UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORMN-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number:811-07177
Name of Fund: BlackRock Mid Cap Dividend Fund of BlackRock Mid Cap Dividend Series, Inc.
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Mid Cap Dividend Fund of BlackRock Mid Cap Dividend Series, Inc., 55 East 52nd Street, New York, NY 10055
Registrant’s telephone number, including area code: (800)441-7762
Date of fiscal year end: 01/31/2020
Date of reporting period: 07/31/2019
Item 1 – Report to Stockholders
JULY 31, 2019
SEMI-ANNUAL REPORT (UNAUDITED) |
BlackRock Mid Cap Dividend Series, Inc.
Ø | BlackRock Mid Cap Dividend Fund |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from BlackRock or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
You may elect to receive all future reports in paper free of charge. If you hold accounts directly with BlackRock, you can call (800)441-7762 to inform BlackRock that you wish to continue receiving paper copies of your shareholder reports. If you hold accounts through a financial intermediary, you can follow the instructions included with this disclosure, if applicable, or contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. Please note that not all financial intermediaries may offer this service. Your election to receive reports in paper will apply to all funds advised by BlackRock Advisors, LLC, BlackRock Fund Advisors or their affiliates, or all funds held with your financial intermediary, as applicable.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive electronic delivery of shareholder reports and other communications by: (i) accessing the BlackRock website at www.blackrock.com/edelivery and logging into your accounts, if you hold accounts directly with BlackRock, or (ii) contacting your financial intermediary, if you hold accounts through a financial intermediary. Please note that not all financial intermediaries may offer this service.
Not FDIC Insured • May Lose Value • No Bank Guarantee |
Dear Shareholder,
Investment performance in the 12 months ended July 31, 2019 was a tale of two markets. The first half of the reporting period was characterized by restrictive monetary policy, deteriorating economic growth, equity market volatility, and rising fear of an imminent recession. During the second half of the reporting period, stocks and bonds rebounded sharply, as restrained inflation and weak economic growth led the U.S. Federal Reserve (the “Fed”) to stop raising interest rates, which led to broad-based optimism that stimulative monetary policy could help forestall a recession.
After the dust settled, the U.S. equity and bond markets posted mixed returns while weathering significant volatility. Less volatile U.S. large cap equities and U.S. bonds advanced, while equities at the high end of the risk spectrum — emerging markets, international developed, and U.S. small cap — posted relatively flat returns.
Fixed-income securities delivered modest positive returns with relatively low volatility, as interest rates declined (and bond prices rose). Longer-term U.S. Treasury yields declined further than short-term Treasury yields. This led to positive returns for U.S. Treasuries and a substantial flattening of the yield curve. Investment grade and high yield corporate bonds also posted positive returns, as the credit fundamentals in corporate markets remained relatively solid.
In the U.S. equity market, volatility spiked in late 2018, as a wide range of risks were brought to bear on markets, ranging from rising interest rates and slowing global growth to heightened trade tensions and political turmoil. These risks manifested in a broad-based sell-off in December, leading to the worst December performance on record since 1931.
Volatility also rose in emerging markets, as the rising U.S. dollar and higher interest rates in the U.S. disrupted economic growth abroad. U.S.-China trade relations and debt concerns adversely affected the Chinese stock market, particularly in mainland China, while Turkey and Argentina became embroiled in currency crises, largely due to hyperinflation in both countries. An economic slowdown in Europe and ongoing uncertainty about Brexit led to modest performance for European equities.
As equity performance faltered and global economic growth slowed, the Fed shifted to a more patient perspective on the economy in January 2019. The Fed left interest rates unchanged for six months, then lowered interest rates for the first time in 11 years in July 2019. Similarly, the European Central Bank signaled a continuation of accommodative monetary policy, while China committed to looser credit conditions and an increase in fiscal spending.
The outpouring of global economic stimulus led to a sharp rally in risk assets throughout the world. Hopes continued to remain high thereafter, as the current economic expansion became the longest in U.S. history. Looking ahead, markets are pricing in additional rate cuts by the Fed over the next year, as investors anticipate a steady shift toward more stimulative monetary policy.
We expect a slowing expansion with additional room to run, as opposed to an economic recession. However, escalating trade tensions and the resulting disruptions in global supply chains have become the greatest risk to the global expansion.
We believe U.S. and emerging market equities remain relatively attractive. Within U.S. equities, companies with high-quality earnings and strong balance sheets offer the most attractive risk/reward trade-off. For bonds, U.S. Treasuries are likely to help buffer against volatility in risk assets, while income from other types of bonds can continue to offer steady returns.
In this environment, investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visitblackrock.com for further insight about investing in today’s markets.
Sincerely,
Rob Kapito
President, BlackRock Advisors, LLC
Rob Kapito
President, BlackRock Advisors, LLC
Total Returns as of July 31, 2019 | ||||
6-month | 12-month | |||
U.S. large cap equities | 11.32% | 7.99% | ||
U.S. small cap equities | 5.76 | (4.42) | ||
International equities | 5.64 | (2.60) | ||
Emerging market equities | 0.44 | (2.18) | ||
3-month Treasury bills | 1.23 | 2.34 | ||
U.S. Treasury securities | 6.68 | 11.16 | ||
U.S. investment grade bonds | 5.23 | 8.08 | ||
Tax-exempt municipal bonds | 4.98 | 6.93 | ||
U.S. high yield bonds | 5.78 | 6.91 | ||
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index. |
2 | THIS PAGEISNOT PARTOF YOUR FUND REPORT |
Page | ||||
The Markets in Review | 2 | |||
Semi-Annual Report: | ||||
4 | ||||
6 | ||||
6 | ||||
Financial Statements: | ||||
7 | ||||
10 | ||||
11 | ||||
12 | ||||
13 | ||||
18 | ||||
25 | ||||
28 | ||||
29 |
3 |
Fund Summary as of July 31, 2019 | BlackRock Mid Cap Dividend Fund |
Investment Objective
BlackRock Mid Cap Dividend Fund’s (the “Fund”) investment objective is to seek capital appreciation and, secondarily, income, by investing in securities, primarily equity securities that Fund management believes are undervalued and therefore represent an investment value.
Portfolio Management Commentary
How did the Fund perform?
For thesix-month period ended July 31, 2019, the Fund outperformed its benchmark, the Russell Midcap® Value Index.
What factors influenced performance?
The largest contribution to the Fund’s relative performance during thesix-month period derived from a combination of stock selection within and an overweight to the financials sector. In particular, an overweight and stock selection in the insurance industry, as well as stock selection among banks, proved beneficial to Fund returns. Within the energy sector, stock selection among oil, gas & consumable fuels stocks boosted relative performance. Notably, the Fund’s avoidance of lower quality stocks within energy aided returns. Lastly, stock selection in utilities and consumer discretionary added to Fund performance during the period, as did an overweight to the information technology (“IT”) sector.
The largest detractor from relative performance came from stock selection in the health care sector. Notably, selection decisions within the health care providers & services and pharmaceuticals industries weighed on relative return. Within the communication services sector, stock selection in the wireless telecom services industry detracted from performance, as did an overweight exposure to the industry.
Describe recent portfolio activity.
During thesix-month period, the portfolio’s exposure to financials and consumer discretionary increased, while its exposure to the real estate and energy sectors decreased.
Describe portfolio positioning at period end.
At the end of the period, the Fund’s largest allocations were in the financials, IT and health care sectors. Relative to the Russell Midcap® Value Index, the largest overweight positions were also in financials, IT and health care. Conversely, the largest relative underweights were in the real estate, consumer discretionary and industrials sectors.
The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.
Portfolio Information
TEN LARGEST HOLDINGS
Security | Percent of Net Assets | |||
FirstEnergy Corp. | 3 | % | ||
Marathon Petroleum Corp. | 3 | |||
AXA Equitable Holdings, Inc. | 2 | |||
American International Group, Inc. | 2 | |||
Koninklijke Philips NV | 2 | |||
Regions Financial Corp. | 2 | |||
Telephone & Data Systems, Inc. | 2 | |||
Arthur J Gallagher & Co. | 2 | |||
Williams Cos., Inc. | 2 | |||
KeyCorp | 2 |
SECTOR ALLOCATION
Sector | Percent of Net Assets | |||
Financials | 27 | % | ||
Information Technology | 12 | |||
Health Care | 11 | |||
Industrials | 9 | |||
Consumer Discretionary | 9 | |||
Energy | 7 | |||
Utilities | 6 | |||
Materials | 5 | |||
Consumer Staples | 4 | |||
Short-term Securities | 4 | |||
Communication Services | 4 | |||
Real Estate | 3 | |||
Liabilities in Excess of other Assets | (1 | ) |
For Fund compliance purposes, the Fund’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.
4 | 2019 BLACKROCK SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Fund Summary as of July 31, 2019 (continued) | BlackRock Mid Cap Dividend Fund |
Performance Summary for the Period Ended July 31, 2019
Average Annual Total Returns (a)(b) | ||||||||||||||||||||||||||||||||||||||||
1 Year | 5 Years | 10 Years | ||||||||||||||||||||||||||||||||||||||
6-Month Total Returns | w/o sales charge | w/sales charge | w/o sales charge | w/sales charge | w/o sales charge | w/sales charge | ||||||||||||||||||||||||||||||||||
Institutional | 9.12 | % | 3.05 | % | N/A | 6.53 | % | N/A | 12.41 | % | N/A | |||||||||||||||||||||||||||||
Investor A | 8.96 | 2.71 | (2.68 | )% | 6.23 | 5.09 | % | 12.07 | 11.47 | % | ||||||||||||||||||||||||||||||
Investor C | 8.58 | 1.99 | 1.04 | 5.41 | 5.41 | 11.11 | 11.11 | |||||||||||||||||||||||||||||||||
Class K | 9.21 | 3.10 | N/A | 6.55 | N/A | 12.42 | N/A | |||||||||||||||||||||||||||||||||
Class R | 8.83 | 2.47 | N/A | 5.93 | N/A | 11.71 | N/A | |||||||||||||||||||||||||||||||||
Russell Midcap® Value Index(c) | 7.90 | 1.78 | N/A | 7.53 | N/A | 13.59 | N/A |
(a) | Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 6 for a detailed description of share classes, including any related sales charges and fees, and how performance was calculated for certain share classes. |
(b) | Under normal circumstances, the Fund will invest at least 80% of its net assets plus the amount of any borrowings for investment purposes in equity securities of mid cap companies and at least 80% of its net assets plus the amount of any borrowings for investment purposes in dividend-paying securities. The Fund’s total returns prior to June 12, 2017 are the returns of the Fund when it followed different investment strategies under the name BlackRock Mid Cap Value Opportunities Fund. |
(c) | An unmanaged index that measures the performance of the mid-capitalization value sector of the U.S. equity market. It is a subset of the Russell Midcap® Index, which measures the performance of the mid-capitalization sector of the U.S. equity market. The Russell Midcap® Value Index measures the performance of equity securities of Russell Midcap® Index issuers with relatively lower price-to-book ratios and lower forecasted growth. The Russell Midcap® Index is a float-adjusted, capitalization-weighted index of approximately 785 of the smallest issuers in the Russell 1000® Index and includes securities issued by issuers which range in size between approximately $150 million and $50 billion, although this range may change from time to time. |
N/A — Not applicable as share class and index do not have a sales charge.
Past performance is not indicative of future results.
Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.
Expense Example
Actual | Hypothetical (b) | |||||||||||||||||||||||||||||||
Beginning Account Value (02/01/19) | Ending Account Value (07/31/19) | Expenses Paid During the Period (a) | Beginning Account Value (02/01/19) | Ending Account Value (07/31/19) | Expenses Paid During the Period (a) | Annualized Expense Ratio | ||||||||||||||||||||||||||
Institutional | $ | 1,000.00 | $ | 1,091.20 | $ | 4.41 | $ | 1,000.00 | $ | 1,020.58 | $ | 4.26 | 0.85 | % | ||||||||||||||||||
Investor A | 1,000.00 | 1,089.60 | 5.70 | 1,000.00 | 1,019.34 | 5.51 | 1.10 | |||||||||||||||||||||||||
Investor C | 1,000.00 | 1,085.80 | 9.57 | 1,000.00 | 1,015.62 | 9.25 | 1.85 | |||||||||||||||||||||||||
Class K | 1,000.00 | 1,092.10 | 4.05 | 1,000.00 | 1,020.93 | 3.91 | 0.78 | |||||||||||||||||||||||||
Class R | 1,000.00 | 1,088.30 | 6.99 | 1,000.00 | 1,018.10 | 6.76 | 1.35 |
(a) | For each class of the Fund, expenses are equal to the annualized net expense ratio for the class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown). |
(b) | Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365. |
See “Disclosure of Expenses” on page 6 for further information on how expenses were calculated.
