| UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES |
| Investment Company Act file number 811-03595 Name of Fund: BlackRock Healthcare Fund, Inc. Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809 Name and address of agent for service: Donald C. Burke, Chief Executive Officer, BlackRock Healthcare Fund, Inc., 800 Scudders Mill Road, Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011, Princeton, NJ, 08543-9011 Registrant’s telephone number, including area code: (800) 441-7762 Date of fiscal year end: 04/30/2008 Date of reporting period: 05/01/2007 – 04/30/2008 Item 1 – Report to Stockholders |
| EQUITIES FIXED INCOME REAL ESTATE LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS |
| BlackRock Healthcare Fund, Inc. ANNUAL REPORT | APRIL 30, 2008 |
| NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE |
| Table of Contents | ||
| Page | ||
| A Letter to Shareholders | 3 | |
| Annual Report: | ||
| Fund Summary | 4 | |
| About Fund Performance | 6 | |
| Disclosure of Expenses | 6 | |
| Financial Statements: | ||
| Schedule of Investments | 7 | |
| Statement of Assets and Liabilities | 9 | |
| Statement of Operations | 10 | |
| Statements of Changes in Net Assets | 11 | |
| Financial Highlights | 12 | |
| Notes to Financial Statements | 15 | |
| Report of Independent Registered Public Accounting Firm | 20 | |
| Important Tax Information (Unaudited) | 20 | |
| Officers and Directors | 21 | |
| Additional Information | 24 | |
| Mutual Fund Family | 26 | |
2 BLACKROCK HEALTHCARE FUND, INC.
| APRIL 30, 2008 |
| A Letter to Shareholders |
| Dear Shareholder Over the past several months, financial markets have been buffeted by the housing recession, the credit market unraveling and related liquidity freeze and steadily rising commodity prices. Counterbalancing these difficulties were booming export activity, a robust non-financial corporate sector and, notably, aggressive and timely monetary and fiscal policy actions. Amid the market tumult, the Federal Reserve Board (the “Fed”) intervened with a series of moves to bolster liquidity and ensure financial market stability. Since September 2007, the central bank slashed the target federal funds rate 325 basis points (3.25%), bringing the rate to 2.0% as of period-end. Of greater magnitude, however, were the Fed’s other policy decisions, which included opening the discount window directly to broker dealers and investment banks and backstopping the unprecedented rescue of Bear Stearns. The Fed’s response to the financial crisis helped to improve credit conditions and investor mood. After hitting a low point on March 17 (coinciding with the collapse of Bear Stearns), equity markets found a welcome respite in April, when the S&P 500 Index of U.S. stocks posted positive monthly performance for the first time since October 2007. International markets, which outpaced those of the U.S. for much of 2007, saw a reversal in that trend, as effects of the credit crisis and downward pressures on growth were far-reaching. In contrast to equity markets, Treasury securities rallied (yields fell as prices correspondingly rose), as a broad “flight- to–quality” theme persisted. The yield on 10-year Treasury issues, which touched 5.30% in June 2007 (its highest level in five years), fell to 4.04% by year-end and to 3.77% by April 30. Treasury issues relinquished some of their gains in April, however, as investor appetite for risk returned and other high-quality fixed income sectors outperformed. Problems within the monoline insurance industry and the failure of auctions for auction rate securities plagued the municipal bond market, driving yields higher and prices lower across the curve. However, in conjunction with the more recent shift in sentiment, the sector delivered strong performance in the final month of the reporting period. Overall, the major benchmark indexes generated results that generally reflected heightened investor risk aversion: Total Returns as of April 30, 2008 6-month 12-month |
| U.S. equities (S&P 500 Index) | – 9.64% | – 4.68% | |||
| Small cap U.S. equities (Russell 2000 Index) | –12.92 | –10.96 | |||
| International equities (MSCI Europe, Australasia, Far East Index) | –9.21 | – 1.78 | |||
| Fixed income (Lehman Brothers U.S. Aggregate Index) | + 4.08 | + 6.87 | |||
| Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) | + 1.47 | + 2.79 | |||
| High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Capped Index) | –0.73 | – 0.80 | |||
| Past performance is no guarantee of future results. Index performance shown for illustrative purposes only. You cannot invest directly in an index. As you navigate today’s volatile markets, we encourage you to review your investment goals with your financial professional and to make portfolio changes, as needed. For more up-to-date commentary on the economy and financial markets, we invite you to visit www.blackrock.com/funds. As always, we thank you for entrusting BlackRock with your investment assets, and we look forward to continuing to serve you in the months and years ahead. |
THIS PAGE NOT PART OF YOUR FUND REPORT
| Fund Summary |
Portfolio Management Commentary
How did the Fund perform?
•The Fund outperformed the broad-market benchmark, the S&P 500
Index, and the Russell 3000 Health Care Index for the annual period.
What factors influenced performance?
•Fund outperformance during the fiscal year was the result of positive
stock selection and sub-sector allocation decisions.
•The Fund’s overweight relative to the Russell 3000 Health Care Index
in both the health care equipment & supplies and life science tools &
services sub-sectors, and underweight in pharmaceuticals and health
care providers & services contributed significantly to performance.
Additionally, effective security selection within each of these sub-
sectors benefited comparative results.
•Standout performers during the period included Thermo Fisher
Scientific, Inc. and Covance, Inc. in the life sciences area and Cytyc
Corp. (acquired by Hologic Inc., another Fund holding), Intuitive Surgical,
Inc. and SonoSite, Inc. in the health care equipment & supplies sub-
sector. German pharmaceuticals/chemical company Bayer AG and Sun
Pharmaceuticals Industries Ltd., a generic pharmaceutical company
based in India, also enhanced relative returns. Each of these com-
panies experienced substantial earnings acceleration due to strong
new product performance.
•In contrast, Fund holdings that were exposed to clinical study failures,
FDA new product approval delays and HMO revenue and earnings
shortfalls had the greatest negative impact on comparative perform-
ance. Notably, a negative clinical trial outcome for one of Progenics
Pharmaceuticals, Inc.’s highly anticipated new products hampered the
Fund’s comparative results, as did an earnings shortfall at OMRIX
Biopharmaceuticals, Inc.
Describe recent portfolio activity.
•During the period, we increased Fund exposure to the biotechnology
sub-sector. Among our largest purchases were well-known biotech
leaders Celgene Corp. and Genentech, Inc., in addition to Onyx
Pharmaceuticals, which has developed a new product for the treat-
ment of liver cancer. We also added Teva Pharmaceuticals Industries
Ltd., a leading generic and specialty pharmaceutical product company.
•We reduced exposure to health care equipment and supplies, trimming
or selling several holdings that had been excellent performers, but had
become richly valued, in our view. Major sales included Intuitive Surgical,
Inc. and Baxter International, Inc.
Describe Fund positioning at period-end.
•At the end of the reporting period, the Fund’s largest sub-sector weight-
ings were in pharmaceuticals, biotechnology and health care equipment
and supplies.
| Total Return Based on a $10,000 Investment |
* Assuming maximum sales charge, if any, transaction costs and other operating expenses, including advisory fees.
† The Fund invests worldwide primarily in equity securities of companies that, in the opinion of management, derive or are expected to derive a
substantial portion of their sales from products or services in health care.
† † This unmanaged Index covers 500 industrial, utility, transportation and financial companies of the U.S. markets (mostly NYSE issues)
representing about 75% of NYSE market capitalization and 30% of NYSE issues. S&P 500 is a trademark of the McGraw-Hill Companies.
