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 811-08797
811-09049
Name of Fund: BlackRock International Fund of BlackRock Series, Inc.
BlackRock Master International Portfolio of BlackRock Master LLC
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: Donald C. Burke, Chief Executive
Officer, BlackRock International Fund of BlackRock Series, Inc. and
BlackRock Master International Portfolio of BlackRock Master LLC, 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: 05/31/2008
Date of reporting period: 06/01/2007 - 05/31/2008
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE
LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS
BlackRock International Fund BLACKROCK
OF BLACKROCK SERIES, INC.
ANNUAL REPORT | MAY 31, 2008
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
Table of Contents
================================================================================
Page
- --------------------------------------------------------------------------------
A Letter to Shareholders ................................................. 3
Annual Report:
Fund Summary ............................................................. 4
About Fund Performance ................................................... 6
Disclosure of Expenses ................................................... 6
Fund Financial Statements:
Statement of Assets and Liabilities .................................. 7
Statement of Operations .............................................. 8
Statements of Changes in Net Assets .................................. 9
Fund Financial Highlights ................................................ 10
Fund Notes to Financial Statements ....................................... 12
Fund Report of Independent Registered Public Accounting Firm ............. 15
Important Tax Information (Unaudited) .................................... 15
Portfolio Summary ........................................................ 16
Portfolio Financial Statements:
Schedule of Investments .............................................. 17
Statement of Assets and Liabilities .................................. 20
Statement of Operations .............................................. 21
Statements of Changes in Net Assets .................................. 22
Portfolio Financial Highlights ........................................... 22
Portfolio Notes to Financial Statements .................................. 23
Portfolio Report of Independent Registered Public Accounting Firm ........ 25
Officers and Directors ................................................... 26
Additional Information ................................................... 29
Mutual Fund Family ....................................................... 31
2 BLACKROCK INTERNATIONAL FUND MAY 31, 2008
A Letter to Shareholders
Dear Shareholder
For much of the reporting period, investors grappled with the repercussions of
the credit crisis that surfaced last summer, and with the effects of a weakening
economy and surging energy and food prices. These factors were offset by the
positive impact from robust export activity, strength in the non-financial
corporate sector and monetary and fiscal stimuli.
Amid the market turbulence, the Federal Reserve Board (the "Fed") initiated a
series of moves to restore liquidity and bolster financial market stability.
Since September 2007, the central bank slashed the target federal funds rate 325
basis points (3.25%), bringing the rate to 2.0% as of period-end. Also of
significance were its other policy decisions, which included extending use of
the discount window to broker-dealers and investment banks and backstopping the
rescue of ill-fated Bear Stearns. Notably, on April 30, the Fed dropped previous
references to downside growth risks and added more emphasis on inflationary
pressures, indicating the central bankers have likely concluded the current
cycle of monetary easing.
Nevertheless, the Fed's response to the financial crisis helped to ease credit
turmoil and investor anxiety. Since hitting a low point on March 17, following
the collapse of Bear Stearns, stocks appreciated 10% (through May 30). Most
international markets, which had outperformed U.S. stocks for some time, saw a
reversal in that trend, as the troubled credit situation and downward pressures
on growth fanned recession fears.
In fixed income markets, Treasury securities rallied (yields fell as prices
correspondingly rose), as a broad "flight-to-quality" theme persisted. The yield
on 10-year Treasury issues, which touched 5.30% in June 2007 (its highest level
in five years), fell to a low of 3.34% in March 2008 before rising to 4.06% by
May 31 as investors grew more risk tolerant and shifted out of Treasury issues
in favor of stocks and other high-quality fixed income sectors. Tax-exempt
issues underperformed throughout most of the reporting period, pressured by
problems among municipal bond insurers and the freeze in the market for auction
rate securities. However, the final two months saw a firmer tone in the
municipal market, as investors took advantage of unusually high yields.
On the whole, results for the major benchmark indexes generally reflected
heightened investor risk aversion:
Total Returns as of May 31, 2008 6-month 12-month
===========================================================================================================
U.S. equities (S&P 500 Index) (4.47%) (6.70%)
- -----------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) (1.87) (10.53)
- -----------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) (5.21) (2.53)
- -----------------------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers U.S. Aggregate Index) 1.49 6.89
- -----------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) 1.44 3.87
- -----------------------------------------------------------------------------------------------------------
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Capped Index) 1.81 (1.08)
- -----------------------------------------------------------------------------------------------------------
Past performance is no guarantee of future results. Index performance shown for
illustrative purposes only.
You cannot invest directly in an index.
As you navigate today's volatile markets, we encourage you to review your
investment goals with your financial professional and to make portfolio changes,
as needed. For more up-to-date commentary on the economy and financial markets,
we invite you to visit www.blackrock.com/funds. As always, we thank you for
entrusting BlackRock with your investment assets, and we look forward to
continuing to serve you in the months and years ahead.
Sincerely,
/s/ Rob Kapito
Rob Kapito
President, BlackRock Advisors, LLC
3
THIS PAGE NOT PART OF YOUR FUND REPORT
Fund Summary
Portfolio Management Commentary
How did the Fund perform?
o The Fund, through its investment in BlackRock Master International
Portfolio, generated a solid return for the 12-month period, outpacing the
benchmark Morgan Stanley Capital International Europe, Australasia, Far
East ("MSCI EAFE") Index.
What factors influenced performance?
o An underweight in financials benefited the Fund's performance versus the
benchmark, as the negative effects of the global credit crunch hurt the
sector. Nevertheless, several of the Fund's holdings in the sector,
including Sun Hung Kai Properties Ltd. and China Life Insurance Co. Ltd.,
posted strong gains for the period.
o Stock selection and an overweight in energy also enhanced relative
returns, as the sector recorded significant gains during the annual
period. Most notably, Fund holding Tullow Oil Plc enjoyed strong
performance on positive developments in the oil and gas exploration
subsector.
o Exposure to the telecommunication services sector aided comparative
performance as well. In particular, a focus on high-growth companies with
significant exposure to emerging markets proved beneficial. Notable
contributors included Tele2 AB, Telefonica SA and MTN Group Ltd.
o At an allocation level, an underweight in Japan and overweights in China
and Hong Kong enhanced relative returns.
o Performance detractors were limited, but security selection in information
technology hampered results in the first half of the year. Specifically,
shares of Fund holding Ericsson declined after the company unexpectedly
reduced future revenue guidance amid a sharp slowdown in the consumption
of higher-margin services.
o Elsewhere, holdings in selected Japanese financial companies (ORIX Corp.
and Sumitomo Mitsui Financial Group, Inc.) detracted from performance as
the turnaround in the domestic economy stalled and interest rate rises
failed to materialize as quickly as expected.
Describe recent portfolio activity.
o Early in the annual period, we reduced the Fund's exposure to the
financials sector, selling positions in Allied Irish Banks Plc and Banco
Bilbao Vizcaya Argentaria SA given concerns regarding the companies'
exposure to deteriorating conditions in the housing markets in Ireland and
Spain, respectively. We also decreased weightings in industrials and
utilities.
o We increased the Fund's allocation to the energy sector, initiating
positions in two deep water oil services companies, Acergy SA and Subsea
7, Inc., and in CNOOC Ltd., an oil and gas exploration and production
company. We also added to existing positions in the telecommunication
services and materials sectors, and moved the Fund's information
technology exposure from an underweight to an overweight.
Describe Fund positioning at period-end.
o At period-end, the Fund had a small overweight in emerging markets and
also held an overweight in the U.K., focused primarily on companies with
international earnings and operations. The Fund remains underweight in
Japan. We have maintained the Fund's overweights in telecommunication
services, consumer staples and insurance, and underweights in banks and
health care.
o The Fund is tilted somewhat towards growth and quality, as we favor
companies with lower leverage and higher returns on equity.
The views expressed reflect the opinions of BlackRock as of the date of this
report and are subject to change based on changes in market, economic or other
conditions. These views are not intended to be a forecast of future events and
are no guarantee of future results.
Expense Example
Actual Hypothetical 2
------------------------------------------------------ -----------------------------------------------------
Beginning Ending Beginning Ending
Account Value Account Value Expenses Paid Account Value Account Value Expenses Paid
December 1, 2007 May 31, 2008 During the Period 1 December 1, 2007 May 31, 2008 During the Period 1
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional ......... $1,000 $1,004.00 $ 7.77 $1,000 $1,017.14 $ 7.82
Investor A ............ $1,000 $1,002.70 $ 9.36 $1,000 $1,015.55 $ 9.42
Investor B ............ $1,000 $ 997.90 $14.41 $1,000 $1,010.48 $14.50
Investor C ............ $1,000 $ 999.30 $12.92 $1,000 $1,011.97 $13.01
- ------------------------------------------------------------------------------------------------------------------------------------
1 For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (1.56% for Institutional, 1.88% for Investor A, 2.90%
for Investor B and 2.60% for Investor C), multiplied by the average
account value over the period, multiplied by 182/366 (to reflect the
one-half year period shown). Because the Fund is a feeder fund, the
expense table example reflects the expenses of both the feeder fund and
the master portfolio in which it invests.
2 Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half year divided by 366.
See "Disclosure of Expenses" on page 6 for further information on how
expenses were calculated.
4 BLACKROCK INTERNATIONAL FUND MAY 31, 2008
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's Institutional
and Investor A Shares compared to growth of an investment in the MSCI Europe,
Australasia and Far East Index. Values are from October 30, 1998 to May 2008.
MSCI Europe,
Institutional Investor A Australasia and
Shares(1,2) Shares(1,2) Far East Index(3)
10/30/98(4) $10,000 $9,475 $10,000
5/99 $10,420 $9,854 $10,934
5/00 $12,608 $11,901 $12,809
5/01 $10,224 $9,624 $10,602
5/02 $9,166 $8,614 $9,584
5/03 $7,989 $7,483 $8,405
5/04 $9,608 $8,971 $11,151
5/05 $10,887 $10,141 $12,781
5/06 $13,587 $12,627 $16,391
5/07 $15,800 $14,650 $20,790
5/08 $16,840 $15,567 $20,264
1 Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including advisory fees.
2 The Fund invests all of its assets in BlackRock Master International
Portfolio of BlackRock Master LLC. The Portfolio invests primarily in
stocks of companies located outside of the United States that its
management believes are undervalued or have good prospects for earnings
growth.
3 This unmanaged broad-based Index measures the total returns of developed
foreign stock markets in Europe, Australasia and the Far East.
4 Commencement of operations.
Performance Summary for the Period Ended May 31, 2008
Average Annual Total Returns 1
-------------------------------------------------------------
1 Year 5 Years Since Inception 2
------------------ ------------------ ------------------
6-Month w/o sales w/sales w/o sales w/sales w/o sales w/sales
Total Returns charge charge charge charge charge charge
- -----------------------------------------------------------------------------------------------------------------------
Institutional 0.40% 6.58% -- 16.08% -- 5.59% --
Investor A 0.27 6.25 0.68% 15.78 14.54% 5.32 4.73%
Investor B (0.21) 5.13 0.63 14.82 14.59 4.63 4.63
Investor C (0.07) 5.50 4.50 14.91 14.91 4.50 4.50
MSCI EAFE Index (5.21) (2.53) -- 19.24 -- 7.65 --
- -----------------------------------------------------------------------------------------------------------------------
1 Assuming maximum sales charges. See "About Fund Performance" on page 6 for
a detailed description of share classes, including any related sales
charges and fees.
2 The Fund commenced operations on 10/30/98.
Past performance is not indicative of future results.
BLACKROCK INTERNATIONAL FUND MAY 31, 2008 5
About Fund Performance
o 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.
o 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).
o Investor B Shares are subject to a maximum contingent deferred sales
charge of 4.50% declining to 0% after the sixth year. 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.
o 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 may be
subject to a 1% contingent deferred sales charge if redeemed within one
year of purchase.
