UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-06669
Name of Fund: BlackRock Fundamental Growth Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, BlackRock Fundamental Growth Fund, Inc., 800 Scudders Mill
Road, Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011,
Princeton, NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 08/31/07
Date of reporting period: 09/01/06 - 02/28/07
Item 1 - Report to Stockholders
ALTERNATIVES BLACKROCK SOLUTIONS EQUITIES FIXED INCOME LIQUIDITY
REAL ESTATE
BlackRock
Fundamental Growth Fund, Inc.
SEMI-ANNUAL REPORT
FEBRUARY 28, 2007 (UNAUDITED)
(BLACKROCK logo)
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
This report is transmitted to shareholders only. It is not authorized for
use as an offer of sale or a solicitation of an offer to buy shares of the
Fund unless accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
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.
BlackRock Fundamental Growth Fund, Inc.
P.O. Box 9011
Princeton, NJ 08543-9011
(GO PAPERLESS... logo)
It's Fast, Convenient, & Timely!
To sign up today, go to www.blackrock.com/edelivery.
BlackRock Fundamental Growth Fund, Inc.
Portfolio Information as of February 28, 2007
Percent of
Ten Largest Holdings Net Assets
General Electric Co. 3.4%
Cisco Systems, Inc. 3.3
Google, Inc. Class A 2.6
Genentech, Inc. 2.3
Lockheed Martin Corp. 2.2
Starbucks Corp. 2.2
Coach Inc. 2.1
Thermo Fisher Scientific Inc. 2.1
Procter & Gamble 2.1
Exxon Mobil Corp. 2.0
Percent of
Five Largest Industries Net Assets
Energy Equipment & Services 9.2%
Capital Markets 6.5
Communications Equipment 6.0
IT Services 5.7
Internet Software & Services 5.3
Percent of
Total
Sector Representation Investments
Information Technology 19.9%
Consumer Discretionary 15.9
Health Care 9.6
Financials 9.3
Energy 9.1
Industrials 8.9
Materials & Processing 4.3
Consumer Staples 2.7
Other* 20.3
* Includes portfolio holdings in short-term investments.
For Fund compliance purposes, the Fund's industry and sector
classifications refer to any one or more of the industry and
sector sub-classifications used by one or more widely recognized
market indexes or ratings group indexes, and/or as defined by
Fund management. This definition may not apply for purposes
of this report, which may combine industry and sector sub-
classifications for reporting ease.
Officers and Directors
Robert C. Doll, Jr., President and Director
James H. Bodurtha, Director
Kenneth A. Froot, Director
Joe Grills, Director
Herbert I. London, Director
Roberta Cooper Ramo, Director
Robert S. Salomon, Jr., Director
Donald C. Burke, Vice President and Treasurer
Thomas E. Burke, Vice President
Jeffrey Hiller, Fund Chief Compliance Officer
Alice A. Pellegrino, Secretary
Custodian
JPMorgan Chase Bank, N.A.
3 Chase Metrotech Center
Brooklyn, NY 11245
Transfer Agent
PFPC Inc.
Wilmington, DE 19809
Effective April 13, 2007, Jeffrey Hiller resigned his position as Chief
Compliance Officer of the Fund. Also effective April 13, 2007, Karen Clark was
appointed Chief Compliance Officer of the Fund. Ms. Clark has been a Managing
Director of BlackRock, Inc. since 2007. She was a Director thereof from 2005
to 2007. Prior to that, Ms. Clark was a principal and senior compliance
officer at State Street Global Advisors from 2001 to 2005. Ms. Clark was a
principal consultant with PricewaterhouseCoopers, LLP from 1998 to 2001. From
1993 to 1998, Ms. Clark was Branch Chief, Division of Investment Management
and Office of Compliance Examinations, with the U.S. Securities and Exchange
Commission.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
A Letter to Shareholders
Dear Shareholder
The new year began on a positive note for most financial markets, continuing
the momentum from the fourth quarter of 2006. At the end of February, however,
global equity markets registered their first significant decline since last
summer. The market jitters were triggered by a significant setback in the
Chinese market and were exacerbated by several concerns, notably a weakening
economy, some disappointing corporate earnings announcements, geopolitical
concerns related to Iran's nuclear program and increasing delinquencies in the
subprime mortgage market. Despite the recent spate of volatility, underlying
stock market fundamentals appear quite sound, supported by a generally good
global economic backdrop, tame inflation, relatively low interest rates and
attractive valuations.
Not unlike the equity market, the bond market also has seen volatility
recently as observers have attempted to interpret mixed economic signals. A
bond market rally late last year reversed early in 2007 as the economic data
strengthened. Prices improved (and yields fell) again in February as equities
struggled. Notably, the Treasury curve remained inverted for much of 2006 and
into 2007. The 30-year Treasury yield stood at 4.68% on February 28, 2007,
while the one-month Treasury offered the highest yield on the curve at 5.24%.
For its part, the Federal Reserve Board (the Fed) has left the target short-
term interest rate on hold at 5.25% since first pausing on August 8, 2006.
Although the central bankers continue to express concern about potential
inflationary pressures, they also have made reference to signs of economic
weakness in their public statements. Most observers expect the Fed to keep
interest rates on hold for now, but acknowledge that the combination of a mild
economic slowdown and moderating inflation could prompt an interest rate cut
later in 2007.
Notwithstanding the volatility along the way, most major market indexes
managed to post positive returns for the annual and semi-annual reporting
periods ended February 28, 2007:
Total Returns as of February 28, 2007 6-month 12-month
U.S. equities (Standard & Poor's 500 Index) + 8.93% +11.97%
Small cap U.S. equities (Russell 2000 Index) +10.76 + 9.87
International equities (MSCI Europe, Australasia, Far East Index) +12.17 +21.07
Fixed income (Lehman Brothers Aggregate Bond Index) + 3.66 + 5.54
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 2.89 + 4.96
High yield bonds (Credit Suisse High Yield Index) + 8.62 +12.36
If the recent market movements are any guide, 2007 could be a year of enhanced
market volatility. As you navigate the uncertainties of the financial markets,
we encourage you to review your investment goals with your financial
professional and to make portfolio changes, as needed. We thank you for
trusting BlackRock with your investment assets, and we look forward to
continuing to serve you in the months and years ahead.
Sincerely,
(Robert C. Doll, Jr.)
Robert C. Doll, Jr.
Fund President and Director
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
A Discussion With Your Fund's Portfolio Manager
Following the summer 2006 market correction, we adjusted the portfolio to
account for a more moderate rate of economic growth in the United States and a
shift in market leadership.
How did the Fund perform during the period in light of the existing market
conditions?
For the six-month period ended February 28, 2007, BlackRock Fundamental Growth
Fund, Inc.'s Institutional, Investor A, Investor B, Investor C and Class R
Shares had total returns of +2.64%, +2.49%, +2.09%, +2.07% and +2.33%,
respectively. For the same period, the benchmark S&P 500 Citigroup Growth
Index returned +7.18% and the Lipper Large-Cap Growth Funds category had an
average return of +8.33%. The broader U.S. equity market, as measured by the
S&P 500 Index, gained 8.93% over the same six-month period. (Fund results
shown do not reflect sales charges and would be lower if sales charges were
included. Complete performance information can be found on pages 6 and 7 of
this report to shareholders.)
During the six-month period, the large cap growth style of investing was
challenged as small- and mid-sized companies led the market out of the bottom
that had been reached in mid-July 2006. In addition, a general bias toward
value investing continued to dominate throughout the period. Concerns about
the direction and magnitude of growth in the U.S. economy also significantly
influenced market leadership, as a clear defensive tone emerged with renewed
investor interest in "mega caps" (that is, the largest companies as measured
by market cap) evident across most sectors. This tended to favor market-
capitalization-weighted indexes over individual growth stock selection.
Furthermore, investor perceptions and definitions of growth and value became
increasingly ambiguous against this backdrop. The new year opened with equity
markets performing strongly until the end of February, when investor concerns
over global risk premiums once again sent global equity markets into a
corrective phase.
The Fund's performance for the period was negatively influenced by our
conviction that growth stocks were attractive investments, while the
market, in general, had become more defensive. Consequently, the Fund's
underperformance versus the largely market-weighted benchmark resulted from an
under-representation in "mega cap" stocks, in addition to adverse security
selection. In particular, we saw poor performance among portfolio holdings in
the consumer discretionary, health care and information technology (IT)
sectors. Conversely, stock selection in the materials and financials sectors
was modestly favorable, as were the Fund's underweight positions in consumer
staples and health care. The Fund's relative performance improved measurably
by the end of the period (specifically, year-to-date through February), as our
positioning gained investor acceptance.
Individual Fund holdings that detracted from performance during the six-month
period included Medco Health Solutions, Inc., CVS Corp., WellPoint, Inc.,
Motorola, Inc. and Corning, Inc. At the same time, several names were notably
additive to performance, including Cognizant Technology Solutions, Infosys
Technologies Ltd., Nike, Inc., Pall Corp. and Nalco Holding Co. Avoidance of
Pfizer, Inc. and Johnson & Johnson aided relative performance, while lack of
exposure to Microsoft Corp. detracted.
What changes were made to the portfolio during the period?