4 BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2008
| Performance Summary for the Period Ended April 30, 2008 | |||||||||||||||
| Average Annual Total Returns* | |||||||||||||||
| 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 | –14.00% | –3.54% | — | +9.47% | — | +8.36% | — | ||||||||
| Investor A | –14.03 | –3.80 | –8.85% | + 9.22 | +8.05% | +8.09 | +7.51% | ||||||||
| Investor B | –14.37 | –4.49 | –7.99 | + 8.35 | +8.10 | +7.43 | +7.43 | ||||||||
| Investor C | –14.57 | –4.62 | –5.39 | + 8.36 | +8.36 | +7.22 | +7.22 | ||||||||
| Class R | –14.39 | –4.29 | — | + 8.96 | — | +7.85 | — | ||||||||
| S&P 500 Index | – 9.64 | –4.68 | — | +10.62 | — | +3.89 | — | ||||||||
| Russell 3000 Health Care Index** | –11.45 | –9.26 | — | + 5.56 | — | +2.69 | — | ||||||||
| * Assuming maximum sales charges. See “About Fund Performance” on page 6 for a detailed description of share classes, including any related sales charges and fees. ** The Russell 3000 Health Care Index is an unmanaged index containing companies involved in medical services or healthcare in the Russell 3000 Index. Past performance is not indicative of future results. |
| Expense Example | ||||||||||||
| Actual | Hypothetical** | |||||||||||
| Beginning | Ending | Beginning | Ending | |||||||||
| Account Value | Account Value | Expenses Paid | Account Value | Account Value | Expenses Paid | |||||||
| November 1, 2007 | April 30, 2008 | During the Period* | November 1, 2007 | April 30, 2008 | During the Period* | |||||||
| Institutional | $1,000 | $860.00 | $ 6.01 | $1,000 | $1,017.84 | $ 6.52 | ||||||
| Investor A | $1,000 | $859.70 | $ 7.12 | $1,000 | $1,017.24 | $ 7.72 | ||||||
| Investor B | $1,000 | $856.30 | $10.85 | $1,000 | $1,013.21 | $11.76 | ||||||
| Investor C | $1,000 | $854.30 | $10.83 | $1,000 | $1,013.21 | $11.76 | ||||||
| Class R | $1,000 | $856.10 | $ 9.74 | $1,000 | $1,014.41 | $10.57 | ||||||
| * For each class of the Fund, expenses are equal to the annualized expense ratio for the class (1.30% for Institutional, 1.54% for Investor A, 2.35% for Investor B, 2.35% for Investor C and 2.11% for Class R), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period shown). ** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the most recent fiscal half year divided by 366. See “Disclosure of Expenses” on page 6 for further information on how expenses were calculated. |
| Fund Profile as of April 30, 2008 |
| Percent of | ||
| Ten Largest Holdings | Net Assets | |
| Thermo Fisher Scientific, Inc. | 7% | |
| Hologic, Inc. | 6 | |
| Bayer AG | 6 | |
| Celgene Corp. | 5 | |
| SonoSite, Inc. | 4 | |
| Sun Pharmaceuticals Industries Ltd. | 4 | |
| Abbott Laboratories | 4 | |
| Cerner Corp. | 4 | |
| Roche Holding AG | 3 | |
| Teva Pharmaceutical Industries Ltd. | 3 | |
| Percent of | ||
| Five Largest Industries | Net Assets | |
| Biotechnology | 24% | |
| Pharmaceuticals | 23 | |
| Health Care Equipment & Supplies | 15 | |
| Life Sciences Tools & Services | 9 | |
| Health Care Providers & Services | 8 | |
| Percent of | ||
| Long-Term | ||
| Sector Representation | Investments | |
| Health Care | 91% | |
| Materials | 6 | |
| Consumer Staples | 2 | |
| Information Technology | 1 | |
| For Fund compliance purposes, the Fund's industry and sector classifications refer to | ||
| any one or more of the industry and sector sub-classifications used by one or more | ||
| widely recognized market indexes or ratings group indexes, and/or as defined by Fund | ||
| management. This definition may not apply for purposes of this report, which may | ||
| combine such industry and sector sub-classifications for reporting ease. | ||
| BLACKROCK HEALTHCARE FUND, INC. |
| APRIL 30, 2008 |
| 5 |
About Fund Performance
•Institutional Sharesare not subject to any sales charge. Institutional
Shares bear no ongoing distribution or service fees and are available
only to eligible investors.
•Investor A Sharesincur 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 Sharesare subject to a maximum contingent deferred sale
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 C Sharesare subject to a distribution fee of 0.75%per year
and a service fee of 0.25% per year. In addition, Investor C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
•Class R Sharesdo 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 inception, Class R Share performance results are those of the 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 share- holder would pay on fund distributions or the redemption of fund shares. Figures shown in the performance table on pages 4 and 5 assume rein- vestment 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,
distribution fees including 12b-1 fees, and other Fund expenses. The
expense example on page 5 (which is based on a hypothetical invest-
ment of $1,000 invested on November 1, 2007 and held through April
30, 2008) is intended to assist shareholders both in calculating expens-
es based on an investment in the Fund and in comparing these expens-
es 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 correspon-
ding 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 table is useful in comparing ongoing expenses only, and will
not help shareholders determine the relative total expenses of owning
different funds. If these transactional expenses were included, shareholder
expenses would have been higher.
6 BLACKROCK HEALTHCARE FUND, INC.
| APRIL 30, 2008 |
Schedule of Investments April 30, 2008 (Percentages shown are based on Net Assets) |
| Common Stocks | Shares | Value | ||
| Biotechnology — 24.2% | ||||
| Celgene Corp. (a) | 325,500 | $ 20,226,570 | ||
| Cleveland Biolabs, Inc. (a) | 250,000 | 1,287,500 | ||
| Cougar Biotechnology, Inc. (a)(b) | 80,000 | 1,614,400 | ||
| Cytori Therapeutics, Inc. (a)(b) | 180,000 | 907,200 | ||
| Genentech, Inc. (a) | 86,000 | 5,865,200 | ||
| Genmab A/S (a) | 50,000 | 2,697,709 | ||
| Genzyme Corp. (a) | 115,056 | 8,094,190 | ||
| Gilead Sciences, Inc. (a) | 199,000 | 10,300,240 | ||
| Intercell AG (a) | 220,000 | 9,285,623 | ||
| Lexicon Genetics, Inc. (a) | 1,360,069 | 2,801,742 | ||
| Medigene AG (a) | 71,100 | 661,347 | ||
| Nanosphere, Inc. (a) | 70,000 | 466,200 | ||
| OMRIX Biopharmaceuticals, Inc. (a)(b) | 545,000 | 8,093,250 | ||
| Onyx Pharmaceuticals, Inc. (a) | 285,000 | 10,020,600 | ||
| Progenics Pharmaceuticals, Inc. (a)(b) | 728,700 | 9,815,589 | ||
| Sangamo Biosciences, Inc. (a)(b) | 345,000 | 4,398,750 | ||
| Savient Pharmaceuticals, Inc. (a)(b) | 150,000 | 3,276,000 | ||
| Seattle Genetics, Inc. (a) | 200,000 | 2,032,000 | ||
| Synta Pharmaceuticals Corp. (a)(b) | 300,000 | 2,013,000 | ||
| Tercica, Inc. (a)(b) | 64,401 | 320,073 | ||
| Vical, Inc. (a) | 120,000 | 422,400 | ||
| 104,599,583 | ||||
| Chemicals — 5.9% | ||||
| Bayer AG | 300,000 | 25,402,481 | ||
| Food & Staples Retailing — 1.9% | ||||
| CVS Caremark Corp. | 200,000 | 8,074,000 | ||
| Health Care Equipment & Supplies — 15.0% | ||||
| Alsius Corp. (a) | 183,302 | 159,473 | ||
| Gen-Probe, Inc. (a) | 123,000 | 6,932,280 | ||
| Hansen Medical, Inc. (a)(b) | 120,000 | 2,094,000 | ||
| Hologic, Inc. (a)(b) | 878,000 | 25,628,820 | ||
| Masimo Corp. (a) | 130,000 | 3,789,500 | ||
| Mindray Medical International Ltd. (c) | 200,000 | 6,800,000 | ||
| SonoSite, Inc. (a)(b) | 606,000 | 19,325,340 | ||
| 64,729,413 | ||||
| Health Care Providers & Services — 7.8% | ||||
| Aetna, Inc. | 162,000 | 7,063,200 | ||
| AmerisourceBergen Corp. | 20,000 | 811,000 | ||
| Cardinal Health, Inc. | 20,000 | 1,041,400 | ||
| Cigna Corp. | 40,000 | 1,708,400 | ||
| Express Scripts, Inc. (a) | 100,000 | 7,002,000 | ||
| Genoptix, Inc. (a)(b) | 231,639 | 6,353,858 | ||
| Medco Health Solutions, Inc. (a) | 199,000 | 9,858,460 | ||
| 33,838,318 | ||||
| Common Stocks | Shares | Value | ||
| Health Care Technology — 6.8% | ||||
| Cerner Corp. (a)(b) | 339,000 | $ 15,685,530 | ||
| HLTH Corp. (a) | 1,250,000 | 13,900,000 | ||
| 29,585,530 | ||||
| Internet Software & Services — 1.2% | ||||
| WebMD Health Corp. Class A (a)(b) | 166,000 | 5,204,100 | ||
| Life Sciences Tools & Services — 9.2% | ||||
| Covance, Inc. (a) | 39,000 | 3,267,810 | ||
| Exelixis, Inc. (a) | 140,000 | 1,065,400 | ||
| Thermo Fisher Scientific, Inc. (a) | 491,000 | 28,414,170 | ||
| Waters Corp. (a) | 51,000 | 3,134,460 | ||
| WuXi PharmaTech Cayman, Inc. (a)(c) | 220,000 | 4,056,800 | ||
| 39,938,640 | ||||
| Pharmaceuticals — 23.1% | ||||
| Abbott Laboratories | 300,000 | 15,825,000 | ||
| BioForm Medical, Inc. (a)(b) | 150,000 | 762,000 | ||
| Bristol-Myers Squibb Co. | 400,000 | 8,788,000 | ||
| Elan Corp. Plc (a)(c) | 300,000 | 7,887,000 | ||
| Eurand NV (a) | 100,000 | 1,595,000 | ||
| Glenmark Pharmaceuticals Ltd. | 200,000 | 3,319,019 | ||
| Johnson & Johnson | 100,000 | 6,709,000 | ||
| Merck & Co., Inc. | 150,000 | 5,706,000 | ||
| Pfizer, Inc. | 50,000 | 1,005,500 | ||
| Roche Holding AG | 85,000 | 14,065,476 | ||
| Simcere Pharmacautical-ADR (a)(c) | 40,800 | 513,672 | ||
| Sirtris Pharmaceuticals, Inc. (a)(b) | 50,000 | 1,117,500 | ||
| Sun Pharmaceuticals Industries Ltd. (a) | 440,000 | 15,796,914 | ||
| Takeda Pharmaceutical Co., Ltd. | 50,000 | 2,643,550 | ||
| Teva Pharmaceutical Industries Ltd. (c) | 300,000 | 14,034,000 | ||
| 99,767,631 | ||||
| Total Common Stocks (Cost — $353,283,738) — 95.1% | 411,139,696 | |||
| Beneficial | ||||
| Interest | ||||
| Short-Term Securities | (000) | |||
| Merrill Lynch Premier Institutional Fund, | ||||
| 3.03% (d)(e)(f) | $ 87,398 | 87,398,300 | ||
| Total Short-Term Securities | ||||
| (Cost — $87,398,300) — 20.2% | 87,398,300 | |||
| Total Investments (Cost — $440,682,038*) — 115.3% | 498,537,996 | |||
| Liabilities in Excess of Other Assets — (15.3%) | (66,326,816) | |||
| Net Assets — 100.0% | $432,211,180 | |||
See Notes to Financial Statements.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2008 7
Schedule of Investments (concluded)
* The cost and unrealized appreciation (depreciation) of investments as of April 30,
2008, as computed for federal income tax purposes, were as follows:
| Aggregate cost | $ 446,958,786 | |
| Gross unrealized appreciation | $ 77,804,896 | |
| Gross unrealized depreciation | (26,225,686) | |
| Net unrealized appreciation | $ 51,579,210 | |
| (a) Non-income producing security. (b) Security, or a portion of security, is on loan. (c) Depositary receipts. (d) Investments in companies considered to be an affiliate of the Fund, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as follows: |
| Net | ||||
| Activity | Interest | |||
| Affiliate | (000) | Income | ||
| BlackRock Liquidity Series, LLC | ||||
| Cash Sweep Series | $ (10,090) | $629,600 | ||
| BlackRock Liquidity Series, LLC | ||||
| Money Market Series | $ (167,472) | $542,309 | ||
| Merrill Lynch Premier Institutional Fund | $ 87,398 | $ 900 | ||
(e) Represents the current yield as of report date.
