capital gains indefinitely, including short-term losses of $2,445,311. The Fund has reviewed the tax positions for the open tax years as of December 31, 2014 and has determined that no provision for income tax and/or uncertain tax provisions is required in the Fund s financial statements. The Fund s federal tax return for the prior fiscal year remains open subject to examination by the Internal Revenue Service. Dividends and Distributions to Shareholders Dividends from net investment income are expected to be declared and paid quarterly. Distributions from capital gains are expected to be declared and paid at least annually. Dividends and capital gain distributions paid by the Fund will be reinvested in additional common shares of beneficial interest, par value $0.001 per share, of the Fund ( Shares ), unless a shareholder elects not to reinvest in Shares or is otherwise ineligible. Shares purchased by reinvestment are issued at their net asset value on the next valuation date following the ex-dividend date. Offering Costs At June 30, 2015, the Fund had $593,253 payable to the Investment Manager for offering costs paid by the Investment Manager on behalf of the Fund. This amount is subject to the Expense Limitation and Reimbursement Agreement (See Note 5) and is recorded within the payable to Investment Manager on the Statement of Assets and Liabilities. Offering costs will be amortized over 12 months on a straight-line basis beginning with the commencement of operations, subject to the Expense Limitation and Reimbursement Agreement (See Note 5). 4. Fund Terms Issuance of Shares The Fund offers its Shares on a best efforts basis pursuant to a continuous offering registered with the Securities and Exchange Commission. The Fund will issue Shares to eligible investors as of the first business day of the month or at such other times as determined by the Board upon receipt and acceptance of an initial or additional application for Shares. The Fund reserves the right to reject any applications for subscriptions of Shares. Shares are subject to a maximum sales load of up to 3.00%. No public market exists for the Shares, 6

9 Blackstone Real Estate Income Fund Notes to Financial Statements (Continued) For the Period Ended June 30, 2015 (Unaudited) and none is expected to develop. The Shares are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Fund s Declaration of Trust. Repurchase of Shares The Fund may, from time to time, offer to repurchase a portion of its outstanding Shares pursuant to written tenders by shareholders. Repurchases will be made only at such times and on such terms as may be determined by the Board, in its complete and exclusive discretion. Shareholders who tender Shares within the 12 month period following acquisition will be subject to an early withdrawal fee of 2% of the aggregate net asset value of the Shares repurchased by the Fund. In determining whether the Fund should repurchase Shares from shareholders pursuant to written tenders, the Fund s Board will consider the Investment Manager s recommendations. The Investment Manager expects that generally it will recommend to the Fund s Board that the Fund offer to repurchase Shares from shareholders on a quarterly basis. Since the Fund s assets will consist primarily of its investment in the Master Fund, the ability of the Fund to have its Shares in the Master Fund repurchased would be subject to the Master Fund s repurchase policy. The timing, terms and conditions of any particular repurchase offer may vary at the sole discretion of the Board. Repurchase offers will generally commence approximately 95 days prior to the last day of March, June, September and December each year (each such last date is referred to as a Tender Valuation Date ) and remain open for approximately 30 calendar days. The early withdrawal fees for the Fund for the period ended June 30, 2015 were $10, Investment Adviser Fees and Other Related Party Transactions Management Fee The Master Fund pays the Investment Manager a management fee (the Management Fee ) quarterly in arrears (accrued on a monthly basis), equal to 1.50% (annualized) of the Master Fund s Managed Assets. Managed Assets is defined as net assets, plus the amount of leverage for investment purposes. The Management Fee for any period less than a full quarter will be prorated. The Investment Manager agreed to temporarily reduce its Management Fee to an annualized rate of 0.75% of the Master Fund s Managed Assets, effective from October 1, 2014 until December 31, 2015 (which may be extended, terminated or modified by the Investment Manager in its sole discretion). The Investment Manager will not charge the Fund a management fee as long as substantially all of the assets of the Fund are invested in the Master Fund. The