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/funds 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. The Fund may charge a 2% redemption fee for sales or exchanges of
shares within 30 days of purchase or exchange. Performance data does not reflect
this potential fee. Figures shown in the performance tables on page 5 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.
Disclosure of Expenses
Shareholders of this Fund may incur the following charges: (a) expenses related
to transactions, including sales charges, redemption fees and exchange fees; and
(b) operating expenses including advisory fees, distribution fees including
12b-1 fees and other Fund expenses. The expense example on page 4 (which is
based on a hypothetical investment of $1,000 invested on December 1, 2007 and
held through May 31, 2008) 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 table provides information about actual account values and actual expenses.
In order to estimate the expenses a shareholder paid during the period covered
by this report, shareholders can divide their account value by $1,000 and then
multiply the result by the number corresponding to their share class under the
heading entitled "Expenses Paid During the Period."
The table also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses. In order to assist shareholders
in comparing the ongoing expenses of investing in this Fund and other funds,
compare the 5% hypothetical example with the 5% hypothetical examples that
appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders' ongoing
costs only and do not reflect any transactional expenses, such as sales charges,
redemption fees or exchange fees. Therefore, the hypothetical table is useful in
comparing ongoing expenses only, and will not help shareholders determine the
relative total expenses of owning different funds. If these transactional
expenses were included, shareholder expenses would have been higher.
6 BLACKROCK INTERNATIONAL FUND MAY 31, 2008
Statement of Assets and Liabilities BlackRock International Fund
May 31, 2008
===================================================================================================================================
Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Investment at value -- BlackRock Master International Portfolio (the "Portfolio") (cost -- $110,434,709) ......... $ 118,235,840
Portfolio interest sold receivable ............................................................................... 231,347
Capital shares sold receivable ................................................................................... 29,196
Prepaid expenses ................................................................................................. 29,714
-------------
Total assets ..................................................................................................... 118,526,097
-------------
===================================================================================================================================
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------------
Capital shares redeemed payable .................................................................................. 260,543
Other affiliates payable ......................................................................................... 63,283
Distribution fees payable ........................................................................................ 62,715
Administration fees payable ...................................................................................... 24,595
Other accrued expenses payable ................................................................................... 13,956
-------------
Total liabilities ................................................................................................ 425,092
-------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets ....................................................................................................... $ 118,101,005
=============
===================================================================================================================================
Net Assets Consist of
- -----------------------------------------------------------------------------------------------------------------------------------
Institutional Shares, $0.0001 par value .......................................................................... $ 73
Investor A Shares, $0.0001 par value ............................................................................. 283
Investor B Shares, $0.0001 par value ............................................................................. 313
Investor C Shares, $0.0001 par value ............................................................................. 147
Paid-in capital in excess of par ................................................................................. 148,515,493
Undistributed net investment income .............................................................................. 514,616
Accumulated net realized loss allocated from the Portfolio ....................................................... (38,731,051)
Net unrealized appreciation/depreciation allocated from the Portfolio ............................................ 7,801,131
-------------
Net assets ....................................................................................................... $ 118,101,005
=============
===================================================================================================================================
Net Asset Value
- -----------------------------------------------------------------------------------------------------------------------------------
Institutional -- Based on net assets of $10,903,573 and 726,323 shares outstanding ............................... $ 15.01
=============
Investor A -- Based on net assets of $42,051,761 and 2,831,599 shares outstanding ................................ $ 14.85
=============
Investor B -- Based on net assets of $44,253,973 and 3,131,479 shares outstanding ................................ $ 14.13
=============
Investor C -- Based on net assets of $20,891,698 and 1,472,050 shares outstanding ................................ $ 14.19
=============
See Notes to Financial Statements.
BLACKROCK INTERNATIONAL FUND MAY 31, 2008 7
Statement of Operations BlackRock International Fund
Year Ended May 31, 2008
===================================================================================================================================
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income allocated from the Portfolio:
Dividends ..................................................................................................... $ 3,417,665
Interest from affiliates ...................................................................................... 45,203
Expenses ...................................................................................................... (1,185,510)
------------
Total income ...................................................................................................... 2,277,358
------------
===================================================================================================================================
Expenses
- -----------------------------------------------------------------------------------------------------------------------------------
Administration .................................................................................................... 298,744
Service -- Investor A ............................................................................................. 93,465
Service and distribution -- Investor B ............................................................................ 498,332
Service and distribution -- Investor C ............................................................................ 208,466
Transfer agent -- Institutional ................................................................................... 19,706
Transfer agent -- Investor A ...................................................................................... 83,251
Transfer agent -- Investor B ...................................................................................... 270,961
Transfer agent -- Investor C ...................................................................................... 43,205
Printing .......................................................................................................... 66,697
Registration ...................................................................................................... 51,462
Professional ...................................................................................................... 26,004
Officer and Directors ............................................................................................. 64
Miscellaneous ..................................................................................................... 10,721
------------
Total expenses .................................................................................................... 1,671,078
------------
Net investment income ............................................................................................. 606,280
------------
===================================================================================================================================
Realized and Unrealized Gain (Loss) Allocated From the Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ................................................................................................... 10,524,683
Foreign currency .............................................................................................. (89,498)
------------
10,435,185
------------
Net change in unrealized appreciation/depreciation on:
Investments ................................................................................................... (4,768,922)
Foreign currency .............................................................................................. 53,589
------------
(4,715,333)
------------
Total realized and unrealized gain ................................................................................ 5,719,852
------------
Net Increase in Net Assets Resulting from Operations .............................................................. $ 6,326,132
============
See Notes to Financial Statements.
8 BLACKROCK INTERNATIONAL FUND MAY 31, 2008
Statements of Changes in Net Assets BlackRock International Fund
Year Ended
May 31,
-------------------------------
Increase (Decrease) in Net Assets: 2008 2007
===================================================================================================================================
Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income .......................................................................... $ 606,280 $ 188,798
Net realized gain .............................................................................. 10,435,185 25,383,534
Net change in unrealized appreciation/depreciation ............................................. (4,715,333) (7,673,440)
-------------------------------
Net increase in net assets resulting from operations ........................................... 6,326,132 17,898,892
-------------------------------
===================================================================================================================================
Dividends to Shareholders From
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income:
Institutional .............................................................................. (74,593) (188,373)
Investor A ................................................................................. (150,124) (286,547)
Investor B ................................................................................. -- (397,492)
Investor C ................................................................................. -- (126,047)
-------------------------------
Decrease in net assets resulting from dividends to shareholders ................................ (224,717) (998,459)
-------------------------------
===================================================================================================================================
Capital Share Transactions
- -----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets derived from capital share transactions ............................. (14,445,370) (19,755,833)
-------------------------------
===================================================================================================================================
Redemption Fee
- -----------------------------------------------------------------------------------------------------------------------------------
Redemption fee ................................................................................. 963 1,164
-------------------------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Total decrease in net assets ................................................................... (8,342,992) (2,854,236)
Beginning of year .............................................................................. 126,443,997 129,298,233
-------------------------------
End of year .................................................................................... $ 118,101,005 $ 126,443,997
===============================
End of year undistributed net investment income ................................................ $ 514,616 $ 222,551
===============================
See Notes to Financial Statements.
BLACKROCK INTERNATIONAL FUND MAY 31, 2008 9
Financial Highlights BlackRock International Fund
Institutional
----------------------------------------------------------------
Year Ended May 31,
----------------------------------------------------------------
2008 2007 2006 2005 2004
===========================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------
Net asset value, beginning of year .... $ 14.18 $ 12.38 $ 10.05 $ 8.90 $ 7.40
----------------------------------------------------------------
Net investment income 1 ............... 0.19 0.12 0.08 0.07 0.06
Net realized and unrealized gain ...... 0.73 2 1.87 2 2.39 2 1.11 2 1.44
----------------------------------------------------------------
Net increase from investment operations 0.92 1.99 2.47 1.18 1.50
----------------------------------------------------------------
Dividends from net investment income .. (0.09) (0.19) (0.14) (0.03) --
----------------------------------------------------------------
Net asset value, end of year .......... $ 15.01 $ 14.18 $ 12.38 $ 10.05 $ 8.90
================================================================
===========================================================================================================
Total Investment Return 3
- -----------------------------------------------------------------------------------------------------------
Based on net asset value .............. 6.58% 16.29% 24.80% 13.31% 20.27%
================================================================
===========================================================================================================
Ratios to Average Net Assets 4
- -----------------------------------------------------------------------------------------------------------
Total expenses ........................ 1.54% 1.65% 1.74% 1.72% 1.77%
================================================================
Net investment income ................. 1.32% 0.97% 0.72% 0.76% 0.75%
================================================================
===========================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------
Net assets, end of year (000) ......... $ 10,904 $ 12,133 $ 12,453 $ 11,946 $ 13,901
================================================================
Portfolio turnover of the Portfolio ... 153% 151% 96% 49% 74%
================================================================
Investor A
----------------------------------------------------------------
Year Ended May 31,
----------------------------------------------------------------
2008 2007 2006 2005 2004
===========================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------
Net asset value, beginning of year .... $ 14.04 $ 12.26 $ 9.94 $ 8.80 $ 7.34
----------------------------------------------------------------
Net investment income 1 ............... 0.17 0.10 0.06 0.03 0.04
Net realized and unrealized gain ...... 0.70 2 1.84 2 2.36 2 1.12 2 1.42
----------------------------------------------------------------
Net increase from investment operations 0.87 1.94 2.42 1.15 1.46
----------------------------------------------------------------
Dividends from net investment income .. (0.06) (0.16) (0.10) (0.01) --
----------------------------------------------------------------
Net asset value, end of year .......... $ 14.85 $ 14.04 $ 12.26 $ 9.94 $ 8.80
================================================================
===========================================================================================================
Total Investment Return 3
- -----------------------------------------------------------------------------------------------------------
Based on net asset value .............. 6.25% 16.02% 24.51% 13.04% 19.89%
================================================================
===========================================================================================================
Ratios to Average Net Assets 4
- -----------------------------------------------------------------------------------------------------------
Total expenses ........................ 1.84% 1.91% 1.98% 1.97% 2.00%
================================================================
Net investment income ................. 1.18% 0.77% 0.53% 0.30% 0.55%
================================================================
===========================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------
Net assets, end of year (000) ......... $ 42,052 $ 35,750 $ 21,807 $ 18,058 $ 28,428
================================================================
Portfolio turnover of the Portfolio ... 153% 151% 96% 49% 74%
================================================================
1 Based on average shares outstanding.
2 Includes a redemption fee, which is less than $0.01 per share.
3 Total investment returns exclude the effects of any sales charges.
4 Includes the Fund's share of the Portfolio's allocated expenses and/or net
investment income.
See Notes to Financial Statements.
