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 811-03450
Name of Fund: BlackRock Focus Value Fund, Inc.
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: Donald C. Burke, Chief Executive Officer,
BlackRock Focus Value Fund, Inc., 800 Scudders Mill Road, Plainsboro, NJ
08536. Mailing address: P.O. Box 9011, Princeton, NJ 08543-9011
Registrant's telephone number, including area code: (800) 441-7762
Date of fiscal year end: 06/30/2008
Date of reporting period: 07/01/2007 - 06/30/2008
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE
LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS
BlackRock BLACKROCK
Focus Value Fund, Inc.
ANNUAL REPORT | JUNE 30, 2008
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
Table of Contents
================================================================================
Page
- --------------------------------------------------------------------------------
A Letter to Shareholders .................................................. 3
Annual Report:
Fund Summary .............................................................. 4
About Fund Performance .................................................... 6
Disclosure of Expenses .................................................... 6
Portfolio Information ..................................................... 7
Financial Statements:
Schedule of Investments ................................................. 8
Statement of Assets and Liabilities ..................................... 10
Statements of Operations ................................................ 11
Statements of Changes in Net Assets ..................................... 12
Financial Highlights ...................................................... 13
Notes to Financial Statements ............................................. 18
Report of Independent Registered Public Accounting Firm ................... 24
Important Tax Information (Unaudited) ..................................... 24
Disclosure of Investment Advisory Agreement and Subadvisory Agreement ..... 25
Officers and Directors .................................................... 29
Additional Information .................................................... 33
Mutual Fund Family ........................................................ 35
2 BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008
A Letter to Shareholders
Dear Shareholder
Throughout the past year, investors were overwhelmed by lingering credit and
financial market troubles, surging oil prices and more recently, renewed
inflation concerns. Healthy nonfinancial corporate profits and robust exporting
activity remained among the few bright spots, helping the economy to grow at a
modest, but still positive, pace.
The Federal Reserve Board (the "Fed") has been aggressive in its attempts to
stoke economic growth and ease financial market instability. In addition to
slashing the target federal funds rate 325 basis points (3.25%) between
September 2007 and April 2008, the central bank introduced the new Term
Securities Lending Facility, granted broker-dealers access to the discount
window and used its own balance sheet to help negotiate the sale of Bear
Stearns. As widely anticipated, the end of the period saw a pause in Fed action,
as the central bank held the target rate steady at 2.0% amid rising inflationary
pressures.
As the Fed's bold response to the financial crisis helped ease credit turmoil
and investor anxiety, U.S. equity markets sank sharply over the last six months,
notwithstanding a brief rally in the spring. International markets were not
immune to the tumult, with most regions also registering declines.
Treasury securities also traded in a volatile fashion, but generally rallied
(yields fell as prices correspondingly rose), with investors continuing to seek
safety as part of a broader flight to quality. The yield on 10-year Treasury
issues, which fell to 3.34% in March 2008, climbed up to the 4.20% range in
mid-June as investors temporarily shifted out of Treasury issues in favor of
riskier assets (such as stocks and other high-quality fixed income sectors),
then reversed course and declined to 3.99% by period-end when credit fears
re-emerged.
Tax-exempt issues eked out gains for the reporting period, but underperformed
their taxable counterparts, as the group continued to be pressured by problems
among municipal bond insurers and the breakdown in the market for auction rate
securities.
The major benchmark indexes generated results that largely reflected heightened
investor risk aversion:
Total Returns as of June 30, 2008 6-month 12-month
==============================================================================================================
U.S. equities (S&P 500 Index) (11.91)% (13.12)%
- --------------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) (9.37)% (16.19)%
- --------------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) (10.96)% (10.61)%
- --------------------------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers U.S. Aggregate Index) 1.13% 7.12%
- --------------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) 0.02% 3.23%
- --------------------------------------------------------------------------------------------------------------
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Capped Index) (1.08)% (1.74)%
- --------------------------------------------------------------------------------------------------------------
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's returns for the 12-month period lagged that of the Russell 1000
Value Index and the broad-market S&P 500 Index. The Fund recently changed
its year end to June 30.
What factors influenced performance?
o Poor stock selection in the financials, consumer staples,
telecommunication services and information technology sectors had the
greatest negative impact on performance. Individual securities that
detracted included Qwest Communications International Inc., Borland
Software Corp., Alcatel SA, American International Group, Inc. and Morgan
Stanley.
o In the consumer discretionary and energy sectors, the benefits reaped from
stock selection were partially offset by the negative impact of our
allocation decisions within these sectors. Conversely, the benefits
generated by overweighting healthcare and materials were partially offset
by disappointing stock selection results within these sectors.
o Underweight positions versus the benchmark in utilities (namely electric
and multi-utilities) also hindered relative results, as did overweights in
telecommunication services and information technology (especially
communications equipment and semiconductor names).
o Benefiting performance was the Fund's underweight in financials
(particularly in commercial banks, mortgages and diversified services).
Successful stock selection within industrials, notably Raytheon Co., also
contributed positively. Individual holdings from other sectors of the Fund
that contributed to performance included Halliburton Co., Peabody Energy
Corp., BJ Services Co. and LSI Corp.
Describe recent portfolio activity.
o We increased the Fund's exposure to information technology, consumer
discretionary, materials, telecommunication services and health care. The
largest purchases were Qwest Communications International Inc.,
Bristol-Myers Squibb Co., LSI Corp., American Eagle Outfitters, Inc., and
Wyeth.
o During the reporting period, we reduced exposure to industrials and
consumer staples. Largest sales included shares of American International
Group Inc., The Home Depot, Inc., GlobalSantaFe Corp., The Kroger Co. and
Anadarko Petroleum Corp.
Describe Fund positioning at period-end.
o As of June 30, 2008, the Fund was overweight versus its benchmark in
information technology, materials, consumer discretionary and
telecommunication services, and underweight in financials, utilities,
consumer staples, energy, industrials and health care.
o The U.S. economy has slowed beyond our initial expectations, primarily due
to the uncertainty in the credit markets. Nevertheless, we believe there
are a number of factors that will keep the downturn moderate. Aggressive
monetary easing on the part of the Fed, fiscal stimulus, a strong global
economy and pristine corporate balance sheets continue to offset the
negative effects of credit restrictions and rising food and energy prices
on consumer behavior.
o A good portion of the portfolio is invested in larger-capitalization,
multi-national companies given their strong cash flows, global
diversification and shareholder-friendly capital allocation decisions.
However, given the retreat in prices being experienced by stocks in the
most economically sensitive sectors -- retail, auto, paper, banking and
pharmaceutical -- we have begun to transition the portfolio in that
direction. While valuations in these industries are at multi-year lows, we
may need to see economic and political stability before their equity
performance improves.
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
January 1, 2008 June 30, 2008 During the Period 1 January 1, 2008 June 30, 2008 During the Period 1
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional .... $1,000 $871.10 $ 4.79 $1,000 $1,019.78 $ 5.17
Investor A ....... $1,000 $869.60 $ 6.23 $1,000 $1,018.24 $ 6.72
Investor B ....... $1,000 $865.60 $10.02 $1,000 $1,014.16 $10.82
Investor C ....... $1,000 $865.60 $ 9.93 $1,000 $1,014.26 $10.72
Class R .......... $1,000 $866.30 $ 9.88 $1,000 $1,014.31 $10.67
- ------------------------------------------------------------------------------------------------------------------------------------
1 For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (1.03% for Institutional, 1.34% for Investor A, 2.16%
for Investor B, 2.14% for Investor C and 2.13% for Class R), multiplied by
the average account value over the period, multiplied by 182/366 (to
reflect the one-half year period shown).
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 FOCUS VALUE FUND, INC. JUNE 30, 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 Russell 1000(R)
Value Index and the S&P 500(R) Index. Values are from June 1998 to June 2008:
Russell
1000(R)
Institutional Investor A Value S&P 500(R)
Shares(1,2) Shares(1,2) Index(3) Index(4)
6/98 $10,000 $9,475 $10,000 $10,000
6/99 $11,769 $11,124 $11,637 $12,276
6/00 $13,488 $12,711 $10,599 $13,165
6/01 $14,274 $13,418 $11,694 $11,213
6/02 $12,427 $11,656 $10,647 $9,196
6/03 $12,920 $12,084 $10,538 $9,219
6/04 $16,308 $15,212 $12,766 $10,981
6/05 $17,117 $15,938 $14,560 $11,675
6/06 $19,153 $17,782 $16,322 $12,683
6/07 $24,024 $22,237 $19,891 $15,294
6/08 $18,525 $17,101 $16,156 $13,287
1 Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including advisory fees.
2 The Fund invests in a diversified portfolio of equity and fixed income
securities, including municipal securities, of issues in weak financial
condition or experiencing poor operating results that management of the
Fund believes are undervalued relative to management's assessment of the
current or prospective condition of such issuers.
3 This unmanaged broad-based Index is a subset of the Russell 1000 Index
consisting of those Russell 1000 securities with lower price/book ratios
and lower forecasted growth values. Russell 1000 is a registered trademark
of the Frank Russell Company.
4 This unmanaged Index covers 500 industrial, utility, transportation and
financial companies of the U.S. markets (mostly NYSE issues), representing
about 75% of NYSE market capitalization and 30% of NYSE issues. S&P 500 is
a registered trademark of the McGraw-Hill Companies.
Performance Summary for the Period Ended June 30, 2008
Average Annual Total Returns 1
----------------------------------------------------------------------
1 Year 5 Years 10 Years
-------------------- ------------------- -------------------
6-Month w/o sales w/sales w/o sales w/sales w/o sales w/sales
Total Returns charge charge charge charge charge charge
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional ............................. (12.89)% (22.89)% -- 7.47% -- 6.36% --
Investor A ................................ (13.04) (23.10) (27.13)% 7.19 6.04% 6.08 5.51%
Investor B ................................ (13.44) (23.78) (26.71) 6.34 6.03 5.43 5.43
Investor C ................................ (13.44) (23.78) (24.42) 6.36 6.36 5.25 5.25
Class R ................................... (13.37) (23.66) -- 6.84 -- 5.83 --
Russell 1000 Value Index .................. (13.57) (18.78) -- 8.92 -- 4.91 --
S&P 500 Index ............................. (11.91) (13.12) -- 7.58 -- 2.88 --
- ------------------------------------------------------------------------------------------------------------------------------------
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.
Past performance is not indicative of future results.
BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 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 six years. In addition, Investor B
Shares are subject to a distribution fee of 0.75% per year and a service
fee of 0.25% per year. These shares automatically convert to Investor A
Shares after approximately eight years. (There is no initial sales charge
for automatic share conversions.) All returns for periods greater than
eight years reflect this conversion.
o Investor C Shares are subject to a distribution fee of 0.75% and a service
fee of 0.25% per year. In addition, Investor C Shares are subject to a 1%
contingent deferred sales charge if redeemed within one year of purchase.
o Class R Shares do not incur a maximum initial sales charge (front-end
load) or deferred sales charge. These shares are subject to a distribution
fee of 0.25% per year and a service fee of 0.25% per year. Class R Shares
are available only to certain retirement plans. Prior to inception, Class
R Share performance results are those of Institutional Shares (which have
no distribution or service fees) restated to reflect the Class R Share
fees.
Performance information reflects past performance and does not guarantee future
results. Current performance may be lower or higher than the performance data
quoted. Refer to www.blackrock.com/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. Figures shown in the performance table 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. The Fund's Manager waived a portion of its investment
advisory fee. Without such a waiver, the Fund's performance would have been
lower.
