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 811-09375 and 811-09633
Name of Fund: BlackRock Global Financial Services Fund, Inc.
Global Financial Services Master LLC
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: Donald C. Burke, Chief Executive
Officer, BlackRock Global Financial Services Fund, Inc. and Global
Financial Services Master LLC, 800 Scudders Mill Road, Plainsboro, NJ
08536. Mailing address: P.O. Box 9011, Princeton, NJ 08543-9011
Registrant's telephone number, including area code: (800) 441-7762
Date of fiscal year end: 09/30/2008
Date of reporting period: 10/01/2007 - 09/30/2008
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE
LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS
BlackRock Global Financial BLACKROCK
Services Fund, Inc.
ANNUAL REPORT | SEPTEMBER 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
Fund Financial Statements:
Statement of Assets and Liabilities .................................. 7
Statement of Operations .............................................. 8
Statements of Changes in Net Assets .................................. 9
Fund Financial Highlights ................................................ 10
Fund Notes to Financial Statements ....................................... 13
Fund Report of Independent Registered Public Accounting Firm ............. 17
Important Tax Information (Unaudited) .................................... 17
Portfolio Information .................................................... 18
Portfolio Financial Statements:
Schedule of Investments .............................................. 19
Statement of Assets and Liabilities .................................. 22
Statement of Operations .............................................. 23
Statements of Changes in Net Assets .................................. 24
Portfolio Financial Highlights ........................................... 24
Portfolio Notes to Financial Statements .................................. 25
Master Report of Independent Registered Public Accounting Firm ........... 28
Disclosure of Investment Advisory Agreement and Subadvisory Agreement .... 29
Officers and Directors ................................................... 33
Additional Information ................................................... 36
Mutual Fund Family ....................................................... 38
2 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
A Letter to Shareholders
Dear Shareholder
It has been a tumultuous period for investors, marked by almost daily headlines
related to the housing market turmoil, volatile energy prices, and the
escalating credit crisis. The news took an extraordinarily heavy tone in
September as the credit crisis boiled over and triggered unprecedented failures
and consolidation in the financial sector, stoking fears of a market and
economic collapse and prompting the largest government rescue plan since the
Great Depression.
Through it all, the Federal Reserve Board (the "Fed") has taken decisive action
to restore liquidity and bolster financial market stability. Key moves included
slashing the target federal funds rate 275 basis points (2.75%) between October
2007 and April 2008 and providing massive cash injections and lending programs.
As the credit crisis took an extreme turn for the worse, the Fed, in concert
with five other global central banks, cut interest rates by 50 basis points in
early October in a rare move intended to stave off worldwide economic damage
from the intensifying financial market turmoil. The U.S. economy managed to grow
at a slow-but-positive pace through the second quarter of the year, though
recent events almost certainly portend a global economic recession.
Against this backdrop, U.S. stocks experienced intense volatility and generally
posted losses for the current reporting period, with small-cap stocks faring
noticeably better than their larger counterparts. Non-U.S. markets followed the
U.S. on the way down and, notably, decelerated at a faster pace than domestic
equities -- a stark reversal of recent years' trends, when international stocks
generally outpaced U.S. stocks.
Treasury securities also traded in a volatile fashion, but rallied overall
(yields fell and prices correspondingly rose) amid an ongoing flight to quality.
The yield on 10-year Treasury issues, which fell to 3.34% in March, climbed 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 declined again to 3.85% by period-end as the financial
market contagion widened. Tax-exempt issues underperformed overall, as problems
among municipal bond insurers and the collapse in the market for auction rate
securities pressured the group throughout the course of the past year. At the
same time, the above mentioned economic headwinds and malfunctioning credit
markets led to considerable weakness in the high yield sector.
