We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of FDP Series, Inc. (the “Corporation”) comprising MFS Research International FDP Fund, Marsico Growth FDP Fund, Van Kampen Value FDP Fund and Franklin Templeton Total Return FDP Fund, as of May 31, 2010, the related statements 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 four years in the period then ended. These financial statements and financial highlights are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights of the Corporation for the period ended May 31, 2006 were audited by other auditors whose report, dated July 19, 2006, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Corporation 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 Corporation’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 management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of May 31, 2010, by correspondence with the custodian, brokers and other financial intermediaries; where replies were not received from brokers and other financial intermediaries, 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 each of the funds constituting FDP Series, Inc. as of May 31, 2010, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
The following information is provided with respect to the distributions paid by FDP Series, Inc. during fiscal year ended May 31, 2010:
Disclosure of Investment Advisory Agreement and Sub-Advisory Agreements
Morgan Stanley sold its Van Kampen asset management business and portions of its related businesses to Invesco Ltd. in a transaction that closed on June 1, 2010 (the “Transaction”). Van Kampen Asset Management (“Van Kampen”) acted as sub-advisor to Van Kampen Value FDP Fund (the “Van Kampen Fund”), a series of FDP Series, Inc. (the “Corporation”), pursuant to a sub-advisory agreement between BlackRock Advisors, LLC (the “Manager” or “BlackRock”) and Van Kampen. At an in-person meeting held on February 9 – 10, 2010, the Board of Directors (the “Board,” and the members of which are referred to as “Board Members”) of the Corporation considered whether it would be in the best interests of the Van Kampen Fund and its shareholders to approve a new sub-advisory agreement (the “Invesco Sub-Advisory Agreement”) between the Manager and Invesco Advisers, Inc. (“Invesco”). The Board proposed the Invesco Sub-Advisory Agreement for the Van Kampen Fund because the current sub-advisory agreement with Van Kampen would have terminated upon completion of the Transaction. At a special meeting of shareholders on June 25, 2010, the shareholders of the Van Kampen Fund voted to approve the Invesco Sub-Advisory Agreement.
The following describes the Board’s considerations for approving (a) the Invesco Sub-Advisory Agreement between the Manager and Invesco for the Van Kampen Fund at an in-person meeting on February 9 – 10, 2010; (b) the investment advisory agreement (the “Advisory Agreement”) between the Corporation, on behalf of its series, Franklin Templeton Total Return FDP Fund (the “Franklin Fund”), Marsico Growth FDP Fund (the “Marsico Fund”), MFS Research International FDP Fund (the “MFS Fund”) and the Van Kampen Fund (each, a “Fund”), with the Manager, each Fund’s investment advisor, at in-person meetings on April 13, 2010 and May 11 – 12, 2010; and (c) the sub-advisory agreements (collectively, the “Sub-Advisory Agreements”) between the Manager and each of (i) Franklin Advisers, Inc.; (ii) Marsico Capital Management, LLC; and (iii) Massachusetts Financial Services Company (collectively, the “Sub-Advisors”) with respect to the respective Fund at in-person meetings April 13, 2010 and May 11 – 12, 2010. The Board of the Van Kampen Fund is also the Board of the Franklin Fund, Marsico Fund and MFS Fund. The Advisory Agreement and the Sub-Advisory Agreements are referred to herein as the “Agreements.”
Activities and Composition of the Board
The Board consists of fourteen individuals, eleven of whom are not “interested persons” of the Corporation 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 each Fund and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chairman of the Board is an Independent Board Member. The Board has established five standing committees: 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
At an in-person meeting held on February 9 – 10, 2010, the Board received, reviewed and evaluated information concerning the nature, extent and quality of the personnel of and the services to be provided to the Van Kampen Fund by Invesco pursuant the Invesco Sub-Advisory Agreement. In particular, the Board focused on comparability of fees of the Van Kampen Fund, the proposed investment objectives and strategies for the Van Kampen Fund, and Invesco’s experience in managing the specific types of investments to be used by the Van Kampen Fund.
Pursuant to the 1940 Act, the Board is required to consider the continuation 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 each Fund by the personnel of BlackRock and its affiliates, and the Sub-Advisors, 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 and the Sub-Advisors to each Fund and its 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, sub-advisory, administration, if applicable, and other amounts paid to BlackRock and its affiliates, and the Sub-Advisors by each Fund for services, such as transfer agency, marketing and distribution, call center and fund accounting; (c) Fund operating expenses; (d) the resources devoted to and compliance reports relating to each Fund’s investment objective, policies and restrictions; (e) each Fund’s compliance with its 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, the Sub-Advisors’ 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, as applicable, and execution quality of portfolio transactions; (j) BlackRock’s implementation of each Fund’s valuation and liquidity procedures; (k) an analysis of contractual and actual management fees for products with similar investment objectives across BlackRock’s open-end fund, closed-end fund and institutional account product channels; and (l) periodic updates on BlackRock’s and the Sub-Advisors’ business.
Board Considerations in Approving the Agreements
The Approval Process: To assist the Board in its consideration of the Invesco Sub-Advisory Agreement, Invesco provided written materials and information about Invesco, including its asset management capabilities and organization, as well as the Transaction. At an in-person meeting held on February 9 – 10, 2010, the Board reviewed materials relating to its consideration of the
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Disclosure of Investment Advisory Agreement and Sub-Advisory Agreements (continued)
Invesco Sub-Advisory Agreement. After the Independent Board Members deliberated in executive session, the Board, including the Independent Board Members, unanimously approved the Invesco Sub-Advisory Agreement.