FUND SUMMARY | 5 |
Institutional Shares and Class K Sharesare not subject to any sales charge. These shares bear no ongoing distribution or service fees and are available only to certain eligible investors. Class K Shares performance shown prior to the Class K Shares inception date of January 25, 2018 is that of Institutional Shares. The performance of the Fund’s Class K Shares would be substantially similar to Institutional Shares because Class K Shares and Institutional Shares invest in the same portfolio of securities and performance would only differ to the extent that Class K Shares and Institutional Shares have different expenses. The actual returns of Class K Shares would have been higher than those of the Institutional Shares because Class K Shares have lower expenses than the Institutional Shares.
Investor A Sharesare subject to a maximum initial sales charge(front-end load) of 5.25% and a service fee of 0.25% per year (but no distribution fee). Certain redemptions of these shares may be subject to a contingent deferred sales charge (“CDSC”) where no initial sales charge was paid at the time of purchase. These shares are generally available through financial intermediaries.
Investor C Shares are subject to a 1.00% CDSC if redeemed within one year of purchase. In addition, these shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. These shares are generally available through financial intermediaries. Effective November 8, 2018, the Fund adopted an automatic conversion feature whereby Investor C Shares held for approximately ten years will be automatically converted into Investor A Shares.
Class R Shares are not subject to any sales charge. These shares are subject to a distribution fee of 0.25% per year and a service fee of 0.25% per year. These shares are available only to certain employer-sponsored retirement plans.
Performance information reflects past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Refer towww.blackrock.com to obtain performance data current to the most recent month-end. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Figures shown in the performance table on the previous page assume reinvestment of all distributions, if any, at net asset value (“NAV”) on theex-dividend date. Investment return and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Distributions paid to each class of shares will vary because of the different levels of service, distribution and transfer agency fees applicable to each class, which are deducted from the income available to be paid to shareholders.
BlackRock Advisors, LLC (the “Manager”), the Fund’s investment adviser, has contractually and/or voluntarily agreed to waive and/or reimburse a portion of the Fund’s expenses. Without such waiver and/or reimbursement, the Fund’s performance would have been lower. With respect to the Fund’s voluntary waiver, the Manager is under no obligation to waive and/or reimburse or to continue waiving and/or reimbursing its fees and such voluntary waiver may be reduced or discontinued at any time. With respect to the Fund’s contractual waiver, the Manager is under no obligation to continue waiving and/or reimbursing its fees after the applicable termination date of such agreement. See Note 5 of the Notes to Financial Statements for additional information on waivers and/or reimbursements.
Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example shown on the previous page (which is based on a hypothetical investment of $1,000 invested on February 1, 2019 and held through July 31, 2019) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.
The expense example provides information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 and then multiply the result by the number corresponding to their share class under the heading entitled “Expenses Paid During the Period.”
The expense example also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. In order to assist shareholders in comparing the ongoing expenses of investing in the Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
The expenses shown in the expense example are intended to highlight shareholders’ ongoing costs only and do not reflect transactional expenses, such as sales charges, if any. Therefore, the hypothetical example is useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.
6 | 2019 BLACKROCK SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Schedule of Investments (unaudited) July 31, 2019 | BlackRock Mid Cap Dividend Fund (Percentages shown are based on Net Assets) |
Security | Shares | Value | ||||||
Common Stocks — 96.3% |
| |||||||
Aerospace & Defense — 1.4% | ||||||||
BAE Systems PLC | 686,044 | $ | 4,557,891 | |||||
Hexcel Corp. | 4,220 | 345,027 | ||||||
|
| |||||||
4,902,918 | ||||||||
Auto Components — 0.9% | ||||||||
Garrett Motion, Inc.(a) | 101,679 | 1,440,791 | ||||||
Magna International, Inc. | 36,457 | 1,838,162 | ||||||
|
| |||||||
3,278,953 | ||||||||
Automobiles — 1.4% | ||||||||
General Motors Co. | 117,111 | 4,724,258 | ||||||
|
| |||||||
Banks — 5.2% | ||||||||
KeyCorp | 356,451 | 6,548,005 | ||||||
Regions Financial Corp. | 460,826 | 7,340,958 | ||||||
SunTrust Banks, Inc. | 62,928 | 4,191,005 | ||||||
|
| |||||||
18,079,968 | ||||||||
Beverages — 1.3% | ||||||||
Constellation Brands, Inc., Class A | 9,855 | 1,939,661 | ||||||
Molson Coors Brewing Co., Class B | 50,564 | 2,729,950 | ||||||
|
| |||||||
4,669,611 | ||||||||
Building Products — 1.0% | ||||||||
Johnson Controls International PLC | 84,130 | 3,570,477 | ||||||
|
| |||||||
Capital Markets — 3.0% | ||||||||
Blackstone Group, Inc., Class A | 95,119 | 4,563,810 | ||||||
Raymond James Financial, Inc. | 21,740 | 1,753,766 | ||||||
State Street Corp. | 69,758 | 4,052,242 | ||||||
|
| |||||||
10,369,818 | ||||||||
Chemicals — 2.5% | ||||||||
Cabot Corp. | 31,068 | 1,389,361 | ||||||
Corteva, Inc.(a) | 97,683 | 2,881,648 | ||||||
Eastman Chemical Co. | 40,234 | 3,031,632 | ||||||
Huntsman Corp. | 71,403 | 1,467,332 | ||||||
|
| |||||||
8,769,973 | ||||||||
Commercial Services & Supplies — 0.6% | ||||||||
IAA, Inc.(a) | 29,223 | 1,366,175 | ||||||
KAR Auction Services, Inc. | 29,150 | 779,471 | ||||||
|
| |||||||
2,145,646 | ||||||||
Communications Equipment — 1.6% | ||||||||
Motorola Solutions, Inc. | 19,302 | 3,203,360 | ||||||
Nokia OYJ — ADR | 147,386 | 797,358 | ||||||
Telefonaktiebolaget LM Ericsson, Class B | 179,857 | 1,573,618 | ||||||
|
| |||||||
5,574,336 | ||||||||
Construction & Engineering — 0.3% | ||||||||
Quanta Services, Inc. | 23,030 | 861,783 | ||||||
|
| |||||||
Construction Materials — 0.6% | ||||||||
CRH PLC | 64,195 | 2,140,228 | ||||||
|
| |||||||
Containers & Packaging — 1.6% | ||||||||
International Paper Co. | 37,716 | 1,656,110 | ||||||
Packaging Corp. of America | 15,806 | 1,595,932 | ||||||
Westrock Co. | 67,849 | 2,445,956 | ||||||
|
| |||||||
5,697,998 | ||||||||
Diversified Consumer Services — 0.5% | ||||||||
H&R Block, Inc. | 67,086 | 1,857,611 | ||||||
|
| |||||||
Diversified Financial Services — 3.6% | ||||||||
AXA Equitable Holdings, Inc. | 372,795 | 8,380,431 | ||||||
Jefferies Financial Group, Inc. | 195,693 | 4,174,132 | ||||||
|
| |||||||
12,554,563 |
Security | Shares | Value | ||||||
Diversified Telecommunication Services — 0.5% | ||||||||
BCE, Inc. | 36,716 | $ | 1,656,259 | |||||
|
| |||||||
Electric Utilities — 5.1% | ||||||||
Entergy Corp. | 42,130 | 4,449,771 | ||||||
Evergy, Inc. | 30,491 | 1,844,400 | ||||||
FirstEnergy Corp. | 224,609 | 9,876,058 | ||||||
PG&E Corp.(a) | 91,500 | 1,658,895 | ||||||
|
| |||||||
17,829,124 | ||||||||
Electrical Equipment — 1.0% | ||||||||
Hubbell, Inc. | 21,143 | 2,746,053 | ||||||
Rockwell Automation, Inc. | 5,220 | 839,271 | ||||||
|
| |||||||
3,585,324 | ||||||||
Electronic Equipment, Instruments & Components — 2.1% | ||||||||
Avnet, Inc. | 122,880 | 5,581,210 | ||||||
TE Connectivity Ltd. | 20,246 | 1,870,730 | ||||||
|
| |||||||
7,451,940 | ||||||||
Energy Equipment & Services — 1.2% | ||||||||
Baker Hughes a GE Co. | 169,099 | 4,293,424 | ||||||
|
| |||||||
Entertainment — 0.7% | ||||||||
Viacom, Inc., Class B | 82,087 | 2,491,340 | ||||||
|
| |||||||
Equity Real Estate Investment Trusts (REITs) — 2.9% | ||||||||
Crown Castle International Corp. | 23,223 | 3,094,697 | ||||||
Lamar Advertising Co., Class A | 49,322 | 3,991,136 | ||||||
PotlatchDeltic Corp. | 17,533 | 645,565 | ||||||
Prologis, Inc. | 11,784 | 949,908 | ||||||
Welltower, Inc. | 16,355 | 1,359,428 | ||||||
|
| |||||||
10,040,734 | ||||||||
Food Products — 2.5% | ||||||||
Bunge Ltd. | 41,017 | 2,396,623 | ||||||
Conagra Brands, Inc. | 104,140 | 3,006,522 | ||||||
Danone SA | 23,013 | 1,997,272 | ||||||
Kellogg Co. | 24,764 | 1,441,760 | ||||||
|
| |||||||
8,842,177 | ||||||||
Health Care Equipment & Supplies — 5.5% | ||||||||
Alcon, Inc.(a) | 43,772 | 2,534,820 | ||||||
ConvaTec Group PLC(b) | 816,379 | 1,542,497 | ||||||
Koninklijke Philips NV | 167,396 | 7,852,656 | ||||||
Smith & Nephew PLC, ADR | 39,698 | 1,803,877 | ||||||
Zimmer Biomet Holdings, Inc. | 41,464 | 5,603,030 | ||||||
|
| |||||||
19,336,880 | ||||||||
Health Care Providers & Services — 5.3% | ||||||||
AmerisourceBergen Corp. | 11,212 | 977,126 | ||||||
Cardinal Health, Inc. | 40,125 | 1,834,916 | ||||||
Cigna Corp.(a) | 24,383 | 4,143,159 | ||||||
Humana, Inc. | 19,037 | 5,649,230 | ||||||
Laboratory Corp. of America Holdings(a) | 12,749 | 2,135,712 | ||||||
McKesson Corp. | 16,905 | 2,348,950 | ||||||
Quest Diagnostics, Inc. | 13,733 | 1,401,865 | ||||||
|
| |||||||
18,490,958 | ||||||||
Household Durables — 2.2% | ||||||||
Mohawk Industries, Inc.(a)(c) | 10,211 | 1,273,210 | ||||||
Newell Brands, Inc. | 283,605 | 4,024,355 | ||||||
Whirlpool Corp. | 16,163 | 2,351,393 | ||||||
|
| |||||||
7,648,958 | ||||||||
Insurance — 15.1% | ||||||||
Allstate Corp. | 25,140 | 2,700,036 | ||||||
American International Group, Inc. | 148,231 | 8,299,454 | ||||||
Arthur J Gallagher & Co. | 73,317 | 6,630,056 | ||||||
Assurant, Inc. | 47,152 | 5,345,151 | ||||||
Assured Guaranty Ltd. | 93,790 | 4,097,685 |
SCHEDULE OF INVESTMENTS | 7 |
Schedule of Investments (unaudited) (continued) July 31, 2019 | BlackRock Mid Cap Dividend Fund (Percentages shown are based on Net Assets) |
Security | Shares | Value | ||||||
Insurance (continued) | ||||||||
Brighthouse Financial, Inc.(a)(c) | 155,152 | $ | 6,077,304 | |||||
Everest Re Group Ltd. | 6,089 | 1,501,791 | ||||||
Hartford Financial Services Group, Inc. | 77,799 | 4,483,556 | ||||||
Marsh & McLennan Cos., Inc. | 17,287 | 1,707,956 | ||||||
MetLife, Inc. | 77,046 | 3,807,613 | ||||||
White Mountains Insurance Group Ltd. | 3,014 | 3,243,064 | ||||||
Willis Towers Watson PLC | 25,014 | 4,883,233 | ||||||
|
| |||||||
52,776,899 | ||||||||
IT Services — 4.2% | ||||||||
Amdocs Ltd. | 39,611 | 2,534,708 | ||||||
Cognizant Technology Solutions Corp., Class A | 95,514 | 6,221,782 | ||||||