Facing unprecedented volatility and macro pressures, the major benchmark indexes
generally recorded losses over the six- and 12-month reporting periods:
Total Returns as of September 30, 2008 6-month 12-month
====================================================================================================================
U.S. equities (S&P 500 Index) (10.87)% (21.98)%
- --------------------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) (0.54) (14.48)
- --------------------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) (22.35) (30.50)
- --------------------------------------------------------------------------------------------------------------------
Fixed income (Barclays Capital U.S. Aggregate Index)* (1.50) 3.65
- --------------------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Barclays Capital Municipal Bond Index)* (2.59) (1.87)
- --------------------------------------------------------------------------------------------------------------------
High yield bonds (Barclays Capital U.S. Corporate High Yield 2% Issuer Capped Index)* (6.77) (10.51)
- --------------------------------------------------------------------------------------------------------------------
* Formerly a Lehman Brothers index.
Past performance is no guarantee of future results. Index performance
shown for illustrative purposes only. You cannot invest directly in an
index.
Through periods of market turbulence, as ever, BlackRock's full resources are
dedicated to the management of our clients' assets. For our most current views
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 investments, 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
THIS PAGE NOT PART OF YOUR FUND REPORT 3
Fund Summary BlackRock Global Financial Services Fund, Inc.
Portfolio Management Commentary
How did the Fund perform?
o The Fund's total return, through its investment in Global Financial
Services Portfolio, lagged the broad-market MSCI World Index for the
12-month period, but outperformed the benchmark MSCI World Financials
Index.
What factors influenced performance?
o Amid unprecedented volatility in world equity markets -- notably in the
financials sector -- the Portfolio's allocation to cash, which averaged
over 6.5% during the period, was a key contributor to performance relative
to the MSCI World Financials Index. Stock selection in diversified
financial services and an allocation to information technology services
name Visa, Inc. also aided relative results. Individual contributors
included JPMorgan Chase & Co., ACE Ltd., Fortis and BNP Paribas SA. At the
country level, stock selection and an underweight in the U.K., stock
selection and an overweight in France, and stock selection in Belgium and
Singapore were sources of relative outperformance.
o Conversely, stock selection in the real estate management & development,
commercial banks, insurance and capital markets subsectors detracted from
relative performance. An underweight in real estate investment trusts
(REITs) also proved unfavorable. Individual detractors included Lehman
Brothers Holdings Inc., American International Group Inc., Wells Fargo &
Co. (which we were underweight) and Fannie Mae. Regionally, stock
selection and an overweight in the U.S., an overweight in China, an
underweight position in Canada and stock selection in Italy hindered
results.
Describe recent portfolio activity.
o From an industry perspective, we increased the Portfolio's allocation to
commercial banks and cash, and initiated positions in IT services and
REITs. We reduced Portfolio exposure to capital markets (primarily
investment banks), diversified financial services and insurance names.
o Regionally, we decreased the Portfolio's exposure to Asia Pacific ex-Japan
and Europe, while increasing the weighting in Japan. Our allocation to
North America was unchanged, though we did initiate a position in Canada.
We also initiated a position in Latin America, specifically Brazil.
Describe Portfolio positioning at period-end.
o Relative to the MSCI World Financials Index, the Portfolio ended the
period overweight in the United States, Indonesia, China/Hong Kong,
Malaysia and South Korea, and underweight in the United Kingdom, Canada,
Japan and Switzerland.
o From a subsector standpoint, the Portfolio was overweight in IT services,
and underweight commercial banks, REITs, real estate management &
development and diversified financial services.
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
April 1, 2008 September 30, 2008 During the Period 1 April 1, 2008 September 30, 2008 During the Period 1
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional ... $1,000 $783.40 $ 6.03 $1,000 $1,018.14 $ 6.82
Investor A ...... $1,000 $782.30 $ 7.05 $1,000 $1,016.99 $ 7.97
Investor B ...... $1,000 $779.50 $10.57 $1,000 $1,013.01 $11.96
Investor C ...... $1,000 $780.40 $10.23 $1,000 $1,013.41 $11.56
Class R ......... $1,000 $780.50 $ 8.99 $1,000 $1,014.81 $10.17
- ------------------------------------------------------------------------------------------------------------------------------------
1 For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (1.36% for Institutional, 1.59% for Investor A, 2.39%
for Investor B, 2.31% for Investor C and 2.03% for Class R), multiplied by
the average account value over the period, multiplied by 183/366 (to
reflect the one-half year period shown). Because the Fund is a feeder
fund, the expense table example reflects the expenses of both the feeder
fund and the master portfolio in which it invests.
