UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORMN-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number:811-08797
Name of Fund: BlackRock Series, Inc.
BlackRock International Fund
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Series, Inc., 55 East 52nd Street, New York, NY 10055
Registrant’s telephone number, including area code: (800)441-7762
Date of fiscal year end: 10/31/2019
Date of reporting period: 04/30/2019
Item 1 – Report to Stockholders
APRIL 30, 2019
SEMI-ANNUAL REPORT (UNAUDITED) |
BlackRock Series, Inc.
▶ | BlackRock International Fund |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’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(800) 441-7762 to inform BlackRock that you wish to 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, BlackRock Fund Advisors or their 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: (i) accessing the BlackRock website at www.blackrock.com/edelivery and logging into your accounts, if you hold accounts directly with BlackRock, or (ii) contacting your financial intermediary, if you hold accounts through a financial intermediary. Please note that not all financial intermediaries may offer this service.
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Not FDIC Insured∎ May Lose Value∎ No Bank Guarantee |
Dear Shareholder,
In the 12 months ended April 30, 2019, the U.S. equity and bond markets posted positive returns while weathering significant volatility. Though the market’s appetite for risk remained healthy for most of the reporting period, risk taking declined sharply in late 2018. Thereafter, global equity markets rebounded strongly, as inflation diminished and the U.S. Federal Reserve (the “Fed”) announced a shift to less restrictive monetary policy.
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. However, recent economic data indicates that Europe may emerge from its economic soft patch, reinvigorated by a manufacturing rebound and China’s economic stimulus.
In the U.S. equity market, volatility 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. These risks manifested in a broad-basedsell-off in December, leading to the worst December performance on record since 1931.
By comparison, fixed-income securities delivered modest positive returns with relatively low volatility. In fixed-income markets, short-term U.S. Treasury yields rose, while longer-term yields declined slightly. This led to positive returns for U.S. Treasuries and a substantial flattening of the yield curve. Investment-grade and high-yield corporate bonds also posted positive returns, as the credit fundamentals in corporate markets remained relatively solid.
The Fed shifted to a more patient perspective on the economy after increasing interest rates three times. In its last four meetings, the Fed left interest rates unchanged and signaled a slower pace of rate hikes in response to the global economic slowdown. Relatively low inflation and modest economic growth give the Fed room to maintain support for the economy until the economic data builds the case for changing interest rates. Similarly, the European Central Bank signaled a continuation of accommodative monetary policy, while China committed to looser credit conditions and an increase in fiscal spending. The shift toward more stimulative economic policy helped equity markets rebound in 2019.
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 because the tax cut stimulus will be less pronounced, and the Fed’s rate hikes in 2018 will gain traction in 2019. We expect profit margins to continue to contract, which tends to happen late in the business cycle.
In this environment, U.S. and emerging market equities remain relatively attractive. Within U.S. equities, we believe that companies with high-quality earnings and strong balance sheets offer the most attractive risk/ rewardtrade-off. For bonds, U.S. Treasuries are likely to help buffer against volatility in risk assets, while income from other types of bonds can continue to offer steady returns.
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 visitblackrock.comfor further insight about investing in today’s markets.
Sincerely,
Rob Kapito
President, BlackRock Advisors, LLC
Rob Kapito
President, BlackRock Advisors, LLC
Total Returns as of April 30, 2019 | ||||
6-month | 12-month | |||
U.S. large cap equities | 9.76% | 13.49% | ||
U.S. small cap equities | 6.06 | 4.61 | ||
International equities | 7.45 | (3.22) | ||
Emerging market equities | 13.76 | (5.04) | ||
3-month Treasury bills | 1.18 | 2.18 | ||
U.S. Treasury securities | 7.09 | 6.44 | ||
U.S. investment grade bonds | 5.49 | 5.29 | ||
Tax-exempt municipal bonds | 5.36 | 5.84 | ||
U.S. high yield bonds | 5.54 | 6.74 | ||
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 |
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Semi-Annual Report: | ||||
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Financial Statements: | ||||
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Fund Summary as of April 30, 2019 | BlackRock International Fund |
Investment Objective
BlackRock International Fund’s (the “Fund”)investment objective is to seek long-term capital growth through investments primarily in a diversified portfolio of equity securities of companies located outside the United States.
Portfolio Management Commentary
How did the Fund perform?
For thesix-month period ended April 30, 2019, the Fund’s Institutional and Class K Shares outperformed its benchmark, the MSCI All Country World Indexex-USA, while its Investor A Shares performed in line with the benchmark and Investor C and Class R Shares underperformed.
What factors influenced performance?
During the period, stock selection within the information technology (“IT”), financials and communication services sectors contributed to returns. At the individual stock level, Southeast Asia internet platform company Sea Ltd., the Dutch health, nutrition and materials multinational Koninklijke DSM NV and Japanese electronics company Omron Corp. were the largest individual contributors. Sentiment with respect to both Sea Ltd. and DSM benefited from strong quarterly results. Omron’s share price was boosted by the stock’s recent addition to the Nikkei 225 Index.
Conversely, stock selection within the consumer discretionary, industrials and consumer staples sectors represented the principal detractors from relative return. In particular, the Fund’s positions in Chinese internet products and services firm Baidu, Inc., Japan-based consumer electronics company Sony Corp. and Canadian aerospace firm Bombardier, Inc. were the largest individual detractors. Baidu’s shares were hurt by a disappointing earnings forecast, while Sony endured a series of profit downgrades by analysts following the unveiling of Google’s cloud-based gaming service. Shares of Bombardier fell after its management reduced the company’s forecast for free cash flow.
Describe recent portfolio activity.
The largest change to the Fund’s active positioning was a decrease in financials exposure, moving from a significant overweight to a significant underweight. The change was mainly driven by sales of emerging market banks from the portfolio in order to reduce its overall risk level. Exposure to the consumer staples sector, especially within food products and beverages, was increased from a slight underweight to significant overweight following the Fund’s purchases of the Swiss food company Nestle SA and the Brazilian brewing company AmBev SA. The Fund’s allocation to communications companies, notably within entertainment, also increased from a slight underweight to a meaningful overweight following the purchase of the French video game publisher Ubisoft Entertainment SA.
Describe portfolio positioning at period end.
The Fund’s largest sector overweight positions were in consumer staples, communication services and real estate, while the largest underweights were to financial, industrials and energy. On a regional basis, the largest overweight positions were in Europeex-U.K., especially Switzerland and the Netherlands, and in the United States, while the largest underweights were in Japan, Australia and Hong Kong.
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.
Portfolio Information
TEN LARGEST HOLDINGS
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Security | Percent of Net Assets | |||
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Sony Corp. | 7% | |||
Nestlé SA, Registered Shares | 7 | |||
Roche Holding AG | 7 | |||
ASML Holding NV | 5 | |||
Burberry Group PLC | 4 | |||
Koninklijke DSM NV | 4 | |||
Fomento Economico Mexicano SAB de CV | 4 | |||
Baidu, Inc. — ADR | 4 | |||
Equinix, Inc. | 4 | |||
Knorr-Bremse AG | 4 | |||
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GEOGRAPHIC ALLOCATION
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Country | Percent of Net Assets | |||
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Switzerland | 15% | |||
United States | 11 | |||
France | 10 | |||
United Kingdom | 10 | |||
Japan | 9 | |||
Netherlands | 9 | |||
China | 8 | |||
Mexico | 4 | |||
Germany | 4 | |||
Spain | 4 | |||
Canada | 3 | |||
Brazil | 3 | |||
Italy | 3 | |||
Zambia | 2 | |||
Luxembourg | 2 | |||
Singapore | 2 | |||
Portugal | 1 | |||
India | 1 | |||
Liabilities in Excess of Other Assets | (1) | |||
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4 | 2 0 1 9 B L A C K R O C K S E M I - A N N U A L R E P O R T T O S H A R E H O L D E R S |
Fund Summary as of April 30, 2019 (continued) | BlackRock International Fund |
Performance Summary for the Period Ended April 30, 2019
Average Annual Total Returns(a)(b) | ||||||||||||||||||||||||||||||||||||||||||||||||||
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6-Month Total Returns | w/o sales charge | w/ sales charge | w/o sales charge | w/ sales charge | w/o sales charge | w/ sales charge | ||||||||||||||||||||||||||||||||||||||||||||
Institutional | 9.28 | % | (4.72 | )% | N/A | 2.91 | % | N/A | 8.43 | % | N/A | |||||||||||||||||||||||||||||||||||||||
Investor A | 9.13 | (4.90 | ) | (9.90 | )% | 2.56 | 1.46 | % | 8.05 | 7.47 | % | |||||||||||||||||||||||||||||||||||||||
Investor C | 8.76 | (5.63 | ) | (6.57 | ) | 1.62 | 1.62 | 7.07 | 7.07 | |||||||||||||||||||||||||||||||||||||||||
Class K | 9.25 | (4.67 | ) | N/A | 2.93 | N/A | 8.44 | N/A | ||||||||||||||||||||||||||||||||||||||||||
Class R | 8.97 | (5.22 | ) | N/A | 2.25 | N/A | 7.76 | N/A | ||||||||||||||||||||||||||||||||||||||||||
MSCI All Country World Indexex-USA(c) | 9.12 | (3.23 | ) | N/A | 2.83 | N/A | 7.75 | N/A |
(a) | Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 6 for a detailed description of share classes, including any related sales charges and fees, and how performance was calculated for certain share classes. |
(b) | The Fund invests primarily in stocks of companies located outside the United States. |
(c) | A free float-adjusted market capitalization index designed to measure the combined equity market performance of developed and emerging market countries, excluding the United States. |
N/A — Not applicable as share class and index do not have a sales charge.
Past performance is not indicative of future results.
Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.