(f) Security was purchased with the cash proceeds from securities loans.
•For Fund compliance purposes,the Fund's industry classifications refer to any one
or more of the industry sub-classifications used by one or more widely recognized
market indexes or ratings group indexes, and/or as defined by Fund management.
This definition may not apply for purposes of this report, which may combine such
industry sub-classifications for reporting ease. These industry classifications
are unaudited.
See Notes to Financial Statements.
| 8 BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2008 |
| Statement of Assets and Liabilities | ||
| April 30, 2008 | ||
| Assets | ||
| Investments at value — unaffiliated (including securities loaned of $83,603,578)(cost — $353,283,738) | $ 411,139,696 | |
| Investments at value — affiliated (cost — $87,398,300) | 87,398,300 | |
| Cash | 16,686,028 | |
| Foreign currency at value (cost — $27,008) | 26,784 | |
| Investments sold receivable | 7,683,741 | |
| Capital shares sold receivable | 719,824 | |
| Dividends receivable | 648,179 | |
| Securities lending income receivable | 57,867 | |
| Interest receivable | 49,309 | |
| Prepaid expenses | 25,803 | |
| Total assets | 524,435,531 | |
| Liabilities | ||
| Collateral at value — securities loaned | 87,398,300 | |
| Investments purchased payable | 2,456,641 | |
| Capital shares redeemed payable | 1,486,220 | |
| Investment advisory fees payable | 345,839 | |
| Distribution fees payable | 130,969 | |
| Deferred foreign capital gains tax payable | 127,380 | |
| Other affiliates payable | 120,521 | |
| Other accrued expenses payable | 158,481 | |
| Total liabilities | 92,224,351 | |
| Net Assets | ||
| Net Assets | $ 432,211,180 | |
| Net Assets Consist of | ||
| Institutional Shares of Common Stock, $0.10 par value, 200,000,000 shares authorized | $ 2,230,149 | |
| Investor A Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized | 3,298,027 | |
| Investor B Shares of Common Stock, $0.10 par value, 250,000,000 shares authorized | 1,297,051 | |
| Investor C Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized | 2,057,307 | |
| Class R Shares of Common Stock, $0.10 par value, 250,000,000 shares authorized | 259,693 | |
| Paid-in capital in excess of par | 378,264,903 | |
| Accumulated net investment loss | (82,870) | |
| Accumulated net realized loss | (12,896,279) | |
| Net unrealized appreciation/depreciation | 57,783,199 | |
| Net Assets | $ 432,211,180 | |
| Net Asset Value | ||
| Institutional — Based on net assets of $132,783,724 and 22,301,488 shares outstanding | $ 5.95 | |
| Investor A — Based on net assets of $175,093,596 and 32,980,271 shares outstanding | $ 5.31 | |
| Investor B — Based on net assets of $44,711,437 and 12,970,510 shares outstanding | $ 3.45 | |
| Investor C — Based on net assets of $70,451,955 and 20,573,066 shares outstanding | $ 3.42 | |
| Class R — Based on net assets of $9,170,468 and 2,596,930 shares outstanding | $ 3.53 | |
| See Notes to Financial Statements. |
| BLACKROCK HEALTHCARE FUND, INC. |
| APRIL 30, 2008 |
| 9 |
| Statement of Operations | ||
| Year Ended April 30, 2008 | ||
| Investment Income | ||
| Dividends (net of $180,594 foreign withholding tax) | $ 2,786,028 | |
| Interest from affiliates | 629,600 | |
| Securities lending | 543,209 | |
| Total income | 3,958,837 | |
| Expenses | ||
| Investment advisory | 4,519,263 | |
| Service — Investor A | 425,737 | |
| Service and distribution — Investor B | 571,195 | |
| Service and distribution — Investor C | 713,356 | |
| Service and distribution — Class R | 40,068 | |
| Transfer agent — Institutional | 246,366 | |
| Transfer agent — Investor A | 260,934 | |
| Transfer agent — Investor B | 144,792 | |
| Transfer agent — Investor C | 166,330 | |
| Transfer agent — Class R | 35,320 | |
| Accounting services | 167,876 | |
| Custodian | 99,273 | |
| Professional | 75,388 | |
| Registration | 74,952 | |
| Printing | 73,889 | |
| Officer and Directors | 31,824 | |
| Miscellaneous | 37,289 | |
| Total expenses | 7,683,852 | |
| Net investment loss | (3,725,015) | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) from: | ||
| Investments (including $3,372 foreign capital gain credit) | 24,103,866 | |
| Foreign currency transactions | (158,558) | |
| 23,945,308 | ||
| Net change in unrealized appreciation/depreciation on: | ||
| Investments (including $63,731 deferred foreign capital gain credit) | (39,684,189) | |