2 Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half year divided by 366.
See "Disclosure of Expenses" on page 6 for further information on how
expenses were calculated.
4 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 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 MSCI World
Index and the MSCI World Financials Index. Values are from November 26, 1999 to
September 2008:
MSCI World
Institutional Investor A MSCI World Financials
Shares(1,2) Shares(1,2) Index(3) Index(4)
11/26/99(5) $10,000 $9,475 $10,000 $10,000
9/00 $12,290 $11,616 $9,806 $10,742
9/01 $11,140 $10,511 $7,046 $8,695
9/02 $10,043 $9,444 $5,695 $7,157
9/03 $13,969 $13,112 $7,141 $9,302
9/04 $17,474 $16,357 $8,362 $11,081
9/05 $22,257 $20,787 $9,945 $13,027
9/06 $25,703 $23,940 $11,355 $16,058
9/07 $28,582 $26,557 $13,750 $17,445
9/08 $18,411 $17,070 $10,169 $11,094
1 Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including advisory fees.
2 The Fund invests primarily in a portfolio of common stocks of financial
services companies that Fund management believes have the potential to
increase in value.
3 This unmanaged market capitalization-weighted Index is comprised of a
representative sampling of large-, medium- and small-capitalization
companies in 23 countries, including the United States.
4 This Index is comprised of the constituents of the MSCI World Index that
are classified into the financial sector. This sector contains companies
involved in activities such as banking, mortgage finance, consumer
finance, specialized finance, investment banking and brokerage, asset
management and custody, corporate lending, insurance, financial investment
and real estate including REITs. The starting date for the Index in the
graph is 11/30/99.
5 Commencement of operations.
Performance Summary for the Period Ended September 30, 2008
Average Annual Total Returns 6
----------------------------------------------------------------------------
1 Year 5 Years Since Inception 7
---------------------- -------------------- --------------------
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 ..................... (21.66)% (35.58)% (35.58)% 5.68% 5.68% 7.14% 7.14%
Investor A ........................ (21.77) (35.72) (39.10) 5.42 4.29 6.88 6.23
Investor B ........................ (22.05) (36.26) (38.56) 4.61 4.38 6.14 6.14
Investor C ........................ (21.96) (36.17) (36.68) 4.62 4.62 6.06 6.06
Class R ........................... (21.95) (36.03) (36.03) 5.09 5.09 6.64 6.64
MSCI World Index .................. (16.66) (26.05) (26.05) 7.32 7.32 0.19 0.19
MSCI World Financials Index ....... (21.08) (36.41) (36.41) 3.59 3.59 1.18 8 1.87 8
- ---------------------------------------------------------------------------------------------------------------------------------
6 Assuming maximum sales charges, if any. See "About Fund Performance" on
page 6 for a detailed description of share classes, including any related
sales charges and fees.
7 The Fund commenced operations on 11/26/99.
8 Since inception total return is from 11/30/99.
Past performance is not indicative of future results.
BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008 5
About Fund Performance BlackRock Global Financial Services Fund, Inc.
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% per year and
a service fee of 0.25% per year. In addition, Investor C Shares are
subject to a 1% contingent deferred sales charge if redeemed within one
year of purchase.
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 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. The Fund may charge a 2%
redemption fee for sales or exchanges of shares within 30 days of purchase
or exchange. Performance data does not reflect this potential fee. Figures
shown in the performance tables on page 5 assume reinvestment of all
dividends and capital gain distributions, if any, at net asset value on
the ex-dividend date. Investment return and principal value of shares will
fluctuate so that shares, when redeemed, may be worth more or less than
their original cost. Dividends paid to each class of shares will vary
because of the different levels of service, distribution and transfer
agency fees applicable to each class, which are deducted from the income
available to be paid to shareholders.
Disclosure of Expenses
Shareholders of this Fund may incur the following charges: (a) expenses related
to transactions, including sales charges, redemption fees and exchange fees; and
(b) operating expenses, including advisory fees, distribution fees including
12b-1 fees, and other Fund expenses. The expense example on page 4 (which is
based on a hypothetical investment of $1,000 invested on April 1, 2008 and held
through September 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 GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
Statement of Assets and Liabilities
BlackRock Global Financial Services Fund, Inc.