Fund indirectly bears a pro rata share of the Master Fund s Management Fee, which was $2,721,202, net of voluntary waivers, for the period ended June 30, Incentive Fee The Master Fund accrues a performance-based incentive fee (the Incentive Fee ) on a monthly basis throughout the fiscal year of the Master Fund. The Incentive Fee is paid to the Investment Manager promptly after the end of each fiscal year of the Master Fund. The Incentive Fee is determined as of the end of the fiscal year in an amount equal to 15% of the amount by which the Master Fund s Net Capital Appreciation (as defined below) for each Fiscal Period (as defined below) ending within or coterminous with the close of such fiscal year exceeds the balance of the loss carryforward account and any allocated Management Fee expense for such Fiscal Period, without duplication for any Incentive Fees paid during such fiscal year. The Master Fund also pays the Investment Manager the Incentive Fee in the event a Fiscal Period is triggered in connection with a repurchase offer by the Master Fund. For purposes of calculating the Incentive Fee, Net Capital Appreciation means, with respect to any Fiscal Period, the difference, if any, between (x) the sum of (i) the value of the Master Fund s net asset value at the end of that Fiscal Period (prior to the Incentive Fee for such Fiscal Period) increased by the dollar amount of the Master Fund s interests repurchased during the 7

10 Blackstone Real Estate Income Fund Notes to Financial Statements (Continued) For the Period Ended June 30, 2015 (Unaudited) Fiscal Period (excluding repurchases as of the last day of the Fiscal Period after determination of the Incentive Fee), (ii) the amount of any dividends, distributions or withdrawals paid to shareholders during the Fiscal Period and not reinvested in the Master Fund (excluding any dividends and other distributions to be paid as of the last day of the Fiscal Period), and (iii) the Management Fee expense and sales load (or other similar sales load) for that Fiscal Period, and (y) the sum of (i) the value of the Master Fund s net asset value at the beginning of that Fiscal Period (prior to the Management Fee for such Fiscal Period), increased by the dollar amount of the Master Fund s interests issued during the Fiscal Period (excluding any shares issued in connection with the reinvestment of dividends and other distributions paid by the Master Fund) and (ii) the amount of any subscriptions to the Master Fund during that Fiscal Period. All calculations of Net Capital Appreciation will be made (without duplication) after deduction of all general, administrative and other operating expenses of the Master Fund (excluding the Incentive Fee) and any amounts necessary, in the Investment Manager s sole discretion, as appropriate reserves for such expenses. Fiscal Period means each twelve-month period ending on the Master Fund s fiscal year-end, provided that whenever the Master Fund conducts a repurchase offer, each of the periods of time from the last Fiscal Period-end through the effective date of the repurchase offer and the period of time from the effective date of the repurchase offer through the next Fiscal Period-end also constitutes a Fiscal Period. The Investment Manager will not charge the Fund an Incentive Fee as long as substantially all of the assets of the Fund are invested in the Master Fund. The Fund indirectly bears a pro rata share of the Master Fund s Incentive Fee, which was $4,317,466 for the period ended June 30, Expense Limitation and Reimbursement The Investment Manager has entered into an Expense Limitation and Reimbursement Agreement (the Expense Limitation and Reimbursement Agreement ) with the Fund to limit the amount of the Fund s Specified Expenses (as defined below) to no more than 0.35% per annum of the Fund s net assets (the Expense Cap ) (computed and applied on a monthly basis). Specified Expenses includes all expenses incurred in the business of the Fund and the Fund s pro rata share of the expenses of the Master Fund, including organizational costs, with the exception of: (i) the Management Fee, (ii) the Incentive Fee, (iii) the Distribution and Service Fee, (iv) brokerage costs, (v) dividend/interest payments (including any dividend payments, interest expenses, commitment fees, or other expenses related to any leverage incurred by the Fund or the Master Fund), (vi) taxes, and (vii) extraordinary expenses (as determined in the sole discretion of the Investment Manager). To the extent that Specified Expenses for the Fund (including the Fund s pro rata share of the Master Fund s Specified Expenses) for any month exceed the Expense Cap, the Investment Manager will waive its fees and/or reimburse the Fund for expenses to the extent necessary to