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, Invesco and the Sub-Advisors, as applicable, to periodically review the nature and scope of the information provided to better assist its deliberations. The materials provided in connection with the April meeting included: (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on Fund fees and expenses, and the investment performance of each Fund as compared with a peer group of funds as determined by Lipper (collectively, “Peers”); (b) information on the profitability of the Advisory Agreement 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 of such other clients, as applicable; (d) the impact of economies of scale; (e) a summary of aggregate amounts paid by each Fund to BlackRock; (f) sales and redemption data regarding each Fund’s shares; and (g) if applicable, a comparison of management fees to similar open-end funds managed by BlackRock or the Sub-Advisors, 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 additional 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, including the Independent Board Members, unanimously approved the continuation of the Advisory Agreement between the Manager and the Corporation, on behalf of each Fund, and the Sub-Advisory Agreements between the Manager and the Sub-Advisor with respect to each Fund, each for a one-year term ending June 30, 2011. In approving the continuation of the Agreements, the Board considered: (a) the nature, extent and quality of the services provided by BlackRock and the Sub-Advisors; (b) the investment performance of each Fund, BlackRock and the Sub-Advisors; (c) the advisory fee and the cost of the services and profits to be realized by BlackRock and its affiliates from their relationship with each 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 Fund shares, services related to the valuation and pricing of Fund portfolio holdings, direct and indirect benefits to BlackRock and its affiliates and significant shareholders from their relationship with each 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 Sub-Advisors and Invesco: The Board, including the Independent Board Members, reviewed and considered the nature and extent of the investment sub-advisory services to be provided by Invesco under the Invesco Sub-Advisory Agreement, including portfolio management, investment research and securities trading. In reviewing the Invesco Sub-Advisory Agreement, the Board assessed the ability of Invesco to provide sub-advisory services to the Van Kampen Fund following the closing of the Transaction. The Board considered the details of the anticipated ownership structure of Invesco generally and information about how Invesco’s management and operations would be structured following the Transaction, including, whether, and if so how, Invesco’s new ownership structure might affect Invesco’s performance of services under the Invesco Sub-Advisory Agreement. The Board discussed the challenges of positioning the Van Kampen Fund on a common operating platform with Invesco, with particular emphasis on ensuring portfolio management operations properly migrate to Invesco as part of the Transaction, to ensure uninterrupted services for Van Kampen Fund shareholders. The Board noted the continuity of portfolio managers currently providing day-to-day management services to the Van Kampen Fund, and key investment management personnel of the portfolio management team that would continue to provide such services to the Van Kampen Fund at Invesco upon consummation of the Transaction. The Board also reviewed the qualifications of each of the Van Kampen Fund’s portfolio managers. The Board considered the reputation, financial strength and resources of Invesco, Ltd., one of the world’s leading independent global investment management firms, the strength of Invesco, Ltd.’s resources and investment capabilities and the client-focused shareholder services offered by Invesco, Ltd.
The Board considered the amount of assets, including investment company assets, under Invesco’s management and noted that Invesco has extensive experience in the investment management business. The Board also reviewed performance information for the Van Kampen Fund and accounts managed by Invesco that are managed in the same way as the Van Kampen Fund. The Board concluded that Invesco has a high level of expertise in managing equity securities, particularly using a value investing style and determined that the Van Kampen Fund would continue to benefit from that expertise.
The Board also focused on the nature and scope of Invesco’s compliance policies and procedures. In connection with this, the Board reviewed a summary of Invesco’s compliance program, a certification from Invesco that the compliance program is reasonably designed and implemented to prevent violations of the federal securities laws, and further noted that the Board will receive annually a report from BlackRock’s compliance staff, including the Van Kampen Fund’s Chief Compliance Officer, on the results of a due diligence review of Invesco. The Board determined that Invesco’s compliance policies and procedures, as overseen by BlackRock, were adequate to ensure the Van Kampen Fund’s compliance with the Van Kampen Fund’s investment objectives and policies and the requirements of the applicable securities laws.
The Board, including the Independent Board Members, reviewed the nature, extent and quality of services provided by BlackRock and the Sub-Advisors under the Agreements, including the investment advisory and sub-advisory
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58 | FDP SERIES, INC. | MAY 31, 2010 |
Disclosure of Investment Advisory Agreement and Sub-Advisory Agreements (continued)
services, and the resulting performance of each Fund. Throughout the year, the Board compared Fund 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 each Fund’s portfolio management team discussing Fund performance and each Fund’s investment objective, strategies and outlook.
The Board considered, among other factors, the number, education and experience of BlackRock’s and the Sub-Advisors’ investment personnel generally and each Fund’s portfolio management team, investments by portfolio managers in the funds they manage, BlackRock’s and the Sub-Advisors’ portfolio trading capabilities, BlackRock’s and the Sub-Advisors’ use of technology, BlackRock’s and the Sub-Advisors’ commitment to compliance and BlackRock’s and the Sub-Advisors’ approach to training and retaining portfolio managers and other research, advisory, sub-advisory and management personnel. The Board also reviewed a general description of BlackRock’s and the Sub-Advisors’ compensation structure with respect to each Fund’s portfolio management team and BlackRock’s and the Sub-Advisors’ 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 each Fund. BlackRock and its affiliates and significant shareholders provide each Fund with certain administrative, transfer agency, shareholder and other services (in addition to any such services provided to the Fund by third parties) and officers and other personnel as are necessary for the operations of each Fund. In addition to investment advisory services, BlackRock and its affiliates provide each Fund with other services, including: (i) preparing disclosure documents, such as the prospectus, 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 each 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 procedures for assuring compliance with applicable laws and regulations.