September 30, 2008
====================================================================================================================================
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Investments at value -- Global Financial Services Portfolio (the "Portfolio"), (cost -- $145,294,447) ......... $ 127,786,226
Capital shares sold receivable ................................................................................ 700,170
Withdrawals receivable from the Portfolio ..................................................................... 25,481
Prepaid expenses .............................................................................................. 47,674
-------------
Total assets .................................................................................................. 128,559,551
-------------
====================================================================================================================================
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Capital shares redeemed payable ............................................................................... 725,651
Service and distribution fees payable ......................................................................... 62,294
Other affiliates payable ...................................................................................... 39,586
Administration fees payable ................................................................................... 38,645
Officer's and Directors' fees payable ......................................................................... 12
Other accrued expenses payable ................................................................................ 39,510
-------------
Total liabilities ............................................................................................. 905,698
-------------
Net Assets .................................................................................................... $ 127,653,853
=============
====================================================================================================================================
Net Assets Consist of
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional Shares, $0.10 par value, 100,000,000 shares authorized .......................................... $ 133,597
Investor A Shares, $0.10 par value, 100,000,000 shares authorized ............................................. 649,715
Investor B Shares, $0.10 par value, 100,000,000 shares authorized ............................................. 93,352
Investor C Shares, $0.10 par value, 100,000,000 shares authorized ............................................. 567,489
Class R Shares, $0.10 par value, 100,000,000 shares authorized ................................................ 94,067
Paid-in capital in excess of par .............................................................................. 168,516,324
Undistributed net investment income ........................................................................... 1,735,641
Accumulated net realized loss allocated from the Portfolio .................................................... (26,628,111)
Net unrealized depreciation allocated from the Portfolio ...................................................... (17,508,221)
-------------
Net Assets .................................................................................................... $ 127,653,853
=============
====================================================================================================================================
Net Asset Value
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional -- Based on net assets of $11,360,859 and 1,335,966 shares outstanding .......................... $ 8.50
=============
Investor A -- Based on net assets of $54,661,300 and 6,497,154 shares outstanding ............................. $ 8.41
=============
Investor B -- Based on net assets of $7,758,032 and 933,519 shares outstanding ................................ $ 8.31
=============
Investor C -- Based on net assets of $46,174,757 and 5,674,886 shares outstanding ............................. $ 8.14
=============
Class R -- Based on net assets of $7,698,905 and 940,673 shares outstanding ................................... $ 8.18
=============
See Notes to Financial Statements.
BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008 7
Statement of Operations BlackRock Global Financial Services Fund, Inc.
Year Ended September 30, 2008
====================================================================================================================================
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income allocated from the Portfolio:
Dividends .......................................................................................... $ 3,781,057
Income from affiliates ............................................................................. 319,730
Securities lending from affiliates ................................................................. 7,200
Expenses ........................................................................................... (788,648)
------------
Total income ........................................................................................... 3,319,339
------------
====================================================================================================================================
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Administration ......................................................................................... 430,476
Service -- Investor A .................................................................................. 120,332
Service and distribution -- Investor B ................................................................. 114,365
Service and distribution -- Investor C ................................................................. 384,335
Service and distribution -- Class R .................................................................... 40,092
Transfer agent -- Institutional ........................................................................ 30,557
Transfer agent -- Investor A ........................................................................... 80,024
Transfer agent -- Investor B ........................................................................... 26,765
Transfer agent -- Investor C ........................................................................... 69,341
Transfer agent -- Class R .............................................................................. 29,035
Registration ........................................................................................... 88,410
Printing ............................................................................................... 67,069
Professional ........................................................................................... 36,509
Officer and Directors .................................................................................. 85
Miscellaneous .......................................................................................... 19,869
------------
Total expenses ......................................................................................... 1,537,264
------------
Net investment income .................................................................................. 1,782,075
------------
====================================================================================================================================
Realized and Unrealized Loss Allocated from the Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized loss from investments and foreign currency .................................................... (26,312,917)
Net change in unrealized appreciation/depreciation on investments and foreign currency ..................... (31,369,302)
------------
Total realized and unrealized loss ......................................................................... (57,682,219)
------------
Net Decrease in Net Assets Resulting from Operations ....................................................... $(55,900,144)
============
See Notes to Financial Statements.