eliminate such excess. The Expense Limitation and Reimbursement Agreement cannot be terminated prior to January 23, 2017 without the Board s consent. The Fund has agreed to repay the amounts borne by the Investment Manager under the Expense Limitation and Reimbursement Agreement within the three year period after the Investment Manager bears the expense, when and if requested by the Investment Manager, but only if and to the extent the Specified Expenses of the Fund (including the Fund s pro rata share of the Master Fund s Specified Expenses) are less than the lower of the Expense Cap and any expense limitation agreement then in effect with respect to the Specified Expenses. The repayment may not raise the level of Specified Expenses of the Fund (including the Fund s pro rata share of the Master Fund s Specified Expenses) in the month of repayment to exceed the Expense Cap. As of June 30, 2015, the repayments that may potentially be made by the Fund to the Investment Manager are $235,584. 8

11 Blackstone Real Estate Income Fund Notes to Financial Statements (Continued) For the Period Ended June 30, 2015 (Unaudited) Distribution Agreement and Distribution and Service Plan Blackstone Advisory Partners L.P., an affiliate of the Investment Manager, acts as the distributor of the Shares (the Distributor ). Pursuant to a distribution agreement between the Fund and the Distributor, the Fund pays the Distributor a fee (the Distribution and Service Fee ) equal to 0.75% (annualized) of the average net assets of the Fund, in accordance with the Fund s Distribution and Service Plan. The Distribution and Service Fee consists of 0.50% for the sale and marketing of the Shares and 0.25% for personal services provided to shareholders and/or the maintenance of shareholder accounts services and to reimburse the Distributor for related expenses incurred. The Distributor may pay all or a portion of the Distribution and Service Fee to the selling agents that sell Shares. 6. Administration Agreements The Master Fund and the Fund have entered into administration, custody and transfer agency agreements (the Administration Agreements ) with State Street Bank and Trust Company ( State Street ). State Street and/ or its affiliates are responsible for providing administration, custody and transfer agency services for the Master Fund and the Fund, including, but not limited to: (i) maintaining corporate and financial books and records of the Master Fund and the Fund, (ii) providing administration services and (iii) performing other accounting and clerical services necessary in connection with the administration of the Master Fund and the Fund. The services performed by State Street may be completed by one or more of its affiliated companies. 7. Financial Instruments and Off-Balance Sheet Risk Market Risk: In the normal course of business, the Master Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the other party to a transaction to perform (credit and counterparty risk). The value of securities held by the Master Fund may decline in response to certain events, including those directly involving the companies whose securities are owned by the Master Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Credit and Counterparty Risk: The Master Fund will be subject to credit risk with respect to the counterparties to its derivatives contracts (whether a clearing corporation in the case of exchange-traded instruments or another third party in the case of over-the-counter ( OTC ) instruments entered into by the Master Fund. The Investment Manager will evaluate and monitor the creditworthiness of counterparties in order to ensure that such counterparties can perform their obligations under the relevant agreements. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Master Fund may experience significant delays in obtaining any recovery under the derivative contract in a dissolution, assignment for the benefit of creditors, liquidation, winding-up, bankruptcy or other analogous proceeding. In addition, in the event of the insolvency of a counterparty to a derivative transaction, the derivative contract would typically be terminated at its fair market value. If the Master Fund is owed this fair market value in the termination of the derivative contract and its claim is unsecured, the Master Fund will be treated as a general creditor of such counterparty, and will not have any claim with respect to the underlying security. The Master Fund may obtain only a limited recovery or may obtain no recovery in such circumstances. Currently, certain categories of interest rate and credit default swaps are subject to mandatory clearing, and more are expected to be cleared in the future. The counterparty risk for cleared derivatives is generally lower than for uncleared OTC derivative transactions because generally a clearing organization becomes substituted for each counterparty to a cleared derivative contract and, in effect, guarantees the parties performance under the contract as each party to a trade looks only to the clearing house for performance of financial obligations. 9