B. The Investment Performance of each Fund, BlackRock, Invesco and the Sub-Advisors: The Board, including the Independent Board Members, also reviewed and considered the performance history of each Fund. In considering the approval of the Invesco Sub-Advisory Agreement, Board Members noted that they receive performance information about the Van Kampen Fund at each quarterly Board meeting, including information comparing the Van Kampen Fund’s performance to its benchmark and its Peers. The Board noted that the Van Kampen Fund ranked in the first, second, and third quartiles against its Lipper Performance Universe for the one-year, three-year and since-inception periods reported, respectively. The Board noted the Van Kampen Fund’s performance had been improving. The Board noted that it will continue its ongoing dialogue with BlackRock and Invesco portfolio management regarding the Van Kampen Fund’s performance. The Board and BlackRock discussed Invesco’s commitment to improve the Van Kampen Fund’s performance.
In preparation for the April 13, 2010 meeting, the Board was provided with reports, independently prepared by Lipper, which included a comprehensive analysis of each Fund’s performance. The Board also reviewed a narrative and statistical analysis of the Lipper data that was prepared by BlackRock, which analyzed various factors that affect Lipper’s rankings. In connection with its review, the Board received and reviewed information regarding the investment performance of each Fund as compared to a representative group of similar funds as determined by Lipper and to all funds in the 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 each Fund 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 Franklin Fund ranked in the second, third, and third quartiles against its Lipper Performance Universe for the one-year, three-year and since-inception periods reported, respectively. The Board and BlackRock reviewed the reasons for the Franklin Fund’s underperformance during the three-year and since-inception periods compared with its Peers. The Board was informed that, among other things, over much of the three-year period, the Franklin Fund was underweight U.S. Treasury securities, which benefited the Franklin Fund when Treasuries turned negative in 2009, but detracted from performance in 2007 and 2008.
The Board noted that the Marsico Fund ranked in the fourth, fourth, and third quartiles against its Lipper Performance Universe for the one-year, three-year and since-inception periods reported, respectively. The Board and BlackRock reviewed the reasons for the Marsico Fund’s underperformance during these periods compared with its Peers. The Board was informed that, among other things, underperformance in the periods can generally be explained by the Marsico Fund’s over-weighted posture to financials securities and underweighted posture to information technology securities.
The Board and BlackRock discussed Franklin Advisors, Inc.’s and Marsico Capital Management, LLC’s strategies for improving the Franklin Fund’s and the Marsico Fund’s performance, respectively, and Franklin Advisors, Inc.’s and Marsico Capital Management, LLC’s commitment to improve the Franklin Fund’s and the Marsico Fund’s performance, respectively.
The Board noted that the MFS Fund ranked in the second quartile against its Lipper Performance Universe for each of the one-year, three-year and since-inception periods reported.
The Board again noted that the Van Kampen Fund ranked in the first, second, and third quartiles against its Lipper Performance Universe for the one-year, three-year and since-inception periods reported, respectively.
The Board noted that BlackRock has made changes to the organization of the overall fixed income group management structure designed to result in a strengthened leadership team with clearer accountability.
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FDP SERIES, INC. | MAY 31, 2010 | 59 |
Disclosure of Investment Advisory Agreement and Sub-Advisory Agreements (continued)
C. Consideration of the Advisory and Sub-Advisory Fees and the Cost of the Services and Profits to be Realized by BlackRock and its Affiliates, Invesco and the Sub-Advisors from their Relationship with each Fund: In connection with the Board’s consideration of the Invesco Sub-Advisory Agreement, the Board, including the Independent Board Members, reviewed the amount of the investment sub-advisory fee to be paid by BlackRock to Invesco. The Board noted that the investment sub-advisory fee to be paid to Invesco by BlackRock was the same sub-advisory fee rate as was paid to Van Kampen. Based on the fact that the Invesco Sub-Advisory Agreement is essentially identical to the sub-advisory agreement with Van Kampen, the Board Members noted that the Van Kampen Fund’s total advisory fees would not change as a result of the Transaction or the approval of the Invesco Sub-Advisory Agreement. The Board also took note of the fact that in its most recent deliberations concerning the adoption of the Invesco Sub-Advisory Agreement, it had determined that the fees for sub-advisory services for the Van Kampen Fund were reasonable in light of the services provided. The Board also noted that the sub-advisory fee is paid by BlackRock solely out of the investment advisory fee it receives from the Van Kampen Fund under the current advisory agreement with the Van Kampen Fund. In connection with its review of the Invesco Sub-Advisory Agreement, the Board considered a comparison of advisory fees for Peers and the overall advisory arrangements of the Van Kampen Fund, as complied by Lipper.
The Board noted that the Van Kampen Fund’s contractual advisory fee rate was lower than the median contractual advisory fee rate paid by the Van Kampen Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that BlackRock has voluntarily agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Van Kampen Fund’s total net expenses on a class-by-class basis, as applicable. The Board noted that the Van Kampen Fund’s sub-advisory arrangements would be reviewed again when the Invesco Sub-Advisory Agreement was considered for renewal.