8 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
Statements of Changes in Net Assets
BlackRock Global Financial Services Fund, Inc.
Year Ended
September 30,
----------------------------------
Increase (Decrease) in Net Assets: 2008 2007
====================================================================================================================================
Operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .................................................................... $ 1,782,075 $ 538,684
Net realized gain (loss) ................................................................. (26,312,917) 22,294,403
Net change in unrealized appreciation/depreciation ....................................... (31,369,302) (12,906,995)
----------------------------------
Net increase (decrease) in net assets resulting from operations .......................... (55,900,144) 9,926,092
----------------------------------
====================================================================================================================================
Dividends and Distributions to Shareholders From
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income:
Institutional ........................................................................ (113,030) (457,900)
Investor A ........................................................................... (275,651) (573,005)
Investor B ........................................................................... -- (464,138)
Investor C ........................................................................... (11,974) (403,911)
Class R .............................................................................. (30,173) (151,046)
Net realized gain:
Institutional ........................................................................ (3,048,637) (494,767)
Investor A ........................................................................... (8,162,775) (682,147)
Investor B ........................................................................... (2,299,693) (836,184)
Investor C ........................................................................... (4,787,102) (683,251)
Class R .............................................................................. (1,753,401) (189,041)
----------------------------------
Decrease in net assets resulting from dividends and distributions to shareholders ........ (20,482,436) (4,935,390)
----------------------------------
====================================================================================================================================
Capital Share Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets derived from capital share transactions ............ 108,854,281 (6,392,855)
----------------------------------
====================================================================================================================================
Redemption Fees
- ------------------------------------------------------------------------------------------------------------------------------------
Redemption fees .......................................................................... 33,598 3,592
----------------------------------
====================================================================================================================================
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets .................................................. 32,505,299 (1,398,561)
Beginning of year ........................................................................ 95,148,554 96,547,115
----------------------------------
End of year .............................................................................. $ 127,653,853 $ 95,148,554
==================================
End of year undistributed net investment income .......................................... $ 1,735,641 $ 424,585
==================================
See Notes to Financial Statements.
BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008 9
Financial Highlights BlackRock Global Financial Services Fund, Inc.
Institutional
----------------------------------------------------------------
Year Ended September 30,
----------------------------------------------------------------
2008 2007 2006 2005 2004
============================================================================================================
Per Share Operating Performance
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ..... $ 16.75 $ 15.93 $ 15.53 $ 14.12 $ 12.76
----------------------------------------------------------------
Net investment income 1 ................ 0.22 0.19 0.50 0.44 0.20
Net realized and unrealized gain (loss) 2 (5.22) 1.59 1.89 3.17 2.78
----------------------------------------------------------------
Net increase (decrease) from
investment operations ................ (5.00) 1.78 2.39 3.61 2.98
----------------------------------------------------------------
Dividends and distributions from:
Net investment income .............. (0.12) (0.46) (0.38) (0.18) --
Net realized gain .................. (3.13) (0.50) (1.61) (2.02) (1.62)
----------------------------------------------------------------
Total dividends and distributions ...... (3.25) (0.96) (1.99) (2.20) (1.62)
----------------------------------------------------------------
Net asset value, end of year ........... $ 8.50 $ 16.75 $ 15.93 $ 15.53 $ 14.12
================================================================
============================================================================================================
Total Investment Return 3
- ------------------------------------------------------------------------------------------------------------
Based on net asset value ............... (35.58)% 11.20% 15.48% 27.37% 25.09%
================================================================
============================================================================================================
Ratios to Average Net Assets 4
- ------------------------------------------------------------------------------------------------------------
Total expenses ......................... 1.35% 1.42% 1.27% 1.32% 1.53%
================================================================