Expense Example
Actual | Hypothetical(b) | |||||||||||||||||||||||||||||||||||||||
Beginning Account Value (11/01/18) | Ending Account Value (04/30/19) | Expenses Paid During the Period(a) | Beginning Account Value (11/01/18) | Ending Account Value (04/30/19) | Expenses Paid During the Period(a) | Annualized Expense Ratio | ||||||||||||||||||||||||||||||||||
Institutional | $ | 1,000.00 | $ | 1,092.80 | $ | 4.62 | $ | 1,000.00 | $ | 1,020.38 | $ | 4.46 | 0.89 | % | ||||||||||||||||||||||||||
Investor A | 1,000.00 | 1,091.30 | 5.91 | 1,000.00 | 1,019.14 | 5.71 | 1.14 | |||||||||||||||||||||||||||||||||
Investor C | 1,000.00 | 1,087.60 | 9.78 | 1,000.00 | 1,015.42 | 9.44 | 1.89 | |||||||||||||||||||||||||||||||||
Class K | 1,000.00 | 1,092.50 | 4.34 | 1,000.00 | 1,020.65 | 4.19 | 0.83 | |||||||||||||||||||||||||||||||||
Class R | 1,000.00 | 1,089.70 | 7.20 | 1,000.00 | 1,017.90 | 6.95 | 1.39 |
(a) | For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect theone-half year period shown). |
(b) | Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365. See “Disclosure of Expenses” on page 6 for further information on how expenses were calculated. |
F U N D S U M M A R Y | 5 |
Institutional and Class K Sharesare not subject to any sales charge. These shares bear no ongoing distribution or service fees and are available only to certain eligible investors. Class K Shares performance shown prior to the Class K Shares inception date of January 25, 2018 is that of Institutional Shares. The performance of the Fund’s Class K Shares would be substantially similar to Institutional Shares because Class K Shares and Institutional Shares invest in the same portfolio of securities and performance would only differ to the extent that Class K Shares and Institutional Shares have different expenses. The actual returns of Class K Shares would have been higher than those of the Institutional Shares because Class K Shares have lower expenses than the Institutional Shares.
Investor A Sharesare subject to a maximum initial sales charge(front-end load) of 5.25% and a service fee of 0.25% per year (but no distribution fee). Certain redemptions of these shares may be subject to a contingent deferred sales charge (“CDSC”) where no initial sales charge was paid at the time of purchase. These shares are generally available through financial intermediaries.
Investor C Sharesare subject to a 1.00% CDSC if redeemed within one year of purchase. In addition, these shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. These shares are generally available through financial intermediaries. Effective November 8, 2018, the Fund adopted an automatic conversion feature whereby Investor C Shares held for approximately ten years will be automatically converted into Investor A Shares, and, thereafter, investors will be subject to lower ongoing fees.
Class R Sharesare not subject to any sales charge. These shares are subject to a distribution fee of 0.25% per year and a service fee of 0.25% per year. These shares are available only to certain employer-sponsored retirement plans. Class R Shares performance shown prior to the Class R Shares inception date of August 15, 2011 is that of Institutional Shares (which have no distribution or service fees) and was restated to reflect Class R Shares fees.
Performance information reflects past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Refer towww.blackrock.comto obtain performance data current to the most recentmonth-end. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Figures shown in the performance table on the previous page assume reinvestment of all distributions, if any, at net asset value (“NAV”) on theex-dividend date. Investment return and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Distributions paid to each class of shares will vary because of the different levels of service, distribution and transfer agency fees applicable to each class, which are deducted from the income available to be paid to shareholders.
BlackRock Advisors, LLC (the “Manager”), the Fund’s investment adviser, has contractually and/or voluntarily agreed to waive and/or reimburse a portion of the Fund’s expenses. Without such waiver and/or reimbursement, the Fund’s performance would have been lower. The Manager is under no obligation to continue waiving and/or reimbursing its fees after the applicable termination date of such agreement and such voluntary waiver and/or reimbursement may be reduced or discontinued at any time. See Note 6 of the Notes to Financial Statements for additional information on waivers and/or reimbursements.
Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including12b-1 fees, acquired fund fees and expenses and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on November 1, 2018 and held through April 30, 2019) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.
The expense example provides information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 and then multiply the result by the number corresponding to their share class under the heading entitled “Expenses Paid During the Period.”
The expense example also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. In order to assist shareholders in comparing the ongoing expenses of investing in the Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
The expenses shown in the expense example are intended to highlight shareholders’ ongoing costs only and do not reflect transactional expenses, such as sales charges, if any. Therefore, the hypothetical example is useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.
6 | 2 0 1 9 B L A C K R O C K S E M I - A N N U A L R E P O R T T O S H A R E H O L D E R S |
Derivative Financial Instruments
The Fund 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 Fund’s 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 the Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Fund’s investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.
D E R I V A T I V E F I N A N C I A L I N S T R U M E N T S | 7 |
Schedule of Investments (unaudited) April 30, 2019 | BlackRock International Fund (Percentages shown are based on Net Assets) |
Security | Shares | Value | ||||||
Common Stocks — 96.8% |
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Brazil — 3.2% |
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Ambev SA | 3,792,537 | $ | 17,864,415 | |||||
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Canada — 3.2% | ||||||||
Suncor Energy, Inc. | 544,731 | 17,963,884 | ||||||
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China — 8.4% | ||||||||
Baidu, Inc. — ADR(a) | 127,341 | 21,167,894 | ||||||
China Molybdenum Co. Ltd., H Shares | 23,547,000 | 8,883,479 | ||||||
Ping An Insurance Group Co. of China Ltd., H Shares | 1,456,000 | 17,624,393 | ||||||
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47,675,766 | ||||||||
France — 9.9% | ||||||||
Alstom SA | 252,400 | 11,104,931 | ||||||
AXA SA | 715,081 | 19,068,808 | ||||||
Engie SA | 760,011 | 11,280,510 | ||||||
Ubisoft Entertainment SA(a) | 152,738 | 14,592,372 | ||||||
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56,046,621 | ||||||||
Germany — 3.6% | ||||||||
Knorr-Bremse AG(a) | 190,013 | 20,628,653 | ||||||
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India — 1.2% | ||||||||
Indiabulls Housing Finance Ltd. | 682,425 | 6,825,463 | ||||||
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Italy — 3.2% | ||||||||
Intesa Sanpaolo SpA | 6,812,037 | 17,847,716 | ||||||
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Japan — 9.4% | ||||||||
Mitsui Fudosan Co. Ltd. | 483,800 | 11,205,744 | ||||||
Sony Corp. | 836,700 | 42,142,997 | ||||||
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53,348,741 | ||||||||
Luxembourg — 2.2% | ||||||||
SES SA | 719,913 | 12,249,131 | ||||||
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Mexico — 3.9% | ||||||||
Fomento Economico Mexicano SAB de CV | 2,256,308 | 22,051,601 | ||||||
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Netherlands — 8.6% | ||||||||
ASML Holding NV | 123,994 | 25,891,370 | ||||||
Koninklijke DSM NV | 197,945 | 22,639,378 | ||||||
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48,530,748 | ||||||||
Portugal — 1.5% | ||||||||
Banco Comercial Portugues SA, Class R(a) | 29,818,549 | 8,369,883 | ||||||
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Security | Shares | Value | ||||||
Singapore — 2.0% | ||||||||
Sea Ltd. — ADR(a)(b) | 457,758 | $ | 11,393,597 | |||||
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Spain — 3.6% | ||||||||
Banco Bilbao Vizcaya Argentaria SA | 3,336,126 | 20,286,559 | ||||||
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Switzerland — 14.5% | ||||||||
Cie Financiere Richemont SA, Registered Shares | 113,163 | 8,272,480 | ||||||
Nestlé SA, Registered Shares | 385,881 | 37,151,717 | ||||||
Roche Holding AG | 139,939 | 36,924,776 | ||||||
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82,348,973 | ||||||||
United Kingdom — 9.6% | ||||||||
Associated British Foods PLC | 561,563 | 18,757,571 | ||||||
BAE Systems PLC | 1,753,014 | 11,267,132 | ||||||
Burberry Group PLC | 931,503 | 24,551,675 | ||||||
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54,576,378 | ||||||||
United States — 6.5% | ||||||||
BioMarin Pharmaceutical, Inc.(a) | 92,284 | 7,893,051 | ||||||
Equinix, Inc. | 46,335 | 21,068,524 | ||||||
Viavi Solutions, Inc.(a) | 594,117 | 7,901,756 | ||||||
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36,863,331 | ||||||||
Zambia — 2.3% | ||||||||
First Quantum Minerals Ltd. | 1,215,501 | 12,838,202 | ||||||
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Total Long-Term Investments — 96.8% |
| 547,709,662 | ||||||
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Short-Term Securities — 4.5% | ||||||||
BlackRock Liquidity Funds,T-Fund, Institutional Class, 2.32%(c)(e) | 19,196,132 | 19,196,132 | ||||||
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SL Liquidity Series, LLC, Money Market Series, 2.61%(c)(d)(e) | 6,171,538 | 6,172,772 | ||||||
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Total Short-Term Securities — 4.5% |
| 25,368,904 | ||||||
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Total Investments — 101.3% |
| 573,078,566 | ||||||
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Liabilities in Excess of Other Assets — (1.3)% |
| (7,129,919 | ) | |||||
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Net Assets — 100.0% |
| $ | 565,948,647 | |||||
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(a) | Non-income producing security. |
(b) | Security, or a portion of the security, is on loan. |
(c) | Annualized7-day yield as of period end. |
(d) | Security was purchased with the cash collateral from loaned securities. |
(e) | During the six months ended April 30, 2019, investments in issuers considered to be an affiliate/affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows: |
Affiliate | Shares Held at 10/31/18 | Net Activity | Shares Held at 04/30/19 | Value at 04/30/19 | Income | Net Realized Gain (Loss)(a) | Change in Unrealized Appreciation (Depreciation) | |||||||||||||||||||||
BlackRock Liquidity Funds,T-Fund, Institutional Class | 20,384,959 | (1,188,827 | ) | 19,196,132 | $ | 19,196,132 | $ | 225,115 | $ | — | $ | — | ||||||||||||||||
SL Liquidity Series, LLC, Money Market Series | 7,190,096 | (1,018,558 | ) | 6,171,538 | 6,172,772 | 11,668 | (b) | 2,081 | 413 | |||||||||||||||||||
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$ | 25,368,904 | $ | 236,783 | $ | 2,081 | $ | 413 | |||||||||||||||||||||
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(a) | Includes net capital gain distributions, if applicable. |
(b) | Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities. |
Portfolio Abbreviation
ADR American Depositary Receipt
8 | 2 0 1 9 B L A C K R O C K S E M I - A N N U A L R E P O R T T O S H A R E H O L D E R S |
Schedule of Investments (unaudited) (continued) April 30, 2019 | BlackRock International Fund |
Derivative Financial Instruments Categorized by Risk Exposure
For the six months ended April 30, 2019, the effect of derivative financial instruments in the Statement of Operations was as follows:
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Net Realized Gain (Loss) from: | Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Currency Exchange Contracts | Interest Rate Contracts | Other Contracts | Total | |||||||||||||||||||||
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Forward foreign currency exchange contracts | $ | — | $ | — | $ | — | $ | (72,059 | ) | $ | — | $ | — | $ | (72,059 | ) | ||||||||||||
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Average Quarterly Balances of Outstanding Derivative Financial Instruments
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Forward foreign currency exchange contracts: | ||||
Average amounts purchased — in USD | — | (a) | ||
Average amounts sold — in USD | — | (a) | ||
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|
(a) | Derivative not held atquarter-end. The amounts shown in the Statement of Operations reflect the results of activity during the period. |
For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.