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 January 1, 2008 and
held through June 30, 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 information 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 FOCUS VALUE FUND, INC. JUNE 30, 2008
Portfolio Information
As of June 30, 2008
Percent of
Ten Largest Equity Holdings Net Assets
- --------------------------------------------------------------------------------
Qwest Communications International Inc. ............................... 5%
LSI Corp. ............................................................. 4
Xerox Corp. ........................................................... 4
Bristol-Myers Squibb Co. .............................................. 4
Unilever NV ........................................................... 3
Halliburton Co. ....................................................... 3
BJ Services Co. ....................................................... 3
Tyco International Ltd. ............................................... 3
Wyeth ................................................................. 3
American Eagle Outfitters, Inc. ....................................... 3
- --------------------------------------------------------------------------------
Percent of
Long-Term
Investment Criteria Investments
- --------------------------------------------------------------------------------
Earnings Turnaround ................................................... 39%
Operational Restructuring ............................................. 23
Price-to-Earnings Per Share ........................................... 22
Above-Average Yield ................................................... 12
Price-to-Book Value ................................................... 4
- --------------------------------------------------------------------------------
Percent of
Five Largest Industries 1 Net Assets
- --------------------------------------------------------------------------------
Energy Equipment & Services ............................................ 9%
Diversified Telecommunication Services ................................. 7
Semiconductors & Semiconductor Equipment ............................... 7
Pharmaceuticals ........................................................ 7
Oil, Gas & Consumable Fuels ............................................ 6
- --------------------------------------------------------------------------------
1 For Fund compliance purposes, the Fund's industry classifications refer to
any one or more of the industry sub-classifications used by one or more
widely recognized market indexes or ratings group indexes, and/or as
defined by Fund management. This definition may not apply for purposes of
this report, which may combine industry sub-classifications for reporting
ease.
BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008 7
Schedule of Investments June 30, 2008
(Percentages shown are based on Net Assets)
Common Stocks Shares Value
===============================================================================
Above-Average Yield -- 11.7%
- -------------------------------------------------------------------------------
Capital Markets -- 1.5%
The Bank of New York Mellon Corp. 92,946 $ 3,516,147
- -------------------------------------------------------------------------------
Chemicals -- 3.0%
The Dow Chemical Co. 129,900 4,534,809
PPG Industries, Inc. 42,400 2,432,488
-------------
6,967,297
- -------------------------------------------------------------------------------
Communications Equipment -- 0.9%
Alcatel SA (a)(b) 360,500 2,177,420
- -------------------------------------------------------------------------------
Diversified Telecommunication Services -- 2.5%
AT&T Inc. 174,100 5,865,429
- -------------------------------------------------------------------------------
Leisure Equipment & Products -- 0.7%
Mattel, Inc. 98,900 1,693,168
- -------------------------------------------------------------------------------
Pharmaceuticals -- 3.1%
Wyeth 149,500 7,170,020
- -------------------------------------------------------------------------------
Total Above-Average Yield 27,389,481
===============================================================================
===============================================================================
Earnings Turnaround -- 36.4%
- -------------------------------------------------------------------------------
Capital Markets -- 2.2%
Morgan Stanley 144,200 5,201,294
- -------------------------------------------------------------------------------
Computers & Peripherals -- 1.6%
International Business Machines Corp. 32,100 3,804,813
- -------------------------------------------------------------------------------
Energy Equipment & Services -- 6.8%
BJ Services Co. 246,600 7,876,404
Halliburton Co. 149,900 7,955,193
-------------
15,831,597
- -------------------------------------------------------------------------------
Food Products -- 3.4%
Unilever NV (a) 281,900 8,005,960
- -------------------------------------------------------------------------------
Industrial Conglomerates -- 2.3%
General Electric Co. 201,000 5,364,690
- -------------------------------------------------------------------------------
Metals & Mining -- 2.5%
Alcoa, Inc. 160,000 5,699,200
- -------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels -- 3.9%
Exxon Mobil Corp. 53,800 4,741,394
Peabody Energy Corp. 50,500 4,446,525
-------------
9,187,919
- -------------------------------------------------------------------------------
Pharmaceuticals -- 4.3%
Bristol-Myers Squibb Co. 483,800 9,932,414
- -------------------------------------------------------------------------------
Semiconductors & Semiconductor
Equipment -- 6.1%
LSI Corp. (c) 1,700,900 10,443,546
Micron Technology, Inc. (c) 644,200 3,865,200
-------------
14,308,746
- -------------------------------------------------------------------------------
Software -- 3.3%
Borland Software Corp. (c) 2,448,900 3,330,504
Parametric Technology Corp. (c) 253,200 4,220,844
-------------
7,551,348
- -------------------------------------------------------------------------------
Total Earnings Turnaround 84,887,981
===============================================================================
===============================================================================
Financial Restructuring -- 0.0%
- -------------------------------------------------------------------------------
Media -- 0.0%
Legacy Holdings, Inc. (c) 1,500 420
- -------------------------------------------------------------------------------
Total Financial Restructuring 420
===============================================================================
===============================================================================
Operational Restructuring -- 21.3%
- -------------------------------------------------------------------------------
Aerospace & Defense -- 2.0%
Raytheon Co. 83,100 4,676,868
- -------------------------------------------------------------------------------
Chemicals -- 2.6%
E.I. du Pont de Nemours & Co. 140,300 6,017,467
- -------------------------------------------------------------------------------
Computers & Peripherals -- 2.3%
Hewlett-Packard Co. 122,400 5,411,304
- -------------------------------------------------------------------------------
Diversified Financial Services -- 2.3%
JPMorgan Chase & Co. 158,840 5,449,800
- -------------------------------------------------------------------------------
Health Care Equipment & Supplies -- 1.8%
Covidien Ltd. 85,750 4,106,568
- -------------------------------------------------------------------------------
Industrial Conglomerates -- 3.2%
Tyco International Ltd. 187,150 7,493,486
- -------------------------------------------------------------------------------
Media -- 2.7%
Time Warner, Inc. 426,200 6,307,760
- -------------------------------------------------------------------------------
Office Electronics -- 4.4%
Xerox Corp. 760,000 10,305,600
- -------------------------------------------------------------------------------
Total Operational Restructuring 49,768,853
===============================================================================
===============================================================================
Price-to-Book Value -- 3.9%
- -------------------------------------------------------------------------------
Capital Markets -- 1.0%
Lehman Brothers Holdings, Inc. 115,400 2,286,074
- -------------------------------------------------------------------------------
Diversified Financial Services -- 1.6%
Citigroup, Inc. 223,500 3,745,860
- -------------------------------------------------------------------------------
Semiconductors & Semiconductor
Equipment -- 1.3%
Fairchild Semiconductor International, Inc. (c) 250,100 2,933,673
- -------------------------------------------------------------------------------
Total Price-to-Book Value 8,965,607
===============================================================================
===============================================================================
Price-to-Earnings Per Share -- 21.0%
- -------------------------------------------------------------------------------
Diversified Telecommunication Services -- 4.9%
Qwest Communications International Inc. (b) 2,899,500 11,395,035
- -------------------------------------------------------------------------------
Electronic Equipment & Instruments -- 1.3%
Avnet, Inc. (c) 115,000 3,137,200
- -------------------------------------------------------------------------------
Energy Equipment & Services -- 1.7%
Global Industries Ltd. (c) 216,400 3,880,052
- -------------------------------------------------------------------------------
Insurance -- 4.1%
Prudential Financial, Inc. 72,900 4,355,046
The Travelers Cos., Inc. 117,845 5,114,473
-------------
9,469,519
- -------------------------------------------------------------------------------
Media -- 2.0%
Viacom, Inc. Class B (c) 155,700 4,755,078
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
8 BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008
Schedule of Investments (concluded) (Percentages shown are based on Net Assets)
Common Stocks Shares Value
===============================================================================
Price-to-Earnings Per Share (concluded)
- -------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels -- 2.2%
Chevron Corp. 51,700 5,125,021
- -------------------------------------------------------------------------------
Specialty Retail -- 2.8%
American Eagle Outfitters, Inc. 479,300 6,532,859
- -------------------------------------------------------------------------------
Textiles, Apparel & Luxury Goods -- 2.0%
Phillips-Van Heusen Corp. 124,400 4,555,528
- -------------------------------------------------------------------------------
Total Price-to-Earnings Per Share 48,850,292
===============================================================================
Total Common Stocks -- 94.3% 219,862,634
===============================================================================
===============================================================================
Beneficial
Interest
Other Interests (d) (000)
===============================================================================
Financial Restructuring -- 0.0%
- -------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels -- 0.0%
WRT Energy Corp. (Litigation Trust
Certificates) (e)(f) $1,981 0
- -------------------------------------------------------------------------------
Total Other Interests -- 0.0% 0
===============================================================================
Total Long-Term Investments
(Cost -- $225,603,080) -- 94.3% 219,862,634
===============================================================================
Short-Term Securities Shares Value
===============================================================================
Merrill Lynch Premier
Institutional Fund, 2.71% (g)(h)(i) 5,687,200 $ 5,687,200
- -------------------------------------------------------------------------------
Total Short-Term Securities
(Cost -- $5,687,200) -- 2.4% 5,687,200
===============================================================================
Total Investments Before Options Written
(Cost -- $231,290,280*) -- 96.7% 225,549,834
===============================================================================
===============================================================================
Options Written Contracts
===============================================================================
Call Options Written
Mattel, Inc., expiring October 2008 at $22.5 600 (15,000)
Peabody Energy Corp., expiring December 2008
at $90 370 (481,000)
- -------------------------------------------------------------------------------
Total Options Written
(Premiums Received -- $422,205) -- (0.2%) (496,000)
===============================================================================
Total Investments, Net of Options Written -- 96.5% 225,053,834
Other Assets Less Liabilities -- 3.5% 8,220,847
------------
Net Assets -- 100.0% $233,274,681
============
* The cost and unrealized appreciation (depreciation) of investments, as of
June 30, 2008, as computed for federal income tax purposes, were as
follows:
Aggregate cost ......................................... $ 233,954,643
=============
Gross unrealized appreciation .......................... $ 26,438,186
Gross unrealized depreciation .......................... (34,842,995)
-------------
Net unrealized depreciation ............................ $ (8,404,809)
=============
(a) Depositary receipts.
(b) Security, or a portion of security, is on loan.
(c) Non-income producing security.
(d) Other interests represent beneficial interest in liquidation trusts and
other reorganization entities and are non-income producing.
(e) Restricted security as to resale, representing 0.0% of net assets was as
follows:
--------------------------------------------------------------------------
Acquisition
Issue Date Cost Value
--------------------------------------------------------------------------
WRT Energy Corp.
(Litigation Trust Certificates) 7/10/1997 $202,416 $0
--------------------------------------------------------------------------
(f) Security is fair valued.
(g) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
-----------------------------------------------------------------------------------
Net Interest
Affiliate Activity Income
-----------------------------------------------------------------------------------
BlackRock Liquidity Series, LLC Cash Sweep Series $ (6,320,291) $306,900
BlackRock Liquidity Series, LLC Money Market Series $(50,332,100) $ 55,973
Merrill Lynch Premier Institutional Fund $ 5,687,200 $ 42
-----------------------------------------------------------------------------------
(h) Represents the current yield as of report date.
(i) Security was purchased with the cash proceeds from securities loans.
o For Fund compliance purposes, the Fund's industry classifications refer to
any one or more of the industry sub-classifications used by one or more
widely recognized market indexes or ratings group indexes, and/or as
defined by Fund management. This definition may not apply for purposes of
this report, which may combine industry sub-classifications for reporting
ease. These industry classifications and investment criteria are
unaudited.