Fidelity National Information Services, Inc. | 43,940 | 5,855,005 | ||||||
|
| |||||||
14,611,495 | ||||||||
Leisure Products — 0.4% | ||||||||
Mattel, Inc.(a)(c) | 91,460 | 1,335,316 | ||||||
|
| |||||||
Machinery — 3.5% | ||||||||
AGCO Corp. | 24,401 | 1,878,877 | ||||||
Allison Transmission Holdings, Inc. | 45,790 | 2,104,050 | ||||||
Dover Corp. | 9,103 | 881,626 | ||||||
Pentair PLC | 142,053 | 5,513,077 | ||||||
Stanley Black & Decker, Inc. | 12,740 | 1,880,297 | ||||||
|
| |||||||
12,257,927 | ||||||||
Media — 0.3% | ||||||||
Publicis Groupe SA | 20,295 | 1,001,473 | ||||||
|
| |||||||
Multi-Utilities — 0.5% | ||||||||
Public Service Enterprise Group, Inc. | 30,507 | 1,743,475 | ||||||
|
| |||||||
Multiline Retail — 2.4% | ||||||||
Dollar General Corp. | 38,309 | 5,134,172 | ||||||
Dollar Tree, Inc.(a) | 30,980 | 3,152,215 | ||||||
|
| |||||||
8,286,387 | ||||||||
Oil, Gas & Consumable Fuels — 6.1% | ||||||||
Marathon Oil Corp. | 380,012 | 5,346,769 | ||||||
Marathon Petroleum Corp. | 165,325 | 9,322,677 | ||||||
Williams Cos., Inc. | 266,294 | 6,561,484 | ||||||
|
| |||||||
21,230,930 | ||||||||
Real Estate Management & Development — 0.2% | ||||||||
Realogy Holdings Corp. | 153,638 | 800,454 | ||||||
|
| |||||||
Road & Rail — 0.5% | ||||||||
Norfolk Southern Corp. | 8,905 | 1,701,924 | ||||||
|
| |||||||
Semiconductors & Semiconductor Equipment — 2.2% | ||||||||
Marvell Technology Group Ltd. | 158,560 | 4,163,785 |
Security | Shares | Value | ||||||
Semiconductors & Semiconductor Equipment (continued) | ||||||||
NXP Semiconductors NV | 32,661 | $ | 3,376,821 | |||||
|
| |||||||
7,540,606 | ||||||||
Software — 2.1% | ||||||||
CDK Global, Inc. | 69,174 | 3,588,055 | ||||||
Constellation Software, Inc. | 3,868 | 3,680,110 | ||||||
|
| |||||||
7,268,165 | ||||||||
Specialty Retail — 0.5% | ||||||||
Signet Jewelers Ltd. | 46,696 | 847,065 | ||||||
Williams-Sonoma, Inc. | 10,935 | 729,146 | ||||||
|
| |||||||
1,576,211 | ||||||||
Textiles, Apparel & Luxury Goods — 0.5% | ||||||||
Ralph Lauren Corp. | 16,080 | 1,676,018 | ||||||
|
| |||||||
Tobacco — 0.5% | ||||||||
Imperial Brands PLC | 65,628 | 1,665,641 | ||||||
|
| |||||||
Trading Companies & Distributors — 0.8% | ||||||||
Ferguson PLC(a) | 35,300 | 2,626,769 | ||||||
|
| |||||||
Wireless Telecommunication Services — 2.0% | ||||||||
Telephone & Data Systems, Inc. | 212,632 | 6,876,519 | ||||||
|
| |||||||
Total Long-Term Investments — 96.3% |
| 335,841,468 | ||||||
|
| |||||||
Short-Term Securities — 4.3% | ||||||||
BlackRock Liquidity Funds,T-Fund, Institutional Class, | 13,631,823 | 13,631,823 | ||||||
SL Liquidity Series, LLC, Money Market Series, | 1,287,206 | 1,287,464 | ||||||
|
| |||||||
Total Short-Term Securities — 4.3% |
| 14,919,287 | ||||||
|
| |||||||
Total Investments — 100.6% |
| 350,760,755 | ||||||
Liabilities in Excess of Other Assets — (0.6)% |
| (2,096,423 | ) | |||||
|
| |||||||
Net Assets — 100.0% |
| $ | 348,664,332 | |||||
|
|
(a) | Non-income producing security. |
(b) | Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors. |
(c) | Security, or a portion of the security, is on loan. |
(d) | Annualized7-day yield as of period end. |
(e) | Security was purchased with the cash collateral from loaned securities. |
(f) | During the six months ended July 31, 2019, investments in issuers considered to be an affiliate/affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows: |
Affiliate | Shares Held at 01/31/19 | Net Activity | Shares Held at 07/31/19 | Value at 07/31/19 | Income | Net Realized Gain (Loss) (a) | Change in Unrealized Appreciation (Depreciation) | |||||||||||||||||||||
BlackRock Liquidity Funds,T-Fund, Institutional Class | 11,667,000 | 1,964,823 | 13,631,823 | $ | 13,631,823 | $ | 126,752 | $ | — | $ | — | |||||||||||||||||
SL Liquidity Series, LLC, Money Market Series | 272,133 | 1,015,073 | 1,287,206 | 1,287,464 | 4,211 | (b) | (68 | ) | (27 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
$ | 14,919,287 | $ | 130,963 | $ | (68 | ) | $ | (27 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
(a) | Includes net capital gain distributions, if applicable. |
(b) | Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities. |
8 | 2019 BLACKROCK SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Schedule of Investments (unaudited) (continued) July 31, 2019 | BlackRock Mid Cap Dividend Fund |
For Fund compliance purposes, the Fund’s industry classifications refer to one or more of the industrysub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such industrysub-classifications for reporting ease.
Fair Value Hierarchy as of Period End
Various inputs are used in determining the fair value of investments. For information about the Fund’s policy regarding valuation of investments, refer to the Notes to Financial Statements.
The following table summarizes the Fund’s investments categorized in the disclosure hierarchy:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Investments: | ||||||||||||||||
Common Stocks: | ||||||||||||||||
Aerospace & Defense | $ | 345,027 | $ | 4,557,891 | $ | — | $ | 4,902,918 | ||||||||
Auto Components | 3,278,953 | — | — | 3,278,953 | ||||||||||||
Automobiles | 4,724,258 | — | — | 4,724,258 | ||||||||||||
Banks | 18,079,968 | — | — | 18,079,968 | ||||||||||||
Beverages | 4,669,611 | — | — | 4,669,611 | ||||||||||||
Building Products | 3,570,477 | — | — | 3,570,477 | ||||||||||||
Capital Markets | 10,369,818 | — | — | 10,369,818 | ||||||||||||
Chemicals | 8,769,973 | — | — | 8,769,973 | ||||||||||||
Commercial Services & Supplies | 2,145,646 | — | — | 2,145,646 | ||||||||||||
Communications Equipment | 4,000,718 | 1,573,618 | — | 5,574,336 | ||||||||||||
Construction & Engineering | 861,783 | — | — | 861,783 | ||||||||||||
Construction Materials | — | 2,140,228 | — | 2,140,228 | ||||||||||||
Containers & Packaging | 5,697,998 | — | — | 5,697,998 | ||||||||||||
Diversified Consumer Services | 1,857,611 | — | — | 1,857,611 | ||||||||||||
Diversified Financial Services | 12,554,563 | — | — | 12,554,563 | ||||||||||||
Diversified Telecommunication Services | 1,656,259 | — | — | 1,656,259 | ||||||||||||
Electric Utilities | 17,829,124 | — | — | 17,829,124 | ||||||||||||
Electrical Equipment | 3,585,324 | — | — | 3,585,324 | ||||||||||||
Electronic Equipment, Instruments & Components | 7,451,940 | — | — | 7,451,940 | ||||||||||||
Energy Equipment & Services | 4,293,424 | — | — | 4,293,424 | ||||||||||||
Entertainment | 2,491,340 | — | — | 2,491,340 | ||||||||||||
Equity Real Estate Investment Trusts (REITs) | 10,040,734 | — | — | 10,040,734 | ||||||||||||
Food Products | 8,842,177 | — | — | 8,842,177 | ||||||||||||
Health Care Equipment & Supplies | 7,406,907 | 11,929,973 | — | 19,336,880 | ||||||||||||
Health Care Providers & Services | 18,490,958 | — | — | 18,490,958 | ||||||||||||
Household Durables | 7,648,958 | — | — | 7,648,958 | ||||||||||||
Insurance | 52,776,899 | — | — | 52,776,899 | ||||||||||||
IT Services | 14,611,495 | — | — | 14,611,495 | ||||||||||||
Leisure Products | 1,335,316 | — | — | 1,335,316 | ||||||||||||
Machinery | 12,257,927 | — | — | 12,257,927 | ||||||||||||
Media | — | 1,001,473 | — | 1,001,473 | ||||||||||||
Multi-Utilities | 1,743,475 | — | — | 1,743,475 | ||||||||||||
Multiline Retail | 8,286,387 | — | — | 8,286,387 | ||||||||||||
Oil, Gas & Consumable Fuels | 21,230,930 | — | — | 21,230,930 | ||||||||||||
Real Estate Management & Development | 800,454 | — | — | 800,454 | ||||||||||||
Road & Rail | 1,701,924 | — | — | 1,701,924 | ||||||||||||
Semiconductors & Semiconductor Equipment | 7,540,606 | — | — | 7,540,606 | ||||||||||||
Software | 7,268,165 | — | — | 7,268,165 | ||||||||||||
Specialty Retail | 1,576,211 | — | — | 1,576,211 | ||||||||||||
Textiles, Apparel & Luxury Goods | 1,676,018 | — | — | 1,676,018 | ||||||||||||
Tobacco | — | 1,665,641 | — | 1,665,641 | ||||||||||||
Trading Companies & Distributors | — | 2,626,769 | — | 2,626,769 | ||||||||||||
Wireless Telecommunication Services | 6,876,519 | — | — | 6,876,519 | ||||||||||||
Short-Term Securities | 13,631,823 | — | — | 13,631,823 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Subtotal | $ | 323,977,698 | $ | 25,495,593 | $ | — | $ | 349,473,291 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Investments Valued at NAV(a) | 1,287,464 | |||||||||||||||
|
| |||||||||||||||
Total Investments | $ | 350,760,755 | ||||||||||||||
|
|
(a) | Certain investments of the Fund were fair valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy. |
See notes to financial statements.
SCHEDULE OF INVESTMENTS | 9 |
Statement of Assets and Liabilities (unaudited)
July 31, 2019
BlackRock Mid Cap Dividend Fund | ||||
ASSETS |
| |||
Investments at value — unaffiliated (including securities loaned at value of $1,255,022 , cost — $314,373,372) | $ | 335,841,468 | ||
Investments at value — affiliated (cost — $14,919,287) | 14,919,287 | |||
Foreign currency at value (cost — $488) | 486 | |||
Receivables: |
| |||
Securities lending income — affiliated | 334 | |||
Capital shares sold | 123,712 | |||
Dividends — affiliated | 22,418 | |||
Dividends — unaffiliated | 132,245 | |||
Prepaid expenses | 56,270 | |||
|
| |||
Total assets | 351,096,220 | |||
|
| |||
LIABILITIES |
| |||
Cash collateral on securities loaned at value | 1,287,263 | |||
Payables: |
| |||
Investments purchased | 45,526 | |||
Board realignment and consolidation | 5,322 | |||
Capital shares redeemed | 482,210 | |||
Investment advisory fees | 191,839 | |||
Offering costs | 15,986 | |||
Directors’ and Officer’s fees | 3,255 | |||
Other accrued expenses | 330,770 | |||
Other affiliates | 945 | |||
Recoupment of past waived fees | 3,683 | |||
Service and distribution fees | 65,089 | |||
|
| |||
Total liabilities | 2,431,888 | |||
|
| |||
NET ASSETS | $ | 348,664,332 | ||
|
| |||
NET ASSETS CONSIST OF |
| |||
Paid-in capital | $ | 324,653,002 | ||
Accumulated earnings | 24,011,330 | |||
|
| |||
NET ASSETS | $ | 348,664,332 | ||
|
| |||
NET ASSET VALUE |
| |||
Institutional — Based on net assets of $118,989,650 and 6,489,043 shares outstanding, 20 million shares authorized, $0.10 par value | $ | 18.34 | ||
|
| |||
Investor A — Based on net assets of $175,297,715 and 10,055,066 shares outstanding, 40 million shares authorized, $0.10 par value | $ | 17.43 | ||
|
| |||
Investor C — Based on net assets of $16,734,653 and 1,230,267 shares outstanding, 40 million shares authorized, $0.10 par value | $ | 13.60 | ||
|
| |||
Class K — Based on net assets of $5,062,125 and 276,061 shares outstanding, 2 billion shares authorized, $0.10 par value | $ | 18.34 | ||
|
| |||
Class R — Based on net assets of $32,580,189 and 2,183,164 shares outstanding, 40 million shares authorized shares authorized, $0.10 par value | $ | 14.92 | ||
|
|
See notes to financial statements.
