UNITEDSTATES
SECURITIESANDEXCHANGECOMMISSION
Washington,D.C.20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-02739 and 811-10179
Name of Fund: BlackRock Basic Value Fund, Inc. and Master Basic Value LLC
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: Anne F. Ackerley, Chief Executive Officer, BlackRock Basic
Value Fund, Inc. and Master Basic Value LLC, 55 East 52nd Street, New York, NY 10055
Registrant’s telephone number, including area code: (800) 441-7762
Date of fiscal year end: 06/30/2010
Date of reporting period: 06/30/2010
Item 1 – Report to Stockholders
BlackRock Basic Value
Fund, Inc.
ANNUAL REPORT I
JUNE 30, 2010
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
| |
| Table of Contents | |
| | Page |
| Dear Shareholder | 3 |
| Annual Report: | |
| Fund Summary | 4 |
| About Fund Performance | 6 |
| Disclosure of Expenses | 6 |
| Fund Financial Statements: | |
| Statement of Assets and Liabilities | 7 |
| Statement of Operations | 8 |
| Statements of Changes in Net Assets | 9 |
| Fund Financial Highlights | 10 |
| Fund Notes to Financial Statements | 13 |
| Fund Report of Independent Public Accounting Firm | 17 |
| Important Tax Information | 17 |
| Portfolio Information | 18 |
| Master LLC Financial Statements: | |
| Schedule of Investments | 19 |
| Statement of Assets and Liabilities | 22 |
| Statement of Operations | 23 |
| Statements of Changes in Net Assets | 24 |
| Master LLC Financial Highlights | 24 |
| Master LLC Notes to Financial Statements | 25 |
| Master LLC Report of Independent Public Accounting FIrm | 28 |
| Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement | 29 |
| Officers and Directors | 33 |
| Additional Information | 36 |
| Mutual Fund Family | 38 |
2 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
Dear Shareholder
Although overall global economic and financial conditions have generally improved over the past year, the past several months have seen high levels
of market volatility and diminishing investor confidence sparked by the sovereign debt crisis in Europe and mixed economic data that have raised con-
cerns over the possibility that some economies could slide back into recession. Despite the uneven nature of recent market conditions, we continue
to believe that the “Great Recession” likely ended at some point last summer, thanks primarily to massive fiscal and monetary stimulus, and that the
global economy remains in recovery mode for most regions of the world. Regarding the US economy, we believe it is unlikely that the United States
will experience a “double dip” recession, although we acknowledge that subpar growth is likely to persist for some time.
Global equity markets bottomed in early 2009 and since that time have moved unevenly higher as investors were lured back into the markets by
depressed valuations, desire for higher yields and improvements in corporate earnings prospects. Volatility levels, however, have remained elevated —
primarily as a result of uneven economic data and lingering deflation issues (especially in Europe). As the period drew to a close, equity markets had
endured a significant correction that drove stock prices into negative territory on a year-to-date basis in almost every market. Over a 12-month basis,
however, global equities posted positive returns thanks to improving corporate revenues and profits and a reasonably strong macro backdrop. From a
geographic perspective, US equities have significantly outpaced their international counterparts over the past six and twelve months, as the domestic
economic recovery has been more pronounced and as credit-related issues have held European markets down. Within the United States, smaller cap
stocks have noticeably outperformed large caps.
In fixed income markets, yields have been moving unevenly over the past six and twelve months as improving economic conditions have been acting
to push Treasury yields higher (and prices correspondingly lower), while concerns over ongoing deflation threats have acted as a counterweight. As the
period drew to a close, however, Treasury yields fell sharply as investors flocked to the “safe haven” asset class in the face of escalating uncertainty. As
a result, US Treasuries became one of the world’s best-performing asset classes on a six-month basis. High yield bonds have also continued to perform
well, thanks in large part to ongoing high levels of investor demand. Meanwhile, municipal bonds performed in line with their taxable counterparts on a
12-month basis, but slightly underperformed over the last six months as investors rotated to the relative safety of Treasuries.
Regarding cash investments, yields on money market securities remain near all-time lows (producing returns only marginally above zero percent), with
the Federal Open Market Committee reiterating that economic circumstances are likely to necessitate an accommodative interest rate stance for an
“extended period.”
| | |
| Against this backdrop, the major market averages posted the following returns: | | |
| Total Returns as of June 30, 2010 | 6-month | 12-month |
| US equities (S&P 500 Index) | (6.65)% | 14.43% |
| Small cap US equities (Russell 2000 Index) | (1.95) | 21.48 |
| International equities (MSCI Europe, Australasia, Far East Index) | (13.23) | 5.92 |
| 3-month Treasury bill (BofA Merrill Lynch 3-Month Treasury Bill Index) | 0.05 | 0.16 |
| US Treasury securities (BofA Merrill Lynch 10-Year US Treasury Index) | 9.36 | 8.20 |
| Taxable fixed income (Barclays Capital US Aggregate Bond Index) | 5.33 | 9.50 |
| Tax-exempt fixed income (Barclays Capital Municipal Bond Index) | 3.31 | 9.61 |
| High yield bonds (Barclays Capital US Corporate High Yield 2% Issuer Capped Index) | 4.45 | 26.66 |
Past performance is no guarantee of future results. Index performance shown for illustrative purposes only. You cannot invest directly in an index.
Although conditions are certainly better than they were a couple of years ago, global financial markets continue to face high volatility and questions
about the strength and sustainability of the recovery abound. Through periods of uncertainty, as ever, BlackRock’s full resources are dedicated to
the management of our clients’ assets. For additional market perspective and investment insight, visit www.blackrock.com/shareholdermagazine,
where you’ll find the most recent issue of our award-winning Shareholder® magazine, as well as its quarterly companion newsletter, Shareholder
Perspectives. As always, we thank you for entrusting BlackRock with your investments, and we look forward to your continued partnership in the
months and years ahead.
THIS PAGE NOT PART OF YOUR FUND REPORT
3
Fund Summary as of June 30, 2010 BlackRock Basic Value Fund, Inc.
Portfolio Management Commentary
How did the Fund perform?
•Through the Fund’s investment in Master Basic Value LLC (the “Master
LLC”) for the 12-month period ended June 30, 2010, the Fund under-
performed its benchmark, the Russell 1000 Value Index, as well as the
broad-market S&P 500 Index and the S&P 500 Value Index. The follow-
ing discussion of relative performance pertains to the Russell 1000
Value Index.
What factors influenced performance?
•Stock selection within the financials sector, particularly positions in
Morgan Stanley and The Bank of New York Mellon Corp., detracted from
performance during the period. Stock selection among oil companies
also proved disappointing, as did overall allocations within the energy
sector, which was pressured by the oil spill in the Gulf of Mexico. In par-
ticular, Exxon Mobil Corp., Noble Corp. and Anadarko Petroleum Corp.
had a negative impact on returns. In industrials, the Master LLC’s hold-
ings in aerospace & defense companies and its underweight positions in
road & rail companies and industrial conglomerates such as General
Electric Co., hampered returns. In materials, an overweight in metals &
mining industry also detracted.
•Conversely, stock selection in the information technology (IT) sector
benefited the Master LLC, with Micron Technology Inc., Xerox Corp. and
International Business Machines Corp. posting gains. In utilities, the
Master LLC benefited from stock selection and allocation decisions,
especially its underweight in electric utilities such as Exelon Corp. In
telecommunication services (telecom), the Master LLC’s position in
Qwest Communications International, Inc. and underweight in AT&T, Inc.
added to returns. In consumer staples, the Master LLC benefited from
favorable stock selection and underweights in tobacco and food.
Describe recent portfolio activity.
•During the 12-month period, we increased the Master LLC’s exposure to
energy, industrials and financials by initiating new positions in Devon
Energy Corp., Hess Corp., Marathon Oil Corp., Occidental Petroleum
Corp., Fluor Corp., General Electric Co. and Citigroup, Inc. We reduced
exposure to IT by trimming positions broadly and exiting positions in
Analog Devices, Inc. and Nokia Corp. We also reduced exposure to
healthcare as the Master LLC’s shares of Schering Plough Co. and Wyeth
were converted to Merck & Co., Inc. and Pfizer, Inc., respectively, due to
acquisitions. The Master LLC’s exposure to telecom, consumer discre-
tionary and consumer staples were also reduced over the period.
Describe portfolio positioning at period end.
•As of June 30, 2010, relative to the benchmark index, the Master LLC
was overweight in IT, energy, industrials, telecom, consumer staples and
materials and underweight in financials, health care, utilities and
consumer discretionary.
•For the remainder of 2010, we expect continued economic improve-
ment, although not in a straight line. Despite strong cyclical tailwinds,
some macroeconomic headwinds remain that warrant caution. Given
this environment, the Master LLC’s positioning at period end is more bal-
anced. The Master LLC’s IT exposure gives it a cyclical posture, which is
offset by more defensive positions in consumer staples. We favor a
bias towards large-cap companies and globally exposed companies
with the potential to benefit from the rapid growth of economies in
emerging markets.
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.
4 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
Total Return Based on a $10,000 Investment
1 Assuming maximum sales charge, transaction costs and other operating expenses, including investment advisory and administration fees, if
any. Institutional Shares do not have a sales charge.
2 The Fund invests all of its assets in Master Basic Value LLC. Master Basic Value LLC invests in securities, primarily equities, that management
of the Fund believes are undervalued and therefore represent basic investment value.
3 This unmanaged Index covers 500 industrial, utility, transportation and financial companies of the US markets (mostly New York Stock
Exchange (“NYSE”) issues) representing about 75% of NYSE market capitalization and 30% of NYSE issues.
4 This unmanaged Index is designed to provide a comprehensive measure of large-cap US equity “value” performance. It is an unmanaged
float adjusted market capitalization weighted index comprised of stocks representing approximately half the market capitalization of the
S&P 500 Index that have been identified as being on the value end of the growth-value spectrum.
5 This index is a subset of Russell 1000 Index that consists of those Russell 1000 securities with lower price-to-book ratios and lower forecasted
growth values. Effective September 30, 2009, the Fund changed the benchmark against which it measures its performance from the S&P 500
Value Index to the Russell 1000 Value Index, as Fund management believes the new benchmark more accurately reflects the investment
strategy of the Fund.
| | | | | | | |
| Performance Summary for the Period Ended June 30, 2010 | | | | | | |
| | | | | Average Annual Total Returns6 | | |
| | | 1 Year | | 5 Years | | 10 Years |
| | 6-Month | w/o sales | w/sales | w/o sales | w/sales | w/o sales | w/sales |
| | Total Returns | charge | charge | charge | charge | charge | charge |
| Institutional | (8.12)% | 14.28% | N/A | 0.11% | N/A | 2.41% | N/A |
| Investor A | (8.25) | 13.97 | 7.99% | (0.16) | (1.23)% | 2.13 | 1.59% |
| Investor B | (8.65) | 12.88 | 8.38 | (1.01) | (1.30) | 1.50 | 1.50 |
| Investor C | (8.64) | 13.01 | 12.01 | (0.97) | (0.97) | 1.33 | 1.33 |
| Class R | (8.41) | 13.51 | N/A | (0.50) | N/A | 1.88 | N/A |
| S&P 500 Index | (6.65) | 14.43 | N/A | (0.79) | N/A | (1.59) | N/A |
| S&P 500 Value Index | (5.30) | 16.40 | N/A | (1.51) | N/A | 1.10 | N/A |
| Russell 1000 Value Index | (5.12) | 16.92 | N/A | (1.64) | N/A | 2.38 | N/A |
6 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.
N/A — Not applicable as share class and index do not have a sales charge.
Past performance is not indicative of future results.
BLACKROCK BASIC VALUE FUND, INC. JUNE 30, 2010 5
About Fund Performance
•Institutional Shares are not subject to any sales charge. Institutional
Shares bear no ongoing distribution or service fees and are available
only to eligible investors.
•Investor A Shares incur a maximum initial sales charge (front-end load)
of 5.25% and a service fee of 0.25% per year (but no distribution fee).
•Investor B Shares are subject to a maximum contingent deferred sales
charge of 4.50% declining to 0% after six years. In addition, Investor B
Shares are subject to a distribution fee of 0.75% per year and a service
fee of 0.25% per year. These shares automatically convert to Investor A
Shares after approximately eight years. (There is no initial sales charge
for automatic share conversions.) All returns for periods greater than
eight years reflect this conversion. Investor B Shares of the Fund are only
available through exchanges, dividend reinvestment by existing share-
holders or for purchase by certain qualified employee benefit plans.
•Investor C Shares are subject to 1% contingent deferred sales charge
if redeemed within one year of purchase. In addition, Investor C Shares
are subject to a distribution fee of 0.75% and a service fee of 0.25%
per year.
•Class R Shares do not incur a maximum initial sales charge (front-end
load) or deferred sales charge. These shares are subject to a distribution
fee of 0.25% per year and a service fee of 0.25% per year. Class R
Shares are available only to certain retirement plans. Prior to January 3,
2003, Class R Share performance results are those of Institutional
Shares (which have no distribution or service fees) restated to reflect
Class R Share fees.
Performance information reflects past performance and does not guar-
antee future results. Current performance may be lower or higher than the
performance data quoted. Refer to www.blackrock.com/funds to obtain
performance data current to the most recent month-end. Performance
results do not reflect the deduction of taxes that a shareholder would
pay on fund distributions or the redemption of fund shares. Figures
shown in the performance table on the previous page assume reinvest-
ment of all dividends and capital gain distributions, if any, at net asset
value on the ex-dividend date. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Dividends paid to each class of shares will
vary because of the different levels of service, distribution and transfer
agency fees applicable to each class, which are deducted from the
income available to be paid to shareholders.
Disclosure of Expenses
Shareholders of this Fund may incur the following charges: (a) expenses
related to transactions, including sales charges, redemption fees and
exchange fees; and (b) operating expenses including advisory fees, serv-
ice, distribution fees including 12b-1 fees and other Fund expenses. The
expense example shown below (which is based on a hypothetical invest-
ment of $1,000 invested on January 1, 2010 and held through June 30,
2010) is intended to assist shareholders both in calculating expenses
based on an investment in the Fund and in comparing these expenses
with similar costs of investing in other mutual funds.
The table provides information about actual account values and actual
expenses. In order to estimate the expenses a shareholder paid during the
period covered by this report, shareholders can divide their account value
by $1,000 and then multiply the result by the number corresponding
to their share class under the heading entitled “Expenses Paid During
the Period.”
The table also provides information about hypothetical account values
and hypothetical expenses based on the Fund’s actual expense ratio and
an assumed rate of return of 5% per year before expenses. In order to
assist shareholders in comparing the ongoing expenses of investing in this
Fund and other funds, compare the 5% hypothetical example with the 5%
hypothetical examples that appear in other funds’ shareholder reports.
The expenses shown in the table are intended to highlight shareholders’
ongoing costs only and do not reflect any transactional expenses, such
as sales charges, redemption fees or exchange fees. Therefore, the hypo-
thetical 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.
