UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-03595
Name of Fund: BlackRock Healthcare Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, BlackRock Healthcare Fund, Inc., 800 Scudders Mill Road,
Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011, Princeton,
NJ, 08543-9011
Registrant's telephone number, including area code: (800) 441-7762
Date of fiscal year end: 04/30/07
Date of reporting period: 05/01/06 - 04/30/07
Item 1 - Report to Stockholders
ALTERNATIVES BLACKROCK SOLUTIONS EQUITIES FIXED INCOME LIQUIDITY
REAL ESTATE
BlackRock
Healthcare Fund, Inc.
ANNUAL REPORT APRIL 30, 2007
(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 return and principal value
of shares will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost. Statements and other information herein are
as dated and are subject to change.
BlackRock Healthcare Fund, Inc.
P.O. Box 9011
Princeton, NJ 08543-9011
(GO PAPERLESS... logo)
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BlackRock Healthcare Fund, Inc.
Portfolio Information as of April 30, 2007
Percent of
Ten Largest Equity Holdings Net Assets
Abbott Laboratories 6.5%
Baxter International, Inc. 5.2
Emdeon Corp. 4.8
Intuitive Surgical, Inc. 4.0
Medco Health Solutions, Inc. 3.9
Celgene Corp. 3.7
SonoSite, Inc. 3.6
Hologic, Inc. 3.3
Cerner Corp. 3.2
Progenics Pharmaceuticals, Inc. 3.1
Percent of
Total
Geographic Allocation Investments
United States 58.4%
Switzerland 2.5
France 2.4
India 2.0
Denmark 1.6
United Kingdom 1.5
Germany 1.5
Japan 1.0
Cayman Islands 0.3
Other* 28.8
* Includes portfolio holdings in short-term investments.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
A Letter to Shareholders
Dear Shareholder
In its first four months, 2007 could already be termed an eventful year for
investors. For most financial markets, 2007 opened just as 2006 ended - on a
positive trajectory. Then, at the end of February and into March, 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 worries of a weakening economy, escalating
geopolitical concerns and rising delinquencies in the subprime mortgage
market. Still, underlying stock market fundamentals appeared quite sound,
supported by a generally favorable global economic backdrop, tame inflation,
slowing but still positive earnings growth, relatively low interest rates and
attractive valuations. These conditions prevailed later, and the Dow Jones
Industrial Average crossed the 13,000 mark for the first time in its history
in late April.
Not unlike the equity market, the bond market also experienced volatility as
observers attempted to interpret mixed economic signals. A bond market rally
(falling yields and rising prices) late last year reversed itself early in
2007 amid some transitory signs of economic strength. Overall, yields have
fluctuated month to month but ended April little changed from the beginning of
the year. However, compared to one year ago, yields on 30-year Treasury bonds
fell 36 basis points (.36%) and 10-year yields fell 44 basis points, while
prices correspondingly rose.
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 in its interest rate-
hiking campaign on August 8, 2006. The central bankers continue to express
concern about potential inflationary pressures, but also acknowledge signs of
economic weakness. Given this relatively "balanced" assessment, most observers
believe the Fed will keep interest rates on hold for now.
Against this backdrop, most major market indexes posted positive returns for
the annual and semi-annual reporting periods ended April 30, 2007:
Total Returns as of April 30, 2007 6-month 12-month
U.S. equities (Standard & Poor's 500 Index) + 8.60% +15.24%
Small cap U.S. equities (Russell 2000 Index) + 6.86 + 7.83
International equities (MSCI Europe, Australasia, Far East Index) +15.46 +19.81
Fixed income (Lehman Brothers Aggregate Bond Index) + 2.64 + 7.36
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 1.59 + 5.78
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index) + 6.96 +11.72
If the first four months are any guide, 2007 could be a year of enhanced
market volatility. As you navigate the un-certainties, we encourage you to
review your investment goals with your financial professional and to make
portfolio changes, as needed. For more insight, we invite you to view "What's
Ahead in 2007: An Investment Perspective" and "Are You Prepared for
Volatility?" at www.blackrock.com/funds. We thank you for entrusting BlackRock
with your investment assets, and we look forward to continuing to serve you in
the months and years ahead.
Sincerely,
(Robert C. Doll, Jr.)
Robert C. Doll, Jr.
Fund President and Director
THIS PAGE NOT PART OF YOUR FUND REPORT
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Discussion With Your Fund's Portfolio Manager
We continued our long-term strategy of stressing more growth-oriented health
care subsectors as well as more defensive holdings in order to balance upside
potential and downside risk in the portfolio.
How did the Fund perform during the fiscal year in light of the existing
market conditions?
For the 12-month period ended April 30, 2007, BlackRock Healthcare Fund,
Inc.'s Institutional, Investor A, Investor B, Investor C and Class R
Shares had total returns of +10.62%, +10.43%, +9.41%, +9.47% and +9.98%,
respectively. (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.) Fund performance
lagged the broader stock market as represented by the Standard & Poor's (S&P)
500 Index, which posted a total return of +15.24% for the 12-month period. The
Russell 3000 Healthcare Index returned +16.03% for the same period.
As the Fund's fiscal year began in May 2006, the broad equity market was at an
all-time high and still on the upswing based on expectations that the Federal
Reserve Board (the Fed) would suspend its two-year string of interest rate
hikes. Interest-rate-sensitive stocks led the rally while the more defensive
health care sector (in that it is less sensitive to interest rate movements)
ranked at the bottom of all U.S. industries in terms of performance at this
time. Shortly thereafter, the market pulled back as super-heated commodity
prices, especially metals prices, sparked inflationary concerns. The markets
again began to anticipate a rise in interest rates.
As 2006 progressed, inflationary fears settled back and the anticipated
interest rate hikes did not materialize. Investor concern shifted from
inflation to slowing economic growth and the possibility that it could
eventually lead the United States into recession. Investor speculation of a
Fed interest rate cut arose and continued amid the slow-growth, mildly
inflationary economy that developed. In this environment, the equity market,
as measured by the Dow Jones Industrial Average, rose steadily (albeit with a
pullback in March 2007) to a series of new all-time highs. The health care
sector moved from the bottom of the industry performance rankings in calendar
year 2006 to a leading position in early 2007. Investors recognized the
reasonable valuations, sturdy dividends (especially from pharmaceutical
companies), modest exposure to the anticipated weaker economy and currency
benefits from a weak U.S. dollar, as well as robust earnings stemming from the
new Medicare prescription drug program. Political concerns about the apparent
strength of congressional Democrats, who have declared pharmaceutical price
cuts to be a top priority in their agenda, were deferred. It was generally
judged that damaging legislation, although still a very real prospect, was
unlikely until 2009 at the earliest (after the 2008 election), with
implementation possible by sometime in 2010 or 2011.
The Fund's performance generally mirrored that of the health care sector, with
strength emerging in the fourth quarter of 2006 and continuing through period-
end. The major reason for the Fund's underperformance in the earlier part of
the fiscal year was its subsector allocation within the health care universe.
We adapted a somewhat more concentrated - but still diversified - portfolio
position in late 2006, and relative performance for the remainder of the
fiscal period improved. Our focus on the pharmaceutical industry for its
defensive characteristics and biotechnology for its upside potential proved to
be highly effective, and the Fund matched the market performance of both
subsectors during the last eight months of the fiscal year. Another positive
influence on Fund performance in the first four months of 2007 was our reduced
weighting in the managed care (HMO) subsector that resulted from the portfolio
changes in late 2006. As a consequence, the Fund outperformed the Russell 3000
Healthcare Index and the S&P 500 Index in the first four months of calendar
year 2007.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
What changes were made to the portfolio during the period?