10 BLACKROCK INTERNATIONAL FUND MAY 31, 2008
Financial Highlights (concluded) BlackRock International Fund
Investor B
----------------------------------------------------------------
Year Ended May 31,
----------------------------------------------------------------
2008 2007 2006 2005 2004
===========================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------
Net asset value, beginning of year .... $ 13.44 $ 11.75 $ 9.54 $ 8.51 $ 7.14
----------------------------------------------------------------
Net investment income (loss) 1 ........ (0.01) (0.02) (0.03) (0.02) (0.02)
Net realized and unrealized gain ...... 0.70 2 1.78 2 2.27 2 1.05 2 1.39
----------------------------------------------------------------
Net increase from investment operations 0.69 1.76 2.24 1.03 1.37
----------------------------------------------------------------
Dividends from net investment income .. -- (0.07) (0.03) -- --
----------------------------------------------------------------
Net asset value, end of year .......... $ 14.13 $ 13.44 $ 11.75 $ 9.54 $ 8.51
================================================================
===========================================================================================================
Total Investment Return 3
- -----------------------------------------------------------------------------------------------------------
Based on net asset value .............. 5.13% 15.02% 23.52% 12.10% 19.19%
================================================================
===========================================================================================================
Ratios to Average Net Assets 4
- -----------------------------------------------------------------------------------------------------------
Total expenses ........................ 2.90% 2.76% 2.76% 2.75% 2.80%
================================================================
Net investment income (loss) .......... (0.11%) (0.20%) (0.31%) (0.24%) (0.25%)
================================================================
===========================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------
Net assets, end of year (000) ......... $ 44,254 $ 56,428 $ 71,575 $ 69,342 $ 76,727
================================================================
Portfolio turnover of the Portfolio ... 153% 151% 96% 49% 74%
================================================================
Investor C
----------------------------------------------------------------
Year Ended May 31,
----------------------------------------------------------------
2008 2007 2006 2005 2004
===========================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------
Net asset value, beginning of year .... $ 13.45 $ 11.75 $ 9.54 $ 8.51 $ 7.14
----------------------------------------------------------------
Net investment income (loss) 1 ........ 0.04 (0.01) (0.03) (0.02) (0.02)
Net realized and unrealized gain ...... 0.70 2 1.78 2 2.27 2 1.05 2 1.39
----------------------------------------------------------------
Net increase from investment operations 0.74 1.77 2.24 1.03 1.37
----------------------------------------------------------------
Dividends from net investment income .. -- (0.07) (0.03) -- --
----------------------------------------------------------------
Net asset value, end of year .......... $ 14.19 $ 13.45 $ 11.75 $ 9.54 $ 8.51
================================================================
===========================================================================================================
Total Investment Return 3
- -----------------------------------------------------------------------------------------------------------
Based on net asset value .............. 5.50% 15.09% 23.47% 12.10% 19.19%
================================================================
===========================================================================================================
Ratios to Average Net Assets 4
- -----------------------------------------------------------------------------------------------------------
Total expenses ........................ 2.57% 2.68% 2.77% 2.76% 2.82%
================================================================
Net investment income (loss) .......... 0.32% (0.09%) (0.32%) (0.27%) (0.29%)
================================================================
===========================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------
Net assets, end of year (000) ......... $ 20,892 $ 22,133 $ 23,463 $ 22,879 $ 27,485
================================================================
Portfolio turnover of the Portfolio ... 153% 151% 96% 49% 74%
================================================================
1 Based on average shares outstanding.
2 Includes a redemption fee, which is less than $0.01 per share.
3 Total investment returns exclude the effects of sales charges.
4 Includes the Fund's share of the Portfolio's allocated expenses and/or net
investment income.
See Notes to Financial Statements.
BLACKROCK INTERNATIONAL FUND MAY 31, 2008 11
Notes to Financial Statements BlackRock International Fund
1. Significant Accounting Policies:
BlackRock International Fund (the "Fund") of BlackRock Series, Inc. (the
"Corporation") is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a diversified, open-end management investment
company. The Fund seeks to achieve its investment objective by investing all of
its assets in BlackRock Master International Portfolio (the "Portfolio") of
BlackRock Master LLC (the "Master LLC"), which has the same investment objective
and strategies as the Fund. The value of the Fund's investment in the Portfolio
reflects the Fund's proportionate interest in the net assets of the Portfolio.
The performance of the Fund is directly affected by the performance of the
Portfolio. The financial statements of the Portfolio, including the Schedule of
Investments, are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements. The Fund's financial
statements are prepared in conformity with accounting principles generally
accepted in the United States of America, which may require the use of
management accruals and estimates. Actual results may differ from these
estimates. The percentage of the Portfolio owned by the Fund at May 31, 2008 was
100%. The Fund offers multiple classes of shares. Institutional Shares are sold
without a sales charge and only to certain eligible investors. Investor A Shares
are generally sold with a front-end sales charge. Investor B and Investor C
Shares may be subject to a contingent deferred sales charge. All classes of
shares have identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Investor A, Investor B and Investor C
Shares bear certain expenses related to the shareholder servicing of such
shares, and Investor B and Investor C 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).
The following is a summary of significant accounting policies followed by the
Fund:
Valuation of Investments: The Fund records its investment in the Portfolio at
fair value. Valuation of securities held by the Portfolio is discussed in Note 1
of the Portfolio's Notes to Financial Statements, which are included elsewhere
in this report.
Investment Transactions and Net Investment Income: Investment transactions in
the Portfolio are accounted for on a trade date basis. The Fund records daily
its proportionate share of the Portfolio's income, expenses and realized and
unrealized gains and losses. In addition, the Fund accrues its own expenses.
Income and realized and unrealized gains and losses are allocated daily to each
class based on its relative net assets.
Dividends and Distribution to Shareholders: Dividends and distributions paid by
the Fund are recorded on the ex-dividend dates.
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.
Effective November 30, 2007, the Fund implemented Financial Accounting Standards
Board ("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income
Taxes -- an interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48
prescribes the minimum recognition threshold a tax position must meet in
connection with accounting for uncertainties in income tax positions taken or
expected to be taken by an entity, including investment companies, before being
measured and recognized in the financial statements. The administrator has
evaluated the application of FIN 48 to the Fund and has determined that the
adoption of FIN 48 does not have a material impact on the Fund's financial
statements. The Fund files U.S. federal and various state and local tax returns.
No income tax returns are currently under examination. The statute of
limitations on the Fund's U.S. federal tax returns remains open for the years
ended May 31, 2005 through May 31, 2007. The statutes of limitations on the
Fund's state and local tax returns may remain open for an additional year
depending upon the jurisdiction.
Recent Accounting Pronouncements: In September 2006, Statement of Financial
Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"), was issued
and is effective for fiscal years beginning after November 15, 2007. FAS 157
defines fair value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements. The impact on the Fund's financial
statement disclosures, if any, is currently being assessed.
In addition, in February 2007, Statement of Financial Accounting Standards No.
159, "The Fair Value Option for Financial Assets and Financial Liabilities"
("FAS 159"), was issued and is effective for fiscal years beginning after
November 15, 2007. FAS 159 permits entities to choose to measure many financial
instruments and certain other items at fair value that are not currently
required to be measured at fair value. FAS 159 also establishes presentation and
disclosure requirements designed to facilitate comparisons between entities that
choose different measurement attributes for similar types of assets and
liabilities. The impact on the Fund's financial statement disclosures, if any,
is currently being assessed.
In March 2008, Statement of Financial Accounting Standards No. 161, "Disclosures
about Derivative Instruments and Hedging Activities -- an amendment of FASB
Statement No. 133" ("FAS 161"), was issued and is effective for fiscal years
beginning after November 15, 2008. FAS 161 is intended to improve financial
reporting for derivative instruments by requiring enhanced disclosure that
enables investors to understand how and why an entity uses derivatives, how
derivatives are accounted for, and how derivative instruments affect an entity's
results of operations and financial position. The impact on the Fund's financial
statement disclosures, if any, is currently being assessed.
12 BLACKROCK INTERNATIONAL FUND MAY 31, 2008
Notes to Financial Statements (continued) BlackRock International Fund
Other: Expenses directly related to the Fund or its classes are charged to the
Fund or class. Other operating expenses shared by several funds are pro-rated
among those funds on the basis of relative net assets or other appropriate
methods. Other expenses of the Fund are allocated daily to each class based on
its relative net assets.
2. Transactions with Affiliates:
The Corporation, on behalf of the Fund, has entered into an Administration
Agreement with BlackRock Advisors, LLC (the "Administrator"), an indirect,
wholly owned subsidiary of BlackRock, Inc., to provide administrative services
(other than investment advice and related portfolio activities). For such
services, the Fund pays a monthly fee at an annual rate of 0.25% of the Fund's
average daily net assets. Merrill Lynch & Co., Inc. ("Merrill Lynch") and The
PNC Financial Services Group, Inc. ("PNC") are the principal owners of
BlackRock, Inc.
The Corporation, on behalf of the Fund, has also entered into separate
Distribution Agreements and Distribution Plans with FAM Distributors, Inc.
("FAMD") and BlackRock Distributors, Inc. and its affiliates ("BDI")
(collectively the "Distributor"). FAMD is a wholly owned subsidiary of Merrill
Lynch Group, Inc. and BDI is an affiliate of BlackRock, Inc.
Pursuant to the Distribution Plans adopted by the Corporation in accordance with
Rule 12b-1 under the 1940 Act, the Fund pays the Distributor ongoing service and
distribution fees. The fees are accrued daily and paid monthly at annual rates
based upon the average daily net assets of the shares as follows:
- --------------------------------------------------------------------------------
Service Distribution
Fee Fee
- --------------------------------------------------------------------------------
Investor A ..................................... 0.25% --
Investor B ..................................... 0.25% 0.75%
Investor C ..................................... 0.25% 0.75%
- --------------------------------------------------------------------------------
Pursuant to sub-agreements with each Distributor, broker-dealers, including
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a wholly owned
subsidiary of Merrill Lynch, and each Distributor provide shareholder servicing
and distribution services to the Fund. The ongoing service fee and/or
distribution fee compensates the Distributor and each broker-dealer for
providing shareholder servicing and/or distribution-related services to Investor
A, Investor B and Investor C shareholders.
For the year ended May 31, 2008, the Distributor earned underwriting discounts
and direct commissions and its affiliates earned dealer concessions on sales of
the Fund's Investor A Shares, which totaled $10,309. These amounts include
payments to Hilliard Lyons, which was considered an affiliate for a portion of
the year.
For the year ended May 31, 2008, affiliates received contingent deferred sales
charges of $2,876 and $572 relating to transactions in Investor B and Investor C
Shares, respectively.
The Administrator 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 year
ended May 31, 2008, the following amounts have been accrued by the Fund to
reimburse the Administrator 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 ................................................. $ 85
Investor A .................................................... $505
Investor B .................................................... $429
Investor C .................................................... $384
- --------------------------------------------------------------------------------
Pursuant to written agreements, certain affiliates provide the Fund with
sub-accounting, recordkeeping, sub-transfer agency and other administrative
services with respect to sub-accounts they service. For these services, these
affiliates receive an annual fee per shareholder account which will vary
depending on share class. For the year ended May 31, 2008, the Fund paid
$378,675 in return for these funds.
PNC Global Investment Servicing (U.S.) Inc., formerly PFPC Inc., an indirect,
wholly owned subsidiary of PNC and an affiliate of the Administrator, is the
Fund's transfer agent. Each share class of the Fund bears the costs of transfer
agent fees associated with such respective classes. Transfer agency fees borne
by each class of the Fund are comprised of those fees charged for all
shareholder communications including shareholder reports, dividend and
distribution notices, and proxy materials for shareholders meetings, as well as
per account and per transaction fees related to servicing and maintenance of
shareholder accounts, including the mailing of, the issuing, redeeming and
transferring of shares of each class of the Fund, 12b-1 fee calculation, check
writing, anti-money laundering services, and customer identification services.
Certain officers and/or directors of the Corporation are officers and/or
directors of BlackRock, Inc. or its affiliates.