We made strides in repositioning the portfolio after the mid-2006 market
correction to adjust to a more moderate rate of economic growth in the United
States and shifts in sector leadership. To that end, we reduced our overweight
position in energy to a slight underweight, while increasing our position in
IT from an underweight to a modest overweight. We also trimmed the portfolio's
overweighting in industrials and exited the managed-care industry, thereby
reducing overall exposure to the health care sector. Finally, we increased the
Fund's positions in the consumer discretionary and financials sectors,
particularly in retail and capital markets-related companies, respectively.
In terms of individual stocks, significant additions included Coach Inc.,
Thermo Fisher Scientific, Inc., Target Corp., EMC Corp., Goldman Sachs Group,
Inc., American International Group, Inc., Oracle Corp. and Comcast Corp.
Significant sales or reductions included WellPoint, Altria Group, Inc., Exxon
Mobil Corp. (which we sold and repurchased within the period), Bank of America
Corp., Medco Health Solutions, CVS, Procter & Gamble, Valero Energy Corp.,
Alcon, Inc., GlaxoSmithKline Plc and Amgen Inc.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
How would you characterize the Fund's position at the close of the period?
U.S. economic growth (that is, gross domestic product growth) has slowed to a
slightly below-trend rate of expansion (in the area of 2% - 3%). We view this
as a typical mid-cycle slowdown and do not expect a recession to unfold. In
fact, we suspect there is upside risk to accelerating economic growth in the
United States by year-end 2007. At this time, it appears as if inflationary
expectations have been well-contained via adequate Federal Reserve Board
policy initiatives. While most other global economies, particularly those in
Europe and Asia, continue to experience strong rates of growth, we are
reviewing portfolio positioning in light of apparent changes recently (late
February) in market risk parameters. Although this mid-cycle slowdown may
challenge broader market (S&P 500 Index) earnings growth over the near term,
we believe it should provide an attractive investment environment for select
growth stocks going forward.
At the end of the period, the portfolio was overweight relative to its
benchmark in the consumer discretionary, IT and materials sectors, and had
significant underweights in consumer staples and health care.
Thomas E. Burke, CFA
Vice President and Portfolio Manager
Dominic Vignola
Associate Portfolio Manager
March 12, 2007
We are pleased to announce that Dominic Vignola has joined the portfolio
management team as the Fund's Associate Portfolio Manager. Mr. Vignola is a
Vice President of and portfolio manager with BlackRock, Inc. Prior to joining
BlackRock in 2006, he was a Vice President of Merrill Lynch Investment
Managers (MLIM) and a member of MLIM's Global Technology management team from
2000 to 2006. Prior to joining MLIM, Mr. Vignola was a technology sector
analyst for Deutsche Asset Management.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Performance Data
About Fund Performance
Effective October 2, 2006, the Fund's Class A, Class B, Class C and Class I
Shares were redesignated Investor A, Investor B, Investor C and Institutional
Shares, respectively. Class R Shares did not change their designation. As
previously communicated to shareholders, new sales charge schedules came into
effect at the same time for certain of these classes.
The Fund has multiple classes of shares:
* Institutional Shares are not subject to any front-end sales charge.
Institutional Shares bear no ongoing distribution or service fees and are
available only to eligible investors.
* Investor A Shares incur a maximum initial sales charge (front-end load) of
5.25% and a service fee of 0.25% per year (but no distribution fee).
* Investor B Shares are subject to a maximum contingent deferred sales charge
of 4.50% declining to 0% after six years. In addition, Investor B Shares are
subject to a distribution fee of 0.75% per year and a service fee of 0.25% per
year. These shares automatically convert to Investor A Shares after
approximately eight years. (There is no initial sales charge for automatic
share conversions). All returns for periods greater than eight years reflect
this conversion.
* Investor C Shares are subject to a distribution fee of 0.75% per year and a
service fee of 0.25% per year. In addition, Investor C Shares are subject to a
1% contingent deferred sales charge if redeemed within one year of purchase.
* Class R Shares do not incur an initial sales charge (front-end load) or
deferred sales charge. These shares are subject to a distribution fee of 0.25%
per year and a service fee of 0.25% per year. Class R Shares are available
only to certain retirement plans. Prior to inception, Class R Share
performance results were those of Institutional Shares (which have no
distribution or service fees) restated for Class R Share fees.
Performance information reflects past performance only and does not guarantee
future results. Current performance may be lower or higher than the
performance data quoted. Refer to www.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 each of the following tables
assume reinvestment of all dividends and capital gain distributions, if any,
at net asset value on the ex-dividend date. Investment return and principal
value of shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class of shares
will vary because of the different levels of service, distribution and
transfer agency fees applicable to each class, which are deducted from the
income available to be paid to shareholders.
Recent Performance Results
6-Month 12-Month 10-Year
As of February 28, 2007 Total Return Total Return Total Return
Institutional Shares* +2.64% + 2.21% + 91.29%
Investor A Shares* +2.49 + 1.95 + 86.38
Investor B Shares* +2.09 + 1.15 + 75.15
Investor C Shares* +2.07 + 1.14 + 72.30
Class R Shares* +2.33 + 1.69 + 83.15
S&P 500 (R) Index** +8.93 +11.97 +108.64
S&P 500 Citigroup Growth Index*** +7.18 + 7.93 + 74.08
* Investment results shown do not reflect sales charges; results shown would be lower if a sales
charge was included. Cumulative total investment returns are based on changes in net asset values
for the periods shown, and assume reinvestment of all dividends and capital gains distributions
at net asset value on the ex-dividend date.
** This unmanaged Index covers 500 industrial, utility, transportation and financial companies of
the U.S. markets (mostly NYSE issues) representing about 75% of NYSE market capitalization and 30%
of NYSE issues.
*** This unmanaged Index is designed to provide a comprehensive measure of large-cap U.S. equity
"growth" performance. It is an unmanaged float adjusted market capitalization weighted index
comprised of stocks representing approximately half the market capitalization of the S&P 500 Index
that have been identified as being on the growth end of the growth-value spectrum.
S&P 500 is a registered trademark of the McGraw-Hill Companies.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Performance Data (concluded)
Total Return Based on a $10,000 Investment
A line graph illustrating the growth of a $10,000 investment in Institutional
Shares*++, Investor A Shares*++, Investor B Shares*++, Investor C Shares*++
and Class R Shares*++ compared to a similar investment in S&P 500 Citigroup
Growth Index++++++ and S&P 500 Index++++. Values illustrated are as follows:
Institutional Shares*++
Date Value
February 1997 $10,000.00
February 1998 $13,678.00
February 1999 $17,553.00
February 2000 $25,256.00
February 2001 $19,977.00
February 2002 $16,628.00
February 2003 $11,896.00
February 2004 $16,113.00
February 2005 $16,666.00
February 2006 $18,714.00
February 2007 $19,129.00
Investor A Shares*++
Date Value
February 1997 $ 9,475.00
February 1998 $12,918.00
February 1999 $16,538.00
February 2000 $23,731.00
February 2001 $18,719.00
February 2002 $15,543.00
February 2003 $11,092.00
February 2004 $14,991.00
February 2005 $15,462.00
February 2006 $17,323.00
February 2007 $17,660.00
Investor B Shares*++
Date Value
February 1997 $10,000.00
February 1998 $13,528.00
February 1999 $17,189.00
February 2000 $24,469.00
February 2001 $19,161.00
February 2002 $15,785.00
February 2003 $11,176.00
February 2004 $14,983.00
February 2005 $15,335.00
February 2006 $17,180.00
February 2007 $17,515.00
Investor C Shares*++
Date Value
February 1997 $10,000.00
February 1998 $13,524.00
February 1999 $17,190.00
February 2000 $24,471.00
February 2001 $19,151.00
February 2002 $15,786.00
February 2003 $11,166.00
February 2004 $14,978.00
February 2005 $15,328.00
February 2006 $17,035.00
February 2007 $17,230.00
Class R Shares*++
Date Value
February 1997 $10,000.00
February 1998 $13,610.00
February 1999 $17,379.00
February 2000 $24,882.00
February 2001 $19,582.00
February 2002 $16,218.00
February 2003 $11,570.00
February 2004 $15,663.00
February 2005 $16,117.00
February 2006 $18,010.00
February 2007 $18,315.00
S&P 500 Citigroup Growth Index++++++
Date Value
February 1997 $10,000.00
February 1998 $13,853.00
February 1999 $17,789.00
February 2000 $22,587.00
February 2001 $17,403.00
February 2002 $14,871.00
February 2003 $11,191.00
February 2004 $15,050.00
February 2005 $15,380.00
February 2006 $16,128.00
February 2007 $17,408.00
S&P 500 Index++++
Date Value
February 1997 $10,000.00
February 1998 $13,500.00
February 1999 $16,165.00
February 2000 $18,061.00
February 2001 $16,580.00
February 2002 $15,003.00
February 2003 $11,600.00
February 2004 $16,068.00
February 2005 $17,190.00
February 2006 $18,633.00
February 2007 $20,864.00
* Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including advisory fees.
++ The Fund invests primarily in equity securities with a particular
emphasis on companies that have exhibited above-average growth rates
in earnings.
++++ This unmanaged Index covers 500 industrial, utility, transportation
and financial companies of the U.S. markets (mostly NYSE issues)
representing about 75% of NYSE market capitalization and 30% of NYSE
issues.