See Notes to Financial Statements.
BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008 9
Statement of Assets and Liabilities
June 30, 2008
===================================================================================================================================
Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Investments at value -- unaffiliated (including securities loaned of $5,294,549) (cost -- $225,603,080) .......... $ 219,862,634
Investments at value -- affiliated (cost -- $5,687,200) .......................................................... 5,687,200
Cash ............................................................................................................. 9,692,699
Investments sold receivable ...................................................................................... 8,300,564
Dividends receivable ............................................................................................. 193,170
Capital shares sold receivable ................................................................................... 54,945
Interest receivable from affiliates .............................................................................. 12,787
Securities lending income receivable ............................................................................. 6,974
Other assets ..................................................................................................... 966
Prepaid expenses ................................................................................................. 25,975
-------------
Total assets ..................................................................................................... 243,837,914
-------------
===================================================================================================================================
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------------
Collateral at value -- securities loaned ......................................................................... 5,687,200
Options written at value (premiums received -- $422,205) ......................................................... 496,000
Investments purchased payable .................................................................................... 3,302,758
Capital shares redeemed payable .................................................................................. 727,661
Investment advisory fees payable ................................................................................. 153,939
Other affiliates payable ......................................................................................... 54,284
Distribution fees payable ........................................................................................ 42,969
Officer's and Directors' fees payable ............................................................................ 185
Other accrued expenses payable ................................................................................... 98,237
-------------
Total liabilities ................................................................................................ 10,563,233
-------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets ....................................................................................................... $ 233,274,681
=============
===================================================================================================================================
Net Assets Consist of
- -----------------------------------------------------------------------------------------------------------------------------------
Institutional Shares, $0.10 par value, 50,000,000 shares authorized .............................................. $ 1,054,929
Investor A Shares, $0.10 par value, 100,000,000 shares authorized ................................................ 867,617
Investor B Shares, $0.10 par value, 100,000,000 shares authorized ................................................ 98,013
Investor C Shares, $0.10 par value, 50,000,000 shares authorized ................................................. 181,145
Class R Shares, $0.10 par value, 100,000,000 shares authorized ................................................... 7,282
Paid-in capital in excess of par ................................................................................. 244,280,948
Undistributed net investment income .............................................................................. 1,405,075
Accumulated net realized loss .................................................................................... (8,806,087)
Net unrealized appreciation/depreciation ......................................................................... (5,814,241)
-------------
Net assets ....................................................................................................... $ 233,274,681
=============
===================================================================================================================================
Net Asset Value
- -----------------------------------------------------------------------------------------------------------------------------------
Institutional -- Based on net assets of $113,989,632 and 10,549,286 shares outstanding ........................... $ 10.81
=============
Investor A -- Based on net assets of $92,544,755 and 8,676,169 shares outstanding ................................ $ 10.67
=============
Investor B -- Based on net assets of $9,345,452 and 980,125 shares outstanding ................................... $ 9.53
=============
Investor C -- Based on net assets of $16,687,182 and 1,811,446 shares outstanding ................................ $ 9.21
=============
Class R -- Based on net assets of $707,660 and 72,817 shares outstanding ......................................... $ 9.72
=============
See Notes to Financial Statements.
10 BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008
Statements of Operations
Period
Aug. 1, 2007 Year Ended
to June 30, July 31,
2008 2007
===================================================================================================================================
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends 1 ...................................................................................... $ 5,344,551 $ 6,841,670
Interest from affiliates ......................................................................... 306,900 477,043
Securities lending ............................................................................... 56,015 30,865
-----------------------------
Total income ..................................................................................... 5,707,466 7,349,578
-----------------------------
===================================================================================================================================
Expenses
- -----------------------------------------------------------------------------------------------------------------------------------
Investment advisory .............................................................................. 2,667,383 3,537,084
Service -- Investor A ............................................................................ 262,325 339,289
Service and distribution -- Investor B ........................................................... 127,353 239,137
Service and distribution -- Investor C ........................................................... 195,601 259,092
Service and distribution -- Class R .............................................................. 3,931 3,615
Transfer agent -- Institutional .................................................................. 124,009 170,480
Transfer agent -- Investor A ..................................................................... 155,777 158,906
Transfer agent -- Investor B ..................................................................... 28,596 36,511
Transfer agent -- Investor C ..................................................................... 35,826 36,506
Transfer agent -- Class R ........................................................................ 4,503 1,996
Accounting services .............................................................................. 121,657 144,923
Professional ..................................................................................... 93,564 86,523
Printing ......................................................................................... 61,847 63,961
Registration ..................................................................................... 58,188 62,579
Officer and Directors ............................................................................ 23,406 20,211
Custodian ........................................................................................ 23,141 23,080
Miscellaneous .................................................................................... 30,546 33,923
-----------------------------
Total expenses ................................................................................... 4,017,653 5,217,816
Less fees waived by advisor ...................................................................... (666,846) (884,271)
-----------------------------
Total expenses after waiver ...................................................................... 3,350,807 4,333,545
-----------------------------
Net investment income ............................................................................ 2,356,659 3,016,033
-----------------------------
===================================================================================================================================
Realized and Unrealized Gain (Loss)
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain from:
Investments .................................................................................. 3,020,589 39,621,413
Options written .............................................................................. 58,910 --
-----------------------------
3,079,499 39,621,413
-----------------------------
Net change in unrealized appreciation/depreciation on:
Investments .................................................................................. (64,202,337) 10,780,382
Options written .............................................................................. 147,212 (221,007)
-----------------------------
(64,055,125) 10,559,375
-----------------------------
Total realized and unrealized gain (loss) ........................................................ (60,975,626) 50,180,788
-----------------------------
Net Increase (Decrease) in Net Assets Resulting from Operations .................................. $(58,618,967) $ 53,196,821
=============================
1 Foreign withholding tax .................................................................... $ 55,921 $ 119,607
=============================
See Notes to Financial Statements.
BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008 11
Statements of Changes in Net Assets
Period
Aug. 1, 2007 Year Ended July 31,
to June 30, ------------------------------
Increase (Decrease) in Net Assets 2008 2007 2006
===================================================================================================================================
Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income ........................................................... $ 2,356,659 $ 3,016,033 $ 1,969,732
Net realized gain ............................................................... 3,079,499 39,621,413 34,404,256
Net change in unrealized appreciation/depreciation .............................. (64,055,125) 10,559,375 (10,674,982)
-----------------------------------------------
Net increase (decrease) in net assets resulting from operations ................. (58,618,967) 53,196,821 25,699,006
-----------------------------------------------
===================================================================================================================================
Dividends and Distributions to Shareholders From
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income:
Institutional ................................................................. (1,722,006) (1,957,773) (662,437)
Investor A .................................................................... (1,044,380) (1,141,424) (191,705)
Investor B .................................................................... -- (6,674) --
Investor C .................................................................... (39,482) (16,998) --
Class R ....................................................................... (4,812) (3,740) (137)
Net realized gain:
Institutional ................................................................. (21,229,909) (15,804,834) (5,610,608)
Investor A .................................................................... (17,601,668) (12,916,921) (4,562,017)
Investor B .................................................................... (2,543,437) (2,615,218) (1,348,179)
Investor C .................................................................... (3,805,100) (2,686,481) (1,129,292)
Class R ....................................................................... (139,186) (59,584) (18,151)
-----------------------------------------------
Decrease in net assets resulting from dividends and distributions to shareholders (48,129,980) (37,209,647) (13,522,526)
-----------------------------------------------
===================================================================================================================================
Capital Share Transactions
- -----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets derived from capital share transactions .............. (2,551,903) (8,579,280) (60,080,064)
-----------------------------------------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets ......................................... (109,300,850) 7,407,894 (47,903,584)
Beginning of period ............................................................. 342,575,531 335,167,637 383,071,221
-----------------------------------------------
End of period ................................................................... $ 233,274,681 $ 342,575,531 $ 335,167,637
===============================================
End of period undistributed net investment income ............................... $ 1,405,075 $ 1,859,132 $ 1,969,708
===============================================
See Notes to Financial Statements.
12 BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008
Financial Highlights
Institutional
-------------------------------------------------------------------------------
Period
Aug. 1, 2007 Year Ended July 31,
to June 30, --------------------------------------------------------------
2008 2007 2006 2005 2004 2003
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............. $ 15.47 $ 14.84 $ 14.27 $ 12.16 $ 10.36 $ 8.60
----------------------------------------------------------------------------
Net investment income 1 .......................... 0.13 0.17 0.12 0.07 0.04 -- 2
Net realized and unrealized gain (loss) .......... (2.62) 2.15 0.99 2.04 1.76 1.76
----------------------------------------------------------------------------
Net increase (decrease) from investment operations (2.49) 2.32 1.11 2.11 1.80 1.76
----------------------------------------------------------------------------
Dividends and distributions from:
Net investment income ........................ (0.16) (0.18) (0.06) -- -- --
Net realized gain ............................ (2.01) (1.51) (0.48) -- -- --
----------------------------------------------------------------------------
Total dividends and distributions ................ (2.17) (1.69) (0.54) -- -- --
----------------------------------------------------------------------------
Net asset value, end of period ................... $ 10.81 $ 15.47 $ 14.84 $ 14.27 $ 12.16 $ 10.36
============================================================================
==================================================================================================================================
Total Investment Return 3
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value ......................... (18.55)% 4 16.67% 8.06% 17.35% 17.37% 20.47%
============================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses after waiver ...................... 1.00% 5 0.97% 1.01% 1.01% 1.09% 1.17%
============================================================================
Total expenses ................................... 1.25% 5 1.22% 1.26% 1.26% 1.26% 1.32%
============================================================================
Net investment income ............................ 1.14% 5 1.10% 0.83% 0.52% 0.33% 0.02%
============================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) .................. $113,990 $162,915 $158,175 $173,121 $172,024 $161,723
============================================================================
Portfolio turnover ............................... 87% 65% 100% 72% 92% 55%
============================================================================
1 Based on average shares outstanding.
2 Amount is less than $0.01 per share.
3 Total investment returns exclude the effects of any sales charges.
4 Aggregate total investment return.
5 Annualized.
See Notes to Financial Statements.
BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008 13
Financial Highlights (continued)
Investor A
-------------------------------------------------------------------------------
Period
Aug. 1, 2007 Year Ended July 31,
to June 30, --------------------------------------------------------------
2008 2007 2006 2005 2004 2003
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............. $ 15.29 $ 14.68 $ 14.12 $ 12.06 $ 10.30 $ 8.58
----------------------------------------------------------------------------
Net investment income (loss) 1 ................... 0.10 0.13 0.08 0.04 0.01 (0.02)
Net realized and unrealized gain (loss) .......... (2.59) 2.12 0.98 2.02 1.75 1.74
----------------------------------------------------------------------------
Net increase (decrease) from investment operations (2.49) 2.25 1.06 2.06 1.76 1.72
----------------------------------------------------------------------------
Dividends and distributions from:
Net investment income ........................ (0.12) (0.13) (0.02) -- -- --
Net realized gain ............................ (2.01) (1.51) (0.48) -- -- --
----------------------------------------------------------------------------
Total dividends and distributions ................ (2.13) (1.64) (0.50) -- -- --
----------------------------------------------------------------------------
Net asset value, end of period ................... $ 10.67 $ 15.29 $ 14.68 $ 14.12 $ 12.06 $ 10.30
============================================================================
==================================================================================================================================
Total Investment Return 2
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value ......................... (18.77)% 3 16.30% 7.79% 17.08% 17.09% 20.05%
============================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses after waiver ...................... 1.30% 4 1.24% 1.26% 1.26% 1.34% 1.42%
============================================================================
Total expenses ................................... 1.55% 4 1.49% 1.51% 1.51% 1.51% 1.57%
============================================================================
Net investment income (loss) ..................... 0.83% 4 0.83% 0.58% 0.27% 0.08% (0.23)%
============================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) .................. $ 92,545 $134,585 $126,028 $135,696 $136,688 $120,193
============================================================================
Portfolio turnover ............................... 87% 65% 100% 72% 92% 55%
============================================================================
1 Based on average shares outstanding.
2 Total investment returns exclude the effects of sales charges.
3 Aggregate total investment return.
4 Annualized.
See Notes to Financial Statements.