10 | 2019 BLACKROCK SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Statement of Operations (unaudited)
Six Months Ended July 31, 2019
BlackRock Mid Cap Dividend Fund | ||||
INVESTMENT INCOME |
| |||
Dividends — affiliated | $ | 126,752 | ||
Dividends — unaffiliated | 4,015,763 | |||
Securities lending income — affiliated — net | 4,211 | |||
Foreign taxes withheld | (79,987 | ) | ||
|
| |||
Total investment income | 4,066,739 | |||
|
| |||
EXPENSES |
| |||
Investment advisory | 1,099,305 | |||
Service and distribution — class specific | 378,798 | |||
Transfer agent — class specific | 268,343 | |||
Registration | 44,822 | |||
Professional | 38,734 | |||
Accounting services | 34,093 | |||
Custodian | 13,598 | |||
Printing | 11,856 | |||
Directors and Officer | 8,505 | |||
Recoupment of past waived and/or reimbursed fees — class specific | 3,683 | |||
Miscellaneous | 10,762 | |||
|
| |||
Total expenses | 1,912,499 | |||
Less: |
| |||
Fees waived and/or reimbursed by the Manager | (3,993 | ) | ||
Transfer agent fees waived and/or reimbursed — class specific | (94,459 | ) | ||
|
| |||
Total expenses after fees waived and/or reimbursed | 1,814,047 | |||
|
| |||
Net investment income | 2,252,692 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) |
| |||
Net realized gain (loss) from: |
| |||
Investments — unaffiliated | 7,416,050 | |||
Investments — affiliated | (68 | ) | ||
Foreign currency transactions | (5,940 | ) | ||
|
| |||
7,410,042 | ||||
|
| |||
Net change in unrealized appreciation (depreciation) on: |
| |||
Investments — unaffiliated | 20,038,743 | |||
Investments — affiliated | (27 | ) | ||
Foreign currency translations | (73 | ) | ||
|
| |||
20,038,643 | ||||
|
| |||
Net realized and unrealized gain | 27,448,685 | |||
|
| |||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 29,701,377 | ||
|
|
See notes to financial statements.
FINANCIAL STATEMENTS | 11 |
Statements of Changes in Net Assets
BlackRock Mid Cap Dividend Fund | ||||||||
Six Months Ended 07/31/19 (unaudited) | Year Ended 01/31/19 | |||||||
INCREASE (DECREASE) IN NET ASSETS | ||||||||
OPERATIONS |
| |||||||
Net investment income | $ | 2,252,692 | $ | 4,485,454 | ||||
Net realized gain | 7,410,042 | 12,539,658 | ||||||
Net change in unrealized appreciation (depreciation) | 20,038,643 | (36,349,210 | ) | |||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 29,701,377 | (19,324,098 | ) | |||||
|
|
|
| |||||
DISTRIBUTIONS TO SHAREHOLDERS(a) |
| |||||||
Institutional | (853,137 | ) | (7,584,925 | ) | ||||
Investor A | (1,123,171 | ) | (12,994,559 | ) | ||||
Investor C | (86,179 | ) | (1,705,045 | ) | ||||
Class K | (35,673 | ) | (276,997 | ) | ||||
Class R | (221,861 | ) | (3,001,187 | ) | ||||
|
|
|
| |||||
Decrease in net assets resulting from distributions to shareholders | (2,320,021 | ) | (25,562,713 | ) | ||||
|
|
|
| |||||
CAPITAL SHARE TRANSACTIONS |
| |||||||
Net decrease in net assets derived from capital share transactions | (10,139,133 | ) | (24,484,923 | ) | ||||
|
|
|
| |||||
NET ASSETS |
| |||||||
Total increase (decrease) in net assets | 17,242,223 | (69,371,734 | ) | |||||
Beginning of period | 331,422,109 | 400,793,843 | ||||||
|
|
|
| |||||
End of period | $ | 348,664,332 | $ | 331,422,109 | ||||
|
|
|
|
(a) | Distributions for annual periods determined in accordance with U.S. federal income tax regulations. |
See notes to financial statements.
12 | 2019 BLACKROCK SEMI-ANNUAL REPORTTO SHAREHOLDERS |
(For a share outstanding throughout each period)
BlackRock Mid Cap Dividend Fund | ||||||||||||||||||||||||||||
Institutional | ||||||||||||||||||||||||||||
Six Months Ended 07/31/19 (unaudited) | Year Ended January 31, | |||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.93 | $ | 19.13 | $ | 21.24 | $ | 16.52 | $ | 21.37 | $ | 23.30 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net investment income(a) | 0.13 | 0.28 | 0.25 | (b) | 0.15 | 0.17 | 0.19 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 1.41 | (1.18 | ) | 1.70 | 5.69 | (2.22 | ) | 1.24 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net increase (decrease) from investment operations | 1.54 | (0.90 | ) | 1.95 | 5.84 | (2.05 | ) | 1.43 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Distributions(c) |
| |||||||||||||||||||||||||||
From net investment income | (0.13 | ) | (0.33 | ) | (0.20 | ) | (0.14 | ) | (0.23 | ) | (0.17 | ) | ||||||||||||||||
From net realized gain | — | (0.97 | ) | (3.86 | ) | (0.98 | ) | (2.57 | ) | (3.19 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total distributions | (0.13 | ) | (1.30 | ) | (4.06 | ) | (1.12 | ) | (2.80 | ) | (3.36 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net asset value, end of period | $ | 18.34 | $ | 16.93 | $ | 19.13 | $ | 21.24 | $ | 16.52 | $ | 21.37 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total Return(d) |
| |||||||||||||||||||||||||||
Based on net asset value | 9.12 | %(e) | (4.77 | )% | 11.13 | % | 35.48 | % | (10.78 | )% | 6.06 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Ratios to Average Net Assets |
| |||||||||||||||||||||||||||
Total expenses | 0.86 | %(f)(g)(h) | 0.92 | % | 0.90 | % | 0.85 | % | 0.94 | % | 0.90 | %(h) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total expenses after fees waived and/or reimbursed and paid indirectly | 0.85 | %(f)(g)(h) | 0.86 | % | 0.86 | % | 0.85 | % | 0.94 | % | 0.90 | %(h) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net investment income | 1.54 | %(f)(g)(h) | 1.52 | % | 1.26 | %(b) | 0.79 | % | 0.81 | % | 0.77 | %(h) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Supplemental Data |
| |||||||||||||||||||||||||||
Net assets, end of period (000) | $ | 118,990 | $ | 107,455 | $ | 119,371 | $ | 207,240 | $ | 144,008 | $ | 154,661 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Portfolio turnover rate | 34 | % | 58 | % | 154 | % | 93 | % | 73 | % | 65 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(a) | Based on average shares outstanding. |
(b) | Net investment income per share and ratio of net investment income to average net assets include $0.03 per share and 0.16%, respectively, resulting from anon-recurring dividend. |
(c) | Distributions for annual periods determined in accordance with U.S. federal income tax regulations. |
(d) | Where applicable, assumes the reinvestment of distributions. |
(e) | Aggregate total return. |
(f) | Annualized. |
(g) | Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the six months ended July 31, 2019, the expense ratio would have been 0.85%. |
(h) | Excludes expenses incurred indirectly as a result of investments in underlying funds as follows: |
Six Months Ended July 31, 2019 (unaudited) | Year Ended January 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||||||||||||||||||||||||||||
Investments in underlying funds | 0.01 | % | — | % | — | % | — | % | — | % | 0.02 | % | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
See notes to financial statements.
FINANCIAL HIGHLIGHTS | 13 |
Financial Highlights (continued)
(For a share outstanding throughout each period)
BlackRock Mid Cap Dividend Fund (continued) | ||||||||||||||||||||||||||||
Investor A | ||||||||||||||||||||||||||||
Six Months Ended 07/31/19 (unaudited) | Year Ended January 31, | |||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.10 | $ | 18.26 | $ | 20.46 | $ | 15.95 | $ | 20.71 | $ | 22.69 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net investment income(a) | 0.11 | 0.22 | 0.18 | (b) | 0.09 | 0.11 | 0.11 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 1.33 | (1.13 | ) | 1.63 | 5.49 | (2.14 | ) | 1.20 | ||||||||||||||||||||
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Net increase (decrease) from investment operations | 1.44 | (0.91 | ) | 1.81 | 5.58 | (2.03 | ) | 1.31 | ||||||||||||||||||||
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Distributions(c) |
| |||||||||||||||||||||||||||
From net investment income | (0.11 | ) | (0.28 | ) | (0.16 | ) | (0.09 | ) | (0.16 | ) | (0.11 | ) | ||||||||||||||||
From net realized gain | — | (0.97 | ) | (3.85 | ) | (0.98 | ) | (2.57 | ) | (3.18 | ) | |||||||||||||||||
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Total distributions | (0.11 | ) | (1.25 | ) | (4.01 | ) | (1.07 | ) | (2.73 | ) | (3.29 | ) | ||||||||||||||||
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Net asset value, end of period | $ | 17.43 | $ | 16.10 | $ | 18.26 | $ | 20.46 | $ | 15.95 | $ | 20.71 | ||||||||||||||||
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Total Return(d) |
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Based on net asset value | 8.96 | %(e) | (5.03 | )% | 10.85 | % | 35.08 | % | (11.01 | )% | 5.71 | % | ||||||||||||||||
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| |||||||||||||||||
Ratios to Average Net Assets |
| |||||||||||||||||||||||||||
Total expenses | 1.17 | %(f)(g) | 1.22 | % | 1.20 | % | 1.15 | % | 1.20 | % | 1.18 | %(g) | ||||||||||||||||
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Total expenses after fees waived and/or reimbursed and paid indirectly | 1.10 | %(f)(g) | 1.11 | % | 1.12 | % | 1.15 | % | 1.20 | % | 1.18 | %(g) | ||||||||||||||||
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Net investment income | 1.31 | %(f)(g) | 1.26 | % | 0.98 | %(b) | 0.49 | % | 0.52 | % | 0.48 | %(g) | ||||||||||||||||
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Supplemental Data |
| |||||||||||||||||||||||||||
Net assets, end of period (000) | $ | 175,298 | $ | 169,202 | $ | 209,284 | $ | 235,578 | $ | 197,218 | $ | 305,516 | ||||||||||||||||
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Portfolio turnover rate | 34 | % | 58 | % | 154 | % | 93 | % | 73 | % | 65 | % | ||||||||||||||||
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(a) | Based on average shares outstanding. |
(b) | Net investment income per share and ratio of net investment income to average net assets include $0.03 per share and 0.16%, respectively, resulting from anon-recurring dividend. |
(c) | Distributions for annual periods determined in accordance with U.S. federal income tax regulations. |
(d) | Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions. |
(e) | Aggregate total return. |
(f) | Annualized. |
(g) | Excludes expenses incurred indirectly as a result of investments in underlying funds as follows: |
Six Months Ended (unaudited) | Year Ended January 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||||||||||||||||||||||||||||
Investments in underlying funds | 0.01 | % | — | % | — | % | — | % | — | % | 0.02 | % | ||||||||||||||||||||||||||||||||||||
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See notes to financial statements.
14 | 2019 BLACKROCK SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Financial Highlights (continued)
(For a share outstanding throughout each period)
BlackRock Mid Cap Dividend Fund (continued) | ||||||||||||||||||||||||||||
Investor C | ||||||||||||||||||||||||||||
Six Months Ended 07/31/19 (Unaudited) | Year Ended January 31, | |||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||||||||
Net asset value, beginning of period | $ | 12.59 | $ | 14.57 | $ | 17.09 | $ | 13.50 | $ | 17.95 | $ | 20.08 | ||||||||||||||||
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| |||||||||||||||||
Net investment income (loss)(a) | 0.04 | 0.07 | 0.02 | (b) | (0.05 | ) | (0.05 | ) | (0.07 | ) | ||||||||||||||||||
Net realized and unrealized gain (loss) | 1.04 | (0.90 | ) | 1.31 | 4.62 | (1.81 | ) | 1.07 | ||||||||||||||||||||
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| |||||||||||||||||
Net increase (decrease) from investment operations | 1.08 | (0.83 | ) | 1.33 | 4.57 | (1.86 | ) | 1.00 | ||||||||||||||||||||
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Distributions(c) |
| |||||||||||||||||||||||||||
From net investment income | (0.07 | ) | (0.18 | ) | (0.02 | ) | — | (0.04 | ) | — | ||||||||||||||||||
From net realized gain | — | (0.97 | ) | (3.83 | ) | (0.98 | ) | (2.55 | ) | (3.13 | ) | |||||||||||||||||
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Total distributions | (0.07 | ) | (1.15 | ) | (3.85 | ) | (0.98 | ) | (2.59 | ) | (3.13 | ) | ||||||||||||||||
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Net asset value, end of period | $ | 13.60 | $ | 12.59 | $ | 14.57 | $ | 17.09 | $ | 13.50 | $ | 17.95 | ||||||||||||||||
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Total Return(d) |
| |||||||||||||||||||||||||||
Based on net asset value | 8.58 | %(e) | (5.76 | )% | 10.02 | % | 33.97 | % | (11.71 | )% | 4.88 | % | ||||||||||||||||
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Ratios to Average Net Assets |
| |||||||||||||||||||||||||||
Total expenses | 2.01 | %(f)(g) | 2.00 | % | 1.98 | % | 1.95 | % | 2.00 | % | 1.99 | %(g) | ||||||||||||||||
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Total expenses after fees waived and/or reimbursed and paid indirectly | 1.85 | %(f)(g) | 1.86 | % | 1.90 | % | 1.95 | % | 2.00 | % | 1.99 | %(g) | ||||||||||||||||
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Net investment income (loss) | 0.57 | %(f)(g) | 0.53 | % | 0.14 | %(b) | (0.31 | )% | (0.27 | )% | (0.33 | )%(g) | ||||||||||||||||
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Supplemental Data |
| |||||||||||||||||||||||||||
Net assets, end of period (000) | $ | 16,735 | $ | 16,738 | $ | 26,876 | $ | 56,247 | $ | 47,178 | $ | 68,488 | ||||||||||||||||
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Portfolio turnover rate | 34 | % | 58 | % | 154 | % | 93 | % | 73 | % | 65 | % | ||||||||||||||||
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(a) | Based on average shares outstanding. |
(b) | Net investment income per share and ratio of net investment income to average net assets include $0.03 per share and 0.16%, respectively, resulting from anon-recurring dividend. |
(c) | Distributions for annual periods determined in accordance with U.S. federal income tax regulations. |
(d) | Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions. |
(e) | Aggregate total return. |
(f) | Annualized. |
(g) | Excludes expenses incurred indirectly as a result of investments in underlying funds as follows: |
Six Months Ended (unaudited) | Year Ended January 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||||||||||||||||||||||||||||
Investments in underlying funds | 0.01 | % | — | % | — | % | — | % | — | % | 0.02 | % | ||||||||||||||||||||||||||||||||||||
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See notes to financial statements.