During the 12-month period, the Fund's subsector weightings were only slightly
changed, but substantial changes to stock weightings took place due to market
price action. Abbott Laboratories, for example, rose by 37% to become the
Fund's largest position. This diversified pharmaceutical company appears
poised to become a leader in the drug-coated stent market, which should
supplement its well-accepted arthritis drug, Humira. We reduced our position
in Sanofi-Aventis as delays in U.S. approval of Acomplia, the company's
obesity-treatment drug, dampened our enthusiasm. In our pharmaceutical
holdings, we eliminated Wyeth and reduced our position in Novartis AG as we
diversified the portfolio. Important additions to the portfolio included Bayer
AG, a leading German drug and chemical company; Baxter International, Inc., a
diversified healthcare company; and Intuitive Surgical, Inc., the pioneer and
leading robotic surgery company.
In general, we continued our long-term strategy of stressing more growth-
oriented subsectors as well as more defensive holdings in order to balance
upside potential and downside risk. We have focused on biotechnology for its
upside potential based on new drug discoveries, and on pharmaceuticals for
their defensive strength due to reasonable valuations and substantial dividend
yields. Throughout the fiscal year, the number of holdings in the portfolio
decreased from 78 to 71 as we worked to increase the portfolio's liquidity by
shifting to large-capitalization positions.
How would you characterize the Fund's position at the close of the period?
On April 30, 2007, the Fund was more heavily weighted in large- and mid-cap
holdings, reflecting our deliberate effort to increase liquidity, given our
belief that the broader stock market advance had matured. U.S. holdings
accounted for 79.5% of the Fund's net assets at period-end, higher than a year
ago, as the earnings of larger domestic multinational companies were buoyed by
stronger non-U.S. currencies. The Fund's emphasis at fiscal year-end continued
to be on pharmaceuticals, medical devices and biotechnology companies.
Overall, we believe the Fund to be appropriately positioned in the climate
of economic slowdown and/or heightened inflation threat that existed at
period-end.
Jordan C. Schreiber
Vice President and Portfolio Manager
May 11, 2007
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 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 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 a maximum initial sales charge (front-end load)
or deferred sales charge. These shares are subject to a distribution fee of
0.25% per year and a service fee of 0.25% per year. Class R Shares are
available only to certain retirement plans. Prior to inception, Class R Share
performance results are those of Institutional Shares (which have no
distribution or service fees) restated for Class R Share fees.
Performance information reflects past performance 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 April 30, 2007 Total Return Total Return Total Return
Institutional Shares* +12.22% +10.62% +233.28%
Investor A Shares* +12.28 +10.43 +225.69
Investor B Shares* +11.59 + 9.41 +206.00
Investor C Shares* +11.62 + 9.47 +200.27
Class R Shares* +12.04 + 9.98 +218.94
S&P 500 (R) Index** + 8.60 +15.24 +116.81
* 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.
S&P 500 is a registered trademark of the McGraw-Hill Companies.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 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*++,
Class R Shares*++ compared to a similar investment in Standard & Poor's 500
Index++++. Values illustrated are as follows:
Institutional Shares*++
Date Value
April 1997 $10,000.00
April 1998 $14,406.00
April 1999 $16,136.00
April 2000 $20,663.00
April 2001 $23,675.00
April 2002 $24,363.00
April 2003 $20,449.00
April 2004 $25,131.00
April 2005 $25,381.00
April 2006 $30,127.00
April 2007 $33,328.00
Investor A Shares*++
Date Value
April 1997 $ 9,475.00
April 1998 $13,639.00
April 1999 $15,233.00
April 2000 $19,457.00
April 2001 $22,222.00
April 2002 $22,839.00
April 2003 $19,100.00
April 2004 $23,389.00
April 2005 $23,561.00
April 2006 $27,945.00
April 2007 $30,859.00
Investor B Shares*++
Date Value
April 1997 $10,000.00
April 1998 $14,260.00
April 1999 $15,799.00
April 2000 $20,063.00
April 2001 $22,728.00
April 2002 $23,148.00
April 2003 $19,235.00
April 2004 $23,384.00
April 2005 $23,363.00
April 2006 $27,710.00
April 2007 $30,600.00
Investor C Shares*++
Date Value
April 1997 $10,000.00
April 1998 $14,266.00
April 1999 $15,810.00
April 2000 $20,031.00
April 2001 $22,711.00
April 2002 $23,130.00
April 2003 $19,173.00
April 2004 $23,366.00
April 2005 $23,345.00
April 2006 $27,430.00
April 2007 $30,027.00
Class R Shares*++
Date Value
April 1997 $10,000.00
April 1998 $14,335.00
April 1999 $15,977.00
April 2000 $20,357.00
April 2001 $23,210.00
April 2002 $23,766.00
April 2003 $19,874.00
April 2004 $24,393.00
April 2005 $24,525.00
April 2006 $29,000.00
April 2007 $31,894.00
Standard & Poor's 500 Index++++
Date Value
April 1997 $10,000.00
April 1998 $14,107.00
April 1999 $17,185.00
April 2000 $18,926.00
April 2001 $16,471.00
April 2002 $14,391.00
April 2003 $12,476.00
April 2004 $15,330.00
April 2005 $16,302.00
April 2006 $18,815.00
April 2007 $21,681.00
* Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including advisory fees.
++ The Fund invests worldwide primarily in equity securities of companies
that, in the opinion of management, derive or are expected to derive a
substantial portion of their sales from products or services in health
care.
++++ This unmanaged Index covers 500 industrial, utility, transportation and
financial companies of the U.S. markets (mostly NYSE issues) representing
about 75% of NYSE market capitalization and 30% of NYSE issues.
Past performance is not indicative of future results.
Average Annual Total Return
Return
Institutional Shares
One Year Ended 4/30/07 +10.62%
Five Years Ended 4/30/07 + 6.47
Ten Years Ended 4/30/07 +12.79
Return Without Return With
Sales Charge Sales Charge*
Investor A Shares
One Year Ended 4/30/07 +10.43% + 4.63%
Five Years Ended 4/30/07 + 6.20 + 5.07
Ten Years Ended 4/30/07 +12.53 +11.93
Return Return
Without CDSC With CDSC++++++
Investor B Shares++
One Year Ended 4/30/07 + 9.41% + 5.36%
Five Years Ended 4/30/07 + 5.37 + 5.08
Ten Years Ended 4/30/07 +11.83 +11.83
Return Return
Without CDSC With CDSC++++++
Investor C Shares++++
One Year Ended 4/30/07 + 9.47% + 8.57%
Five Years Ended 4/30/07 + 5.36 + 5.36
Ten Years Ended 4/30/07 +11.62 +11.62
Return
Class R Shares
One Year Ended 4/30/07 + 9.98%
Five Years Ended 4/30/07 + 6.06
Ten Years Ended 4/30/07 +12.30
* 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 HEALTHCARE FUND, INC. APRIL 30, 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 November 1, 2006 and