In connection with the Board’s annual consideration of the Agreements, the Board, including the Independent Board Members, reviewed each Fund’s contractual advisory fee rates compared with the other funds in its Lipper category. It also compared each Fund’s total expenses, as well as actual management fees, to those of other funds in each Fund’s respective Lipper category. The Board considered the services provided and the fees charged by BlackRock and the Sub-Advisors to other types of clients with similar investment mandates, including separately managed institutional accounts. The Board also noted that the sub-advisory fee for each Fund is paid by BlackRock solely out of the investment advisory fee it receives from that fund under its current advisory agreement.
The Board received and reviewed statements relating to BlackRock’s financial condition and profitability with respect to the services it provided each 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 each Fund. The Board reviewed BlackRock’s profitability with respect to each Fund 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 reviewed 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 profitability 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 leading 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 each Fund by BlackRock, and BlackRock’s and its affiliates’ profits relating to the management and distribution of each 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 each Fund. The Board also considered whether BlackRock and the Sub-Advisors have 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 Franklin Fund’s contractual advisory fee rate was lower than or equal to the median contractual advisory fee rate paid by the Franklin Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that BlackRock has voluntarily agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Franklin Fund’s total net expenses on a class-by-class basis, as applicable.
The Board noted that the Marsico Fund’s contractual advisory fee rate was above the median contractual advisory fee rate paid by the Marsico Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted, however, that the Marsico Fund’s actual management fee rate (a combination of the advisory fee rate and the administration fee rate), after giving effect to any expense reimbursements or fee waivers by BlackRock, was reasonable relative to the median actual management fee rate paid by the Marsico Fund’s Peers, after giving effect to any expense reimbursements or fee waivers, and/or the Marsico Fund’s contractual management fee rate (a combination of the advisory fee rate and the administration fee rate) was reasonable relative to the median contractual management fee rate paid by the Marsico Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that BlackRock has voluntarily agreed to waive fees or
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Disclosure of Investment Advisory Agreement and Sub-Advisory Agreements (concluded)
reimburse expenses in order to limit, to a specified amount, the Marsico Fund’s total net expenses on a class-by-class basis, as applicable.
The Board noted that the MFS Fund’s contractual advisory fee rate was above the median contractual advisory fee rate paid by the MFS Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted, however, that the MFS Fund’s actual management fee rate (a combination of the advisory fee rate and the administration fee rate), after giving effect to any expense reimbursements or fee waivers by BlackRock, was reasonable relative to the median actual management fee rate paid by the MFS Fund’s Peers, after giving effect to any expense reimbursements or fee waivers, and/or the MFS Fund’s contractual management fee rate (a combination of the advisory fee rate and the administration fee rate) was reasonable relative to the median contractual management fee rate paid by the MFS Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that BlackRock has voluntarily agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the MFS Fund’s total net expenses on a class-by-class basis, as applicable.
The Board again noted that the Van Kampen Fund’s contractual advisory fee rate was lower than or equal to the median contractual advisory fee rate paid by the Van Kampen Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that BlackRock has voluntarily agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Van Kampen Fund’s total net expenses on a class-by-class basis, as applicable.
D. Economies of Scale: In connection with the Board’s consideration of the Invesco Sub-Advisory Agreement, the Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of the Van Kampen Fund increase and whether there could be changes in the sub-advisory fee rate or structure in order to enable the Van Kampen Fund to participate in these economies of scale. The Board determined that changes were not currently necessary and that the Van Kampen Fund appropriately participated in any economies of scale.
In connection with the Board’s consideration of the Agreements, the Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of each Fund increase. The Board also considered the extent to which each Fund benefits from such economies and whether there should be changes in the advisory fee rate or structure in order to enable each Fund to participate in these economies of scale, for example through the use of breakpoints in the advisory fee based upon the asset level of each 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 significant shareholders may derive from their respective relationships with each 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 significant shareholders as service providers to each Fund, including for administrative, transfer agency and distribution services. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Board also noted that BlackRock and the Sub-Advisors 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 marketplace, and that shareholders are able to redeem their Fund shares if they believe that each Fund’s fees and expenses are too high or if they are dissatisfied with the performance of the Fund.
Conclusion
After the Independent Board Members deliberated in executive session at the February 9 – 10, 2010 meeting, the Board, including the Independent Board Members, unanimously approved the Invesco Sub-Advisory Agreement, concluding that the sub-advisory fee was reasonable in relation to the services provided and that the Invesco Sub-Advisory Agreement was in the best interests of Van Kampen Fund’s shareholders. In doing so, the Board relied on statements by Invesco’s management that the Transaction would cause no reduction in the quality of services provided to the Van Kampen Fund.
At in-person meeting held on May 11 – 12, 2010, the Board, including the Independent Board Members, also unanimously approved the continuation of the Advisory Agreement between the Manager and the Corporation, on behalf of each Fund for a one-year term ending June 30, 2011 and the Sub-Advisory Agreements between the Manager and each Sub-Advisor, with respect to each Fund, for a one-year term ending June 30, 2011. As part of its approval, the Board considered the detailed review of BlackRock’s fee structure, as it applies to each 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, including the Independent Board Members, was satisfied that the terms of the Agreements were fair and reasonable and in the best interest of each Fund and its shareholders.
In arriving at a decision to approve the Agreements, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination. The contractual fee arrangements for each 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.