12 Blackstone Real Estate Income Fund Notes to Financial Statements (Continued) For the Period Ended June 30, 2015 (Unaudited) However, there can be no assurance that a clearing house, or its members, will satisfy the clearing house s obligations to the Master Fund. Counterparty risk with respect to certain exchange-traded and over-thecounter derivatives may be further complicated by recently enacted U.S. financial reform legislation. Cash collateral that has been pledged to cover obligations of the Master Fund under derivative financial instrument contracts, if any, will be reported separately in the Statement of Assets and Liabilities. Securities pledged as collateral, if any, for the same purpose are noted in the Schedule of Investments. Liquidity Risk: Some securities held by the Master Fund may be difficult to sell, or illiquid, during times of market turmoil or otherwise. Illiquid securities may also be difficult to value. If the Master Fund is forced to sell an illiquid asset to meet redemption requests or other cash needs, the Master Fund may be forced to sell at a loss or at a price lower than it could have otherwise received. Non-Diversification Risk: The Master Fund is classified as a non-diversified investment company which means that the percentage of its assets that may be invested in the securities of a single issuer is not limited by the 1940 Act. As a result, the Master Fund s investment portfolio may be subject to greater risk and volatility than if investments had been made in the securities of a broad range of issuers. Additional risks associated with each type of investment are described within the respective security type notes. The Fund s prospectus includes a discussion of the principal risks of investing in the Fund and indirectly in the Master Fund. 8. Subsequent Events The Investment Manager has evaluated the impact of subsequent events through the date of financial statement issuance, and determined there were no subsequent events outside the normal course of business requiring adjustment to or disclosure in the financial statements. 10

13 Blackstone Real Estate Income Fund Supplemental Information June 30, 2015 (Unaudited) Form N-Q Filings The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the SEC ) for the first and third quarters of each fiscal year on Form N-Q. The Fund s Form N-Q is available on the SEC s website at within 60 days after the Fund s first and third fiscal quarters. The Fund s Form N-Q may be reviewed and copied at the SEC s Public Reference Room in Washington, DC, and information regarding operation of the Public Reference Room may be obtained by calling SEC Holdings and allocations shown on any Form N-Q are as of the date indicated in the filing and may not be representative of future investments. Holdings and allocations should not be considered research or investment advice and should not be relied upon in making investment decisions. Proxy Voting Policies The Fund and the Master Fund have delegated proxy voting responsibilities to the Investment Manager, subject to the Board s general oversight. A description of the policies and procedures used to vote proxies related to the Fund s and the Master Fund s portfolio securities, and information regarding how the Fund and the Master Fund voted proxies relating to their portfolio securities during the most recent 12-month period ended June 30 is available (1) without charge, upon request, by calling toll free, and (2) on the SEC s website at Additional Information The Fund s registration statement includes additional information about the Trustees of the Fund. The registration statement is available, without charge, upon request by calling

14 Blackstone Blackstone Registered Funds Privacy Notice Rev August, 2015 FACTS Why? What? How? WHAT DO BLACKSTONE REGISTERED FUNDS DO WITH YOUR PERSONAL INFORMATION? Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. The types of personal information we collect and share depend on the product or service you have with us. This information can include: Social Security number and income Assets and investment experience Risk tolerance and transaction history All financial companies need to share customers personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers personal information; the reasons Blackstone Registered Funds (as defined below) choose to share; and whether you can limit this sharing. Reasons we can share your personal information Do Blackstone Registered Funds share? Can you limit this sharing? For our everyday business purposes such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus Yes No For our marketing purposes to offer our products and services to you Yes No For joint marketing with other financial companies No We don t share For our affiliates everyday business purposes information about your transactions and experiences No We don t share For our affiliates everyday business purposes information about your creditworthiness No We don t share For our affiliates to market to you No We don t share For nonaffiliates to market to you No We don t share Questions? us at GLB.privacy@blackstone.com 12