| Foreign currency transactions | 45,502 | |
| (39,638,687) | ||
| Total realized and unrealized loss | (15,693,379) | |
| Net Decrease in Net Assets Resulting from Operations | $ (19,418,394) | |
| See Notes to Financial Statements. |
10 BLACKROCK HEALTHCARE FUND, INC.
| APRIL 30, 2008 |
| Statements of Changes in Net Assets | ||||
| Year Ended | ||||
| April 30, | ||||
| Increase (Decrease) in Net Assets: | 2008 | 2007 | ||
| Operations | ||||
| Net investment loss | $ (3,725,015) | $ (5,028,576) | ||
| Net realized gain | 23,945,308 | 47,928,471 | ||
| Net change in unrealized appreciation/depreciation | (39,638,687) | (1,892,152) | ||
| Net increase (decrease) in net assets resulting from operations | (19,418,394) | 41,007,743 | ||
| Distributions to Shareholders from | ||||
| Net realized gain: | ||||
| Institutional | (19,190,519) | (18,041,102) | ||
| Investor A | (23,511,776) | (21,510,564) | ||
| Investor B | (11,380,057) | (16,162,029) | ||
| Investor C | (13,862,386) | (13,564,480) | ||
| Class R | (1,455,949) | (871,195) | ||
| Tax return of capital: | ||||
| Institutional | (821,866) | — | ||
| Investor A | (1,066,468) | — | ||
| Investor B | (519,689) | — | ||
| Investor C | (681,171) | — | ||
| Class R | (74,088) | — | ||
| Decrease in net assets resulting from distributions to shareholders | (72,563,969) | (70,149,370) | ||
| Capital Share Transactions | ||||
| Net increase (decrease) in net assets derived from capital share transactions | 72,072,219 | (46,379,248) | ||
| Net Assets | ||||
| Total decrease in net assets | (19,910,144) | (75,520,875) | ||
| Beginning of year | 452,121,324 | 527,642,199 | ||
| End of year | $ 432,211,180 | $ 452,121,324 | ||
| End of year accumulated net investment loss | $ (82,870) | $ (19,870) | ||
| See Notes to Financial Statements. |
| BLACKROCK HEALTHCARE FUND, INC. |
| APRIL 30, 2008 |
| 11 |
| Financial Highlights | ||||||||||||||||||||||||
| Institutional | Investor A | |||||||||||||||||||||||
| Year Ended April 30, | Year Ended April 30, | |||||||||||||||||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||
| Per Share Operating Performance | ||||||||||||||||||||||||
| Net asset value, beginning of year | $ 7.08 | $ 7.29 | $ 6.55 | $ 6.87 | $ 5.59 | $ 6.41 | $ 6.69 | $ 6.04 | $ 6.38 | $ 5.21 | ||||||||||||||
| Net investment loss1 | (0.03) | (0.04) | (0.05) | (0.06) | (0.05) | (0.04) | (0.05) | (0.07) | (0.07) | (0.06) | ||||||||||||||
| Net realized and unrealized gain (loss) | (0.14) | 0.67 | 1.27 | 0.11 | 1.33 | (0.12) | 0.61 | 1.19 | 0.10 | 1.23 | ||||||||||||||
| Net increase (decrease) from investment | ||||||||||||||||||||||||
| operations | (0.17) | 0.63 | 1.22 | 0.05 | 1.28 | (0.16) | 0.56 | 1.12 | 0.03 | 1.17 | ||||||||||||||
| Distributions from: | ||||||||||||||||||||||||
| Net realized gain | (0.92) | (0.84) | (0.48) | (0.37) | — | (0.90) | (0.84) | (0.47) | (0.37) | — | ||||||||||||||
| Tax return of capital | (0.04) | — | — | — | — | (0.04) | — | — | — | — | ||||||||||||||
| Total distributions | (0.96) | (0.84) | (0.48) | (0.37) | — | (0.94) | (0.84) | (0.47) | (0.37) | — | ||||||||||||||
| Net asset value, end of year | $ 5.95 | $ 7.08 | $ 7.29 | $ 6.55 | $ 6.87 | $ 5.31 | $ 6.41 | $ 6.69 | $ 6.04 | $ 6.38 | ||||||||||||||
| Total Investment Return2 | ||||||||||||||||||||||||
| Based on net asset value | (3.54%) | 10.62% | 18.70%3 | 0.99% | 22.90% | (3.80%) | 10.43% | 18.61%3 | 0.74% | 22.46% | ||||||||||||||
| Ratios to Average Net Assets | ||||||||||||||||||||||||
| Total expenses | 1.29% | 1.33% | 1.30% | 1.33% | 1.29% | 1.52% | 1.57% | 1.55% | 1.58% | 1.55% | ||||||||||||||
| Net investment loss | (0.42%) | (0.64%) | (0.75%) | (0.88%) | (0.75%) | (0.64%) | (0.89%) | (0.99%) | (1.13%) | (1.00%) | ||||||||||||||
| Supplemental Data | ||||||||||||||||||||||||
| Net assets, end of year (000) | $132,784 | $147,755 | $159,116 | $146,922 | $275,570 | $175,094 | $160,652 | $172,585 | $142,774 | $160,443 | ||||||||||||||
| Portfolio turnover | 163% | 152% | 120% | 127% | 141% | 163% | 152% | 120% | 127% | 141% | ||||||||||||||
| 1 | Based on average shares outstanding. |
| 2 | Total investment returns exclude the effects of any sales charges. |
| 3 | In 2006, there was no impact to the Fund’s total investment return as a result of a payment by Merrill Lynch Investment Managers, L.P. |
| See Notes to Financial Statements. |
12 BLACKROCK HEALTHCARE FUND, INC.
| APRIL 30, 2008 |
| Financial Highlights (continued) | ||||||||||||||||||||||||
| Investor B | Investor C | |||||||||||||||||||||||
| Year Ended April 30, | Year Ended April 30, | |||||||||||||||||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||
| Per Share Operating Performance | ||||||||||||||||||||||||
| Net asset value, beginning of year | $ 4.44 | $ 4.93 | $ 4.57 | $ 4.96 | $ 4.08 | $ 4.43 | $ 4.92 | $ 4.57 | $ 4.96 | $ 4.07 | ||||||||||||||
| Net investment loss1 | (0.06) | (0.07) | (0.09) | (0.09) | (0.08) | (0.06) | (0.07) | (0.09) | (0.09) | (0.08) | ||||||||||||||
| Net realized and unrealized gain (loss) | (0.06) | 0.41 | 0.89 | 0.07 | 0.96 | (0.06) | 0.41 | 0.88 | 0.07 | 0.97 | ||||||||||||||
| Net increase (decrease) from investment | ||||||||||||||||||||||||
| operations | (0.12) | 0.34 | 0.80 | (0.02) | 0.88 | (0.12) | 0.34 | 0.79 | (0.02) | 0.89 | ||||||||||||||
| Distributions from: | ||||||||||||||||||||||||
| Net realized gain | (0.83) | (0.83) | (0.44) | (0.37) | — | (0.85) | (0.83) | (0.44) | (0.37) | — | ||||||||||||||
| Tax return of capital | (0.04) | — | — | — | — | (0.04) | — | — | — | — | ||||||||||||||
| Total distributions | (0.87) | (0.83) | (0.44) | (0.37) | — | (0.89) | (0.83) | (0.44) | (0.37) | — | ||||||||||||||
| Net asset value, end of year | $ 3.45 | $ 4.44 | $ 4.93 | $ 4.57 | $ 4.96 | $ 3.42 | $ 4.43 | $ 4.92 | $ 4.57 | $ 4.96 | ||||||||||||||
| Total Investment Return2 | ||||||||||||||||||||||||
| Based on net asset value | (4.49%) | 9.41% | 17.64%3 | (0.09%) | 21.57% | (4.62%) | 9.47% | 17.50%3 | (0.09%) | 21.87% | ||||||||||||||
| Ratios to Average Net Assets | ||||||||||||||||||||||||
| Total expenses | 2.37% | 2.36% | 2.33% | 2.36% | 2.32% | 2.35% | 2.36% | 2.33% | 2.37% | 2.33% | ||||||||||||||
| Net investment loss | (1.52%) | (1.67%) | (1.79%) | (1.91%) | (1.78%) | (1.47%) | (1.67%) | (1.77%) | (1.92%) | (1.79%) | ||||||||||||||
| Supplemental Data | ||||||||||||||||||||||||
| Net assets, end of year (000) | $ 44,711 | $ 68,034 $ 105,503 $ 117,482 $ 177,952 | $ 70,452 | $ 69,535 | $ 85,553 | $ 68,743 | $ 85,753 | |||||||||||||||||
| Portfolio turnover | 163% | 152% | 120% | 127% | 141% | 163% | 152% | 120% | 127% | 141% | ||||||||||||||
| 1 | Based on average shares outstanding. |
| 2 | Total investment returns exclude the effects of sales charges. |
| 3 | In 2006, there was no impact to the Fund’s total investment return as a result of a payment by Merrill Lynch Investment Managers, L.P. |
| See Notes to Financial Statements. |
| BLACKROCK HEALTHCARE FUND, INC. |
| APRIL 30, 2008 |
| 13 |
| Financial Highlights (concluded) | ||||||||||||
| Class R | ||||||||||||
| Year Ended April 30, | ||||||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||
| Per Share Operating Performance | ||||||||||||
| Net asset value, beginning of year | $ 4.57 | $ 5.04 | $ 4.66 | $ 5.02 | $ 4.09 | |||||||
| Net investment loss1 | (0.05) | (0.05) | (0.06) | (0.06) | (0.02) | |||||||
| Net realized and unrealized gain (loss) | (0.06) | 0.42 | 0.90 | 0.07 | 0.95 | |||||||
| Net increase (decrease) from investment operations | (0.11) | 0.37 | 0.84 | 0.01 | 0.93 | |||||||
| Distributions from: | ||||||||||||
| Net realized gain | (0.89) | (0.84) | (0.46) | (0.37) | — | |||||||
| Tax return of capital | (0.04) | — | — | — | — | |||||||
| Total distributions | (0.93) | (0.84) | (0.46) | (0.37) | — | |||||||
| Net asset value, end of year | $ 3.53 | $ 4.57 | $ 5.04 | $ 4.66 | $ 5.02 | |||||||
| Total Investment Return | ||||||||||||
| Based on net asset value | (4.29%) | 9.98% | 18.25%2 | 0.54% | 22.74% | |||||||
| Ratios to Average Net Assets | ||||||||||||
| Total expenses | 2.06% | 1.88% | 1.80% | 1.83% | 1.73% | |||||||
| Net investment loss | (1.16%) | (1.20%) | (1.20%) | (1.37%) | (1.15%) | |||||||
| Supplemental Data | ||||||||||||
| Net assets, end of year (000) | $ 9,170 | $ 6,145 | $ 4,885 | $ 1,853 | $ 473 | |||||||
| Portfolio turnover | 163% | 152% | 120% | 127% | 141% | |||||||
| 1 | Based on average shares outstanding. |
| 2 | In 2006, there was no impact to the Fund’s total investment return as a result of a payment by Merrill Lynch Investment Managers, L.P. |