held through April 30, 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 November 1, 2006
November 1, April 30, to April 30,
2006 2007 2007
Actual
Institutional $1,000 $1,122.20 $ 7.05
Investor A $1,000 $1,122.80 $ 8.32
Investor B $1,000 $1,115.90 $12.43
Investor C $1,000 $1,116.20 $12.44
Class R $1,000 $1,120.40 $10.20
Hypothetical (5% annual return before expenses)**
Institutional $1,000 $1,018.16 $ 6.71
Investor A $1,000 $1,016.96 $ 7.90
Investor B $1,000 $1,013.05 $11.83
Investor C $1,000 $1,013.05 $11.83
Class R $1,000 $1,021.18 $ 9.69
* For each class of the Fund, expenses are equal to the annualized expense ratio for the class
(1.34% for Institutional, 1.58% for Investor A, 2.37% for Investor B, 2.37% for Investor C and
1.94% 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 HEALTHCARE FUND, INC. APRIL 30, 2007
Schedule of Investments as of April 30, 2007 (in U.S. dollars)
Shares
Industry Common Stocks Held Value
Europe
Denmark--2.2%
Biotechnology--0.1%
Genmab A/S (a) 6,100 $ 426,138
Health Care Equipment
& Supplies--2.1%
William Demant Holding (a) 100,000 9,639,847
Total Common Stocks in Denmark 10,065,985
France--3.3%
Pharmaceuticals--3.3%
Flamel Technologies SA (a)(b)(f) 200,000 5,782,000
Sanofi-Aventis 100,000 9,153,683
Total Common Stocks in France 14,935,683
Germany--2.0%
Biotechnology--0.5%
GPC Biotech AG (a) 80,000 2,351,779
Chemicals--1.5%
Bayer AG 100,000 6,879,188
Total Common Stocks in Germany 9,230,967
Switzerland--3.4%
Biotechnology--0.4%
Speedel Holding AG (a) 12,700 1,845,456
Pharmaceuticals--3.0%
Novartis AG Registered Shares 100,000 5,809,572
Roche Holding AG 40,000 7,532,285
--------------
13,341,857
Total Common Stocks in
Switzerland 15,187,313
United Kingdom--2.1%
Pharmaceuticals--2.1%
Shire Pharmaceuticals Plc (b) 12,000 838,680
Shire Plc 370,000 8,576,450
--------------
9,415,130
Total Common Stocks in the
United Kingdom 9,415,130
Total Common Stocks in
Europe--13.0% 58,835,078
North America
Cayman Islands--0.4%
Pharmaceuticals--0.4%
Simcere Pharmacautical (a)(b) 109,000 1,809,400
Total Common Stocks in the
Cayman Islands 1,809,400
United States--79.5%
Biotechnology--16.9%
Arena Pharmaceuticals, Inc. (a) 50,000 651,500
Arqule, Inc. (a) 50,000 439,000
Celgene Corp. (a)(f) 274,000 16,757,840
Cephalon, Inc. (a)(f) 122,403 9,744,503
CytRx Corp. (a)(f) 300,000 1,239,000
Shares
Industry Common Stocks Held Value
North America (continued)
United States (continued)
Biotechnology (concluded)
Cytori Therapeutics, Inc. (a) 200,000 $ 1,130,000
Genentech, Inc. (a) 79,000 6,319,210
Genzyme Corp. (a) 42,000 2,743,020
Gilead Sciences, Inc. (a)(f) 145,000 11,849,400
La Jolla Pharmaceutical Co. (a) 36,400 230,412
Lexicon Genetics, Inc. (a) 80,000 280,800
Medarex, Inc. (a)(f) 290,000 3,970,100
Nabi Biopharmaceuticals (a) 200,000 1,040,000
Progenics Pharmaceuticals, Inc. (a) 570,533 13,806,899
Vertex Pharmaceuticals, Inc. (a)(f) 187,900 5,776,046
Vical, Inc. (a) 120,000 588,000
--------------
76,565,730
Food & Staples Retailing--0.8%
CVS Corp./Caremark Corp. 100,000 3,624,000
Health Care Equipment
& Supplies--26.4%
Accuray, Inc. (a) 142,500 3,363,000
Baxter International, Inc. 413,000 23,388,190
Boston Scientific Corp. (a) 71,700 1,107,048
Cytyc Corp. (a)(f) 361,000 12,718,030
DexCom, Inc. (a)(f) 90,300 719,691
ev3, Inc. (a) 60,000 1,071,000
Gen-Probe, Inc. (a) 42,000 2,146,620
Hansen Medical, Inc. (a)(f) 220,000 4,177,800
Hologic, Inc. (a)(f) 259,000 14,905,450
Intuitive Surgical, Inc. (a)(f) 139,000 18,022,740
Inverness Medical Innovations, Inc. (a) 24,000 961,200
Medtronic, Inc. 20,000 1,058,600
SonoSite, Inc. (a)(f) 563,500 16,330,230
St. Jude Medical, Inc. (a) 180,900 7,740,711
Stryker Corp. 100,000 6,494,000
SurModics, Inc. (a)(f) 14,000 568,820
Thoratec Corp. (a) 100,000 1,962,000
Volcano Corp. (a) 60,000 1,210,800
Zimmer Holdings, Inc. (a) 16,400 1,483,872
--------------
119,429,802
Health Care Providers
& Services--8.7%
Aetna, Inc. 6,600 309,408
AmerisourceBergen Corp. 31,000 1,549,690
Cardinal Health, Inc. 74,300 5,197,285
Express Scripts, Inc. (a) 90,700 8,666,385
Humana, Inc. (a) 7,000 442,680
Medco Health Solutions, Inc. (a) 224,000 17,476,480
UnitedHealth Group, Inc. 103,900 5,512,934
--------------
39,154,862
Health Care Technology--9.9%
Cerner Corp. (a)(f) 271,700 14,465,308
Emdeon Corp. (a)(f) 1,356,800 21,898,752
WebMD Health Corp. Class A (a)(f) 157,000 8,164,000
--------------
44,528,060
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Schedule of Investments (concluded) (in U.S. dollars)
Shares
Industry Common Stocks Held Value
North America (concluded)
United States (concluded)
Life Sciences Tools & Services--7.1%
Charles River Laboratories
International, Inc. (a) 22,000 $ 1,041,920
Covance, Inc. (a) 157,500 9,528,750
Exelixis, Inc. (a)(f) 545,100 5,854,374
Luminex Corp. (a) 71,700 993,045
Thermo Fisher Scientific, Inc. (a)(f) 239,900 12,489,194
Ventana Medical Systems, Inc. (a) 43,000 2,089,370
--------------
31,996,653
Pharmaceuticals--9.7%
Abbott Laboratories (f) 519,000 29,385,780
Bristol-Myers Squibb Co. 241,800 6,978,348
Eli Lilly & Co. 80,000 4,730,400
Pozen, Inc. (a) 200,000 2,914,000
--------------
44,008,528
Total Common Stocks in the United States 359,307,635
Total Common Stocks in North America--79.9% 361,117,035
Pacific Basin/Asia
India--2.7%
Pharmaceuticals--2.7%
Sun Pharma Advanced Research Co. Ltd. 440,000 890,362
Sun Pharmaceuticals Industries Ltd. 440,000 10,908,563
Wockhardt Ltd. 59,598 615,328
Total Common Stocks in India 12,414,253
Shares
Industry Common Stocks Held Value
Pacific Basin/Asia (concluded)
Japan--1.3%
Pharmaceuticals--1.3%
Eisai Co., Ltd. 120,000 $ 5,699,345
Total Common Stocks
in Japan 5,699,345
Total Common Stocks in the
Pacific Basin/Asia--4.0% 18,113,598
Total Common Stocks
(Cost--$340,589,295)--96.9% 438,065,711
Beneficial
Short-Term Securities Interest
BlackRock Liquidity Series, LLC
Cash Sweep Series,
5.26% (c)(d) $ 10,089,879 10,089,879
BlackRock Liquidity Series, LLC
Money Market Series,
5.33% (c)(d)(e) 167,472,400 167,472,400
Total Short-Term Securities
(Cost--$177,562,279)--39.3% 177,562,279
Total Investments (Cost--$518,151,574*)--136.2% 615,627,990
Liabilities in Excess of Other Assets--(36.2%) (163,506,666)
--------------
Net Assets--100.0% $ 452,121,324
==============
* The cost and unrealized appreciation/depreciation of investments
as of April 30, 2007, as computed for federal income tax purposes,
were as follows:
Aggregate cost $ 520,590,918
=================
Gross unrealized appreciation $ 98,692,508
Gross unrealized depreciation (3,655,436)
-----------------
Net unrealized appreciation $ 95,037,072
=================
(a) Non-income producing security.
(b) Depositary receipts.
(c) 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 $ (3,805,740) $507,198
BlackRock Liquidity Series, LLC
Money Market Series $ 103,178,750 $224,475
(d) Represents the current yield as of April 30, 2007.