Net investment income .................. 1.89% 1.18% 3.05% 2.93% 1.46%
================================================================
============================================================================================================
Supplemental Data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) .......... $ 11,361 $ 16,249 $ 17,843 $ 49,612 $ 11,034
================================================================
Portfolio turnover of the Portfolio .... 31% 55% 79% 80% 115%
================================================================
Investor A
----------------------------------------------------------------
Year Ended September 30,
----------------------------------------------------------------
2008 2007 2006 2005 2004
============================================================================================================
Per Share Operating Performance
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ..... $ 16.63 $ 15.82 $ 15.45 $ 14.06 $ 12.71
----------------------------------------------------------------
Net investment income 1 ................ 0.20 0.15 0.44 0.27 0.17
Net realized and unrealized gain (loss) 2 (5.18) 1.58 1.90 3.29 2.76
----------------------------------------------------------------
Net increase (decrease) from
investment operations ................ (4.98) 1.73 2.34 3.56 2.93
----------------------------------------------------------------
Dividends and distributions from:
Net investment income .............. (0.11) (0.42) (0.36) (0.15) --
Net realized gain .................. (3.13) (0.50) (1.61) (2.02) (1.58)
----------------------------------------------------------------
Total dividends and distributions ...... (3.24) (0.92) (1.97) (2.17) (1.58)
----------------------------------------------------------------
Net asset value, end of year ........... $ 8.41 $ 16.63 $ 15.82 $ 15.45 $ 14.06
================================================================
============================================================================================================
Total Investment Return 3
- ------------------------------------------------------------------------------------------------------------
Based on net asset value ............... (35.72)% 10.93% 15.17% 27.08% 24.75%
================================================================
============================================================================================================
Ratios to Average Net Assets 4
- ------------------------------------------------------------------------------------------------------------
Total expenses ......................... 1.57% 1.67% 1.54% 1.62% 1.78%
================================================================
Net investment income .................. 1.80% 0.94% 2.66% 1.87% 1.21%
================================================================
============================================================================================================
Supplemental Data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) .......... $ 54,661 $ 26,777 $ 24,078 $ 10,040 $ 8,684
================================================================
Portfolio turnover of the Portfolio .... 31% 55% 79% 80% 115%
================================================================
1 Based on average shares outstanding.
2 Includes a redemption fee, which is less than $0.01 per share.
3 Total investment returns exclude the effects of any sales charges.
4 Includes the Fund's share of the Portfolio's allocated expenses and/or net
investment income.
See Notes to Financial Statements.
10 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
Financial Highlights (continued) BlackRock Global Financial Services Fund, Inc.
Investor B
----------------------------------------------------------------
Year Ended September 30,
----------------------------------------------------------------
2008 2007 2006 2005 2004
============================================================================================================
Per Share Operating Performance
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ..... $ 16.32 $ 15.52 $ 15.18 $ 13.86 $ 12.51
----------------------------------------------------------------
Net investment income 1 ................ 0.06 0.03 0.33 0.16 0.06
Net realized and unrealized gain (loss) 2 (5.08) 1.55 1.84 3.23 2.74
----------------------------------------------------------------
Net increase (decrease) from
investment operations ................ (5.02) 1.58 2.17 3.39 2.80
----------------------------------------------------------------
Dividends and distributions from:
Net investment income ............. -- (0.28) (0.22) (0.05) --
Net realized gain ................. (2.99) (0.50) (1.61) (2.02) (1.45)
----------------------------------------------------------------
Total dividends and distributions ...... (2.99) (0.78) (1.83) (2.07) (1.45)
----------------------------------------------------------------
Net asset value, end of year ........... $ 8.31 $ 16.32 $ 15.52 $ 15.18 $ 13.86
================================================================
============================================================================================================
Total Investment Return 3
- ------------------------------------------------------------------------------------------------------------
Based on net asset value ............... (36.26)% 10.13% 14.23% 26.08% 23.89%
================================================================
============================================================================================================
Ratios to Average Net Assets 4
- ------------------------------------------------------------------------------------------------------------
Total expenses ......................... 2.41% 2.42% 2.30% 2.39% 2.55%
================================================================
Net investment income .................. 0.49% 0.18% 2.08% 1.09% 0.46%
================================================================
============================================================================================================
Supplemental Data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) .......... $ 7,758 $ 22,592 $ 27,397 $ 31,126 $ 33,733