++++++ This unmanaged Index is designed to provide a comprehensive measure of
large-cap U.S. equity "growth" performance. It is an unmanaged float
adjusted market capitalization weighted index comprised of stocks
representing approximately half the market capitalization of the S&P
500 Index that have been identified as being on the growth end of the
growth-value spectrum.
Past performance is not indicative of future results.
Average Annual Total Return
Return
Institutional Shares
One Year Ended 2/28/07 +2.21%
Five Years Ended 2/28/07 +2.84
Ten Years Ended 2/28/07 +6.70
Return Without Return With
Sales Charge Sales Charge*
Investor A Shares
One Year Ended 2/28/07 +1.95% -3.41%
Five Years Ended 2/28/07 +2.59 +1.49
Ten Years Ended 2/28/07 +6.42 +5.85
Return Without Return With
CDSC CDSC++++++
Investor B Shares++
One Year Ended 2/28/07 +1.15% -3.35%
Five Years Ended 2/28/07 +1.78 +1.41
Ten Years Ended 2/28/07 +5.76 +5.76
Return Without Return With
CDSC CDSC++++++
Investor C Shares++++
One Year Ended 2/28/07 +1.14% +0.14%
Five Years Ended 2/28/07 +1.77 +1.77
Ten Years Ended 2/28/07 +5.59 +5.59
Return
Class R Shares
One Year Ended 2/28/07 +1.69%
Five Years Ended 2/28/07 +2.46
Ten Years Ended 2/28/07 +6.24
* Assuming maximum sales charge of 5.25%.
++ Maximum contingent deferred sales charge is 4.50% and is
reduced to 0% after six years.
++++ Maximum contingent deferred sales charge is 1% and is reduced
to 0% after one year.
++++++ Assuming payment of applicable contingent deferred sales
charge.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Disclosure of Expenses
Shareholders of this Fund may incur the following charges: (a) expenses
related to transactions, including sales charges, redemption fees and
exchange fees; and (b) operating expenses including advisory fees,
distribution fees including 12b-1 fees, and other Fund expenses. The
following example (which is based on a hypothetical investment of $1,000
invested on September 1, 2006 and held through February 28, 2007) 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 first table below 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 in the first line under
the heading entitled "Expenses Paid During the Period."
The second table below provides information about hypothetical account values
and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses. In order to assist
shareholders in comparing the ongoing expenses of investing in this Fund and
other funds, compare the 5% hypothetical example with the 5% hypothetical
examples that appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders'
ongoing costs only and do not reflect any transactional expenses, such as
sales charges, redemption fees or exchange fees. Therefore, the second table
is useful in comparing ongoing expenses only, and will not help shareholders
determine the relative total expenses of owning different funds. If these
transactional expenses were included, shareholder expenses would have been
higher.
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value September 1, 2006
September 1, February 28, to February 28,
2006 2007 2007
Actual
Institutional $1,000 $1,026.40 $4.42
Investor A $1,000 $1,024.90 $5.67
Investor B $1,000 $1,020.90 $9.47
Investor C $1,000 $1,020.70 $9.52
Class R $1,000 $1,023.30 $6.97
Hypothetical (5% annual return before expenses)**
Institutional $1,000 $1,020.44 $4.41
Investor A $1,000 $1,019.20 $5.66
Investor B $1,000 $1,015.43 $9.44
Investor C $1,000 $1,015.38 $9.49
Class R $1,000 $1,017.91 $6.95
* For each class of the Fund, expenses are equal to the annualized expense ratio for the class (.88% for
Institutional, 1.13% for Investor A, 1.89% for Investor B, 1.90% for Investor C and 1.39% for Class R),
multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half
year period shown).
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the most
recent fiscal half year divided by 365.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Schedule of Investments as of February 28, 2007 (Unaudited)
Shares
Industry Common Stocks Held Value
Aerospace & Defense--3.7%
Lockheed Martin Corp. 1,004,700 $ 97,737,216
United Technologies Corp. 1,028,800 67,520,144
--------------
165,257,360
Beverages--1.3%
PepsiCo, Inc. 936,900 59,165,235
Biotechnology--3.3%
Genentech, Inc. (c)(e) 1,227,000 103,521,990
Gilead Sciences, Inc. (c) 656,900 47,007,764
--------------
150,529,754
Capital Markets--6.5%
The Charles Schwab Corp. 4,211,100 77,821,128
Fortress Investment Group LLC 277,100 8,368,420
Franklin Resources, Inc. 565,000 66,325,350
Goldman Sachs Group, Inc. (e) 359,600 72,495,360
State Street Corp. (e) 1,007,700 66,014,427
--------------
291,024,685
Chemicals--4.7%
Air Products & Chemicals, Inc. 812,300 60,776,286
Monsanto Co. 1,037,000 54,639,530
Nalco Holding Co. 1,488,000 35,563,200
Praxair, Inc. (e) 961,800 59,333,442
--------------
210,312,458
Communications Equipment--6.0%
Cisco Systems, Inc. (c) 5,702,200 147,915,068
Corning, Inc. (c)(e) 2,238,600 46,182,318
QUALCOMM, Inc. 1,858,200 74,848,296
--------------
268,945,682
Computers & Peripherals--3.4%
Apple Computer, Inc. (c) 249,100 21,076,351
EMC Corp. (c) 5,966,100 83,227,095
Seagate Technology (e) 927,100 24,938,990
Western Digital Corp. (c) 1,151,900 22,081,923
--------------
151,324,359
Construction & Engineering--1.2%
Fluor Corp. (e) 338,400 28,584,648
Jacobs Engineering Group, Inc. (c) 271,200 24,500,208
--------------
53,084,856
Diversified Financial Services--3.5%
Chicago Mercantile Exchange
Holdings, Inc. (e) 97,600 52,619,088
Citigroup, Inc. 953,200 48,041,280
JPMorgan Chase & Co. 1,145,000 56,563,000
--------------
157,223,368
Electrical Equipment--1.6%
Emerson Electric Co. 1,677,200 72,270,548
Energy Equipment & Services--9.2%
Baker Hughes, Inc. (e) 659,300 42,927,023
Cameron International Corp. (c)(e) 427,300 24,223,637
FMC Technologies, Inc. (c)(e) 394,500 25,950,210
Grant Prideco, Inc. (c) 1,087,900 47,225,739
Halliburton Co. (e) 1,516,500 46,829,520
Shares
Industry Common Stocks Held Value
Energy Equipment & Services (concluded)
National Oilwell Varco,
Inc. (c)(e) 872,000 $ 60,726,080
Schlumberger Ltd. (e) 1,167,600 73,325,280
Transocean, Inc. (c) 616,300 47,257,884
Weatherford International
Ltd. (c)(e) 1,082,400 43,458,360
--------------
411,923,733
Health Care Equipment & Supplies--2.6%
Alcon, Inc. (e) 533,200 66,447,384
Intuitive Surgical, Inc. (c)(e) 240,900 26,763,990
Varian Medical Systems,
Inc. (c)(e) 488,700 22,455,765
--------------
115,667,139
Health Care Providers & Services--0.6%
Laboratory Corp. of America
Holdings (c) 365,500 29,148,625
Hotels, Restaurants & Leisure--5.1%
International Game Technology 987,900 40,750,875
McDonald's Corp. 1,065,700 46,592,404
Starbucks Corp. (c)(e) 3,136,100 96,905,490
Yum! Brands, Inc. 791,700 45,871,098
--------------
230,119,867
Household Products--2.1%
The Procter & Gamble Co. 1,455,700 92,422,393
IT Services--5.7%
Cognizant Technology
Solutions (c)(e) 822,600 74,198,520
Infosys Technologies Ltd. 1,307,500 61,461,107
Paychex, Inc. (e) 1,461,900 59,396,997
Satyam Computer Services Ltd. 2,562,600 24,032,947
Tata Consultancy Services Ltd. 1,382,200 37,238,080
--------------
256,327,651
Industrial Conglomerates--4.4%
General Electric Co. (e) 4,400,000 153,648,000
Textron, Inc. 488,900 45,120,581
--------------
198,768,581
Insurance--1.5%
American International Group,
Inc. 1,006,900 67,562,990
Internet Software & Services--5.3%
Akamai Technologies, Inc. (c)(e) 1,178,400 60,770,088
Google, Inc. Class A (c) 259,300 116,542,385
Yahoo! Inc. (c)(e) 1,910,900 58,970,374
--------------
236,282,847
Life Sciences Tools & Services--2.7%
Covance, Inc. (c)(e) 424,500 26,174,670
Thermo Fisher Scientific,
Inc. (c) 2,100,700 95,098,689
--------------
121,273,359
Media--3.3%
Comcast Corp. Class A (c)(e) 2,584,350 66,469,482
Walt Disney Co. (e) 2,401,200 82,265,112
--------------
148,734,594
Metals & Mining--0.6%
Allegheny Technologies, Inc. 253,300 25,950,585
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Schedule of Investments (concluded)
Shares
Industry Common Stocks Held Value
Multiline Retail--5.1%
JC Penney Co., Inc. 556,900 $ 45,170,159
Kohl's Corp. (c) 698,000 48,155,020
Nordstrom, Inc. (e) 984,300 52,256,487
Target Corp. (e) 1,397,500 85,988,175
--------------
231,569,841
Oil, Gas & Consumable Fuels--2.0%
Exxon Mobil Corp. 1,259,200 90,259,456
Pharmaceuticals--2.5%
Novartis AG (a) 417,800 23,158,654
Novartis AG Registered Shares 794,500 44,096,049
Roche Holding AG 263,500 46,889,613
--------------
114,144,316
Software--4.1%
Activision, Inc. (c) 1,441,700 24,105,224
Adobe Systems, Inc. (c)(e) 1,159,300 45,502,525
Electronic Arts, Inc. (c)(e) 964,400 48,625,048
Oracle Corp. (c) 4,082,300 67,072,189
--------------
185,304,986
Specialty Retail--2.4%
Best Buy Co., Inc. (e) 1,044,500 48,537,915
Staples, Inc. 2,358,100 61,357,762
--------------
109,895,677
Shares
Industry Common Stocks Held Value
Textiles, Apparel & Luxury Goods--3.6%
Coach Inc. (c)(e) 2,034,600 $ 96,033,120
Nike, Inc. Class B (e) 615,500 64,301,285
--------------
160,334,405
Total Common Stocks
(Cost--$3,815,405,541)--98.0% 4,404,829,350
Beneficial
Interest Short-Term Securities
$ 105,421,203 BlackRock Liquidity Series, LLC
Cash Sweep Series, 5.33% (b)(d) 105,421,203
1,015,852,000 BlackRock Liquidity Series, LLC
Money Market Series, 5.33% (b)(d)(f) 1,015,852,000
Total Short-Term Securities
(Cost--$1,121,273,203)--25.0% 1,121,273,203
Total Investments
(Cost--$4,936,678,744*)--123.0% 5,526,102,553
Liabilities in Excess of Other Assets--(23.0%) (1,033,688,117)
----------------
Net Assets--100.0% $ 4,492,414,436
================
* The cost and unrealized appreciation (depreciation) of investments
as of February 28, 2007, as computed for federal income tax purposes,
were as follows:
Aggregate cost $ 4,937,753,469
==================
Gross unrealized appreciation $ 655,897,740
Gross unrealized depreciation (67,548,656)
------------------
Net unrealized appreciation $ 588,349,084
==================
(a) Depositary receipts.