15 Who we are Who is providing this notice? What we do How do Blackstone Registered Funds protect my personal information? How do Blackstone Registered Funds collect my personal information? Why can t I limit all sharing? What happens when I limit sharing for an account I hold jointly with someone else? Definitions Affiliates Nonaffiliates Joint marketing Blackstone Registered Funds include Blackstone Alternative Alpha Fund, Blackstone Alternative Alpha Fund II, Blackstone Real Estate Income Fund, Blackstone Real Estate Income Fund II, Blackstone Alternative Investment Funds, on behalf of its series Blackstone Alternative Multi-Manager Fund and Blackstone Alternative Multi-Strategy Fund, and the GSO Funds, consisting of Blackstone / GSO Senior Floating Rate Term Fund, Blackstone / GSO Long-Short Credit Income Fund and Blackstone / GSO Strategic Income Fund To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We collect your personal information, for example, when you: open an account or give us your income information provide employment information or give us your contact information tell us about your investment or retirement portfolio We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. Federal law gives you the right to limit only: sharing for affiliates everyday business purposes information about your creditworthiness affiliates from using your information to market to you sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law. Your choices will apply to everyone on your account unless you tell us otherwise. Companies related by common ownership or control. They can be financial and nonfinancial companies. Our affiliates include companies with a Blackstone name and financial companies such as GSO Capital Partners LP and Strategic Partners Fund Solutions. Companies not related by common ownership or control. They can be financial and nonfinancial companies. Blackstone Registered Funds do not share with nonaffiliates so they can market to you. A formal agreement between nonaffiliated financial companies that together market financial products or services to you. Our joint marketing partners include financial services companies. Other important information California Residents In accordance with California law, we will not share information we collect about California residents with nonaffiliates except as permitted by law, such as with the consent of the customer or to service the customer s accounts. We will also limit the sharing of information about you with our affiliates to the extent required by applicable California law. Vermont Residents In accordance with Vermont law, we will not share information we collect about Vermont residents with nonaffiliates except as permitted by law, such as with the consent of the customer or to service the customer s accounts. We will not share creditworthiness information about Vermont residents among Blackstone Registered Funds affiliates except with the authorization or consent of the Vermont resident. 13

16 Portfolio Composition Blackstone Real Estate Income Master Fund Schedule of Investments (Unaudited) June 30, 2015 Percentage of Total Net Assets Commercial Mortgage-Backed Securities 103.0% Interest Only Commercial Mortgage-Backed Securities 1.4 Mezzanine Debt 25.1 Bank Loan 2.6 Common Stock 3.3 Repurchase Agreements 7.8 Securities Sold Short (20.2) Other Assets and Liabilities (1) (23.0) Total 100.0% (1) Assets, other than investment in securities, net of other liabilities. See Statement of Assets and Liabilities. See Notes to Financial Statements. 14