FINANCIAL HIGHLIGHTS | 15 |
Financial Highlights (continued)
(For a share outstanding throughout each period)
BlackRock Mid Cap Dividend Fund (continued) | ||||||||||||
Class K | ||||||||||||
Six Months Ended 07/31/19 (Unaudited) | Year Ended 01/31/2019 | Period from 01/25/18 (a) to 01/31/18 | ||||||||||
Net asset value, beginning of period | $ | 16.92 | $ | 19.13 | $ | 19.37 | ||||||
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| |||||||
Net investment income(b) | 0.14 | 0.25 | 0.00 | (c) | ||||||||
Net realized and unrealized gain (loss) | 1.41 | (1.15 | ) | (0.24 | ) | |||||||
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Net increase (decrease) from investment operations | 1.55 | (0.90 | ) | (0.24 | ) | |||||||
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Distributions(d) |
| |||||||||||
From net investment income | (0.13 | ) | (0.34 | ) | — | |||||||
From net realized gain | — | (0.97 | ) | — | ||||||||
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Total distributions | (0.13 | ) | (1.31 | ) | — | |||||||
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Net asset value, end of period | $ | 18.34 | $ | 16.92 | $ | 19.13 | ||||||
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Total Return(e) |
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Based on net asset value | 9.21 | %(f) | (4.78 | )% | (1.24 | )%(f) | ||||||
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Ratios to Average Net Assets |
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Total expenses | 0.79 | %(g)(h)(i) | 0.81 | % | 0.84 | %(g)(j) | ||||||
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Total expenses after fees waived and/or reimbursed and paid indirectly | 0.78 | %(g)(h)(i) | 0.80 | % | 0.77 | %(g) | ||||||
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Net investment income | 1.57 | %(g)(h)(i) | 1.36 | % | 0.32 | %(g) | ||||||
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Supplemental Data |
| |||||||||||
Net assets, end of period (000) | $ | 5,062 | $ | 4,037 | $ | 198 | ||||||
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Portfolio turnover rate | 34 | % | 58 | % | 154 | % | ||||||
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(a) | Commencement of operations. |
(b) | Based on average shares outstanding. |
(c) | Amount is less than $0.005 per share. |
(d) | Distributions for annual periods determined in accordance with U.S. federal income tax regulations. |
(e) | Where applicable, assumes the reinvestment of distributions. |
(f) | Aggregate total return. |
(g) | Annualized. |
(h) | Includes recoupment of past waived and/or reimbursed fees. Excluding the recoupment of past waived and/or reimbursed fees for the six months ended July 31, 2019, the expense ratio would have been 0.77%. |
(i) | Excludes 0.01% of expenses incurred indirectly as a result of investments in underlying funds. |
(j) | Audit costs were not annualized in the calculation of the expense ratio. If these expenses were annualized, the total expenses would have been 0.85%. |
See notes to financial statements.
16 | 2019 BLACKROCK SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Financial Highlights (continued)
(For a share outstanding throughout each period)
BlackRock Mid Cap Dividend Fund (continued) | ||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||
Six Months Ended 07/31/19 (unaudited) | Year Ended January 31, | |||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | �� | 2015 | |||||||||||||||||||||||
Net asset value, beginning of period | $ | 13.80 | $ | 15.85 | $ | 18.29 | $ | 14.36 | $ | 18.93 | $ | 21.00 | ||||||||||||||||
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Net investment income(a) | 0.08 | 0.15 | 0.11 | (b) | 0.03 | 0.04 | 0.04 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 1.14 | (0.98 | ) | 1.43 | 4.92 | (1.93 | ) | 1.12 | ||||||||||||||||||||
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| |||||||||||||||||
Net increase (decrease) from investment operations | 1.22 | (0.83 | ) | 1.54 | 4.95 | (1.89 | ) | 1.16 | ||||||||||||||||||||
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Distributions(c) |
| |||||||||||||||||||||||||||
From net investment income | (0.10 | ) | (0.25 | ) | (0.13 | ) | (0.04 | ) | (0.12 | ) | (0.05 | ) | ||||||||||||||||
From net realized gain | — | (0.97 | ) | (3.85 | ) | (0.98 | ) | (2.56 | ) | (3.18 | ) | |||||||||||||||||
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Total distributions | (0.10 | ) | (1.22 | ) | (3.98 | ) | (1.02 | ) | (2.68 | ) | (3.23 | ) | ||||||||||||||||
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Net asset value, end of period | $ | 14.92 | $ | 13.80 | $ | 15.85 | $ | 18.29 | $ | 14.36 | $ | 18.93 | ||||||||||||||||
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Total Return(d) |
| |||||||||||||||||||||||||||
Based on net asset value | 8.83 | %(e) | (5.31 | )% | 10.59 | % | 34.58 | % | (11.26 | )% | 5.41 | % | ||||||||||||||||
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| |||||||||||||||||
Ratios to Average Net Assets |
| |||||||||||||||||||||||||||
Total expenses | 1.48 | %(f)(g) | 1.52 | % | 1.51 | % | 1.48 | % | 1.50 | % | 1.49 | %(g) | ||||||||||||||||
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| |||||||||||||||||
Total expenses after fees waived and/or reimbursed and paid indirectly | 1.35 | %(f)(g) | 1.36 | % | 1.40 | % | 1.48 | % | 1.50 | % | 1.49 | %(g) | ||||||||||||||||
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| |||||||||||||||||
Net investment income | 1.09 | %(f)(g) | 1.01 | % | 0.70 | %(b) | 0.16 | % | 0.23 | % | 0.17 | %(g) | ||||||||||||||||
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Supplemental Data |
| |||||||||||||||||||||||||||
Net assets, end of period (000) | $ | 32,580 | $ | 33,989 | $ | 45,066 | $ | 51,713 | $ | 44,562 | $ | 61,956 | ||||||||||||||||
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| |||||||||||||||||
Portfolio turnover rate | 34 | % | 58 | % | 154 | % | 93 | % | 73 | % | 65 | % | ||||||||||||||||
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(a) | Based on average shares outstanding. |
(b) | Net investment income per share and ratio of net investment income to average net assets include $0.03 per share and 0.16%, respectively, resulting from anon-recurring dividend. |
(c) | Distributions for annual periods determined in accordance with U.S. federal income tax regulations. |
(d) | Where applicable, assumes the reinvestment of distributions. |
(e) | Aggregate total return. |
(f) | Annualized. |
(g) | Excludes expenses incurred indirectly as a result of investments in underlying funds as follows: |
Six Months Ended (unaudited) | Year Ended January 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||||||||||||||||||||||||||||
Investments in underlying funds | 0.01 | % | — | % | — | % | — | % | — | % | 0.02 | % | ||||||||||||||||||||||||||||||||||||
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See notes to financial statements.
FINANCIAL HIGHLIGHTS | 17 |
1. | ORGANIZATION |
BlackRock Mid Cap Dividend Series, Inc. (the “Corporation”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-end management investment company. The Corporation is organized as a Maryland Corporation. BlackRock Mid Cap Dividend Fund (the “Fund”) is a series of the Corporation. The Fund is classified as diversified.
The Fund offers multiple classes of shares. All classes of shares have identical voting, dividend, liquidation and other rights and are subject to the same terms and conditions, except that certain classes bear expenses related to the shareholder servicing and distribution of such shares. Institutional and Class K Shares are sold without a sales charge and only to certain eligible investors. Class R Shares are available only to certain employer-sponsored retirement plans. Investor A, Investor C and Class R Shares bear certain expenses related to shareholder servicing of such shares, and Investor C and Class R Shares also bear certain expenses related to the distribution of such shares. Investor A and Investor C Shares are generally available through financial intermediaries. Effective November 8, 2018, the Fund adopted an automatic conversion feature whereby Investor C Shares held for approximately ten years will be automatically converted into Investor A Shares. Each class has exclusive voting rights with respect to matters relating to its shareholder servicing and distribution expenditures (except that Investor C shareholders may vote on material changes to the Investor A Shares distribution and service plan).
Share Class | Initial Sales Charge | CDSC | Conversion Privilege | |||||
Institutional, Class K and Class R Shares | No | No | None | |||||
Investor A Shares | Yes | No | (a) | None | ||||
Investor C Shares | No | Yes | To Investor A Shares after approximately 10 years |
(a) | Investor A Shares may be subject to a contingent deferred sales charge (“CDSC”) for certain redemptions where no initial sales charge was paid at the time of purchase. |
The Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of equity, multi-asset, index and money market funds referred to as the BlackRock Multi-Asset Complex.
2. | SIGNIFICANT ACCOUNTING POLICIES |
The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. Below is a summary of significant accounting policies:
Investment Transactions and Income Recognition:For financial reporting purposes, investment transactions are recorded on the dates the transactions are executed (the “trade dates”). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on theex-dividend date. Dividends from foreign securities where theex-dividend date may have passed are subsequently recorded when the Fund is informed of theex-dividend date. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. Upon notification from issuers, a portion of the dividend income received from a real estate investment trust may be redesignated as a reduction of cost of the related investment and/or realized gain. Income, expenses and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.
Foreign Currency Translation:The Fund’s books and records are maintained in U.S. dollars. Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of trading on the New York Stock Exchange (“NYSE”). Purchases and sales of investments are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the investments denominated in that currency will lose value; the opposite effect occurs if the U.S. dollar falls in relative value.
The Fund does not isolate the portion of the results of operations arising as a result of changes in the exchange rates from the changes in the market prices of investments held or sold for financial reporting purposes. Accordingly, the effects of changes in exchange rates on investments are not segregated in the Statement of Operations from the effects of changes in market prices of those investments, but are included as a component of net realized and unrealized gain (loss) from investments. The Fund reports realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.
Distributions: Distributions paid by the Fund are recorded on theex-dividend date. Distributions from net investment income are declared and paid annually. Distributions of capital gains are recorded on theex-dividend date and made at least annually. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.
Offering Costs:Offering costs are amortized over a12-month period beginning with the commencement of operations of a class of shares.
Indemnifications:In the normal course of business, the Fund enters into contracts that contain a variety of representations that provide general indemnification. The Fund’s maximum exposure under these arrangements is unknown because it involves future potential claims against the Fund, which cannot be predicted with any certainty.
Other: Expenses directly related to the Fund or its classes are charged to the Fund or the applicable class. Other operating expenses shared by several funds, including other funds managed by the Manager, are prorated among those funds on the basis of relative net assets or other appropriate methods. Expenses directly related to the Fund and other shared expenses prorated to the Fund are allocated daily to each class based on its relative net assets or other appropriate methods.
18 | 2019 BLACKROCK SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Notes to Financial Statements (continued)
3. | INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS |
Investment Valuation Policies: The Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) as of the close of trading on the New York Stock Exchange (“NYSE”) (generally 4:00 p.m., Eastern time). U.S. GAAP defines fair value as the price the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Fund determines the fair values of its financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of the Fund (the “Board”). The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.
Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of the Fund’s assets and liabilities:
• | Equity investments traded on a recognized securities exchange are valued at the official closing price each day, if available. For equity investments traded on more than one exchange, the official closing price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day may be valued at the last available bid (long positions) or ask (short positions) price. |
Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of trading on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of trading on the NYSE that may not be reflected in the computation of the Fund’s net assets. Each business day, the Fund uses a pricing service to assist with the valuation of certain foreign exchange-traded equity securities and foreign exchange-traded andover-the-counter (“OTC”) options (the “Systematic Fair Value Price”). Using current market factors, the Systematic Fair Value Price is designed to value such foreign securities and foreign options at fair value as of the close of trading on the NYSE, which follows the close of the local markets.