14 BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008
Financial Highlights (continued)
Investor B
-------------------------------------------------------------------------------
Period
Aug. 1, 2007 Year Ended July 31,
to June 30, --------------------------------------------------------------
2008 2007 2006 2005 2004 2003
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............. $ 13.86 $ 13.37 $ 12.98 $ 11.17 $ 9.62 $ 8.07
----------------------------------------------------------------------------
Net investment income(loss) 1 .................... -- 2 0.01 (0.03) (0.06) (0.08) (0.09)
Net realized and unrealized gain (loss) .......... (2.33) 1.92 0.90 1.87 1.63 1.64
----------------------------------------------------------------------------
Net increase (decrease) from investment operations (2.33) 1.93 0.87 1.81 1.55 1.55
----------------------------------------------------------------------------
Dividends and distributions from:
Net investment income ........................ -- -- 3 -- -- -- --
Net realized gain ............................ (2.00) (1.44) (0.48) -- -- --
----------------------------------------------------------------------------
Total dividends and distributions ................ (2.00) (1.44) (0.48) -- -- --
----------------------------------------------------------------------------
Net asset value, end of period ................... $ 9.53 $ 13.86 $ 13.37 $ 12.98 $ 11.17 $ 9.62
============================================================================
==================================================================================================================================
Total Investment Return 4
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value ......................... (19.43)% 5 15.37% 6.97% 16.20% 16.11% 19.21%
============================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses after waiver ...................... 2.11% 6 2.03% 2.03% 2.03% 2.11% 2.20%
============================================================================
Total expenses ................................... 2.36% 6 2.28% 2.28% 2.28% 2.27% 2.35%
============================================================================
Net investment income (loss) ..................... 0.02% 6 0.07% (0.21)% (0.50)% (0.70)% (1.02)%
============================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) .................. $ 9,345 $ 19,000 $ 26,537 $ 42,351 $ 57,812 $ 67,382
============================================================================
Portfolio turnover ............................... 87% 65% 100% 72% 92% 55%
============================================================================
1 Based on average shares outstanding.
2 Amount is less than $0.01 per share.
3 Amount is less than $(0.01) per share.
4 Total investment returns exclude the effects of sales charges.
5 Aggregate total investment return.
6 Annualized.
See Notes to Financial Statements.
BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008 15
Financial Highlights (continued)
Investor C
-------------------------------------------------------------------------------
Period
Aug. 1, 2007 Year Ended July 31,
to June 30, --------------------------------------------------------------
2008 2007 2006 2005 2004 2003
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............. $ 13.49 $ 13.07 $ 12.71 $ 10.94 $ 9.42 $ 7.90
----------------------------------------------------------------------------
Net investment income(loss) 1 .................... 0.01 0.01 (0.03) (0.06) (0.08) (0.08)
Net realized and unrealized gain (loss) .......... (2.26) 1.90 0.87 1.83 1.60 1.60
----------------------------------------------------------------------------
Net increase (decrease) from investment operations (2.25) 1.91 0.84 1.77 1.52 1.52
----------------------------------------------------------------------------
Dividends and distributions from:
Net investment income ........................ (0.02) (0.01) -- -- -- --
Net realized gain ............................ (2.01) (1.48) (0.48) -- -- --
----------------------------------------------------------------------------
Total dividends and distributions ................ (2.03) (1.49) (0.48) -- -- --
----------------------------------------------------------------------------
Net asset value, end of period ................... $ 9.21 $ 13.49 $ 13.07 $ 12.71 $ 10.94 $ 9.42
============================================================================
==================================================================================================================================
Total Investment Return 2
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value ......................... (19.42)% 3 15.50% 6.88% 16.18% 16.14% 19.24%
============================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses after waiver ...................... 2.08% 4 2.01% 2.03% 2.04% 2.12% 2.21%
============================================================================
Total expenses ................................... 2.33% 4 2.26% 2.28% 2.29% 2.28% 2.36%
============================================================================
Net investment income (loss) ..................... 0.05% 4 0.06% (0.21)% (0.50)% (0.70)% (1.02)%
============================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) .................. $ 16,687 $ 25,334 $ 23,819 $ 31,391 $ 34,179 $ 31,492
============================================================================
Portfolio turnover ............................... 87% 65% 100% 72% 92% 55%
============================================================================
1 Based on average shares outstanding.
2 Total investment returns exclude the effects of sales charges.
3 Aggregate total investment return.
4 Annualized.
See Notes to Financial Statements.
16 BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008
Financial Highlights (concluded)
Class R
Period Period
Aug. 1, 2007 Year Ended July 31, Jan. 3, 2003 1
to June 30, to July 31,
2008 2007 2006 2005 2004 2003
====================================================================================================================================
Per Share Operating Performance
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............. $ 14.15 $ 13.71 $ 13.23 $ 11.33 $ 9.71 $ 8.67
------------------------------------------------------------------------------
Net investment income (loss) 2 ................... 0.02 0.06 0.05 -- 3 -- 4 0.04
Net realized and unrealized gain (loss) .......... (2.37) 1.98 0.91 1.90 1.62 1.00
------------------------------------------------------------------------------
Net increase (decrease) from investment operations (2.35) 2.04 0.96 1.90 1.62 1.04
------------------------------------------------------------------------------
Dividends and distributions from:
Net investment income ........................ (0.07) (0.09) -- 4 -- -- --
Net realized gain ............................ (2.01) (1.51) (0.48) -- -- --
------------------------------------------------------------------------------
Total dividends and distributions ................ (2.08) (1.60) (0.48) -- -- --
------------------------------------------------------------------------------
Net asset value, end of period ................... $ 9.72 $ 14.15 $ 13.71 $ 13.23 $ 11.33 $ 9.71
==============================================================================
====================================================================================================================================
Total Investment Return
- ------------------------------------------------------------------------------------------------------------------------------------
Based on net asset value ......................... (19.29)% 5 15.85% 7.56% 16.77% 16.68% 12.00% 5
==============================================================================
====================================================================================================================================
Ratios to Average Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses after waiver ...................... 1.97% 6 1.65% 1.51% 1.51% 1.57% 1.67% 6
==============================================================================
Total expenses ................................... 2.22% 6 1.90% 1.76% 1.76% 1.75% 1.82% 6
==============================================================================
Net investment income (loss) ..................... 0.15% 6 0.43% 0.34% 0.03% (0.05%) (0.27)%6
==============================================================================
====================================================================================================================================
Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) .................. $ 708 $ 741 $ 609 $ 513 $ 389 $ -- 7
==============================================================================
Portfolio turnover ............................... 87% 65% 100% 72% 92% 55%
==============================================================================
1 Commencement of operations.
2 Based on average shares outstanding.
3 Amount is less than $0.01 per share.
4 Amount is less than $(0.01) per share.
5 Aggregate total investment return.
6 Annualized.
7 Amount is less than $1,000.
See Notes to Financial Statements.
BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008 17
Notes to Financial Statements
1. Significant Accounting Policies:
BlackRock Focus Value Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as a diversified, open-end
management investment company. 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. During the period, the Fund changed its
year end to June 30. The Fund offers multiple classes of shares. Institutional
Shares are sold only to certain eligible investors. Investor A Shares are
generally sold with a front-end sales charge. Shares of Investor B and Investor
C may be subject to a contingent deferred sales charge. Class R Shares are sold
only to certain retirement plans. All classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
that Investor A, Investor B, Investor C and Class R Shares bear certain expenses
related to the shareholder servicing of such shares, and Investor B, Investor C
and Class R Shares also bear certain expenses related to the distribution of
such shares. Each class has exclusive voting rights with respect to matters
relating to its shareholder servicing and distribution expenditures (except that
Investor B shareholders may vote on material changes to the Investor A
distribution plan).
The following is a summary of significant accounting policies followed by the
Fund:
Valuation of Securities: 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. For equity
investments traded on more than one exchange, the last reported sale price on
the exchange where the stock is primarily traded is used. Equity investments
traded on a recognized exchange for which there were no sales on that day are
valued at the last available bid price. If no bid price is available, the prior
day's price will be used, unless it is determined that such prior day's price no
longer reflects the fair value of the security. Investments in open-end
investment companies are valued at net asset value each business day. Short-term
securities are valued at amortized cost.
Exchange-traded options are valued at the mean between the last bid and ask
prices at the close of the options market in which the options trade. An
exchange-traded option for which there is no mean price is valued at the last
bid (long position) or ask (short position) price. If no bid or ask price is
available, the prior day's price will be used unless it is determined that the
prior day's price no longer reflects the fair value of the option.
Over-the-counter ("OTC") options are valued by an independent pricing service
using a mathematical model which incorporates a number of market data factors.
In the event that application of these methods of valuation results in a price
for an investment which is deemed not to be representative of the market value
of such investment, the investment will be valued by a method approved by the
Board of Directors (the "Board") as reflecting fair value ("Fair Value Assets").
When determining the price for Fair Value Assets, the investment advisor and/or
sub-advisor seeks to determine the price that the Fund might reasonably expect
to receive from the current sale of that asset in an arms-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.
Derivative Financial Instruments: The Fund may engage in various portfolio
investment strategies to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movements and movements in the securities
markets. Losses may arise if the value of the contract decreases due to an
unfavorable change in price of the underlying security, or if the counterparty
does not perform under the contract.
o Options -- The Fund may purchase and write call and put options. When the
Fund writes an option, an amount equal to the premium received by the Fund
is reflected as an asset and an equivalent liability. The amount of the
liability is subsequently marked-to-market to reflect the current market
value of the option written. When a security is purchased or sold through
an exercise of an option, the related premium paid (or received) is added
to (or deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option expires
(or the Fund enters into a closing transaction), the Fund realizes a gain
or loss on the option to the extent of the premiums received or paid (or
gain or loss to the extent the cost of the closing transaction exceeds the
premium paid or received).
A call option gives the purchaser of the option the right (but not the
obligation) to buy, and obligates the seller to sell (when the option is
exercised), the underlying position at the exercise price at any time or
at a specified time during the option period. A put option gives the
holder the right to sell and obligates the writer to buy the underlying
position at the exercise price at any time or at a specified time during
the option period.
Investment Transactions and Investment Income: Investment transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are deter-mined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. Income and realized and
unrealized gains and losses are allocated daily to each class based on its
relative net assets.
Dividends and Distributions: Dividends and distributions paid by the Fund are
recorded on the ex-dividend dates. Distributions of capital gains are paid at
least annually.