| See Notes to Financial Statements. |
14 BLACKROCK HEALTHCARE FUND, INC.
| APRIL 30, 2008 |
| Notes to Financial Statements 1. Significant Accounting Policies: BlackRock Healthcare Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a non-diversified, open-end management investment company. The Fund’s financial statements are prepared in conformity with accounting princi- ples generally accepted in the United States of America, which may require the use of management accruals and estimates. Actual results may differ from these 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 only to certain retirement plans. All classes of shares have identical voting, divi- dend, 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 expens- es related to the distribution of such shares. 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 of Investments: Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last available bid price. Investments in open-end investment companies are valued at net asset value each business day. Short-term securities are valued at amortized cost. 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, the investment will be valued by a method approved by the Board of Directors (the “Board”) as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or sub-advisor seeks to determine the price that the Fund might reasonably expect to receive from the cur- rent sale of that asset in an arm’s-length transaction. Fair value determi- nations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of business on the New York Stock Exchange (“NYSE”). The values of such securities used in computing the |
| net assets of the Fund are determined as of such times. Foreign cur- rency exchange rates will generally be determined as of the close of business on the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of business on the NYSE that may not be reflected in the computation of the Fund’s net assets. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such securities, those securities will be valued at their fair value as determined in good faith by the Board or by the investment advisor using a pricing service and/or procedures approved by the Board. Foreign Currency Transactions: Foreign currency amounts are translated into United States dollars on the following basis: (i) market value of investment securities, assets and liabilities at the current rate of exchange; and (ii) purchases and sales of investment securities, income and expenses at the rates of exchange prevailing on the respective dates of such transactions. The Fund reports foreign currency related transactions as components of realized gains for financial reporting purposes, whereas such compo- nents are treated as ordinary income for federal income tax purposes. Investment Transactions and Investment Income: Investment transac- tions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on security transactions are determined on the identified cost basis. 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 Fund has determined the ex-dividend date. Interest income is recognized on the accrual basis. Income and realized and unrealized gains and losses 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. Portions of the distributions paid by the Fund during the year ended April 30, 2008 were character- ized as a tax return of capital. Securities Lending: The Fund may lend securities to financial institutions that provide cash or securities issued or guaranteed by the U.S. govern- ment 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 securi- ties. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is deliv- ered to the Fund on the next business day. The Fund typically receives the income on the loaned securities but does not receive the income on the collateral. Where the Fund receives cash collateral, it may invest such collateral and retain the amount earned on such investment, net of any amount rebated to the borrower. The Fund may receive a flat fee for its |
| BLACKROCK HEALTHCARE FUND, INC. |
| APRIL 30, 2008 |
| 15 |
| Notes to Financial Statements (continued) loans. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions. The Fund may pay reasonable lending agent, administrative and custodial fees in connec- tion with its loans. In the event that the borrower defaults on its obliga- tion to return borrowed securities because of insolvency or for any other reason, the Fund could experience delays and costs in gaining access to the collateral. The Fund also could suffer a loss where the value of the collateral falls below the market value of the borrowed securities, in the event of borrower default or in the event of losses on investments made with cash collateral. Income Taxes: It is the Fund’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment compa- nies and to distribute substantially all of its taxable income to its share- holders. Therefore, no federal income tax provision is required. Under the applicable foreign tax laws, a withholding tax may be imposed on inter- est, dividends and capital gains at various rates. Effective October 31, 2007, the Fund implemented Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncer- tainty in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 prescribes the minimum recognition threshold a tax position must meet in connection with accounting for uncertainties in income tax positions taken or expected to be taken by an entity, includ- ing investment companies, before being measured and recognized in the financial statements. The investment advisor has evaluated the applica- tion of FIN 48 to the Fund, and has determined that the adoption of FIN 48 does not have a material impact on the Fund’s financial statements. The Fund files U.S. 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 U.S. federal tax returns remain open for the years ended April 30, 2005 through April 30, 2007. The statute of limitations on the Fund’s state and local tax returns may remain open for an addi- tional year depending upon the jurisdiction. Recent Accounting Pronouncements: In September 2006, Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”), was issued and is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a frame- work for measuring fair value and expands disclosures about fair value measurements. The impact on the Fund’s financial statement disclo- sures, if any, is currently being assessed. In addition, in February 2007, Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“FAS 159”), was issued and is effective for fiscal years beginning after November 15, 2007. FAS 159 permits entities to |
| choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. FAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. The impact on the Fund’s financial statement disclosures, if any, is currently being assessed. In March 2008, Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133” (“FAS 161”) was issued and is effective for fiscal years beginning after November 15, 2008. FAS 161 is intended to improve financial reporting for derivative instruments by requiring enhanced disclosure that enables investors to understand how and why an entity uses derivatives, how derivatives are accounted for, and how derivative instruments affect an entity’s results of operations and financial position. The investment advisor is currently evaluating the implications of FAS 161 and the impact on the Fund’s financial state- ment disclosures, if any, is currently being assessed. Other: Expenses directly related to the Fund or its classes are charged to that 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. Investment Advisory Agreement and Other Transactions with Affiliates: The Fund entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Advisor”), an indirect, wholly owned subsidiary of BlackRock, Inc. to provide investment advisory and administration ser- vices. Merrill Lynch & Co., Inc. (“Merrill Lynch”) and The PNC Financial Services Group, Inc. (“PNC”) are principal owners of BlackRock, Inc. The Advisor is responsible for the management of the Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operation of the Fund. For such services, the Fund pays a monthly fee at an annual rate of 1.0% of the average daily net assets of the Fund. For the year ended April 30, 2008, the Fund reimbursed the Advisor $7,744, for certain accounting services, which is included in accounting services expenses in the Statement of Operations. In addition, the Advisor has entered into a sub-advisory agreement with BlackRock Investment Management, LLC (“BIM”), an affiliate of the Advisor, under which the Advisor pays BIM, for services it provides, a monthly fee that is an annual percentage of the investment advisory fee paid by the Fund to the Advisor. |
16 BLACKROCK HEALTHCARE FUND, INC.
| APRIL 30, 2008 |
| Notes to Financial Statements (continued) The Fund has also entered into separate Distribution Agreements and Distribution Plans with FAM Distributors, Inc. (“FAMD”) and BlackRock Distributors, Inc. and its affiliates (“BDI”) (collectively, the “Distributor”). FAMD is a wholly owned subsidiary of Merrill Lynch Group, Inc., and BDI is an affiliate of BlackRock, Inc. Pursuant to the Distribution Plans adopted by the Fund in accordance with Rule 12b-1 under the 1940 Act, the Fund pays the Distributor 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 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 each Distributor, broker-dealers, includ- ing Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”), a wholly owned subsidiary of Merrill Lynch, and each Distributor provide shareholder servicing and distribution services to the Fund. The ongoing service fee and/or distribution fee compensates the Distributor and each broker-dealer for providing shareholder servicing and/or distri- bution-related services to Investor A, Investor B, Investor C and Class R shareholders. For the year ended April 30, 2008, the affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of the Fund’s Investor A Shares which totaled $132,381. For the year ended April 30, 2008, affiliates received contingent deferred sales charges of $38,355 and $10,631 relating to transactions in Investor B and Investor C Shares, respectively. Furthermore, affiliates received contingent deferred sales charges of $340 relating to transac- tions subject to front-end sales charge waivers on Investor A Shares. The Advisor maintains a call center, which is responsible for providing certain shareholder services to the Fund, such as responding to share- holder inquiries and processing transactions based upon instructions from shareholders with respect to the subscription and redemption of Fund shares. For the year ended April 30, 2008, the Fund reimbursed the Advisor the following amounts for costs incurred running the call center, which are a component of the transfer agent fees in the accom- panying Statement of Operations. |