• | Investments inopen-end U.S. mutual funds are valued at net asset value (“NAV”) each business day. |
• | The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments may follow the parameters of investments by a money market fund that is subject to Rule2a-7 under the 1940 Act. |
If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investments, or in the event that the application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee will include market approach, income approach and cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that the Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in anarm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.
Fair Value Hierarchy: Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial statement purposes as follows:
• | Level 1 — Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access |
• | Level 2 — Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market–corroborated inputs) |
• | Level 3 — Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments) |
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. The categorization of a value determined for investments is based on the pricing transparency of the investments and is not necessarily an indication of the risks associated with investing in those securities.
As of July 31, 2019, certain investments of the Fund were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.
4. | SECURITIES AND OTHER INVESTMENTS |
Securities Lending:The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial
NOTESTO FINANCIAL STATEMENTS | 19 |
Notes to Financial Statements (continued)
collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities, but does not receive interest income on securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.
The market value of any securities on loan, all of which were classified as common stocks in the Fund’s Schedule of Investments, and the value of any related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value-unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedule of Investments.
Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for thenon-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell orre-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell orre-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.
As of period end, the following table is a summary of the Fund’s securities lending agreements by counterparty which are subject to offset under an MSLA:
Counterparty | Securities Loaned at Value | Cash Collateral Received (a) | Net Amount | |||||||||
Citigroup Global Markets Inc. | $ | 785,547 | $ | (785,547 | ) | $ | — | |||||
Jefferies LLC | 128,480 | (128,480 | ) | — | ||||||||
National Financial Services LLC | 215,435 | (215,435 | ) | — | ||||||||
State Street Bank & Trust Company | 125,560 | (125,560 | ) | — | ||||||||
|
|
|
|
|
| |||||||
Total | $ | 1,255,022 | $ | (1,255,022 | ) | $ | — | |||||
|
|
|
|
|
|
(a) | Cash collateral with a value of $1,287,263 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty, if any, is not shown for financial reporting purposes in the table above. |
The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM.BIM’s indemnity allows for full replacement of the securities loaned to the extent the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. Such losses are borne entirely by the Fund.
5. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Investment Advisory:The Corporation, on behalf of the Fund, entered into an Investment Advisory Agreement with the Manager, the Fund’s investment adviser and an indirect, wholly-owned subsidiary of BlackRock, Inc. (“BlackRock”), to provide investment advisory and administrative services. The Manager is responsible for the management of the Fund’s portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of the Fund.
For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:
Average Daily Net Assets | Investment Advisory Fee | |||
First $1 Billion | 0.65 | % | ||
$1 Billion — $3 Billion | 0.61 | |||
$3 Billion — $5 Billion | 0.59 | |||
$5 Billion — $10 Billion | 0.57 | |||
Greater than $10 Billion | 0.55 |
Service and Distribution Fees:The Corporation, on behalf of the Fund, entered into a Distribution Agreement and a Distribution Plans with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager. Pursuant to the Distribution Plans and in accordance with Rule12b-1 under the 1940 Act, the Fund pays BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at annual rates based upon the average daily net assets of the relevant share class of the Fund as follows:
Investor A | Investor C | Class R | ||||||||||
Distribution Fee | — | % | 0.75 | % | 0.25 | % | ||||||
Service Fee | 0.25 | 0.25 | 0.25 |
20 | 2019 BLACKROCK SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Notes to Financial Statements (continued)
BRIL and broker-dealers, pursuant tosub-agreements with BRIL, provide shareholder servicing and distribution services to the Fund. The ongoing service and/or distribution fee compensates BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to shareholders.
For the six months ended July 31, 2019, the following table shows the class specific service and distribution fees borne directly by each share class of the Fund:
Institutional | Investor A | Investor C | Class K | Class R | Total | |||||||||||||||||||||||||||
$ | — | $ | 213,019 | $ | 82,547 | $ | — | $ | 83,232 | $ | 378,798 |
Transfer Agent: Pursuant to written agreements, certain financial intermediaries, some of which may be affiliates, provide the Fund withsub-accounting, recordkeeping,sub-transfer agency and other administrative services with respect to servicing of underlying investor accounts. For these services, these entities receive an asset-based fee or an annual fee per shareholder account, which will vary depending on share class and/or net assets. For the six months ended July 31, 2019, the Fund did not pay any amounts to affiliates of BlackRock in return for these services which are included in transfer agent — class specific in the Statement of Operations:
Institutional | $ | 44 |
The Manager maintains a call center that is responsible for providing certain shareholder services to the Fund. Shareholder services include responding to inquiries and processing purchases and sales based upon instructions from shareholders. For the six months ended July 31, 2019, the Fund reimbursed the Manager the following amounts for costs incurred in running the call center, which are included in transfer agent — class specific in the Statement of Operations:
Institutional | Investor A | Investor C | Class K | Class R | Total | |||||||||||||||||||||||||||
$ | 304 | $ | 4,014 | $ | 1,336 | $ | 16 | $ | 138 | $ | 5,808 |
For the six months ended July 31, 2019, the following table shows the class specific transfer agent fees borne directly by each share class of the Fund:
Institutional | Investor A | Investor C | Class K | Class R | Total | |||||||||||||||||||||||||||
$ | 59,995 | $ | 147,664 | $ | 21,910 | $ | 559 | $ | 38,215 | $ | 268,343 |
Other Fees: For the six months ended July 31, 2019, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of the Fund’s Investor A Shares, which totaled $2,272.
For the six months ended July 31, 2019, affiliates received CDSCs as follows:
Investor A | Investor C | |
$ 45 | $ 204 |
Expense Limitations, Waivers, Reimbursements, and Recoupments:The Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation described below will be reduced by the amount of the affiliated money market fund waiver. These amounts are included in fees waived and/or reimbursed by the Manager in the Statement of Operations. For the six months ended July 31, 2019, the amount waived was $3,993.
The Manager has contractually agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee through May 31, 2020. The contractual agreement may be terminated upon 90 days’ notice by a majority of the directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended July 31, 2019, there were no fees waived and/or reimbursed by the Manager pursuant to this arrangement.
For the six months ended July 31, 2019, the Fund reimbursed the Manager $1,991 for certain accounting services, which is included in accounting services in the Statement of Operations.
With respect to the Fund, the Manager contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses, excluding interest expense, dividend expense, tax expense, acquired fund fees and expenses, and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Fund’s business (“expense limitation”). The expense limitation as a percentage of average daily net assets is as follows:
Institutional | 0.85 | % | ||
Investor A | 1.10 | |||
Investor C | 1.85 | |||
Class K | 0.80 | |||
Class R | 1.35 |
The Manager has agreed not to reduce or discontinue these contractual expense limitations through May 31, 2020, unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended July 31, 2019, there were no fees waived and/or reimbursed by the Manager.
NOTESTO FINANCIAL STATEMENTS | 21 |
Notes to Financial Statements (continued)
These amounts waived and/or reimbursed are shown as transfer agent fees waived and/or reimbursed — class specific, in the Statement of Operations. Class specific expense waivers and/or reimbursements are as follows:
Institutional | Investor A | Investor C | Class K | Class R | Total | |||||||||||||||||||||||||||
$ | 3,901 | $ | 56,893 | $ | 13,127 | $ | — | $ | 20,538 | $ | 94,459 |
With respect to the contractual expense limitation, if during the Fund’s fiscal year the operating expenses of a share class, that at any time during the prior two fiscal years received a waiver and/or reimbursement from the Manager, are less than the current expense limitation for that share class, the Manager is entitled to be reimbursed by such share class up to the lesser of: (a) the amount of fees waived and/or expenses reimbursed during those prior two fiscal years under the agreement and (b) an amount not to exceed either the current expense limitation of that share class or the expense limitation of the share class in effect at the time that the share class received the applicable waiver and/or reimbursement, provided that:
(1) the Fund, of which the share class is a part, has more than $50 million in assets for the fiscal year; and
(2) the Manager or an affiliate continues to serve as the Fund’s investment adviser or administrator.
This repayment applies only to the contractual expense limitation on net expenses and does not apply to the contractual investment advisory fee waiver described above or any voluntary waivers that may be in effect from time to time.
For the six months ended July 31, 2019, the Manager recouped the following fund level and class specific waivers and/or reimbursements previously recorded by the Fund:
Recoupments for Current Period | ||||
Institutional | $ | 3,335 | ||
Class K | 348 |
As of July 31, 2019, the fund level and class specific waivers and/or reimbursements subject to possible future recoupment under the expense limitation agreement are as follows:
Expiring January 31, | ||||||||||||
2020 | 2021 | 2022 | ||||||||||
Fund Level | $ | 4,996 | $ | 471 | $ | — | ||||||
Institutional | 68,978 | 61,347 | 3,901 | |||||||||
Investor A | 169,839 | 207,114 | 56,893 | |||||||||
Investor C | 31,602 | 33,008 | 13,127 | |||||||||
Class K | — | 63 | — | |||||||||
Class R | 52,554 | 62,185 | 20,538 |
Securities Lending:The U.S. Securities and Exchange Commission (“SEC”) has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% of the value withdrawn or temporarily restrict withdrawals for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.
Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.
Pursuant to the current securities lending agreement, the Fund retains 73.5% of securities lending income (which excludes collateral investment expenses), and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.
In addition, commencing the business day following the date that the aggregate securities lending income earned across the BlackRock Multi-Asset Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income in an amount equal to 80% of securities lending income (which excludes collateral investment expenses), and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.
The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Statement of Operations. For the six months ended July 31, 2019, the Fund paid BIM $1,462 for securities lending agent services.
Interfund Lending: In accordance with an exemptive order (the “Order”) from the SEC, the Fund may participate in a joint lending and borrowing facility for temporary purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the Fund’s investment policies and restrictions. The Fund is currently permitted to borrow under the Interfund Lending Program.
22 | 2019 BLACKROCK SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Notes to Financial Statements (continued)
A lending BlackRock fund may lend in aggregate up to 15% of its net assets, but may not lend more than 5% of its net assets to any one borrowing fund through the Interfund Lending Program. A borrowing BlackRock fund may not borrow through the Interfund Lending Program or from any other source more than 33 1/3% of its total assets (or any lower threshold provided for by the fund’s investment restrictions). If a borrowing BlackRock fund’s total outstanding borrowings exceed 10% of its total assets, each of its outstanding interfund loans will be subject to collateralization of at least 102% of the outstanding principal value of the loan. All interfund loans are for temporary or emergency purposes and the interest rate to be charged will be the average of the highest current overnight repurchase agreement rate available to a lending fund and the bank loan rate, as calculated according to a formula established by the Board.
During the six months ended July 31, 2019, the Fund did not participate in the Interfund Lending Program.
Directors and Officers:Certain directors and/or officers of the Fund are directors and/or officers of BlackRock or its affiliates. The Fund reimburses the Manager for a portion of the compensation paid to the Fund’s Chief Compliance Officer, which is included in Directors and Officer in the Statement of Operations.
6. | PURCHASES AND SALES |
For the six months ended July 31, 2019, purchases and sales of investments, excluding short-term securities were $110,267,155 and $122,454,758, respectively.
7. | INCOME TAX INFORMATION |
It is the Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of its taxable income to its shareholders. Therefore, no U.S. federal income tax provision is required.
The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended January 31, 2019. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.
Management has analyzed tax laws and regulations and their application to the Fund as of July 31, 2019, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.
As of July 31, 2019, gross unrealized appreciation and depreciation for investments based on cost for U.S. federal income tax purposes were as follows:
Tax cost | $ | 333,942,745 | ||
|
| |||
Gross unrealized appreciation | 38,690,023 | |||
Gross unrealized depreciation | (21,872,013 | ) | ||
|
| |||
Net unrealized appreciation | $ | 16,818,010 | ||
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|
8. | BANK BORROWINGS |
The Corporation, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a364-day, $2.25 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.75 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.10% per annum on unused commitment amounts and interest at a rate equal to the higher of(a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2020 unless extended or renewed. Prior to April 18, 2019, Participating Funds paid an upfront commitment fee of 0.02% on the total commitment amounts, in addition to administration, legal and arrangement fees, which are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended July 31, 2019, the Fund did not borrow under the credit agreement.
9. | PRINCIPAL RISKS |
In the normal course of business, the Fund invests in securities or other instruments and may enter into certain transactions, and such activities subject the Fund to various risks, including among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate and price fluctuations. The Fund’s prospectus provides details of the risks to which the Fund is subject.
The Fund may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00, which may be subject to redemption gates or liquidity fees under certain circumstances.
Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. The Fund may invest in illiquid investments. An illiquid investment is any investment that the Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. The Fund may experience
NOTESTO FINANCIAL STATEMENTS | 23 |
Notes to Financial Statements (continued)
difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause the Fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of the Fund may lose value, regardless of the individual results of the securities and other instruments in which the Fund invests.