Securities Lending: The Fund may lend securities to financial institutions that
provide cash or securities issued or guaranteed by the
18 BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008
Notes to Financial Statements (continued)
U.S. government as collateral, which will be maintained at all times in an
amount equal to at least 100% of the current market value of the loaned
securities. The market value of the loaned securities is determined at the close
of business of the Fund and any additional required collateral is delivered to
the Fund on the next business day. The Fund typically receives the income on the
loaned securities but does not receive the income on the collateral. Where the
Fund receives cash collateral, it may invest such collateral and retain the
amount earned on such investment, net of any amount rebated to the borrower. The
Fund may receive a flat fee for its loans. Loans of securities are terminable at
any time and the borrower, after notice, is required to return borrowed
securities within the standard time period for settlement of securities
transactions. The Fund may pay reasonable lending agent, administrative and
custodial fees in connection with its loans. In the event that the borrower
defaults on its obligation to return borrowed securities because of insolvency
or for any other reason, the Fund could experience delays and costs in gaining
access to the collateral. The Fund also could suffer a loss where the value of
the collateral falls below the market value of the borrowed securities, in the
event of borrower default or in the event of losses on investments made with
cash collateral.
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 January 31, 2008, 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 Advisor 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 remain open for the years ended July 31, 2005
through July 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. At this time, management is
evaluating the implications of FAS 157 and its impact on the Fund's financial
statements, 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.
Other: Expenses directly related to the Fund or its classes are charged to that
Fund or class. Other operating expenses shared by several funds are pro-rated
among those funds on the basis of relative net assets or other appropriate
methods. Other expenses of the Fund are allocated daily to each class based on
its relative net assets.
2. Investment Advisory Agreement and Other Transactions with Affiliates:
The Fund 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. ("PNC") are principal owners of BlackRock, Inc.
The Advisor is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Fund. For such services, the Fund
pays the Advisor a monthly fee at an annual rate of 1.00% of the average daily
value of the Fund's net assets.
The Advisor contractually agreed to waive 0.25% of the average daily value of
the Fund's net assets. This contractual waiver agreement has a one-year term and
is automatically renewable year to year unless terminated by the Advisor. The
waiver is shown as fees waived by advisor on the Statements of Operations.
For the period August 1, 2007 to June 30, 2008, the Fund reimbursed the Advisor
$4,618 and for the year ended July 31, 2007, the Fund reimbursed the Advisor and
Fund Asset Management, L.P. $5,586 and $1,371,
BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008 19
Notes to Financial Statements (continued)
respectively, for certain accounting services, which is included in accounting
services in the Statements of Operations.
The Advisor has entered into a separate sub-advisory agreement with BlackRock
Investment Management, LLC ("BIM"), an affiliate of the Advisor, under which the
Advisor pays BIM for services it provides, a monthly fee that is a percentage of
the investment advisory fee paid by the Fund to the Advisor.
The Fund has also entered into separate Distribution Agreements and Distribution
Plans with FAM Distributors, Inc. ("FAMD") and BlackRock Distributors, Inc. and
its affiliates ("BDI") (collectively, the "Distributor"). FAMD is a wholly owned
subsidiary of Merrill Lynch Group, Inc. and BDI is an affiliate of BlackRock,
Inc.
Pursuant to the Distribution Plans adopted by the Fund in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Fund pays the Distributor
ongoing service fees and distribution fees. The fees are accrued daily and paid
monthly at annual rates based upon the average daily net assets of the shares as
follows:
- --------------------------------------------------------------------------------
Service Distribution
Fee Fee
- --------------------------------------------------------------------------------
Investor A ........................................... 0.25% --
Investor B ........................................... 0.25% 0.75%
Investor C ........................................... 0.25% 0.75%
Class R .............................................. 0.25% 0.25%
- --------------------------------------------------------------------------------
Pursuant to sub-agreements with the Distributor, broker-dealers, including
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a wholly owned
subsidiary of Merrill Lynch, and the 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, Investor C and Class R shareholders.
For the period August 1, 2007 to June 30, 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 $2,897, and
affiliates received contingent deferred sales charges of $10,495 and $2,660
relating to transactions in Investor B and Investor C Shares, respectively.
These amounts include payments to Hilliard Lyons, which was considered an
affiliate for a portion of the period.
For the year ended July 31, 2007, FAMD and BDI earned underwriting discounts and
direct commissions and MLPF&S and BDI earned dealer concessions on sales of the
Fund's Investor A Shares as follows:
- --------------------------------------------------------------------------------
FAMD MLPF&S BDI
- --------------------------------------------------------------------------------
Investor A .................................... $2,243 $23,944 $47
- --------------------------------------------------------------------------------
For the year ended July 31, 2007, affiliates received contingent deferred sales
charges of $17,593 and $1,817 relating to transactions in Investor B and
Investor C Shares, respectively. Furthermore, affiliates received contingent
deferred sales charges of $39 relating to transactions subject to front-end
sales charge waivers on Investor A Shares.
Pursuant to written agreements, certain affiliates provide certain Funds 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 period August 1, 2007 to June 30, 2008 and the
year ended July 31, 2007, the Fund paid $271,463 and $254,758, respectively, in
return for these services.
PNC Global Investment Servicing (U.S.) Inc., formerly PFPC Inc., an indirect,
wholly owned subsidiary of PNC and an affiliate of the Advisor, serves as
transfer agent. Each class of the Fund bears the costs of transfer agent fees
associated with such respective classes. Transfer agency fees borne by each
class of the Fund are comprised of those fees charged for all shareholder
communications including the mailing of 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 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.
The Advisor 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. For the period August
1, 2007 to June 30, 2008 and the year ended July 31, 2007, the Fund reimbursed
the Advisor the following amounts for costs incurred running the call center,
which are a component of the transfer agent fees in the accompanying Statements
of Operations.
- --------------------------------------------------------------------------------
Period Ended Year Ended
6/30/08 7/31/08
- --------------------------------------------------------------------------------
Institutional ........................................ $3,752 $3,470
Investor A ........................................... $3,484 $2,840
Investor B ........................................... $ 705 $ 740
Investor C ........................................... $ 641 $ 560
Class R .............................................. $ 38 $ 20
- --------------------------------------------------------------------------------
The Fund has received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to MLPF&S or its
affiliates. Pursuant to that order, the Fund has retained BIM as the securities
lending agent for a fee based on a share of the returns on investment of cash
collateral. BIM may, on behalf of the Fund, invest cash collateral received by
the Fund for such loans, among other things, in a private investment company
managed by the Advisor or in registered money market funds advised by the
Advisor or its affiliates. For the period August 1, 2007 to June 30, 2008 and
the year ended July 31, 2007, BIM received $14,154 and $11,233, respectively, in
security lending agent fees.
20 BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008
Notes to Financial Statements (continued)
In addition, MLPF&S received $16,832 and $134,706 in commissions on the
execution of the portfolio security transactions for the Fund for the period
August 1, 2007 to June 30, 2008 and the year ended July 31, 2007, respectively.
Certain officers and/or directors of the Fund are officers and/or directors of
BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
period August 1, 2007 to June 30, 2008 were $248,411,497 and $303,763,358,
respectively.
Transactions in options written for the period August 1, 2007 to June 30, 2008
were as follows:
- --------------------------------------------------------------------------------
Premiums
Contracts Received
- --------------------------------------------------------------------------------
Outstanding call options written,
beginning of period ................................ 2,000 $ 238,993
Options written ...................................... 2,540 724,315
Options closed ....................................... (3,570) (541,103)
---------------------
Outstanding call options written,
end of period ...................................... 970 $ 422,205
=====================
4. Short-Term Borrowings:
The Fund, along with certain other funds managed by the Advisor and its
affiliates, is a party to a $500,000,000 credit agreement with a group of
lenders. The Fund may borrow under the credit agreement to fund shareholder
redemptions and for other lawful purposes other than for leverage. The Fund may
borrow up to the maximum amount allowable under the Fund's current Prospectus
and Statement of Additional Information, subject to various other legal,
regulatory or contractual limits. On November 21, 2007, the credit agreement was
renewed for one year under substantially the same terms. The Fund pays a
commitment fee of 0.06% per annum based on the Fund's pro rata share of the
unused portion of the credit agreement, which is included in miscellaneous in
the Statements of Operations. Amounts borrowed under the credit agreement bear
interest at a rate equal to, at the Fund's election, the federal funds rate plus
0.35% or a base rate as defined in the credit agreement. The Fund did not borrow
under the credit agreement during the period August 1, 2007 to June 30, 2008.
5. 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, $36 has been reclassified between undistributed net investment
income and accumulated net realized gains as a result of a permanent difference
attributable to the reclassification of distributions. This reclassification has
no effect on net assets or net asset values per share.
The tax character of distributions paid during the period August 1, 2007 to June
30, 2008 and fiscal years ended July 31, 2007 and July 31, 2006 was as follows:
- --------------------------------------------------------------------------------
6/30/2008 7/31/2007 7/31/2006
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary income .................... $11,876,837 $23,678,746 $ 854,279
Net long-term capital gain ......... $36,253,143 $13,530,901 $12,668,247
---------------------------------------
Total distributions .................. $48,129,980 $37,209,647 $13,522,526
=======================================
As of June 30, 2008, the components of accumulated losses on a tax basis were as
follows:
- ------------------------------------------------------------------------------
Undistributed ordinary net income ............................. $ 1,169,355
Undistributed long-term net capital gains ..................... --
------------
Total undistributed net earnings .............................. 1,169,355
Net unrealized losses ......................................... (14,384,608)*
------------
Total accumulated losses ...................................... $(13,215,253)
============
* The difference between book-basis and tax-basis net unrealized losses is
attributable primarily to the tax deferral of losses on wash sales, the
deferral of post-October capital losses for tax purposes and the timing of
income recognition on partnership interests.
6. Beneficial Interest Transactions:
Transactions in beneficial interest for each class were as follows:
Period
August 1, 2007 to Year Ended
June 30, 2008 July 31, 2007
--------------------------- --------------------------
Shares Dollar Amount Shares Dollar Amount
- -----------------------------------------------------------------------------------------------------------------------------------
Institutional
- -----------------------------------------------------------------------------------------------------------------------------------
Shares sold ........................................................ 402,699 $ 5,140,945 303,548 $ 4,636,786
Shares issued to shareholders in reinvestment of dividends
and distributions ................................................ 1,519,450 20,500,508 1,081,848 15,590,409
--------------------------- --------------------------
Total issued ....................................................... 1,922,149 25,641,453 1,385,396 20,227,195
Shares redeemed .................................................... (1,903,979) (23,574,806) (1,511,666) (23,239,218)
--------------------------- --------------------------
Net increase (decrease) ............................................ 18,170 $ 2,066,647 (126,270) $ (3,012,023)
=========================== ==========================
BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008 21
Notes to Financial Statements (continued)
Year Ended
July 31, 2006
--------------------------
Shares Dollar Amount
- -----------------------------------------------------------------------------------------------------------------------------------
Class I*
- -----------------------------------------------------------------------------------------------------------------------------------
Shares sold ........................................................................................ 471,851 $ 6,632,904
Shares issued to shareholders in reinvestment of dividends
and distributions ................................................................................ 399,615 5,505,500
--------------------------
Total issued ....................................................................................... 871,466 12,138,404
Shares redeemed .................................................................................... (2,344,047) (33,086,613)
--------------------------
Net decrease ....................................................................................... (1,472,581) $(20,948,209)
==========================
* Effective October 2, 2006, Class I Shares were redesignated Institutional
Shares.