| Call Center | ||
| Fees | ||
| Institutional | $8,970 | |
| Investor A | $6,225 | |
| Investor B | $2,330 | |
| Investor C | $2,818 | |
| Class R | $ 277 | |
| The Fund has received an exemptive order from the Securities and Exchange Commission permitting it to lend portfolio securities to MLPF&S or its affiliates. As of April 30, 2008, the Fund loaned securities with a value of $2,194,500 to MLPF&S or its affiliates. Pursuant to that order, the Fund has retained BIM as the securities lending agent for a fee based on a share of the returns on investment of cash collateral. BIM may, on behalf of the Fund, invest cash collateral received by the Fund for such loans, among other things, in a private investment comp- any managed by the Advisor or in registered money market funds advised by the Advisor or its affiliates. For the year ended April 30, 2008, BIM received $141,982 in securities lending agent fees. In addition, MLPF&S received $549,842 in commissions on the execu- tion of portfolio security transactions for the Fund for the year ended April 30, 2008. PFPC Inc., an indirect, wholly owned subsidiary of PNC and an affiliate of the Advisor, serves as transfer agent. Each class of the Fund bears the costs of transfer agent fees associated with such respective classes. Transfer agency fees borne by each class of the Fund are comprised of those fees charged for all shareholder communications including share- holder reports, dividend and distribution notices, and proxy materials for shareholders meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares of each class of the Fund, 12b-1 fee calculation, check writing, anti-money laundering services, and customer identification services. Certain officers and/or directors of the Fund are officers and/or directors of BlackRock, Inc. or its affiliates. 3. Investments: Purchases and sales of investments, excluding short-term securities, for the year ended April 30, 2008, were $717,827,520, and $728,937,242, respectively. |
| BLACKROCK HEALTHCARE FUND, INC. |
| APRIL 30, 2008 |
| 17 |
| Notes to Financial Statements (continued) | |||||||||||
| 4. Capital Share Transactions: | |||||||||||
| Transactions in common stock for each class were as follows: | |||||||||||
| Year Ended | Year Ended | ||||||||||
| April 30, 2008 | April 30, 2007 | ||||||||||
| Shares | Amount | Shares | Amount | ||||||||
| Institutional Shares | |||||||||||
| Shares sold | 3,636,933 | $ 24,157,299 | 1,680,191 | $ 11,164,078 | |||||||
| Shares issued to shareholders in reinvestment | |||||||||||
| of distributions | 1,666,185 | 11,110,554 | 2,574,159 | 15,775,291 | |||||||
| Total issued | 5,303,118 | 35,267,853 | 4,254,350 | 26,939,369 | |||||||
| Shares redeemed | (3,859,722) | (25,369,674) | (5,218,571) | (34,370,859) | |||||||
| Net increase (decrease) | 1,443,396 | $ 9,898,179 | (964,221) | $ (7,431,490) | |||||||
| Investor A Shares | |||||||||||
| Shares sold and automatic conversion of shares | 13,900,855 | $ 81,903,347 | 5,529,150 | $ 33,428,253* | |||||||
| Shares issued to shareholders in reinvestment | |||||||||||
| of distributions | 2,230,527 | 13,359,839 | 3,406,307 | 18,923,333 | |||||||
| Total issued | 16,131,382 | 95,263,186 | 8,935,457 | 52,351,586 | |||||||
| Shares redeemed | (8,232,045) | (48,139,484) | (9,662,117) | (57,886,509) | |||||||
| Net increase (decrease) | 7,899,337 | $ 47,123,702 | (726,660) | $ (5,534,923) | |||||||
| * In September 2006, certain brokerages, including a wholly owned subsidiary of Merrill Lynch, entered into a remediation agreement with a regulatory organization, which among other things, permitted certain shareholders of Investor B Shares to convert their shares into the Fund’s Investor A Shares. As a result, a wholly owned subsidiary of Merrill Lynch supplemented the Investor A Share purchase by approximately $61,000. |
| Investor B Shares | ||||||||
| Shares sold | 2,536,472 | $ 10,043,911 | 1,243,186 | $ 5,325,187 | ||||
| Shares issued to shareholders in reinvestment | ||||||||
| of distributions | 1,603,409 | 6,436,538 | 3,689,599 | 14,366,476 | ||||
| Total issued | 4,139,881 | 16,480,449 | 4,932,785 | 19,691,663 | ||||
| Shares redeemed and automatic conversion of shares | (6,493,212) | (25,984,096) | (11,030,047) | (46,535,654) | ||||
| Net decrease | (2,353,331) | $ (9,503,647) | (6,097,262) | $ (26,843,991) | ||||
| Investor C Shares | ||||||||
| Shares sold | 7,623,364 | $ 29,864,565 | 2,129,339 | $ 9,034,668 | ||||
| Shares issued to shareholders in reinvestment | ||||||||
| of distributions | 1,872,373 | 7,474,447 | 3,078,519 | 11,960,130 | ||||
| Total issued | 9,495,737 | 37,339,012 | 5,207,858 | 20,994,798 | ||||
| Shares redeemed | (4,610,643) | (17,870,414) | (6,907,028) | (29,145,267) | ||||
| Net increase (decrease) | 4,885,094 | $ 19,468,598 | (1,699,170) | $ (8,150,469) | ||||
| Class R Shares | ||||||||
| Shares sold | 2,286,947 | $ 9,216,749 | 870,793 | $ 3,790,289 | ||||
| Shares issued to shareholders in reinvestment | ||||||||
| of distributions | 186,789 | 767,099 | 210,784 | 840,798 | ||||
| Total issued | 2,473,736 | 9,983,848 | 1,081,577 | 4,631,087 | ||||
| Shares redeemed | (1,221,218) | (4,898,461) | (707,165) | (3,049,462) | ||||
| Net increase | 1,252,518 | $ 5,085,387 | 374,412 | $ 1,581,625 | ||||
18 BLACKROCK HEALTHCARE FUND, INC.
| APRIL 30, 2008 |
| Notes to Financial Statements (concluded) |
| 5. Short-Term Borrowings: The Fund, along with certain other funds managed by the Advisor and its affiliates, is a party to a $500,000,000 credit agreement with a group of lenders. The Fund may borrow under the credit agreement to fund shareholder redemptions and for other lawful purposes other than for leverage. The Fund may borrow up to the maximum amount allowable under the Fund’s current Prospectus and Statement of Additional Information, subject to various other legal, regulatory or contractual limits. On November 21, 2007, the credit agreement was renewed for one year under substantially the same terms. The Fund pays a commit- ment fee of 0.06% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement, which is included in miscel- laneous expenses in the Statement of Operations. Amounts borrowed under the credit agreement bear interest at a rate equal to, at the fund’s election, the federal funds rate plus 0.35% or a base rate as defined in the credit agreement. The Fund did not borrow under the credit agree- ment during the year ended April 30, 2008. 6. Commitments: At April 30, 2008, the Fund had entered into foreign exchange contracts under which it had agreed to purchase various foreign currencies with approximate values of $272,000. |
| 7. Income Tax Information: Reclassification: U.S. generally accepted accounting principles require that certain components of net assets be adjusted to reflect permanent differ- ences between financial and tax reporting. Accordingly, during the current year, $3,662,015 has been reclassified between accumulated net realized loss and accumulated net investment loss as a result of permanent differ- ences attributable to net operating losses, foreign currency transactions and foreign taxes paid. These reclassifications have no effect on net assets or net asset values per share. The tax character of distributions paid during the fiscal years ended April 30, 2008 and April 30, 2007 was as follows: |
| 4/30/2008 | 4/30/2007 | |||
| Distributions paid from: | ||||
| Ordinary income | $ 21,440,851 | $ 2,650,052 | ||
| Net long-term capital gains | 47,959,836 | 67,499,318 | ||
| Tax return of capital | 3,163,282 | — | ||
| Total distributions | $72,563,969 | $70,149,370 | ||
| As of April 30, 2008, the components of accumulated earnings on a tax | ||||
| basis were as follows: | ||||
| Net unrealized gains | $ 44,804,050* | |||
| Total net accumulated earnings | $ 44,804,050 | |||
| * The difference between book-basis and tax-basis net unrealized gains is attributable primarily to the tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains (losses) on certain foreign currency contracts and the deferral of post-October currency and capital losses for tax purposes. |
| BLACKROCK HEALTHCARE FUND, INC. |
| APRIL 30, 2008 |
| 19 |
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of BlackRock
Healthcare Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of BlackRock Healthcare Fund,
Inc. (the “Fund”) as of April 30, 2008, 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 finan-
cial highlights for each of the five years in the period then ended. These
financial statements and financial highlights 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 finan-
cial 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 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 proce-
dures included confirmation of securities owned as of April 30, 2008,
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 BlackRock Healthcare Fund, Inc. as of April 30, 2008, 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 con-
formity with accounting principles generally accepted in the United
States of America.
| Deloitte & Touche LLP Princeton, New Jersey June 25, 2008 |
| Important Tax Information (Unaudited) The following information is provided with respect to the ordinary income distributions paid by BlackRock Healthcare Fund, Inc. during the fiscal year ended April 30, 2008: |
| Record Date | July 18, 2007 | December 11, 2007 | ||||
| Payable Date | July 20, 2007 | December 13, 2007 | ||||
| Qualified Dividend Income for Individuals | 80.17%* | 5.49%* | ||||
| Dividends Qualifying for the Dividends Received Deduction for Corporations | 37.64%* | 4.55%* | ||||
| Short-Term Capital Gains Dividends for Non-U.S. Residents | 100.00%** | 100.00%** | ||||
| * The Fund hereby designates the percentage indicated above or the maximum amount allowable by law. ** Represents the portion of the taxable ordinary income dividends eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations. Additionally, the Fund distributed long-term capital gains of $0.467672 per share to shareholders of record on July 18, 2007 and $0.149800 per share to shareholders of record on December 11, 2007. |