Counterparty Credit Risk:The Fund may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions. The Fund manages counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Fund to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Fund’s exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statement of Assets and Liabilities, less any collateral held by the Fund.
As of period end, the Fund invested a significant portion of its assets in securities in the financials sector. Changes in economic conditions affecting such sectors would have a greater impact on the Fund and could affect the value, income and/or liquidity of positions in such securities.
10. | CAPITAL SHARE TRANSACTIONS |
Transactions in capital shares for each class were as follows:
Six Months Ended 07/31/19 | Year Ended 01/31/19 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Institutional | ||||||||||||||||
Shares sold | 1,506,945 | $ | 26,094,419 | 2,716,197 | $ | 48,165,169 | ||||||||||
Shares issued in reinvestment of distributions | 31,251 | 557,938 | 318,349 | 5,505,568 | ||||||||||||
Shares redeemed | (1,397,991 | ) | (24,532,327 | ) | (2,924,774 | ) | (52,287,214 | ) | ||||||||
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|
|
|
|
|
|
| |||||||||
Net increase | 140,205 | $ | 2,120,030 | 109,772 | $ | 1,383,523 | ||||||||||
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|
|
|
|
| |||||||||
Investor A | ||||||||||||||||
Shares sold | 595,582 | $ | 9,915,486 | 1,518,128 | $ | 26,177,050 | ||||||||||
Shares issued in reinvestment of distributions | 63,677 | 1,080,887 | 759,970 | 12,558,681 | ||||||||||||
Shares redeemed | (1,114,663 | ) | (18,603,825 | ) | (3,226,838 | ) | (55,701,128 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (455,404 | ) | $ | (7,607,452 | ) | (948,740 | ) | $ | (16,965,397 | ) | ||||||
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|
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|
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|
| |||||||||
Investor C | ||||||||||||||||
Shares sold | 59,587 | $ | 777,665 | 224,579 | $ | 3,010,457 | ||||||||||
Shares issued in reinvestment of distributions | 6,320 | 83,685 | 127,972 | 1,667,114 | ||||||||||||
Shares redeemed | (165,051 | ) | (2,155,551 | ) | (867,530 | ) | (11,772,177 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (99,144 | ) | $ | (1,294,201 | ) | (514,979 | ) | $ | (7,094,606 | ) | ||||||
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| |||||||||
Class K | ||||||||||||||||
Shares sold | 77,736 | $ | 1,358,509 | 259,159 | $ | 4,656,905 | ||||||||||
Shares issued in reinvestment of distributions | 1,918 | 34,272 | 14,621 | 253,979 | ||||||||||||
Shares redeemed | (42,150 | ) | (737,387 | ) | (45,548 | ) | (824,527 | ) | ||||||||
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|
|
|
|
|
|
| |||||||||
Net increase | 37,504 | $ | 655,394 | 228,232 | $ | 4,086,357 | ||||||||||
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|
|
|
|
| |||||||||
Class R | ||||||||||||||||
Shares sold | 207,920 | $ | 2,961,973 | 353,185 | $ | 5,230,174 | ||||||||||
Shares issued in reinvestment of distributions | 15,276 | 221,806 | 211,074 | 3,000,488 | ||||||||||||
Shares redeemed | (503,260 | ) | (7,196,683 | ) | (944,927 | ) | (14,125,462 | ) | ||||||||
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|
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| |||||||||
Net decrease | (280,064 | ) | $ | (4,012,904 | ) | (380,668 | ) | $ | (5,894,800 | ) | ||||||
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Total Net Decrease | (656,903 | ) | $ | (10,139,133 | ) | (1,506,383 | ) | $ | (24,484,923 | ) | ||||||
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As of July 31, 2019, BlackRock Financial Management, Inc., an affiliate of the Fund, owned 10,376 Class K Shares of the Fund.
11. | SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.
24 | 2019 BLACKROCK SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Disclosure of Investment Advisory Agreement
The Board of Directors (the “Board,” the members of which are referred to as “Board Members”) of BlackRock Mid Cap Dividend Series, Inc. (the “Company”) met in person on April 17, 2019 (the “April Meeting”) and May14-15, 2019 (the “May Meeting”) to consider the approval of the investment advisory agreement (the “Agreement”) between the Company, on behalf of BlackRock Mid Cap Dividend Fund (the “Fund”), and BlackRock Advisors, LLC (the “Manager” or “BlackRock”), the Company’s investment advisor.
Activities and Composition of the Board
On the date of the May Meeting, the Board consisted of fifteen individuals, thirteen of whom were not “interested persons” of the Company as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of the Company and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chair of the Board is an Independent Board Member. The Board has established five standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee and an Ad Hoc Topics Committee, each of which is chaired by an Independent Board Member and composed of Independent Board Members (except for the Ad Hoc Topics Committee, which also has one interested Board Member).
The Agreement
Consistent with the requirements of the 1940 Act, the Board considers the continuation of the Agreement on an annual basis. The Board has four quarterly meetings per year, each typically extending for two days, and additionalin-person and telephonic meetings throughout the year, as needed. While the Board also has a fifthone-day meeting to consider specific information surrounding the renewal of the Agreement, the Board’s consideration entails a year-long deliberative process whereby the Board and its committees assess BlackRock’s services to the Fund. In particular, the Board assessed, among other things, the nature, extent and quality of the services provided to the Fund by BlackRock, BlackRock’s personnel and affiliates, including (as applicable): investment management; accounting, administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. Throughout the year, including during the contract renewal process, the Independent Board Members were advised by independent legal counsel, and met with independent legal counsel in various executive sessions outside of the presence of management.
During the year, the Board, acting directly and through its committees, considers information that is relevant to its annual consideration of the renewal of the Agreement, including the services and support provided by BlackRock to the Fund and its shareholders. BlackRock also furnished additional information to the Board in response to specific questions from the Board. This additional information is discussed further below in the section titled “Board Considerations in Approving the Agreement.” Among the matters the Board considered were: (a) investment performance forone-year, three-year, five-year,ten-year, and/or since inception periods, as applicable, against peer funds, applicable benchmark, and performance metrics, as applicable, as well as senior management’s and portfolio managers’ analyses of the reasons for any over-performance or under-performance relative to its peers, benchmarks, and other performance metrics, as applicable; (b) fees, including advisory, administration, if applicable, and other amounts paid to BlackRock and its affiliates by the Fund for services; (c) Fund operating expenses and how BlackRock allocates expenses to the Fund; (d) the resources devoted to, risk oversight of, and compliance reports relating to, implementation of the Fund’s investment objective, policies and restrictions, and meeting regulatory requirements; (e) BlackRock and the Company’s adherence to applicable compliance policies and procedures; (f) the nature, character and scope ofnon-investment management services provided by BlackRock and its affiliates and the estimated cost of such services; (g) BlackRock’s and other service providers’ internal controls and risk and compliance oversight mechanisms; (h) BlackRock’s implementation of the proxy voting policies approved by the Board; (i) the use of brokerage commissions and execution quality of portfolio transactions; (j) BlackRock’s implementation of the Company’s valuation and liquidity procedures; (k) an analysis of management fees for products with similar investment mandates across theopen-end fund, exchange-traded fund (“ETF”),closed-end fund,sub-advised mutual fund, separately managed account, collective investment trust, and institutional separate account product channels, as applicable, and the similarities and differences between these products and the services provided as compared to the Fund; (l) BlackRock’s compensation methodology for its investment professionals and the incentives and accountability it creates, along with investment professionals’ investments in the fund(s) they manage; and (m) periodic updates on BlackRock’s business.
Board Considerations in Approving the Agreement
The Approval Process: Prior to the April Meeting, the Board requested and received materials specifically relating to the Agreement. The Independent Board Members are continuously engaged in a process with their independent legal counsel and BlackRock to review the nature and scope of the information provided to better assist its deliberations. The materials provided in connection with the April Meeting included, among other things: (a) information independently compiled and prepared by Broadridge Financial Solutions, Inc. (“Broadridge”), based on either a Lipper classification or Morningstar category, regarding the Fund’s fees and expenses as compared with a peer group of funds as determined by Broadridge (“Expense Peers”) and the investment performance of the Fund as compared with a peer group of funds (“Performance Peers”) and other metrics, as applicable; (b) information on the composition of the Expense Peers and Performance Peers, and a description of Broadridge’s methodology; (c) information on the estimated profits realized by BlackRock and its affiliates pursuant to the Agreement and a discussion offall-out benefits to BlackRock and its affiliates; (d) a general analysis provided by BlackRock concerning investment management fees received in connection with other types of investment products, such as institutional accounts,sub-advised mutual funds, ETFs,closed-end funds,open-end funds, and separately managed accounts under similar investment mandates, as well as the performance of such other products, as applicable; (e) review ofnon-management fees; (f) the existence, impact and sharing of potential economies of scale, if any, with the Fund; (g) a summary of aggregate amounts paid by the Fund to BlackRock; (h) sales and redemption data regarding the Fund’s shares; and (i) various additional information requested by the Board as appropriate regarding BlackRock’s and the Fund’s operations.
At the April Meeting, the Board reviewed materials relating to its consideration of the Agreement. As a result of the discussions that occurred during the April Meeting, and as a culmination of the Board’s year-long deliberative process, the Board presented BlackRock with questions and requests for additional information. BlackRock responded to these requests with additional written information in advance of the May Meeting.
DISCLOSURE OF INVESTMENT ADVISORY AGREEMENT | 25 |
Disclosure of Investment Advisory Agreement (continued)
At the May Meeting, the Board concluded its assessment of, among other things: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of the Fund as compared with Performance Peers and other metrics, as applicable; (c) the advisory fee and the estimated cost of the services and estimated profits realized by BlackRock and its affiliates from their relationship with the Fund; (d) the Fund’s fees and expenses compared to Expense Peers; (e) the sharing of potential economies of scale;(f) fall-out benefits to BlackRock and its affiliates as a result of BlackRock’s relationship with the Fund; and (g) other factors deemed relevant by the Board Members.
The Board also considered other matters it deemed important to the approval process, such as other payments made to BlackRock or its affiliates relating to securities lending and cash management, and BlackRock’s services related to the valuation and pricing of Fund portfolio holdings. The Board noted the willingness of BlackRock personnel to engage in open, candid discussions with the Board. The Board did not identify any particular information as determinative, and each Board Member may have attributed different weights to the various items considered.
A. Nature, Extent and Quality of the Services Provided by BlackRock The Board, including the Independent Board Members, reviewed the nature, extent and quality of services provided by BlackRock, including the investment advisory services and the resulting performance of the Fund. Throughout the year, the Board compared Fund performance to the performance of a comparable group of mutual funds, relevant benchmark, and performance metrics, as applicable. The Board met with BlackRock’s senior management personnel responsible for investment activities, including the senior investment officers. The Board also reviewed the materials provided by the Fund’s portfolio management team discussing the Fund’s performance and the Fund’s investment objective, strategies and outlook.
The Board considered, among other factors, with respect to BlackRock: the number, education and experience of investment personnel generally and the Fund’s portfolio management team; BlackRock’s research capabilities; investments by portfolio managers in the funds they manage; portfolio trading capabilities; use of technology; commitment to compliance; credit analysis capabilities; risk analysis and oversight capabilities; and the approach to training and retaining portfolio managers and other research, advisory and management personnel. The Board also considered BlackRock’s overall risk management program, including the continued efforts of BlackRock and its affiliates to address cybersecurity risks and the role of BlackRock’s Risk & Quantitative Analysis Group. The Board engaged in a review of BlackRock’s compensation structure with respect to the Fund’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent and create performance incentives.
In addition to investment advisory services, the Board considered the nature and quality of the administrative and othernon-investment advisory services provided to the Fund. BlackRock and its affiliates provide the Fund with certain administrative, shareholder and other services (in addition to any such services provided to the Fund by third parties) and officers and other personnel as are necessary for the operations of the Fund. In particular, BlackRock and its affiliates provide the Fund with administrative services including, among others: (i) responsibility for disclosure documents, such as the prospectus, the summary prospectus (as applicable), the statement of additional information and periodic shareholder reports; (ii) oversight of daily accounting and pricing; (iii) responsibility for periodic filings with regulators; (iv) overseeing and coordinating the activities of other service providers including, among others, the Fund’s custodian, fund accountant, transfer agent, and auditor; (v) organizing Board meetings and preparing the materials for such Board meetings; (vi) providing legal and compliance support; (vii) furnishing analytical and other support to assist the Board in its consideration of strategic issues such as the merger, consolidation or repurposing of certainopen-end funds; and (viii) performing or managing administrative functions necessary for the operation of the Fund, such as tax reporting, expense management, fulfilling regulatory filing requirements, overseeing the Fund’s distribution partners, and shareholder call center and other services. The Board reviewed the structure and duties of BlackRock’s fund administration, shareholder services, and legal & compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.