BLACKROCK INTERNATIONAL FUND MAY 31, 2008 13
Notes to Financial Statements (continued) BlackRock International Fund
3. Capital Share Transactions:
There are 100,000,000 shares authorized for all classes. Transactions in common
stock for each class were as follows:
Year Ended Year Ended
May 31, 2008 May 31, 2007
------------------------------- ------------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
Institutional
- ----------------------------------------------------------------------------------------------------------------------------------
Shares sold .................................................... 24,171 $ 351,017 102,421 $ 1,260,887
Shares issued to shareholders in reinvestment of dividends ..... 5,110 67,055 12,783 160,677
------------------------------- ------------------------------
Total issued ................................................... 29,281 418,072 115,204 1,421,564
Shares redeemed ................................................ (158,602) (2,237,713) (265,784) (3,322,164)
------------------------------- ------------------------------
Net decrease ................................................... (129,321) $ (1,819,641) (150,580) $ (1,900,600)
=============================== ==============================
==================================================================================================================================
Investor A
- ----------------------------------------------------------------------------------------------------------------------------------
Shares sold and automatic conversion of shares ................. 1,140,058 $ 16,105,187 1,856,876 $ 23,764,197
Shares issued to shareholders in reinvestment of dividends ..... 10,055 130,879 21,871 272,736
------------------------------- ------------------------------
Total issued ................................................... 1,150,113 16,236,066 1,878,747 24,036,933
Shares redeemed ................................................ (865,330) (12,179,455) (1,110,949) (14,360,866)
------------------------------- ------------------------------
Net increase ................................................... 284,783 $ 4,056,611 767,798 $ 9,676,067
=============================== ==============================
==================================================================================================================================
Investor B
- ----------------------------------------------------------------------------------------------------------------------------------
Shares sold .................................................... 1,081,938 $ 14,597,126 1,429,741 $ 17,605,872
Shares issued to shareholders in reinvestment of dividends ..... -- -- 30,377 365,136
------------------------------- ------------------------------
Total issued ................................................... 1,081,938 14,597,126 1,460,118 17,971,008
Shares redeemed and automatic conversion of shares ............. (2,148,978) (28,924,995) (3,354,459) (41,150,734)
------------------------------- ------------------------------
Net decrease ................................................... (1,067,040) $(14,327,869) (1,894,341) $(23,179,726)
=============================== ==============================
==================================================================================================================================
Investor C
- ----------------------------------------------------------------------------------------------------------------------------------
Shares sold .................................................... 89,447 $ 1,217,816 98,864 $ 1,212,045
Shares issued to shareholders in reinvestment of dividends ..... -- -- 9,012 108,329
------------------------------- ------------------------------
Total issued ................................................... 89,447 1,217,816 107,876 1,320,374
Shares redeemed ................................................ (262,730) (3,572,287) (459,955) (5,671,948)
------------------------------- ------------------------------
Net decrease ................................................... (173,283) $ (2,354,471) (352,079) $ (4,351,574)
=============================== ==============================
There is a 2% redemption fee on shares redeemed or exchanged which have been
held for 30 days or less. The redemption fees are collected and retained by the
Fund for the benefit of the remaining shareholders. The redemption fees are
recorded as a credit to paid in capital.
4. Income Tax Information:
Reclassification: Accounting principles generally accepted in the United States
of America require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting. Accordingly, during
the current year, $89,498 has been reclassified between undistributed net
investment income and accumulated net realized capital losses as a result of
permanent differences attributable to foreign currency transactions. This
reclassification has no effect on net asset values per share.
The tax character of distributions paid during the fiscal years ended May 31,
2008 and May 31, 2007 was as follows:
- --------------------------------------------------------------------------------
5/31/2008 5/31/2007
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary income ................................. $224,717 $998,459
------------------------
Total taxable distributions ....................... $224,717 $998,459
========================
14 BLACKROCK INTERNATIONAL FUND MAY 31, 2008
Notes to Financial Statements (concluded) BlackRock International Fund
As of May 31, 2008, the components of accumulated losses on a tax basis were as
follows:
- -----------------------------------------------------------------------------
Net undistributed ordinary income ........................... $ 528,588
Net undistributed long-term capital gains ................... --
------------
Total undistributed net earnings ............................ 528,588
Capital loss carryforward ................................... (38,696,952)*
Net unrealized gains ........................................ 7,753,060**
------------
Total accumulated net losses ................................ $(30,415,304)
============
* On May 31, 2008, the Fund had a capital loss carryforward of $38,696,952,
all of which expires in 2011. This amount will be available to offset
future realized capital gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on wash sales, the
realization for tax purposes of unrealized gains (losses) on certain
foreign currency contracts and the deferral of post-October passive
foreign investment company losses for tax purposes.
Report of Independent Registered Public Accounting Firm
BlackRock International Fund
To the Shareholders and Board of Directors of
BlackRock Series, Inc.:
We have audited the accompanying statement of assets and liabilities of
BlackRock International Fund, one of the series constituting BlackRock Series,
Inc. ("BlackRock"), as of May 31, 2008, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of BlackRock'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. BlackRock
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 purposes
of expressing an opinion on the effectiveness of BlackRock'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. 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 International Fund of BlackRock Series, Inc. as of May 31, 2008, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended, in conformity with
accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
July 28, 2008
Important Tax Information (Unaudited)
The following information is provided with respect to the ordinary income
distribution paid by BlackRock International Fund of BlackRock Series, Inc. to
shareholders of record on August 20, 2007:
- --------------------------------------------------------------------------------
Qualified Dividend Income for Individuals ...................... 100.00%
Foreign Source Income .......................................... 98.06%
Foreign Taxes Paid Per Share ................................... $ 0.080691
- --------------------------------------------------------------------------------
The foreign taxes paid represent taxes incurred by the Fund on income received
by the Fund from foreign sources. Foreign taxes paid may be included in taxable
income with an offsetting deduction from gross income or may be taken as a
credit for taxes paid to foreign governments. You should consult your tax
advisor regarding the appropriate treatment of foreign taxes paid.
BLACKROCK INTERNATIONAL FUND MAY 31, 2008 15
Portfolio Summary BlackRock Master International Portfolio
Percent of
Ten Largest Equity Holdings Net Assets
- --------------------------------------------------------------------------------
British American Tobacco Plc ............................................. 4%
E.ON AG .................................................................. 3
Unilever Plc ............................................................. 3
Vodafone Group Plc ....................................................... 3
Philippine Long Distance Telephone Co. ................................... 3
Telefonica SA ............................................................ 2
Nintendo Co., Ltd. ....................................................... 2
Tele2 AB ................................................................. 2
Unicredit SpA ............................................................ 2
Tesco Plc ................................................................ 2
- --------------------------------------------------------------------------------
Percent of
Five Largest Industries Net Assets
- --------------------------------------------------------------------------------
Wireless Telecommunication Services ...................................... 8%
Oil, Gas & Consumable Fuels .............................................. 8
Chemicals ................................................................ 6
Tobacco .................................................................. 5
Diversified Telecommunication Services ................................... 5
- --------------------------------------------------------------------------------
For Portfolio compliance purposes, the Portfolio'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 Portfolio management. This
definition may not apply for purposes of this report, which may combine
such industry sub-classifications for reporting ease. These industry
classifications are unaudited.
Percent of
Ten Largest Countries Net Assets
- --------------------------------------------------------------------------------
United Kingdom ........................................................... 28%
Germany .................................................................. 10
Japan .................................................................... 10
Hong Kong ................................................................ 6
France ................................................................... 5
Italy .................................................................... 4
Sweden ................................................................... 4
Brazil ................................................................... 4
Switzerland .............................................................. 4
Netherlands .............................................................. 4
- --------------------------------------------------------------------------------
16 BLACKROCK INTERNATIONAL FUND MAY 31, 2008
Schedule of Investments May 31, 2008 BlackRock Master International Portfolio
(Percentages shown are based on Net Assets)
Common Stocks Shares Value
===============================================================================
Belgium -- 3.1%
Beverages -- 2.2%
InBev NV 33,179 $ 2,560,251
- -------------------------------------------------------------------------------
Commercial Banks -- 0.9%
KBC Bancassurance Holding 9,188 1,133,670
- -------------------------------------------------------------------------------
Total Common Stocks in Belgium 3,693,921
===============================================================================
Brazil -- 4.1%
Media -- 1.2%
NET Servicos de Comunicacao SA (a) 101,049 1,451,064
- -------------------------------------------------------------------------------
Metals & Mining -- 1.5%
Companhia Vale do Rio Doce (Common Shares) (a) 43,752 1,740,455
- -------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels -- 1.4%
Petroleo Brasileiro SA (a) 23,748 1,674,234
- -------------------------------------------------------------------------------
Total Common Stocks in Brazil 4,865,753
===============================================================================
Canada -- 1.1%
Chemicals -- 1.1%
Potash Corp. of Saskatchewan, Inc. 6,576 1,306,000
- -------------------------------------------------------------------------------
Total Common Stocks in Canada 1,306,000
===============================================================================
Denmark -- 1.5%
Electrical Equipment -- 1.5%
Vestas Wind Systems A/S (b) 12,927 1,779,502
- -------------------------------------------------------------------------------
Total Common Stocks in Denmark 1,779,502
===============================================================================
France -- 4.9%
Media -- 1.5%
Eutelsat Communications 58,736 1,763,597
- -------------------------------------------------------------------------------
Multiline Retail -- 1.7%
Pinault-Printemps-Redoute 15,635 2,043,219
- -------------------------------------------------------------------------------
Wireless Telecommunication Services -- 1.7%
Bouygues 24,843 2,028,702
- -------------------------------------------------------------------------------
Total Common Stocks in France 5,835,518
===============================================================================
Germany -- 10.3%
Auto Components -- 2.0%
Continental AG 18,550 2,352,010
- -------------------------------------------------------------------------------
Electric Utilities -- 3.0%
E.ON AG 16,792 3,572,721
- -------------------------------------------------------------------------------
Electrical Equipment -- 1.2%
SGL Carbon AG (b) 19,455 1,446,761
- -------------------------------------------------------------------------------
Insurance -- 2.3%
Allianz AG Registered Shares 14,392 2,724,669
- -------------------------------------------------------------------------------
Machinery -- 1.8%
MAN AG 13,171 2,054,396
- -------------------------------------------------------------------------------
Total Common Stocks in Germany 12,150,557
===============================================================================
Hong Kong -- 5.7%
Oil, Gas & Consumable Fuels -- 2.1%
CNOOC Ltd. 1,428,598 2,489,644
- -------------------------------------------------------------------------------
Real Estate Management & Development -- 3.6%
Hongkong Land Holdings Ltd. 545,000 2,588,750
Sun Hung Kai Properties Ltd. 105,000 1,687,233
------------
4,275,983
- -------------------------------------------------------------------------------
Total Common Stocks in Hong Kong 6,765,627
===============================================================================
Indonesia -- 1.3%
Oil, Gas & Consumable Fuels -- 1.3%
Bumi Resources Tbk PT 1,776,500 1,535,247
- -------------------------------------------------------------------------------
Total Common Stocks in Indonesia 1,535,247
===============================================================================
Italy -- 4.4%
Automobiles -- 2.0%
Fiat SpA 105,260 2,345,825
- -------------------------------------------------------------------------------
Commercial Banks -- 2.4%
Unicredit SpA 398,404 2,784,824
- -------------------------------------------------------------------------------
Total Common Stocks in Italy 5,130,649
===============================================================================
Japan -- 9.6%
Building Products -- 1.0%
Nippon Sheet Glass Co., Ltd. 259,000 1,166,999
- -------------------------------------------------------------------------------
Chemicals -- 2.6%
Nippon Sanso Corp. 167,000 1,424,142
Toray Industries, Inc. 251,000 1,645,238
------------
3,069,380
- -------------------------------------------------------------------------------
Consumer Finance -- 1.6%
ORIX Corp. 10,000 1,889,585
- -------------------------------------------------------------------------------
Machinery -- 2.0%
Kubota Corp. 289,000 2,343,910
- -------------------------------------------------------------------------------
Software -- 2.4%
Nintendo Co., Ltd. 5,200 2,860,937
- -------------------------------------------------------------------------------
Total Common Stocks in Japan 11,330,811
===============================================================================
Luxembourg -- 1.3%
Metals & Mining -- 1.3%
ArcelorMittal 15,444 1,529,792
- -------------------------------------------------------------------------------
Total Common Stocks in Luxembourg 1,529,792
===============================================================================
Netherlands -- 3.7%
Chemicals -- 2.3%
Akzo Nobel NV 31,934 2,703,147
- -------------------------------------------------------------------------------
Diversified Financial Services -- 1.4%
Fortis 70,452 1,721,897
- -------------------------------------------------------------------------------
Total Common Stocks in the Netherlands 4,425,044
===============================================================================
See Notes to Financial Statements.