================================================================
Portfolio turnover of the Portfolio .... 31% 55% 79% 80% 115%
================================================================
Investor C
----------------------------------------------------------------
Year Ended September 30,
----------------------------------------------------------------
2008 2007 2006 2005 2004
============================================================================================================
Per Share Operating Performance
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ..... $ 16.20 $ 15.44 $ 15.10 $ 13.82 $ 12.51
----------------------------------------------------------------
Net investment income 1 ................ 0.12 0.02 0.30 0.16 0.07
Net realized and unrealized gain (loss) 2 (5.04) 1.53 1.87 3.21 2.72
----------------------------------------------------------------
Net increase (decrease) from
investment operations ................ (4.92) 1.55 2.17 3.37 2.79
----------------------------------------------------------------
Dividends and distributions from:
Net investment income ............. (0.01) (0.29) (0.22) (0.07) --
Net realized gain ................. (3.13) (0.50) (1.61) (2.02) (1.48)
----------------------------------------------------------------
Total dividends and distributions ...... (3.14) (0.79) (1.83) (2.09) (1.48)
----------------------------------------------------------------
Net asset value, end of year ........... $ 8.14 $ 16.20 $ 15.44 $ 15.10 $ 13.82
================================================================
============================================================================================================
Total Investment Return 3
- ------------------------------------------------------------------------------------------------------------
Based on net asset value ............... (36.17)% 10.04% 14.35% 26.02% 23.83%
================================================================
============================================================================================================
Ratios to Average Net Assets 4
- ------------------------------------------------------------------------------------------------------------
Total expenses ......................... 2.32% 2.47% 2.31% 2.40% 2.56%
================================================================
Net investment income .................. 1.17% 0.13% 1.91% 1.10% 0.48%
================================================================
============================================================================================================
Supplemental Data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) .......... $ 46,175 $ 20,535 $ 21,915 $ 15,087 $ 16,714
================================================================
Portfolio turnover of the Portfolio .... 31% 55% 79% 80% 115%
================================================================
1 Based on average shares outstanding.
2 Includes a redemption fee, which is less than $0.01 per share.
3 Total investment returns exclude the effects of sales charges.
4 Includes the Fund's share of the Portfolio's allocated expenses and/or net
investment income.
See Notes to Financial Statements.
BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008 11
Financial Highlights (concluded) BlackRock Global Financial Services Fund, Inc.
Class R
----------------------------------------------------------------
Year Ended September 30,
----------------------------------------------------------------
2008 2007 2006 2005 2004
============================================================================================================
Per Share Operating Performance
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ..... $ 16.28 $ 15.54 $ 15.21 $ 13.91 $ 12.62
----------------------------------------------------------------
Net investment income 1 ................. 0.12 0.10 0.36 0.29 0.14
Net realized and unrealized gain (loss) 2 (5.04) 1.54 1.90 3.18 2.74
----------------------------------------------------------------
Net increase (decrease) from
investment operations ................ (4.92) 1.64 2.26 3.47 2.88
----------------------------------------------------------------
Dividends and distributions from:
Net investment income ............. (0.05) (0.40) (0.32) (0.15) --
Net realized gain ................. (3.13) (0.50) (1.61) (2.02) (1.59)
----------------------------------------------------------------
Total dividends and distributions ...... (3.18) (0.90) (1.93) (2.17) (1.59)
----------------------------------------------------------------
Net asset value, end of year ........... $ 8.18 $ 16.28 $ 15.54 $ 15.21 $ 13.91
================================================================
============================================================================================================
Total Investment Return
- ------------------------------------------------------------------------------------------------------------
Based on net asset value ............... (36.03)% 10.53% 14.90% 26.74% 24.51%
================================================================
============================================================================================================
Ratios to Average Net Assets 3
- ------------------------------------------------------------------------------------------------------------
Total expenses ......................... 2.03% 2.02% 1.80% 1.83% 2.11%
================================================================
Net investment income .................. 1.09% 0.61% 2.22% 2.02% 0.99%
================================================================
============================================================================================================
Supplemental Data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) .......... $ 7,699 $ 8,996 $ 5,314 $ 2,040 $ 555
================================================================
Portfolio turnover of the Portfolio .... 31% 55% 79% 80% 115%
================================================================
1 Based on average shares outstanding.
2 Includes a redemption fee, which is less than $0.01 per share.
3 Includes the Fund's share of the Portfolio's allocated expenses and/or net
investment income.