(e) Security was purchased with the cash proceeds from securities loans.
(f) Security, or a portion of security, is on loan.
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 such industry
sub-classifications for reporting ease. Industries are shown as a
percent of net assets. These industry classifications are unaudited.
See Notes to Financial Statements.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Statement of Assets and Liabilities
As of April 30, 2007
Assets
Investments in unaffiliated securities, at value (including securities
loaned of $160,353,571) (identified cost--$340,589,295) $ 438,065,711
Investments in affiliated securities, at value (identified cost--$177,562,279) 177,562,279
Cash 182,780
Foreign cash (Cost--$35,996) 36,570
Receivables:
Securities sold $ 13,587,785
Capital shares sold 625,222
Dividends 551,502
Securities lending 57,293 14,821,802
---------------
Prepaid expenses 21,579
---------------
Total assets 630,690,721
---------------
Liabilities
Collateral on securities loaned, at value 167,472,400
Deferred foreign capital gains tax 63,649
Payables:
Securities purchased 8,515,496
Capital shares redeemed 1,710,691
Investment adviser 371,288
Distributor 149,000
Other affiliates 25,139 10,771,614
---------------
Accrued expenses and other liabilities 261,734
---------------
Total liabilities 178,569,397
---------------
Net Assets
Net assets $ 452,121,324
===============
Net Assets Consist of
Institutional Shares of Common Stock, $.10 par value, 200,000,000 shares authorized $ 2,085,809
Investor A Shares of Common Stock, $.10 par value, 100,000,000 shares authorized 2,508,093
Investor B Shares of Common Stock, $.10 par value, 250,000,000 shares authorized 1,532,384
Investor C Shares of Common Stock, $.10 par value, 100,000,000 shares authorized 1,568,797
Class R Shares of Common Stock, $.10 par value, 250,000,000 shares authorized 134,441
Paid-in capital in excess of par 310,668,669
Accumulated investment loss--net $ (19,870)
Undistributed realized capital gains--net 36,221,115
Unrealized appreciation--net 97,421,886
---------------
Total accumulated earnings--net 133,623,131
---------------
Net Assets $ 452,121,324
===============
Net Asset Value
Institutional--Based on net assets of $147,755,320 and 20,858,092 shares outstanding $ 7.08
===============
Investor A--Based on net assets of $160,651,694 and 25,080,934 shares outstanding $ 6.41
===============
Investor B--Based on net assets of $68,034,360 and 15,323,841 shares outstanding $ 4.44
===============
Investor C--Based on net assets of $69,535,217 and 15,687,972 shares outstanding $ 4.43
===============
Class R--Based on net assets of $6,144,733 and 1,344,412 shares outstanding $ 4.57
===============
See Notes to Financial Statements.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Statement of Operations
For the Year Ended April 30, 2007
Investment Income
Dividends (net of $152,746 foreign withholding tax) $ 2,467,230
Interest (including $507,198 from affiliates) 507,814
Securities lending--net 224,475
---------------
Total income 3,199,519
---------------
Expenses
Investment advisory fees $ 4,674,952
Service and distribution fees--Investor B 823,660
Service and distribution fees--Investor C 731,120
Service fees--Investor A 401,568
Transfer agent fees--Investor A 311,006
Transfer agent fees--Institutional 290,959
Accounting services 182,494
Transfer agent fees--Investor B 170,666
Custodian fees 156,483
Transfer agent fees--Investor C 151,306
Professional fees 77,371
Registration fees 70,097
Printing and shareholder reports 64,750
Directors' fees and expenses 43,255
Service and distribution fees--Class R 26,008
Transfer agent fees--Class R 13,243
Pricing fees 4,775
Other 34,382
---------------
Total expenses 8,228,095
---------------
Investment loss--net (5,028,576)
---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain (loss) on:
Investments--net (including $13,015 foreign capital gain tax) 48,385,249
Foreign currency transactions--net (456,778) 47,928,471
---------------
Change in unrealized appreciation/depreciation on:
Investments--net (including $16,914 foreign capital gain credit) (1,940,882)
Foreign currency transactions--net 48,730 (1,892,152)
--------------- ---------------
Total realized and unrealized gain--net 46,036,319
---------------
Net Increase in Net Assets Resulting from Operations $ 41,007,743
===============
See Notes to Financial Statements.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Statements of Changes in Net Assets
For the Year Ended April 30,
Increase (Decrease) in Net Assets: 2007 2006
Operations
Investment loss--net $ (5,028,576) $ (6,432,988)
Realized gain--net 47,928,471 97,645,714
Change in unrealized appreciation/depreciation--net (1,892,152) (5,800,436)
--------------- ---------------
Net increase in net assets resulting from operations 41,007,743 85,412,290
--------------- ---------------
Distributions to Shareholders
Realized gain--net:
Institutional (18,041,102) (10,315,668)
Investor A (21,510,564) (11,287,434)
Investor B (16,162,029) (10,211,998)
Investor C (13,564,480) (6,879,317)
Class R (871,195) (286,716)
--------------- ---------------
Net decrease in net assets resulting from distributions to shareholders (70,149,370) (38,981,133)
--------------- ---------------
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions (46,379,248) 3,436,185
--------------- ---------------
Net Assets
Total increase (decrease) in net assets (75,520,875) 49,867,342
Beginning of year 527,642,199 477,774,857
--------------- ---------------
End of year* $ 452,121,324 $ 527,642,199
=============== ===============
* Undistributed (accumulated) investment income (loss)--net $ (19,870) $ 2,907
=============== ===============
See Notes to Financial Statements.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Financial Highlights
The following per share
data and ratios have Institutional Investor A
been derived from
information provided in For the Year Ended April 30, For the Year Ended April 30,
the financial statements. 2007 2006 2005 2004 2003 2007 2006 2005 2004 2003
Per Share Operating Performance
Net asset value, beginning
of year $ 7.29 $ 6.55 $ 6.87 $ 5.59 $ 6.66 $ 6.69 $ 6.04 $ 6.38 $ 5.21 $ 6.23
------------------------------------------------- -------------------------------------------------
Investment loss--net** (.04) (.05) (.06) (.05) (.04) (.05) (.07) (.07) (.06) (.05)
Realized and unrealized
gain (loss)--net .67 1.27 .11 1.33 (1.03) .61 1.19 .10 1.23 (.97)
------------------------------------------------- -------------------------------------------------
Total from investment
operations .63 1.22 .05 1.28 (1.07) .56 1.12 .03 1.17 (1.02)
------------------------------------------------- -------------------------------------------------
Less distributions from
realized gain--net (.84) (.48) (.37) -- -- (.84) (.47) (.37) -- --
------------------------------------------------- -------------------------------------------------
Net asset value, end
of year $ 7.08 $ 7.29 $ 6.55 $ 6.87 $ 5.59 $ 6.41 $ 6.69 $ 6.04 $ 6.38 $ 5.21
================================================= =================================================
Total Investment Return*
Based on net asset
value per share 10.62% 18.70%++ .99% 22.90% (16.07%) 10.43% 18.61%++ .74% 22.46% (16.37%)
================================================= =================================================
Ratios to Average Net Assets
Expenses 1.33% 1.30% 1.33% 1.29% 1.33% 1.57% 1.55% 1.58% 1.55% 1.58%
================================================= =================================================
Investment loss--net (.64%) (.75%) (.88%) (.75%) (.79%) (.89%) (.99%) (1.13%) (1.00%) (1.04%)
================================================= =================================================
Supplemental Data
Net assets, end of
year (in thousands) $147,755 $159,116 $146,922 $275,570 $244,217 $160,652 $172,585 $142,774 $160,443 $119,375
================================================= =================================================
Portfolio turnover 152.38% 120.32% 126.81% 141.46% 128.24% 152.38% 120.32% 126.81% 141.46% 128.24%
================================================= =================================================
* Total investment returns exclude the effects of any sales charges.