Fair Value Hierarchy as of Period End
Various inputs are used in determining the fair value of investments. For information about the Fund’s policy regarding valuation of investments, refer to the Notes to Financial Statements.
The following table summarizes the Fund’s investments categorized in the disclosure hierarchy:
| ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| ||||||||||||||||
Assets: | ||||||||||||||||
Investments: | ||||||||||||||||
Long-Term Investments: | ||||||||||||||||
Common Stocks: | ||||||||||||||||
Brazil | $ | 17,864,415 | $ | — | $ | — | $ | 17,864,415 | ||||||||
Canada | 17,963,884 | — | — | 17,963,884 | ||||||||||||
China | 21,167,894 | 26,507,872 | — | 47,675,766 | ||||||||||||
France | — | 56,046,621 | — | 56,046,621 | ||||||||||||
Germany | — | 20,628,653 | — | 20,628,653 | ||||||||||||
India | — | 6,825,463 | — | 6,825,463 | ||||||||||||
Italy | — | 17,847,716 | — | 17,847,716 | ||||||||||||
Japan | — | 53,348,741 | — | 53,348,741 | ||||||||||||
Luxembourg | 12,249,131 | — | — | 12,249,131 | ||||||||||||
Mexico | 22,051,601 | — | — | 22,051,601 | ||||||||||||
Netherlands | — | 48,530,748 | — | 48,530,748 | ||||||||||||
Portugal | — | 8,369,883 | — | 8,369,883 | ||||||||||||
Singapore | 11,393,597 | — | — | 11,393,597 | ||||||||||||
Spain | — | 20,286,559 | — | 20,286,559 | ||||||||||||
Switzerland | — | 82,348,973 | — | 82,348,973 | ||||||||||||
United Kingdom | — | 54,576,378 | — | 54,576,378 | ||||||||||||
United States | 36,863,331 | — | — | 36,863,331 | ||||||||||||
Zambia | 12,838,202 | — | — | 12,838,202 | ||||||||||||
Short-Term Securities | 19,196,132 | — | — | 19,196,132 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Subtotal | $ | 171,588,187 | $ | 395,317,607 | $ | — | $ | 566,905,794 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Investments Valued at NAV(a) | 6,172,772 | |||||||||||||||
|
| |||||||||||||||
Total Investments | $ | 573,078,566 | ||||||||||||||
|
|
(a) | Certain investments of the Fund were fair valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy. |
See notes to financial statements.
S C H E D U L E O F I N V E S T M E N T S | 9 |
Statement of Assets and Liabilities (unaudited)
April 30, 2019
BlackRock International Fund | ||||
ASSETS | ||||
Investments at value — unaffiliated (including securities loaned at value of $5,911,873) (cost — $508,138,915) | $ | 547,709,662 | ||
Investments at value — affiliated (cost — $25,368,900) | 25,368,904 | |||
Cash | 2,219,270 | |||
Foreign currency at value (cost — $127,306) | 122,849 | |||
Receivables: | ||||
Capital shares sold | 686,015 | |||
Dividends — unaffiliated | 2,636,118 | |||
Dividends — affiliated | 39,387 | |||
Investments sold | 5,691,787 | |||
Securities lending income — affiliated | 1,329 | |||
From the Manager | 84,628 | |||
Prepaid expenses | 52,121 | |||
|
| |||
Total assets | 584,612,070 | |||
|
| |||
LIABILITIES | ||||
Foreign bank overdraft (cost — $2,221,211) | 2,232,455 | |||
Cash collateral on securities loaned at value | 6,171,644 | |||
Payables: | ||||
Investments purchased | 8,858,639 | |||
Capital shares redeemed | 708,643 | |||
Investment advisory fees | 327,167 | |||
Service and distribution fees | 107,722 | |||
Directors’ and Officer’s fees | 1,304 | |||
Other affiliates | 591 | |||
Transfer agent fees | 224,214 | |||
Other accrued expenses | 31,044 | |||
|
| |||
Total liabilities | 18,663,423 | |||
|
| |||
NET ASSETS | $ | 565,948,647 | ||
|
| |||
NET ASSETS CONSIST OF | ||||
Paid-in capital | $ | 547,231,333 | ||
Accumulated gain | 18,717,314 | |||
|
| |||
NET ASSETS | $ | 565,948,647 | ||
|
| |||
NET ASSET VALUE | ||||
Institutional— Based on net assets of $186,317,071 and 11,428,572 shares outstanding, 100 million shares authorized, $0.0001 par value | $ | 16.30 | ||
|
| |||
Investor A— Based on net assets of $310,673,627 and 19,481,575 shares outstanding, 100 million shares authorized, $0.0001 par value | $ | 15.95 | ||
|
| |||
Investor C— Based on net assets of $45,009,353 and 3,023,115 shares outstanding, 100 million shares authorized, $0.0001 par value | $ | 14.89 | ||
|
| |||
Class K— Based on net assets of $10,094,812 and 619,216 shares outstanding, 2 billion shares authorized, $0.0001 par value | $ | 16.30 | ||
|
| |||
Class R— Based on net assets of $13,853,784 and 867,237 shares outstanding, 100 million shares authorized, $0.0001 par value | $ | 15.97 | ||
|
|
See notes to financial statements.
10 | 2 0 1 9 B L A C K R O C K S E M I - A N N U A L R E P O R T T O S H A R E H O L D E R S |
Statement of Operations (unaudited)
Six Months Ended April 30, 2019
BlackRock International Fund | ||||
INVESTMENT INCOME | ||||
Dividends — unaffiliated | $ | 5,293,587 | ||
Dividends — affiliated | 225,115 | |||
Securities lending — affiliated — net | 11,668 | |||
Foreign taxes withheld | (605,346 | ) | ||
|
| |||
Total investment income | 4,925,024 | |||
|
| |||
EXPENSES | ||||
Investment advisory | 1,971,509 | |||
Service and distribution — class specific | 616,617 | |||
Transfer agent — class specific | 561,603 | |||
Custodian | 105,269 | |||
Registration | 48,607 | |||
Accounting services | 36,411 | |||
Professional | 30,174 | |||
Printing | 24,486 | |||
Board realignment and consolidation | 14,554 | |||
Offering | 12,736 | |||
Directors and Officer | 8,737 | |||
Miscellaneous | 12,091 | |||
|
| |||
Total expenses | 3,442,794 | |||
Less: | ||||
Fees waived and/or reimbursed by the Manager | (72,196 | ) | ||
Transfer agent fees waived and/or reimbursed — class specific | (404,588 | ) | ||
|
| |||
Total expenses after fees waived and/or reimbursed | 2,966,010 | |||
|
| |||
Net investment income | 1,959,014 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain (loss) from: | ||||
Investments — unaffiliated (net of $214,461 foreign capital gain tax) | (7,561,888 | ) | ||
Investments — affiliated | 2,081 | |||
Forward foreign currency exchange contracts | (72,059 | ) | ||
Foreign currency transactions | 12,905 | |||
|
| |||
(7,618,961 | ) | |||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments — unaffiliated | 54,417,133 | |||
Investments — affiliated | 413 | |||
Foreign currency translations | 4,738 | |||
|
| |||
54,422,284 | ||||
|
| |||
Net realized and unrealized gain | 46,803,323 | |||
|
| |||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 48,762,337 | ||
|
|
See notes to financial statements.
F I N A N C I A L S T A T E M E N T S | 11 |
Statements of Changes in Net Assets
BlackRock International Fund | ||||||||
Six Months Ended 04/30/19 (unaudited) | Year Ended 10/31/18 | |||||||
INCREASE (DECREASE) IN NET ASSETS | ||||||||
OPERATIONS | ||||||||
Net investment income | $ | 1,959,014 | $ | 8,503,813 | ||||
Net realized gain (loss) | (7,618,961 | ) | 15,385,609 | |||||
Net change in unrealized appreciation (depreciation) | 54,422,284 | (88,556,464 | ) | |||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 48,762,337 | (64,667,042 | ) | |||||
|
|
|
| |||||
DISTRIBUTIONS TO SHAREHOLDERS(a)(b) | ||||||||
Institutional | (2,908,788 | ) | (2,442,646 | ) | ||||
Investor A | (4,101,774 | ) | (3,503,879 | ) | ||||
Investor C | (245,734 | ) | — | |||||
Class K | (79,676 | ) | — | |||||
Class R | (174,833 | ) | (153,503 | ) | ||||
|
|
|
| |||||
Decrease in net assets resulting from distributions to shareholders | (7,510,805 | ) | (6,100,028 | ) | ||||
|
|
|
| |||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase (decrease) in net assets derived from capital share transactions | (9,230,909 | ) | 6,641,038 | |||||
|
|
|
| |||||
NET ASSETS | ||||||||
Total increase (decrease) in net assets | 32,020,623 | (64,126,032 | ) | |||||
Beginning of period | 533,928,024 | 598,054,056 | ||||||
|
|
|
| |||||
End of period | $ | 565,948,647 | $ | 533,928,024 | ||||
|
|
|
|
(a) | Distributions for annual periods determined in accordance with U.S. federal income tax regulations. |
(b) | The Fund’s current practice is to retain long-term capital gains, if any, and to pay federal taxes thereon at corporate tax rates on behalf of the shareholders. For federal income tax purposes, each shareholder will be required to include their proportionate share of the retained capital gains in income and are entitled to report a credit for their share of the tax paid by the Fund. |
See notes to financial statements.