17 Blackstone Real Estate Income Master Fund Schedule of Investments June 30, 2015 (Unaudited) Principal Amount Value LONG-TERM INVESTMENTS 135.4% COMMERCIAL MORTGAGE-BACKED SECURITIES 103.0% American Homes 4 Rent, Series 2014-SFR2, Class E, 6.23%, 10/17/36 (a),(c),(d) $ 12,573,000 $ 13,217,945 American Homes 4 Rent, Series 2014-SFR3, Class E, 6.42%, 12/17/36 (a),(d) 12,222,000 12,936,529 American Homes 4 Rent, Series 2015-SFR1, Class E, 5.64%, 04/17/52 (a),(d) 10,071,000 10,170,678 Banc of America Merrill Lynch, Series 2014-FL1, Class E, 5.69%, 12/15/31 (a),(b),(d) 9,361,000 8,422,757 Banc of America Merrill Lynch, Series 2014-FRR5, Class A714, 0.00%, 01/27/47 (a),(c),(e) 14,843,755 11,032,085 Banc of America Merrill Lynch, Series 2014-INLD, Class E, 3.52%, 12/15/29 (a),(b),(c),(d) 21,112,000 20,688,350 Series 2014-INLD, Class F, 2.71%, 12/15/29 (a),(b),(c),(d) 45,859,000 42,243,155 Banc of America Merrill Lynch, Series 2015-ASHF, Class F, 4.19%, 01/15/28 (a),(b),(d) 8,915,000 8,922,357 Barclays Commercial Mortgage, Series 2015-RRI, Class E, 3.79%, 05/15/32 (a),(b),(d) 26,904,000 26,580,754 Series 2015-RRI, Class F, 4.64%, 05/15/32 (a),(b),(d) 30,748,000 30,372,641 BHMS Mortgage Trust, Series 2014-ATLS, Class BFX, 4.24%, 07/05/33 (a),(c) 10,102,000 10,110,639 Series 2014-ATLS, Class EFL, 4.19%, 07/05/33 (a),(b),(d) 10,000,000 9,934,856 Carefree Portfolio Trust, Series 2014-CARE, Class F, 2.77%, 11/15/19 (a),(b),(c),(d) 13,538,000 12,832,164 Citigroup Commercial Mortgage Trust, Series 2012-GC8, Class E, 5.00%, 09/10/45 (a),(b),(d) 6,296,926 5,726,069 Citigroup Commercial Mortgage Trust, Series P, Class E, 3.63%, 05/10/35 (a),(b),(d) 5,949,613 5,409,972 Colony American Homes, Series A, Class E, 3.05%, 05/17/31 (a),(b),(d) 11,939,830 11,539,422 Colony American Homes, Series A, Class E, 3.39%, 07/17/31 (a),(b),(d) 4,536,361 4,449,339 Commercial Mortgage Trust, Series 2013-CR8, Class E, 4.00%, 06/10/46 (a),(b),(c),(d) 10,522,000 8,396,241 Commercial Mortgage Trust, Series 2014-CR17, Class E, 4.96%, 05/10/47 (a),(b),(c) 8,387,000 7,291,337 Commercial Mortgage Trust, Series 2014-FL5, Class KH1, 3.84%, 08/15/31 (a),(b),(d) 16,445,000 15,878,034 Series 2014-FL5, Class KH2, 4.69%, 08/15/31 (a),(b),(d) 10,598,000 10,198,441 Commercial Mortgage Trust, Series 2014-UBS5, Class D, 3.50%, 09/10/47 (a),(c) 2,006,000 1,622,514 Commercial Mortgage Trust, Series 2014-UBS6, Class E, 4.62%, 12/10/47 (a),(b),(c) 9,693,000 7,944,039 See Notes to Financial Statements. 15

18 Blackstone Real Estate Income Master Fund Schedule of Investments (Continued) June 30, 2015 (Unaudited) Principal Amount Value Commercial Mortgage Trust, Series 2015-CR23, Class CME, 3.81%, 05/10/48 (a),(c) $ 7,501,000 $ 6,808,595 Commercial Mortgage Trust, Series 2012-CR5, Class F, 4.48%, 12/10/45 (a),(b),(c) 12,489,160 10,834,350 Credit Suisse Mortgage Trust, Series 2014-USA, Class E, 4.37%, 09/15/37 (a),(c),(d) 6,506,000 5,957,728 Credit Suisse Mortgage Trust, Series 2015-TOWN, Class E, 4.34%, 03/15/17 (a),(b),(c),(d) 26,859,000 26,808,296 Cress Ltd., Series 2008, Class B, 1.48%, 12/21/42 (b) 19,686,391 17,988,440 Series 2008, Class C, 1.33%, 12/21/42 (b) 7,500,000 5,390,625 Series 2008, Class D, 1.48%, 12/21/42 (b) 4,219,000 1,914,371 Series 2008, Class E, 1.73%, 12/21/42 (b) 5,156,000 1,308,335 Series 2008, Class F, 1.00%, 12/21/42 (b) 19,637,476 1,943,128 Equity Mortgage Trust, Series 2014-INNS, Class E, 3.64%, 05/08/31 (a),(b),(d) 10,000,000 9,993,363 Series 2014-INNS, Class F, 4.09%, 05/08/31 (a),(b),(c),(d) 24,443,000 24,131,828 GAHR Commercial Mortgage Trust, Series 2015-NRF, Class EFX, 3.49%, 12/15/19 (a),(b),(d) 23,844,000 22,327,534 Series 2015-NRF, Class FFX, 3.49%, 12/15/19 (a),(b),(c) 4,087,000 3,762,153 GCCFC Commercial Mortgage Trust, Series 2007-GG9, Class AJ, 5.51%, 03/10/39 (b),(d) 12,681,856 12,308,914 Great Wolf Trust, Series 2015-WOLF, Class E, 4.64%, 05/15/34 (a),(b),(d) 23,719,000 23,715,442 GS Mortgage Securities Trust, Series 2006-GG8, Class B, 5.66%, 11/10/39 (c) 4,595,000 4,118,220 GS Mortgage Securities Trust, Series 2007-GG10, Class AM, 5.79%, 08/10/45 (b),(d) 18,669,000 19,023,106 GS Mortgage Securities Trust, Series 2012-GCJ9, Class E, 5.02%, 11/10/45 (a),(b),(c) 10,250,422 9,115,486 GS Mortgage Securities Trust, Series 2014-GSFL, Class E, 6.14%, 07/15/31 (a),(b),(c),(d) 19,516,000 19,410,828 JP Morgan Chase Commercial Mortgage Trust, Series 2013-LC11, Class E, 3.25%, 04/15/46 (a),(b),(c) 4,728,280 3,619,988 JP Morgan Chase Commercial Mortgage Trust, Series 2014-FL6, Class D, 4.44%, 11/15/31 (a),(b),(d) 16,375,000 15,846,368 JP Morgan Chase Commercial Mortgage Trust, Series 2014-INN, Class E, 3.79%, 06/15/29 (a),(b),(d) 16,535,000 16,487,801 LB-UBS Commercial Mortgage Trust, Series 2006-C7, Class AJ, 5.41%, 11/15/38 (c),(d) 13,117,428 12,005,229 Merrill Lynch Mortgage Trust, Series 2007-C1, Class AJ, 6.03%, 06/12/50 (b),(c) 6,846,000 3,405,152 Morgan Stanley Bank of America Merrill Lynch Trust, Series 2012-C5, Class G, 4.50%, 08/15/45 (a),(d) 12,300,651 10,794,350 Morgan Stanley Bank of America Merrill Lynch Trust, Series 2013-C7, Class F, 4.44%, 02/15/46 (a),(b),(d) 10,844,953 9,127,840 See Notes to Financial Statements. 16