BLACKROCK INTERNATIONAL FUND MAY 31, 2008 17
Schedule of Investments (continued) BlackRock Master International Portfolio
(Percentages shown are based on Net Assets)
Common Stocks Shares Value
===============================================================================
Norway -- 2.0%
Energy Equipment & Services -- 2.0%
Acergy SA 46,858 $ 1,216,530
Subsea 7, Inc. (b) 41,228 1,179,420
- -------------------------------------------------------------------------------
Total Common Stocks in Norway 2,395,950
===============================================================================
Philippines -- 2.5%
Wireless Telecommunication Services -- 2.5%
Philippine Long Distance Telephone Co. 49,880 2,968,980
- -------------------------------------------------------------------------------
Total Common Stocks in the Philippines 2,968,980
===============================================================================
South Africa -- 1.5%
Wireless Telecommunication Services -- 1.5%
MTN Group Ltd. 88,313 1,766,318
- -------------------------------------------------------------------------------
Total Common Stocks in South Africa 1,766,318
===============================================================================
Spain -- 2.5%
Diversified Telecommunication Services -- 2.5%
Telefonica SA 101,178 2,904,157
- -------------------------------------------------------------------------------
Total Common Stocks in Spain 2,904,157
===============================================================================
Sweden -- 4.1%
Diversified Telecommunication Services -- 2.4%
Tele2 AB 133,664 2,856,830
- -------------------------------------------------------------------------------
Tobacco -- 1.7%
Swedish Match AB 94,993 2,022,391
- -------------------------------------------------------------------------------
Total Common Stocks in Sweden 4,879,221
===============================================================================
Switzerland -- 3.9%
Capital Markets -- 2.3%
Credit Suisse Group AG 53,444 2,722,837
- -------------------------------------------------------------------------------
Pharmaceuticals -- 1.6%
Roche Holding AG 10,978 1,892,777
- -------------------------------------------------------------------------------
Total Common Stocks in Switzerland 4,615,614
===============================================================================
Taiwan -- 1.7%
Electronic Equipment & Instruments -- 1.7%
HON HAI Precision Industry Co., Ltd. 350,412 1,982,464
- -------------------------------------------------------------------------------
Total Common Stocks in Taiwan 1,982,464
===============================================================================
United Kingdom -- 27.8%
Aerospace & Defense -- 2.2%
BAE Systems Plc 291,763 2,619,576
- -------------------------------------------------------------------------------
Capital Markets -- 1.7%
Man Group Plc 164,612 2,024,960
- -------------------------------------------------------------------------------
Commercial Banks -- 1.4%
Royal Bank of Scotland Group Plc 376,025 1,702,027
- -------------------------------------------------------------------------------
Food & Staples Retailing -- 2.3%
Tesco Plc 335,309 2,750,514
- -------------------------------------------------------------------------------
Food Products -- 2.9%
Unilever Plc 101,806 3,369,871
- -------------------------------------------------------------------------------
Hotels, Restaurants & Leisure -- 3.4%
Compass Group Plc 336,413 2,499,007
Dolphin Capital (b) 637,869 1,481,521
------------
3,980,528
- -------------------------------------------------------------------------------
Insurance -- 1.5%
Prudential Plc 137,146 1,806,626
- -------------------------------------------------------------------------------
Metals & Mining -- 1.9%
Xstrata Plc 28,054 2,216,778
- -------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels -- 3.3%
Cairn Energy Plc (b) 20,656 1,377,285
Tullow Oil Plc 142,036 2,504,101
------------
3,881,386
- -------------------------------------------------------------------------------
Textiles, Apparel & Luxury Goods -- 1.1%
Burberry Group Plc 132,926 1,316,568
- -------------------------------------------------------------------------------
Tobacco -- 3.5%
British American Tobacco Plc 109,920 4,110,950
- -------------------------------------------------------------------------------
Wireless Telecommunication Services -- 2.6%
Vodafone Group Plc 946,566 3,042,279
- -------------------------------------------------------------------------------
Total Common Stocks in the United Kingdom 32,822,063
===============================================================================
Total Common Stocks -- 97.0% 114,683,188
===============================================================================
===============================================================================
Par
Structured Notes (000)
===============================================================================
United States -- 1.9%
Citigroup Global Markets Holdings, Inc.
(Emaar Properties PJSC), 3/24/09 $ 712 2,219,704
- -------------------------------------------------------------------------------
Total Structured Notes -- 1.9% 2,219,704
===============================================================================
Total Long-Term Investments
(Cost -- $109,185,294) -- 98.9% 116,902,892
===============================================================================
===============================================================================
Short-Term Securities
===============================================================================
United States -- 1.7%
Time Deposits -- 1.7%
Citibank London, 1.46%, 6/02/08 1,996 1,996,405
- -------------------------------------------------------------------------------
Total Short-Term Securities (Cost -- $1,996,405) -- 1.7% 1,996,405
===============================================================================
Total Investments (Cost -- $111,181,699*) -- 100.6% 118,899,297
Liabilities in Excess of Other Assets -- (0.6%) (663,457)
------------
Net Assets -- 100.0% $118,235,840
============
See Notes to Financial Statements.
18 BLACKROCK INTERNATIONAL FUND MAY 31, 2008
Schedule of Investments (concluded) BlackRock Master International Portfolio
(Percentages shown are based on Net Assets)
* The cost and unrealized appreciation (depreciation) of investments as of
May 31, 2008, as computed for federal income tax purposes, were as
follows:
Aggregate cost ......................................... $ 111,215,799
=============
Gross unrealized appreciation .......................... $ 12,140,921
Gross unrealized depreciation .......................... (4,457,423)
-------------
Net unrealized appreciation ............................ $ 7,683,498
=============
(a) Depositary receipts.
(b) Non-income producing security.
o Investments in companies considered to be an affiliate of the Portfolio,
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 $(1,610,454) $45,203
--------------------------------------------------------------------------
o For Portfolio compliance purposes, the Portfolio'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 Portfolio management. This
definition may not apply for purposes of this report, which may combine
industry sub-classifications for reporting ease. These industry
classifications are unaudited.
See Notes to Financial Statements.
BLACKROCK INTERNATIONAL FUND MAY 31, 2008 19
Statement of Assets and Liabilities BlackRock Master International Portfolio
May 31, 2008
================================================================================
Assets
- --------------------------------------------------------------------------------
Investments at value -- (cost -- $111,181,699) ................. $118,899,297
Investments sold receivable .................................... 1,933,164
Dividends receivable ........................................... 833,186
Prepaid expenses ............................................... 2,791
Other assets ................................................... 164,338
------------
Total assets ................................................... 121,832,776
------------
================================================================================
Liabilities
- --------------------------------------------------------------------------------
Bank overdraft ................................................. 1,397
Investments purchased payable .................................. 3,206,860
Withdrawals payable ............................................ 231,347
Investment advisory fees payable ............................... 73,834
Directors' fees payable ........................................ 3,354
Other affiliates payable ....................................... 819
Other accrued expenses payable ................................. 79,325
------------
Total liabilities .............................................. 3,596,936
------------
================================================================================
Net Assets
- --------------------------------------------------------------------------------
Net assets ..................................................... $118,235,840
============
================================================================================
Net Assets Consist of
- --------------------------------------------------------------------------------
Investor's capital ............................................. $110,434,709
Net unrealized appreciation/depreciation ....................... 7,801,131
------------
Net assets ..................................................... $118,235,840
============
See Notes to Financial Statements.
20 BLACKROCK INTERNATIONAL FUND MAY 31, 2008
Statement of Operations BlackRock Master International Portfolio
Year Ended May 31, 2008
================================================================================
Investment Income
- --------------------------------------------------------------------------------
Dividends (net of $353,274 foreign withholding tax) ........... $ 3,417,665
Interest from affiliates ...................................... 45,203
------------
Total income .................................................. 3,462,868
------------
================================================================================
Expenses
- --------------------------------------------------------------------------------
Investment advisory ........................................... 896,902
Custodian ..................................................... 117,297
Accounting services ........................................... 100,101
Professional .................................................. 36,064
Officer and Directors ......................................... 19,945
Printing ...................................................... 635
Miscellaneous ................................................. 14,566
------------
Total expenses ................................................ 1,185,510
------------
Net investment income ......................................... 2,277,358
------------
================================================================================
Realized and Unrealized Gain (Loss)
- --------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ............................................... 10,524,683
Foreign currency .......................................... (89,498)
------------
10,435,185
------------
Net change in unrealized appreciation/depreciation on:
Investments ............................................... (4,768,922)
Foreign currency .......................................... 53,589
------------
(4,715,333)
------------
Total realized and unrealized gain ............................ 5,719,852
------------
Net Increase in Net Assets Resulting from Operations .......... $ 7,997,210
============
See Notes to Financial Statements.
BLACKROCK INTERNATIONAL FUND MAY 31, 2008 21
Statements of Changes in Net Assets BlackRock Master International Portfolio
Year Ended
May 31,
-------------------------------
Increase (Decrease) in Net Assets: 2008 2007
===============================================================================================
Operations
- -----------------------------------------------------------------------------------------------
Net investment income ...................................... $ 2,277,358 $ 2,062,812
Net realized gain .......................................... 10,435,185 25,383,534
Net change in unrealized appreciation/depreciation ......... (4,715,333) (7,673,440)
-------------------------------
Net increase in net assets resulting from operations ....... 7,997,210 19,772,906
-------------------------------
===============================================================================================
Capital Transactions
- -----------------------------------------------------------------------------------------------
Proceeds from contributions ................................ 32,271,146 43,466,052
Fair value of withdrawals .................................. (48,626,388) (66,120,001)
-------------------------------
Net decrease in net assets derived from capital transactions (16,355,242) (22,653,949)
-------------------------------
===============================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------
Total decrease in net assets ............................... (8,358,032) (2,881,043)
Beginning of year .......................................... 126,593,872 129,474,915
-------------------------------
End of year ................................................ $ 118,235,840 $ 126,593,872
===============================
Financial Highlights BlackRock Master International Portfolio
Year Ended May 31,
------------------------------------------------------------
2008 2007 2006 2005 2004
=============================================================================================
Total Investment Return
- ---------------------------------------------------------------------------------------------
Total investment return ..... 7.12% 16.99% 25.58% 14.08% 21.12%
============================================================
=============================================================================================
Ratios to Average Net Assets
- ---------------------------------------------------------------------------------------------
Total expenses .............. 0.99% 0.96% 0.98% 0.95% 0.94%
============================================================
Net investment income ....... 1.90% 1.64% 1.48% 1.51% 1.60%
============================================================
=============================================================================================
Supplemental Data
- ---------------------------------------------------------------------------------------------
Net assets, end of year (000) $118,236 $126,594 $129,475 $122,401 $146,726
============================================================
Portfolio turnover .......... 153% 151% 96% 49% 74%
============================================================
See Notes to Financial Statements.
22 BLACKROCK INTERNATIONAL FUND MAY 31, 2008
Notes to Financial Statements BlackRock Master International Portfolio
1. Significant Accounting Policies:
BlackRock Master International Portfolio (the "Portfolio") of BlackRock Master
LLC (the "Master LLC") is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), and is organized as a Delaware limited liability
company. Prior to June 15, 2007, the Master LLC was organized as a Delaware
statutory trust (the "Trust"). The Limited Liability Company Agreement (the "LLC
Agreement") permits the Directors (and prior to June 15, 2007, the Declaration
of Trust permitted the Trustees) to issue nontransferable interests in the
Master LLC/Trust, subject to certain limitations. Throughout this report, the
Trust and the Master LLC are referred to as the Master LLC and the Board of
Trustees and Board of Directors are referred to as the Board of Directors (the
"Board"). The Portfolio's financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require the use of management accruals and estimates. Actual results may
differ from these estimates.
The following is a summary of significant accounting policies followed by the
Portfolio:
Valuation of Investments: Equity investments traded on a recognized securities
exchange or the NASDAQ Global Market System are valued at the last reported sale
price that day or the NASDAQ official closing price, if applicable. Equity
investments traded on a recognized exchange for which there were no sales on
that day are valued at the last available bid price. Short-term securities are
valued at amortized cost. Investments in open-end investment companies are
valued at net asset value each business day.