20 BLACKROCK HEALTHCARE FUND, INC.
| APRIL 30, 2008 |
| Officers and Directors | ||||||||||
| Number of | ||||||||||
| Length of | BlackRock- | |||||||||
| Position(s) | Time | Advised Funds | ||||||||
| Name, Address | Held with | Served as | and Portfolios | Public | ||||||
| and Year of Birth | the Fund | a Director** | Principal Occupation(s) During Past 5 Years | Overseen | Directorships | |||||
| Non-Interested Directors* | ||||||||||
| David O. Beim | Director | Since | Professor of Finance and Economics at the Columbia University | 35 Funds | None | |||||
| 40 East 52nd Street | 2007 | Graduate School of Business since 1991; Trustee, Phillips Exeter | 81 Portfolios | |||||||
| New York, NY 10022 | Academy since 2002; Formerly Chairman, Wave Hill Inc. (public | |||||||||
| 1940 | garden and cultural center) from 1990 to 2006. | |||||||||
| Ronald W. Forbes | Director and | Since | Professor Emeritus of Finance, School of Business, State University | 35 Funds | None | |||||
| 40 East 52nd Street | Co-Chair of | 2000 | of New York at Albany since 2000. | 81 Portfolios | ||||||
| New York, NY 10022 | the Board of | |||||||||
| 1940 | Directors | |||||||||
| Dr. Matina Horner | Director | Since | Formerly Executive Vice President of Teachers Insurance and | 35 Funds | NSTAR (electric | |||||
| 40 East 52nd Street | 2007 | Annuity Association and College Retirement Equities Fund | 81 Portfolios | and gas utility) | ||||||
| New York, NY 10022 | from 1989 to 2003. | |||||||||
| 1939 | ||||||||||
| Rodney D. Johnson | Director and | Since | President, Fairmount Capital Advisors, Inc. since 1987; Director, | 35 Funds | None | |||||
| 40 East 52nd Street | Co-Chair of | 2007 | Fox Chase Cancer Center since 2002; Member of the Archdiocesan | 81 Portfolios | ||||||
| New York, NY 10022 | the Board of | Investment Committee of the Archdiocese of Philadelphia since | ||||||||
| 1941 | Directors | 2003; Director, the Committee of Seventy (civic) since 2006. | ||||||||
| Herbert I. London | Director and | Since | Professor Emeritus, New York University since 2005; John M. Olin | 35 Funds | AIMS Worldwide, | |||||
| 40 East 52nd Street | Member of | 2007 | Professor of Humanities, New York University from 1993 to 2005 | 81 Portfolios | Inc. (marketing) | |||||
| New York, NY 10022 | the Audit | and Professor thereof from 1980 to 2005; President, Hudson Institute | ||||||||
| 1939 | Committee | (policy research organization) since 1997 and Trustee thereof since | ||||||||
| 1980; Chairman of the Board of Trustees for Grantham University since | ||||||||||
| 2006; Director, InnoCentive, Inc. (strategic solutions company) since | ||||||||||
| 2005; Director of Cerego, LLC (software development and design) | ||||||||||
| since 2005. | ||||||||||
| Cynthia A. Montgomery | Director | Since | Professor, Harvard Business School since 1989; Director, Harvard | 35 Funds | Newell Rubbermaid, | |||||
| 40 East 52nd Street | 2000 | Business School Publishing since 2005; Director, McLean Hospital | 81 Portfolios | Inc. (manufacturing) | ||||||
| New York, NY 10022 | since 2005. | |||||||||
| 1952 | ||||||||||
| Joseph . Platt, Jr. | Director | Since | Director, The West Penn Allegheny Health System (a not-for-profit | 35 Funds | Greenlight Capital | |||||
| 40 East 52nd Street | 2007 | health system) since 2008; Partner, Amarna Corporation, LLC | 81 Portfolios | Re, Ltd (reinsurance | ||||||
| New York, NY 10022 | (private investment company) since 2002; Director, WQED Multimedia | company) | ||||||||
| 1947 | (PBS and Multimedia, a not-for-profit company) since 2002; Director, | |||||||||
| Jones and Brown (Canadian insurance broker) since 1998; General | ||||||||||
| Partner, Thorn Partner, LP (private investment) since 1998. | ||||||||||
| Robert C. Robb, Jr. | Director | Since | Partner, Lewis, Eckert, Robb and Company (management and | 35 Funds | None | |||||
| 40 East 52nd Street | 2007 | financial consulting firm) since 1981. | 81 Portfolios | |||||||
| New York, NY 10022 | ||||||||||
| 1945 | ||||||||||
| Toby Rosenblatt | Director | Since | President, Founders Investments Ltd. (private investments) since | 35 Funds | A Pharma, Inc. | |||||
| 40 East 52nd Street | 2007 | 1999; Director of Forward Management, LLC since 2007; Director, | 81 Portfolios | (specialty | ||||||
| New York, NY 10022 | The James Irvine Foundation (philanthropic foundation) since 1997; | pharmaceuticals) | ||||||||
| 1938 | Formerly Trustee, State Street Research Mutual Funds from 1990 to | |||||||||
| 2005; Formerly, Trustee, Metropolitan Series Funds, Inc. from 2001 | ||||||||||
| to 2005. | ||||||||||
| BLACKROCK HEALTHCARE FUND, INC. |
| APRIL 30, 2008 |
| 21 |
| Officers and Directors (continued) | ||||||||||
| Number of | ||||||||||
| Length of | BlackRock- | |||||||||
| Position(s) | Time | Advised Funds | ||||||||
| Name, Address | Held with | Served as | and Portfolios | Public | ||||||
| and Year of Birth | the Fund | a Director** | Principal Occupation(s) During Past 5 Years | Overseen | Directorships | |||||
| Non-Interested Directors* (concluded) | ||||||||||
| Kenneth L. Urish | Director and | Since | Managing Partner, Urish Popeck & Co., LLC (certified public | 35 Funds | None | |||||
| 40 East 52nd Street | Chair of | 2007 | accountants and consultants) since 1976; Member of External | 81 Portfolios | ||||||
| New York, NY 10022 | the Audit | Advisory Board, The Pennsylvania State University Accounting | ||||||||
| 1951 | Committee | Department since 2001; Trustee, The Holy Family Foundation since | ||||||||
| 2001; Committee Member/Professional Ethics Committee of the | ||||||||||
| Pennsylvania Institute of Certified Public Accountants since 2007; | ||||||||||
| President and Trustee, Pittsburgh Catholic Publishing Associates | ||||||||||
| since 2003; Formerly Director, Inter-Tel from 2006 to 2007. | ||||||||||
| Frederick W. Winter | Director and | Since | Professor and Dean Emeritus of the Joseph M. Katz School of | 35 Funds | None | |||||
| 40 East 52nd Street | Member of | 2007 | Business, University of Pittsburgh since 2005 and Dean thereof | 81 Portfolios | ||||||
| New York, NY 10022 | the Audit | from 1997 to 2005. Director, Alkon Corporation (pneumatics) since | ||||||||
| 1945 | Committee | 1992; Director, Indotronix International (IT services) since 2004; | ||||||||
| Director, Tippman Sports (recreation) since 2005. | ||||||||||
| * Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. | ||||||||||
| ** Following the combination of Merrill Lynch Investment Managers, L (“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 board in 2007, those directors first became a member of the board of | ||||||||||
| directors of other legacy MLIM or legacy BlackRock Funds as follows: David O. Beim since 1998; Ronald W. Forbes since 1977; Matina | ||||||||||
| Horner since 2004; Rodney D. Johnson since 1995; Herbert I. London since 1987; Cynthia A. Montgomery since 1994; Joseph . Platt | ||||||||||
| since 1999; Robert C. Robb, Jr. since 1999; Toby Rosenblatt since 2005; Kenneth L. Urish since 1999 and Frederick W. Winter since 1999. | ||||||||||
| Interested Directors* | ||||||||||
| Richard S. Davis | Director | Since | Managing Director, BlackRock, Inc. since 2005; Formerly Chief | 185 Funds | None | |||||
| 40 East 52nd Street | 2007 | Executive Officer, State Street Research & Management Company | 295 Portfolios | |||||||
| New York, NY 10022 | from 2000 to 2005; Formerly Chairman of the Board of Trustees, | |||||||||
| 1945 | State Street Research Mutual Funds from 2000 to 2005; Formerly | |||||||||
| Chairman, SSR Realty from 2000 to 2004 | ||||||||||
| Henry Gabbay | Director | Since | Consultant, BlackRock, Inc. since 2007; Formerly Managing Director, | 184 Funds | None | |||||
| 40 East 52nd Street | 2007 | BlackRock, Inc. from 1989 to 2007; Formerly Chief Administrative | 294 Portfolios | |||||||
| New York, NY 10022 | Officer, BlackRock Advisors, LLC from 1998 to 2007; Formerly President | |||||||||
| 1947 | 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. | ||||||||||
| * | Messrs. Davis and Gabbay are both “interested persons,” as defined in the Investment Company Act of 1940, of the Fund based on their positions with BlackRock, Inc. and its affiliates. Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. |