(b) Investments in companies considered to be an affiliate of the Fund,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
were as follows:
Net Interest
Affiliate Activity Income
BlackRock Liquidity Series, LLC
Cash Sweep Series $ (89,478,310) $3,489,625
BlackRock Liquidity Series, LLC
Money Market Series $ 265,109,300 $ 299,202
(c) Non-income producing security.
(d) Represents the current yield as of February 28, 2007.
(e) Security, or a portion of security, is on loan.
(f) Security was purchased with the cash proceeds from securities loans.
o For Fund compliance purposes, the Fund's industry classifications refer
to any one or more of the industry sub-classifications used by one or
more widely recognized market indexes or ratings group indexes, and/or
as defined by Fund management. This definition may not apply for purposes
of this report, which may combine industry sub-classifications for
reporting ease. Industries are shown as a percentage of net assets.
See Notes to Financial Statements.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Statement of Assets and Liabilities
As of February 28, 2007 (Unaudited)
Assets
Investments in unaffiliated securities, at value (including securities
loaned of $1,000,806,781) (identified cost--$3,815,405,541) $ 4,404,829,350
Investments in affiliated securities, at value (identified cost--$1,121,273,203) 1,121,273,203
Receivables:
Capital shares sold $ 6,690,109
Dividends 3,846,861
Securities lending 71,960 10,608,930
----------------
Prepaid expenses and other assets 165,293
----------------
Total assets 5,536,876,776
----------------
Liabilities
Collateral on securities loaned, at value 1,015,852,000
Deferred foreign capital gain tax 9,053,065
Payables:
Capital shares redeemed 13,192,284
Other affiliates 2,550,420
Investment adviser 2,202,312
Distributor 1,612,259 19,557,275
---------------- ----------------
Total liabilities 1,044,462,340
----------------
Net Assets
Net assets $ 4,492,414,436
================
Net Assets Consist of
Institutional Shares of Common Stock, $.10 par value, 300,000,000 shares authorized $ 6,322,612
Investor A Shares of Common Stock, $.10 par value, 300,000,000 shares authorized 8,288,356
Investor B Shares of Common Stock, $.10 par value, 500,000,000 shares authorized 4,248,134
Investor C Shares of Common Stock, $.10 par value, 300,000,000 shares authorized 4,765,292
Class R Shares of Common Stock, $.10 par value, 500,000,000 shares authorized 212,879
Paid-in capital in excess of par 5,622,840,673
Accumulated investment loss--net $ (4,726,543)
Accumulated realized capital losses--net (1,729,907,711)
Unrealized appreciation--net 580,370,744
----------------
Total accumulated losses--net (1,154,263,510)
----------------
Net Assets $ 4,492,414,436
================
Net Asset Value
Institutional--Based on net assets of $1,255,431,497 and 63,226,124 shares outstanding $ 19.86
================
Investor A--Based on net assets of $1,606,025,507 and 82,883,562 shares outstanding $ 19.38
================
Investor B--Based on net assets of $748,597,685 and 42,481,340 shares outstanding $ 17.62
================
Investor C--Based on net assets of $844,023,189 and 47,652,923 shares outstanding $ 17.71
================
Class R--Based on net assets of $38,336,558 and 2,128,786 shares outstanding $ 18.01
================
See Notes to Financial Statements.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Statement of Operations
For the Six Months Ended February 28, 2007 (Unaudited)
Investment Income
Dividends $ 22,941,752
Interest from affiliates 3,489,625
Securities lending--net 299,202
----------------
Total income 26,730,579
----------------
Expenses
Investment advisory fees $ 14,322,201
Service and distribution fees--Investor C 4,260,124
Service and distribution fees--Investor B 4,143,495
Service and distribution fees--Investor A 2,070,957
Transfer agent fees--Investor A 1,812,074
Transfer agent fees--Institutional 1,430,180
Transfer agent fees--Investor C 1,045,525
Transfer agent fees--Investor B 975,453
Accounting services 343,590
Custodian fees 315,042
Printing and shareholder reports 100,987
Service and distribution fees--Class R 90,944
Directors' fees and expenses 66,616
Registration fees 65,057
Professional fees 58,529
Transfer agent fees--Class R 40,750
Pricing fees 960
Other 66,959
----------------
Total expenses 31,209,443
----------------
Investment loss--net (4,478,864)
----------------
Realized & Unrealized Gain (Loss)--Net
Realized gain (loss) on:
Investments--net (including $1,234,448 deferred foreign capital gain tax) 183,975,477
Foreign currency transactions--net (73,765) 183,901,712
----------------
Change in unrealized appreciation/depreciation on:
Investments--net (including $6,530,038 deferred foreign capital gain tax) (64,868,622)
Foreign currency transactions--net 74,650 (64,793,972)
---------------- ----------------
Total realized and unrealized gain--net 119,107,740
----------------
Net Increase in Net Assets Resulting from Operations $ 114,628,876
================
See Notes to Financial Statements.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
February 28, 2007 August 31,
Increase (Decrease) in Net Assets: (Unaudited) 2006
Operations
Investment income (loss)--net $ (4,478,864) $ 746,809
Realized gain--net 183,901,712 383,321,947
Change in unrealized appreciation/depreciation--net (64,793,972) (43,394,865)
---------------- ----------------
Net increase in net assets resulting from operations 114,628,876 340,673,891
---------------- ----------------
Dividends to Shareholders
Investment income--net:
Institutional -- (13,212,756)
Investor A -- (11,376,016)
Investor C -- (221,265)
Class R -- (129,656)
---------------- ----------------
Net decrease in net assets resulting from dividends to shareholders -- (24,939,693)
---------------- ----------------
Capital Share Transactions
Net decrease in net assets derived from capital share transactions (340,012,243) (753,849,258)
---------------- ----------------
Net Assets
Total decrease in net assets (225,383,367) (438,115,060)
Beginning of period 4,717,797,803 5,155,912,863
---------------- ----------------
End of period* $ 4,492,414,436 $ 4,717,797,803
================ ================
* Accumulated (distributions in excess of) investment income (loss)--net $ (4,726,543) $ (247,679)
================ ================
See Notes to Financial Statements.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Financial Highlights
Institutional
For the Six
The following per share data and ratios Months Ended
have been derived from information February 28, 2007 For the Year Ended August 31,
provided in the financial statements. (Unaudited) 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 19.35 $ 18.22 $ 15.61 $ 15.16 $ 13.84 $ 17.46
----------- ----------- ----------- ----------- ----------- -----------
Investment income (loss)--net** .03 .09 .17 (.02) (.01) (.02)
Realized and unrealized gain (loss)--net .48 1.21 2.44 .47 1.33 (3.60)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .51 1.30 2.61 .45 1.32 (3.62)
----------- ----------- ----------- ----------- ----------- -----------
Less dividends from investment income--net -- (.17) -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 19.86 $ 19.35 $ 18.22 $ 15.61 $ 15.16 $ 13.84
=========== =========== =========== =========== =========== ===========
Total Investment Return
Based on net asset value per share 2.64%++++ 7.22%++ 16.72% 2.97% 9.54% (20.73%)
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses .88%* .87% .91% .91% .93% .94%
=========== =========== =========== =========== =========== ===========
Investment income (loss)--net .27%* .49% .96% (.13%) (.04%) (.09%)
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 1,255,431 $ 1,315,683 $ 1,508,098 $ 1,396,668 $ 1,284,423 $ 1,170,884
=========== =========== =========== =========== =========== ===========
Portfolio turnover 49.75% 60.14% 87.68% 78.23% 108.34% 92.35%
=========== =========== =========== =========== =========== ===========
* Annualized.