In the event that application of these methods of valuation results in a price
for an investment which is deemed not to be representative of the market value
of such investment, the investment will be valued by a method approved by the
Board as reflecting fair value ("Fair Value Assets"). When determining the price
for Fair Value Assets, the investment advisor and/or sub-advisor seeks to
determine the price that the Portfolio might reasonably expect to receive from
the current sale of that asset in an arm's-length transaction. Fair value
determinations shall be based upon all available factors that the investment
advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets
is subsequently reported to the Board or a committee thereof.
Generally, trading in foreign securities, is substantially completed each day at
various times prior to the close of business on the New York Stock Exchange
("NYSE"). The values of such securities used in computing the net assets of the
Portfolio are determined as of such times. Foreign currency exchange rates will
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 Portfolio's net assets.
If events (for example, a company announcement, market volatility or a natural
disaster) occur during such periods that are expected to materially affect the
value of such securities, those securities will be valued at their fair value as
determined in good faith by the Board or by the investment advisor using a
pricing service and/or procedures approved by the Board.
Derivative Financial Instruments: The Portfolio may engage in various portfolio
investment strategies to increase the return of the Portfolio and to hedge, or
protect, its exposure to interest rate movements and movements in the securities
markets. Losses may arise if the value of the contract decreases due to an
unfavorable change in the price of the underlying security or if the
counterparty does not perform under the contract.
o Forward foreign currency contracts -- The Portfolio may enter into forward
foreign currency contracts as a hedge against either specific transactions
or portfolio positions. Forward currency contracts, when used by the
Portfolio, help to manage the overall exposure to the foreign currency
backing some of the investments held by the Portfolio. The contract is
marked-to-market daily and the change in market value is recorded by the
Portfolio as an unrealized gain or loss. When the contract is closed, the
Portfolio 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.
Foreign Currency Transactions: Foreign currency amounts are translated into
United States dollars on the following basis: (i) market value of investment
securities, assets and liabilities at the current rate of exchange; and (ii)
purchases and sales of investment securities, income and expenses at the rates
of exchange prevailing on the respective dates of such transactions.
The Portfolio reports foreign currency related transactions as components of
realized gains for financial reporting purposes, whereas such components are
treated as ordinary income for federal income tax purposes.
Investment Transactions and Investment Income: Investment trans-actions 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 Portfolio has determined the ex-dividend date.
Interest income is recognized on the accrual basis.
BLACKROCK INTERNATIONAL FUND MAY 31, 2008 23
Notes to Financial Statements (continued)
BlackRock Master International Portfolio
Income Taxes: The Master LLC is classified as a "pass-through entity" for
federal income tax purposes. As such, each investor in the Master LLC is treated
as owner of its proportionate share of the net assets, income, expenses and
realized and unrealized gains and losses of the Master LLC. Therefore, no
federal income tax provision is required. It is intended that the Master LLC's
assets will be managed so an investor in the Master LLC can satisfy the
requirements of Subchapter M of the Internal Revenue Code. Under the applicable
foreign tax laws, a withholding tax may be imposed on interest, dividend, and
capital gains at various rates.
Effective November 30, 2007, the Portfolio implemented Financial Accounting
Standards Board ("FASB") Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes -- an interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48
prescribes the minimum recognition threshold a tax position must meet in
connection with accounting for uncertainties in income tax positions taken or
expected to be taken by an entity, including investment companies, before being
measured and recognized in the financial statements. The investment advisor has
evaluated the application of FIN 48 to the Portfolio and has determined that the
adoption of FIN 48 does not have a material impact on the Portfolio's financial
statements. The Portfolio files U.S. federal and various state and local tax
returns. No income tax returns are currently under examination. The statutes of
limitations on the Portfolio's U.S. federal tax returns remain open for the
years ended May 31, 2005 through May 31, 2007. The statutes of limitations on
the Portfolio's state and local tax returns may remain open for an additional
year depending upon the jurisdiction.
Recent Accounting Pronouncements: In September 2006, Statement of Financial
Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"), was issued
and is effective for fiscal years beginning after November 15, 2007. FAS 157
defines fair value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements. The impact on the Fund's financial
statement disclosures, if any, is currently being assessed.
In addition, in February 2007, Statement of Financial Accounting Standards No.
159, "The Fair Value Option for Financial Assets and Financial Liabilities"
("FAS 159"), was issued and is effective for fiscal years beginning after
November 15, 2007. FAS 159 permits entities to choose to measure many financial
instruments and certain other items at fair value that are not currently
required to be measured at fair value. FAS 159 also establishes presentation and
disclosure requirements designed to facilitate comparisons between entities that
choose different measurement attributes for similar types of assets and
liabilities. The impact on the Portfolio's financial statement disclosures, if
any, is currently being assessed.
In March 2008, Statement of Financial Accounting Standards No. 161, "Disclosures
about Derivative Instruments and Hedging Activities -- an amendment of FASB
Statement No. 133" ("FAS 161"), was issued and is effective for fiscal years
beginning after November 15, 2008. FAS 161 is intended to improve financial
reporting for derivative instruments by requiring enhanced disclosure that
enables investors to understand how and why an entity uses derivatives, how
derivatives are accounted for, and how derivative instruments affect an entity's
results of operations and financial position. The impact on the Portfolio's
financial statement disclosures, if any, is currently being assessed.
Bank Overdraft: The Portfolio recorded a bank overdraft which resulted from
management estimates of available cash.
Other: Expenses directly related to the Portfolio are charged to that Portfolio.
Other operating expenses shared by several funds are pro-rated among those funds
on the basis of relative net assets or other appropriate methods.
2. Investment Advisory Agreement and Other Transactions with Affiliates:
The Master LLC, on behalf of the Portfolio, has entered into an Investment
Advisory Agreement with BlackRock Advisors, LLC (the "Advisor"), an indirect,
wholly owned subsidiary of BlackRock, Inc., to provide investment advisory and
administration services. Merrill Lynch & Co., Inc. ("Merrill Lynch") and The PNC
Financial Services Group, Inc. are principal owners of BlackRock, Inc.
The Advisor is responsible for the management of the Portfolio's investments and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Portfolio. For such services, the
Portfolio pays the Advisor a monthly fee based upon the average daily value of
the Portfolio's net assets at the following annual rates: 0.75% of the
Portfolio's average daily net assets not exceeding $500 million and 0.70% of the
Portfolio's average daily net assets in excess of $500 million.
The Advisor has entered into a separate sub-advisory agreement with BlackRock
Investment Management International Limited, an affiliate of the Advisor, under
which the Advisor pays the sub-advisor, for services it provides, a monthly fee
that is a percentage of the investment advisory fee paid by the Portfolio to the
Advisor.
For the year ended May 31, 2008, the Portfolio reimbursed the Advisor $2,175 for
certain accounting services, which are included in accounting services in the
Statement of Operations.
In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a
wholly owned subsidiary of Merrill Lynch, received $1,333 in commissions on the
execution of portfolio security transactions for the Portfolio for the year
ended May 31, 2008.
Certain officers and/or directors of the Master LLC are officers and/or
directors of BlackRock, Inc. or its affiliates.
24 BLACKROCK INTERNATIONAL FUND MAY 31, 2008
Notes to Financial Statements (concluded)
BlackRock Master International Portfolio
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended May 31, 2008 were $182,903,465 and $199,206,335, respectively.
4. Short-Term Borrowings:
The Portfolio, along with certain other funds managed by the Advisor and its
affiliates, is a party to a $500,000,000 credit agreement with a group of
lenders. The Portfolio may borrow under the credit agreement to fund shareholder
redemptions and for other lawful purposes other than for leverage. The Portfolio
may borrow up to the maximum amount allowable under the Portfolio's current
prospectus and statement of additional information, subject to various other
legal, regulatory or contractual limits. On November 21, 2007, the credit
agreement was renewed for one year under substantially the same terms. The
Portfolio pays a commitment fee of 0.06% per annum based on the Portfolio's pro
rata share of the unused portion of the credit agreement, which is included in
miscellaneous in the Statement of Operations. Amounts borrowed under the credit
agreement bear interest at a rate equal to, at each fund's election, the federal
funds rate plus 0.35% or a base rate as defined in the credit agreement. The
Portfolio did not borrow under the credit agreement during the year ended May
31, 2008.
5. Commitments:
At May 31, 2008, the Portfolio had entered into foreign exchange contracts under
which it had agreed to purchase and sell various foreign currencies with
approximate values of $1,750,000 and $1,926,000, respectively.
Report of Independent Registered Public Accounting Firm
BlackRock Master International Portfolio
To the Investor and Board of Directors of
BlackRock Master LLC:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of BlackRock Master International Portfolio, one of
the series constituting BlackRock Master LLC (formerly BlackRock Master Trust)
(the "Master LLC"), as of May 31, 2008, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Master LLC'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
Master LLC 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 Master LLC's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of May 31, 2008, by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
BlackRock Master International Portfolio of BlackRock Master LLC as of May 31,
2008, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in conformity
with accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
July 28, 2008
BLACKROCK INTERNATIONAL FUND MAY 31, 2008 25
Officers and Directors
Length of Number of
Position(s) Time BlackRock-
Held with Served Advised Funds
Name, Address Fund/ as a Principal Occupation(s) and Portfolios Public
and Year of Birth Portfolio Director 2 During Past Five Years Overseen Directorships
====================================================================================================================================
Non-Interested Directors 1
- ------------------------------------------------------------------------------------------------------------------------------------
David O. Beim Director Since 1998 Professor of Finance and Economics at the 35 Funds None
40 East 52nd Street Columbia University Graduate School of 81 Portfolios
New York, NY 10022 Business since 1991; Trustee, Phillips
1940 Exeter Academy since 2002; Formerly
Chairman, Wave Hill Inc. (public garden
and cultural center) from 1990 to 2006.
- ------------------------------------------------------------------------------------------------------------------------------------
Ronald W. Forbes Co-Chairman Since 2007 Professor Emeritus of Finance, School of 35 Funds None
40 East 52nd Street of the Board Business, State University of New York at 81 Portfolios
New York, NY 10022 and Director Albany since 2000.
1940
- ------------------------------------------------------------------------------------------------------------------------------------
Dr. Matina Horner Director Since 2007 Formerly Executive Vice President of 35 Funds NSTAR (electric and
40 East 52nd Street Teachers Insurance and Annuity Association 81 Portfolios gas utility)
New York, NY 10022 and College Retirement Equities Fund from
1939 1989 to 2003.
- ------------------------------------------------------------------------------------------------------------------------------------
Rodney D. Johnson Co-Chairman Since 2007 President, Fairmount Capital Advisors, 35 Funds None
40 East 52nd Street of the Board Inc. since 1987; Director, Fox Chase 81 Portfolios
New York, NY 10022 and Director Cancer Center since 2002; Member of the
1941 Archdiocesan Investment Committee of the
Archdiocese of Philadelphia since 2003;
Director, the Committee of Seventy (civic)
since 2006.
- ------------------------------------------------------------------------------------------------------------------------------------
Herbert I. London Director and Since 2007 Professor Emeritus, New York University 35 Funds AIMS Worldwide, Inc.
40 East 52nd Street Member of since 2005; John M. Olin Professor of 81 Portfolios (marketing)
New York, NY 10022 the Audit Humanities, New York University from 1993
1939 Committee to 2005 and Professor thereof from 1980 to
2005; President, Hudson Institute (policy
research organization) since 1997 and
Trustee thereof since 1980; Chairman of
the Board of Trustees for Grantham
University since 2006; Director,
InnoCentive, Inc. (strategic solutions
company) since 2005; Director of Cerego,
LLC (software development and design)
since 2005.