Period
August 1, 2007 to Year Ended
June 30, 2008 July 31, 2007
--------------------------- --------------------------
Shares Dollar Amount Shares Dollar Amount
- -----------------------------------------------------------------------------------------------------------------------------------
Investor A
- -----------------------------------------------------------------------------------------------------------------------------------
Shares sold and automatic conversion of shares ..................... 780,187 $ 9,715,232 1,289,085 $ 19,660,976
Shares issued to shareholders in reinvestment of dividends
and distributions ................................................ 1,255,373 16,751,967 876,677 12,509,924
--------------------------- --------------------------
Total issued ....................................................... 2,035,560 26,467,199 2,165,762 32,170,900
Shares redeemed .................................................... (2,159,543) (26,828,964) (1,952,723) (29,649,811)
--------------------------- --------------------------
Net increase (decrease) ............................................ (123,983) $ (361,765) 213,039 $ 2,521,089
=========================== ==========================
Year Ended
July 31, 2006
--------------------------
Shares Dollar Amount
- -----------------------------------------------------------------------------------------------------------------------------------
Class A**
- -----------------------------------------------------------------------------------------------------------------------------------
Shares sold ........................................................................................ 517,347 $ 7,262,405
Automatic conversion of shares ..................................................................... 535,965 7,437,583
Shares issued to shareholders in reinvestment of dividends
and distributions ................................................................................ 310,746 4,247,406
--------------------------
Total issued ....................................................................................... 1,364,058 18,947,394
Shares redeemed .................................................................................... (2,389,363) (33,629,756)
--------------------------
Net decrease ....................................................................................... (1,025,305) $(14,682,362)
==========================
** Effective October 2, 2006, Class A Shares were redesignated Investor A
Shares.
Period
August 1, 2007 to Year Ended
June 30, 2008 July 31, 2007
------------------------- ------------------------
Shares Dollar Amount Shares Dollar Amount
- -----------------------------------------------------------------------------------------------------------------------------------
Investor B
- -----------------------------------------------------------------------------------------------------------------------------------
Shares sold ........................................................ 43,951 $ 506,259 198,734 $ 2,711,938
Shares issued to shareholders in reinvestment of dividends
and distributions ................................................ 183,477 2,205,664 177,687 2,306,819
------------------------- ------------------------
Total issued ....................................................... 227,428 2,711,923 376,421 5,018,757
Shares redeemed and automatic conversion of shares ................. (617,682) (6,933,533) (991,230) (13,763,952)
------------------------- ------------------------
Net decrease ....................................................... (390,254) $ (4,221,610) (614,809) $ (8,745,195)
========================= ========================
22 BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008
Notes to Financial Statements (continued)
Year Ended
July 31, 2006
--------------------------
Shares Dollar Amount
- -----------------------------------------------------------------------------------------------------------------------------------
Class B*
- -----------------------------------------------------------------------------------------------------------------------------------
Shares sold ........................................................................................ 168,871 $ 2,162,223
Shares issued to shareholders in reinvestment of distributions ..................................... 97,123 1,216,215
--------------------------
Total issued ....................................................................................... 265,994 3,378,438
--------------------------
Automatic conversion of shares ..................................................................... (585,261) (7,437,583)
Shares redeemed .................................................................................... (958,367) (12,280,439)
--------------------------
Total redeemed ..................................................................................... (1,543,628) (19,718,022)
--------------------------
Net decrease ....................................................................................... (1,277,634) $(16,339,584)
==========================
* Effective October 2, 2006, Class B Shares were redesignated Investor B
Shares.
Period
August 1, 2007 to Year Ended
June 30, 2008 July 31, 2007
------------------------- ------------------------
Shares Dollar Amount Shares Dollar Amount
- -----------------------------------------------------------------------------------------------------------------------------------
Investor C
- -----------------------------------------------------------------------------------------------------------------------------------
Shares sold ........................................................ 183,909 $ 2,086,352 220,524 $ 2,964,264
Shares issued to shareholders in reinvestment of dividends
and distributions ................................................ 290,678 3,375,976 186,970 2,363,804
------------------------- ------------------------
Total issued ....................................................... 474,587 5,462,328 407,494 5,328,068
Shares redeemed .................................................... (541,305) (5,797,194) (351,168) (4,760,440)
------------------------- ------------------------
Net increase (decrease) ............................................ (66,718) $ (334,866) 56,326 $ 567,628
========================= ========================
Year Ended
July 31, 2006
--------------------------
Shares Dollar Amount
- -----------------------------------------------------------------------------------------------------------------------------------
Class C**
- -----------------------------------------------------------------------------------------------------------------------------------
Shares sold ........................................................................................ 108,720 $ 1,373,768
Shares issued to shareholders in reinvestment of distributions ..................................... 81,723 1,001,868
--------------------------
Total issued ....................................................................................... 190,443 2,375,636
Shares redeemed .................................................................................... (839,093) (10,562,949)
--------------------------
Net decrease ....................................................................................... (648,650) $ (8,187,313)
==========================
** Effective October 2, 2006, Class C Shares were redesignated Investor C
Shares.
Period
August 1, 2007 to Year Ended
June 30, 2008 July 31, 2007
------------------------- ------------------------
Shares Dollar Amount Shares Dollar Amount
- -----------------------------------------------------------------------------------------------------------------------------------
Class R
- -----------------------------------------------------------------------------------------------------------------------------------
Shares sold ........................................................ 50,772 $ 621,829 72,257 $ 1,026,061
Shares issued to shareholders in reinvestment of dividends
and distributions ................................................ 11,800 144,058 4,777 63,326
------------------------- ------------------------
Total issued ....................................................... 62,572 765,887 77,034 1,089,387
Shares redeemed .................................................... (42,143) (466,196) (69,074) (1,000,166)
------------------------- ------------------------
Net increase ....................................................... 20,429 $ 299,691 7,960 $ 89,221
========================= ========================
BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008 23
Notes to Financial Statements (concluded)
Year Ended
July 31, 2006
--------------------------
Shares Dollar Amount
- -----------------------------------------------------------------------------------------------------------------------------------
Class R
- -----------------------------------------------------------------------------------------------------------------------------------
Shares sold ........................................................................................ 19,842 $ 264,538
Shares issued to shareholders in reinvestment of dividends
and distributions ................................................................................ 1,429 18,289
--------------------------
Total issued ....................................................................................... 21,271 282,827
Shares redeemed .................................................................................... (15,570) (205,423)
--------------------------
Net increase ....................................................................................... 5,701 $ 77,404
==========================
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of BlackRock Focus Value Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of BlackRock Focus Value Fund, Inc. (the "Fund) as
of June 30, 2008, and the related statements of operations for the period August
1, 2007 to June 30, 2008 and for the year ended July 31, 2007, the statements of
changes in net assets for the period August 1, 2007 to June 30, 2008 and for
each of the two years in the period ended July 31, 2007, and the financial
highlights for the respective periods presented. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of June 30, 2008, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
BlackRock Focus Value Fund, Inc. as of June 30, 2008, the results of its
operations for the period August 1, 2007 to June 30, 2008 and for the year ended
July 31, 2007, the changes in its net assets for the period August 1, 2007 to
June 30, 2008 and for each of the two years in the period ended July 31, 2007,
and the financial highlights for the respective periods presented, in conformity
with accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
August 25, 2008
Important Tax Information (Unaudited)
The following information is provided with respect to the ordinary income
distributions paid by BlackRock Focus Value Fund, Inc. during the period ended
June 30, 2008:
================================================================================
Record Date October 22, 2007 December 11, 2007
Payable Date October 24, 2007 December 13, 2007
================================================================================
Qualified Dividend Income for Individuals* 33.58% 100.00%
- --------------------------------------------------------------------------------
Dividends Qualifying for the Dividends
Received Deduction for Corporations* 28.33% 100.00%
- --------------------------------------------------------------------------------
* The Fund hereby designates the percentage indicated above or the maximum
amount allowable by law.
Additionally, the Fund paid long-term capital gain distributions of $1.115505
and $0.482872 per share to shareholders of record on October 22, 2007 and
December 11, 2007, respectively.
24 BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
The Board of Directors (the "Board," the members of which are referred to as
"Directors") of BlackRock Focus Value Fund, Inc. (the "Fund") met in April and
June 2008 to consider the approval of the Fund's investment advisory agreement
(the "Advisory Agreement") with BlackRock Advisors, LLC (the "Adviser"), the
Fund's investment adviser. The Board also considered the approval of the Fund's
subadvisory agreement (the "Subadvisory Agreement") between the Adviser and
BlackRock Investment Management, LLC (the "Subadviser"). The Adviser and the
Subadviser are referred to herein as "BlackRock." The Advisory Agreement and the
Subadvisory Agreement are referred to herein as the "Agreements."
Activities and Composition of the Board
The Board of the Fund consists of fifteen individuals, twelve of whom are not
"interested persons" of the Fund as defined in the Investment Company Act of
1940, as amended (the "1940 Act") (the "Independent Directors"). The Directors
are responsible for the oversight of the operations of the Fund and perform the
various duties imposed on the directors of investment companies by the 1940 Act.
The Independent Directors have retained independent legal counsel to assist them
in connection with their duties. The Chairman of the Board is an Independent
Director. The Board established four standing committees: an Audit Committee, a
Governance and Nominating Committee, a Compliance Committee and a Performance
Oversight Committee, each of which is composed of, and chaired by Independent
Directors.
The Agreements
Upon the consummation of the combination of BlackRock's investment management
business with Merrill Lynch & Co., Inc.'s investment management business,
including Merrill Lynch Investment Managers, L.P., and certain affiliates (the
"Transaction"), the Fund entered into the Advisory Agreement with an initial
two-year term and the Adviser entered into the Subadvisory Agreement with the
Subadviser with an initial two-year term. Consistent with the 1940 Act, prior to
the expiration of the Agreements' respective initial two-year term, the Board is
required to consider the continuation of the Fund's Agreements on an annual
basis. In connection with this process, the Board assessed, among other things,
the nature, scope and quality of the services provided to the Fund by the
personnel of BlackRock and its affiliates, including investment management,
administrative services, shareholder services, oversight of fund accounting and
custody, marketing services and assistance in meeting legal and regulatory
requirements. The Board also received and assessed information regarding the
services provided to the Fund by certain unaffiliated service providers.
Throughout the year, the Board, acting directly and through its committees,
considers at each of its meetings factors that are relevant to its annual
consideration of the renewal of the Fund's Agreements, including the services
and support provided to the Fund and its shareholders. Among the matters the
Board considered were: (a) investment performance for one, three and five years,
as applicable, against peer funds, as well as senior management and portfolio
managers' analysis of the reasons for underperformance, if applicable; (b) fees,
including advisory, administration, if applicable, and other fees paid to
BlackRock and its affiliates by the Fund, such as transfer agency fees and fees
for marketing and distribution; (c) Fund operating expenses; (d) the resources
devoted to and compliance reports relating to the Fund's investment objective,
policies and restrictions, (e) the Fund's compliance with its Code of Ethics and
compliance policies and procedures; (f) the nature, cost and character of
non-investment management services provided by BlackRock and its affiliates; (g)
BlackRock's and other service providers' internal controls; (h) BlackRock's
implementation of the proxy voting guidelines approved by the Board; (i) the use
of brokerage commissions and spread and execution quality; (j) valuation and
liquidity procedures; and (k) periodic overview of BlackRock's business,
including BlackRock's response to the increasing scale of its business.