19 Blackstone Real Estate Income Master Fund Schedule of Investments (Continued) June 30, 2015 (Unaudited) Principal Amount Value Morgan Stanley Bank of America Merrill Lynch Trust, Series 2013-C9, Class E, 4.30%, 05/15/46 (a),(b),(c) $ 5,516,000 $ 4,722,249 Series 2013-C9, Class F, 4.30%, 05/15/46 (b),(c) 8,644,588 7,131,050 Morgan Stanley Bank of America Merrill Lynch Trust, Series 2013-C10, Class F, 4.22%, 07/15/46 (a),(b),(c) 10,598,802 8,911,093 Morgan Stanley Bank of America Merrill Lynch Trust, Series 2013-C12, Class E, 4.93%, 10/15/46 (a),(b),(d) 6,233,532 5,591,445 Morgan Stanley Bank of America Merrill Lynch Trust, Series 2014-C15, Class E, 5.06%, 04/15/47 (a),(b),(c) 4,000,000 3,530,095 Wachovia Bank Commercial Mortgage Trust, Series 2006-C27, Class AJ, 5.83%, 07/15/45 (b),(c),(d) 18,211,837 18,478,631 Series 2006-C27, Class B, 5.87%, 07/15/45 (b),(c) 11,503,000 10,597,789 Wachovia Bank Commercial Mortgage Trust, Series 2006-C29, Class AJ, 5.37%, 11/15/48 (b),(d) 22,785,682 22,982,676 TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES (COST $660,019,749) 676,012,816 INTEREST ONLY COMMERCIAL MORTGAGE-BACKED SECURITIES 1.4% Commercial Mortgage Trust, Series 2013-LC6, Class XC, 0.93%, 01/10/46 (a),(b),(c) 92,323,222 4,597,964 JP Morgan Chase Commercial Mortgage Trust, Series 2013-C16, Class XC, 1.43%, 12/15/46 (a),(b),(c) 36,883,521 2,993,843 JPMBB Commercial Mortgage Securities Trust, Series 2014-C19, Class XC, 1.01%, 04/15/47 (a),(b),(c) 28,065,772 1,618,432 TOTAL INTEREST ONLY COMMERCIAL MORTGAGE-BACKED SECURITIES (COST $9,121,478) 9,210,239 MEZZANINE DEBT 25.1% BHMS Mortgage Trust, Series 2014-MZ, Class M, 7.37%, 07/05/33 (a),(b),(c) 20,204,000 20,111,587 Carefree Portfolio Trust, Series 2014-CMZA, Class MZA, 6.16%, 11/15/19 (a),(b),(c) 24,624,000 24,694,055 CGBAM Commercial Mortgage Trust, Series 2015-SMRT, Class MZ, 8.21%, 04/10/20 (c) 102,500, ,137,571 Equity Mortgage Trust, Series 2014-INMZ, Class M, 4.93%, 05/08/31 (a),(b),(c) 16,207,241 16,198,931 TOTAL MEZZANINE DEBT (COST $163,959,076) 165,142,144 BANK LOAN 2.6% Four Seasons Holdings, Inc., 6.25%, 12/27/20 (b) 17,028,000 17,028,000 TOTAL BANK LOAN (COST $17,066,361) 17,028,000 See Notes to Financial Statements. 17

20 Blackstone Real Estate Income Master Fund Schedule of Investments (Continued) June 30, 2015 (Unaudited) Shares Value COMMON STOCK 3.3% REITS Mortgage 3.3% Apollo Commercial Real Estate Finance, Inc. (c) 1,309,297 $ 21,524,843 TOTAL COMMON STOCK (COST $21,791,033) 21,524,843 TOTAL LONG-TERM INVESTMENTS (COST $871,957,697) 888,918,042 Principal Amount Value SHORT-TERM INVESTMENTS 7.8% REPURCHASE AGREEMENTS 7.8% Bank of America Merrill Lynch: Dated 04/01/2015, with a maturity date of 07/01/2015, an interest rate of 0.15%, collateralized by USD 25,000,000 U.S. Treasury Notes 1.38%, due 03/31/20 and a market value, including accrued interest of $25,478,740. $ 25,469,083 25,469,083 Dated 04/06/2015, with a maturity date of 07/06/2015, an interest rate of 0.20%, collateralized by USD 25,000,000 U.S. Treasury Notes 1.38%, due 03/31/20 and a market value, including accrued interest of $25,549, ,537,623 25,537,623 TOTAL REPURCHASE AGREEMENTS (COST $51,006,706) 51,006,706 TOTAL SHORT-TERM INVESTMENTS (COST $51,006,706) 51,006,706 TOTAL INVESTMENTS IN SECURITIES 143.2% (COST $922,964,403) (f) 939,924,748 SECURITIES SOLD SHORT (20.2)% U.S. TREASURY NOTES (20.2)% U.S. Treasury Notes, 1.38%, 03/31/20 50,000,000 (49,476,555) U.S. Treasury Notes, 2.13%, 05/15/25 18,000,000 (17,643,519) U.S. Treasury Notes, 2.25%, 11/15/24 66,000,000 (65,489,543) TOTAL U.S. TREASURY NOTES (PROCEEDS $134,097,194) (132,609,617) TOTAL SECURITIES SOLD SHORT (PROCEEDS $134,097,194) (132,609,617) Other Assets and Liabilities (23.0)% (g) (150,764,873) Net Assets 100.0% $ 656,550,258 See Notes to Financial Statements. 18

21 Blackstone Real Estate Income Master Fund Schedule of Investments (Continued) June 30, 2015 (Unaudited) Footnote Legend: (a) Security is exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. Security may only be sold to qualified institutional buyers unless registered under the Securities Act of 1933, as amended, or otherwise exempt from registration. (b) Variable/floating interest rate security. Rate presented is as of June 30, (c) All or a portion of this security is pledged as collateral for derivative financial instruments. (d) All or a portion of this security is pledged as collateral in connection with reverse repurchase agreements. (e) Non-interest bearing bond. (f) Approximates cost for federal tax purposes. (g) Assets, other than investments in securities, less liabilities other than securities sold short. Abbreviation Legend: REITS Real Estate Investment Trusts Reverse Repurchase Agreements Outstanding at June 30, 2015 Counterparty Interest Rate Trade Date Maturity Date Face Value Face Value Including Accrued Interest Bank of America Merrill Lynch 1.68% 04/14/15 07/14/15 $ 9,482,000 $ 9,516,514 Bank