12 | 2 0 1 9 B L A C K R O C K S E M I - A N N U A L R E P O R T T O S H A R E H O L D E R S |
(For a share outstanding throughout each period)
BlackRock International Fund | ||||||||||||||||||||||||
Institutional | ||||||||||||||||||||||||
Six Months | ||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||
04/30/19 | Year Ended October 31, | |||||||||||||||||||||||
(unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $ | 15.18 | $ | 17.17 | $ | 14.03 | $ | 14.23 | $ | 15.03 | $ | 15.51 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net investment income(a) | 0.07 | 0.29 | 0.24 | 0.22 | 0.16 | 0.21 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 1.30 | (2.03 | ) | 3.12 | (0.33 | ) | (0.64 | ) | (0.41 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) from investment operations | 1.37 | (1.74 | ) | 3.36 | (0.11 | ) | (0.48 | ) | (0.20 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Distributions from net investment | (0.25 | ) | (0.25 | ) | (0.22 | ) | (0.09 | ) | (0.32 | ) | (0.28 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net asset value, end of period | $ | 16.30 | $ | 15.18 | $ | 17.17 | $ | 14.03 | $ | 14.23 | $ | 15.03 | ||||||||||||
|
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|
|
|
|
|
|
|
|
| |||||||||||||
Total Return(c) | ||||||||||||||||||||||||
Based on net asset value | 9.28 | %(d) | (10.33 | )% | 24.36 | % | (0.76 | )% | (3.17 | )% | (1.26 | )% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ratios to Average Net Assets | ||||||||||||||||||||||||
Total expenses(e) | 1.00 | %(f) | 0.95 | % | 1.10 | %(g)(h) | 1.26 | %(g)(h) | 1.25 | %(g)(h) | 1.23 | %(g)(h) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total expenses after fees waived and/or reimbursed(e) | 0.89 | %(f) | 0.91 | % | 1.00 | %(g)(h) | 1.00 | %(g)(h) | 1.00 | %(g)(h) | 1.00 | %(g)(h) | ||||||||||||
|
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|
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|
|
| |||||||||||||
Net investment income(e) | 0.97 | %(f) | 1.68 | % | 1.53 | %(g)(h) | 1.60 | %(g)(h) | 1.11 | %(g)(h) | 1.39 | %(g)(h) | ||||||||||||
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| |||||||||||||
Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000) | $ | 186,317 | $ | 178,081 | $ | 166,510 | $ | 114,863 | $ | 130,327 | $ | 194,685 | ||||||||||||
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|
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|
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| |||||||||||||
Portfolio turnover rate | 59 | % | 102 | % | 101 | %(i) | 84 | %(j) | 112 | %(j) | 128 | %(j) | ||||||||||||
|
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|
|
|
|
|
|
(a) | Based on average shares outstanding. |
(b) | Distributions for annual periods determined in accordance with U.S. federal income tax regulations. |
(c) | Where applicable, assumes the reinvestment of distributions. |
(d) | Aggregate total return. |
(e) | Excludes expenses incurred indirectly as a result of investments in underlying funds as follows: |
Six Months | ||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||
04/30/19 | Year Ended October 31, | |||||||||||||||||||||||
(unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Investments in underlying funds | 0.01 | % | 0.01 | % | 0.01 | % | N/A | N/A | N/A | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(f) | Annualized. |
(g) | Includes the Fund’s share of the allocated net expenses and/or net investment income of BlackRock Master International Portfolio (the “Portfolio”), an affiliate of the Fund. |
(h) | Includes the Fund’s share of the Portfolio’s allocated fees waived of less than 0.01%. |
(i) | Prior to February 27, 2017, the Fund invested all of its assets in the Portfolio. Portfolio turnover rate includes transactions from the Portfolio prior to February 27, 2017. |
(j) | Portfolio turnover rate of the Portfolio. |
See notes to financial statements.
F I N A N C I A L H I G H L I G H T S | 13 |
Financial Highlights (continued)
(For a share outstanding throughout each period)
BlackRock International Fund (continued) | ||||||||||||||||||||||||
Investor A | ||||||||||||||||||||||||
Six Months | ||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||
04/30/19 | Year Ended October 31, | |||||||||||||||||||||||
(unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $ | 14.84 | $ | 16.75 | $ | 13.71 | $ | 13.90 | $ | 14.68 | $ | 15.17 | ||||||||||||
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|
|
|
|
|
|
|
| |||||||||||||
Net investment income(a) | 0.05 | 0.23 | 0.17 | 0.16 | 0.11 | 0.14 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 1.27 | (1.96 | ) | 3.05 | (0.31 | ) | (0.62 | ) | (0.40 | ) | ||||||||||||||
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| |||||||||||||
Net increase (decrease) from investment operations | 1.32 | (1.73 | ) | 3.22 | (0.15 | ) | (0.51 | ) | (0.26 | ) | ||||||||||||||
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|
| |||||||||||||
Distributions from net investment | (0.21 | ) | (0.18 | ) | (0.18 | ) | (0.04 | ) | (0.27 | ) | (0.23 | ) | ||||||||||||
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|
|
|
|
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|
| |||||||||||||
Net asset value, end of period | $ | 15.95 | $ | 14.84 | $ | 16.75 | $ | 13.71 | $ | 13.90 | $ | 14.68 | ||||||||||||
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| |||||||||||||
Total Return(c) | ||||||||||||||||||||||||
Based on net asset value | 9.13 | %(d) | (10.48 | )% | 23.77 | % | (1.10 | )% | (3.50 | )% | (1.70 | )% | ||||||||||||
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|
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|
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| |||||||||||||
Ratios to Average Net Assets | ||||||||||||||||||||||||
Total expenses(e) | 1.33 | %(f) | 1.27 | % | 1.45 | %(g)(h) | 1.64 | %(g)(h) | 1.59 | %(g)(h) | 1.57 | %(g)(h) | ||||||||||||
|
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|
|
|
|
|
| |||||||||||||
Total expenses after fees waived and/or reimbursed(e) | 1.14 | %(f) | 1.19 | % | 1.37 | %(g)(h) | 1.38 | %(g)(h) | 1.38 | %(g)(h) | 1.38 | %(g)(h) | ||||||||||||
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|
|
|
|
| |||||||||||||
Net investment income(e) | 0.73 | %(f) | 1.38 | % | 1.15 | %(g)(h) | 1.21 | %(g)(h) | 0.76 | %(g)(h) | 0.92 | %(g)(h) | ||||||||||||
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| |||||||||||||
Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000) | $ | 310,674 | $ | 285,527 | $ | 336,934 | $ | 307,992 | $ | 285,442 | $ | 285,565 | ||||||||||||
|
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|
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|
|
| |||||||||||||
Portfolio turnover rate | 59 | % | 102 | % | 101 | %(i) | 84 | %(j) | 112 | %(j) | 128 | %(j) | ||||||||||||
|
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|
|
|
|
|
|
(a) | Based on average shares outstanding. |
(b) | Distributions for annual periods determined in accordance with U.S. federal income tax regulations. |
(c) | Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions. |
(d) | Aggregate total return. |
(e) | Excludes expenses incurred indirectly as a result of investments in underlying funds as follows: |
Six Months | ||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||
04/30/19 | Year Ended October 31, | |||||||||||||||||||||||
(unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Investments in underlying funds | 0.01 | % | 0.01 | % | 0.01 | % | N/A | N/A | N/A | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(f) | Annualized. |
(g) | Includes the Fund’s share of the allocated net expenses and/or net investment income of BlackRock Master International Portfolio (the “Portfolio”), an affiliate of the Fund. |
(h) | Includes the Fund’s share of the Portfolio’s allocated fees waived of less than 0.01%. |
(i) | Prior to February 27, 2017, the Fund invested all of its assets in the Portfolio. Portfolio turnover rate includes transactions from the Portfolio prior to February 27, 2017. |
(j) | Portfolio turnover rate of the Portfolio. |
See notes to financial statements.