** Based on average shares outstanding.
++ Approximately 1.5% of the Fund's total return was attributable to proceeds received in a settlement
of litigation seeking recovery of investment losses previously realized by the Fund.
++++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Financial Highlights (continued)
Investor A
For the Six
The following per share data and ratios Months Ended
have been derived from information February 28, 2007 For the Year Ended August 31,
provided in the financial statements. (Unaudited) 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 18.91 $ 17.80 $ 15.29 $ 14.89 $ 13.63 $ 17.23
----------- ----------- ----------- ----------- ----------- -----------
Investment income (loss)--net*** --+++ .05 .12 (.06) (.04) (.05)
Realized and unrealized gain (loss)--net .47 1.18 2.39 .46 1.30 (3.55)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .47 1.23 2.51 .40 1.26 (3.60)
----------- ----------- ----------- ----------- ----------- -----------
Less dividends from investment income--net -- (.12) -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 19.38 $ 18.91 $ 17.80 $ 15.29 $ 14.89 $ 13.63
=========== =========== =========== =========== =========== ===========
Total Investment Return**
Based on net asset value per share 2.49%++++ 7.00%++ 16.42% 2.69% 9.24% (20.89%)
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses 1.13%* 1.12% 1.16% 1.16% 1.18% 1.18%
=========== =========== =========== =========== =========== ===========
Investment income (loss)--net .02%* .24% .71% (.38%) (.29%) (.33%)
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 1,606,026 $ 1,635,443 $ 1,651,135 $ 1,587,995 $ 1,544,751 $ 1,384,765
=========== =========== =========== =========== =========== ===========
Portfolio turnover 49.75% 60.14% 87.68% 78.23% 108.34% 92.35%
=========== =========== =========== =========== =========== ===========
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Based on average shares outstanding.
++ Approximately 1.5% of the Fund's total return was attributable to proceeds received in a settlement
of litigation seeking recovery of investment losses previously realized by the Fund.
++++ Aggregate total investment return.
+++ Amount is less than $.01 per share.
See Notes to Financial Statements.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Financial Highlights (continued)
Investor B
For the Six
The following per share data and ratios Months Ended
have been derived from information February 28, 2007 For the Year Ended August 31,
provided in the financial statements. (Unaudited) 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 17.26 $ 16.26 $ 14.07 $ 13.81 $ 12.74 $ 16.24
----------- ----------- ----------- ----------- ----------- -----------
Investment loss--net*** (.07) (.09) (.01) (.17) (.13) (.17)
Realized and unrealized gain (loss)--net .43 1.09 2.20 .43 1.20 (3.33)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .36 1.00 2.19 .26 1.07 (3.50)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 17.62 $ 17.26 $ 16.26 $ 14.07 $ 13.81 $ 12.74
=========== =========== =========== =========== =========== ===========
Total Investment Return**
Based on net asset value per share 2.09%++++ 6.15%++ 15.57% 1.88% 8.40% (21.55%)
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses 1.89%* 1.90% 1.94% 1.93% 1.97% 1.96%
=========== =========== =========== =========== =========== ===========
Investment loss--net (.74%)* (.55%) (.05%) (1.16%) (1.08%) (1.10%)
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 748,598 $ 896,007 $ 1,193,442 $ 1,445,258 $ 1,685,904 $ 1,802,731
=========== =========== =========== =========== =========== ===========
Portfolio turnover 49.75% 60.14% 87.68% 78.23% 108.34% 92.35%
=========== =========== =========== =========== =========== ===========
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Based on average shares outstanding.
++ Approximately 1.5% of the Fund's total return was attributable to proceeds received in a settlement
of litigation seeking recovery of investment losses previously realized by the Fund.
++++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Financial Highlights (continued)
Investor C
For the Six
The following per share data and ratios Months Ended
have been derived from information February 28, 2007 For the Year Ended August 31,
provided in the financial statements. (Unaudited) 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 17.35 $ 16.35 $ 14.15 $ 13.89 $ 12.82 $ 16.34
----------- ----------- ----------- ----------- ----------- -----------
Investment loss--net*** (.07) (.09) (.01) (.17) (.14) (.17)
Realized and unrealized gain (loss)--net .43 1.09 2.21 .43 1.21 (3.35)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .36 1.00 2.20 .26 1.07 (3.52)
----------- ----------- ----------- ----------- ----------- -----------
Less dividends from investment income--net -- --+++ -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 17.71 $ 17.35 $ 16.35 $ 14.15 $ 13.89 $ 12.82
=========== =========== =========== =========== =========== ===========
Total Investment Return**
Based on net asset value per share 2.07%++++ 6.15%++ 15.55% 1.87% 8.35% (21.54%)
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses 1.90%* 1.91% 1.95% 1.94% 1.98% 1.97%
=========== =========== =========== =========== =========== ===========
Investment loss--net (.76%)* (.54%) (.10%) (1.17%) (1.09%) (1.11%)
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 844,023 $ 836,032 $ 782,172 $ 692,924 $ 608,176 $ 596,871
=========== =========== =========== =========== =========== ===========
Portfolio turnover 49.75% 60.14% 87.68% 78.23% 108.34% 92.35%
=========== =========== =========== =========== =========== ===========
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Based on average shares outstanding.
++ Approximately 1.5% of the Fund's total return was attributable to proceeds received in a settlement
of litigation seeking recovery of investment losses previously realized by the Fund.
++++ Aggregate total investment return.
+++ Amount is less than $(.01) per share.
See Notes to Financial Statements.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Financial Highlights (concluded)
Class R
For the Six For the Period
The following per share data and ratios Months Ended For the Year Ended January 3, 2003++
have been derived from information February 28, 2007 August 31, to August 31,
provided in the financial statements. (Unaudited) 2006 2005 2004 2003
Per Share Operating Performance
Net asset value, beginning of period $ 17.60 $ 16.60 $ 14.28 $ 13.95 $ 12.13
----------- ----------- ----------- ----------- -----------
Investment income (loss)--net** (.02) --+++++ .06 (.09) (.02)
Realized and unrealized gain--net .43 1.10 2.26 .42 1.84
----------- ----------- ----------- ----------- -----------
Total from investment operations .41 1.10 2.32 .33 1.82
----------- ----------- ----------- ----------- -----------
Less dividends from investment income--net -- (.10) -- -- --
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 18.01 $ 17.60 $ 16.60 $ 14.28 $ 13.95
=========== =========== =========== =========== ===========
Total Investment Return
Based on net asset value per share 2.33%+++ 6.70%++++ 16.25% 2.37% 15.00%+++
=========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses 1.39%* 1.37% 1.41% 1.41% 1.42%*
=========== =========== =========== =========== ===========
Investment income (loss)--net (.24%)* --%++++++++ .39% (.60%) (.53%)*
=========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 38,337 $ 34,633 $ 21,066 $ 10,254 $ 14
=========== =========== =========== =========== ===========
Portfolio turnover 49.75% 60.14% 87.68% 78.23% 108.34%
=========== =========== =========== =========== ===========
* Annualized.
** Based on average shares outstanding.
++ Commencement of operations.
++++ Approximately 1.5% of the Fund's total return was attributable to proceeds received in a settlement
of litigation seeking recovery of investment losses previously realized by the Fund.
+++ Aggregate total investment return.
+++++ Amount is less than $.01 per share.
++++++++ Amount is less than .01%.
See Notes to Financial Statements.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Notes to Financial Statements (Unaudited)
1. Significant Accounting Policies:
BlackRock Fundamental Growth Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's financial statements are prepared in
conformity with U.S. generally accepted accounting principles, which may
require the use of management accruals and estimates. Actual results may
differ from these estimates. These unaudited financial statements reflect all
adjustments, which are, in the opinion of management, necessary to present a
fair statement of the results for the interim period. All such adjustments are
of a normal, recurring nature. The Fund offers multiple classes of shares.
Effective October 2, 2006, Class I, Class A, Class B and Class C Shares were
redesignated Institutional, Investor A, Investor B and Investor C Shares,
respectively. Class R Shares did not change their designation. Institutional
Shares are sold only to certain eligible investors. Investor A Shares are sold
with a front-end sales charge. Shares of Investor B and Investor C may be
subject to a contingent deferred sales charge. Class R Shares are sold only to
certain retirement plans. All classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and conditions,
except that Investor A, Investor B, Investor C and Class R Shares bear certain
expenses related to the shareholder servicing of such shares, and Investor B,
Investor C and Class R Shares also bear certain expenses related to the
distribution of such shares. Each class has exclusive voting rights with
respect to matters relating to its shareholder servicing and distribution
expenditures (except that Investor B shareholders may vote on material changes
to the Investor A distribution plan). Income, expenses (other than expenses
attributable to a specific class) and realized and unrealized gains and losses
are allocated daily to each class based on its relative net assets. The
following is a summary of significant accounting policies followed by the
Fund.