Board Considerations in Approving the Agreements
The Approval Process: At an in-person meeting held on April 10, 2008, the Board
reviewed materials relating to its consideration of the Agreements. At an
in-person meeting held on June 5 - 6, 2008, the Fund's Board, including the
Independent Directors, unanimously approved the continuation of the Advisory
Agreement between the Adviser and the Fund for a one-year term ending June 30,
2009 and the Subadvisory Agreement between the Adviser and the Subadviser for a
one-year term ending June 30, 2009. In considering the approval of the
Agreements, the Board received and discussed various materials provided to it in
advance of the April 10, 2008 meeting. As a result of the discussions that
occurred during the April 10, 2008 meeting, the Board requested and BlackRock
provided additional information, as detailed below, in advance of the June 5 -
6, 2008 Board meeting. The Board considered all factors it believed relevant
with respect to the Fund, including, among other factors: (a) the nature, extent
and quality of the services provided by BlackRock; (b) the investment
performance of the Fund and BlackRock portfolio management; (c) the advisory fee
and the cost of the services and profits to be realized by BlackRock and certain
affiliates from the relationship with the Fund; (d) economies of scale; and (e)
other factors.
BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008 25
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
(continued)
Prior to the April 10, 2008 meeting, the Board requested and received materials
specifically relating to the Agreements. The Board is engaged in an ongoing
process with BlackRock to continuously review the nature and scope of the
information provided to better assist its deliberations. These materials
included (a) information independently compiled and prepared by Lipper, Inc.
("Lipper") on Fund fees and expenses, and the investment performance of the Fund
as compared with a peer group of funds as determined by Lipper ("Peers"); (b)
information on the profitability of the Agreements to BlackRock and certain
affiliates, including their other relationships with the Fund, and a discussion
of fall-out benefits; (c) a general analysis provided by BlackRock concerning
investment advisory fees charged to other clients, such as institutional and
closed-end funds, under similar investment mandates, as well as the performance
of such other clients; (d) a report on economies of scale; (e) sales and
redemption data regarding the Fund's shares; and (f) an internal comparison of
management fees classified by Lipper, if applicable. At the April 10, 2008
meeting, the Board requested and subsequently received from BlackRock (i) a
comprehensive analysis of total expenses on a fund-by-fund basis; (ii) further
analysis of investment performance; (iii) further data regarding Fund
profitability, Fund size and Fund fee levels; and (iv) additional information on
sales and redemptions.
The Board also considered other matters it deemed important to the approval
process, such as payments made to BlackRock or its affiliates relating to the
distribution of Fund shares, services related to the valuation and pricing of
Fund portfolio holdings, allocation of Fund brokerage fees (including the
benefits of "soft dollars"), and direct and indirect benefits to BlackRock and
its affiliates from their relationship with the Fund. The Board did not identify
any particular information as controlling, and each Director may have attributed
different weights to the various items considered.
A. Nature, Extent and Quality of the Services: The Board, including the
Independent Directors, reviewed the nature, extent and quality of services
provided by BlackRock, including the investment advisory services and the
resulting performance of the Fund. Throughout the year the Board compared Fund
performance -- both including and excluding the effects of the Fund's fees and
expenses -- to the performance of a comparable group of mutual funds as
classified by Lipper and the performance of at least one relevant index or
combination of indices. The Board met with BlackRock's senior management
personnel responsible for investment operations, including the senior investment
officers. The Board also reviewed the materials provided by the Fund's portfolio
management team discussing Fund performance and the Fund's investment objective,
strategies and outlook.
The Board considered, among other factors, the number, education and experience
of BlackRock's investment personnel generally and the Fund's portfolio
management team, BlackRock's portfolio trading capabilities, BlackRock's use of
technology, BlackRock's commitment to compliance and BlackRock's approach to
training and retaining portfolio managers and other research, advisory and
management personnel. The Board also reviewed BlackRock's compensation structure
with respect to the Fund's portfolio management team and BlackRock's ability to
attract and retain high-quality talent.
In addition to advisory services, the Board considered the quality of the
administrative and non-investment advisory services provided to the Fund.
BlackRock and its affiliates provide the Fund with certain administrative,
transfer agency, shareholder and other services (in addition to any such
services provided to the Fund by third parties) and officers and other personnel
as are necessary for the operations of the Fund. In addition to investment
advisory services, BlackRock and its affiliates provide the Fund with other
services, including (i) preparing disclosure documents, such as the prospectus,
the statement of additional information and shareholder reports; (ii) assisting
with daily accounting and pricing; (iii) overseeing and coordinating the
activities of other service providers; (iv) organizing Board meetings and
preparing the materials for such Board meetings; (v) providing legal and
compliance support; and (vi) performing other administrative functions necessary
for the operation of the Fund, such as tax reporting and fulfilling regulatory
filing requirements. The Board reviewed the structure and duties of BlackRock's
fund administration, accounting, legal and compliance departments.
26 BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
(continued)
B. The Investment Performance of the Fund and BlackRock: The Board, including
the Independent Directors, also reviewed and considered the performance history
of the Fund. In preparation for the April 10, 2008 meeting, the Board was
provided with reports, independently prepared by Lipper, which included a
comprehensive analysis of the Fund's performance. The Board also reviewed a
narrative and statistical analysis of the Lipper data that was prepared by
BlackRock, which analyzed various factors that affect Lipper's rankings. In
connection with its review, the Board received and reviewed information
regarding the investment performance of the Fund as compared to a representative
group of similar funds as determined by Lipper and to all funds in the Fund's
applicable Lipper category. The Board was provided with a description of the
methodology used by Lipper to select peer funds. The Board regularly reviews the
performance of the Fund throughout the year. The Board attaches more importance
to performance over relatively long periods of time, typically three to five
years.
The Fund ranked in the fourth, third and third quartiles on a net basis against
its Lipper peer universe for the one-, three- and five-year periods ended
December 31, 2007, experiencing a substantial underperformance from the median
for the one-year period. In considering the Advisory Agreement the Board
expressed its concern with the Fund's investment performance. The Board
discussed the Fund's management personnel and processes with BlackRock's senior
management and will continue to monitor the Fund's performance. There was a
discussion of the negative impact on performance of investment decisions in
respect of specific sectors and securities.
C. Consideration of the Advisory Fees and the Cost of the Services and Profits
to be Realized by BlackRock and its Affiliates from the Relationship with the
Fund: The Board, including the Independent Directors, reviewed the Fund's
contractual advisory fee rates compared with the other funds in its Lipper
category. It also compared the Fund's total expenses to those of other
comparable funds. The Board considered the services provided and the fees
charged by BlackRock to other types of clients with similar investment mandates,
including separately managed institutional accounts.
The Board received and reviewed statements relating to BlackRock's financial
condition and profitability with respect to the services it provided the Fund.
The Board was also provided with a profitability analysis that detailed the
revenues earned and the expenses incurred by BlackRock and certain affiliates
that provide services to the Fund. The Board reviewed BlackRock's profitability
with respect to the Fund and each fund the Board currently oversees for the year
ended December 31, 2007 compared to aggregated profitability data provided for
the year ended December 31, 2005.
In addition, the Board considered the cost of the services provided to the Fund
by BlackRock, and BlackRock's and its affiliates' profits relating to the
management and distribution of the Fund and the other funds advised by BlackRock
and its affiliates. As part of its analysis, the Board reviewed BlackRock's
methodology in allocating its costs to the management of the Fund and concluded
that there was a reasonable basis for the allocation. The Board also considered
whether BlackRock has the financial resources necessary to attract and retain
high-quality investment management personnel to perform its obligations under
the Agreements and to continue to provide the high quality of services that are
expected by the Board.
The Board noted that, although the Fund paid contractual advisory fees higher
than its Peers, the Fund paid actual management fees that were lower than or
equal to the median of its Peers.
The Board took into account that BlackRock has contractually agreed to waive a
portion of its advisory fee, thereby lowering Fund expenses. The Board concluded
that the Fund's advisory fee structure was reasonable and that it would continue
to review fees in connection with future renewals of the Agreements.
D. Economies of Scale: The Board, including the Independent Directors,
considered the extent to which economies of scale might be realized as the
assets of the Fund increase and whether there should be changes in the advisory
fee rate or structure in order to enable the Fund to participate in these
economies of scale. The Board, including the Independent Directors, considered
whether the shareholders would benefit from economies of scale and whether there
was potential for future realization of economies with respect to the Fund. The
Board considered that the funds in the BlackRock fund complex share common
resources and, as a result, an increase in the overall size of the complex could
permit each fund to incur lower expenses than it would otherwise as stand-alone
entities. The Board also considered the anticipated efficiencies in the
processes of BlackRock's overall operations as it continues to add personnel and
commit capital to expand the scale of operations. The Board found, based on its
review of comparable funds, that the Fund's management fee is appropriate in
light of the scale of the Fund.
BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008 27
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
(concluded)
E. Other Factors: The Board also took into account other ancillary or "fall-out"
benefits that BlackRock may derive from its relationship with the Fund, both
tangible and intangible, such as BlackRock's ability to leverage its investment
professionals that manage other portfolios, an increase in BlackRock's profile
in the investment advisory community, and the engagement of BlackRock's
affiliates as service providers to the Fund, including for administrative,
transfer agency and distribution services. The Board also noted that BlackRock
may use third-party research obtained by soft dollars generated by transactions
in the Fund to assist itself in managing all or a number of its other client
accounts.
In connection with its consideration of the Agreements, the Board also received
information regarding BlackRock's brokerage and soft dollar practices. The Board
received reports from BlackRock which included information on brokerage
commissions and trade execution throughout the year.
Conclusion
The Board approved the continuation of the Advisory Agreement between the
Adviser and the Fund for a one-year term ending June 30, 2009 and the
Subadvisory Agreement between the Adviser and the Subadviser for a one-year term
ending June 30, 2009. Based upon their evaluation of all these factors in their
totality, the Board, including the Independent Directors, was satisfied that the
terms of the Agreements were fair and reasonable and in the best interest of the
Fund and the Fund's shareholders. In arriving at a decision to approve the
Agreements, the Board did not identify any single factor or group of factors as
all-important or controlling, but considered all factors together. The
Independent Directors were also assisted by the advice of independent legal
counsel in making this determination. The contractual fee arrangements for the
Fund reflect the result of several years of review by the Directors and
predecessor Directors, and discussions between the Directors (and predecessor
Directors) and BlackRock. Certain aspects of the arrangements may be the subject
of more attention in some years than in others, and the Directors' conclusions
may be based in part on their consideration of these arrangements in prior
years.
28 BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008
Officers and Directors
Number of
Length of BlackRock-
Position(s) Time Served Advised Funds
Name, Address Held with as a Principal Occupation(s) and Portfolios
and Year of Birth Fund Director 2 During Past Five Years Overseen Public Directorships
====================================================================================================================================
Non-Interested Directors 1
- ------------------------------------------------------------------------------------------------------------------------------------
Robert M. Hernandez Chairman of Since 2007 Formerly Director, Vice Chairman and 37 Funds ACE Limited
40 East 52nd Street the Board, Chief Financial Officer of USX 104 Portfolios (insurance company);
New York, NY 10022 Director and Corporation (energy and steel business) Eastman Chemical
1944 Member of the from 1991 to 2001. Company (chemical);
Audit RTI International
Committee Metals, Inc.
(metals); TYCO
Electronics
(electronics)
- ------------------------------------------------------------------------------------------------------------------------------------
Fred G. Weiss Vice Chairman Since 2007 Managing Director, FGW Associates 37 Funds Watson
40 East 52nd Street of the Board, (consulting and investment company) since 104 Portfolios Pharmaceutical Inc.
New York, NY 10022 Chairman of 1997; Director, Michael J. Fox Foundation
1941 the Audit for Parkinson's Research since 2000;
Committee Formerly Director of BTG International
and Director Plc (a global technology
commercialization company) from 2001 to
2007.