14 | 2 0 1 9 B L A C K R O C K S E M I - A N N U A L R E P O R T T O S H A R E H O L D E R S |
Financial Highlights (continued)
(For a share outstanding throughout each period)
BlackRock International Fund (continued) | ||||||||||||||||||||||||
Investor C | ||||||||||||||||||||||||
Six Months | ||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||
04/30/19 | Year Ended October 31, | |||||||||||||||||||||||
(unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $ | 13.77 | $ | 15.52 | $ | 12.67 | $ | 12.94 | $ | 13.68 | $ | 14.15 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net investment income (loss)(a) | (0.00 | )(b) | 0.09 | 0.04 | 0.02 | (0.03 | ) | (0.01 | ) | |||||||||||||||
Net realized and unrealized gain (loss) | 1.20 | (1.84 | ) | 2.83 | (0.29 | ) | (0.58 | ) | (0.36 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) from investment operations | 1.20 | (1.75 | ) | 2.87 | (0.27 | ) | (0.61 | ) | (0.37 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Distributions from net investment | (0.08 | ) | — | (0.02 | ) | — | (0.13 | ) | (0.10 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net asset value, end of period | $ | 14.89 | $ | 13.77 | $ | 15.52 | $ | 12.67 | $ | 12.94 | $ | 13.68 | ||||||||||||
|
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|
| |||||||||||||
Total Return(d) | ||||||||||||||||||||||||
Based on net asset value | 8.76 | %(e) | (11.28 | )% | 22.69 | % | (2.09 | )% | (4.49 | )% | (2.62 | )% | ||||||||||||
|
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|
|
|
|
|
|
|
| |||||||||||||
Ratios to Average Net Assets | ||||||||||||||||||||||||
Total expenses(f) | 2.24 | %(g) | 2.15 | % | 2.35 | %(h)(i) | 2.54 | %(h)(i) | 2.45 | %(h)(i) | 2.43 | %(h)(i) | ||||||||||||
|
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|
|
|
|
|
| |||||||||||||
Total expenses after fees waived and/or reimbursed(f) | 1.89 | %(g) | 2.00 | % | 2.31 | %(h)(i) | 2.42 | %(h)(i) | 2.37 | %(h)(i) | 2.35 | %(h)(i) | ||||||||||||
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| |||||||||||||
Net investment income (loss)(f) | (0.05 | )%(g) | 0.54 | % | 0.26 | %(h)(i) | 0.19 | %(h)(i) | (0.24 | )%(h)(i) | (0.05 | )%(h)(i) | ||||||||||||
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Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000) | $ | 45,009 | $ | 50,344 | $ | 72,478 | $ | 110,527 | $ | 136,136 | $ | 148,042 | ||||||||||||
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Portfolio turnover rate | 59 | % | 102 | % | 101 | %(j) | 84 | %(k) | 112 | %(k) | 128 | %(k) | ||||||||||||
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(a) | Based on average shares outstanding. |
(b) | Amount is less than $(0.01) per share. |
(c) | Distributions for annual periods determined in accordance with U.S. federal income tax regulations. |
(d) | Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions. |
(e) | Aggregate total return. |
(f) | Excludes expenses incurred indirectly as a result of investments in underlying funds as follows: |
Six Months | ||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||
04/30/19 | Year Ended October 31, | |||||||||||||||||||||||
(unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Investments in underlying funds | 0.01 | % | 0.01 | % | 0.01 | % | N/A | N/A | N/A | |||||||||||||||
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(g) | Annualized. |
(h) | Includes the Fund’s share of the allocated net expenses and/or net investment income of BlackRock Master International Portfolio (the “Portfolio”), an affiliate of the Fund. |
(i) | Includes the Fund’s share of the Portfolio’s allocated fees waived of less than 0.01%. |
(j) | Prior to February 27, 2017, the Fund invested all of its assets in the Portfolio. Portfolio turnover rate includes transactions from the Portfolio prior to February 27, 2017. |
(k) | Portfolio turnover rate of the Portfolio. |
See notes to financial statements.
F I N A N C I A L H I G H L I G H T S | 15 |
Financial Highlights (continued)
(For a share outstanding throughout each period)
BlackRock International Fund (continued) | ||||||||||||||||||||||||||
Class K | ||||||||||||||||||||||||||
Six Months Ended 04/30/19 (unaudited) | Period from 01/25/18(a) to 10/31/18 | |||||||||||||||||||||||||
Net asset value, beginning of period | $ | 15.20 | $ | 19.02 | ||||||||||||||||||||||
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| |||||||||||||||||||||||
Net investment income(b) | 0.10 | 0.27 | ||||||||||||||||||||||||
Net realized and unrealized loss | 1.27 | (4.09 | ) | |||||||||||||||||||||||
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Net increase from investment operations | 1.37 | (3.82 | ) | |||||||||||||||||||||||
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Distributions from net investment income(c) | (0.27 | ) | — | |||||||||||||||||||||||
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Net asset value, end of period | $ | 16.30 | $ | 15.20 | ||||||||||||||||||||||
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Total Return(d)(e) | ||||||||||||||||||||||||||
Based on net asset value | 9.25 | % | (20.08 | )% | ||||||||||||||||||||||
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Ratios to Average Net Assets | ||||||||||||||||||||||||||
Total expenses(f)(g) | 0.87 | % | 0.83 | % | ||||||||||||||||||||||
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Total expenses after fees waived and/or reimbursed(f)(g) | 0.83 | % | 0.80 | % | ||||||||||||||||||||||
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| |||||||||||||||||||||||
Net investment income(f)(g) | 1.36 | % | 2.10 | % | ||||||||||||||||||||||
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Supplemental Data | ||||||||||||||||||||||||||
Net assets, end of period (000) | $ | 10,095 | $ | 3,353 | ||||||||||||||||||||||
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Portfolio turnover rate | 59 | % | 102 | %(h) | ||||||||||||||||||||||
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(a) | Commencement of operations. |
(b) | Based on average shares outstanding. |
(c) | Distributions for annual periods determined in accordance with U.S. federal income tax regulations. |
(d) | Aggregate total return. |
(e) | Where applicable, assumes the reinvestment of distributions. |
(f) | Excludes expenses incurred indirectly as a result of investments in underlying funds as follows: |
Six Months Ended 04/30/19 (unaudited) | Period from 01/25/18(a) to 10/31/18 | |||||||||||||
Investments in underlying funds | 0.01 | % | 0.01 | % | ||||||||||
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(g) | Annualized. |
(h) | Portfolio turnover rate is representative of the Fund for the entire year. |
See notes to financial statements.
16 | 2 0 1 9 B L A C K R O C K S E M I - A N N U A L R E P O R T T O S H A R E H O L D E R S |
Financial Highlights (continued)
(For a share outstanding throughout each period)
BlackRock International Fund (continued) | ||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||
Six Months | ||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||
04/30/19 | Year Ended October 31, | |||||||||||||||||||||||
(unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $ | 14.83 | $ | 16.73 | $ | 13.68 | $ | 13.88 | $ | 14.64 | $ | 15.12 | ||||||||||||
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Net investment income(a) | 0.03 | 0.19 | 0.13 | 0.12 | 0.06 | 0.09 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 1.28 | (1.97 | ) | 3.05 | (0.32 | ) | (0.62 | ) | (0.39 | ) | ||||||||||||||
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Net increase (decrease) from investment operations | 1.31 | (1.78 | ) | 3.18 | (0.20 | ) | (0.56 | ) | (0.30 | ) | ||||||||||||||
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Distributions from net investment | (0.17 | ) | (0.12 | ) | (0.13 | ) | — | (0.20 | ) | (0.18 | ) | |||||||||||||
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Net asset value, end of period | $ | 15.97 | $ | 14.83 | $ | 16.73 | $ | 13.68 | $ | 13.88 | $ | 14.64 | ||||||||||||
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Total Return(c) | ||||||||||||||||||||||||
Based on net asset value | 8.97 | %(d) | (10.73 | )% | 23.44 | % | (1.44 | )% | (3.81 | )% | (1.98 | )% | ||||||||||||
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| |||||||||||||
Ratios to Average Net Assets | ||||||||||||||||||||||||
Total expenses(e) | 1.58 | %(f) | 1.51 | % | 1.74 | %(g)(h) | 1.93 | %(g)(h) | 1.85 | %(g)(h) | 1.84 | %(g)(h) | ||||||||||||
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| |||||||||||||
Total expenses after fees waived and/or reimbursed(e) | 1.39 | %(f) | 1.43 | % | 1.66 | %(g)(h) | 1.70 | %(g)(h) | 1.70 | %(g)(h) | 1.70 | %(g)(h) | ||||||||||||
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| |||||||||||||
Net investment income(e) | 0.41 | %(f) | 1.13 | % | 0.87 | %(g)(h) | 0.90 | %(g)(h) | 0.42 | %(g)(h) | 0.63 | %(g)(h) | ||||||||||||
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Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000) | $ | 13,854 | $ | 16,624 | $ | 22,132 | $ | 20,819 | $ | 21,453 | $ | 24,318 | ||||||||||||
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| |||||||||||||
Portfolio turnover rate | 59 | % | 102 | % | 101 | %(i) | 84 | %(j) | 112 | %(j) | 128 | %(j) | ||||||||||||
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(a) | Based on average shares outstanding. |
(b) | Distributions for annual periods determined in accordance with U.S. federal income tax regulations. |
(c) | Where applicable, assumes the reinvestment of distributions. |
(d) | Aggregate total return. |
(e) | Excludes expenses incurred indirectly as a result of investments in underlying funds as follows: |
Six Months | ||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||
04/30/19 | Year Ended October 31, | |||||||||||||||||||||||
(unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Investments in underlying funds | 0.01 | % | 0.01 | % | 0.01 | % | N/A | N/A | N/A | |||||||||||||||
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(f) | Annualized. |
(g) | Includes the Fund’s share of the allocated net expenses and/or net investment income of BlackRock Master International Portfolio (the “Portfolio”), an affiliate of the Fund. |
(h) | Includes the Fund’s share of the Portfolio’s allocated fees waived of less than 0.01%. |
(i) | Prior to February 27, 2017, the Fund invested all of its assets in the Portfolio. Portfolio turnover rate includes transactions from the Portfolio prior to February 27, 2017. |
(j) | Portfolio turnover rate of the Portfolio. |
See notes to financial statements.
F I N A N C I A L H I G H L I G H T S | 17 |
Notes to Financial Statements (unaudited)
1. | ORGANIZATION |
BlackRock Series, Inc. (the “Corporation”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-end management investment company. The Corporation is organized as a Maryland corporation. BlackRock International Fund (the “Fund”) is a series of the Corporation and is classified as diversified.
The Fund offers multiple classes of shares. All classes of shares have identical voting, dividend, liquidation and other rights and are subject to the same terms and conditions, except that certain classes bear expenses related to the shareholder servicing and distribution of such shares. Institutional and Class K Shares are sold without a sales charge and only to certain eligible investors. Investor A Shares are generally sold with an initial sales charge, and may be subject to a contingent deferred sales charge (“CDSC”) for certain redemptions where no initial sales charge was paid at the time of purchase. Investor C Shares may be subject to a CDSC. Class R Shares are sold without a sales charge and only to certain employer-sponsored retirement plans. Investor A, Investor C and Class R Shares bear certain expenses related to shareholder servicing of such shares, and Investor C and Class R Shares also bear certain expenses related to the distribution of such shares. Investor A and Investor C Shares are generally available through financial intermediaries. Effective November 8, 2018, the Fund adopted an automatic conversion feature whereby Investor C Shares held for approximately ten years will be automatically converted into Investor A Shares, and, thereafter, investors will be subject to lower ongoing fees. Each class has exclusive voting rights with respect to matters relating to its shareholder servicing and distribution expenditures (except that Investor C shareholders may vote on material changes to the Investor A distribution and service plan).