22 BLACKROCK HEALTHCARE FUND, INC.
| APRIL 30, 2008 |
| Officers and Directors (concluded) | ||||||||||||
| Position(s) | ||||||||||||
| Name, Address | Held with | Length of | ||||||||||
| and Year of Birth | the Fund | Time Served | Principal Occupation(s) During Past 5 Years | |||||||||
| Fund Officers* | ||||||||||||
| Donald C. Burke | Fund | Since | Managing Director of BlackRock, Inc. since 2006; Formerly Managing Director of Merrill Lynch Investment | |||||||||
| 40 East 52nd Street | President | 2007 | Managers, L ("MLIM") and Fund Asset Management, L ("FAM") in 2006; First Vice President thereof from | |||||||||
| New York, NY 10022 | and Chief | 1997 to 2005; Treasurer thereof from 1999 to 2006 and Vice President thereof from 1990 to 1997. | ||||||||||
| 1960 | Executive | |||||||||||
| Officer | ||||||||||||
| Anne F. Ackerley | Vice | Since | Managing Director of BlackRock, Inc. since 2000 and First Vice President and Chief Operating Officer of Mergers | |||||||||
| 40 East 52nd Street | President | 2007 | and Acquisitions Group from 1997 to 2000; First Vice President and Chief Operating Officer of Public Finance | |||||||||
| New York, NY 10022 | Group thereof from 1995 to 1997; First Vice President of Emerging Markets Fixed Income Research of Merrill | |||||||||||
| 1962 | Lynch & Co., Inc. from 1994 to 1995. | |||||||||||
| Neal J. Andrews | Chief | Since | Managing Director of BlackRock, Inc. since 2006; Formerly Senior Vice President and Line of Business Head of | |||||||||
| 40 East 52nd Street | Financial | 2007 | Fund Accounting and Administration at PFPC Inc. from 1992 to 2006. | |||||||||
| New York, NY 10022 | Officer | |||||||||||
| 1966 | ||||||||||||
| Jay M. Fife | Treasurer | Since | Managing Director of BlackRock, Inc. since 2007 and Director in 2006; Formerly Assistant Treasurer of the | |||||||||
| 40 East 52nd Street | 2007 | MLIM/FAM advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.�� | ||||||||||
| New York, NY 10022 | ||||||||||||
| 1970 | ||||||||||||
| Brian P. Kindelan | Chief | Since | Chief Compliance Officer of the BlackRock-advised Funds since 2007; Anti-Money Laundering Officer of the | |||||||||
| 40 East 52nd Street | Compliance | 2007 | Funds since 2007; Managing Director and Senior Counsel of BlackRock, Inc. since 2005; Director and Senior | |||||||||
| New York, NY 10022 | Officer of | Counsel of BlackRock Advisors, Inc. from 2001 to 2004 and Vice President and Senior Counsel thereof from | ||||||||||
| 1959 | the Funds | 1998 to 2000; Senior Counsel of The PNC Bank Corp. from 1995 to 1998. | ||||||||||
| Howard Surloff | Secretary | Since | Managing Director of BlackRock, Inc. and General Counsel of U.S. Funds at BlackRock, Inc. since 2006; Formerly | |||||||||
| 40 East 52nd Street | 2007 | General Counsel (U.S.) of Goldman Sachs Asset Management, L from 1993 to 2006. | ||||||||||
| New York, NY 10022 | ||||||||||||
| 1965 | ||||||||||||
| * Officers of the Fund serve at the pleasure of the Board of Directors. | ||||||||||||
| Further information about the Fund’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. | ||||||||||||
| Custodian | Transfer Agent | Accounting Agent | Independent Registered Public | Legal Counsel | ||||||||
| JPMorgan Chase Bank, N.A. | PFPC Inc. | State Street Bank and | Accounting Firm | Sidley Austin LLP | ||||||||
| Brooklyn, NY 11245 | Wilmington, DE 19809 | Trust Company | Deloitte & Touche LLP | New York, NY 10019 | ||||||||
| Princeton, NJ 08540 | Princeton, NJ 08540 | |||||||||||
| BLACKROCK HEALTHCARE FUND, INC. |
| APRIL 30, 2008 |
| 23 |
| Additional Information 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 infor- mation 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 appli- cations, forms or other documents; (ii) information about your transac- tions 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. |
24 BLACKROCK HEALTHCARE FUND, INC.
| APRIL 30, 2008 |
Availability of Additional Information
| 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 prospectuses 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) Click on the applicable link and follow the steps to sign up 3) Log into your account |
| 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 Proxy Voting Policies and Procedures A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available |
| (1) without charge, upon request, by calling toll-free (800) 441-7762; (2) at www.blackrock.com; and (3) on the Securities and Exchange |
| Commission’s (the “SEC”) website at http://www.sec.gov. Availability of Proxy Voting Record Information about how the Fund votes proxies relating to securities held in the Fund’s 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. |
| Availability of Quarterly Portfolio Schedule The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’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 Forms N-Q may also be obtained upon request and without charge by calling (800) 441-7762. |
| Shareholder Privileges Account Information Call us at (800) 441-7762 from 8:00 AM – 6:00 PM EST to get infor- mation 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 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 HEALTHCARE FUND, INC. |
| APRIL 30, 2008 |
| 25 |
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 Global Resources Portfolio | BlackRock Global Opportunities Portfolio | BlackRock Mid-Cap Growth Equity Portfolio | ||
| BlackRock Asset Allocation Portfolio† | BlackRock Global Resources Portfolio | BlackRock Mid-Cap Value Equity Portfolio | ||
| BlackRock Aurora Portfolio | BlackRock Global Science & Technology | BlackRock Mid Cap Value Opportunities Fund | ||
| BlackRock Balanced Capital Fund† | Opportunities Portfolio | BlackRock Natural Resources Trust | ||
| BlackRock Basic Value Fund | BlackRock Global SmallCap Fund | BlackRock Pacific Fund | ||
| BlackRock Capital Appreciation Portfolio | BlackRock Health Sciences Opportunities Portfolio* | BlackRock Small Cap Core Equity Portfolio | ||
| BlackRock Equity Dividend Fund | BlackRock Healthcare Fund | BlackRock Small Cap Growth Equity Portfolio | ||
| BlackRock EuroFund | BlackRock Index Equity Portfolio* | BlackRock Small Cap Growth Fund II | ||
| BlackRock Focus Growth Fund | BlackRock International Fund | BlackRock Small Cap Index Fund | ||
| BlackRock Focus Value Fund | BlackRock International Index Fund | BlackRock Small Cap Value Equity Portfolio* | ||
| BlackRock Fundamental Growth Fund | BlackRock International Opportunities Portfolio | BlackRock Small/Mid-Cap Growth Portfolio | ||
| BlackRock Global Allocation Fund† | BlackRock International Value Fund | BlackRock S&P 500 Index Fund | ||
| BlackRock Global Dynamic Equity Fund | BlackRock Large Cap Core Fund | BlackRock Technology Fund | ||
| BlackRock Global Emerging Markets Fund | BlackRock Large Cap Growth Fund | BlackRock U.S. Opportunities Portfolio | ||
| BlackRock Global Financial Services Fund | BlackRock Large Cap Value Fund | BlackRock Utilities and Telecommunications Fund | ||
| BlackRock Global Growth Fund | BlackRock Latin America Fund | BlackRock Value Opportunities Fund | ||
| Fixed Income Funds | ||||
| BlackRock Commodity Strategies Fund | BlackRock Income Builder Portfolio | BlackRock Managed Income Portfolio | ||
| BlackRock Emerging Market Debt Portfolio | BlackRock Inflation Protected Bond Portfolio | BlackRock Short-Term Bond Fund | ||
| BlackRock Enhanced Income Portfolio | BlackRock Intermediate Bond Portfolio II | BlackRock Strategic Income Portfolio | ||
| BlackRock GNMA Portfolio | BlackRock Intermediate Government | BlackRock Total Return Fund | ||
| BlackRock Government Income Portfolio | Bond Portfolio | BlackRock Total Return Portfolio II | ||
| BlackRock High Income Fund | BlackRock International Bond Portfolio | BlackRock World Income Fund | ||
| BlackRock High Yield Bond Portfolio | BlackRock Long Duration Bond Portfolio | |||
| BlackRock Income Portfolio | BlackRock Low Duration Bond Portfolio | |||
| Municipal Bond Funds | ||||
| BlackRock AMT-Free Municipal Bond Portfolio | BlackRock Intermediate Municipal Fund | BlackRock New York Municipal Bond Fund | ||
| BlackRock California Insured Municipal Bond Fund | BlackRock Kentucky Municipal Bond Portfolio | BlackRock Ohio Municipal Bond Portfolio | ||
| BlackRock Delaware Municipal Bond Portfolio | BlackRock Municipal Insured Fund | BlackRock Pennsylvania Municipal Bond Fund | ||
| BlackRock Florida Municipal Bond Fund | BlackRock National Municipal Fund | BlackRock Short-Term Municipal Fund | ||
| BlackRock High Yield Municipal Fund | BlackRock New Jersey Municipal Bond Fund | |||
| Target Risk & Target Date Funds | ||||
| BlackRock Prepared Portfolios | BlackRock Lifecycle Prepared Portfolios | |||
| Conservative Prepared Portfolio | Prepared Portfolio 2010 | Prepared Portfolio 2030 | ||
| Moderate Prepared Portfolio | Prepared Portfolio 2015 | Prepared Portfolio 2035 | ||
| Growth Prepared Portfolio | Prepared Portfolio 2020 | Prepared Portfolio 2040 | ||
| Aggressive Growth Prepared Portfolio | Prepared Portfolio 2025 | Prepared Portfolio 2045 | ||
| Prepared Portfolio 2050 | ||||
| * See the prospectus for information on specific limitations on investments in the fund. | ||||
| † Mixed asset fund. | ||||
BlackRock mutual funds are distributed by BlackRock Distributors, Inc. and certain funds are also distributed by FAM Distributors, Inc. 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) 882-0052 or from your financial advisor. The prospectus should be read carefully before investing.
26 BLACKROCK HEALTHCARE FUND, INC.
| APRIL 30, 2008 |
#10254-4/08
| 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: Ronald W. Forbes (not reappointed to audit committee, effective November 1, 2007) Kenneth L. Urish (term began, effective November 1, 2007) Richard R. West (term ended, effective November 1, 2007) 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 | ||||||||||||||||
| Healthcare Fund, | $34,300 | $36,500 | $0 | $0 | $6,100 | $6,100 | $1,049 | $0 | ||||||||
| Inc. | ||||||||||||||||
| 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 for all of the registrants the Committee oversees. 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 one or more of its members 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 Healthcare Fund, | ||||
| Inc. | $288,549 | $3,002,183 | ||
| (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) – $287,500, 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 recommended by shareholders when a vacancy becomes available. Shareholders who wish to recommend a nominee should send nominations which 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 15d-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 Healthcare Fund, Inc. By: /s/ Donald C. Burke Donald C. Burke Chief Executive Officer of BlackRock Healthcare Fund, Inc. Date: June 23, 2008 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/ Donald C. Burke Donald C. Burke Chief Executive Officer (principal executive officer) of BlackRock Healthcare Fund, Inc. Date: June 23, 2008 By: /s/ Neal J. Andrews Neal J. Andrews Chief Financial Officer (principal financial officer) of BlackRock Healthcare Fund, Inc. Date: June 23, 2008 |