Expense Example
| | | | | | | |
| | | Actual | | | Hypothetical2 | | |
| | Beginning | Ending | | Beginning | Ending | | Annualized |
| | Account Value | Account Value | Expenses Paid | Account Value | Account Value | Expenses Paid | Expense |
| | January 1, 2010 | June 30, 2010 | During the Period1 | January 1, 2010 | June 30, 2010 | During the Period1 | Ratio |
| Institutional | $1,000 | $918.80 | $2.57 | $1,000 | $1,022.12 | $2.71 | 0.54% |
| Investor A | $1,000 | $917.50 | $4.09 | $1,000 | $1,020.54 | $4.31 | 0.86 |
| Investor B | $1,000 | $913.50 | $8.21 | $1,000 | $1,016.22 | $8.65 | 1.73 |
| Investor C | $1,000 | $913.60 | $7.92 | $1,000 | $1,016.52 | $8.35 | 1.67 |
| Class R | $1,000 | $915.90 | $5.70 | $1,000 | $1,018.85 | $6.01 | 1.20 |
1 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 the one-half year period shown). Because the Fund is a feeder fund, the expense table example reflects the expenses of both the Fund and the Master LLC in which
it invests.
2 Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the most recent fiscal half year divided by 365.
6 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
| | |
| Statement of Assets and Liabilities | BlackRock Basic Value Fund, Inc. |
| June 30, 2010 | | |
| Assets | | |
| Investments at value — Master Basic Value LLC (the “Master LLC”) (cost — $3,318,853,329) | | $ 3,955,383,066 |
| Withdrawls receivable from the Master LLC | | 25,772,844 |
| Capital shares sold receivable | | 7,086,497 |
| Prepaid expenses | | 17,062 |
| Total assets | | 3,988,259,469 |
| Liabilities | | |
| Capital shares redeemed payable | | 32,859,341 |
| Distribution fees payable | | 777,919 |
| Other affiliates payable | | 87,316 |
| Officer’s fees payable | | 1,387 |
| Other accrued expenses payable | | 1,143,721 |
| Total liabilities | | 34,869,684 |
| Net Assets | | $ 3,953,389,785 |
| Net Assets Consist of | | |
| Paid-in capital | | $ 3,889,197,537 |
| Undistributed net investment income | | 34,618,860 |
| Accumulated net realized loss allocated from the Master LLC | | (606,956,349) |
| Net unrealized appreciation/depreciation allocated from the Master LLC | | 636,529,737 |
| Net Assets | | $ 3,953,389,785 |
| Net Asset Value | | |
| Institutional — Based on net assets of $1,956,794,339 and 91,983,572 shares outstanding, 400 million shares authorized, $0.10 par value | $ 21.27 |
| Investor A — Based on net assets of $1,461,423,302 and 69,206,084 shares outstanding, 200 million shares authorized, $0.10 par value | $ 21.12 |
| Investor B — Based on net assets of $101,507,516 and 4,905,283 shares outstanding, 400 million shares authorized, $0.10 par value | $ 20.69 |
| Investor C — Based on net assets of $413,806,168 and 20,917,510 shares outstanding, 200 million shares authorized, $0.10 par value | $ 19.78 |
| Class R — Based on net assets of $19,858,460 and 969,683 shares outstanding, 400 million shares authorized, $0.10 par value | | $ 20.48 |
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
7
| |
| Statement of Operations | BlackRock Basic Value Fund, Inc. |
| Year Ended June 30, 2010 | |
| Investment Income | |
| Net investment income allocated from the Master LLC: | |
| Dividends | $ 107,893,133 |
| Foreign taxes withheld | (798,715) |
| Securities lending — affiliated | 298,135 |
| Dividends — affiliated | 47,898 |
| Expenses | (18,780,497) |
| Total income | 88,659,954 |
| Expenses | |
| Service — Investor A | 4,074,376 |
| Service and distribution — Investor B | 1,481,997 |
| Service and distribution — Investor C | 4,635,538 |
| Service and distribution — Class R | 106,857 |
| Transfer agent — Institutional | 2,276,312 |
| Transfer agent — Investor A | 2,755,069 |
| Transfer agent — Investor B | 503,030 |
| Transfer agent — Investor C | 1,109,009 |
| Transfer agent — Class R | 59,062 |
| Printing | 217,825 |
| Registration | 92,751 |
| Professional | 84,752 |
| Officer | 5,685 |
| Miscellaneous | 30,770 |
| Total expenses | 17,433,033 |
| Net investment income | 71,226,921 |
| Realized and Unrealized Gain Allocated from the Master LLC | |
| Net realized gain from investments | 123,648,030 |
| Net change in unrealized appreciation/depreciation on investments | 343,495,707 |
| Total realized and unrealized gain | 467,143,737 |
| Net Increase in Net Assets Resulting from Operations | $ 538,370,658 |
See Notes to Financial Statements.
8 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
| | |
| Statements of Changes in Net Assets | BlackRock Basic Value Fund, Inc. |
| | Year Ended June 30, |
| Increase (Decrease) in Net Assets: | 2010 | 2009 |
| Operations | | |
| Net investment income | $ 71,226,921 | $ 92,714,487 |
| Net realized gain (loss) | 123,648,030 | (658,009,767) |
| Net change in unrealized appreciation/depreciation | 343,495,707 | (843,083,793) |
| Net increase (decrease) in net assets resulting from operations | 538,370,658 | (1,408,379,073) |
| Dividends and Distributions to Shareholders From | | |
| Net investment income: | | |
| Institutional | (41,476,697) | (56,372,234) |
| Investor A | (29,906,916) | (38,111,190) |
| Investor B | (1,032,003) | (3,159,713) |
| Investor C | (5,255,684) | (7,911,748) |
| Class R | (328,911) | (443,707) |
| Net realized gain: | | |
| Institutional | — | (47,280,236) |
| Investor A | — | (35,805,612) |
| Investor B | — | (6,480,815) |
| Investor C | — | (12,527,725) |
| Class R | — | (522,499) |
| Net decrease in net assets resulting from dividends and distributions to shareholders | (78,000,211) | (208,615,479) |
| Capital Share Transactions | | |
| Net decrease in net assets derived from capital share transactions | (243,757,942) | (487,432,138) |
| Net Assets | | |
| Total increase (decrease) in net assets | 216,612,505 | (2,104,426,690) |
| Beginning of year | 3,736,777,280 | 5,841,203,970 |
| End of year | $3,953,389,785 | $3,736,777,280 |
| Undistributed net investment income | $ 34,618,860 | $ 41,391,358 |
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
9
| | | | | | | | | | | | | |
| Financial Highlights | | | | | | | | BlackRock Basic Value Fund, Inc. |
| | | | | Institutional | | | | | | Investor A | | | |
| | | | Year Ended June 30, | | | | Year Ended June 30, | | |
| | | 2010 | 2009 | 2008 | | 2007 | 2006 | 2010 | 2009 | 2008 | | 2007 | 2006 |
| Per Share Operating Performance | | | | | | | | | | | |
| Net asset value, beginning | | | | | | | | | | | | | |
| of year | $ 18.99 | $ 26.12 | $ 33.96 | $ 32.87 | $ 31.19 | $ 18.86 | $ 25.94 | $ 33.78 | $ 32.69 | $ 31.03 |
| Net investment income1 | | 0.43 | 0.50 | 0.54 | | 0.55 | 0.48 | 0.36 | 0.44 | 0.45 | | 0.46 | 0.40 |
| Net realized and unrealized | | | | | | | | | | | | | |
| gain (loss) | | 2.31 | (6.60) | (6.28) | | 6.98 | 3.18 | 2.30 | (6.56) | (6.24) | | 6.95 | 3.16 |
| Net increase (decrease) from | | | | | | | | | | | | | |
| investment operations | | 2.74 | (6.10) | (5.74) | | 7.53 | 3.66 | 2.66 | (6.12) | (5.79) | | 7.41 | 3.56 |
| Dividends and distributions | | | | | | | | | | | | | |
| from: | | | | | | | | | | | | | |
| Net investment income | | (0.46) | (0.57) | (0.28) | | (0.80) | (0.47) | (0.40) | (0.50) | (0.23) | | (0.68) | (0.39) |
| Net realized gain | | — | (0.46) | (1.82) | | (5.64) | (1.51) | — | (0.46) | (1.82) | | (5.64) | (1.51) |
| Total dividends and | | | | | | | | | | | | | |
| distributions | | (0.46) | (1.03) | (2.10) | | (6.44) | (1.98) | (0.40) | (0.96) | (2.05) | | (6.32) | (1.90) |
| Net asset value, | | | | | | | | | | | | | |
| end of year | $ 21.27 | $ 18.99 | $ 26.12 | $ 33.96 | $ 32.87 | $ 21.12 | $ 18.86 | $ 25.94 | $ 33.78 | $ 32.69 |
| Total Investment Return2 | | | | | | | | | | | | | |
| Based on net asset value | | 14.28% | (23.67)% | (17.84)% | | 25.11% | 12.18%3 | 13.97% | (23.93)% | (18.08)% | | 24.81% | 11.89%3 |
| Ratios to Average Net Assets4 | | | | | | | | | | | | |
| Total expenses | | 0.55% | 0.58% | 0.53% | | 0.54% | 0.57% | 0.86% | 0.89% | 0.82% | | 0.80% | 0.82% |
| Net investment income | | 1.93% | 2.54% | 1.76% | | 1.63% | 1.52% | 1.62% | 2.24% | 1.48% | | 1.37% | 1.28% |
| Supplemental Data | | | | | | | | | | | | | |
| Net assets, | | | | | | | | | | | | | |
| end of year (000) | $ 1,956,794 | $1,747,444 | $2,721,795 | $4,071,437 | $3,655,602 | $1,461,423 | $1,388,725 | $2,026,095 | $2,759,567 | $2,266,626 |
| Portfolio turnover | | | | | | | | | | | | | |
| of the Master LLC | | 48% | 38% | 45% | | 31% | 42% | 48% | 38% | 45% | | 31% | 42% |
1 Based on average shares outstanding.
2 Where applicable, total investment returns exclude the effect of any sales charges and include the reinvestment of dividends and distributions.
3 A portion of total investment return consists of payments by the previous investment advisor to the Master LLC for compensation as a result of a securities class action
entitlement recovery and as a result of a corporate action, which increased the return by 0.10%. Excluding these items, the total return would have been 12.08% for
Institutional Shares and 11.79% for Investor A Shares.
4 Includes the Fund’s share of the Master LLC’s allocated expenses and/or net investment income.
See Notes to Financial Statements.
10 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
| | | | | | | | | | | | | | |
| Financial Highlights (continued) | | | | | | | BlackRock Basic Value Fund, Inc. |
| | | | | Investor B | | | | | | Investor C | | | |
| | | | Year Ended June 30, | | | | Year Ended June 30, | | |
| | | 2010 | 2009 | | 2008 | | 2007 | 2006 | 2010 | 2009 | 2008 | | 2007 | 2006 |
| Per Share Operating Performance | | | | | | | | | | | | |
| Net asset value, | | | | | | | | | | | | | | |
| beginning of year | $ 18.45 | $ 25.30 | $ 33.10 | $ 32.00 | $ 30.39 | $ 17.70 | $ 24.37 | $ 31.97 | $ 31.15 | $ 29.66 |
| Net investment income1 | | 0.16 | 0.26 | | 0.19 | | 0.19 | 0.15 | 0.17 | 0.26 | 0.19 | | 0.19 | 0.15 |
| Net realized and | | | | | | | | | | | | | | |
| unrealized gain (loss) | | 2.23 | (6.41) | | (6.10) | | 6.80 | 3.09 | 2.15 | (6.17) | (5.87) | | 6.60 | 3.01 |
| Net increase (decrease) from | | | | | | | | | | | | | | |
| investment operations | | 2.39 | (6.15) | | (5.91) | | 6.99 | 3.24 | 2.32 | (5.91) | (5.68) | | 6.79 | 3.16 |
| Dividends and distributions | | | | | | | | | | | | | | |
| from: | | | | | | | | | | | | | | |
| Net investment income | | (0.15) | (0.24) | | (0.07) | | (0.25) | (0.12) | (0.24) | (0.30) | (0.10) | | (0.33) | (0.16) |
| Net realized gain | | — | (0.46) | | (1.82) | | (5.64) | (1.51) | — | (0.46) | (1.82) | | (5.64) | (1.51) |
| Total dividends and | | | | | | | | | | | | | | |
| distributions | | (0.15) | (0.70) | | (1.89) | | (5.89) | (1.63) | (0.24) | (0.76) | (1.92) | | (5.97) | (1.67) |
| Net asset value, | | | | | | | | | | | | | | |
| end of year | $ 20.69 | $ 18.45 | $ 25.30 | $ 33.10 | $ 32.00 | $ 19.78 | $ 17.70 | $ 24.37 | $ 31.97 | $ 31.15 |
| Total Investment Return2 | | | | | | | | | | | | | | |
| Based on net asset value | | 12.88% | (24.60)% | | (18.76)% | | 23.82% | 11.01%3 | 13.01% | (24.57)% | (18.71)% | | 23.83% | 11.02%3 |
| Ratios to Average Net Assets4 | | | | | | | | | | | | | |
| Total expenses | | 1.79% | 1.79% | | 1.66% | | 1.59% | 1.59% | 1.68% | 1.72% | 1.62% | | 1.58% | 1.59% |
| Net investment income | | 0.73% | 1.34% | | 0.62% | | 0.59% | 0.50% | 0.80% | 1.40% | 0.68% | | 0.59% | 0.50% |
| Supplemental Data | | | | | | | | | | | | | | |
| Net assets, | | | | | | | | | | | | | | |
| end of year (000) | $ 101,508 | $ 168,115 | $ 389,812 | $ 729,334 | $ 860,121 | $ 413,806 | $ 413,576 | $ 675,654 | $ 906,972 | $ 763,451 |
| Portfolio turnover | | | | | | | | | | | | | | |
| of the Master LLC | | 48% | 38% | | 45% | | 31% | 42% | 48% | 38% | 45% | | 31% | 42% |
1 Based on average shares outstanding.
2 Where applicable, total investment returns exclude the effect of any sales charges and include the reinvestment of dividends and distributions.
3 A portion of total investment return consists of payments by the previous investment advisor to the Master LLC for compensation as a result of a securities class action
entitlement recovery and as a result of a corporate action, which increased the return by 0.10%. Excluding these items, the total return would have been 10.91% for
Investor B Shares and 10.92% for Investor C Shares.
4 Includes the Fund’s share of the Master LLC’s allocated expenses and/or net investment income.
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
11
| | | | | | |
| Financial Highlights (concluded) | | | BlackRock Basic Value Fund, Inc. |
| | | | Class R | | | |
| | | Year Ended June 30, | | |
| | 2010 | 2009 | 2008 | | 2007 | 2006 |
| Per Share Operating Performance | | | | | | |
| Net asset value, beginning of year | $ 18.31 | $ 25.19 | $ 32.92 | $ 31.98 | $ 30.41 |
| Net investment income1 | 0.27 | 0.35 | 0.33 | | 0.35 | 0.32 |
| Net realized and unrealized gain (loss) | 2.23 | (6.37) | (6.06) | | 6.79 | 3.08 |
| Net increase (decrease) from investment operations | 2.50 | (6.02) | (5.73) | | 7.14 | 3.40 |
| Dividends and distributions from: | | | | | | |
| Net investment income | (0.33) | (0.40) | (0.18) | | (0.56) | (0.32) |
| Net realized gain | — | (0.46) | (1.82) | | (5.64) | (1.51) |
| Total dividends and distributions | (0.33) | (0.86) | (2.00) | | (6.20) | (1.83) |
| Net asset value, end of year | $ 20.48 | $ 18.31 | $ 25.19 | $ 32.92 | $ 31.98 |
| Total Investment Return2 | | | | | | |
| Based on net asset value | 13.51% | (24.21)% | (18.37)% | | 24.46% | 11.59%3 |
| Ratios to Average Net Assets4 | | | | | | |
| Total expenses | 1.22% | 1.29% | 1.18% | | 1.09% | 1.07% |
| Net investment income | 1.27% | 1.83% | 1.12% | | 1.08% | 1.02% |
| Supplemental Data | | | | | | |
| Net assets, end of year (000) | $ 19,858 | $ 18,918 | $ 27,849 | $ 39,143 | $ 27,114 |
| Portfolio turnover of the Master LLC | 48% | 38% | 45% | | 31% | 42% |
1 Based on average shares outstanding.
2 Where applicable, total investment returns include the reinvestment of dividends and distributions.
3 A portion of total investment return consists of payments by the previous investment advisor to the Master LLC for compensation as a result of a securities class action
entitlement recovery and as a result of a corporate action, which increased the return by 0.10%. Excluding these items, the total return would have been 11.49% for
Class R Shares.