(a) Valuation of investments--Equity securities held by the Fund that are
traded on stock exchanges or the NASDAQ Global Market are valued at the last
sale price or official close price on the exchange, as of the close of
business on the day the securities are being valued or, lacking any sales, at
the last available bid price for long positions, and at the last available
asked price for short positions. In cases where equity securities are traded
on more than one exchange, the securities are valued on the exchange
designated as the primary market by or under the authority of the Board of
Directors of the Fund. Long positions traded in the over-the-counter ("OTC")
market, NASDAQ Capital Market or Bulletin Board are valued at the last
available bid price or yield equivalent obtained from one or more dealers or
pricing services approved by the Board of Directors of the Fund. Short
positions traded in the OTC market are valued at the last available asked
price. Portfolio securities that are traded both in the OTC market and on a
stock exchange are valued according to the broadest and most representative
market.
Options written or purchased are valued at the last sale price in the case of
exchange-traded options. Options traded in the OTC market are valued at the
last asked price (options written) or the last bid price (options purchased).
Swap agreements are valued based upon quoted fair valuations received daily by
the Fund from a pricing service or counterparty. Financial futures contracts
and options thereon, which are traded on exchanges, are valued at their last
sale price as of the close of such exchanges. Obligations with remaining
maturities of 60 days or less are valued at amortized cost unless BlackRock
Advisors, LLC (the "Manager"), an indirect, wholly owned subsidiary of
BlackRock, Inc., believes that this method no longer produces fair valuations.
Valuation of other short-term investment vehicles is generally based on the
net asset value of the underlying investment vehicle or amortized cost.
Repurchase agreements are valued at cost plus accrued interest. The Fund
employs pricing services to provide certain securities prices for the Fund.
Securities and assets for which market quotations are not readily available
are valued at fair value as determined in good faith by or under the direction
of the Board of Directors of the Fund, including valuations furnished by the
pricing services retained by the Fund, which may use a matrix system for
valuations. The procedures of a pricing service and its valuations are
reviewed by the officers of the Fund under the general supervision of the
Fund's Board of Directors. Such valuations and procedures will be reviewed
periodically by the Board of Directors of the Fund.
Generally, trading in foreign securities, as well as U.S. government
securities, money market instruments and certain fixed income securities, is
substantially completed each day at various times prior to the close of
business on the New York Stock Exchange ("NYSE"). The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates will generally be
determined as of the close of business on the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of business on
the NYSE that may not be reflected in the computation of the Fund's net asset
value. If events (for example, a company announcement, market volatility or a
natural disaster) occur during such periods that are expected to materially
affect the value of such securities, those securities will be valued at their
fair value as determined in good faith by the Fund's Board of Directors or by
the Manager using a pricing service and/or procedures approved by the Fund's
Board of Directors.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Notes to Financial Statements (continued)
(b) Derivative financial instruments--The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movements and movements in the
securities markets. Losses may arise due to changes in the value of the
contract or if the counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell financial futures
contracts and options on such financial futures contracts. Financial futures
contracts are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a contract,
the Fund deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to the
contract, the Fund agrees to receive from or pay to the broker an amount of
cash equal to the daily fluctuation in value of the contract. Such receipts or
payments are known as variation margin and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
* Options--The Fund may write and purchase call and put options. When the Fund
writes an option, an amount equal to the premium received by the Fund is
reflected as an asset and an equivalent liability. The amount of the liability
is subsequently marked-to-market to reflect the current value of the option
written. When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or deducted from)
the basis of the security acquired or deducted from (or added to) the proceeds
of the security sold. When an option expires (or the Fund enters into a
closing transaction), the Fund realizes a gain or loss on the option to the
extent of the premiums received or paid (or gain or loss to the extent the
cost of the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Foreign currency transactions--Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized.
Assets and liabilities denominated in foreign currencies are valued at the
exchange rate at the end of the period. Foreign currency transactions are the
result of settling (realized) or valuing (unrealized) assets or liabilities
expressed in foreign currencies into U.S. dollars. Realized and unrealized
gains or losses from investments include the effects of foreign exchange rates
on investments. The Fund invests in foreign securities, which may involve a
number of risk factors and special considerations not present with investments
in securities of U.S. corporations.
(d) Income taxes--It is the Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required. Under the applicable
foreign tax law, a withholding tax may be imposed on interest, dividends and
capital gains at various rates.
(e) Recent accounting pronouncements--In July 2006, the Financial Accounting
Standards Board ("FASB") issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes--an interpretation of FASB Statement No. 109."
FIN 48 prescribes the minimum recognition threshold a tax position must meet
in connection with accounting for uncertainties in income tax positions taken
or expected to be taken by an entity including mutual funds before being
measured and recognized in the financial statements. Adoption of FIN 48 is
required for the last net asset value calculation in the first required
financial statement reporting period for fiscal years beginning after December
15, 2006. The impact on the Fund's financial statements, if any, is currently
being assessed.
In September 2006, Statement of Financial Accounting Standards No. 157, "Fair
Value Measurements" ("FAS 157"), was issued and is effective for fiscal years
beginning after November 15, 2007. FAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. At this time, management is evaluating the implications of FAS
157 and its impact on the Fund's financial statements, if any, has not been
determined.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Notes to Financial Statements (continued)
In addition, in February 2007, FASB issued "Statement of Financial Accounting
Standards No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities" ("FAS 159"), which is effective for fiscal years beginning after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also
elects to apply the provisions of FAS 157. FAS 159 permits entities to choose
to measure many financial instruments and certain other items at fair value
that are not currently required to be measured at fair value. FAS 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. At this time, management is
evaluating the implications of FAS 159 and its impact on the Fund's financial
statements, if any, has not been determined.
(f) Security transactions and investment income--Security transactions are
recorded on the dates the trans-actions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Dividends from foreign securities where the ex-dividend date may have passed
are subsequently recorded when the Fund has determined the ex-dividend date.
Interest income is recognized on the accrual basis.
(g) Prepaid registration fees--Prepaid registration fees are charged to
expense as the related shares are issued.
(h) Dividends and distributions--Dividends and distributions paid by the Fund
are recorded on the ex-dividend dates.
(i) Securities lending--The Fund may lend securities to financial institutions
that provide cash or securities issued or guaranteed by the U.S. government as
collateral, which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. The market
value of the loaned securities is determined at the close of business of the
Fund and any additional required collateral is delivered to the Fund on the
next business day. Where the Fund receives securities as collateral for the
loaned securities, it collects a fee from the borrower. The Fund typically
receives the income on loaned securities but does not receive the income on
the collateral. Where the Fund receives cash collateral, it may invest such
collateral and retain the amount earned on such investment, net of any amount
rebated to the borrower. Loans of securities are terminable at any time and
the borrower, after notice, is required to return borrowed securities within
five business days. The Fund may pay reasonable finder's, lending agent,
administrative and custodial fees in connection with its loans. In the event
that the borrower defaults on its obligation to return borrowed securities
because of insolvency or for any other reason, the Fund could experience
delays and costs in gaining access to the collateral. The Fund also could
suffer a loss where the value of the collateral falls below the market value
of the borrowed securities, in the event of borrower default or in the event
of losses on investments made with cash collateral.
2. Investment Advisory Agreement and Transactions with Affiliates:
On September 29, 2006, BlackRock, Inc. and Merrill Lynch & Co., Inc. ("Merrill
Lynch") combined Merrill Lynch's investment management business, Merrill Lynch
Investment Managers, L.P. ("MLIM"), and its affiliates, with BlackRock, Inc.
to create a new independent company. Merrill Lynch has a 49.8% economic
interest and a 45% voting interest in the combined company and The PNC
Financial Services Group, Inc. ("PNC") has approximately a 34% economic and
voting interest. The new company operates under the BlackRock name and is
governed by a board of directors with a majority of independent members.
The Investment Advisory Agreement between the Fund and the Manager became
effective on September 29, 2006. Prior to September 29, 2006, MLIM was the
Fund's manager. The general partner of MLIM is Princeton Services, Inc.
("PSI"), an indirect, wholly owned subsidiary of Merrill Lynch, which is the
limited partner. The Fund has also entered into separate Distribution
Agreements and Distribution Plans with FAM Distributors, Inc. ("FAMD") and
BlackRock Distributors, Inc. ("BDI") (collectively, the "Distributor"). FAMD
is a wholly owned subsidiary of Merrill Lynch Group, Inc. and BDI is an
affiliate of BlackRock, Inc.
The Manager is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operation of the Fund. For such services, the Fund
pays a monthly fee at an annual rate of .65% of the average net assets of the
Fund not exceeding $1 billion, .625% of average net assets of the Fund in
excess of $1 billion but not exceeding $1.5 billion, .60% of net assets in
excess of $1.5 billion but not exceeding $5 billion, .575% of net assets in
excess of $5 billion but not exceeding $7.5 billion and .55% of net assets in
excess of $7.5 billion.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Notes to Financial Statements (continued)
In addition, the Manager has entered into a sub-advisory agreement with
BlackRock Investment Management, LLC ("BIM"), an affiliate of the Manager,
under which the Manager pays BIM for services it provides a monthly fee at an
annual rate equal to a percentage of the management fee paid by the Fund to
the Manager.