of America Merrill Lynch 1.88% 05/19/15 08/19/15 2,303,000 2,308,172 Bank of America Merrill Lynch 1.88% 05/19/15 08/19/15 2,879,000 2,885,465 Bank of America Merrill Lynch 1.88% 05/19/15 08/19/15 3,494,000 3,501,846 Bank of America Merrill Lynch 1.88% 05/19/15 08/19/15 5,486,000 5,498,319 Bank of America Merrill Lynch 1.88% 05/19/15 08/19/15 5,970,000 5,983,406 Bank of America Merrill Lynch 1.88% 05/19/15 08/19/15 7,460,000 7,476,752 Bank of America Merrill Lynch 1.88% 05/19/15 08/19/15 7,539,000 7,555,929 Bank of America Merrill Lynch 1.88% 05/19/15 08/19/15 10,945,000 10,969,578 Bank of America Merrill Lynch 1.88% 05/19/15 08/19/15 11,913,000 11,939,751 Bank of America Merrill Lynch 1.88% 05/26/15 08/26/15 1,710,000 1,713,215 Bank of America Merrill Lynch 1.88% 05/26/15 08/26/15 7,944,000 7,958,935 Bank of America Merrill Lynch 1.89% 06/15/15 09/15/15 5,645,000 5,649,742 Bank of America Merrill Lynch 1.89% 06/15/15 09/15/15 6,923,000 6,928,815 Bank of America Merrill Lynch 2.14% 06/15/15 09/15/15 8,078,000 8,083,762 Bank of America Merrill Lynch 1.79% 06/18/15 09/15/15 3,264,000 3,266,110 Bank of America Merrill Lynch 1.79% 06/18/15 09/15/15 3,542,000 3,544,289 Bank of America Merrill Lynch 2.03% 06/22/15 09/22/15 8,752,000 8,756,442 Bank of America Merrill Lynch 1.98% 06/25/15 09/22/15 7,903,000 7,905,608 Bank of America Merrill Lynch 1.69% 06/29/15 07/29/15 5,167,000 5,167,485 Bank of America Merrill Lynch 1.69% 06/29/15 07/29/15 5,362,000 5,362,503 RBC Capital Markets, LLC 1.88% 02/17/15 08/17/15 13,262,000 13,354,923 RBC Capital Markets, LLC 1.78% 04/14/15 07/14/15 17,864,000 17,932,779 RBC Capital Markets, LLC 1.63% 05/12/15 08/12/15 13,119,000 13,148,697 RBC Capital Markets, LLC 1.53% 05/18/15 08/18/15 12,405,000 12,428,137 RBC Capital Markets, LLC 1.78% 06/04/15 09/04/15 11,841,000 11,856,796 RBC Capital Markets, LLC 1.88% 06/04/15 09/04/15 12,935,000 12,953,226 RBC Capital Markets, LLC 1.88% 06/09/15 09/09/15 6,829,000 6,836,851 See Notes to Financial Statements. 19

22 Counterparty Blackstone Real Estate Income Master Fund Schedule of Investments (Continued) June 30, 2015 (Unaudited) Interest Rate Trade Date Maturity Date Face Value Face Value Including Accrued Interest RBC Capital Markets, LLC 1.78% 06/09/15 09/09/15 $ 11,425,000 $ 11,437,436 RBC Capital Markets, LLC 2.04% 06/19/15 09/21/15 15,062,000 15,081,975 RBC Capital Markets, LLC 1.54% 06/19/15 09/21/15 18,610,000 18,619,526 RBC Capital Markets, LLC 1.94% 06/23/15 12/23/15 10,332,000 10,336,463 RBC Capital Markets, LLC 1.38% 06/25/15 09/25/15 7,255,000 7,255,582 RBC Capital Markets, LLC 1.84% 06/25/15 10/26/15 15,920,000 15,924,884 RBC Capital Markets, LLC 1.94% 06/26/15 10/26/15 5,397,000 5,398,454 RBC Capital Markets, LLC 1.83% 06/30/15 10/26/15 16,603,000 16,603,000 Total Reverse Repurchase Agreements Outstanding $ 320,620,000 $ 321,141,367 OTC Credit Default Swaps on Index (Sell Protection) Outstanding at June 30, 2015 Master Fund Reference Fixed Deal (Pay) Maturity Notional Market Upfront Premium Paid Unrealized Appreciation Obligation Rating Rate Date Counterparty Amount (1) Value (Received) (Depreciation) CMBX.NA.BB.6 BB 5.00% 05/25/63 Citibank, N.A. 103,326,210 USD $ (583,172) $ 801,643 $ (1,384,815) CMBX.NA.BB.6 BB 5.00% 05/25/63 Morgan Stanley 5,532,220 USD (31,224) 35,503 (66,727) & Co. LLC CMBX.NA.BB.6 BB 5.00% 05/25/63 Goldman Sachs & Co. 26,875,610 USD (151,686) 94,725 (246,411) CMBX.NA.BB.7 BB 5.00% 01/25/47 Citibank, N.A. 7,399,410 USD (179,723) (234,934) 55,211 CMBX.NA.BB.7 BB 5.00% 01/25/47 Morgan Stanley 5,000,000 USD (121,444) (9,739) (111,705) & Co. LLC CMBX.NA.BB.7 BB 5.00% 01/25/47 Goldman Sachs & Co. 3,628,000 USD (88,120) (30,044) (58,076) CMBX.NA.BBB.7 BBB 3.00% 01/25/47 Citibank, N.A. 4,425,510 USD (122,337) (139,592) 17,255 Total OTC Credit Default Swaps on Index (Sell Protection) $ (1,277,706) $ 517,562 $ (1,795,268) (1) The maximum potential amount the Master Fund could be required to pay as a seller of credit protection if a credit event occurs as defined under the terms of that particular swap agreement. Centrally Cleared Credit Default Swaps on Index (Buy Protection) Outstanding at June 30, 2015 Reference Obligation Rating Master Fund Fixed Deal (Pay) Rate Maturity Date Counterparty Notional Amount Market Value Upfront Premium Paid (Received) Unrealized Appreciation (Depreciation) CDX.NA.HY.20 BB (5.00%) 06/20/18 Citibank, N.A. 30,720,000 USD $ (2,519,279) $ (2,450,707) $ (68,572) CDX.NA.HY.21 BB (5.00%) 06/20/18 Citibank, N.A. 28,800,000 USD (2,207,590) (2,229,120) 21,530 CDX.NA.HY.22 BB (5.00%) 06/20/19 Citibank, N.A. 66,240,000 USD (5,368,030) (5,020,583) (347,447) Total Centrally Cleared Credit Default Swaps on Index (Buy Protection) $ (10,094,899) $ (9,700,410) $ (394,489) See Notes to Financial Statements. 20