4 Includes the Fund’s share of the Master LLC’s allocated expenses and/or net investment income.
See Notes to Financial Statements.
12 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
Notes to Financial Statements BlackRock Basic Value Fund, Inc.
1. Organization and Significant Accounting Policies:
BlackRock Basic Value Fund, Inc. (the “Fund”) is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as a
diversified, open-end management investment company. The Fund
seeks to achieve its investment objective by investing all of its assets in
Master Basic Value LLC (the “Master LLC”), which has the same invest-
ment objective and strategies as the Fund. The Fund is organized as a
Maryland corporation. The value of the Fund’s investment in the Master
LLC reflects the Fund’s proportionate interest in the net assets of the
Master LLC. The percentage of the Master LLC owned by the Fund at
June 30, 2010 was 99.7%. The performance of the Fund is directly
affected by the performance of the Master LLC. The financial statements
of the Master LLC, including the Schedule of Investments, are included
elsewhere in this report and should be read in conjunction with the
Fund’s financial statements. The Fund’s financial statements are pre-
pared in conformity with accounting principles generally accepted in the
United States of America (“US GAAP”), which may require management
to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ
from those estimates. The Fund offers multiple classes of shares.
Institutional Shares are sold without a sales charge and only to certain
eligible investors. Investor A Shares are generally sold with a front-end
sales charge. Investor B and Investor C Shares may be subject to a
contingent deferred sales charge. Class R Shares are sold without a
sales charge and only to certain retirement and other similar plans.
All classes of shares have identical voting, dividend, liquidation and
other rights and the same terms and conditions, except that Investor A,
Investor B, Investor C and Class R Shares bear certain expenses
related to the shareholder servicing of such shares, and Investor B,
Investor C and Class R Shares also bear certain expenses related to
the distribution of such shares. Investor B Shares automatically convert
to Investor A Shares after approximately eight years. Investor B Shares
are only available through exchanges, dividend reinvestment by exsisting
shareholders or for purchase by certain qualified employee benefit
plans. Each class has exclusive voting rights with respect to matters
relating to its shareholder servicing and distribution expenditures
(except that Investor B shareholders may vote on material changes to
the Investor A distribution plan).
The following is a summary of significant accounting policies followed by
the Fund:
Valuation: The Fund’s policy is to fair value its financial instruments at
market value. The Fund records its investment in the Master LLC at fair
value based on the Fund’s proportionate interest in the net assets of the
Master LLC. Valuation of securities held by the Master LLC, including
categorization of fair value measurements, is discussed in Note 1 of
the Master LLC’s Notes to Financial Statements, which are included
elsewhere in this report.
Investment Transactions and Net Investment Income: For financial
reporting purposes, investment transactions in the Master LLC are
accounted for on a trade date basis. The Fund records daily its propor-
tionate share of the Master LLC’s income, expenses and realized and
unrealized gains and losses. In addition, the Fund accrues its own
expenses. Income and realized and unrealized gains and losses on
investments are allocated daily to each class based on its relative
net assets.
Dividends and Distributions: Dividends and distributions paid by the
Fund are recorded on the ex-dividend dates. The amount and timing of
dividends and distributions are determined in accordance with federal
income tax regulations, which may differ from US GAAP.
Income Taxes: It is the Fund’s policy to comply with the requirements
of the Internal Revenue Code of 1986, as amended, applicable to regu-
lated investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no federal income tax
provision is required.
The Fund files US federal and various state and local tax returns. No
income tax returns are currently under examination. The statute of limita-
tions on the Fund’s US federal tax returns remains open for each of
the four years ended June 30, 2010. The statutes of limitations on the
Fund’s state and local tax returns may remain open for an additional
year depending upon the jurisdiction. There are no uncertain tax posi-
tions that require recognition of a tax liability.
Other: Expenses directly related to the Fund or its classes are charged to
the Fund or class. Other operating expenses shared by several funds are
pro rated among those funds on the basis of relative net assets or other
appropriate methods. Other expenses of the Fund are allocated daily to
each class based on its relative net assets.
2. Administration Agreement and Other Transactions
with Affiliates:
The PNC Financial Services Group, Inc. (“PNC”), Bank of America
Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest
stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership
structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC
and Barclays are not.
The Fund entered into an Administration Agreement with BlackRock
Advisors, LLC (the “Administrator”), an indirect, wholly owned subsidiary
of BlackRock, to provide administrative services (other than investment
advice and related portfolio activities). Currently the Fund pays the
Administrator no fees pursuant to the agreement.
BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
13
Notes to Financial Statements (continued) BlackRock Basic Value Fund, Inc.
The Fund entered into a Distribution Agreement and Distribution Plan
with BlackRock Investments, LLC (“BRIL”), an affiliate of BlackRock.
Pursuant to the Distribution Plan and in accordance with Rule 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 shares of the Fund as follows:
| | |
| | Service | Distribution |
| | Fee | Fee |
| Investor A | 0.25% | — |
| Investor B | 0.25% | 0.75% |
| Investor C | 0.25% | 0.75% |
| Class R | 0.25% | 0.25% |
Pursuant to sub-agreements with BRIL, broker-dealers and 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 Investor A, Investor B, Investor C and Class R shareholders.
For the year ended June 30, 2010, affiliates earned underwriting dis-
counts, direct commissions and dealer concessions on sales of the
Fund’s Investor A Shares, which totaled $51,611. For the year ended
June 30, 2010, affiliates received the following contingent deferred sales
charges relating to transactions in Investor B and Investor C Shares:
| |
| Investor B | $86,179 |
| Investor C | $41,451 |
Furthermore, affiliates received contingent deferred sale charges of
$2,018 relating to transactions subject to front-end sales charge waivers
on Investor A Shares.
PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”), an indirect,
wholly owned subsidiary of PNC and an affiliate of the Administrator,
serves as transfer agent and dividend disbursing agent. Effective July 1,
2010, PNCGIS was sold to The Bank of New York Mellon Corporation
and is no longer considered an affiliate of the Administrator. At the
close of the sale, PNCGIS changed its name to BNY Mellon Investment
Servicing (US) Inc. Transfer agency fees borne by the Fund are com-
prised of those fees charged for all shareholder communications
including mailing of shareholder reports, dividend and distribution
notices, and proxy materials for shareholder meetings, as well as per
account and per transaction fees related to servicing and maintenance
of shareholder accounts, including the issuing, redeeming and transfer-
ring of shares, check writing, anti-money laundering services, and cus-
tomer identification services.
Pursuant to written agreements, certain affiliates provide the Fund with
sub-accounting, recordkeeping, sub-transfer agency and other adminis-
trative services with respect to sub-accounts they service. For these
services, these affiliates receive an annual fee per shareholder account
which will vary depending on share class. For the year ended June 30,
2010, the Fund paid $33 in return for these services, which is included
in transfer agent — class specific in the Statement of Operations.
The Administrator maintains a call center, which is responsible for pro-
viding certain shareholder services to the Fund, such as responding to
shareholder inquiries and processing transactions based upon instruc-
tions from shareholders with respect to the subscription and redemption
of Fund shares. For the year ended June 30, 2010, the Fund reimbursed
the Administrator 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 | $17,486 |
| Investor A | $26,003 |
| Investor B | $ 3,542 |
| Investor C | $ 9,600 |
| Class R | $ 209 |
Certain officers and/or directors of the Fund are officers and/or directors
of BlackRock or its affiliates. The Fund reimburses the Administrator for
compensation paid to the Fund’s Chief Compliance Officer.
3. Income Tax Information:
Reclassifications: US GAAP require that certain components of net
assets be adjusted to reflect permanent differences between financial
and tax reporting. These reclassifications have no effect on net assets or
net asset values per share. The following permanent differences as of
June 30, 2010 attributable to the classification of settlement proceeds
and the expiration of capital loss carryforwards were reclassified to the
following accounts:
| |
| Paid-in Capital | $ (8,227) |
| Undistributed net investment income | $ 792 |
| Accumulated net realized loss | $ 7,435 |
The tax character of distributions paid during the fiscal years ended June
30, 2010 and June 30, 2009 was as follows:
| | |
| | 6/30/2010 | 6/30/2009 |
| Ordinary income | $ 78,000,211 | $114,620,332 |
| Long-term capital gains | — | 93,995,147 |
| Total | $ 78,000,211 | $208,615,479 |
14 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
| | | | | | |
| Notes to Financial Statements (continued) | | | BlackRock Basic Value Fund, Inc. |
| As of June 30, 2010, the tax components of accumulated net earnings | | | | | |
| were as follows: | | | | | | |
| Undistributed ordinary income | $ 34,210,019 | | | | | |
| Capital loss carryforwards | (468,059,366) | | | | | |
| Net unrealized gains* | 498,041,595 | | | | | |
| Total | $ 64,192,248 | | | | | |
| * The differences between book-basis and tax-basis net unrealized gains were | | | | | |
| attributable primarily to the tax deferral of losses on wash sales, the tax deferral | | | | | |
| of losses on straddles and the timing and recognition of partnership income. | | | | | |
| As of June 30, 2010, the Fund had capital loss carryforwards | | | | | |
| available to offset future realized capital gains through the indicated | | | | | |
| expiration dates: | | | | | | |
| Expires June 30, | | | | | | |
| 2017 | $ 150,396,348 | | | | | |
| 2018 | 317,663,018 | | | | | |
| Total | $ 468,059,366 | | | | | |
| 4. Capital Share Transactions: | | | | | | |
| Transactions in capital shares for each class were as follows: | | | | | |
| | Year Ended | | Year Ended | |
| | June 30, 2010 | June 30, 2009 |
| | Shares | | Amount | Shares | | Amount |
| Institutional | | | | | | |
| Shares sold | 15,085,675 | $ 342,973,218 | 16,546,181 | $ 311,383,196 |
| Shares issued to shareholders in reinvestment of dividends | | | | | | |
| and distributions | 1,661,823 | | 37,724,578 | 4,499,728 | | 95,083,334 |
| Total issued | 16,747,498 | | 380,697,796 | 21,045,909 | | 406,466,530 |
| Shares redeemed | (16,789,471) | | (379,459,975) | (33,214,175) | | (627,330,107) |
| Net increase (decrease) | (41,973) | $ 1,237,821 | (12,168,266) | $ (220,863,577) |
| Investor A | | | | | | |
| Shares sold and automatic conversion of shares | 14,106,684 | $ 316,136,899 | 12,791,388 | $ 250,825,070 |
| Shares issued to shareholders in reinvestment of dividends | | | | | | |
| and distributions | 1,211,107 | | 27,334,997 | 3,209,727 | | 67,427,371 |
| Total issued | 15,317,791 | | 343,471,896 | 16,001,115 | | 318,252,441 |
| Shares redeemed | (19,736,172) | | (444,119,558) | (20,477,648) | | (390,928,456) |
| Net decrease | (4,418,381) | $ (100,647,662) | (4,476,533) | $ (72,676,015) |
| Investor B | | | | | | |
| Shares sold | 481,054 | $ 10,503,230 | 1,118,265 | $ 20,994,876 |
| Shares issued to shareholders in reinvestment of dividends | | | | | | |
| and distributions | 42,111 | | 936,132 | 416,763 | | 8,808,027 |
| Total issued | 523,165 | | 11,439,362 | 1,535,028 | | 29,802,903 |
| Shares redeemed and automatic conversion of shares | (4,730,521) | | (103,100,199) | (7,829,459) | | (148,413,274) |
| Net decrease | (4,207,356) | $ (91,660,837) | (6,294,431) | $ (118,610,371) |
BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
15
| | | | | | |
| Notes to Financial Statements (concluded) | | | BlackRock Basic Value Fund, Inc. |
| | Year Ended | | Year Ended | |
| | June 30, 2010 | June 30, 2009 |
| | Shares | | Amount | Shares | | Amount |
| Investor C | | | | | | |
| Shares sold | 2,055,828 | $ 43,471,351 | 2,951,145 | $ 53,703,391 |
| Shares issued to shareholders in reinvestment of dividends | | | | | | |
| and distributions | 222,093 | | 4,717,356 | 929,878 | | 18,735,771 |
| Total issued | 2,277,921 | | 48,188,707 | 3,881,023 | | 72,439,162 |
| Shares redeemed | (4,724,884) | | (99,500,217) | (8,244,108) | | (146,547,526) |
| Net decrease | (2,446,963) | $ (51,311,510) | (4,363,085) | $ (74,108,364) |
| Class R | | | | | | |
| Shares sold | 353,135 | $ 7,659,231 | 353,698 | $ 6,765,843 |
| Shares issued to shareholders in reinvestment of dividends | | | | | | |
| and distributions | 14,996 | | 328,854 | 46,865 | | 965,414 |
| Total issued | 368,131 | | 7,988,085 | 400,563 | | 7,731,257 |
| Shares redeemed | (431,926) | | (9,363,839) | (472,645) | | (8,905,068) |
| Net decrease | (63,795) | $ (1,375,754) | (72,082) | $ (1,173,811) |
| 5. Subsequent Events: | | | | | | |
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and has
determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.
16 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
Report of Independent Registered Public Accounting Firm
BlackRock Basic Value Fund, Inc.
To the Shareholders and Board of Directors
of BlackRock Basic Value Fund, Inc.:
We have audited the accompanying statement of assets and liabilities
of BlackRock Basic Value Fund, Inc. (the “Fund”) as of June 30, 2010,
and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years
in the period then ended. These financial statements and financial high-
lights are the responsibility of the Fund’s management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assur-
ance about whether the financial statements and financial highlights are
free of material misstatement. The Fund is not required to have, nor were
we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Fund’s internal control over finan-
cial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
BlackRock Basic Value Fund, Inc. as of June 30, 2010, the results of its
operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial high-
lights for each of the five years in the period then ended, in conformity
with accounting principles generally accepted in the United States of
America.
Deloitte & Touche LLP
Princeton, New Jersey
August 20, 2010
Important Tax Information
The entire amount of the ordinary income distribution paid by BlackRock Basic Value Fund, Inc. during the fiscal year ended June 30, 2010 qualifies
for the dividends received deduction for corporations and consists entirely of qualified dividend income for individuals.
BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
17
| | | |
| Portfolio Information | | | Master Basic Value LLC |
| As of June 30, 2010 | | | |
| | Percent of | | Percent of |
| | Long-Term | | Long-Term |
| Ten Largest Equity Holdings | Investments | Investment Criteria | Investments |
| Exxon Mobil Corp. | 4% | Above-Average Yield | 33% |
| International Business Machines Corp. | 4 | Below-Average Price/Earnings Ratio | 30 |
| The Travelers Cos., Inc. | 4 | Low Price-to-Book Value | 17 |
| JPMorgan Chase & Co. | 3 | Price-to-Cash Flow | 14 |
| Unilever NV — ADR | 3 | Special Situations | 6 |
| Halliburton Co. | 3 | | |
| Qwest Communications International, Inc. | 3 | | |
| Kraft Foods, Inc. | 3 | | |
| LSI Corp. | 3 | | |
| Kimberly-Clark Corp. | 3 | | |
18 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
Schedule of Investments June 30, 2010
Master Basic Value LLC
(Percentages shown are based on Net Assets)
| | |
| Common Stocks | Shares | Value |
| Above-Average Yield* — 33.0% | | |
| Aerospace & Defense — 1.5% | | |
| Honeywell International, Inc. | 1,559,900 | $ 60,882,897 |
| Capital Markets — 1.2% | | |
| The Bank of New York Mellon Corp. | 1,995,300 | 49,263,957 |
| Chemicals — 1.5% | | |
| E.I. du Pont de Nemours & Co. | 1,673,000 | 57,869,070 |
| Commercial Banks — 0.6% | | |
| U.S. Bancorp | 1,058,500 | 23,657,475 |
| Diversified Financial Services — 3.3% | | |
| JPMorgan Chase & Co. | 3,605,900 | 132,011,999 |
| Diversified Telecommunication | | |
| Services — 2.1% | | |
| AT&T, Inc. | 1,575,500 | 38,111,345 |
| Verizon Communications, Inc. | 1,671,200 | 46,827,024 |
| | | 84,938,369 |
| Electric Utilities — 1.4% | | |
| The Southern Co. | 1,661,200 | 55,284,736 |
| Food Products — 1.6% | | |
| General Mills, Inc. | 1,792,700 | 63,676,704 |
| Industrial Conglomerates — 3.8% | | |
| General Electric Co. | 5,882,100 | 84,819,882 |
| Tyco International Ltd. | 1,815,425 | 63,957,423 |
| | | 148,777,305 |
| Metals & Mining — 1.3% | | |
| Alcoa, Inc. (a) | 5,049,900 | 50,801,994 |
| Multi-Utilities — 1.5% | | |
| Dominion Resources, Inc. (a) | 1,497,098 | 57,997,577 |
| Oil, Gas & Consumable Fuels — 5.6% | | |
| Chevron Corp. | 691,900 | 46,952,334 |
| Exxon Mobil Corp. | 2,652,200 | 151,361,054 |
| Marathon Oil Corp. | 793,700 | 24,676,133 |
| | | 222,989,521 |
| Pharmaceuticals — 5.6% | | |
| Bristol-Myers Squibb Co. | 548,891 | 13,689,342 |
| Eli Lilly & Co. (a) | 1,256,400 | 42,089,400 |
| Johnson & Johnson | 528,700 | 31,225,022 |
| Merck & Co., Inc. | 2,122,716 | 74,231,378 |
| Pfizer, Inc. | 4,340,170 | 61,890,824 |
| | | 223,125,966 |
| Software — 2.0% | | |
| Microsoft Corp. | 3,443,200 | 79,228,032 |
| Total Above-Average Yield | | 1,310,505,602 |
| | |
| Common Stocks | Shares | Value |
| Below-Average Price/Earnings Ratio* — 30.5% | |
| Aerospace & Defense — 1.3% | | |
| Northrop Grumman Corp. | 911,600 | $ 49,627,504 |
| Capital Markets — 1.7% | | |
| Morgan Stanley | 2,922,100 | 67,821,941 |
| Computers & Peripherals — 1.6% | | |
| Hewlett-Packard Co. | 1,439,100 | 62,284,248 |
| Diversified Financial Services — 4.2% | | |
| Bank of America Corp. | 6,658,414 | 95,681,409 |
| Citigroup, Inc. (b) | 18,838,900 | 70,834,264 |
| | | 166,515,673 |
| Energy Equipment & Services — 1.6% | | |
| Noble Corp. | 2,001,800 | 61,875,638 |
| Food Products — 6.1% | | |
| Kraft Foods, Inc. | 4,237,269 | 118,643,532 |
| Unilever NV — ADR | 4,580,200 | 125,131,064 |
| | | 243,774,596 |
| Insurance — 8.1% | | |
| ACE Ltd. | 1,408,000 | 72,483,840 |
| MetLife, Inc. | 1,580,840 | 59,692,519 |
| Prudential Financial, Inc. | 775,000 | 41,586,500 |
| The Travelers Cos., Inc. | 3,013,076 | 148,393,993 |
| | | 322,156,852 |
| Media — 2.7% | | |
| Viacom, Inc., Class B | 3,401,000 | 106,689,370 |
| Metals & Mining — 0.8% | | |
| Nucor Corp. | 809,600 | 30,991,488 |
| Office Electronics — 1.0% | | |
| Xerox Corp. | 4,787,185 | 38,488,967 |
| Oil, Gas & Consumable Fuels — 1.4% | | |
| Devon Energy Corp. | 909,700 | 55,418,924 |
| Total Below-Average Price/Earnings Ratio | | 1,205,645,201 |
| Low Price-to-Book Value* — 17.4% | | |
| Aerospace & Defense — 1.9% | | |
| Raytheon Co. | 1,600,594 | 77,452,743 |
| Commercial Banks — 1.0% | | |
| Wells Fargo & Co. | 1,570,500 | 40,204,800 |
| Construction & Engineering — 1.6% | | |
| Fluor Corp. | 1,509,900 | 64,170,750 |
| |
| Portfolio Abbreviation |
| ADR | American Depositary Receipts |
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
19
Schedule of Investments (continued)
Master Basic Value LLC
(Percentages shown are based on Net Assets)
| | |
| Common Stocks | Shares | Value |
| Low Price-to-Book Value* (concluded) | | |
| Energy Equipment & Services — 3.1% | | |
| Halliburton Co. | 5,048,200 | $ 123,933,310 |
| Household Products — 2.8% | | |
| Kimberly-Clark Corp. | 1,854,900 | 112,462,587 |
| Insurance — 0.1% | | |
| Hartford Financial Services Group, Inc. (a) | 97,900 | 2,166,527 |
| Machinery — 0.7% | | |
| Deere & Co. | 487,700 | 27,155,136 |
| Media — 1.4% | | |
| Walt Disney Co. (a) | 1,754,600 | 55,269,900 |
| Metals & Mining — 0.5% | | |
| United States Steel Corp. (a) | 475,300 | 18,322,815 |
| Semiconductors & Semiconductor | | |
| Equipment — 4.3% | | |
| LSI Corp. (b) | 25,297,189 | 116,367,070 |
| Lam Research Corp. (b) | 1,378,873 | 52,479,906 |
| | | 168,846,976 |
| Total Low Price-to-Book Value | | 689,985,544 |
| Price-to-Cash Flow* — 13.7% | | |
| Diversified Telecommunication | | |
| Services — 3.1% | | |
| Qwest Communications International, Inc. | 23,479,500 | 123,267,375 |
| Food & Staples Retailing — 1.2% | | |
| The Kroger Co. | 2,363,500 | 46,537,315 |
| Health Care Providers & Services — 1.4% | | |
| UnitedHealth Group, Inc. | 1,990,600 | 56,533,040 |
| IT Services — 0.7% | | |
| The Western Union Co. | 2,006,000 | 29,909,460 |
| Media — 3.0% | | |
| Comcast Corp., Special Class A | 3,270,800 | 53,739,244 |
| Time Warner, Inc. | 2,296,666 | 66,396,614 |
| | | 120,135,858 |
| Oil, Gas & Consumable Fuels — 3.4% | | |
| Hess Corp. | 1,021,300 | 51,412,242 |
| Occidental Petroleum Corp. | 226,700 | 17,489,905 |
| Peabody Energy Corp. | 1,662,700 | 65,061,451 |
| | | 133,963,598 |
| Wireless Telecommunication | | |
| Services — 0.9% | | |
| Sprint Nextel Corp. (b) | 8,059,800 | 34,173,552 |
| Total Price-to-Cash Flow | | 544,520,198 |
| Special Situations* — 5.9% | | |
| Health Care Equipment & Supplies — 0.4% | | |
| Covidien Plc | 403,600 | 16,216,648 |
| IT Services — 3.7% | | |
| International Business Machines Corp. | 1,203,400 | 148,595,832 |
| | |
| Common Stocks | Shares | Value |
| Special Situations* (concluded) | | |
| Semiconductors & Semiconductor | | |
| Equipment — 1.8% | | |
| Intel Corp. | 3,594,600 | $ 69,914,970 |
| Total Special Situations | | 234,727,450 |
| Total Long-Term Investments | | |
| (Cost — $3,348,130,951) — 100.5% | | 3,985,383,995 |
| | Beneficial | |
| | Interest | |
| | (000) | |
| Short-Term Securities | | |
| BlackRock Liquidity Series, LLC | | |
| Money Market Series, 0.27% (c)(d)(e) | $ 68,108 | 68,108,300 |
| Total Short-Term Securities | | |
| (Cost — $68,108,300) — 1.7% | | 68,108,300 |
| Total Investments (Cost — $3,416,239,251**) — 102.2% | 4,053,492,295 |
| Liabilities in Excess of Other Assets — (2.2)% | | (87,122,217) |
| Net Assets — 100.0% | | $3,966,370,078 |
* Classification is unaudited.
** The cost and unrealized appreciation (depreciation) of investments as of
June 30, 2010, as computed for federal income tax purposes, were as follows:
| |
| Aggregate cost | $3,541,367,729 |
| Gross unrealized appreciation | $ 678,845,806 |
| Gross unrealized depreciation | (166,721,240) |
| Net unrealized appreciation | $ 512,124,566 |
(a) Security, or a portion of security, is on loan.
(b) Non-income producing security.
(c) Investments in companies considered to be an affiliate of the Master LLC
during the year, for purposes of Section 2(a)(3) of the Investment Company Act
of 1940, as amended, were as follows:
| | | | |
| | Shares/Beneficial | Shares/Beneficial |
| | Interest Held at | Net | Interest Held at | |
| Affiliate | June 30, 2009 | Activity | June 30, 2010 | Income |
| BlackRock | | | | |
| Liquidity Funds, | | | |
| TempFund, | | | | |
| Institutional | | | | |
| Class | 75,156,895 (75,156,895) | — | $ 47,989 |
| BlackRock | | | | |
| Liquidity | | | | |
| Series, LLC | | | | |
| Money Market | | | | |
| Series | 63,355,150 | 4,753,150 | 68,108,300 | $298,751 |
(d) Represents the current yield as of report date.
(e) Security was purchased with the cash collateral from loaned securities.
•For Master LLC compliance purposes, the Master LLC’s industry classifications
refer to any one or more of the industry sub-classifications used by one or more
widely recognized market indexes or rating group indexes, and/or as defined
by Master LLC management. This definition may not apply for purposes of this
report, which may combine such industry sub-classifications for reporting ease.
See Notes to Financial Statements.
20 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
Schedule of Investments (concluded)
Master Basic Value LLC
•Fair Value Measurements — Various inputs are used in determining the fair value
of investments, which are as follows:
•Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
•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 Master LLC’s own assumptions used in determining the fair
value of investments)
The inputs or methodologies used for valuing securities are not necessarily
an indication of the risk associated with investing in those securities. For infor-
mation about the Master LLC’s policy regarding valuation of investments and
other significant accounting policies, please refer to Note 1 of the Notes to
Financial Statements.
The following table summarizes the inputs used as of June 30, 2010 in deter-
mining the fair valuation of the Master LLC’s investments:
| | | | |
| Valuation Inputs | Level 1 | Level 2 | Level 3 | Total |
| Assets: | | | | |
| Investments in Securities: | | | |
| Long-Term | | | | |
| Investments1 | $3,985,383,995 | — | — | $3,985,383,995 |
| Short-Term | | | | |
| Securities | — | $68,108,300 | — | 68,108,300 |
| Total | $3,985,383,995 | $68,108,300 | — | $4,053,492,295 |
1 See above Schedule of Investments for values in each industry.
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
21
| |
| Statement of Assets and Liabilities | Master Basic Value LLC |
| June 30, 2010 | |
| Assets | |
| Investments at value — unaffiliated (including securities loaned of $65,517,421) (cost — $3,348,130,951) | $ 3,985,383,995 |
| Investments at value — affiliated (cost — $68,108,300) | 68,108,300 |
| Investments sold receivable | 30,182,254 |
| Dividends receivable | 5,580,849 |
| Securities lending income receivable — affiliated | 20,119 |
| Dividends receivable — affiliated | 3,992 |
| Prepaid expenses | 119,487 |
| Other assets | 1,392 |
| Total assets | 4,089,400,388 |
| Liabilities | |
| Collateral on securities loaned at value | 68,108,300 |
| Withdrawls payable to investors | 25,769,997 |
| Bank overdraft | 19,210,858 |
| Investments purchased payable | 8,336,678 |
| Investment advisory fees payable | 1,404,258 |
| Other affiliates payable | 20,652 |
| Directors’ fees payable | 1,720 |
| Other accrued expenses payable | 177,230 |
| Other liabilities | 617 |
| Total liabilities | 123,030,310 |
| Net Assets | $ 3,966,370,078 |
| Net Assets Consist of | |
| Investors’ capital | $ 3,329,117,034 |
| Net unrealized appreciation/depreciation | 637,253,044 |
| Net Assets | $ 3,966,370,078 |
See Notes to Financial Statements.
22 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
| |
| Statement of Operations | Master Basic Value LLC |
| Year Ended June 30, 2010 | |
| Investment Income | |
| Dividends | $ 108,119,122 |
| Foreign taxes withheld | (800,353) |
| Securities lending — affiliated | 298,751 |
| Dividends — affiliated | 47,989 |
| Total income | 107,665,509 |
| Expenses | |
| Investment advisory | 17,651,216 |
| Accounting services | 678,562 |
| Custodian | 191,335 |
| Directors | 115,370 |
| Professional | 59,514 |
| Printing | 10,074 |
| Miscellaneous | 130,645 |
| Total expenses | 18,836,716 |
| Less fees waived by advisor | (16,464) |
| Total expenses after fees waived | 18,820,252 |
| Net investment income | 88,845,257 |
| Realized and Unrealized Gain | |
| Net realized gain from investments | 123,852,530 |
| Net change in unrealized appreciation/depreciation on investments | 343,869,161 |
| Total realized and unrealized gain | 467,721,691 |
| Net Increase in Net Assets Resulting from Operations | $ 556,566,948 |
See Notes to Financial Statements.
BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
23
| | | | | |
| Statements of Changes in Net Assets | | | | Master Basic Value LLC |
| | | | | Year Ended June 30, |
| Increase (Decrease) in Net Assets: | | | | 2010 | 2009 |
| Operations | | | | | |
| Net investment income | | | $ 88,845,257 | $ 111,860,336 |
| Net realized gain (loss) | | | | 123,852,530 | (659,058,854) |
| Net change in unrealized appreciation/depreciation | | | | 343,869,161 | (842,747,405) |
| Net increase (decrease) in net assets resulting from operations | | | | 556,566,948 | (1,389,945,923) |
| Capital Transactions | | | | | |
| Proceeds from contributions | | | | 790,229,991 | 649,568,659 |
| Value of withdrawals | | | (1,125,287,017) | (1,361,467,619) |
| Net decrease in net assets derived from capital transactions | | | | (335,057,026) | (711,898,960) |
| Net Assets | | | | | |
| Total increase (decrease) in net assets | | | | 221,509,922 | (2,101,844,883) |
| Beginning of year | | | 3,744,860,156 | 5,846,705,039 |
| End of year | | | $3,966,370,078 | $ 3,744,860,156 |
| Financial Highlights | | | | Master Basic Value LLC |
| | | Year Ended June 30, | |
| | 2010 | 2009 | 2008 | 2007 | 2006 |
| Total Investment Return | | | | | |
| Total investment return | 14.40% | (23.55)% | (17.73)% | 25.25% | 12.32%1 |
| Ratios to Average Net Assets | | | | | |
| Total expenses | 0.43% | 0.44% | 0.43% | 0.43% | 0.43% |
| Total expenses after fees waived | 0.43% | 0.44% | 0.43% | 0.43% | 0.43% |
| Net investment income | 2.05% | 2.69% | 1.87% | 1.74% | 1.66% |
| Supplemental Data | | | | | |
| Net assets, end of year (000) | $ 3,966,370 | $ 3,744,860 | $ 5,846,705 | $ 8,510,263 | $ 7,581,315 |
| Portfolio turnover | 48% | 38% | 45% | 31% | 42% |
1 A portion of total investment return consists of payments by the previous investment advisor for compensation as a result of a securities class action entitlement recovery
and as a result of a corporate action, which increased the return by 0.10%. Excluding these items, the total return would have been 12.22%.