Share Class | Initial Sales Charge | CDSC | Conversion Privilege | |||||||
Institutional, Class K and Class R Shares | No | No | None | |||||||
Investor A Shares | Yes | No | (a) | None | ||||||
Investor C Shares | No | Yes | To Investor A Shares after approximately 10 years |
(a) | Investor A Shares may be subject to a CDSC for certain redemptions where no initial sales charge was paid at the time of purchase. |
The Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of equity, multi-asset, index and money market funds referred to as the BlackRock Multi-Asset Complex.
2. | SIGNIFICANT ACCOUNTING POLICIES |
The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. Below is a summary of significant accounting policies:
Investment Transactions and Income Recognition:For financial reporting purposes, investment transactions are recorded on the dates the transactions are executed. Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on theex-dividend date. Dividends from foreign securities where theex-dividend date may have passed are subsequently recorded when the Fund is informed of theex-dividend date. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. Income, expenses and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.
Foreign Currency Translation:The Fund’s books and records are maintained in U.S. dollars. Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of trading on the New York Stock Exchange (“NYSE”). Purchases and sales of investments are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the investments denominated in that currency will lose value; the opposite effect occurs if the U.S. dollar falls in relative value.
The Fund does not isolate the portion of the results of operations arising as a result of changes in the exchange rates from the changes in the market prices of investments held or sold for financial reporting purposes. Accordingly, the effects of changes in exchange rates on investments are not segregated in the Statement of Operations from the effects of changes in market prices of those investments, but are included as a component of net realized and unrealized gain (loss) from investments. The Fund reports realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.
Segregation and Collateralization:In cases where the Fund enters into certain investments (e.g., forward foreign currency exchange contracts) that would be treated as “senior securities” for 1940 Act purposes, the Fund may segregate or designate on its books and records cash or liquid assets having a market value at least equal to the amount of its future obligations under such investments. Doing so allows the investment to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, the Fund may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.
Distributions:Distributions paid by the Fund are recorded on theex-dividend date. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.
Offering Costs:Offering costs are amortized over a12-month period beginning with the commencement of operations of a class of shares.
Indemnifications:In the normal course of business, the Fund enters into contracts that contain a variety of representations that provide general indemnification. The Fund’s maximum exposure under these arrangements is unknown because it involves future potential claims against the Fund, which cannot be predicted with any certainty.
18 | 2 0 1 9 B L A C K R O C K S E M I - A N N U A L R E P O R T T O S H A R E H O L D E R S |
Notes to Financial Statements (unaudited) (continued)
Other:Expenses directly related to the Fund or its classes are charged to the Fund or the applicable class. Other operating expenses shared by several funds, including other funds managed by the Manager, are prorated among those funds on the basis of relative net assets or other appropriate methods. Expenses directly related to the Fund and other shared expenses prorated to the Fund are allocated daily to each class based on its relative net assets or other appropriate methods.
The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.
3. | INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS |
Investment Valuation Policies:The Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) as of the close of trading on the NYSE (generally 4:00 p.m., Eastern time). U.S. GAAP defines fair value as the price the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Fund determines the fair values of its financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of the Corporation (the “Board”). The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.
Fair Value Inputs and Methodologies:The following methods and inputs are used to establish the fair value of the Fund’s assets and liabilities:
• | Equity investments traded on a recognized securities exchange are valued at the official closing price each day, if available. For equity investments traded on more than one exchange, the official closing price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day may be valued at the last available bid (long positions) or ask (short positions) price. |
Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of trading on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of trading on the NYSE that may not be reflected in the computation of the Fund’s net assets. Each business day, the Fund uses a pricing service to assist with the valuation of certain foreign exchange-traded equity securities and foreign exchange-traded andover-the-counter (“OTC”) options (the “Systematic Fair Value Price”). Using current market factors, the Systematic Fair Value Price is designed to value such foreign securities and foreign options at fair value as of the close of trading on the NYSE, which follows the close of the local markets. |
• | Investments inopen-end U.S. mutual funds are valued at net asset value (“NAV”) each business day. |
• | The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments may follow the parameters of investments by a money market fund that is subject to Rule2a-7 under the 1940 Act. |
• | Forward foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of trading on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available. |
If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investments, or in the event that the application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee will include market approach, income approach and cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that the Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in anarm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.
Fair Value Hierarchy:Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial statement purposes as follows:
• | Level 1 — Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access |
• | Level 2 — Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market–corroborated inputs) |
• | Level 3 — Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments and derivative financial instruments) |
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds. There may not be a secondary market, and/or there are a limited number of investors.
N O T E S T O F I N A N C I A L S T A T E M E N T S | 19 |
Notes to Financial Statements (unaudited) (continued)
The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investments and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities.
As of April 30, 2019, certain investments of the Fund were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.
4. | SECURITIES AND OTHER INVESTMENTS |
Securities Lending:The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities, but does not receive interest income on securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.
The market value of any securities on loan, all of which were classified as common stocks in the Fund’s Schedule of Investments, and the value of any related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedule of Investments.
Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for thenon-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell orre-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell orre-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.
As of period end, the following table is a summary of the Fund’s securities lending agreements by counterparty which are subject to offset under an MSLA:
Counterparty | Securities Loaned at Value | Cash Collateral Received(a) | Net Amount | |||||||||
| ||||||||||||
BNP Paribas Securities Corp. | $4,978,000 | $(4,978,000 | ) | $— | ||||||||
Citigroup Global Markets, Inc. | 933,873 | (933,873 | ) | — | ||||||||
|
| |||||||||||
$5,911,873 | $(5,911,873 | ) | $— | |||||||||
|
|
(a) | Cash collateral with a value of $6,171,644 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty, if any, is not shown for financial reporting purposes in the table above. |
The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received.
5. | DERIVATIVE FINANCIAL INSTRUMENTS |
The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and/or to manage its exposure to certain risks such as credit risk, equity risk, interest rate risk, foreign currency exchange rate risk, commodity price risk or other risks (e.g., inflation risk). Derivative financial instruments categorized by risk exposure are included in the Schedule of Investments. These contracts may be transacted on an exchange or OTC.
20 | 2 0 1 9 B L A C K R O C K S E M I - A N N U A L R E P O R T T O S H A R E H O L D E R S |
Notes to Financial Statements (unaudited) (continued)
Forward Foreign Currency Exchange Contracts:Forward foreign currency exchange contracts are entered into to gain or reduce exposure to foreign currencies (foreign currency exchange rate risk).
A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a specified date. These contracts help to manage the overall exposure to the currencies in which some of the investments held by the Fund are denominated and in some cases, may be used to obtain exposure to a particular market.
The contract ismarked-to-market daily and the change in market value is recorded as unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. When a contract is closed, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the value at the time it was opened and the value at the time it was closed.Non-deliverable forward foreign currency exchange contracts are settled with the counterparty in cash without the delivery of foreign currency. The use of forward foreign currency exchange contracts involves the risk that the value of a forward foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies. Cash amounts pledged for forward foreign currency exchange contracts are considered restricted and are included in cash pledged as collateral for OTC derivatives in the Statement of Assets and Liabilities.
6. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Investment Advisory:The Corporation, on behalf of the Fund, entered into an Investment Advisory Agreement with the Manager, the Fund’s investment adviser and an indirect, wholly-owned subsidiary of BlackRock, Inc. (“BlackRock”), to provide investment advisory and administrative services. The Manager is responsible for the management of the Fund’s portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of the Fund.
For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:
| ||||
Average Daily Net Assets | Investment Advisory Fee | |||
| ||||
Not exceeding $500 Million | 0.75 | % | ||
In excess of $500 Million | 0.70 | |||
|
With respect to the Fund, the Manager entered into asub-advisory agreement with BlackRock International Limited (“BIL”), an affiliate of the Manager. The Manager pays BIL for services it provides for that portion of the Fund for which it acts assub-adviser, a monthly fee that is equal to a percentage of the investment advisory fees paid by the Fund to the Manager.
Service and Distribution Fees:The Corporation, on behalf of the Fund, entered into a Distribution Agreement and Distribution Plans with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager. Pursuant to the Distribution Plans and in accordance withRule 12b-1 under the 1940 Act, the Fund pays BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at annual rates based upon the average daily net assets of the relevant share class of the Fund as follows:
| ||||||||||||
Investor A | Investor C | Class R | ||||||||||
| ||||||||||||
Distribution Fee | — | % | 0.75 | % | 0.25 | % | ||||||
Service Fee | 0.25 | 0.25 | 0.25 | |||||||||
|
BRIL and broker-dealers, pursuant tosub-agreements with BRIL, provide shareholder servicing and distribution services to the Fund. The ongoing service and/or distribution fee compensates BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to shareholders.
For the six months ended April 30, 2019, the following table shows the class specific service and distribution fees borne directly by each share class of the Fund:
| ||||||
Investor A | Investor C | Class R | Total | |||
| ||||||
$360,812 | $219,779 | $36,026 | $616,617 | |||
|
Transfer Agent:Pursuant to written agreements, certain financial intermediaries, some of which may be affiliates, provide the Fund withsub-accounting, recordkeeping,sub-transfer agency and other administrative services with respect to servicing of underlying investor accounts. For these services, these entities receive an asset-based fee or an annual fee per shareholder account, which will vary depending on share class and/or net assets. For the six months ended April 30, 2019, the Fund paid $14 for the Fund’s Institutional Shares to affiliates of BlackRock in return for these services, which are included in transfer agent — class specific in the Statement of Operations.
The Manager maintains a call center that is responsible for providing certain shareholder services to the Fund. Shareholder services include responding to inquiries and processing purchases and sales based upon instructions from shareholders. For the six months ended April 30, 2019, the Fund reimbursed the Manager the following amounts for costs incurred in running the call center, which are included in transfer agent — class specific in the Statement of Operations:
| ||||||||
Institutional | Investor A | Investor C | Class R | Total | ||||
| ||||||||
$1,477 | $2,186 | $837 | $69 | $4,569 | ||||
|
N O T E S T O F I N A N C I A L S T A T E M E N T S | 21 |
Notes to Financial Statements (unaudited) (continued)
For the six months ended April 30, 2019, the following table shows the class specific transfer agent fees borne directly by each share class of the Fund:
| ||||||||||
Institutional | Investor A | Investor C | Class K | Class R | Total | |||||
| ||||||||||
$131,893 | $325,431 | $87,657 | $185 | $16,437 | $561,603 | |||||
|
Other Fees:For the six months ended April 30, 2019, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of the Fund’s Investor A Shares of $6,145.