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Name, Address
and Year of Birth | | Position(s)
Held with
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Advised Registered
Investment Companies
(“RICs”) Consisting of
Investment Portfolios
(“Portfolios”) Overseen | | Public
Directorships |
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Robert M. Hernandez
55 East 52nd Street
New York, NY 10055
1944 | | Chairman of the Board and Director | | Since
2007 | | Formerly Director, Vice Chairman and Chief Financial Officer of USX Corporation (energy and steel business) from 1991 to 2001. | | 34 RICs consisting of 97 Portfolios | | ACE Limited (insurance company); Eastman Chemical Company (chemical); RTI International Metals, Inc. (metals); TYCO Electronics (electronics) |
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Fred G. Weiss
55 East 52nd Street
New York, NY 10055
1941 | | Vice Chairman of the Board and Director | | Since
2007 | | Managing Director, FGW Associates (consulting and investment company) since 1997; Director, Michael J. Fox Foundation for Parkinson’s Research since 2000; Formerly Director of BTG International Plc (a global technology commercialization company) from 2001 to 2007. | | 34 RICs consisting of 97 Portfolios | | Watson Pharmaceutical Inc. |
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James H. Bodurtha
55 East 52nd Street
New York, NY 10055
1944 | | Director | | Since
2007 | | Director, The China Business Group, Inc. (consulting firm) since 1996 and formerly Executive Vice President thereof from 1996 to 2003; Chairman of the Board, Berkshire Holding Corporation since 1980. | | 34 RICs consisting of 97 Portfolios | | None |
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Bruce R. Bond
55 East 52nd Street
New York, NY 10055
1946 | | Director | | Since
2007 | | Formerly Trustee and Member of the Governance Committee, State Street Research Mutual Funds from 1997 to 2005; Formerly Board Member of Governance, Audit and Finance Committee, Avaya Inc. (computer equipment) from 2003 to 2007. | | 34 RICs consisting of 97 Portfolios | | None |
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Donald W. Burton
55 East 52nd Street
New York, NY 10055
1944 | | Director | | Since
2007 | | Managing General Partner, The Burton Partnership, LP (an investment partnership) since 1979; Managing General Partner, The South Atlantic Venture Funds since 1983; Member of the Investment Advisory Council of the Florida State Board of Administration from 2001 to 2007. | | 34 RICs consisting of 97 Portfolios | | Knology, Inc. (telecommunications); Capital Southwest (financial) |
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Stuart E. Eizenstat
55 East 52nd Street
New York, NY 10055
1943 | | Director | | Since
2007 | | Partner and Head of International Practice, Covington and Burling (law firm) since 2001; International Advisory Board Member, The Coca-Cola Company since 2002; Advisory Board Member, BT Americas (telecommunications) since 2004; Member of the Board of Directors, Chicago Climate Exchange (environmental) since 2006; Member of the International Advisory Board, GML (energy) since 2003. | | 34 RICs consisting of 97 Portfolios | | Alcatel-Lucent (telecommunications); Global Specialty Metallurgical (metallurgical industry); UPS Corporation (delivery service) |
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Kenneth A. Froot
55 East 52nd Street
New York, NY 10055
1957 | | Director | | Since
2007 | | Professor, Harvard University since 1992. | | 34 RICs consisting of 97 Portfolios | | None |
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John F. O’Brien
55 East 52nd Street
New York, NY 10055
1943 | | Director | | Since
2007 | | Chairman and Director, Woods Hole Oceanographic Institute since 2009 and formerly Trustee thereof from 2003 to 2009; Formerly Director, Allmerica Financial Corporation from 1995 to 2003; Formerly Director, ABIOMED from 1989 to 2006; Formerly Director, Ameresco, Inc. (energy solutions company) from 2006 to 2007; Formerly Vice Chairman and Director, Boston Lyric Opera from 2002 to 2007. | | 34 RICs consisting of 97 Portfolios | | Cabot Corporation (chemicals); LKQ Corporation (auto parts manufacturing); TJX Companies, Inc. (retailer) |
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Roberta Cooper Ramo
55 East 52nd Street
New York, NY 10055
1942 | | Director | | Since
2007 | | Shareholder, Modrall, Sperling, Roehl, Harris & Sisk, P.A. (law firm) since 1993; Chairman of the Board, Cooper’s Inc. (retail) since 2000; Director of ECMC Group (service provider to students, schools and lenders) since 2001; President, The American Law Institute (non-profit) since 2008; Formerly President, American Bar Association from 1995 to 1996. | | 34 RICs consisting of 97 Portfolios | | None |
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| | |
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62 | FDP SERIES, INC. | MAY 31, 2010 |
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Officers and Directors (continued) |
| | | | | | | | | | |
Name, Address
and Year of Birth | | Position(s)
Held with
Funds | | Length
of Time
Served as
a Director2 | | Principal Occupation(s) During Past Five Years | | Number of BlackRock-
Advised Registered
Investment Companies
(“RICs”) Consisting of
Investment Portfolios
(“Portfolios”) Overseen | | Public
Directorships |
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Non-Interested Directors1 (concluded) | | | |
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David H. Walsh
55 East 52nd Street
New York, NY 10055
1941 | | Director | | Since
2007 | | Director, National Museum of Wildlife Art since 2007; Director, Ruckleshaus Institute and Haub School of Natural Resources at the University of Wyoming from 2006 to 2008; Trustee, University of Wyoming Foundation since 2008; Director, The American Museum of Fly Fishing since 1997; Formerly Director, The National Audubon Society from 1998 to 2005. | | 34 RICs consisting of 97 Portfolios | | None |
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Richard R. West
55 East 52nd Street
New York, NY 10055
1938 | | Director | | Since
2007 | | Dean Emeritus, New York University’s Leonard N. Stern School of Business Administration since 1995. | | 34 RICs consisting of 97 Portfolios | | Bowne & Co., Inc. (financial printers); Vornado Realty Trust (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 | 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 directors as joining the Funds’ board in 2007, each director first became a member of the board of directors 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. |