See Notes to Financial Statements.
24 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
Notes to Financial Statements Master Basic Value LLC
1. Organization and Significant Accounting Policies:
Master Basic Value LLC (the “Master LLC”) is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), and
is organized as a Delaware limited liability company. The Limited Liability
Company Agreement permits the Board of Directors (the “Board”) to
issue non transferable interests in the Master LLC, subject to certain
limitations. The Master LLC’s financial statements are prepared in
conformity with accounting principles generally accepted in the United
States of America, which may require management to make estimates
and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by
the Master LLC:
Valuation: The Master LLC’s policy is to fair value its financial instru-
ments at market value using independent dealers or pricing services
selected under the supervision of the Board. Equity investments traded
on a recognized securities exchange or the NASDAQ Global Market Sys-
tem are valued at the last reported sale price that day or the NASDAQ
official closing price, if applicable. For equity investments traded on
more than one exchange, the last reported sale 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
are valued at the last available bid (long positions) or ask (short posi-
tions) price. If no bid or ask price is available, the prior day’s price will
be used, unless it is determined that such prior day’s price no longer
reflects the fair value of the security. Investments in open-end investment
companies are valued at net asset value each business day. Short-term
securities with remaining maturities of 60 days or less may be valued at
amortized cost, which approximates fair value.
The Master LLC values its investments in BlackRock Liquidity Series, LLC
Money Market Series (the “Money Market Series”) at fair value, which
is ordinarily based upon its pro rata ownership in the net assets of the
underlying fund. The Money Market Series seeks current income consis-
tent with maintaining liquidity and preserving capital. Although the
Money Market Series is not registered under the 1940 Act, its invest-
ments will follow the parameters of investments by a money market fund
that is subject to Rule 2a-7 promulgated by the Securities and Exchange
Commission (“SEC”) under the 1940 Act. The Master LLC may withdraw
up to 25% of its investment daily, although the manager of the Money
Market Series, in its sole discretion, may permit an investor to withdraw
more than 25% on any one day.
In the event that application of these methods of valuation results in a
price for an investment, which is deemed not to be representative of the
market value of such investment or is not available, the investment will
be valued in accordance with a policy approved by the Board as reflect-
ing fair value (“Fair Value Assets”). When determining the price for Fair
Value Assets, the investment advisor and/or the sub-advisor seeks to
determine the price that the Master LLC might reasonably expect to
receive from the current sale of that asset in an arm’s-length transac-
tion. Fair value determinations shall be based upon all available factors
that the investment advisor and/or sub-advisor deems relevant. The pric-
ing of all Fair Value Assets is subsequently reported to the Board or a
committee thereof.
Investment Transactions and Investment Income: For financial reporting
purposes, investment transactions are recorded on the dates the trans-
actions are entered into (the trade dates). Realized gains and losses
on investment transactions are determined on the identified cost basis.
Under the applicable foreign tax laws, a withholding tax at various rates
may be imposed on capital gains, dividends and interest. Dividend
income is recorded on the ex-dividend dates. Dividends from foreign
securities where the ex-dividend date may have passed are subsequently
recorded when the Master LLC has determined the ex-dividend date.
Interest income, including amortization of premium and accretion of
discount on debt securities, is recognized on the accrual basis.
Securities Lending: The Master LLC may lend securities to financial
institutions that provide cash as collateral, which will be maintained at
all times in an amount equal to at least 100% of the current market
value of the loaned securities. The market value of the loaned securities
is determined at the close of business of the Master LLC and any addi-
tional required collateral is delivered to the Master LLC on the next busi-
ness day. Securities lending income, as disclosed in the Statement of
Operations, represents the income earned from the investment of the
cash collateral, net of rebates paid to, or fees paid by, borrowers and
less the fees paid to the securities lending agent. 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. In the event that the borrower defaults on its
obligation to return borrowed securities because of insolvency or for any
other reason, the Master LLC could experience delays and costs in gain-
ing access to the collateral. The Master LLC also could suffer a loss if
the value of an investment purchased with cash collateral falls below
the market value of loaned securities or if the value of an investment
purchased with cash collateral falls below the value of the original cash
collateral received.
Income Taxes: The Master LLC is classified as a partnership for federal
income tax purposes. As such, each investor in the Master LLC is treated
as owner of its proportionate share of the net assets, income, expenses
and realized and unrealized gains and losses of the Master LLC.
Therefore, no federal income tax provision is required. It is intended that
the Master LLC’s assets will be managed so an investor in the Master
LLC can satisfy the requirements of Subchapter M of the Internal
Revenue Code of 1986, as amended. Under the applicable foreign
tax law, a withholding tax may be imposed on interest, dividends and
capital gains at various rates.
BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
25
Notes to Financial Statements (continued) Master Basic Value LLC
The Master LLC files US federal and various state and local tax returns.
No income tax returns are currently under examination. The statute of
limitations on the Master LLC’s US federal tax returns remains open for
each of the four years ended June 30, 2010. The statutes of limitations
on the Master LLC’s state and local tax returns may remain open for an
additional year depending upon the jurisdiction.
Other: Expenses directly related to the Master LLC are charged to the
Master LLC. Other operating expenses shared by several funds are pro
rated among those funds on the basis of relative net assets or other
appropriate methods. The Master LLC has an arrangement with the cus-
todian whereby fees may be reduced by credits earned on uninvested
cash balances, which if applicable are shown as fees paid indirectly in
the Statement of Operations. The custodian imposes fees on overdrawn
cash balances, which can be offset by accumulated credits earned or
may result in additional custody charges.
2. Investment Advisory Agreement and Other Transactions
with Affiliates:
The PNC Financial Services Group, Inc. (“PNC”), Bank of America
Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest
stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership
structure, PNC is an affiliate of the Master LLC for 1940 Act purposes,
but BAC and Barclays are not.
The Master LLC entered into an Investment Advisory Agreement with
BlackRock Advisors, LLC (the “Manager”), the Master LLC’s investment
advisor, an indirect, wholly owned subsidiary of BlackRock, to provide
investment advisory and administration services. The Manager is respon-
sible for the management of the Master LLC’s portfolio and provides
the necessary personnel, facilities, equipment and certain other services
necessary to the operations of the Master LLC. For such services, the
Master LLC pays the Manager a monthly fee at the following annual
rates of the Master LLC’s average daily net assets:
| |
| Portfolio of average daily value of net assets | Rate |
| Not exceeding $100 million | 0.60% |
| In excess of $100 million, but not exceeding $200 million | 0.50% |
| In excess of $200 million | 0.40% |
The Manager voluntarily agreed to waive its advisory fees by the amount
of investment advisory fees the Master LLC pays to the Manager indi-
rectly through its investment in affiliated money market funds, however
the Manager does not waive its advisory fees by the amount of invest-
ment advisory fees paid through its investment in other affiliated invest-
ment companies, if any. This amount is shown as fees waived by advisor
in the Statement of Operations.
The Manager entered into a sub-advisory agreement with BlackRock
Investment Management, LLC (“BIM”), an affiliate of the Manager.
The Manager pays BIM for services it provides, a monthly fee that is a
percentage of the investment advisory fees paid by the Master LLC to
the Manager.
For the year ended June 30, 2010, the Master LLC reimbursed the
Manager $84,280 for certain accounting services, which is included in
accounting services in the Statement of Operations.
The Master LLC received an exemptive order from the SEC permitting,
among other things, to pay an affiliated securities lending agent a fee
based on a share of the income derived from the securities lending
activities and has retained BIM as the securities lending agent. BIM
may, on behalf of the Master LLC, invest cash collateral received by the
Master LLC for such loans, among other things, in a private investment
company managed by the Manager or in registered money market funds
advised by the Manager or its affiliates. The market value of securities on
loan and the value of the related collateral are shown in the Statement
of Assets and Liabilities as securities loaned and collateral on securities
loaned at value, respectively. The cash collateral invested by BIM is dis-
closed in the Schedule of Investments. The share of income earned by
the Master LLC on such investments is shown as securities lending —
affiliated in the Statement of Operations. For the year ended June 30,
2010, BIM received $72,760 in securities lending agent fees related to
securities lending activities for the Master LLC.
Certain officers and/or Directors of the Master LLC are officers and/or
directors of BlackRock or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities
for the year ended June 30, 2010, were $2,039,299,775 and
$2,172,693,664, respectively.
4. Borrowings:
The Master LLC, along with certain other funds managed by the Manager
and its affiliates, is a party to a $500 million credit agreement with a
group of lenders, which was renewed until November 2010. The Master
LLC may borrow under the credit agreement to fund shareholder
redemptions. Prior to its renewal, the credit agreement had the following
terms: 0.02% upfront fee on the aggregate commitment amount which
was allocated to the Master LLC based on its net assets as of October
31, 2008; a commitment fee of 0.08% per annum based on the Master
LLC’s pro rata share of the unused portion of the credit agreement,
which is included in miscellaneous in the Statements of Operations, and
interest at a rate equal to the higher of the (a) federal funds effective
rate and (b) reserve adjusted one-month LIBOR, plus, in each case, the
higher of (i) 1.50% and (ii) 50% of the CDX Index (as defined in the
credit agreement) on amounts borrowed. Effective November 2009, the
credit agreement was renewed with the following terms: 0.02% upfront
fee on the aggregate commitment amount which was allocated to the
26 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
Notes to Financial Statements (concluded)
Master Basic Value LLC
Master LLC based on its net assets as of October 31, 2009, a commit-
ment fee of 0.10% per annum based the Master LLC’s pro rata share of
the unused portion of the credit agreement and interest at a rate equal
to the higher of (a) the one-month LIBOR plus 1.25% per annum and
(b) the Fed Funds rate plus 1.25% per annum on amounts borrowed.
The Master LLC did not borrow under the credit agreement during the
year ended June 30, 2010.
5. Market and Credit Risk:
In the normal course of business, the Master LLC invests in securities
and enters into transactions where risks exist due to fluctuations in the
market (market risk) or failure of the issuer of a security to meet all its
obligations (issuer credit risk). The value of securities held by the Master
LLC may decline in response to certain events, including those directly
involving the issuers whose securities are owned by the Master LLC;
conditions affecting the general economy; overall market changes; local,
regional or global political, social or economic instability; and currency
and interest rate and price fluctuations. Similar to issuer credit risk, the
Master LLC may be exposed to counterparty credit risk, or the risk that
an entity with which the Master LLC has unsettled or open transactions
may fail to or be unable to perform on its commitments. The Master LLC
manages counterparty risk by entering into transactions only with coun-
terparties that they believe have the financial resources to honor their
obligations and by monitoring the financial stability of those counterpar-
ties. Financial assets, which potentially expose the Master LLC to market,
issuer and counterparty credit risks, consist principally of financial
instruments and receivables due from counterparties. The extent of the
Master LLC’s exposure to market, issuer and counterparty credit risks
with respect to these financial assets is generally approximated by their
value recorded in the Master LLC’s Statement of Assets and Liabilities,
less any collateral held by the Master LLC.
6. Subsequent Events:
Management has evaluated the impact of all subsequent events on the
Master LLC through the date the financial statements were issued and
has determined that there were no subsequent events requiring adjust-
ment or additional disclosure in the financial statements.
BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
27
Report of Independent Registered Public Accounting Firm
Master Basic Value LLC
To the Investors and Board of Directors
of Master Basic Value LLC:
We have audited the accompanying statement of assets and liabilities
of Master Basic Value LLC (the “Master LLC”), including the schedule of
investments, as of June 30, 2010, and the related statement of opera-
tions for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of
the Master LLC’s management. Our responsibility is to express an opin-
ion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assur-
ance about whether the financial statements and financial highlights are
free of material misstatement. The Master LLC is not required to have,
nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control
over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of express-
ing an opinion on the effectiveness of the Master LLC’s internal control
over financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by manage-
ment, as well as evaluating the overall financial statement presentation.
Our procedures included confirmation of securities owned as of June 30,
2010, by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above, present fairly, in all material respects, the financial position of
Master Basic Value LLC as of June 30, 2010, the results of its operations
for the year then ended, the changes in its net assets for each of the two
years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
August 20, 2010
28 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement
The Board of Directors of Master Basic Value LLC (the “Master Fund”)
met on April 13, 2010 and May 11 – 12, 2010 to consider the approval
of the Master Fund’s investment advisory agreement (the “Advisory
Agreement”) with BlackRock Advisors, LLC (the “Manager”), the Master
Fund’s investment advisor. The Board of Directors of the Master Fund
also considered the approval of the sub-advisory agreement (the “Sub-
Advisory Agreement”) between the Manager and BlackRock Investment
Management, LLC (the “Sub-Advisor”), with respect to the Master Fund.
BlackRock Basic Value Fund, Inc. (the “Feeder Fund”) is a “feeder” fund
that invests all of its investable assets in the Master Fund. Accordingly,
the Board of Directors of the Feeder Fund also considered the approval
of the Advisory Agreement and the Sub-Advisory Agreement with respect
to the Master Fund. The Manager and the Sub-Advisor are referred to
herein as “BlackRock.” The Advisory Agreement and the Sub-Advisory
Agreement are referred to herein as the “Agreements.” For simplicity, the
Board of Directors of the Master Fund and the Board of Directors of the
Feeder Fund are referred to herein collectively as the “Board,” and the
members are referred to as “Board Members.”
Activities and Composition of the Board
The Board consists of fourteen individuals, eleven of whom are not
“interested persons” of the Master Fund or the Feeder Fund as defined
in the Investment Company Act of 1940, as amended (the “1940 Act”)
(the “Independent Board Members). The Board Members are responsible
for the oversight of the operations of the Master Fund or the Feeder
Fund, as pertinent, and perform the various duties imposed on the direc-
tors of investment companies by the 1940 Act. The Independent Board
Members have retained independent legal counsel to assist them in
connection with their duties. The Chairman of the Board is an Indepen-
dent Board Member. The Board has established five standing commit-
tees: an Audit Committee, a Governance and Nominating Committee, a
Compliance Committee, a Performance Oversight Committee and an
Executive Committee, each of which is composed of Independent Board
Members (except for the Performance Oversight Committee and the
Executive Committee, each of which also has one interested Board
Member) and is chaired by Independent Board Members. The Board
also has one ad hoc committee, the Joint Product Pricing Committee,
which consists of Independent Board Members and directors/trustees
of the boards of certain other BlackRock-managed funds, who are not
“interested persons” of their respective funds.