Pursuant to the Distribution Plans adopted by the Fund in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Fund pays the Distributor
ongoing service and distribution fees. The fees are accrued daily and paid
monthly at annual rates based upon the average daily net assets of the shares
as follows:
Service Distribution
Fee Fee
Investor A .25% --
Investor B .25% .75%
Investor C .25% .75%
Class R .25% .25%
Pursuant to sub-agreements with each Distributor, broker-dealers, including
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a wholly owned
subsidiary of Merrill Lynch, and each Distributor provides shareholder
servicing and distribution services to the Fund. The ongoing service fee
compensates the Distributor and each broker-dealer (including MLPF&S) for
providing shareholder services to Investor A, Investor B, Investor C and Class
R shareholders. The ongoing distribution fee compensates each Distributor and
MLPF&S for providing shareholder servicing and distribution-related services
to Investor B, Investor C and Class R shareholders.
For the six months ended February 28, 2007, FAMD, the Funds' sole Distributor
until September 29, 2006, and BDI earned underwriting discounts and direct
commissions and MLPF&S and BDI earned dealer concessions on sales of the
Fund's Institutional and Investor A Shares as follows:
Institutional Investor A
FAMD $ 585 $ 28,630
BDI -- $ 78
MLPF&S $ 585 $ 362,309
For the six months ended February 28, 2007, MLPF&S received contingent
deferred sales charges of $145,688 and $28,985 relating to transactions in
Investor B and Investor C Shares, respectively. In addition, BDI received
contingent deferred sales charges of $186 and $123 relating to transactions in
Investor B and Investor C Shares, respectively.
Furthermore, MLPF&S received contingent deferred sales charges of $1,208
relating to transactions subject to front-end sales charge waivers in Investor
A Shares.
The Manager maintains a call center, which is responsible for providing
certain shareholder services to the Fund, such as responding to shareholder
inquiries and processing transactions based upon instructions from
shareholders with respect to the subscription and redemption of Fund shares.
During the period September 29, 2006 to February 28, 2007, the following
amounts have been accrued by the Fund to reimburse the Manager for costs
incurred running the call center, which are a component of the transfer agent
fees in the accompanying Statements of Operations.
Call Center Fees
Institutional $ 5,507
Investor A $22,827
Investor B $12,186
Investor C $ 7,384
Class R $ 207
The Fund has received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to MLPF&S or its
affiliates. As of February 28, 2007, the Fund lent securities with a value of
$416,006,909 to MLPF&S or its affiliates. Pursuant to that order, the Fund has
retained BIM as the securities lending agent for a fee based on a share of the
returns on investment of cash collateral. Prior to September 29, 2006, BIM was
organized as Merrill Lynch Investment Managers, LLC ("MLIM, LLC"), an
affiliate of MLIM, and MLIM, LLC was the securities lending agent. BIM may, on
behalf of the Fund, invest cash collateral received by the Fund for such
loans, among other things, in a private investment company managed by the
Manager or its affiliates. For the six months ended February 28, 2007, BIM
received $164,460 in securities lending agent fees.
In addition, MLPF&S received $904,022 in commissions on the execution of
portfolio security transactions for the Fund for the six months ended February
28, 2007.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Notes to Financial Statements (continued)
For the six months ended February 28, 2007, the Fund reimbursed MLIM and
the Manager $7,889 and $39,447, respectively, for certain accounting
services.
Effective September 29, 2006, PFPC Inc., an indirect, wholly owned
subsidiary of PNC and an affiliate of the Manager, became the Fund's
transfer agent. Prior to September 29, 2006, the Fund's transfer agent was
Financial Data Services, Inc. ("FDS"), a wholly owned subsidiary of Merrill
Lynch.
Prior to September 29, 2006, certain officers and/or directors of the Fund
were officers and/or directors of MLIM, PSI, FDS, FAMD, Merrill Lynch,
and/or MLIM, LLC.
Commencing September 29, 2006, certain officers and/or directors of the
Fund are officers and/or directors of BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
six months ended February 28, 2007 were $2,262,182,493 and $2,533,589,474,
respectively.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions was
$340,012,243 and $753,849,258 for the six months ended February 28, 2007 and
the year ended August 31, 2006, respectively.
Transactions in capital shares for each class were as follows:
Institutional Shares for
the Six Months Ended Dollar
February 28, 2007 Shares Amount
Shares sold 5,389,031 $ 107,571,352
Shares redeemed (10,144,549) (202,349,428)
--------------- ---------------
Net decrease (4,755,518) $ (94,778,076)
=============== ===============
Institutional Shares for the Dollar
Year Ended August 31, 2006 Shares Amount
Shares sold 14,744,236 $ 284,460,127
Shares issued to shareholders in
Reinvestment of dividends 688,158 12,077,182
--------------- ---------------
Total issued 15,432,394 296,537,309
Shares redeemed (30,224,344) (580,764,592)
--------------- ---------------
Net decrease (14,791,950) $ (284,227,283)
=============== ===============
Investor A Shares for
the Six Months Ended Dollar
February 28, 2007 Shares Amount
Shares sold 9,306,065 $ 180,821,108
Automatic conversion of shares 339,712 6,356,700
--------------- ---------------
Total issued 9,645,777 187,177,808
Shares redeemed (13,248,455) (258,359,366)
--------------- ---------------
Net decrease (3,602,678) $ (71,181,558)
=============== ===============
Investor A Shares for the Dollar
Year Ended August 31, 2006 Shares Amount
Shares sold 13,955,267 $ 262,397,648
Automatic conversion of shares 7,807,568 145,861,375
Shares issued to shareholders in
reinvestment of dividends 609,641 10,473,631
--------------- ---------------
Total issued 22,372,476 418,732,654
Shares redeemed (28,628,662) (538,229,658)
--------------- ---------------
Net decrease (6,256,186) $ (119,497,004)
=============== ===============
Investor B Shares for
the Six Months Ended Dollar
February 28, 2007 Shares Amount
Shares sold 2,744,660 $ 48,630,877
--------------- ---------------
Automatic conversion of shares (372,259) (6,356,700)
Shares redeemed (11,794,461) (209,517,677)
--------------- ---------------
Total redeemed (12,166,720) (215,874,377)
--------------- ---------------
Net decrease (9,422,060) $ (167,243,500)
=============== ===============
Investor B Shares for the Dollar
Year Ended August 31, 2006 Shares Amount
Shares sold 7,628,651 $ 131,149,007
--------------- ---------------
Automatic conversion of shares (8,521,893) (145,861,375)
Shares redeemed (20,587,617) (353,872,926)
--------------- ---------------
Total redeemed (29,109,510) (499,734,301)
--------------- ---------------
Net decrease (21,480,859) $ (368,585,294)
=============== ===============
Investor C Shares for
the Six Months Ended Dollar
February 28, 2007 Shares Amount
Shares sold 5,598,216 $ 99,858,393
Shares redeemed (6,127,254) (109,584,442)
--------------- ---------------
Net decrease (529,038) $ (9,726,049)
=============== ===============
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
Notes to Financial Statements (concluded)
Investor C Shares for the Dollar
Year Ended August 31, 2006 Shares Amount
Shares sold 11,895,857 $ 205,984,627
Shares issued to shareholders in
Reinvestment of dividends 12,464 197,936
--------------- ---------------
Total issued 11,908,321 206,182,563
Shares redeemed (11,558,786) (200,032,860)
--------------- ---------------
Net increase 349,535 $ 6,149,703
=============== ===============
Class R Shares for
the Six Months Ended Dollar
February 28, 2007 Shares Amount
Shares sold 517,959 $ 9,400,868
Shares redeemed (357,336) (6,483,928)
--------------- ---------------
Net increase 160,623 $ 2,916,940
=============== ===============
Class R Shares for the Dollar
Year Ended August 31, 2006 Shares Amount
Shares sold 1,183,794 $ 20,752,937
Shares issued to share-
holders in reinvestment
of dividends 8,090 129,598
--------------- ---------------
Total issued 1,191,884 20,882,535
Shares redeemed (493,107) (8,571,915)
--------------- ---------------
Net increase 698,777 $ 12,310,620
=============== ===============
5. Short-Term Borrowings:
The Fund, along with certain other funds managed by the Manager and its
affiliates, is a party to a $500,000,000 credit agreement with a group of
lenders. The Fund may borrow under the credit agreement to fund shareholder
redemptions and for other lawful purposes other than for leverage. The Fund
may borrow up to the maximum amount allowable under the Fund's current
prospectus and statement of additional information, subject to various other
legal, regulatory or contractual limits. On November 22, 2006, the credit
agreement was renewed for one year under substantially the same terms. The
Fund pays a commitment fee of .06% per annum based on the Fund's pro rata
share of the unused portion of the credit agreement. Amounts borrowed under
the credit agreement bear interest at a rate equal to, at each fund's
election, the federal funds rate plus .35% or a base rate as defined in the
credit agreement. The Fund did not borrow under the credit agreement during
the six months ended February 28, 2007.
6. Capital Loss Carryforward:
On August 31, 2006, the Fund had a net capital loss carryforward of
$1,912,734,698, of which $14,506,158 expires in 2009, $529,772,863 expires in
2010, $1,300,237,466 expires in 2011 and $68,218,211 expires in 2012. This
amount will be available to offset like amounts of any future taxable gains.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
BlackRock Funds
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former
fund investors and individual clients (collectively, "Clients") and to
safeguarding their nonpublic personal information. The following information
is provided to help you understand what personal information BlackRock
collects, how we protect that information and why in certain cases we share
such information with select parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal nonpublic 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 Web sites.