- ------------------------------------------------------------------------------------------------------------------------------------
James H. Bodurtha Director Since 2002 Director, The China Business Group, Inc. 37 Funds None
40 East 52nd Street (consulting firm) since 1996 and formerly 104 Portfolios
New York, NY 10022 Executive Vice President thereof from
1944 1996 to 2003; Chairman of the Board,
Berkshire Holding Corporation since 1980.
- ------------------------------------------------------------------------------------------------------------------------------------
Bruce R. Bond Director Since 2007 Formerly Trustee and Member of the 37 Funds None
40 East 52nd Street Governance Committee, State Street 104 Portfolios
New York, NY 10022 Research Mutual Funds from 1997 to 2005;
1946 Formerly Board Member of Governance,
Audit and Finance Committee, Avaya Inc.
(computer equipment) from 2003 to 2007.
- ------------------------------------------------------------------------------------------------------------------------------------
Donald W. Burton Director Since 2007 Managing General Partner, The Burton 37 Funds Knology, Inc.
40 East 52nd Street Partnership, LP (an investment 104 Portfolios (telecommunications);
New York, NY 10022 partnership) since 1979; Managing General Capital Southwest
1944 Partner, The South Atlantic Venture Funds (financial)
since 1983; Member of the Investment
Advisory Council of the Florida State
Board of Administration from 2001 to
2007.
- ------------------------------------------------------------------------------------------------------------------------------------
Honorable Director Since 2007 Partner and Head of International 37 Funds UPS Corporation
Stuart E. Eizenstat Practice, Covington and Burling (law 104 Portfolios (delivery service)
40 East 52nd Street firm) since 2001; International Advisory
New York, NY 10022 Board Member, The Coca Cola Company since
1943 2002; Advisory Board Member BT Americas
(telecommunications) since 2004; Member
of the Board of Directors, Chicago
Climate Exchange (environmental) since
2006; Member of the International
Advisory Board GML (energy) since 2003.
- ------------------------------------------------------------------------------------------------------------------------------------
Kenneth A. Froot Director Since 2005 Professor, Harvard University since 1992. 37 Funds None
40 East 52nd Street 104 Portfolios
New York, NY 10022
1957
- ------------------------------------------------------------------------------------------------------------------------------------
John F. O'Brien Director Since 2007 Trustee, Woods Hole Oceanographic 37 Funds Cabot Corporation
40 East 52nd Street Institute since 2003; Formerly Director, 104 Portfolios (chemicals); LKQ
New York, NY 10022 Allmerica Financial Corporation from 1995 Corporation (auto
1943 to 2003; Formerly Director, ABIOMED from parts manufacturing);
1989 to 2006; Formerly Director, TJX Companies, Inc.
Ameresco, Inc. (energy solutions company) (retailer)
from 2006 to 2007.
- ------------------------------------------------------------------------------------------------------------------------------------
BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008 29
Officers and Directors (continued)
Number of
Length of BlackRock-
Position(s) Time Served Advised Funds
Name, Address Held with as a Principal Occupation(s) and Portfolios
and Year of Birth Fund Director 2 During Past Five Years Overseen Public Directorships
====================================================================================================================================
Non-Interested Directors 1 (concluded)
- ------------------------------------------------------------------------------------------------------------------------------------
Roberta Cooper Ramo Director Since 2002 Shareholder, Modrall, Sperling, Roehl, 37 Funds None
40 East 52nd Street Harris & Sisk, P.A. (law firm) since 104 Portfolios
New York, NY 10022 1993; Chairman of the Board, Cooper's
1942 Inc. (retail) since 2000; Director of
ECMC Group (service provider to students,
schools and lenders) since 2001;
President Elect, The American Law
Institute (non-profit), 2007; Formerly
President, American Bar Association from
1995 to 1996.
- ------------------------------------------------------------------------------------------------------------------------------------
Jean Margo Reid Director Since 2007 Self-employed consultant since 2001; 37 Funds None
40 East 52nd Street Director and Secretary, SCB, Inc. 104 Portfolios
New York, NY 10022 (holding company) since 1998; Director
1945 and Secretary, SCB Partners, Inc.
(holding company) since 2000; Formerly
Director, Covenant House (non-profit)
from 2001 to 2004.
- ------------------------------------------------------------------------------------------------------------------------------------
David H. Walsh Director Since 2007 Director, National Museum of Wildlife Art 37 Funds None
40 East 52nd Street since 2007; Director, Ruckleshaus 104 Portfolios
New York, NY 10022 Institute and Haub School of Natural
1941 Resources at the University of Wyoming
since 2006; Director, The American Museum
of Fly Fishing since 1997; Formerly
Consultant with Putnam Investments from
1993 to 2003; Formerly Director, The
National Audubon Society from 1998 to
2005.
- ------------------------------------------------------------------------------------------------------------------------------------
Richard R. West Director and Since 2007 Dean Emeritus, New York University's 37 Funds Bowne & Co., Inc.
40 East 52nd Street Member of the Leonard N. Stern School of Business 104 Portfolios (financial printers);
New York, NY 10022 Audit Committee Administration since 1995. Vornado Realty Trust
1938 (real estate
company); Alexander's
Inc. (real estate
company)
------------------------------------------------------------------------------------------------------------
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: James H. Bodurtha since
1995; Bruce R. Bond since 2005; Donald W. Burton since 2002; Stuart E. Eizenstat since 2001; Kenneth
A. Froot since 2005; Robert M. Hernandez since 1996; John F. O'Brien since 2004; Roberta Cooper Ramo
since 2000; Jean Margo Reid since 2004; David H. Walsh since 2003; Fred G. Weiss since 1998; and
Richard R. West since 1978.
30 BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008
Officers and Directors (continued)
Number of
Length of BlackRock-
Position(s) Time Served Advised Funds
Name, Address Held with as a Principal Occupation(s) and Portfolios
and Year of Birth Fund Director During Past Five Years Overseen Public Directorships
====================================================================================================================================
Interested Directors 1
- ------------------------------------------------------------------------------------------------------------------------------------
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
1945 Company 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.
- ------------------------------------------------------------------------------------------------------------------------------------
Laurence D. Fink Director Since 2007 Chairman and Chief Executive Officer of 37 Funds None
40 East 52nd Street BlackRock, Inc. since its formation in 104 Portfolios
New York, NY 10022 1998 and of BlackRock, Inc.'s predecessor
1952 entities since 1988 and Chairman of the
Executive and Management Committees;
Formerly Managing Director, The First
Boston Corporation, Member of its
Management Committee, Co-head of its
Taxable Fixed Income Division and Head of
its Mortgage and Real Estate Products
Group; Chairman of the Board of several
of BlackRock's alternative investment
vehicles; Director of several of
BlackRock's offshore funds; Member of the
Board of Trustees of New York University,
Chair of the Financial Affairs Committee
and a member of the Executive Committee,
the Ad Hoc Committee on Board Governance,
and the Committee on Trustees;
Co-Chairman of the NYU Hospitals Center
Board of Trustees, Chairman of the
Development/ Trustee Stewardship
Committee and Chairman of the Finance
Committee; Trustee, The Boys' Club of New
York.
- ------------------------------------------------------------------------------------------------------------------------------------
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.
------------------------------------------------------------------------------------------------------------
1 Messrs. Davis, Fink and Gabbay are all "interested persons," as defined in the Investment Company Act
of 1940, of the Fund based on their positions with BlackRock, Inc. and its affiliates. Directors serve
until their resignation, removal or death, or until December 31 of the year in which they turn 72.
BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008 31
Officers and Directors (concluded)
Length of
Position(s) Time Served
Name, Address Held with as a
and Year of Birth Fund Director Principal Occupation(s) During Past Five Years
====================================================================================================================================
Fund Officers 1
- ------------------------------------------------------------------------------------------------------------------------------------
Donald C. Burke Fund President Since 2007 Managing Director of BlackRock, Inc. since 2006; Formerly Managing Director of
40 East 52nd Street and Chief Merrill Lynch Investment Managers, L.P. ("MLIM") and Fund Asset Management,
New York, NY 10022 Executive L.P. ("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 Since 2007 Managing Director of BlackRock, Inc. since 2000; Chief Operating Officer of
40 East 52nd Street President 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 Since 2007 Managing Director of BlackRock, Inc. since 2006; Formerly Senior Vice President
40 East 52nd Street Financial and Line of Business Head of Fund Accounting and Administration at PFPC Inc.
New York, NY 10022 Officer 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
New York, NY 10022 of 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 of and Senior Counsel of BlackRock, Inc. since 2005; Director and Senior Counsel
1959 the Fund of 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 Bond Fund/Master LLC serve at the pleasure of the Board of Directors.
- ------------------------------------------------------------------------------------------------------------------------------------
Further information about the Bond Fund's/Master LLC's Officers and Directors is available in Bond Fund's
Statement of Additional Information, which can be obtained without charge by calling (800) 441-7762.
- ------------------------------------------------------------------------------------------------------------------------------------
Custodian
JPMorgan Chase Bank, N.A.
3 Chase Metrotech Center
Brooklyn, NY 11245
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
Willkie Farr & Gallagher LLP
New York, NY 10019
32 BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 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.
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.
BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 2008 33
Additional Information (concluded)
Availability of Additional Information (concluded)
Availability of Proxy Voting Record
Information about 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 each fiscal year on Form N-Q. The Fund's Forms N-Q
are available on the SEC's website at http://www.sec.gov and may also be
reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
Information on the operation of the Public Reference Room may be obtained by
calling (800) SEC-0330. The Fund's Forms N-Q may also be obtained upon request
and without charge by calling (800) 441-7762.
Shareholder Privileges
Account Information
Call us at (800) 441-7762 from 8:00 AM 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.
34 BLACKROCK FOCUS VALUE FUND, INC. JUNE 30, 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 FOCUS VALUE FUND, INC. JUNE 30, 2008 35
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.
BlackRock Focus Value Fund, Inc.
100 Bellevue Parkway
Wilmington, DE 19809
BLACKROCK
#10263-6/08
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:
Joe Grills (not reappointed to the Audit Committee,
effective November 1, 2007)
Robert M. Hernandez (term began, effective November 1, 2007)
Robert S. Salomon, Jr. (term ended, effective November 1, 2007)
Fred G. Weiss (term began, effective November 1, 2007)
Richard R. West (term began, effective November 1, 2007)
Under applicable securities laws, a person determined to be an audit
committee financial expert will not be deemed an "expert" for any
purpose, including without limitation for the purposes of Section 11
of the Securities Act of 1933, as a result of being designated or
identified as an audit committee financial expert. The designation
or identification as an audit committee financial expert does not
impose on such person any duties, obligations, or liabilities
greater than the duties, obligations, and liabilities imposed on
such person as a member of the audit committee and board of
directors in the absence of such designation or identification.
Item 4 - Principal Accountant Fees and Services
- -----------------------------------------------------------------------------------------------------------------------------------
(a) Audit Fees (b) Audit-Related 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 Focus
Value Fund, Inc. $37,300 $39,500 $0 $0 $6,100 $6,100 $1,049 $1,042
- -----------------------------------------------------------------------------------------------------------------------------------
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 Focus Value Fund, Inc. $294,649 $712,933
--------------------------------------------------------------------
(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 that 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 Focus Value Fund, Inc.
By: /s/ Donald C. Burke
-------------------
Donald C. Burke
Chief Executive Officer of
BlackRock Focus Value Fund, Inc.
Date: August 22, 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 Focus Value Fund, Inc.
Date: August 22, 2008
By: /s/ Neal J. Andrews
-------------------
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock Focus Value Fund, Inc.
Date: August 22, 2008