The Agreements
Pursuant to the 1940 Act, the Board is required to consider the contin-
uation of the Agreements on an annual basis. In connection with this
process, the Board assessed, among other things, the nature, scope and
quality of the services provided to the Master Fund and the Feeder Fund
by the personnel of BlackRock and its affiliates, including investment
management, administrative and shareholder services, oversight of fund
accounting and custody, marketing services and assistance in meeting
applicable legal and regulatory requirements.
From time to time throughout the year, the Board, acting directly
and through its committees, considers at each of its meetings factors
that are relevant to its annual consideration of the renewal of the
Agreements, including the services and support provided by BlackRock
to the Master Fund, the Feeder Fund and their shareholders. Among
the matters the Board considered were: (a) investment performance
for one-, three- and five-year periods, as applicable, against peer funds,
and applicable benchmarks, if any, as well as senior management and
portfolio managers’ analysis of the reasons for any over performance or
underperformance against its peers and/or benchmark, as applicable;
(b) fees, including advisory, administration, if applicable, and other
amounts paid to BlackRock and its affiliates by the Master Fund and/
or the Feeder Fund for services, such as transfer agency, marketing and
distribution, call center and fund accounting; (c) Master Fund’s and/or
the Feeder Fund’s operating expenses; (d) the resources devoted to and
compliance reports relating to the Master Fund’s and the Feeder Fund’s
investment objective, policies and restrictions, (e) the Master Fund’s and
the Feeder Fund’s compliance with its respective Code of Ethics and
compliance policies and procedures; (f) the nature, cost and character
of non-investment management services provided by BlackRock and its
affiliates; (g) BlackRock’s and other service providers’ internal controls;
(h) BlackRock’s implementation of the proxy voting policies approved by
the Board; (i) the use of brokerage commissions and execution quality
of portfolio transactions; (j) BlackRock’s implementation of the Master
Fund’s and/or the Feeder Fund’s valuation and liquidity procedures;
(k) an analysis of contractual and actual management fees for products
with similar investment objectives across the open-end fund, closed-end
fund and institutional account product channels; and (l) periodic
updates on BlackRock’s business.
Board Considerations in Approving the Agreements
The Approval Process: Prior to the April 13, 2010 meeting, the Board
requested and received materials specifically relating to the Agreements.
The Board is engaged in a process with BlackRock to periodically review
the nature and scope of the information provided to better assist its
deliberations. The materials provided in connection with the April meet-
ing included (a) information independently compiled and prepared by
Lipper, Inc. (“Lipper”) on fees and expenses of the Master Fund and the
Feeder Fund, as applicable, and the investment performance of the
Feeder Fund as compared with a peer group of funds as determined by
Lipper (collectively, “Peers”); (b) information on the profitability of the
Agreements to BlackRock and a discussion of fall-out benefits to
BlackRock and its affiliates and significant shareholders; (c) a general
analysis provided by BlackRock concerning investment advisory fees
charged to other clients, such as institutional clients and closed-end
funds, under similar investment mandates, as well as the performance
BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
29
Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement (continued)
of such other clients, as applicable; (d) the impact of economies of
scale; (e) a summary of aggregate amounts paid by the Master Fund
and/or the Feeder Fund to BlackRock; (f) sales and redemption data
regarding the Feeder Fund’s shares; and (g) if applicable, a comparison
of management fees to similar BlackRock open-end funds, as classified
by Lipper.
At an in-person meeting held on April 13, 2010, the Board reviewed
materials relating to its consideration of the Agreements. As a result
of the discussions that occurred during the April 13, 2010 meeting,
the Board presented BlackRock with questions and requests for addi-
tional information and BlackRock responded to these requests with
additional written information in advance of the May 11 – 12, 2010
Board meeting.
At an in-person meeting held on May 11 – 12, 2010, the Board of the
Master Fund, including the Independent Board Members, unanimously
approved the continuation of the Advisory Agreement between the Man-
ager and the Master Fund and the Sub-Advisory Agreement between the
Manager and the Sub-Advisor with respect to the Master Fund, each for
a one-year term ending June 30, 2011. The Board of the Feeder Fund,
including the Independent Board Members, also considered the continu-
ation of the Agreements and found the Agreements to be satisfactory.
In approving the continuation of the Agreements, the Board considered:
(a) the nature, extent and quality of the services provided by BlackRock;
(b) the investment performance of the Master Fund, the Feeder Fund
and BlackRock; (c) the advisory fee and the cost of the services and
profits to be realized by BlackRock and its affiliates from their relation-
ship with the Master Fund and the Feeder Fund; (d) economies of scale;
and (e) other factors deemed relevant by the Board Members.
The Board also considered other matters it deemed important to the
approval process, such as payments made to BlackRock or its affiliates
relating to the distribution of Feeder Fund shares, services related to the
valuation and pricing of portfolio holdings of the Master Fund, direct and
indirect benefits to BlackRock and its affiliates and significant share-
holders from their relationship with the Master Fund and the Feeder
Fund and advice from independent legal counsel with respect to the
review process and materials submitted for the Board’s review. The Board
noted the willingness of BlackRock personnel to engage in open, candid
discussions with the Board. The Board did not identify any particular
information as controlling, and each Board Member may have attributed
different weights to the various items considered.
A. Nature, Extent and Quality of the Services Provided by BlackRock:
The Board, including the Independent Board Members, reviewed the
nature, extent and quality of services provided by BlackRock, including
the investment advisory services and the resulting performance of the
Feeder Fund. Throughout the year, the Board compared the Feeder
Fund’s performance to the performance of a comparable group of
mutual funds, and the performance of a relevant benchmark, if any. The
Board met with BlackRock’s senior management personnel responsible
for investment operations, including the senior investment officers. The
Board also reviewed the materials provided by the portfolio management
team discussing performance and the investment objective, strategies
and outlook.
The Board considered, among other factors, the number, education
and experience of BlackRock’s investment personnel generally and
the Master Fund’s portfolio management team, investments by portfolio
managers in the funds they manage, BlackRock’s portfolio trading capa-
bilities, BlackRock’s use of technology, BlackRock’s commitment to com-
pliance and BlackRock’s approach to training and retaining portfolio
managers and other research, advisory and management personnel. The
Board also reviewed a general description of BlackRock’s compensation
structure with respect to the Master Fund’s portfolio management team
and BlackRock’s ability to attract and retain high-quality talent.
In addition to advisory services, the Board considered the quality of
the administrative and non-investment advisory services provided to
the Master Fund and the Feeder Fund. BlackRock and its affiliates and
significant shareholders provide the Master Fund and the Feeder Fund
with certain administrative, transfer agency, shareholder and other serv-
ices (in addition to any such services provided to the Master Fund and
the Feeder Fund by third parties) and officers and other personnel as
are necessary for the operations of the Master Fund and the Feeder
Fund. In addition to investment advisory services, BlackRock and its
affiliates provide the Master Fund and the Feeder Fund with other serv-
ices, including (i) preparing disclosure documents, such as the prospec-
tus, the statement of additional information and periodic shareholder
reports; (ii) assisting with daily accounting and pricing; (iii) overseeing
and coordinating the activities of other service providers; (iv) organizing
Board meetings and preparing the materials for such Board meetings;
(v) providing legal and compliance support; and (vi) performing other
administrative functions necessary for the operation of the Master Fund
and the Feeder Fund, such as tax reporting, fulfilling regulatory filing
requirements, and call center services. The Board reviewed the structure
and duties of BlackRock’s fund administration, accounting, legal and
compliance departments and considered BlackRock’s policies and pro-
cedures for assuring compliance with applicable laws and regulations.
B. The Investment Performance of the Master Fund, the Feeder Fund
and BlackRock: The Board, including the Independent Board Members,
also reviewed and considered the performance history of the Master
Fund and the Feeder Fund, as applicable. The Board noted that the
Master Fund’s investment results correspond directly to the investment
results of the Feeder Fund. In preparation for the April 13, 2010 meet-
ing, the Board was provided with reports, independently prepared by
Lipper, which included a comprehensive analysis of the Feeder Fund’s
performance. The Board also reviewed a narrative and statistical analysis
30 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement (continued)
of the Lipper data that was prepared by BlackRock, which analyzed vari-
ous factors that affect Lipper’s rankings. In connection with its review,
the Board received and reviewed information regarding the investment
performance of the Feeder Fund as compared to a representative group
of similar funds as determined by Lipper and to all funds in the Feeder
Fund’s applicable Lipper category. The Board was provided with a
description of the methodology used by Lipper to select peer funds.
The Board regularly reviews the performance of the Master Fund and
the Feeder Fund, as applicable, throughout the year. The Board attaches
more importance to performance over relatively long periods of time,
typically three to five years.
The Board noted that the Feeder Fund ranked in the first quartile against
its Lipper Performance Universe for each of the one-, three- and five-year
periods reported.
C. Consideration of the Advisory Fees and the Cost of the Services
and Profits to be Realized by BlackRock and its Affiliates from their
Relationship with the Master Fund and the Feeder Fund: The Board,
including the Independent Board Members, reviewed the Master Fund’s
contractual advisory fee rate compared with the other funds in the
Feeder Fund’s Lipper category. It also compared the Feeder Fund’s total
expenses, as well as actual management fees, to those of other funds in
its Lipper category. The Board considered the services provided and the
fees charged by BlackRock to other types of clients with similar invest-
ment mandates, including separately managed institutional accounts.
The Board received and reviewed statements relating to BlackRock’s
financial condition and profitability with respect to the services it
provided the Master Fund and the Feeder Fund. The Board was also
provided with a profitability analysis that detailed the revenues earned
and the expenses incurred by BlackRock for services provided to the
Master Fund and the Feeder Fund. The Board reviewed BlackRock’s
profitability with respect to the Master Fund and the Feeder Fund, as
applicable, and other funds the Board currently oversees for the year
ended December 31, 2009 compared to available aggregate profitability
data provided for the year ended December 31, 2008. The Board re-
viewed BlackRock’s profitability with respect to other fund complexes
managed by the Manager and/or its affiliates. The Board reviewed
BlackRock’s assumptions and methodology of allocating expenses in
the profitability analysis, noting the inherent limitations in allocating
costs among various advisory products. The Board recognized that
profitability may be affected by numerous factors including, among
other things, fee waivers and expense reimbursements by the Manager,
the types of funds managed, expense allocations and business mix,
and the difficulty of comparing profitability as a result of those factors.
The Board noted that, in general, individual fund or product line prof-
itability of other advisors is not publicly available. Nevertheless, to the
extent such information was available, the Board considered BlackRock’s
operating margin, in general, compared to the operating margin for lead-
ing investment management firms whose operations include advising
open-end funds, among other product types. That data indicates that
operating margins for BlackRock with respect to its registered funds are
generally consistent with margins earned by similarly situated publicly
traded competitors. In addition, the Board considered, among other
things, certain third party data comparing BlackRock’s operating margin
with that of other publicly-traded asset management firms. That third
party data indicates that larger asset bases do not, in themselves,
translate to higher profit margins.
In addition, the Board considered the cost of the services provided to
the Master Fund and the Feeder Fund by BlackRock, and BlackRock’s
and its affiliates’ profits relating to the management and distribution of
the Master Fund and the Feeder Fund and the other funds advised by
BlackRock and its affiliates. As part of its analysis, the Board reviewed
BlackRock’s methodology in allocating its costs to the management
of the Master Fund and the Feeder Fund. The Board also considered
whether BlackRock has the financial resources necessary to attract
and retain high quality investment management personnel to perform
its obligations under the Agreements and to continue to provide the
high quality of services that is expected by the Board.
The Board noted that the Master Fund’s contractual advisory fee rate
was lower than or equal to the median contractual advisory fee rate paid
by the Feeder Fund’s Peers, in each case, before taking into account any
expense reimbursements or fee waivers. The Board also noted that the
Master Fund has an advisory fee arrangement that includes breakpoints
that adjust the fee rate downward as the size of the Master Fund
increases above certain contractually specified levels.
D. Economies of Scale: The Board, including the Independent Board
Members, considered the extent to which economies of scale might be
realized as the assets of the Master Fund and the Feeder Fund increase.
The Board also considered the extent to which the Master Fund and
Feeder Fund benefit from such economies and whether there should
be changes in the advisory fee rate or structure in order to enable the
Master Fund and the Feeder Fund to participate in these economies of
scale, for example through the use of revised breakpoints in the advisory
fee based upon the asset level of the Master Fund.
E. Other Factors Deemed Relevant by the Board Members: The Board,
including the Independent Board Members, also took into account other
ancillary or “fall-out” benefits that BlackRock or its affiliates and signifi-
cant shareholders may derive from their respective relationships with the
Master Fund and the Feeder Fund, both tangible and intangible, such as
BlackRock’s ability to leverage its investment professionals who manage
other portfolios, an increase in BlackRock’s profile in the investment
advisory community, and the engagement of BlackRock’s affiliates and
BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
31
Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement (concluded)
significant shareholders as service providers to the Master Fund and
the Feeder Fund, including for administrative, transfer agency and distri-
bution services. The Board also considered BlackRock’s overall opera-
tions and its efforts to expand the scale of, and improve the quality of,
its operations. The Board also noted that BlackRock may use and benefit
from third party research obtained by soft dollars generated by certain
mutual fund transactions to assist in managing all or a number of its
other client accounts. The Board further noted that BlackRock completed
the acquisition of a complex of exchange-traded funds (“ETFs”) on
December 1, 2009, and that BlackRock’s funds may invest in such
ETFs without any offset against the management fees payable by the
funds to BlackRock.
In connection with its consideration of the Agreements, the Board also
received information regarding BlackRock’s brokerage and soft dollar
practices. The Board received reports from BlackRock which included
information on brokerage commissions and trade execution practices
throughout the year.
The Board noted the competitive nature of the open-end fund market-
place, and that shareholders are able to redeem their Feeder Fund
shares if they believe that the Feeder Fund’s and/or the Master Fund’s
fees and expenses are too high or if they are dissatisfied with the
performance of the Feeder Fund.
Conclusion
The Board of the Master Fund, including the Independent Board
Members, unanimously approved the continuation of the Advisory
Agreement between the Manager and the Master Fund for a one-year
term ending June 30, 2011 and the Sub-Advisory Agreement between
the Manager and the Sub-Advisor, with respect to the Master Fund, for a
one-year term ending June 30, 2011. As part of its approval, the Board
of the Master Fund considered the detailed review of BlackRock’s fee
structure, as it applies to the Master Fund, being conducted by the
ad hoc Joint Product Pricing Committee. Based upon its evaluation of all
of the aforementioned factors in their totality, the Board of the Master
Fund, including the Independent Board Members, was satisfied that the
terms of the Agreements were fair and reasonable and in the best inter-
est of the Master Fund and its shareholders. The Board of the Feeder
Fund, including the Independent Board Members, also considered the
continuation of the Agreements with respect to the Master Fund and
found the Agreements to be satisfactory. In arriving at a decision to
approve the Agreements, the Board of the Master Fund did not identify
any single factor or group of factors as all-important or controlling, but
considered all factors together, and different Board Members may have
attributed different weights to the various factors considered. The
Independent Board Members were also assisted by the advice of inde-
pendent legal counsel in making this determination. The contractual fee
arrangements for the Master Fund reflect the results of several years of
review by the Board Members and predecessor Board Members, and
discussions between such Board Members (and predecessor Board
Members) and BlackRock. Certain aspects of the arrangements may
be the subject of more attention in some years than in others, and
the Board Members’ conclusions may be based in part on their
consideration of these arrangements in prior years.