For the six months ended April 30, 2019, affiliates received CDSCs as follows:
| ||||||||
| Investor A | Investor C | ||||||
| ||||||||
$361 | $139 | |||||||
|
Expense Limitations, Waivers and Reimbursements:With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation described below will be reduced by the amount of the affiliated money market fund waiver. This amount is included in fees waived and/or reimbursed by the Manager in the Statement of Operations. For the six months ended April 30, 2019, the amount waived was $7,017.
The Manager has contractually agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee through February 29, 2020. The contractual agreement may be terminated upon 90 days’ notice by a majority of the directors who are not “interested persons” of the Corporation, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended April 30, 2019, there were no fees waived and/or reimbursed by the Manager pursuant to this arrangement.
The Fund has incurred expenses with the realignment and consolidation of the boards of directors of certain BlackRock-advised funds. The Manager has voluntarily agreed to reimburse the Fund for all or a portion of such expenses, which amounts are included in fees waived and/or reimbursed by the Manager in the Statement of Operations. For the six months ended April 30, 2019, the amount reimbursed to the Fund was $14,554.
With respect to the Fund, the Manager contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses, excluding interest expense, dividend expense, tax expense, acquired fund fees and expenses, and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Fund’s business (“expense limitation”). The expense limitations as a percentage of average daily net assets are as follows:
| ||||||||
Institutional | Investor A | Investor C | Class K | Class R | ||||
| ||||||||
0.89% | 1.14% | 1.89% | 0.84% | 1.39% | ||||
|
The Manager has agreed not to reduce or discontinue these contractual expense limitations through February 29, 2020, unless approved by the Board, including a majority of the Independent Directors, or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended April 30, 2019, the Manager waived and/or reimbursed $50,625, which is included in fees waived and/or reimbursed by the Manager in the Statement of Operations.
For the six months ended April 30, 2019, the Fund reimbursed the Manager $3,737 for certain accounting services, which is included in accounting services in the Statement of Operations.
These amounts waived and/or reimbursed are included in transfer agent fees waived and/or reimbursed — class specific in the Statement of Operations. For the six months ended April 30, 2019, class specific expense waivers and/or reimbursements are as follows:
| ||||||||||
Institutional | Investor A | Investor C | Class K | Class R | Total | |||||
| ||||||||||
$79,671 | $239,541 | $73,296 | $125 | $11,955 | $404,588 | |||||
|
Securities Lending:The U.S. Securities and Exchange Commission (“SEC”) has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% of the value withdrawn or temporarily restrict withdrawals for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.
22 | 2 0 1 9 B L A C K R O C K S E M I - A N N U A L R E P O R T T O S H A R E H O L D E R S |
Notes to Financial Statements (unaudited) (continued)
Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.
Pursuant to the current securities lending agreement, the Fund retains 82% of securities lending income (which excludes collateral investment expenses), and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses. In addition, commencing the business day following the date that the aggregate securities lending income earned across the BlackRock Multi-Asset Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income in an amount equal to 85% of securities lending income (which excludes collateral investment expenses), and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.
Prior to January 1, 2019, the Fund retained 80% of securities lending income (which excluded collateral investment expenses) and the amount retained could never be less than 70% of the total of securities lending income plus the collateral investment expenses. In addition, commencing the business day following the date that the aggregate securities lending income earned across a complex ofopen-end funds referred to as the Equity-Liquidity Complex in a calendar year exceeded a specified threshold, the Fund would retain for the remainder of that calendar year 85% of securities lending income (which excluded collateral investment expenses), and the amount retained could never be less than 70% of the total of securities lending income plus the collateral investment expenses.
The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Statement of Operations. For the six months ended April 30, 2019, the Fund paid BIM $2,407 for securities lending agent services.
Interfund Lending:In accordance with an exemptive order (the “Order”) from the SEC, the Fund may participate in a joint lending and borrowing facility for temporary purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the Fund’s investment policies and restrictions. The Fund is currently permitted to borrow under the Interfund Lending Program.
A lending BlackRock fund may lend in aggregate up to 15% of its net assets, but may not lend more than 5% of its net assets to any one borrowing fund through the Interfund Lending Program. A borrowing BlackRock fund may not borrow through the Interfund Lending Program or from any other source more than 33 1/3% of its total assets (or any lower threshold provided for by the fund’s investment restrictions). If a borrowing BlackRock fund’s total outstanding borrowings exceed 10% of its total assets, each of its outstanding interfund loans will be subject to collateralization of at least 102% of the outstanding principal value of the loan. All interfund loans are for temporary or emergency purposes and the interest rate to be charged will be the average of the highest current overnight repurchase agreement rate available to a lending fund and the bank loan rate, as calculated according to a formula established by the Board.
During the six months ended April 30, 2019, the Fund did not participate in the Interfund Lending Program.
Directors and Officers:Certain directors and/or officers of the Corporation are directors and/or officers of BlackRock or its affiliates. The Fund reimburses the Manager for a portion of the compensation paid to the Fund’s Chief Compliance Officer, which is included in Directors and Officer in the Statement of Operations.
7. | PURCHASES AND SALES |
For the six months ended April 30, 2019, purchases and sales of investments, excluding short-term securities, were $301,599,753 and $312,970,105, respectively.
8. | INCOME TAX INFORMATION |
It is the Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of its taxable income to its shareholders. Therefore, no U.S. federal income tax provision is required.
The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended October 31, 2018. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.
Management has analyzed tax laws and regulations and their application to the Fund as of April 30, 2019, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.
As of October 31, 2018, the Fund had capital loss carryforwards of $14,389,645 available to offset future realized capital gains. These losses are subject to expire on October 31, 2019.
As of April 30, 2019, gross unrealized appreciation and depreciation for investments based on cost for U.S. federal income tax purposes were as follows:
| ||||
Tax cost | $ | 534,188,659 | ||
|
| |||
Gross unrealized appreciation | $ | 53,978,409 | ||
Gross unrealized depreciation | (15,088,502 | ) | ||
|
| |||
Net unrealized appreciation | $ | 38,889,907 | ||
|
|
N O T E S T O F I N A N C I A L S T A T E M E N T S | 23 |
Notes to Financial Statements (unaudited) (continued)
9. | BANK BORROWINGS |
The Corporation, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a364-day, $2.25 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.75 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.10% per annum on unused commitment amounts and interest at a rate equal to the higher of(a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2020 unless extended or renewed. Prior to April 18, 2019, Participating Funds paid an upfront commitment fee of 0.02% on the total commitment amounts, in addition to administration, legal and arrangement fees, which are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended April 30, 2019, the Fund did not borrow under the credit agreement.
10. | PRINCIPAL RISKS |
In the normal course of business, the Fund invests in securities or other instruments and may enter into certain transactions, and such activities subject the Fund to various risks, including among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate and price fluctuations. The Fund’s prospectus provides details of the risks to which the Fund is subject.
The Fund may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00, which may be subject to redemption gates or liquidity fees under certain circumstances.
Valuation Risk:The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. The Fund may invest in illiquid investments. An illiquid investment is any investment that the Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. The Fund may experience difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause the Fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of the Fund may lose value, regardless of the individual results of the securities and other instruments in which the Fund invests.
Counterparty Credit Risk:The Fund may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions. The Fund manages counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Fund to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Fund’s exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statement of Assets and Liabilities, less any collateral held by the Fund.
A derivative contract may suffer amark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.
Concentration Risk:The Fund invests a significant portion of its assets in securities of issuers located in Europe or with significant exposure to European issuers or countries. The European financial markets have recently experienced volatility and adverse trends due to concerns about economic downturns in, or rising government debt levels of, several European countries. These events may spread to other countries in Europe and may affect the value and liquidity of certain of the Fund’s investments.
Responses to the financial problems by European governments, central banks and others, including austerity measures and reforms, may not work, may result in social unrest and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets and asset valuations around the world. In addition, the United Kingdom has voted to withdraw from the European Union, and one or more other countries may withdraw from the European Union and/or abandon the Euro, the common currency of the European Union. The impact of these actions, especially if they occur in a disorderly fashion, is not clear but could be significant and far reaching.
24 | 2 0 1 9 B L A C K R O C K S E M I - A N N U A L R E P O R T T O S H A R E H O L D E R S |
Notes to Financial Statements (unaudited) (continued)
11. | CAPITAL SHARE TRANSACTIONS |
Transactions in capital shares for each class were as follows:
Six Months Ended 04/30/19 | Year Ended 10/31/18 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
| ||||||||||||||||||||
Institutional | ||||||||||||||||||||
Shares sold | 1,613,677 | $ | 23,987,237 | 5,816,304 | $ | 100,772,303 | ||||||||||||||
Shares issued in reinvestment of distributions | 182,335 | 2,585,517 | 121,921 | 2,103,139 | ||||||||||||||||
Shares redeemed | (2,095,632 | ) | (31,684,979 | ) | (3,909,818 | ) | (65,830,081 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) | (299,620 | ) | $ | (5,112,225 | ) | 2,028,407 | $ | 37,045,361 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Investor A | ||||||||||||||||||||
Shares sold | 2,310,960 | $ | 33,464,255 | 4,395,175 | $ | 74,030,212 | ||||||||||||||
Shares issued in reinvestment of distributions | 277,600 | 3,853,116 | 193,436 | 3,269,082 | ||||||||||||||||
Shares redeemed | (2,352,219 | ) | (34,868,667 | ) | (5,452,910 | ) | (92,218,258 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) | 236,341 | $ | 2,448,704 | (864,299 | ) | $ | (14,918,964 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Investor C | ||||||||||||||||||||
Shares sold | 187,241 | $ | 2,528,291 | 539,288 | $ | 8,614,015 | ||||||||||||||
Shares issued in reinvestment of distributions | 17,684 | 229,888 | — | — | ||||||||||||||||
Shares redeemed | (837,393 | ) | (11,654,084 | ) | (1,554,514 | ) | (24,486,427 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net decrease | (632,468 | ) | $ | (8,895,905 | ) | (1,015,226 | ) | $ | (15,872,412 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Period from 01/25/18(a) to 10/31/18 | ||||||||||||||||||||
Class K | ||||||||||||||||||||
Shares sold | 436,941 | $ | 6,673,127 | 237,550 | $ | 3,969,485 | ||||||||||||||
Shares issued to shareholders in reinvestment of distributions | 5,425 | 76,874 | — | — | ||||||||||||||||
Shares redeemed | (43,808 | ) | (672,644 | ) | (16,892 | ) | (281,234 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net increase | 398,558 | $ | 6,077,357 | 220,658 | $ | 3,688,251 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Class R | ||||||||||||||||||||
Shares sold | 72,358 | $ | 1,068,882 | 259,764 | $ | 4,436,716 | ||||||||||||||
Shares issued in reinvestment of distributions | 12,560 | 174,833 | 9,072 | 153,502 | ||||||||||||||||
Shares redeemed | (338,677 | ) | (4,992,555 | ) | (470,563 | ) | (7,891,416 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net decrease | (253,759 | ) | $ | (3,748,840 | ) | (201,727 | ) | $ | (3,301,198 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Net Increase (Decrease) | (550,948 | ) | $ | (9,230,909 | ) | 167,813 | $ | 6,641,038 | ||||||||||||
|
|
|
|
|
|
|
|
(a)Commencement of operations.