** Based on average shares outstanding.
++ In 2006, there was no impact to the Fund's total investment return as a result of a payment by
Merrill Lynch Investment Managers, L.P.
See Notes to Financial Statements.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Financial Highlights (continued)
The following per share
data and ratios have Investor B Investor C
been derived from
information provided in For the Year Ended April 30, For the Year Ended April 30,
the financial statements. 2007 2006 2005 2004 2003 2007 2006 2005 2004 2003
Per Share Operating Performance
Net asset value, beginning
of year $ 4.93 $ 4.57 $ 4.96 $ 4.08 $ 4.91 $ 4.92 $ 4.57 $ 4.96 $ 4.07 $ 4.91
------------------------------------------------- -------------------------------------------------
Investment loss--net** (.07) (.09) (.09) (.08) (.08) (.07) (.09) (.09) (.08) (.08)
Realized and unrealized
gain (loss)--net .41 .89 .07 .96 (.75) .41 .88 .07 .97 (.76)
------------------------------------------------- -------------------------------------------------
Total from investment
operations .34 .80 (.02) .88 (.83) .34 .79 (.02) .89 (.84)
------------------------------------------------- -------------------------------------------------
Less distributions from
realized gain--net (.83) (.44) (.37) -- -- (.83) (.44) (.37) -- --
------------------------------------------------- -------------------------------------------------
Net asset value, end
of year $ 4.44 $ 4.93 $ 4.57 $ 4.96 $ 4.08 $ 4.43 $ 4.92 $ 4.57 $ 4.96 $ 4.07
================================================= =================================================
Total Investment Return*
Based on net asset value
per share 9.41% 17.64%++ (.09%) 21.57% (16.90%) 9.47% 17.50%++ (.09%) 21.87% (17.11%)
================================================= =================================================
Ratios to Average Net Assets
Expenses 2.36% 2.33% 2.36% 2.32% 2.36% 2.36% 2.33% 2.37% 2.33% 2.37%
================================================= =================================================
Investment loss--net (1.67%) (1.79%) (1.91%) (1.78%) (1.83%) (1.67%) (1.77%) (1.92%) (1.79%) (1.84%)
================================================= =================================================
Supplemental Data
Net assets, end of
year (in thousands) $ 68,034 $105,503 $117,482 $177,952 $194,543 $ 69,535 $ 85,553 $ 68,743 $ 85,753 $ 76,606
================================================= =================================================
Portfolio turnover 152.38% 120.32% 126.81% 141.46% 128.24% 152.38% 120.32% 126.81% 141.46% 128.24%
================================================= =================================================
* Total investment returns exclude the effects of sales charges.
** Based on average shares outstanding.
++ In 2006, there was no impact to the Fund's total investment return as a result of a payment by
Merrill Lynch Investment Managers, L.P.
See Notes to Financial Statements.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Financial Highlights (concluded)
Class R
For the Period
January 3, 2003++
The following per share data and ratios have been derived For the Year Ended April 30, to April 30,
from information provided in the financial statements. 2007 2006 2005 2004 2003
Per Share Operating Performance
Net asset value, beginning of period $ 5.04 $ 4.66 $ 5.02 $ 4.09 $ 4.04
---------- ---------- ---------- ---------- ----------
Investment loss--net* (.05) (.06) (.06) (.02) (.01)
Realized and unrealized gain--net .42 .90 .07 .95 .06
---------- ---------- ---------- ---------- ----------
Total from investment operations .37 .84 .01 .93 .05
---------- ---------- ---------- ---------- ----------
Less distributions from realized gain--net (.84) (.46) (.37) -- --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 4.57 $ 5.04 $ 4.66 $ 5.02 $ 4.09
========== ========== ========== ========== ==========
Total Investment Return
Based on net asset value per share 9.98% 18.25%++++ .54% 22.74% 1.24%+++++
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses 1.88% 1.80% 1.83% 1.73% 1.84%+++
========== ========== ========== ========== ==========
Investment loss--net (1.20%) (1.20%) (1.37%) (1.15%) (.36%)+++
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 6,145 $ 4,885 $ 1,853 $ 473 --**
========== ========== ========== ========== ==========
Portfolio turnover 152.38% 120.32% 126.81% 141.46% 128.24%
========== ========== ========== ========== ==========
* Based on average shares outstanding.
** Amount is less than $1,000.
++ Commencement of operations.
++++ In 2006, there was no impact to the Fund's total investment return as a result of a payment by
Merrill Lynch Investment Managers, L.P.
+++ Annualized.
+++++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Notes to Financial Statements
1. Significant Accounting Policies:
On September 29, 2006, Merrill Lynch Healthcare Fund, Inc. was renamed
BlackRock Healthcare Fund, Inc. (the "Fund"). The Fund is registered under the
Investment Company Act of 1940, as amended, as a non-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. 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 without a sales charge and 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")
markets, 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 markets are valued at the last available asked
price. Portfolio securities that are traded both in the OTC markets 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 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.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Notes to Financial Statements (continued)
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 the close of business on the NYSE. 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.
(b) 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.
(c) 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 due to an unfavorable change in the price of the underlying security,
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.
* Foreign currency options and futures--The Fund may also purchase or sell
listed or OTC foreign currency options, foreign currency futures and related
options on foreign currency futures as a short or long hedge against possible
variations in foreign exchange rates. Such transactions may be effected with
respect to hedges on non-U.S. dollar denominated securities owned by the Fund,
sold by the Fund but not yet delivered, or committed or anticipated to be
purchased by the Fund.
* Forward foreign exchange contracts--The Fund may enter into forward foreign
exchange contracts as a hedge against either specific transactions or
portfolio positions. The contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
contract is closed, the Fund records a realized gain or loss equal to the
difference between the value at the time it was opened and the value at the
time it was closed.
* Options--The Fund may purchase and write 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 market 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.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Notes to Financial Statements (continued)
(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) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Dividends from foreign securities where the ex-dividend date may have passed
are subsequently recorded when the Fund has determined the ex-dividend date.
Interest income is recognized on the accrual basis.
(f) Prepaid registration fees--Prepaid registration fees are charged to
expense as the related shares are issued.
(g) Dividends and distributions--Dividends and distributions paid by the Fund
are recorded on the ex-dividend dates.
(h) 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, the Fund typically receives the income on both the loaned
securities and the collateral and, as a result, the Fund's yield may increase.
Where the Fund receives cash collateral, it may invest such collateral and
retain the amount earned on such investment, net of any amount rebated to the
borrower. The Fund may receive a flat fee for its loans. 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.
(i) 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 the 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.
In addition, in February 2007, the Financial Accounting Standards Board issued
"Statement of Financial Accounting Standard 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.
(j) Reclassification--U.S. generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, during the
current year, $5,005,799 has been reclassified between undistributed net
realized capital gains on investments and accumulated net investment loss as a
result of permanent differences attributable to net operating losses, foreign
currency transactions, and foreign taxes paid. This reclassification has no
effect on net assets or net asset values per share.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Notes to Financial Statements (continued)
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.
On August 15, 2006, shareholders of the Fund approved a new Investment
Advisory Agreement with BlackRock Advisors, Inc., an indirect, wholly owned
subsidiary of BlackRock, Inc., which was reorganized into a limited liability
company and renamed BlackRock Advisors, LLC. The new 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 also has
entered into separate Distribution Agreements and Distribution Plans with FAM
Distributors, Inc. ("FAMD") and BlackRock Distributors, Inc. and its affiliates
("BDI") (collectively, the "Distributor"). FAMD is a wholly owned subsidiary
of Merrill Lynch Group, Inc., and BDI is an affiliate of BlackRock, Inc.