32 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
| | | | | |
| Officers and Directors | | | | |
| | | | | Number of BlackRock- | |
| | | | | Advised Registered | |
| | | Length | | Investment Companies | |
| | Position(s) | of Time | | (“RICs”) Consisting of | |
| Name, Address | Held with | Served as | | Investment Portfolios | Public |
| and Year of Birth | Fund/Master LLC | a Director2 | Principal Occupation(s) During Past 5 Years | (“Portfolios”) Overseen | Directorships |
| Non-Interested Directors1 | | | | |
| Robert M. Hernandez | Chairman of the | Since | Director, Vice Chairman and Chief Financial Officer of USX | 34 RICs consisting of | ACE Limited |
| 55 East 52nd Street | Board, Director | 2007 | Corp. (energy and steel business) from 1991 to 2001. | 97 Portfolios | (insurance company); |
| New York, NY 10055 | and Member of | | | | Eastman Chemical |
| 1944 | the Audit | | | | Company (chemical); |
| | Committee | | | | RTI International |
| | | | | | Metals, Inc. (metals); |
| | | | | | TYCO Electronics |
| | | | | | (electronics) |
| Fred G. Weiss | Vice Chairman | Since | Managing Director, FGW Associates (consulting and investment | 34 RICs consisting of | Watson |
| 55 East 52nd Street | of the Board, | 1998 | company) since 1997; Director, Michael J. Fox Foundation for | 97 Portfolios | Pharmaceutical, Inc. |
| New York, NY 10055 | Chairman of the | | Parkinson’s Research since 2000; Director, BTG International | | |
| 1941 | Audit Committee | | Plc (a global technology commercialization company) from | | |
| | and Director | | 2001 to 2007. | | |
| James H. Bodurtha | Director | Since | Director, The China Business Group, Inc. (consulting firm) since | 34 RICs consisting of | None |
| 55 East 52nd Street | | 2007 | 1996 and Executive Vice President thereof from 1996 to 2003; | 97 Portfolios | |
| New York, NY 10055 | | | Chairman of the Board, Berkshire Holding Corporation since 1980. | | |
| 1944 | | | | | |
| Bruce R. Bond | Director | Since | Trustee and Member of the Governance Committee, State Street | 34 RICs consisting of | None |
| 55 East 52nd Street | | 2007 | Research Mutual Funds from 1997 to 2005; Board Member | 97 Portfolios | |
| New York, NY 10055 | | | of Governance, Audit and Finance Committee, Avaya Inc. | | |
| 1946 | | | (computer equipment) from 2003 to 2007. | | |
| Donald W. Burton | Director | Since | Managing General Partner, The Burton Partnership, LP (an | 34 RICs consisting of | Knology, Inc. (tele- |
| 55 East 52nd Street | | 2002 | investment partnership) since 1979; Managing General Partner, | 97 Portfolios | communications); |
| New York, NY 10055 | | | The South Atlantic Venture Funds since 1983; Member of the | | Capital Southwest |
| 1944 | | | Investment Advisory Council of the Florida State Board of | | (financial) |
| | | | Administration from 2001 to 2007. | | |
| Stuart E. Eizenstat | Director | Since | Partner and Head of International Practice, Covington and | 34 RICs consisting of | Alcatel-Lucent (tele- |
| 55 East 52nd Street | | 2007 | Burling (law firm) since 2001; International Advisory Board | 97 Portfolios | communications); |
| New York, NY 10055 | | | Member, The Coca Cola Company since 2002; Advisory Board | | Global Specialty |
| 1943 | | | Member, BT Americas (telecommunications) since 2004; | | Metallurgical (metal- |
| | | | Member of the Board of Directors, Chicago Climate Exchange | | lurgical industry); |
| | | | (environmental) since 2006; Member of the International | | UPS Corp. (delivery |
| | | | Advisory Board GML (energy) since 2003. | | service) |
| Kenneth A. Froot | Director | Since | Professor, Harvard University since 1992. | 34 RICs consisting of | None |
| 55 East 52nd Street | | 2007 | | 97 Portfolios | |
| New York, NY 10055 | | | | | |
| 1957 | | | | | |
| John F. O’Brien | Director | Since | Chairman and Director, Woods Hole Oceanographic Institute | 34 RICs consisting of | Cabot Corporation |
| 55 East 52nd Street | | 2005 | since 2009 and Trustee thereof from 2003 to 2009;Director, | 97 Portfolios | (chemicals); LKQ |
| New York, NY 10055 | | | Allmerica Financial Corporation from 1995 to 2003;Director, | | Corp.(auto parts |
| 1943 | | | ABIOMED from 1989 to 2006; Director, Ameresco, Inc. | | manufacturing); TJX |
| | | | (energy solutions company) from 2006 to 2007; Vice Chairman | | Companies, Inc. |
| | | | and Director, Boston Lyric Opera from 2002 to 2007. | | (retailer) |
| Roberta Cooper Ramo | Director | Since | Shareholder, Modrall, Sperling, Roehl, Harris & Sisk, P.A. (law | 34 RICs consisting of | None |
| 40 East 52nd Street | | 2007 | firm) since 1993; Chairman of the Board, Cooper’s Inc. (retail) | 97 Portfolios | |
| New York, NY 10022 | | | since 2000; Director of ECMC Group (service provider to | | |
| 1942 | | | students, schools and lenders) since 2001; President, The | | |
| American Law Institute (non-profit) since 2008; President, |
| | | | American Bar Association from 1995 to 1996. | | |
BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
33
| | | | | |
| Officers and Directors (continued) | | |
| | | | | Number of BlackRock- | |
| | | | | Advised Registered | |
| | | Length | | Investment Companies | |
| | Position(s) | of Time | | (“RICs”) Consisting of | |
| Name, Address | Held with | Served as | | Investment Portfolios | Public |
| and Year of Birth | Fund/Master LLC | a Director2 | Principal Occupation(s) During Past 5 Years | (“Portfolios”) Overseen | Directorships |
| Non-Interested Trustees1 (concluded) | | | | |
| David H. Walsh | Director | Since | Director, National Museum of Wildlife Art since 2007; Director, | 34 RICs consisting of | None |
| 55 East 52nd Street | | 2003 | Ruckleshaus Institute and Haub School of Natural Resources | 97 Portfolios | |
| New York, NY 10055 | | | at the University of Wyoming from 2006 to 2008; Trustee, | | |
| 1941 | | | University of Wyoming Foundation since 2008; Director, The | | |
| American Museum of Fly Fishing since 1997; Director, The |
| | | | National Audubon Society from 1998 to 2005. | | |
| Richard R. West | Director | Since | Dean Emeritus, New York University’s Leonard N. Stern School | 34 RICs consisting of | Bowne & Co., Inc. |
| 55 East 52nd Street | and Member | 2007 | of Business Administration since 1995. | 97 Portfolios | (financial printers); |
| New York, NY 10055 | of the Audit | | | | Vornado Realty Trust |
| 1938 | Committee | | | | (real estate |
| | | | | | company); |
| | | | | | Alexander’s Inc. |
| | | | | | (real estate |
| | | | | | company) |
| | 1 Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. | |
| | 2 Date shown is the earliest date a person has served as a director for the Fund/Master LLC covered by this annual report. Following the combination |
| | of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. (“BlackRock”) in September 2006, the various legacy MLIM and legacy |
| | BlackRock Fund boards were realigned and consolidated into three new Fund boards in 2007. As a result, although the chart shows certain directors |
| | as joining the Fund’s/Master LLC’s board in 2007, each director first became a member of the board of other legacy MLIM or legacy BlackRock Funds |
| | as follows: James H. Bodurtha, 1995; Bruce R. Bond, 2005; Donald W. Burton, 2002; Stuart E. Eizenstat, 2001; Kenneth A. Froot, 2005; Robert M. |
| | Hernandez, 1996; John F. O’Brien, 2004; Roberta Cooper Ramo, 2000; David H. Walsh, 2003; Fred G. Weiss, 1998; and Richard R. West, 1978. |
| Interested Trustees3 | | | | | |
| Richard S. Davis | Director | Since | Managing Director, BlackRock, Inc. since 2005; Chief Executive | 169 RICs consisting of | None |
| 55 East 52nd Street | | 2007 | Officer, State Street Research & Management Company from | 291 Portfolios | |
| New York, NY 10055 | | | 2000 to 2005; Chairman of the Board of Trustees, State Street | | |
| 1945 | | | Research Mutual Funds from 2000 to 2005. | | |
| Laurence D. Fink | Director | Since | Chairman and Chief Executive Officer of BlackRock, Inc. since its | 34 RICs consisting of | None |
| 55 East 52nd Street | | 2007 | formation in 1998 and of BlackRock, Inc.’s predecessor entities | 97 Portfolios | |
| New York, NY 10055 | | | since 1988 and Chairman of the Executive and Management | | |
| 1952 | | | Committees; Formerly Managing Director, The First Boston Corp- | | |
| oration, Member of its Management Committee, Co-head of its |
| | | | Taxable Fixed Income Division and Head of its Mortgage and Real | | |
| Estate Products Group; Chairman of the Board of several of |
| | | | BlackRock’s alternative investment vehicles; Director of several of | | |
| | | | BlackRock’s offshore funds; Member of the Board of Trustees of | | |
| | | | New York University, Chair of the Financial Affairs Committee and | | |
| | | | a member of the Executive Committee, the Ad Hoc Committee on | | |
| | | | Board Governance, and the Committee on Trustees; Co-Chairman | | |
| of the NYU Hospitals Center Board of Trustees, Chairman of the |
| Development/Trustee Stewardship Committee and Chairman of |
| the Finance Committee; Trustee, The Boys’ Club of New York. |
|
| Henry Gabbay | Director | Since | Consultant, BlackRock, Inc. from 2007 to 2008; Managing | 169 RICs consisting of | None |
| 55 East 52nd Street | | 2007 | Director, BlackRock, Inc. from 1989 to 2007; Chief | 291 Portfolios | |
| New York, NY 10055 | | | Administrative Officer, BlackRock Advisors, LLC from 1998 to | | |
| 1947 | | | 2007; President of BlackRock Funds and BlackRock Bond | | |
| Allocation Target Shares from 2005 to 2007 and Treasurer of |
| certain closed-end funds in the BlackRock fund complex from |
| | | | 1989 to 2006. | | |
3 Messrs. Davis and Fink are both “interested persons,” as defined in the Investment Company Act of 1940, of the Fund/Master LLC based on their
positions with BlackRock, Inc. and its affiliates. Mr. Gabbay is an "interested person" of the Fund based on his former positions with BlackRock, Inc.
and its affiliated as well as his ownership of BlackRock, Inc. and The PNC Financial Services Group, Inc. securities. Directors serve until their resigna-
tion, removal or death, or until December 31 of the year in which they turn 72.
34 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
| | | | | | |
| Officers and Directors (concluded) | | |
| | Position(s) | | | | |
| Name, Address | Held with | Length of | | | |
| and Year of Birth | Fund/Master LLC | Time Served | Principal Occupation(s) During Past 5 Years | | |
| Officers1 | | | | | | |
| Anne Ackerley | President | Since | Managing Director of BlackRock, Inc. since 2000; Vice President of the BlackRock-advised funds from 2007 to |
| 55 East 52nd Street | and Chief | 20092 | 2009; Chief Operating Officer of BlackRock’s Global Client Group (GCG) since 2009; Chief Operating Officer |
| New York, NY 10055 | Executive | | of BlackRock’s U.S. Retail Group from 2006 to 2009; Head of BlackRock’s Mutual Fund Group from 2000 |
| 1962 | Officer | | | to 2006. | | |
| Jeffrey Holland, CFA | Vice | | Since | Managing Director of BlackRock, Inc. since 2010; Director of BlackRock, Inc. from 2006 to 2009; Chief Operating |
| 55 East 52nd Street | President | 2009 | Officer of BlackRock’s U.S. Retail Group since 2009; Co-head of Product Development and Management for |
| New York, NY 10055 | | | | BlackRock’s U.S. Retail Group from 2007 to 2009; Product Manager of Raymond James & Associates from |
| 1971 | | | | 2003 to 2006. | | |
| Brendan Kyne | Vice | | Since | Managing Director of BlackRock, Inc. since 2010; Director of BlackRock, Inc. from 2008 to 2009; Head of Product |
| 55 East 52nd Street | President | 2009 | Development and Management for BlackRock's U.S. Retail Group since 2009, Co-head thereof from 2007 to |
| New York, NY 10055 | | | | 2009; Vice President of BlackRock, Inc. from 2005 to 2008. | |
| 1977 | | | | | | |
| Brian Schmidt | Vice | | Since | Managing Director of BlackRock, Inc. since 2004; Various positions with U.S. Trust Company from 1991 to 2003 |
| 55 East 52nd Street | President | 2009 | including Director from 2001 to 2003 and Senior Vice President from 1998 to 2003; Vice President, Chief Financial |
| New York, NY 10055 | | | | Officer and Treasurer of Excelsior Funds, Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust from 2001 |
| 1958 | | | | to 2003. | | |
| Neal Andrews | Chief | | Since | Managing Director of BlackRock, Inc. since 2006; Senior Vice President and Line of Business Head of Fund |
| 55 East 52nd Street | Financial | | 2007 | Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. from 1992 to 2006. |
| New York, NY 10055 | Officer | | | | | |
| 1966 | | | | | | |
| Jay Fife | Treasurer | | Since | Managing Director of BlackRock, Inc. since 2007 and Director in 2006; Assistant Treasurer of the Merrill Lynch |
| 55 East 52nd Street | | | 2007 | Investment Managers, L.P. (“MLIM”) and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director |
| New York, NY 10055 | | | | of MLIM Fund Services Group from 2001 to 2006. | |
| 1970 | | | | | | |
| Brian Kindelan | Chief | | Since | Chief Compliance Officer of the BlackRock-advised funds since 2007; Managing Director and Senior Counsel of |
| 55 East 52nd Street | Compliance | 2007 | BlackRock, Inc. since 2005. | | |
| New York, NY 10055 | Officer | | | | | |
| 1959 | | | | | | |
| Howard Surloff | Secretary | Since | Managing Director of BlackRock, Inc. and General Counsel of U.S. Funds at BlackRock, Inc. since 2006; General |
| 55 East 52nd Street | | | 2007 | Counsel (U.S.) of Goldman Sachs Asset Management, L.P. from 1993 to 2006. | |
| New York, NY 10055 | | | | | | |
| 1965 | | | | | | |
| | 1 Officers of the Fund/Master LLC serve at the pleasure of the Board. | | |
| | 2 Ms. Ackerley has been President and Chief Executive Officer since 2009 and Vice President from 2007 to 2009. | |
| | Further information about the Fund’s/Master LLC’s Officers and Directors is available in the Fund’s Statement of Additional Information, which can |
| | be obtained without charge by calling (800) 441-7762. | | |
| Investment Advisor and | Custodian | Accounting Agent | Legal Counsel | Address of the Fund |
| Administrator | | The Bank of New York | State Street Bank and Trust | Willkie Farr & Gallagher LLP | 100 Bellevue Parkway |
| BlackRock Advisors, LLC | Mellon | | Company | New York, NY 10019 | Wilmington, DE 19809 |
| Wilmington, DE 19809 | New York, NY 10286 | Princeton, NJ 08540 | | |
| | | | | | Independent Registered | |
| Sub-Advisor | | Transfer Agent | Distributor | Public Accounting Firm | |
| BlackRock Investment | | BNY Mellon Investment | BlackRock Investments, LLC | Deloitte & Touche LLP | |
| Management, LLC | | Servicing (US) Inc. | New York, NY 10022 | Princeton, NJ 08540 | |
| Plainsboro, NJ 08536 | | Wilmington, DE 19809 | | | |
BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
35
Additional Information
General Information
Electronic Delivery
Electronic copies of most financial reports and prospectuses are available
on the Fund’s website or shareholders can sign up for e-mail notifications
of quarterly statements, annual and semi-annual reports and prospec-
tuses by enrolling in the Fund’s electronic delivery program.