As of April 30, 2019, BlackRock Financial Management, Inc., an affiliate of the Fund, owned 10,515 Class K Shares of the Fund.
12. | SUBSEQUENT EVENTS |
Management’s evaluation of the impact of all subsequent events on the Fund’s financial statements was completed through the date the financial statements were issued and the following items were noted:
On May 15, 2019, the Board of Directors of FDP Series, Inc. and the Board of Directors of BlackRock Series, Inc. each approved the reorganization of FDP BlackRock International Fund (the “Target Fund”) with and into the Fund, with the Fund continuing as the surviving Fund after the reorganization. The reorganization is expected to occur during the third quarter of 2019. Shareholders of the Target Fund or the Fund are not required to approve the reorganization.
N O T E S T O F I N A N C I A L S T A T E M E N T S | 25 |
Director and Officer Information
Mark Stalnecker, Chair of the Board and Director
Bruce R. Bond, Director
Susan J. Carter, Director
Collette Chilton, Director
Neil A. Cotty, Director
Lena G. Goldberg, Director
Robert M. Hernandez, Director
Henry R. Keizer, Director
Cynthia A. Montgomery, Director
Donald C. Opatrny, Director
Joseph P. Platt, Director
Kenneth L. Urish, Director
Claire A. Walton, Director
Robert Fairbairn, Director
John M. Perlowski, Director, President and Chief Executive Officer
Jennifer McGovern, Vice President
Neal J. Andrews, Chief Financial Officer
Jay M. Fife, Treasurer
Charles Park, Chief Compliance Officer
John MacKessy, Anti-Money Laundering Compliance Officer
Benjamin Archibald, Secretary
Investment Adviser
BlackRock Advisors, LLC
Wilmington, DE 19809
Sub-Adviser
BlackRock International Limited
Edinburgh, EH3 8BL
United Kingdom
Accounting Agent and Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
Wilmington, DE 19809
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
Philadelphia, PA 19103
Custodian
Brown Brothers Harriman & Co.
Boston, MA 02109
Distributor
BlackRock Investments, LLC
New York, NY 10022
Legal Counsel
Sidley Austin LLP
New York, NY 10019
Address of the Corporation
100 Bellevue Parkway
Wilmington, DE 19809
26 | 2 0 1 9 B L A C K R O C K S E M I - A N N U A L R E P O R T T O S H A R E H O L D E R S |
Proxy Results
A Special Meeting of Shareholders was held on November 21, 2018 for shareholders of record on September 24, 2018, to elect a Board of Directors of the Corporation. The newly elected Directors took office effective January 1, 2019.
Shareholders approved the Directors* of BlackRock FundsSM with voting results as follows:
Votes For | Votes Withheld | |||||||
| ||||||||
Bruce R. Bond | 1,194,453,855 | 13,902,348 | ||||||
Susan J. Carter | 1,196,552,121 | 11,804,082 | ||||||
Collette Chilton | 1,196,528,363 | 11,827,840 | ||||||
Neil A. Cotty | 1,196,166,120 | 12,190,083 | ||||||
Robert Fairbairn | 1,193,957,290 | 14,398,913 | ||||||
Lena G. Goldberg | 1,196,028,565 | 12,327,638 | ||||||
Robert M. Hernandez | 1,194,378,100 | 13,978,103 | ||||||
Henry R. Keizer | 1,195,228,758 | 13,127,445 | ||||||
Cynthia A. Montgomery | 1,196,372,720 | 11,983,483 | ||||||
Donald C. Opatrny | 1,195,869,848 | 12,486,356 | ||||||
John M. Perlowski | 1,193,999,184 | 14,357,019 | ||||||
Joseph P. Platt | 1,195,764,828 | 12,591,375 | ||||||
Mark Stalnecker | 1,195,994,960 | 12,361,243 | ||||||
Kenneth L. Urish | 1,195,716,210 | 12,639,993 | ||||||
Claire A. Walton | 1,196,904,200 | 11,452,003 | ||||||
|
* Denotes Corporation-wide proposal and voting results.
The above Directors, referred to as the BlackRock Multi-Asset Board, have also been elected to serve as directors for other BlackRock-advised equity, multi-asset, index and money market funds.
General Information
Householding
The Fund will mail only one copy of shareholder documents, including prospectuses, annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call the Fund at (800)441-7762.
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on FormN-Q. The Fund’s FormsN-Q are available on the SEC’s website at http://www.sec.gov. The Fund’s FormsN-Q may also be obtained upon request and without charge by calling (800)441-7762.
Availability of Proxy Voting Policies and Procedures
A description of the policies and procedures that the Fund use to determine how to vote proxies relating to portfolio securities is available upon request and without charge (1) by calling (800)441-7762; (2) athttp://www.blackrock.com; and (3) on the SEC’s website at http://www.sec.gov.
Availability of Proxy Voting Record
Information about how the Fund voted proxies relating to securities held in the Fund’s portfolios during the most recent12-month period ended June 30 is available, upon request and without charge (1) athttp://www.blackrock.comor by calling (800)441-7762 and (2) on the SEC’s website at http://www.sec.gov.
BlackRock’s Mutual Fund Family
BlackRock offers a diverse lineup ofopen-end mutual funds crossing all investment styles and managed by experts in equity, fixed income andtax-exempt investing. Visithttp://www.blackrock.comfor more information.
Shareholder Privileges
Account Information
Call us at (800)441-7762 from 8:00 AM to 6:00 PM ET on any business day to get information about your account balances, recent transactions and share prices. You can also reach us on the Web athttp://www.blackrock.com.
A D D I T I O N A L I N F O R M A T I O N | 27 |
Additional Information (continued)
Automatic Investment Plans
Investor Class shareholders who want to invest regularly can arrange to have $50 or more automatically deducted from their checking or savings account and invested in any of the BlackRock funds.
Systematic Withdrawal Plans
Investor Class shareholders can establish a systematic withdrawal plan and receive periodic payments of $50 or more from their BlackRock funds, as long as their account balance is at least $10,000.
Retirement Plans
Shareholders may make investments in conjunction with Traditional, Rollover, Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans.
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding theirnon-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.
If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.
BlackRock obtains or verifies personalnon-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.
BlackRock does not sell or disclose tonon-affiliated third parties anynon-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. Thesenon-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access tonon-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect thenon-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.
28 | 2 0 1 9 B L A C K R O C K S E M I - A N N U A L R E P O R T T O S H A R E H O L D E R S |
This report is intended for current holders. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless preceded or accompanied by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
IF-4/19-SAR |
Item 2 – | Code of Ethics – Not Applicable to this semi-annual report | |
Item 3 – | Audit Committee Financial Expert – Not Applicable to this semi-annual report | |
Item 4 – | Principal Accountant Fees and Services – Not Applicable to this semi-annual report | |
Item 5 – | Audit Committee of Listed Registrant – Not Applicable | |
Item 6 – | Investments | |
(a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this Form. | ||
(b) Not Applicable due to no such divestments during the semi-annual period covered since the previousForm N-CSR filing. | ||
Item 7 – | Disclosure of Proxy Voting Policies and Procedures forClosed-End Management Investment Companies – Not Applicable | |
Item 8 – | Portfolio Managers ofClosed-End Management Investment Companies – Not Applicable | |
Item 9 – | Purchases of Equity Securities byClosed-End Management Investment Company and Affiliated Purchasers – Not Applicable | |
Item 10 – | Submission of Matters to a Vote of Security Holders –There have been no material changes to these procedures. | |
Item 11 – | Controls and Procedures | |
(a) The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended. | ||
(b) There were no changes in the registrant’s internal control over financial reporting (as defined inRule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting. | ||
Item 12 – | Disclosure of Securities Lending Activities forClosed-End Management Investment Companies – Not Applicable | |
Item 13 – | Exhibits attached hereto | |
(a)(1) – Code of Ethics – Not Applicable to this semi-annual report | ||
(a)(2) – Certifications – Attached hereto | ||
(a)(3) – Not Applicable |
2
(a)(4) – Not Applicable | ||
(b) – Certifications – Attached hereto |
3
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock Series, Inc. | ||||
By: | /s/ John M. Perlowski | |||
John M. Perlowski | ||||
Chief Executive Officer (principal executive officer) of | ||||
BlackRock Series, Inc. | ||||
Date: July 8, 2019 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ John M. Perlowski | |
John M. Perlowski | ||
Chief Executive Officer (principal executive officer) of | ||
BlackRock Series, Inc. | ||
Date: July 8, 2019 | ||
By: | /s/ Neal J. Andrews | |
Neal J. Andrews | ||
Chief Financial Officer (principal financial officer) of | ||
BlackRock Series, Inc. | ||
Date: July 8, 2019 |
4