BlackRock does not sell or disclose to nonaffiliated third parties any
nonpublic personal information about its Clients, except as permitted by law
or as is necessary to service Client accounts. These nonaffiliated third
parties are required to protect the confidentiality and security of this
information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that
may be of interest to you. In addition, BlackRock restricts access to
nonpublic personal information about its Clients to those BlackRock employees
with a legitimate business need for the information. BlackRock maintains
physical, electronic and procedural safeguards that are designed to protect
the nonpublic personal information of its Clients, including procedures
relating to the proper storage and disposal of such information.
Availability of Additional Information
Electronic copies of most financial reports and prospectuses are available on
the Fund's Web site or shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Fund's electronic delivery program.
To enroll:
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor. Please note that not all investment
advisers, banks or brokerages may offer this service.
Shareholders Who Hold Accounts Directly with BlackRock:
1) Access the BlackRock Web site at
http://www.blackrock.com/edelivery
2) Select eDelivery under the More Information section
3) Log into your account
The Fund will mail only one copy of shareholder documents, including
prospectuses, annual and semi-annual reports and proxy statements, to
shareholders with multiple accounts at the same address. This practice is
commonly called "householding" and it is intended to reduce expenses and
eliminate duplicate mailings of shareholder documents. Mailings of your
shareholder documents may be householded indefinitely unless you instruct us
otherwise. If you do not want the mailing of these documents to be combined
with those for other members of your household, please contact the Fund at
(800) 441-7762.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
BlackRock Funds (concluded)
Availability of Additional Information (concluded)
Availability of Proxy Voting Policies and Procedures
The Fund has delegated proxy voting responsibilities to BlackRock and its
affiliates, subject to the general oversight of the Fund's Board of Directors.
A description of the policies and procedures that BlackRock and its affiliates
use to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, on our Web site at www.blackrock.com,
by calling (800) 441-7762, or on the Web site of the Securities and Exchange
Commission (the "Commission") at http://www.sec.gov.
Availability of Proxy Voting Record
Information on how proxies relating to the Fund's voting securities were voted
(if any) by the Fund's previous manager during the most recent 12-month period
ended June 30 is available, upon request and without charge, on our Web site
at www.blackrock.com, by calling (800) 441-7762 or on the Web site of the
Commission at http://www.sec.gov.
Availability of Quarterly Portfolio Schedule
The Fund files its complete schedule of portfolio holdings for the first and
third quarters of its fiscal year with the Commission on Form N-Q. The Fund's
Forms N-Q are available on the Commission's Web site at http://www.sec.gov and
may be reviewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330. The Fund's Forms N-Q may also
be obtained upon request, without charge, by calling (800) 441-7762.
Shareholder Privileges
Account Information
Call us at (800) 441-7762 8:00 AM - 6:00 PM EST to get information about your
account balances, recent transactions and share prices. You can also reach us
on the Web at 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 portfolios.
Systematic Withdrawal Plans
Investor Class shareholders can establish a systematic withdrawal plan and
receive periodic payments of $50 or more from their BlackRock portfolios, as
long as their account is at least $10,000.
Retirement Plans
Shareholders may make investments in conjunction with Traditional, Rollover,
Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
A World-Class Mutual Fund Family
BlackRock now offers an expanded lineup of open-end mutual funds. Our range
includes more than 85 funds crossing all investment styles and managed by
experts in equity, fixed income and tax-exempt investing.
Equity Portfolios
BlackRock All-Cap Global Resources Portfolio
BlackRock Aurora Portfolio
BlackRock Asset Allocation Portfolio++
BlackRock Balanced Capital Fund++
BlackRock Basic Value Fund
BlackRock Developing Capital Markets Fund
BlackRock Equity Dividend Fund
BlackRock EuroFund
BlackRock Focus Twenty Fund
BlackRock Focus Value Fund
BlackRock Fundamental Growth Fund
BlackRock Global Allocation Fund++
BlackRock Global Dynamic Equity Fund
BlackRock Global Financial Services Fund
BlackRock Global Growth Fund
BlackRock Global Opportunities Portfolio
BlackRock Global Resources Portfolio*
BlackRock Global Science & Technology
Opportunities Portfolio
BlackRock Global SmallCap Fund
BlackRock Global Technology Fund
BlackRock Global Value Fund
BlackRock Healthcare Fund
BlackRock Health Sciences Opportunities Portfolio
BlackRock Index Equity Portfolio*
BlackRock International Fund
BlackRock International Index Fund
BlackRock International Opportunities Portfolio*
BlackRock International Value Fund
BlackRock Investment Trust
BlackRock Large Cap Core Fund
BlackRock Large Cap Growth Fund
BlackRock Large Cap Value Fund
BlackRock Latin America Fund
BlackRock Capital Appreciation Portfolio
BlackRock Mid-Cap Growth Equity Portfolio
BlackRock Mid-Cap Value Equity Portfolio
BlackRock Mid Cap Value Opportunities Fund
BlackRock Natural Resources Trust
BlackRock Pacific Fund
BlackRock Small Cap Core Equity Portfolio
BlackRock Small Cap Growth Equity Portfolio
BlackRock Small Cap Growth Fund II
BlackRock Small Cap Index Fund
BlackRock Small Cap Value Equity Portfolio*
BlackRock Small/Mid-Cap Growth Portfolio
BlackRock S&P 500 Index Fund
BlackRock U.S. Opportunities Portfolio
BlackRock Utilities and Telecommunications Fund
BlackRock Value Opportunities Fund
Fixed Income Portfolios
BlackRock Bond Fund
BlackRock Enhanced Income Portfolio
BlackRock GNMA Portfolio
BlackRock Government Income Portfolio
BlackRock High Income Fund
BlackRock High Yield Bond Portfolio
BlackRock Inflation Protected Bond Portfolio
BlackRock Intermediate Bond Portfolio
BlackRock Intermediate Bond Portfolio II
BlackRock Intermediate Government
Bond Portfolio
BlackRock International Bond Portfolio
BlackRock Low Duration Bond Portfolio
BlackRock Managed Income Portfolio
BlackRock Real Investment Fund
BlackRock Short-Term Bond Fund
BlackRock Total Return Portfolio
BlackRock Total Return Portfolio II
BlackRock World Income Fund
Municipal Bond Portfolios
BlackRock AMT-Free Municipal Bond Portfolio
BlackRock California Insured Municipal Bond Fund
BlackRock Delaware Municipal Bond Portfolio
BlackRock Florida Municipal Bond Fund
BlackRock High Yield Municipal Fund
BlackRock Intermediate Municipal Fund
BlackRock Kentucky Municipal Bond Portfolio
BlackRock Municipal Insured Fund
BlackRock National Municipal Fund
BlackRock New Jersey Municipal Bond Fund
BlackRock New York Municipal Bond Fund
BlackRock Ohio Municipal Bond Portfolio
BlackRock Pennsylvania Municipal Bond Fund
BlackRock Short-Term Municipal Fund
Money Market Portfolios
BlackRock Money Market Portfolio
BlackRock Municipal Money Market Portfolio+++
BlackRock NC Municipal MM Portfolio+++
BlackRock NJ Municipal MM Portfolio+++
BlackRock OH Municipal MM Portfolio+++
BlackRock PA Municipal MM Portfolio+++
BlackRock Summit Cash Reserves Fund*
BlackRock U.S. Treasury MM Portfolio
BlackRock VA Municipal MM Portfolio+++
* See the prospectus for information on specific
limitations on investments in the fund.
++ Mixed asset fund.
+++ Tax-exempt fund.
BlackRock mutual funds are distributed by BlackRock Distributors, Inc. and
certain funds are also distributed by FAM Distributors, Inc. You should
consider the investment objectives, risks, charges and expenses of the funds
under consideration carefully before investing. Each fund's prospectus
contains this and other information and is available at www.blackrock.com or
by calling 800-882-0052 or from your financial advisor. The prospectus should
be read carefully before investing.
BLACKROCK FUNDAMENTAL GROWTH FUND, INC. FEBRUARY 28, 2007
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 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 11 - Controls and Procedures
11(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others
particularly during the period in which this report is being
prepared. The registrant's certifying officers have determined that
the registrant's disclosure controls and procedures are effective
based on our evaluation of these controls and procedures as of a
date within 90 days prior to the filing date of this report.
11(b) - As of September 29, 2006, with the conclusion of the combination of
Merrill Lynch's asset management business with BlackRock, the
registrant was migrated to BlackRock's trading and compliance
monitoring systems, and various personnel changes occurred. In
conjunction with these business improvements, there were no changes
in the registrants internal control over financial reporting (as
defined in Rule 30a-3(d) under Act (17 CFR 270.30a-3(d)) that
occurred during the last fiscal half-year of the period covered by
this report that has materially affected, or is reasonably likely to
affect, the registrant's internal control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock Fundamental Growth Fund, Inc.
By: /s/ Robert C. Doll, Jr.
-----------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock Fundamental Growth Fund, Inc.
Date: April 23, 2007
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/ Robert C. Doll, Jr.
-----------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock Fundamental Growth Fund, Inc.
Date: April 23, 2007
By: /s/ Donald C. Burke
-------------------
Donald C. Burke,
Chief Financial Officer of
BlackRock Fundamental Growth Fund, Inc.
Date: April 23, 2007