B. The Investment Performance of the Fund and BlackRock The Board, including the Independent Board Members, also reviewed and considered the performance history of the Fund. In preparation for the April Meeting, the Board was provided with reports independently prepared by Broadridge, which included a comprehensive analysis of the Fund’s performance as of December 31, 2018. Broadridge ranks funds in quartiles, ranging from first to fourth, where first is the most desirable quartile position and fourth is the least desirable. In connection with its review, the Board received and reviewed information regarding the investment performance of the Fund as compared to its Performance Peers. The Board and its Performance Oversight Committee regularly review, and meet with Fund management to discuss, the performance of the Fund throughout the year.
In evaluating performance, the Board focused particular attention on funds with less favorable performance records. The Board also noted that while it found the data provided by Broadridge generally useful, it recognized the limitations of such data, including in particular, that notable differences may exist between a fund and the Performance Peer funds (for example, the investment objective(s) and investment strategies). Further, the Board recognized that the performance data reflects a snapshot of a period as of a particular date and that selecting a different performance period could produce significantly different results. The Board also acknowledged that long-term performance could be impacted by even one period of significant outperformance or underperformance, and that a single investment theme could have the ability to affect long-term performance disproportionately.
The Board noted that for theone-, three- and five-year periods reported, the Fund ranked in the fourth, third and fourth quartiles, respectively, against its Performance Peers. The Board and BlackRock reviewed the Fund’s underperformance during the applicable periods. The Board was informed that, among other things, the Fund’s lower market capitalization posture relative to its Performance Peers detracted from performance over theone-year period. The Board also noted that effective June 12, 2017, the Fund had undergone changes in its investment strategy and portfolio management team, and in connection with such changes, the Fund changed its name from BlackRock Mid Cap Value Opportunities Fund to BlackRock Mid Cap Dividend Fund.
The Board and BlackRock discussed BlackRock’s strategy for improving the Fund’s investment performance. Discussions covered topics such as performance attribution, the Fund’s investment personnel, and the resources appropriate to support the Fund’s investment processes.
C. Consideration of the Advisory/Management Fees and the Estimated Cost of the Services and Estimated Profits Realized by BlackRock and its Affiliates from their Relationship with the Fund The Board, including the Independent Board Members, reviewed the Fund’s contractual management fee rate compared with those of its Expense Peers. The contractual management fee rate represents a combination of the advisory fee and any administrative fees, before taking into account any
26 | 2019 BLACKROCK SEMI-ANNUAL REPORTTO SHAREHOLDERS |
Disclosure of Investment Advisory Agreement (continued)
reimbursements or fee waivers. The Board also compared the Fund’s total expense ratio, as well as its actual management fee rate, to those of its Expense Peers. The total expense ratio represents a fund’s total net operating expenses, including any12b-1 or non12b-1 service fees. The total expense ratio gives effect to any expense reimbursements or fee waivers that benefit a fund, and the actual management fee rate gives effect to any management fee reimbursements or waivers that benefit a fund. The Board considered the services provided and the fees charged by BlackRock and its affiliates to other types of clients with similar investment mandates, as applicable, including institutional accounts andsub-advised mutual funds (including mutual funds sponsored by third parties).
The Board received and reviewed statements relating to BlackRock’s financial condition. The Board reviewed BlackRock’s profitability methodology and was also provided with an estimated profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to the Fund. The Board reviewed BlackRock’s estimated profitability with respect to the Fund and other funds the Board currently oversees for the year ended December 31, 2018 compared to available aggregate estimated profitability data provided for the prior two years. The Board reviewed BlackRock’s estimated profitability with respect to certain other U.S. fund complexes managed by the Manager and/or its affiliates. The Board reviewed BlackRock’s assumptions and methodology of allocating expenses in the estimated profitability analysis, noting the inherent limitations in allocating costs among various advisory products. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Manager, the types of funds managed, precision of expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is difficult.
The Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. The Board reviewed BlackRock’s overall operating margin, in general, compared to that of certain other publicly-traded asset management firms. The Board considered the differences between BlackRock and these other firms, including the contribution of technology at BlackRock, BlackRock’s expense management, and the relative product mix.
In addition, the Board considered the estimated cost of the services provided to the Fund by BlackRock, and BlackRock’s and its affiliates’ estimated profits relating to the management of the Fund and the other funds advised by BlackRock and its affiliates. As part of its analysis, the Board reviewed BlackRock’s methodology in allocating its costs of managing the Fund, to the Fund. The Board considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreement and to continue to provide the high quality of services that is expected by the Board. The Board further considered factors including but not limited to BlackRock’s commitment of time, assumption of risk, and liability profile in servicing the Fund, including in contrast to what is required of BlackRock with respect to other products with similar investment mandates across theopen-end fund, ETF,closed-end fund,sub-advised mutual fund, separately managed account, collective investment trust, and institutional separate account product channels, as applicable.
The Board noted that the Fund’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio each ranked in the second quartile, relative to the Fund’s Expense Peers. The Board also noted that the Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. The Board noted that if the size of the Fund were to decrease, the Fund could lose the benefit of one or more breakpoints. The Board further noted that BlackRock and the Board have contractually agreed to a cap on the Fund’s total expenses as a percentage of the Fund’s average daily net assets on aclass-by-class basis.
D. Economies of Scale The Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of the Fund increase, including the existence of fee waivers and/or expense caps, as applicable, noting that any contractual fee waivers and expense caps had been approved by the Board. The Board also considered the extent to which the Fund benefits from such economies in a variety of ways and whether there should be changes in the advisory fee rate or breakpoint structure in order to enable the Fund to more fully participate in these economies of scale. The Board considered the Fund’s asset levels and whether the current fee schedule was appropriate. In their consideration, the Board Members took into account the existence of any expense caps and further considered the continuation and/or implementation, as applicable, of such caps.
E. Other Factors Deemed Relevant by the Board Members The Board, including the Independent Board Members, also took into account other ancillary or“fall-out” benefits that BlackRock or its affiliates may derive from BlackRock’s respective relationships with the Fund, both tangible and intangible, such as BlackRock��s ability to leverage its investment professionals who manage other portfolios and risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to the Fund, including for administrative, distribution, securities lending and cash management services. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Board also noted that, subject to applicable law, BlackRock may use and benefit from third party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or a number of its other client accounts.
In connection with its consideration of the Agreement, the Board also received information regarding BlackRock’s brokerage and soft dollar practices. The Board received reports from BlackRock which included information on brokerage commissions and trade execution practices throughout the year.
The Board noted the competitive nature of theopen-end fund marketplace, and that shareholders are able to redeem their Fund shares if they believe that the Fund’s fees and expenses are too high or if they are dissatisfied with the performance of the Fund.
Conclusion
The Board, including the Independent Board Members, unanimously approved the continuation of the Agreement between the Manager and the Company, on behalf of the Fund, for aone-year term ending June 30, 2020. Based upon its evaluation of all of the aforementioned factors in their totality, as well as other information, the Board, including the Independent Board Members, was satisfied that the terms of the Agreement were fair and reasonable and in the best interest of the Fund and its shareholders. In arriving at its decision to approve the Agreement, the Board did not identify any single factor or group of factors asall-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination.
DISCLOSURE OF INVESTMENT ADVISORY AGREEMENT | 27 |
Director and Officer Information
Mark Stalnecker, Chair of the Board and Director
Bruce R. Bond, Director
Susan J. Carter, Director
Collette Chilton, Director
Neil A. Cotty, Director
Lena G. Goldberg, Director
Robert M. Hernandez, Director
Henry R. Keizer, Director
Cynthia A. Montgomery, Director
Donald C. Opatrny, Director
Joseph P. Platt, Director
Kenneth L. Urish, Director
Claire A. Walton, Director
Robert Fairbairn, Director
John M. Perlowski, Director, President and Chief Executive Officer
Jennifer McGovern, Vice President
Neal J. Andrews, Chief Financial Officer
Jay M. Fife, Treasurer
Charles Park, Chief Compliance Officer
John MacKessy, Anti-Money Laundering Compliance Officer
Benjamin Archibald, Secretary
Investment Adviser
BlackRock Advisors, LLC
Wilmington, DE 19809
Custodian and Accounting Agent
State Street Bank and Trust Company
Boston, MA 02111
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
Wilmington, DE 19809
Distributor
BlackRock Investments, LLC
New York, NY 10022
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Boston, MA 02116
Legal Counsel
Sidley Austin LLP
New York, NY 10019
Address of the Corporation
100 Bellevue Parkway
Wilmington, DE 19809
28 | 2019 BLACKROCK SEMI-ANNUAL REPORTTO SHAREHOLDERS |
General Information
Householding
The Fund will mail only one copy of shareholder documents, including prospectuses, annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call the Fund at(800) 441-7762.
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT, and for reporting periods ended prior to March 31, 2019, filed such information onForm N-Q. The Fund’s Forms N-PORT andN-Q are available on the SEC’s website at http://www.sec.gov. The Fund’s Forms N-PORT andN-Q may also be obtained upon request and without charge by calling(800) 441-7762.
Availability of Proxy Voting Policies and Procedures
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available upon request and without charge (1) by calling(800) 441-7762; (2) athttp://www.blackrock.com; and (3) on the SEC’s website at http://www.sec.gov.
Availability of Proxy Voting Record
Information about how the Fund voted proxies relating to securities held in the Fund’s portfolio during the most recent12-month period ended June 30 is available upon request and without charge (1) athttp://www.blackrock.com; or by calling(800) 441-7762 and (2) on the SEC’s website at http://www.sec.gov.
BlackRock’s Mutual Fund Family
BlackRock offers a diverse lineup of open-end mutual funds crossing all investment styles and managed by experts in equity, fixed-income and tax-exempt investing. Visithttp://www.blackrock.com for more information.
Shareholder Privileges
Account Information
Call us at(800) 441-7762 from 8:00 AM to 6:00 PM ET on any business day to get information about your account balances, recent transactions and share prices. You can also reach us on the Web athttp://www.blackrock.com.
Automatic Investment Plans
Investor Class shareholders who want to invest regularly can arrange to have $50 or more automatically deducted from their checking or savings account and invested in any of the BlackRock funds.
Systematic Withdrawal Plans
Investor Class shareholders can establish a systematic withdrawal plan and receive periodic payments of $50 or more from their BlackRock funds, as long as their account balance is at least $10,000.
Retirement Plans
Shareholders may make investments in conjunction with Traditional, Rollover, Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans.
ADDITIONAL INFORMATION | 29 |
Additional Information (continued)
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding theirnon-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.
If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.
BlackRock obtains or verifies personalnon-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.
BlackRock does not sell or disclose tonon-affiliated third parties anynon-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. Thesenon-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access tonon-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect thenon-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.
Portfolio Abbreviations | ||
ADR | American Depositary Receipts |
30 | 2019 BLACKROCK SEMI-ANNUAL REPORTTO SHAREHOLDERS |
This report is intended for current holders. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless preceded or accompanied by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
MIDCAPVAL-7/19-SAR |
Item 2 – | Code of Ethics – Not Applicable to this semi-annual report |
Item 3 – | Audit Committee Financial Expert – Not Applicable to this semi-annual report |
Item 4 – | Principal Accountant Fees and Services – Not Applicable to this semi-annual report |
Item 5 – | Audit Committee of Listed 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 previousForm N-CSR filing.
Item 7 – | Disclosure of Proxy Voting Policies and Procedures forClosed-End Management Investment Companies – Not Applicable |
Item 8 – | Portfolio Managers ofClosed-End Management Investment Companies – Not Applicable |
Item 9 – | Purchases of Equity Securities byClosed-End Management Investment Company and Affiliated Purchasers – Not Applicable |
Item 10 – | Submission of Matters to a Vote of Security Holders –There have been no material changes to these procedures. |
Item 11 – | Controls and Procedures |
(a) The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended.
(b) There were no changes in the registrant’s internal control over financial reporting (as defined inRule 30a-3(d) under the 1940 Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12 – | Disclosure of Securities Lending Activities forClosed-End Management Investment Companies – Not Applicable |
Item 13 – | Exhibits attached hereto |
(a)(1) – Code of Ethics – Not Applicable to this semi-annual report
(a)(2) – Certifications – Attached hereto
(a)(3) – Not Applicable
(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 Mid Cap Dividend Fund of BlackRock Mid Cap Dividend Series, Inc. | ||
By: | /s/ John M. Perlowski | |
John M. Perlowski | ||
Chief Executive Officer (principal executive officer) of | ||
BlackRock Mid Cap Dividend Fund of BlackRock Mid Cap Dividend Series, Inc. |
Date: October 4, 2019
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ John M. Perlowski | |
John M. Perlowski | ||
Chief Executive Officer (principal executive officer) of | ||
BlackRock Mid Cap Dividend Fund of BlackRock Mid Cap Dividend Series, Inc. | ||
Date: October 4, 2019 | ||
By: | /s/ Neal J. Andrews | |
Neal J. Andrews | ||
Chief Financial Officer (principal financial officer) of | ||
BlackRock Mid Cap Dividend Fund of BlackRock Mid Cap Dividend Series, Inc. | ||
Date: October 4, 2019 |