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Interested Directors3 | | | |
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Richard S. Davis
55 East 52nd Street
New York, NY 10055
1945 | | Director | | Since
2007 | | Managing Director, BlackRock, Inc. since 2005; Formerly Chief Executive Officer, State Street Research & Management Company from 2000 to 2005; Formerly Chairman of the Board of Trustees, State Street Research Mutual Funds from 2000 to 2005. | | 169 RICs consisting of 299 Portfolios | | None |
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|
Laurence D. Fink
55 East 52nd Street
New York, NY 10055
1952 | | Director | | Since
2007 | | Chairman and Chief Executive Officer of BlackRock, Inc. since its formation in 1998 and of BlackRock, Inc.’s predecessor entities since 1988 and Chairman of the Executive and Management Committees; Formerly Managing Director, The First Boston Corporation, 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. | | 34 RICs consisting of 97 Portfolios | | None |
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|
Henry Gabbay
55 East 52nd Street
New York, NY 10055
1947 | | Director | | Since
2007 | | Consultant, BlackRock, Inc. from 2007 to 2008; Formerly Managing Director, BlackRock, Inc. from 1989 to 2007; Formerly Chief Administrative Officer, BlackRock Advisors, LLC from 1998 to 2007; Formerly 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. | | 169 RICs consisting of 299 Portfolios | | None |
| | |
|
|
| 3 | Messrs. Davis and Fink are both “interested persons,” as defined in the Investment Company Act of 1940, of the Funds based on their positions with BlackRock, Inc. and its affiliates. Mr. Gabbay is an “interested person” of the Funds based on his former positions with BlackRock, Inc. and its affiliates as well as his ownership of BlackRock, Inc. and The PNC Financial Services Group, Inc. securities. Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. |
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|
FDP SERIES, INC. | MAY 31, 2010 | 63 |
|
|
|
Officers and Directors (concluded) |
| | | | | | |
Name, Address
and Year of Birth | | Position(s)
Held with
Funds | | Length
of Time
Served | | Principal Occupation(s) During Past Five Years |
|
|
|
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|
|
Officers1 | | | | | | |
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|
Anne Ackerley
55 East 52nd Street
New York, NY 10055
1962 | | President and
Chief Executive
Officer | | Since
20092 | | Managing Director of BlackRock, Inc. since 2000; Vice President of the BlackRock-advised Funds from 2007 to 2009; Chief Operating Officer of BlackRock’s Global Client Group (GCG) since 2009; Chief Operating Officer of BlackRock’s U.S. Retail Group from 2006 to 2009; Head of BlackRock’s Mutual Fund Group from 2000 to 2006. |
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|
Jeffrey Holland, CFA
55 East 52nd Street
New York, NY 10055
1971 | | Vice
President | | Since
2009 | | Managing Director of BlackRock, Inc. since 2010; Director of BlackRock, Inc. from 2006 to 2009; Chief Operating Officer of BlackRock’s U.S. Retail Group since 2009; Co-head of Product Development and Management for BlackRock’s U.S. Retail Group from 2007 to 2009; Product Manager of Raymond James & Associates from 2003 to 2006. |
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|
Brendan Kyne
55 East 52nd Street
New York, NY 10055
1977 | | Vice
President | | Since
2009 | | Managing Director of BlackRock, Inc. since 2010; Director of BlackRock, Inc. from 2008 to 2009; Head of Product Development and Management for BlackRock’s U.S. Retail Group since 2009, Co-head thereof from 2007 to 2009; Vice President of BlackRock, Inc. from 2005 to 2008. |
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Brian Schmidt
55 East 52nd Street
New York, NY 10055
1958 | | Vice
President | | Since
2009 | | Managing Director of BlackRock, Inc. since 2004; Various positions with U.S. Trust Company from 1991 to 2003 including Director from 2001 to 2003 and Senior Vice President from 1998 to 2003; Vice President, Chief Financial Officer and Treasurer of Excelsior Funds, Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust from 2001 to 2003. |
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|
Neal Andrews
55 East 52nd Street
New York, NY 10055
1966 | | Chief
Financial
Officer | | Since
2007 | | Managing Director of BlackRock, Inc. since 2006; Formerly Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (US) Inc. (formerly PFPC Inc.) from 1992 to 2006. |
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Jay Fife
55 East 52nd Street
New York, NY 10055
1970 | | Treasurer | | Since
2007 | | Managing Director of BlackRock, Inc. since 2007 and Director in 2006; Formerly Assistant Treasurer of the Merrill Lynch Investment Managers, L.P. (“MLIM”) and Fund Asset Management, L.P. advised Funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006. |
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|
Brian Kindelan
55 East 52nd Street
New York, NY 10055
1959 | | Chief
Compliance
Officer | | Since
2007 | | Chief Compliance Officer of the BlackRock-advised Funds since 2007; Managing Director and Senior Counsel of BlackRock, Inc. since 2005. |
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|
Howard Surloff
55 East 52nd Street
New York, NY 10055
1965 | | Secretary | | Since
2007 | | Managing Director of BlackRock, Inc. and General Counsel of U.S. Funds at BlackRock, Inc. since 2006; Formerly General Counsel (US) of Goldman Sachs Asset Management, L.P. from 1993 to 2006. |
| | |
|
|
| 1 | Officers of the Funds serve at the pleasure of the Board of Directors. |
| | |
| 2 | Ms. Ackerley has been President and Chief Executive Officer since 2009 and was Vice President from 2007 to 2009. |
|
|
| |
| Further information about the Funds’ Officers and Directors is available in the Funds’ Statement of Additional Information, which can be obtained without charge by calling (800) 441-7762. |
|
|
Investment Advisor |
BlackRock Advisors, LLC
Wilmington, DE 19809 |
|
Sub-Advisors |
Massachusetts Financial
Services Company
Boston, MA 02116 |
|
Marsico Capital
Management, LLC
Denver, CO 80202 |
|
Invesco Advisors, Inc.