- ------------------------------------------------------------------------------------------------------------------------------------
Cynthia A. Montgomery Director Since 2007 Professor, Harvard Business School since 35 Funds Newell Rubbermaid,
40 East 52nd Street 1989; Director, Harvard Business School 81 Portfolios Inc. (manufacturing)
New York, NY 10022 Publishing since 2005; Director, McLean
1952 Hospital since 2005.
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph P. Platt, Jr. Director Since 2007 Director, The West Penn Allegheny Health 35 Funds Greenlight Capital
40 East 52nd Street System (a not-for-profit health system) 81 Portfolios Re, Ltd (reinsurance
New York, NY 10022 since 2008; Partner, Amarna Corporation, company)
1947 LLC (private investment company) since
2002; Director, WQED Multimedia (PBS and
Multimedia, a not-for-profit company)
since 2002; Director, Jones and Brown
(Canadian insurance broker) since 1998;
General Partner, Thorn Partner, LP
(private investment) since 1998.
- ------------------------------------------------------------------------------------------------------------------------------------
Robert C. Robb, Jr. Director Since 2007 Partner, Lewis, Eckert, Robb and Company 35 Funds None
40 East 52nd Street (management and financial consulting firm) 81 Portfolios
New York, NY 10022 since 1981.
1945
- ------------------------------------------------------------------------------------------------------------------------------------
Toby Rosenblatt Director Since 2007 President, Founders Investments Ltd. 35 Funds A.P. Pharma, Inc.
40 East 52nd Street (private investments) since 1999; Director 81 Portfolios (specialty
New York, NY 10022 of Forward Management, LLC since 2007; pharmaceuticals)
1938 Director, The James Irvine Foundation
(philanthropic foundation) since 1997;
Formerly Trustee, State Street Research
Mutual Funds from 1990 to 2005; Formerly
Trustee, Metropolitan Series Funds, Inc.
from 2001 to 2005.
- ------------------------------------------------------------------------------------------------------------------------------------
26 BLACKROCK INTERNATIONAL FUND MAY 31, 2008
Officers and Directors (continued)
Length of Number of
Position(s) Time BlackRock-
Held with Served Advised Funds
Name, Address Fund/ as a Principal Occupation(s) and Portfolios Public
and Year of Birth Portfolio Director 2 During Past Five Years Overseen Directorships
====================================================================================================================================
Non-Interested Directors 1 (concluded)
- ------------------------------------------------------------------------------------------------------------------------------------
Kenneth L. Urish Chairman of the Since 2007 Managing Partner, Urish Popeck & Co., LLC 35 Funds None
40 East 52nd Street Audit Committee (certified public accountants and 81 Portfolios
New York, NY 10022 and Director consultants) since 1976; Member of
1951 External Advisory Board, The Pennsylvania
State University Accounting Department
since 2001; Trustee, The Holy Family
Foundation since 2001; Committee
Member/Professional Ethics Committee of
the Pennsylvania Institute of Certified
Public Accountants since 2007; President
and Trustee, Pittsburgh Catholic
Publishing Associates since 2003; Formerly
Director, Inter-Tel from 2006 to 2007.
- ------------------------------------------------------------------------------------------------------------------------------------
Frederick W. Winter Director and Since 2007 Professor and Dean Emeritus of the Joseph 35 Funds None
40 East 52nd Street Member of the M. Katz School of Business, University of 81 Portfolios
New York, NY 10022 Audit Committee Pittsburgh since 2005 and Dean thereof
1945 from 1997 to 2005; Director, Alkon
Corporation (pneumatics) since 1992;
Director, Indotronix International (IT
services) since 2004; Director, Tippman
Sports (recreation) since 2005.
-------------------------------------------------------------------------------------------------------------
1 Directors serve until their resignation, removal or death, or until December 31 of the year in which
they turn 72.
2 Following the combination of Merrill Lynch Investment Managers, L.P. ("MLIM") and BlackRock, Inc.
("BlackRock") in September 2006, the various legacy MLIM and legacy BlackRock Fund boards were
realigned and consolidated into three new Fund boards in 2007. As a result, although the chart shows
certain directors as joining the Fund's board in 2007, each director first became a member of the board
of directors of other legacy MLIM or legacy BlackRock Funds as follows: David O. Beim since 1998;
Ronald W. Forbes since 1977; Matina Horner since 2004; Rodney D. Johnson since 1995; Herbert I. London
since 1987; Cynthia A. Montgomery since 1994; Joseph P. Platt since 1999; Robert C. Robb, Jr. since
1999; Toby Rosenblatt since 2005; Kenneth L. Urish since 1999 and Frederick W. Winter since 1999.
====================================================================================================================================
Interested Directors 3
- ------------------------------------------------------------------------------------------------------------------------------------
Richard S. Davis Director Since 2007 Managing Director, BlackRock, Inc. since 185 Funds None
40 East 52nd Street 2005; Formerly Chief Executive Officer, 295 Portfolios
New York, NY 10022 State Street Research & Management Company
1945 from 2000 to 2005; Formerly Chairman of
the Board of Trustees, State Street
Research Mutual Funds from 2000 to 2005;
Formerly Chairman, SSR Realty from 2000 to
2004.
- ------------------------------------------------------------------------------------------------------------------------------------
Henry Gabbay Director Since 2007 Consultant, BlackRock, Inc. since 2007; 184 Funds None
40 East 52nd Street Formerly Managing Director, BlackRock, 294 Portfolios
New York, NY 10022 Inc. from 1989 to 2007; Formerly Chief
1947 Administrative Officer, BlackRock
Advisors, LLC from 1998 to 2007; Formerly
President of BlackRock Funds and BlackRock
Bond Allocation Target Shares from 2005 to
2007 and Treasurer of certain closed-end
funds in the BlackRock fund complex from
1989 to 2006.
-------------------------------------------------------------------------------------------------------------
3 Messrs. Davis and Gabbay are both "interested persons," as defined in the Investment Company Act of
1940, of the Fund/Portfolio based on their positions with BlackRock, Inc. and its affiliates. Directors
serve until their resignation, removal or death, or until December 31 of the year in which they turn
72.
BLACKROCK INTERNATIONAL FUND MAY 31, 2008 27
Officers and Directors (concluded)
Position(s) Length of
Name, Address Held with Time
and Year of Birth Fund Served Principal Occupation(s) During Past Five Years
====================================================================================================================================
Fund Officers 1
- ------------------------------------------------------------------------------------------------------------------------------------
Donald C. Burke Fund Since 2007 Managing Director of BlackRock, Inc. since 2006; Formerly Managing Director of
40 East 52nd Street President and Merrill Lynch Investment Managers, L.P. ("MLIM") and Fund Asset Management, L.P.
New York, NY 10022 Chief Executive ("FAM") in 2006; First Vice President thereof from 1997 to 2005; Treasurer
1960 Officer thereof from 1999 to 2006 and Vice President thereof from 1990 to 1997.
- ------------------------------------------------------------------------------------------------------------------------------------
Anne F. Ackerley Vice President Since 2007 Managing Director of BlackRock, Inc. since 2000; Chief Operating Officer of
40 East 52nd Street BlackRock's U.S. Retail Group since 2006; Head of BlackRock's Mutual Fund Group
New York, NY 10022 from 2000 to 2006; Merrill Lynch & Co., Inc. from 1984 to 1986 and from 1988 to
1962 2000, most recently as First Vice President and Operating Officer of the Mergers
and Acquisitions Group.
- ------------------------------------------------------------------------------------------------------------------------------------
Neal J. Andrews Chief Financial Since 2007 Managing Director of BlackRock, Inc. since 2006; Formerly Senior Vice President
40 East 52nd Street Officer and Line of Business Head of Fund Accounting and Administration at PFPC Inc.
New York, NY 10022 from 1992 to 2006.
1966
- ------------------------------------------------------------------------------------------------------------------------------------
Jay M. Fife Treasurer Since 2007 Managing Director of BlackRock, Inc. since 2007 and Director in 2006; Formerly
40 East 52nd Street Assistant Treasurer of the MLIM/FAM-advised funds from 2005 to 2006; Director of
New York, NY 10022 MLIM Fund Services Group from 2001 to 2006.
1970
- ------------------------------------------------------------------------------------------------------------------------------------
Brian P. Kindelan Chief Since 2007 Chief Compliance Officer of the BlackRock-advised Funds since 2007; Anti-Money
40 East 52nd Street Compliance Laundering Officer of the BlackRock-advised Funds since 2007; Managing Director
New York, NY 10022 Officer and Senior Counsel of BlackRock, Inc. since 2005; Director and Senior Counsel of
1959 of the Fund BlackRock Advisors, Inc. from 2001 to 2004 and Vice President and Senior Counsel
thereof from 1998 to 2000; Formerly Senior Counsel of The PNC Bank Corp. from
1995 to 1998.
- ------------------------------------------------------------------------------------------------------------------------------------
Howard Surloff Secretary Since 2007 Managing Director of BlackRock, Inc. and General Counsel of U.S. Funds at
40 East 52nd Street BlackRock, Inc. since 2006; Formerly General Counsel (U.S.) of Goldman Sachs
New York, NY 10022 Asset Management, L.P. from 1993 to 2006.
1965
-------------------------------------------------------------------------------------------------------------
1 Officers of the Fund/Portfolio serve at the pleasure of the Board of Directors.
-------------------------------------------------------------------------------------------------------------
Further information about the Fund's/Portfolio's Officers and Directors is available in the Fund's Statement
of Additional Information, which can be obtained without charge by calling (800) 441-7762.
- ------------------------------------------------------------------------------------------------------------------------------------
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109-3661
Transfer Agent
PNC Global Investment
Servicing (U.S.) Inc.
Wilmington, DE 19809
Accounting Agent
State Street Bank and
Trust Company
Princeton, NJ 08540
Independent Registered Public
Accounting Firm
Deloitte & Touche LLP
Princeton, NJ 08540
Legal Counsel
Sidley Austin LLP
New York, NY 10019
28 BLACKROCK INTERNATIONAL FUND MAY 31, 2008
Additional Information
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former fund
investors and individual clients (collectively, "Clients") and to safeguarding
their non-public personal information. The following information is provided to
help you understand what personal information BlackRock collects, how we protect
that information and why in certain cases we share such information with select
parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you
from different sources, including the following: (i) information we receive from
you or, if applicable, your financial intermediary, on applications, forms or
other documents; (ii) information about your transactions with us, our
affiliates, or others; (iii) information we receive from a consumer reporting
agency; and (iv) from visits to our websites.
BlackRock does not sell or disclose to non-affiliated third parties any
non-public personal information about its Clients, except as permitted by law or
as is necessary to respond to regulatory requests or to service Client accounts.
These non-affiliated third parties are required to protect the confidentiality
and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that may
be of interest to you. In addition, BlackRock restricts access to non-public
personal information about its Clients to those BlackRock employees with a
legitimate business need for the information. BlackRock maintains physical,
electronic and procedural safeguards that are designed to protect the non-public
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
BLACKROCK INTERNATIONAL FUND MAY 31, 2008 29
Additional Information (concluded)
Availability of Additional Information
Electronic copies of most financial reports and prospectuses are available on
the Fund's website or shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Fund's electronic delivery program.
To enroll:
Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:
Please contact your financial advisor. Please note that not all investment
advisors, banks or brokerages may offer this service.
Shareholders Who Hold Accounts Directly with BlackRock:
1) Access the BlackRock website at http://www.blackrock.com/edelivery
2) Click on the applicable link and follow the steps to sign up
3) Log into your account
Householding
The Fund will mail only one copy of shareholder documents, including
prospectuses, annual and semi-annual reports and proxy statements, to
shareholders with multiple accounts at the same address. This practice is
commonly called "householding" and it is intended to reduce expenses and
eliminate duplicate mailings of shareholder documents. Mailings of your
shareholder documents may be householded indefinitely unless you instruct us
otherwise. If you do not want the mailing of these documents to be combined with
those for other members of your household, please contact the Fund at (800)
441-7762.