To enroll:
Shareholders Who Hold Accounts with Investment Advisors, Banks or
Brokerages:
Please contact your financial advisor. Please note that not all investment
advisors, banks or brokerages may offer this service.
Shareholders Who Hold Accounts Directly with BlackRock:
1) Access the BlackRock website at
http://www.blackrock.com/edelivery
2) Select “eDelivery” under the “More Information” section
3) Log into your account
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 it is intended to reduce expenses
and eliminate duplicate mailings of shareholder documents. Mailings of
your shareholder documents may be householded indefinitely unless you
instruct us otherwise. If you do not want the mailing of these documents
to be combined with those for other members of your household, please
contact the Fund at (800) 441-7762.
Availability of Quarterly Portfolio Schedule of Investments
The Fund/Master LLC files its complete schedule of portfolio
holdings with the Securities and Exchange Commission (the “SEC”)
for the first and third quarters of each fiscal year on Form N-Q. The
Fund’s/Master LLC‘s Forms N-Q are available on the SEC’s website
at http://www.sec.gov and may also be reviewed and copied at the
SEC’s Public Reference Room in Washington, D.C. Information on the
operation of the Public Reference Room may be obtained by calling
(800) SEC-0330. The Fund’s/Master LLC‘s Forms N-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/Master LLC
uses to determine how to vote proxies relating to portfolio securities is
available (1) without charge, upon request, by calling (800) 441-7762;
(2) at http://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/Master LLC voted proxies relating to
securities held in the Fund’s/Master LLC’s portfolio during the most
recent 12-month period ended June 30 is available upon request and
without charge (1) at http://www.blackrock.com or by calling (800)
441-7762 and (2) on the SEC’s website at http://www.sec.gov.
Shareholder Privileges
Account Information
Call us at (800) 441-7762 8:00 AM to 6:00 PM EST on any business day
to get information about your account balances, recent transactions and
share prices. You can also reach us on the Web at
http://www.blackrock.com/funds.
Automatic Investment Plans
Investor Class shareholders who want to invest regularly can arrange to
have $50 or more automatically deducted from their checking or savings
account and invested in any of the BlackRock funds.
Systematic Withdrawal Plans
Investor Class shareholders can establish a systematic withdrawal plan
and receive periodic payments of $50 or more from their BlackRock
funds, as long as their account 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.
36 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
Additional Information (concluded)
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and
former fund investors and individual clients (collectively, “Clients”) and
to safeguarding their non-public personal information. The following
information is provided to help you understand what personal informa-
tion BlackRock collects, how we protect that information and why in cer-
tain cases we share such information with select parties.
If you are located in a jurisdiction where specific laws, rules or regula-
tions require BlackRock to provide you with additional or different
privacy-related rights beyond what is set forth below, then BlackRock
will comply with those specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and
about you from different sources, including the following: (i) information
we receive from you or, if applicable, your financial intermediary, on
applications, forms or other documents; (ii) information about your
transactions with us, our affiliates, or others; (iii) information we receive
from a consumer reporting agency; and (iv) from visits to our websites.
BlackRock does not sell or disclose to non-affiliated third parties any
non-public personal information about its Clients, except as permitted
by law or as is necessary to respond to regulatory requests or to service
Client accounts. These non-affiliated third parties are required to protect
the confidentiality and security of this information and to use it only for
its intended purpose.
We may share information with our affiliates to service your account or
to provide you with information about other BlackRock products or serv-
ices that may be of interest to you. In addition, BlackRock restricts
access to non-public personal information about its Clients to those
BlackRock employees with a legitimate business need for the informa-
tion. BlackRock maintains physical, electronic and procedural safeguards
that are designed to protect the non-public personal information of its
Clients, including procedures relating to the proper storage and disposal
of such information.
BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
37
A World-Class Mutual Fund Family
BlackRock offers a diverse lineup of open-end mutual funds crossing all investment styles and managed by experts in equity, fixed income and
tax-exempt investing.
| | | | |
| Equity Funds | | | | |
| BlackRock All-Cap Energy & Resources Portfolio | BlackRock Global SmallCap Fund | BlackRock Natural Resources Trust |
| BlackRock Asset Allocation Portfolio† | BlackRock Health Sciences Opportunities Portfolio | BlackRock Pacific Fund |
| BlackRock Balanced Capital Fund† | BlackRock Healthcare Fund | BlackRock Science & Technology |
| BlackRock Basic Value Fund | BlackRock Index Equity Portfolio* | Opportunities Portfolio |
| BlackRock Capital Appreciation Fund | BlackRock International Fund | BlackRock Small Cap Core Equity Portfolio |
| BlackRock Energy & Resources Portfolio | BlackRock International Index Fund | BlackRock Small Cap Growth Equity Portfolio |
| BlackRock Equity Dividend Fund | BlackRock International Opportunities Portfolio | BlackRock Small Cap Growth Fund II |
| BlackRock EuroFund | BlackRock International Value Fund | BlackRock Small Cap Index Fund |
| BlackRock Focus Growth Fund | BlackRock Large Cap Core Fund | BlackRock Small/Mid-Cap Growth Portfolio |
| BlackRock Focus Value Fund | BlackRock Large Cap Core Plus Fund | BlackRock S&P 500 Index Fund |
| BlackRock Global Allocation Fund† | BlackRock Large Cap Growth Fund | BlackRock U.S. Opportunities Portfolio |
| BlackRock Global Dynamic Equity Fund | BlackRock Large Cap Value Fund | BlackRock Utilities and Telecommunications Fund |
| BlackRock Global Emerging Markets Fund | BlackRock Latin America Fund | BlackRock Value Opportunities Fund |
| BlackRock Global Financial Services Fund | BlackRock Mid-Cap Growth Equity Portfolio | BlackRock World Gold Fund |
| BlackRock Global Growth Fund | BlackRock Mid-Cap Value Equity Portfolio | | |
| BlackRock Global Opportunities Portfolio | BlackRock Mid Cap Value Opportunities Fund | | |
| Fixed Income Funds | | | | |
| BlackRock Bond Portfolio | BlackRock Income Builder Portfolio† | BlackRock Multi-Sector Bond Portfolio |
| BlackRock Emerging Market Debt Portfolio | BlackRock Inflation Protected Bond Portfolio | BlackRock Short-Term Bond Fund |
| BlackRock Floating Rate Income Portfolio | BlackRock Intermediate Government | BlackRock Strategic Income |
| BlackRock GNMA Portfolio | Bond Portfolio | | Opportunities Portfolio |
| BlackRock Government Income Portfolio | BlackRock International Bond Portfolio | BlackRock Total Return Fund |
| BlackRock High Income Fund | BlackRock Long Duration Bond Portfolio | BlackRock Total Return Portfolio II |
| BlackRock High Yield Bond Portfolio | BlackRock Low Duration Bond Portfolio | BlackRock World Income Fund |
| BlackRock Income Portfolio† | BlackRock Managed Income Portfolio | | |
| Municipal Bond Funds | | | | |
| BlackRock AMT-Free Municipal Bond Portfolio | BlackRock Kentucky Municipal Bond Portfolio | BlackRock New York Municipal Bond Fund |
| BlackRock California Municipal Bond Fund | BlackRock Municipal Insured Fund | BlackRock Ohio Municipal Bond Portfolio |
| BlackRock High Yield Municipal Fund | BlackRock National Municipal Fund | BlackRock Pennsylvania Municipal Bond Fund |
| BlackRock Intermediate Municipal Fund | BlackRock New Jersey Municipal Bond Fund | BlackRock Short-Term Municipal Fund |
| Target Risk & Target Date Funds† | | | | |
| BlackRock Prepared Portfolios | BlackRock Lifecycle Prepared Portfolios | BlackRock LifePath Portfolios |
| Conservative Prepared Portfolio | 2010 | 2035 | Retirement | 2040 |
| Moderate Prepared Portfolio | 2015 | 2040 | 2020 | 2045 |
| Growth Prepared Portfolio | 2020 | 2045 | 2025 | 2050 |
| Aggressive Growth Prepared Portfolio | 2025 | 2050 | 2030 | 2055 |
| | 2030 | | 2035 | |
* See the prospectus for information on specific limitations on investments in the fund.
† Mixed asset fund.
BlackRock mutual funds are currently distributed by BlackRock Investments, LLC. You should consider the investment objectives, risks, charges and
expenses of the funds under consideration carefully before investing. Each fund’s prospectus contains this and other information and is available at
www.blackrock.com or by calling (800) 441-7762 or from your financial advisor. The prospectus should be read carefully before investing.
38 BLACKROCK BASIC VALUE FUND, INC.
JUNE 30, 2010
This report is not authorized for use as an offer of sale or a solic-
itation of an offer to buy shares of the Fund unless accompanied
or preceded by the Fund’s current prospectus. Past performance
results shown in this report should not be considered a repre-
sentation of future performance. Investment return 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. Please see the Fund’s prospectus for a description of
risks associated with global investments.
Item 2 – Code of Ethics – The registrant (or the “Fund”) has adopted a code of ethics, as of the end
of the period covered by this report, applicable to the registrant’s principal executive officer,
principal financial officer and principal accounting officer, or persons performing similar
functions. During the period covered by this report, there have been no amendments to or
waivers granted under the code of ethics. A copy of the code of ethics is available without
charge at www.blackrock.com.
Item 3 – Audit Committee Financial Expert – The registrant’s board of directors or trustees, as
applicable (the “board of directors”), has determined that (i) the registrant has the following
audit committee financial experts serving on its audit committee and (ii) each audit
committee financial expert is independent:
Robert M. Hernandez
Fred G. Weiss
Richard R. West
Under applicable securities laws, a person determined to be an audit committee financial
expert will not be deemed an “expert” for any purpose, including without limitation for the
purposes of Section 11 of the Securities Act of 1933, as a result of being designated or
identified as an audit committee financial expert. The designation or identification as an
audit committee financial expert does not impose on such person any duties, obligations, or
liabilities greater than the duties, obligations, and liabilities imposed on such person as a
member of the audit committee and board of directors in the absence of such designation or
identification.
Item 4 – Principal Accountant Fees and Services
| | | | | | | | |
| | (a) Audit Fees | (b) Audit-Related Fees1 | (c) Tax Fees2 | (d) All Other Fees3 |
| | Current | Previous | Current | Previous | Current | Previous | Current | Previous |
| | Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year |
| Entity Name | End | End | End | End | End | End | End | End |
| BlackRock Basic | $6,800 | $6,800 | $0 | $0 | $6,100 | $6,100 | $888 | $1,028 |
| Value Fund, Inc. | | | | | | | | |
| Master Basic Value | | | | | | | | |
| LLC | $34,000 | $41,500 | $0 | $0 | $9,200 | $9,200 | $0 | $0 |
1 The nature of the services include assurance and related services reasonably related to the performance of the audit of
financial statements not included in Audit Fees.
2 The nature of the services include tax compliance, tax advice and tax planning.
3 The nature of the services include a review of compliance procedures and attestation thereto.
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The registrant’s audit committee (the “Committee”) has adopted policies and
procedures with regard to the pre-approval of services. Audit, audit-related and tax
compliance services provided to the registrant on an annual basis require specific pre-
approval by the Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to the registrant’s affiliated
service providers that relate directly to the operations and the financial reporting of the
registrant. Certain of these non-audit services that the Committee believes are a) consistent
with the SEC’s auditor independence rules and b) routine and recurring services that will
not impair the independence of the independent accountants may be approved by the
Committee without consideration on a specific case-by-case basis (“general pre-approval”).
The term of any general pre-approval is 12 months from the date of the pre-approval, unless
the Committee provides for a different period. Tax or other non-audit services provided to
the registrant which have a direct impact on the operation or financial reporting of the
registrant will only be deemed pre-approved provided that any individual project does not
exceed $10,000 attributable to the registrant or $50,000 per project. For this purpose,
multiple projects will be aggregated to determine if they exceed the previously mentioned
cost levels.
Any proposed services exceeding the pre-approved cost levels will require specific
pre-approval by the Committee, as will any other services not subject to general pre-
approval (e.g., unanticipated but permissible services). The Committee is informed of each
service approved subject to general pre-approval at the next regularly scheduled in-person
board meeting. At this meeting, an analysis of such services is presented to the Committee
for ratification. The Committee may delegate to the Committee Chairman the authority to
approve the provision of and fees for any specific engagement of permitted non-audit
services, including services exceeding pre-approved cost levels.
(e)(2) None of the services described in each of Items 4(b) through (d) were approved by
the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not Applicable
(g) Affiliates’ Aggregate Non-Audit Fees:
| | |
| | Current Fiscal Year | Previous Fiscal Year |
| Entity Name | End | End |
| BlackRock Basic Value Fund, | $17,765 | $409,628 |
| Inc. | | |
| Master Basic Value LLC | $19,977 | $411,700 |
(h) The registrant’s audit committee has considered and determined that the provision of
non-audit services that were rendered to the registrant’s investment adviser (not including
any non-affiliated sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by the registrant’s investment adviser), and any entity
controlling, controlled by, or under common control with the investment adviser that
provides ongoing services to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant’s independence.
Regulation S-X Rule 2-01(c)(7)(ii) – $10,777, 0%
Item 5 – Audit Committee of Listed Registrants – 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 previous Form N-CSR filing.
Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management
Investment Companies – Not Applicable
Item 8 – Portfolio Managers of Closed-End Management Investment Companies – Not Applicable
Item 9 – Purchases of Equity Securities by Closed-End Management Investment Company and
Affiliated Purchasers – Not Applicable
Item 10 – Submission of Matters to a Vote of Security Holders – The registrant’s Nominating and
Governance Committee will consider nominees to the board of directors recommended by
shareholders when a vacancy becomes available. Shareholders who wish to recommend a
nominee should send nominations that include biographical information and set forth the
qualifications of the proposed nominee to the registrant’s Secretary. There have been no
material changes to these procedures.
Item 11 – Controls and Procedures
11(a) – The registrant’s principal executive and principal financial officers or persons performing
similar functions have concluded that the registrant’s disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the
“1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the
evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act
and Rule 15(d)-15(b) under the Securities Exchange Act of 1934, as amended.
11(b) – There were no changes in the registrant’s internal control over financial reporting (as
defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter
of the period covered by this report that have materially affected, or are reasonably likely to
materially affect, the registrant’s internal control over financial reporting.
Item 12 – Exhibits attached hereto
12(a)(1) – Code of Ethics – See Item 2
12(a)(2) – Certifications – Attached hereto
12(a)(3) – Not Applicable
12(b) – Certifications – Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment
Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
BlackRock Basic Value Fund, Inc. and Master Basic Value LLC
By: /s/ Anne F. Ackerley
Anne F. Ackerley
Chief Executive Officer of
BlackRock Basic Value Fund, Inc. and Master Basic Value LLC
Date: September 2, 2010
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/ Anne F. Ackerley
Anne F. Ackerley
Chief Executive Officer (principal executive officer) of
BlackRock Basic Value Fund, Inc. and Master Basic Value LLC
Date: September 2, 2010
By: /s/ Neal J. Andrews
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock Basic Value Fund, Inc. and Master Basic Value LLC
Date: September 2, 2010