Atlanta, GA 30309 |
|
Franklin Advisers, Inc.
San Mateo, CA 94403 |
|
Custodian |
Brown Brothers
Harriman & Co.
Boston, MA 02109 |
|
Transfer Agent |
BNY Mellon Investment
Servicing (US) Inc.
Wilmington, DE 19809 |
|
Accounting Agent |
State Street Bank and
Trust Company
Princeton, NJ 08540 |
|
Independent Registered
Public Accounting Firm |
Deloitte & Touche LLP
Princeton, NJ 08540 |
|
Distributor |
BlackRock
Investments, LLC
New York, NY 10022 |
|
Legal Counsel |
Willkie Farr &
Gallagher LLP
New York, NY 10019 |
|
Address of the Funds |
100 Bellevue Parkway
Wilmington, DE 19809 |
| | |
|
64 | FDP SERIES, INC. | MAY 31, 2010 |
During the six-month period ended May 31, 2010, the shareholders of Van Kampen Value FDP Fund of FDP Series, Inc. voted on the following proposal. On May 17, 2010, a special shareholders’ meeting was adjourned with respect to the proposal until June 25, 2010, at which time it was approved. A description of the proposal and number of shares voted are as follows:
| | | | | | | |
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| | For | | Against | | Abstain | |
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|
|
To approve the new sub-advisory agreement between BlackRock Advisors, LLC and Invesco Advisors, Inc. | | 5,589,940 | | 162,365 | | 241,799 | |
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|
|
Electronic Delivery
Electronic copies of most financial reports and prospectuses are available on the Funds’ website or shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual reports and prospectuses by enrolling in the Funds’ 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 Funds will mail only one copy of shareholder documents, including prospectuses, annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call (800) 441-7762.
Availability of Quarterly Portfolio Schedule of Investments
The Funds file their 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 Funds’ 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 Funds’ 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 Funds use to determine how to vote proxies relating to portfolio securities is available (1) without charge, upon request, by calling (800) 441-7762; (2) at www.blackrock.com; and (3) on the SEC’s website at http://www.sec.gov.
Availability of Proxy Voting Record
Information about how the Funds voted proxies relating to securities held in the Funds’ portfolios during the most recent 12-month period ended June 30 is available upon request and without charge (1) at www.blackrock.com or by calling (800) 441-7762 and (2) on the SEC’s website at http://www.sec.gov.
| | |
|
FDP SERIES, INC. | MAY 31, 2010 | 65 |
|
|
|
Additional Information (concluded) |
Account Information
Call us at (800) 441-7762 from 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 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.
|
|
BlackRock Privacy Principles |
|
BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.
If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.
BlackRock does not sell or disclose to non-affiliated third parties any non-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. These non-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.
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66 | FDP SERIES, INC. | MAY 31, 2010 |
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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 Asset Allocation Portfolio† |
BlackRock Aurora Portfolio |
BlackRock Balanced Capital Fund† |
BlackRock Basic Value Fund |
BlackRock Capital Appreciation Fund |
BlackRock Energy & Resources Portfolio |
BlackRock Equity Dividend Fund |
BlackRock EuroFund |
BlackRock Focus Growth Fund |
BlackRock Focus Value Fund |
BlackRock Global Allocation Fund† |
BlackRock Global Dynamic Equity Fund |
BlackRock Global Emerging Markets Fund |
BlackRock Global Financial Services Fund |
BlackRock Global Growth Fund |
BlackRock Global Opportunities Portfolio |
BlackRock Global SmallCap Fund |
BlackRock Health Sciences Opportunities Portfolio |
BlackRock Healthcare Fund |
BlackRock Index Equity Portfolio* |
BlackRock International Fund |
BlackRock International Index Fund |
BlackRock International Opportunities Portfolio |
BlackRock International Value Fund |
BlackRock Large Cap Core Fund |
BlackRock Large Cap Core Plus Fund |
BlackRock Large Cap Growth Fund |
BlackRock Large Cap Value Fund |
BlackRock Latin America Fund |
BlackRock Mid-Cap Growth Equity Portfolio |
BlackRock Mid-Cap Value Equity Portfolio |
BlackRock Mid Cap Value Opportunities Fund |
BlackRock Natural Resources Trust |
BlackRock Pacific Fund |
BlackRock Science & Technology Opportunities Portfolio |
BlackRock Small Cap Core Equity Portfolio |
BlackRock Small Cap Growth Equity Portfolio |
BlackRock Small Cap Growth Fund II |
BlackRock Small Cap Index Fund |
BlackRock Small/Mid-Cap Growth Portfolio |
BlackRock S&P 500 Index Fund |
BlackRock U.S. Opportunities Portfolio |
BlackRock Utilities and Telecommunications Fund |
BlackRock Value Opportunities Fund |
BlackRock World Gold Fund |
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Fixed Income Funds |
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BlackRock Bond Portfolio |
BlackRock Emerging Market Debt Portfolio |
BlackRock GNMA Portfolio |
BlackRock Government Income Portfolio |
BlackRock High Income Fund |
BlackRock High Yield Bond Portfolio |
BlackRock Income Portfolio† |
BlackRock Income Builder Portfolio† |
BlackRock Inflation Protected Bond Portfolio |
BlackRock Intermediate Government Bond Portfolio |
BlackRock International Bond Portfolio |
BlackRock Long Duration Bond Portfolio |
BlackRock Low Duration Bond Portfolio |
BlackRock Managed Income Portfolio |
BlackRock Multi-Sector Bond Portfolio |
BlackRock Short-Term Bond Fund |
BlackRock Strategic Income Opportunities Portfolio |
BlackRock Total Return Fund |
BlackRock Total Return Portfolio II |
BlackRock World Income Fund |
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Municipal Bond Funds |