Availability of Proxy Voting Policies and Procedures
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free (800) 441-7762; (2) at
www.blackrock.com; and (3) on the Securities and Exchange Commission's (the
"SEC") website at http://www.sec.gov.
Availability of Proxy Voting Record
Information on how the Fund votes proxies relating to securities held in the
Fund's portfolio during the most recent 12-month period ended June 30 is
available upon request and without charge (1) at www.blackrock.com or by calling
(800) 441-7762 and (2) on the SEC's website at http://www.sec.gov.
Availability of Quarterly Portfolio Schedule
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of its fiscal year on Form N-Q. The Fund's Forms N-Q
are available on the Commission's website at http://www.sec.gov and may also be
reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
Information on the operation of the Public Reference Room may be obtained by
calling (800) SEC-0330. The Fund's Forms N-Q may also be obtained upon request
and without charge by calling (800) 441-7762.
Shareholder Privileges
Account Information
Call us at (800) 441-7762 from 8:00 AM to 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/funds.
Automatic Investment Plans
Investor Class shareholders who want to invest regularly can arrange to have $50
or more automatically deducted from their checking or savings account and
invested in any of the BlackRock funds.
Systematic Withdrawal Plans
Investor Class shareholders can establish a systematic withdrawal plan and
receive periodic payments of $50 or more from their BlackRock funds, as long as
their account is at least $10,000.
Retirement Plans
Shareholders may make investments in conjunction with Traditional, Rollover,
Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans.
30 BLACKROCK INTERNATIONAL FUND MAY 31, 2008
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 Asset Allocation Portfolio+
BlackRock Aurora Portfolio
BlackRock Balanced Capital Fund+
BlackRock Basic Value Fund
BlackRock Capital Appreciation Portfolio
BlackRock Equity Dividend Fund
BlackRock EuroFund
BlackRock Focus Growth Fund
BlackRock Focus Value Fund
BlackRock Fundamental Growth Fund
BlackRock Global Allocation Fund+
BlackRock Global Dynamic Equity Fund
BlackRock Global Emerging Markets Fund
BlackRock Global Financial Services Fund
BlackRock Global Growth Fund
BlackRock Global Opportunities Portfolio
BlackRock Global Resources Portfolio
BlackRock Global Science & Technology Opportunities Portfolio
BlackRock Global SmallCap Fund
BlackRock Health Sciences Opportunities Portfolio*
BlackRock Healthcare Fund
BlackRock Index Equity Portfolio*
BlackRock International Fund
BlackRock International Index Fund
BlackRock International Opportunities Portfolio
BlackRock International Value Fund
BlackRock Large Cap Core Fund
BlackRock Large Cap 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 Technology Fund
BlackRock U.S. Opportunities Portfolio
BlackRock Utilities and Telecommunications Fund
BlackRock Value Opportunities Fund
Fixed Income Funds
BlackRock Commodity Strategies Fund
BlackRock Emerging Market Debt Portfolio
BlackRock Enhanced Income Portfolio
BlackRock GNMA Portfolio
BlackRock Government Income Portfolio
BlackRock High Income Fund
BlackRock High Yield Bond Portfolio
BlackRock Income Portfolio
BlackRock Income Builder Portfolio
BlackRock Inflation Protected Bond Portfolio
BlackRock Intermediate Bond Portfolio II
BlackRock Intermediate Government Bond Portfolio
BlackRock International Bond Portfolio
BlackRock Long Duration Bond Portfolio
BlackRock Low Duration Bond Portfolio
BlackRock Managed Income Portfolio
BlackRock Short-Term Bond Fund
BlackRock Strategic Income Portfolio
BlackRock Total Return Fund
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 INTERNATIONAL FUND MAY 31, 2008 31
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of the Fund unless accompanied or preceded by the Fund's
current prospectus. Past performance results shown in this report should not be
considered a representation of future performance. Investment returns and
principal value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Statements and other information
herein are as dated and are subject to change.
Investment in foreign securities involves special risks including fluctuating
foreign exchange rates, foreign government regulations, differing degrees of
liquidity and the possibility of substantial volatility due to adverse
political, economic or other developments.
BlackRock International Fund
Of BlackRock Series, Inc.
100 Bellevue Parkway
Wilmington, DE 19809
BLACKROCK
#INTL-5/08
Item 2 - Code of Ethics - The registrant (or the "Fund") has adopted a code
of ethics, as of the end of the period covered by this report,
applicable to the registrant's principal executive officer,
principal financial officer and principal accounting officer, or
persons performing similar functions. During the period covered by
this report, there have been no amendments to or waivers granted
under the code of ethics. A copy of the code of ethics is available
without charge at www.blackrock.com.
Item 3 - Audit Committee Financial Expert - The registrant's board of
directors or trustees, as applicable (the "board of directors") has
determined that (i) the registrant has the following audit committee
financial experts serving on its audit committee and (ii) each audit
committee financial expert is independent:
David O. Beim (not reappointed to audit committee, effective
November 1, 2007)
James T. Flynn (term ended, effective November 1, 2007)
W. Carl Kester (term ended, effective November 1, 2007)
Karen P. Robards (term ended, effective November 1, 2007)
Kenneth L. Urish (term began, effective November 1, 2007)
The registrant's board of directors has determined that David O.
Beim, W. Carl Kester and Karen P. Robards qualify as financial
experts pursuant to Item 3(c)(4) of Form N-CSR.
Mr. Beim has a thorough understanding of generally accepted
accounting principles, financial statements and internal control
over financial reporting as well as audit committee functions. For
25 years, Mr. Beim was an investment banker actively engaged in
financial analysis for securities transactions and mergers. These
transactions presented a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and
complexity of issues that can reasonably be expected to be raised by
the registrant's financial statements. Mr. Beim has also been a
professor of finance and economics at the Columbia University
Graduate School of Business since 1991.
Prof. Kester has a thorough understanding of generally accepted
accounting principles, financial statements and internal control
over financial reporting as well as audit committee functions. Prof.
Kester has been involved in providing valuation and other financial
consulting services to corporate clients since 1978. Prof. Kester's
financial consulting services present a breadth and level of
complexity of accounting issues that are generally comparable to the
breadth and complexity of issues that can reasonably be expected to
be raised by the registrant's financial statements.
Ms. Robards has a thorough understanding of generally accepted
accounting principles, financial statements and internal control
over financial reporting as well as audit committee functions. Ms.
Robards has been President of Robards & Company, a financial
advisory firm, since 1987. Ms. Robards was formerly an investment
banker for more than 10 years where she was responsible for
evaluating and assessing the performance of companies based on their
financial results. Ms. Robards has over 30 years of experience
analyzing financial statements. She also is a member of the audit
committee of one publicly held company and a non-profit
organization.
Under applicable securities laws, a person determined to be an audit
committee financial expert will not be deemed an "expert" for any
purpose, including without limitation for the purposes of Section 11
of the Securities Act of 1933, as a result of being designated or
identified as an audit committee financial expert. The designation
or identification as an audit committee financial expert does not
impose on such person any duties, obligations, or liabilities
greater than the duties, obligations, and liabilities imposed on
such person as a member of the audit committee and board of
directors in the absence of such designation or identification.
Item 4 - Principal Accountant Fees and Services
- -----------------------------------------------------------------------------------------------------------------------------------
(a) Audit Fees (b) Audit-Related Fees(1) (c) Tax Fees(2) (d) All Other Fees(3)
- -----------------------------------------------------------------------------------------------------------------------------------
Current Previous Current Previous Current Previous Current Previous
Fiscal Year Fiscal Fiscal Year Fiscal Fiscal Year Fiscal Fiscal Year Fiscal
Entity Name End Year End End Year End End Year End End Year End
- -----------------------------------------------------------------------------------------------------------------------------------
BlackRock $6,800 $6,600 $0 $0 $6,100 $6,100 $1,049 $1,042
International Fund
- -----------------------------------------------------------------------------------------------------------------------------------
BlackRock Master $29,300 $32,000 $0 $0 $0 $0 $0 $0
International
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
1 The nature of the services include assurance and related services reasonably
related to the performance of the audit of financial statements not included in
Audit Fees.
2 The nature of the services include tax compliance, tax advice and tax
planning.
3 The nature of the services include a review of compliance procedures and
attestation thereto.
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The registrant's audit committee (the "Committee") has adopted
policies and procedures with regard to the pre-approval of services.
Audit, audit-related and tax compliance services provided to the
registrant on an annual basis require specific pre-approval by the
Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to
the registrant's affiliated service providers that relate directly
to the operations and the financial reporting of the registrant.
Certain of these non-audit services that the Committee believes are
a) consistent with the SEC's auditor independence rules and b)
routine and recurring services that will not impair the independence
of the independent accountants may be approved by the Committee
without consideration on a specific case-by-case basis ("general
pre-approval"). The term of any general pre-approval is 12 months
from the date of the pre-approval, unless the Committee provides for
a different period. Tax or other non-audit services provided to the
registrant which have a direct impact on the operation or financial
reporting of the registrant will only be deemed pre-approved
provided that any individual project does not exceed $10,000
attributable to the registrant or $50,000 for all of the registrants
the Committee oversees. For this purpose, multiple projects will be
aggregated to determine if they exceed the previously mentioned cost
levels.
Any proposed services exceeding the pre-approved cost levels
will require specific pre-approval by the Committee, as will any
other services not subject to general pre-approval (e.g.,
unanticipated but permissible services). The Committee is informed
of each service approved subject to general pre-approval at the next
regularly scheduled in-person board meeting. At this meeting, an
analysis of such services is presented to the Committee for
ratification. The Committee may delegate to one or more of its
members the authority to approve the provision of and fees for any
specific engagement of permitted non-audit services, including
services exceeding pre-approved cost levels.
(e)(2) None of the services described in each of Items 4(b) through
(d) were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not Applicable
(g) Affiliates' Aggregate Non-Audit Fees:
--------------------------------------------------------------------
Current Fiscal Previous Fiscal
Entity Name Year End Year End
--------------------------------------------------------------------
BlackRock International Fund $294,649 $2,986,459
--------------------------------------------------------------------
BlackRock Master International $287,500 $2,979,317
Portfolio
--------------------------------------------------------------------
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any non-affiliated
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by the registrant's investment
adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services
to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $287,500, 0%
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Investments
(a) The registrant's Schedule of Investments is included as part of
the Report to Stockholders filed under Item 1 of this form.
(b) Not Applicable due to no such divestments during the semi-annual
period covered since the previous Form N-CSR filing.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating and Governance Committee will consider
nominees to the board of directors recommended by shareholders when
a vacancy becomes available. Shareholders who wish to recommend a
nominee should send nominations which include biographical
information and set forth the qualifications of the proposed nominee
to the registrant's Secretary. There have been no material changes
to these procedures.
Item 11 - Controls and Procedures
11(a) - The registrant's principal executive and principal financial
officers or persons performing similar functions have concluded that
the registrant's disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940, as amended
(the "1940 Act")) are effective as of a date within 90 days of the
filing of this report based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act and Rule
15d-15(b) under the Securities Exchange Act of 1934, as amended.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act)
that occurred during the second fiscal quarter of the period covered
by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock International Fund of BlackRock Series, Inc. and BlackRock Master
International Portfolio of BlackRock Master LLC
By: /s/ Donald C. Burke
-----------------------------------
Donald C. Burke
Chief Executive Officer of
BlackRock International Fund of BlackRock Series, Inc. and
BlackRock Master International Portfolio of BlackRock Master LLC
Date: July 18, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Donald C. Burke
-----------------------------------
Donald C. Burke
Chief Executive Officer (principal executive officer) of
BlackRock International Fund of BlackRock Series, Inc. and
BlackRock Master International Portfolio of BlackRock Master LLC
Date: July 18, 2008
By: /s/ Neal J. Andrews
-----------------------------------
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock International Fund of BlackRock Series, Inc. and
BlackRock Master International Portfolio of BlackRock Master LLC
Date: July 18, 2008