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 operations of the Fund. For such services, the Fund
pays the Manager a monthly fee at an annual rate of 1.0% of the average daily
value of the Fund's net assets. 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 the Sub-Adviser 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. Prior to September 29,
2006, MLIM had a Sub-Advisory Agreement with Merrill Lynch Asset Management
U.K. Limited ("MLAM U.K."), an affiliate of MLIM.
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 each 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 an affiliate of each Distributor, provide
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 servicing to Investor A, Investor B,
Investor C and Class R shareholders. The ongoing distribution fee compensates
each Distributor and the MLPF&S for providing shareholder servicing and
distribution-related services to Investor B, Investor C and Class R
shareholders.
For the year ended April 30, 2007, FAMD, the Fund's 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 Investor A Shares as follows:
FAMD MLPF&S BDI
Investor A $ 2,517 $ 31,105 $ 281
For the year ended April 30, 2007, MLPF&S received contingent deferred sales
charges of $79,166 and $36,002 relating to transactions in Investor B and
Investor C Shares, respectively. Furthermore, MLPF&S received contingent
deferred sales charges of $12,030 relating to transactions subject to front-
end sales charge waivers in Investor A Shares.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Notes to Financial Statements (continued)
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 April 30, 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 Statement of Operations.
Call Center
Fees
Institutional $5,747
Investor A $2,682
Investor B $1,719
Investor C $1,463
Class R $ 56
The Fund has received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to MLPF&S or its
affiliates. As of April 30, 2007, the Fund lent securities with a value of
$38,222,755 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 in
registered money market funds advised by the Manager or its affiliates. For
the year ended April 30, 2007, BIM received $99,953 in securities lending
agent fees.
In addition, MLPF&S received $441,695 in commissions on the execution of
portfolio security transactions for the Fund for the year ended April 30, 2007.
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.
For the year ended April 30, 2007, the Fund reimbursed MLIM and the Manager
$4,643 and $5,369, respectively, for certain accounting services.
Prior to September 29, 2006, certain officers and/or directors of the Fund
were officers and/or directors of MLIM, PSI, MLAM U.K., 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
year ended April 30, 2007, were $685,649,065 and $818,066,653, respectively.
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share transactions
was $(46,379,248) and $3,436,185 for the years ended April 30, 2007 and
April 30, 2006, respectively.
Transactions in capital shares for each class were as follows:
Institutional Shares for the Year Dollar
Ended April 30, 2007 Shares Amount
Shares sold 1,680,191 $ 11,164,078
Shares issued to shareholders in
reinvestment of distributions 2,574,159 15,775,291
--------------- ---------------
Total issued 4,254,350 26,939,369
Shares redeemed (5,218,571) (34,370,859)
--------------- ---------------
Net decrease (964,221) $ (7,431,490)
=============== ===============
Institutional Shares for the Year Dollar
Ended April 30, 2006 Shares Amount
Shares sold 1,980,252 $ 14,623,037
Shares issued to shareholders in
reinvestment of distributions 1,238,017 8,995,171
--------------- ---------------
Total issued 3,218,269 23,618,208
Shares redeemed (3,840,068) (28,130,597)
--------------- ---------------
Net decrease (621,799) $ (4,512,389)
=============== ===============
Investor A Shares for the Year Dollar
Ended April 30, 2007 Shares Amount
Shares sold 4,675,332 $ 28,163,644*
Automatic conversion of shares 853,818 5,264,609
Shares issued to shareholders in
reinvestment of distributions 3,406,307 18,923,333
--------------- ---------------
Total issued 8,935,457 52,351,586
Shares redeemed (9,662,117) (57,886,509)
--------------- ---------------
Net decrease (726,660) $ (5,534,923)
=============== ===============
* In September 2006, certain brokerages, including a wholly
owned subsidiary of Merrill Lynch, entered into a remediation
agreement with a regulatory organization, which among other
things, permitted certain shareholders of Investor B Shares to
convert their shares into the Fund's Investor A Shares. As a
result, a wholly owned subsidiary of Merrill Lynch supplemented
the Investor A Share purchase by approximately $61,000.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Notes to Financial Statements (continued)
Investor A Shares for the Year Dollar
Ended April 30, 2006 Shares Amount
Shares sold 5,209,230 $ 35,351,422
Automatic conversion of shares 1,865,830 12,619,876
Shares issued to shareholders in
reinvestment of distributions 1,482,227 9,897,213
--------------- ---------------
Total issued 8,557,287 57,868,511
Shares redeemed (6,376,078) (43,135,276)
--------------- ---------------
Net increase 2,181,209 $ 14,733,235
=============== ===============
Investor B Shares for the Year Dollar
Ended April 30, 2007 Shares Amount
Shares sold 1,243,186 $ 5,325,187
Shares issued to shareholders in
reinvestment of distributions 3,689,599 14,366,476
--------------- ---------------
Total issued 4,932,785 19,691,663
--------------- ---------------
Shares redeemed (9,848,626) (41,271,045)
Automatic conversion of shares (1,181,421) (5,264,609)
--------------- ---------------
Total redeemed (11,030,047) (46,535,654)
--------------- ---------------
Net decrease (6,097,262) $ (26,843,991)
=============== ===============
Investor B Shares for the Year Dollar
Ended April 30, 2006 Shares Amount
Shares sold 2,540,095 $ 12,808,840
Shares issued to shareholders in
reinvestment of distributions 1,823,121 9,031,488
--------------- ---------------
Total issued 4,363,216 21,840,328
--------------- ---------------
Shares redeemed (6,145,786) (30,792,636)
Automatic conversion of shares (2,504,306) (12,619,876)
--------------- ---------------
Total redeemed (8,650,092) (43,412,512)
--------------- ---------------
Net decrease (4,286,876) $ (21,572,184)
=============== ===============
Investor C Shares for the Year Dollar
Ended April 30, 2007 Shares Amount
Shares sold 2,129,339 $ 9,034,668
Shares issued to shareholders in
reinvestment of distributions 3,078,519 11,960,130
--------------- ---------------
Total issued 5,207,858 20,994,798
Shares redeemed (6,907,028) (29,145,267)
--------------- ---------------
Net decrease (1,699,170) $ (8,150,469)
=============== ===============
Investor C Shares for the Year Dollar
Ended April 30, 2006 Shares Amount
Shares sold 4,355,082 $ 22,039,665
Shares issued to shareholders in
reinvestment of distributions 1,208,718 5,982,447
--------------- ---------------
Total issued 5,563,800 28,022,112
Shares redeemed (3,227,561) (16,165,790)
--------------- ---------------
Net increase 2,336,239 $ 11,856,322
=============== ===============
Class R Shares for the Year Dollar
Ended April 30, 2007 Shares Amount
Shares sold 870,793 $ 3,790,289
Shares issued to shareholders in
reinvestment of distributions 210,784 840,798
--------------- ---------------
Total issued 1,081,577 4,631,087
Shares redeemed (707,165) (3,049,462)
--------------- ---------------
Net increase 374,412 $ 1,581,625
=============== ===============
Class R Shares for the Year Dollar
Ended April 30, 2006 Shares Amount
Shares sold 813,812 $ 4,173,316
Shares issued to shareholders in
reinvestment of distributions 56,656 286,716
--------------- ---------------
Total issued 870,468 4,460,032
Shares redeemed (298,389) (1,528,831)
--------------- ---------------
Net increase 572,079 $ 2,931,201
=============== ===============
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 year ended April 30, 2007.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Notes to Financial Statements (concluded)
6. Distributions to Shareholders:
The tax character of distributions paid during the fiscal years ended April
30, 2007 and April 30, 2006 was as follows:
4/30/2007 4/30/2006
Distributions paid from:
Ordinary income $ 2,650,052 $ 6,200,040
Net long-term capital gains 67,499,318 32,781,093
--------------- ---------------
Total taxable distributions $ 70,149,370 $ 38,981,133
=============== ===============
As of April 30, 2007, the components of accumulated earnings on a tax
basis were as follows:
Undistributed ordinary income--net $ 3,104,031
Undistributed long-term capital gains--net 35,536,559
---------------
Total undistributed earnings--net 38,640,590
Capital loss carryforward --
Unrealized gains--net 94,982,541*
---------------
Total accumulated earnings--net $ 133,623,131
===============
* The difference between book-basis and tax-basis net unrealized
gains is attributable primarily to the tax deferral of losses on wash
sales and the realization for tax purposes of unrealized gains
on investments in passive foreign investment companies.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
of BlackRock Healthcare Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of BlackRock Healthcare Fund, Inc.