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BlackRock AMT-Free Municipal Bond Portfolio |
BlackRock California Municipal Bond Fund |
BlackRock High Yield Municipal Fund |
BlackRock Intermediate Municipal Fund |
BlackRock Kentucky Municipal Bond Portfolio |
BlackRock Municipal Insured Fund |
BlackRock National Municipal Fund |
BlackRock New Jersey Municipal Bond Fund |
BlackRock New York Municipal Bond Fund |
BlackRock Ohio Municipal Bond Portfolio |
BlackRock Pennsylvania Municipal Bond Fund |
BlackRock Short-Term Municipal Fund |
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Target Risk & Target Date Funds† |
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BlackRock Prepared Portfolios |
Conservative Prepared Portfolio |
Moderate Prepared Portfolio |
Growth Prepared Portfolio |
Aggressive Growth Prepared Portfolio |
|
BlackRock Lifecycle Prepared Portfolios |
|
2010 |
2015 |
2020 |
2025 |
2030 |
2035 |
2040 |
2045 |
2050 |
|
BlackRock LifePath Portfolios Retirement |
|
2020 |
2025 |
2030 |
2035 |
2040 |
2045 |
2050 |
2055 |
| |
* | 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.
| | |
|
FDP SERIES, INC. | MAY 31, 2010 | 67 |
This report is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Funds unless accompanied or preceded by the Funds’ current prospectus. Past performance results shown in this report should not be considered a representation 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.
| | |
| 
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| | #FDPS-5/10 |
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 |
Entity Name | Current Fiscal Year End | Previous Fiscal Year End | Current Fiscal Year End | Previous Fiscal Year End | Current Fiscal Year End | Previous Fiscal Year End | Current Fiscal Year End | Previous Fiscal Year End |
Franklin Templeton Total Return FDP Fund | $38,300 | $38,300 | $0 | $0 | $6,100 | $6,100 | $40 | $1,028 |
Marsico Growth FDP Fund | $29,500 | $29,500 | $0 | $0 | $6,100 | $6,100 | $23 | $1,028 |
MFS Research International FDP Fund | $31,700 | $31,700 | $0 | $0 | $7,424 | $12,398 | $26 | $1,028 |
Van Kampen Value FDP Fund | $29,500 | $29,500 | $0 | $0 | $6,100 | $6,100 | $22 | $1,028 |
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: |
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| 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 |
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| 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. |
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| 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. |
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| (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. |
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| (f) Not Applicable |
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| (g) Affiliates’ Aggregate Non-Audit Fees: |
Entity Name | Current Fiscal Year End | Previous Fiscal Year End |
Franklin Templeton Total Return FDP Fund | $16,917 | $409,628 |
Marsico Growth FDP Fund | $16,900 | $409,628 |
MFS Research International FDP Fund | $18,227 | $415,926 |
Van Kampen Value FDP Fund | $16,899 | $409,628 |
| (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. |
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| Regulation S-X Rule 2-01(c)(7)(ii) – $10,777, 0% |
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Item 5 – | Audit Committee of Listed Registrants – Not Applicable |
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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. |
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Item 7 – | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not Applicable |
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Item 8 – | Portfolio Managers of Closed-End Management Investment Companies – Not Applicable |
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Item 9 – | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable |
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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. |
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Item 11 – | Controls and Procedures |
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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. |
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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. |
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Item 12 – | Exhibits attached hereto |
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12(a)(1) – | Code of Ethics – See Item 2 |
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12(a)(2) – | Certifications – Attached hereto |
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12(a)(3) – | Not Applicable |
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12(b) – | Certifications – Attached hereto |
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| Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. |
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| FDP Series, Inc. |
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| | By: | /s/ Anne F. Ackerley | |
| | | Anne F. Ackerley |
| | | Chief Executive Officer of |
| | | FDP Series, Inc. |
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| | Date: August 4, 2010 |
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| | 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. |
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| | By: | /s/ Anne F. Ackerley | |
| | | Anne F. Ackerley |
| | | Chief Executive Officer (principal executive officer) of |
| | | FDP Series, Inc. |
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| | Date: August 4, 2010 |
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| | By: | /s/ Neal J. Andrews | |
| | | Neal J. Andrews |
| | | Chief Financial Officer (principal financial officer) of |
| | | FDP Series, Inc. |
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| | Date: August 4, 2010 |
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