(formerly Merrill Lynch Healthcare Fund, Inc.) as of April 30, 2007, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. The Fund is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Fund's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. Our
procedures included confirmation of securities owned as of April 30, 2007, by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
BlackRock Healthcare Fund, Inc. as of April 30, 2007, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and its financial highlights for each
of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
June 19, 2007
Important Tax Information (unaudited)
The following information is provided with respect to the ordinary income
distribution paid by BlackRock Healthcare Fund, Inc. to shareholders of record
on July 13, 2006:
Qualified Dividend Income for Individuals 64.34%*
Dividends Qualifying for the Dividends Received Deduction
for Corporations 24.92%*
Short-Term Capital Gain Dividends for Non-U.S. Residents 100.0%**
* The Fund hereby designates the percentage indicated above or the maximum
amount allowable by law.
** Represents the portion of the taxable ordinary income dividends eligible
for exemption from U.S. withholding tax for nonresident aliens and foreign
corporations.
Additionally, the Fund distributed long-term capital gains of $.740402 per
share to shareholders of record on July 13, 2006 and $.062618 per share to
shareholders of record on December 13, 2006.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Officers and Directors
Number of
Funds and
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
Interested Director
Robert C. Doll, Jr.* Fund 2005 to Vice Chairman and Director of BlackRock, Inc., 122 Funds None
P.O. Box 9011 President present Global Chief Investment Officer for Equities, 168 Portfolios
Princeton, and Chairman of the BlackRock Retail Operating
NJ 08543-9011 Director Committee, and member of the BlackRock
Age: 52 Executive Committee since 2006; President of
the funds advised by Merrill Lynch Investment
Managers, L.P. ("MLIM") and its affiliates
("MLIM/FAM-advised funds") from 2005 to
2006 and Chief Investment Officer thereof from
2001 to 2006; President of MLIM and Fund
Asset Management, L.P. ("FAM") from 2001 to
2006; Co-Head (Americas Region) thereof from
2000 to 2001 and Senior Vice President from
1999 to 2001; President and Director of Princeton
Services, Inc. ("Princeton Services") and President
of Princeton Administrators, L.P. ("Princeton
Administrators") from 2001 to 2006; Chief
Investment Officer of OppenheimerFunds, Inc. in
1999 and Executive Vice President thereof from
1991 to 1999.
* Mr. Doll is a director, trustee or member of an advisory board of certain
other investment companies for which BlackRock Advisors, LLC, and its affiliates,
act as investment adviser. Mr. Doll is an "interested person," as defined in the
Investment Company Act, of the Fund based on his positions with BlackRock, Inc.
and its affiliates. Directors serve until their resignation, removal or death, or
until December 31 of the year in which they turn 72. As Fund President, Mr. Doll
serves at the pleasure of the Board of Directors.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Officers and Directors (continued)
Number of
Funds and
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
Independent Directors*
Ronald W. Forbes** Director 2000 to Professor Emeritus of Finance, School of 47 Funds None
P.O. Box 9095 present Business, State University of New York at 49 Portfolios
Princeton, Albany since 2000 and Professor thereof from
NJ 08543-9095 1989 to 2000; International Consultant, Urban
Age: 66 Institute, Washington, D.C. from 1995 to 1999.
Cynthia A. Montgomery++ Director 2000 to Professor, Harvard Business School since 1989; 47 Funds Newell
P.O. Box 9095 present Associate Professor, J.L. Kellogg Graduate 49 Portfolios Rubbermaid, Inc.
Princeton, School of Management, Northwestern University (manufacturing)
NJ 08543-9095 from 1985 to 1989; Associate Professor,
Age: 54 Graduate School of Business Administration,
University of Michigan from 1979 to 1985;
Director, Harvard Business School Publishing
since 2005; Director, McLean Hospital since 2005.
Jean Margo Reid Director 2004 to Self-employed consultant since 2001; Counsel 47 Funds None
P.O. Box 9095 present of Alliance Capital Management (investment 49 Portfolios
Princeton, adviser) in 2000; General Counsel, Director and
NJ 08543-9095 Secretary of Sanford C. Bernstein & Co., Inc.
Age: 61 (investment adviser/broker-dealer) from 1997 to
2000; Secretary, Sanford C. Bernstein Fund, Inc.
from 1994 to 2000; Director and Secretary of
SCB, Inc. since 1998; Director and Secretary of
SCB Partners, Inc. since 2000; and Director of
Covenant House from 2001 to 2004.
Roscoe S. Suddarth Director 2000 to President, Middle East Institute, from 1995 to 47 Funds None
P.O. Box 9095 present 2001; Foreign Service Officer, United States 49 Portfolios
Princeton, Foreign Service, from 1961 to 1995 and Career
NJ 08543-9095 Minister from 1989 to 1995; Deputy Inspector
Age: 71 General, U.S. Department of State, from 1991 to
1994; U.S. Ambassador to the Hashemite Kingdom
of Jordan from 1987 to 1990.
Richard R. West Director 1983 to Professor of Finance from 1984 to 1995, 47 Funds Bowne & Co.,
P.O. Box 9095 present Dean from 1984 to 1993 and since 1995 49 Portfolios Inc. (financial
Princeton, Dean Emeritus of New York University's printers);
NJ 08543-9095 Leonard N. Stern School of Business Vornado Realty
Age: 69 Administration. Trust (real
estate company);
Alexander's, Inc.
(real estate
company)
* Directors serve until their resignation, removal or death, or until December 31
of the year in which they turn 72.
** Chairman of the Board of Directors and the Audit Committee.
++ Chair of the Nominating Committee.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Officers and Directors (concluded)
Position(s) Length of
Held with Time
Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years
Fund Officers*
Donald C. Burke Vice 1993 to Managing Director of BlackRock, Inc. since 2006; Managing Director of Merrill
P.O. Box 9011 President present Lynch Investment Managers, L.P. ("MLIM") and Fund Asset Management, L.P.
Princeton, and and ("FAM") in 2006; First Vice President of MLIM and FAM from 1997 to 2005 and
NJ 08543-9011 Treasurer 1999 to Treasurer thereof from 1999 to 2006; Vice President of MLIM and FAM from 1990
Age: 46 present to 1997.
Jordan C. Schreiber Vice 1983 to Managing Director of BlackRock, Inc. since 2006; Managing Director of MLIM
P.O. Box 9011 President present from 2000 to 2006; Director of MLIM from 1997 to 2000.
Princeton,
NJ 08543-9011
Age: 77
Karen Clark Fund Chief 2007 to Managing Director of BlackRock, Inc. and Chief Compliance Officer of certain
P.O. Box 9011 Compliance present BlackRock-advised funds since 2007; Director of BlackRock, Inc. from 2005 to
Princeton, Officer 2007; Principal and Senior Compliance Officer, State Street Global Advisors,
NJ 08543-9011 from 2001 to 2005; Prinicpal Consultant, PricewaterhouseCoopers, LLP from 1998
Age: 42 to 2001; and Branch Chief, Division of Investment Management and Office of
Compliance Inspections and Examinations, U.S. Securities and Exchange Commission,
from 1993 to 1998.
Alice A. Pellegrino Secretary 2004 to Director of BlackRock, Inc. since 2006; Director (Legal Advisory) of MLIM from
P.O. Box 9011 present 2002 to 2006; Vice President of MLIM from 1999 to 2002; Attorney associated with
Princeton, MLIM from 1997 to 1999; Secretary of MLIM, FAM, FAM Distributors, Inc. and
NJ 08543-9011 Princeton Services from 2004 to 2006.
Age: 47
* Officers of the Fund serve at the pleasure of the Board of Directors.
Further information about the Fund's Officers and Directors is available in
the Fund's Statement of Additional Information, which can be obtained without
charge by calling 1-800-441-7762.
Custodian
JPMorgan Chase Bank, N.A.
3 Chase Metrotech Center
Brooklyn, NY 11245
Transfer Agent
PFPC Inc.
Wilmington, DE 19809
Effective January 1, 2007, Edward D. Zinbarg retired as a Director of
BlackRock Healthcare Fund, Inc. The Fund's Board of Directors wishes
Mr. Zinbarg well in his retirement.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 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 non-public personal information. The following information
is provided to help you understand what personal information BlackRock
collects, how we protect that information and why in certain cases we share
such information with select parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about
you from different sources, including the following: (i) information we
receive from you or, if applicable, your financial intermediary, on
applications, forms or other documents; (ii) information about your
transactions with us, our affiliates, or others; (iii) information we receive
from a consumer reporting agency; and (iv) from visits to our Web sites.
BlackRock does not sell or disclose to non-affiliated third parties any non-
public personal information about its Clients, except as permitted by law or
as is necessary to respond to regulatory requests or to service Client
accounts. These non-affiliated third parties are required to protect the
confidentiality and security of this information and to use it only for its
intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that
may be of interest to you. In addition, BlackRock restricts access to non-
public personal information about its Clients to those BlackRock employees
with a legitimate business need for the information. BlackRock maintains
physical, electronic and procedural safeguards that are designed to protect
the non-public personal information of its Clients, including procedures
relating to the proper storage and disposal of such information.
Availability of Additional Information
Electronic copies of most financial reports and prospectuses are available on
the Fund's Web site or shareholders can signup 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 HEALTHCARE FUND, INC. APRIL 30, 2007
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 deter-mine 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 HEALTHCARE FUND, INC. APRIL 30, 2007
A World-Class Mutual Fund Family
BlackRock offers a diverse lineup of open-end mutual funds crossing all
investment styles and managed by experts in equity, fixed income and tax-
exempt investing.
Equity Funds
BlackRock All-Cap Global Resources Portfolio
BlackRock Aurora Portfolio
BlackRock Asset Allocation Portfolio++
BlackRock Balanced Capital Fund++
BlackRock Basic Value Fund
BlackRock Capital Appreciation Portfolio
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 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 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 Funds
BlackRock Bond Fund
BlackRock Commodity Strategies 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 II
BlackRock Intermediate Government
Bond Portfolio
BlackRock International Bond Portfolio
BlackRock Low Duration Bond Portfolio
BlackRock Managed Income Portfolio
BlackRock Short-Term Bond Fund
BlackRock Total Return Portfolio
BlackRock Total Return Portfolio II
BlackRock World Income Fund
Municipal Bond Funds
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
Target Risk & Target Date Funds
BlackRock Prepared Portfolios
Conservative Prepared Portfolio
Moderate Prepared Portfolio
Growth Prepared Portfolio
Aggressive Growth Prepared Portfolio
BlackRock Lifecycle Prepared Portfolios
Prepared Portfolio 2010
Prepared Portfolio 2015
Prepared Portfolio 2020
Prepared Portfolio 2025
Prepared Portfolio 2030
Prepared Portfolio 2035
Prepared Portfolio 2040
Prepared Portfolio 2045
Prepared Portfolio 2050
* See the prospectus for information on specific limitations on
investments in the fund.
++ Mixed asset fund.
BlackRock mutual funds are distributed by BlackRock Distributors, Inc. and
certain funds are also distributed by FAM Distributors, Inc. You should
consider the investment objectives, risks, charges and expenses of the funds
under consideration carefully before investing. Each fund's prospectus
contains this and other information and is available at www.blackrock.com or
by calling 800-882-0052 or from your financial advisor. The prospectus should
be read carefully before investing.
BLACKROCK HEALTHCARE FUND, INC. APRIL 30, 2007
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as of
the end of the period covered by this report, that applies to the
registrant's principal executive officer, principal financial
officer and principal accounting officer, or persons performing
similar functions. A copy of the code of ethics is available
without charge at www.blackrock.com.
Item 3 - Audit Committee Financial Expert - The registrant's board of
directors has determined that (i) the registrant has the following
audit committee financial experts serving on its audit committee and
(ii) each audit committee financial expert is independent: (1)
Ronald W. Forbes, (2) Richard R. West, and (3) Edward D. Zinbarg
(retired as of December 31, 2006).
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ended April 30, 2007 - $36,500
Fiscal Year Ended April 30, 2006 - $36,500
(b) Audit-Related Fees - Fiscal Year Ended April 30, 2007 - $0
Fiscal Year Ended April 30, 2006 - $0
(c) Tax Fees - Fiscal Year Ended April 30, 2007 - $6,100
Fiscal Year Ended April 30, 2006 - $6,000
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ended April 30, 2007 - $0
Fiscal Year Ended April 30, 2006 - $0
(e)(1) The registrant's audit committee (the "Committee") has
adopted policies and procedures with regard to the pre-approval of
services. Audit, audit-related and tax compliance services provided
to the registrant on an annual basis require specific pre-approval
by the Committee. The Committee also must approve other non-audit
services provided to the registrant and those non-audit services
provided to the registrant's affiliated service providers that
relate directly to the operations and the financial reporting of the
registrant. Certain of these non-audit services that the Committee
believes are a) consistent with the SEC's auditor independence rules
and b) routine and recurring services that will not impair the
independence of the independent accountants may be approved by the
Committee without consideration on a specific case-by-case basis
("general pre-approval"). However, such services will only be
deemed pre-approved provided that any individual project does not
exceed $5,000 attributable to the registrant or $50,000 for all of
the registrants the Committee oversees. Any proposed services
exceeding the pre-approved cost levels will require specific pre-
approval by the Committee, as will any other services not subject to
general pre-approval (e.g., unanticipated but permissible services).
The Committee is informed of each service approved subject to
general pre-approval at the next regularly scheduled in-person board
meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ended April 30, 2007 - $2,711,583
Fiscal Year Ended April 30, 2006 - $3,439,633
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser and any entity controlling,
controlled by, or under common control with the investment adviser
that provides ongoing services to the registrant that were not
pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal
accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $1,739,500, 0%
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - The registrant's Schedule of Investments
is included as part of the Report to Stockholders filed under Item 1
of this form.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating Committee will consider nominees to the
Board recommended by shareholders when a vacancy becomes available.
Shareholders who wish to recommend a nominee should send nominations
which include biographical information and set forth the
qualifications of the proposed nominee to the registrant's
Secretary. There have been no material changes to these procedures.
Item 11 - Controls and Procedures
11(a) - The registrant's principal executive and principal financial
officers or persons performing similar functions have concluded that
the registrant's disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940, as amended
(the "1940 Act")) are effective as of a date within 90 days of the
filing of this report based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act and Rule
15d-15(b) under the Securities and Exchange Act of 1934, as amended.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter
of the period covered by this report that have materially affected,
or are reasonably likely to materially affect, the registrant's
internal control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock Healthcare Fund, Inc.
By: /s/ Robert C. Doll, Jr.
-----------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock Healthcare Fund, Inc.
Date: June 19, 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 Healthcare Fund, Inc.
Date: June 19, 2007
By: /s/ Donald C. Burke
-------------------
Donald C. Burke,
Chief Financial Officer of
BlackRock Healthcare Fund, Inc.
Date: June 19, 2007