See Notes to Financial Statements.
12 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
Notes to Financial Statements BlackRock Global Financial Services Fund, Inc.
1. Significant Accounting Policies:
BlackRock Global Financial Services 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 seeks to achieve
its investment objective by investing all of its assets in Global Financial
Services Portfolio (the "Portfolio") of Global Financial Services Master LLC,
which has the same investment objective and strategies as the Fund. The value of
the Fund's investment in the Portfolio reflects the Fund's proportionate
interest in the net assets of the Portfolio. The performance of the Fund is
directly affected by the performance of the Portfolio. The financial statements
of the Portfolio, including the Schedule of Investments, are included elsewhere
in this report and should be read in conjunction with the Fund's financial
statements. The Fund's financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require the use of management accruals and estimates. Actual results may
differ from these estimates. The percentage of the Portfolio owned by the Fund
at September 30, 2008 was 100%. 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. Investor B and Investor
C Shares 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 Investments: The Fund records its investment in the Portfolio at
fair value. Valuation of securities held by the Portfolio is discussed in Note 1
of the Portfolio's Notes to Financial Statements, which are included elsewhere
in this report.
Investment Transactions and Net Investment Income: Investment transactions in
the Portfolio are accounted for on a trade date basis. The Fund records daily
its proportionate share of the Portfolio's income, expenses and realized and
unrealized gains and losses. In addition, the Fund accrues its own expenses.
Income and realized and unrealized gains and losses are allocated daily to each
class based on its relative net assets.
Dividends and Distributions to Shareholders: Dividends and distributions paid by
the Fund are recorded on the ex-dividend dates.
Income Taxes: It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required. Under the applicable
foreign tax laws, a withholding tax may be imposed on interest, dividends and
capital gains at various rates.
Effective March 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 administrator has
evaluated the application of FIN 48 to the Fund, and has determined that the
adoption of FIN 48 does not have a material impact on the Fund's financial
statements. The Fund files U.S. federal and various state and local tax returns.
No income tax returns are currently under examination. The statute of
limitations on the Fund's U.S. Federal tax returns remains open for the years
ended September 30, 2005 through September 30, 2007. The statutes of limitations
on the Fund's state and local tax returns may remain open for an additional year
depending upon the jurisdiction.
Recent Accounting Pronouncements: In September 2006, Statement of Financial
Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"), was issued
and is effective for fiscal years beginning after November 15, 2007. FAS 157
defines fair value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements. The impact on the Fund's financial
statement disclosures, if any, is currently being assessed.
In 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. 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. In September 2008, FASB Staff
Position No. 133-1 and FASB Interpretation No. 45-4 (the "FSP"), "Disclosures
about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement
No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date
of FASB Statement No. 161," was issued and is effective for fiscal years and
interim periods ending after November 15, 2008. The FSP amends FASB Statement
No. 133, "Accounting for Derivative Instruments and Hedging Activities," to
require disclosures by sellers of credit derivatives, including credit
derivatives embedded in hybrid instruments. The FSP also clarifies the effective
date of FAS 161, whereby disclosures required by FAS 161 are effective for
financial statements issued for fiscal years and interim periods
BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008 13
Notes to Financial Statements (continued)
BlackRock Global Financial Services Fund, Inc.
beginning after November 15, 2008. 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. Transactions with Affiliates:
The Fund has entered into an Administration Agreement with BlackRock Advisors,
LLC (the "Administrator"), an indirect, wholly owned subsidiary of BlackRock,
Inc. to provide administrative services (other than investment advice and
related portfolio activities). For such services, the Fund pays a monthly fee at
an annual rate of 0.35% of the Fund's average daily net assets. Merrill Lynch &
Co., Inc. ("Merrill Lynch") and The PNC Financial Services Group, Inc. ("PNC")
are principal owners of BlackRock, Inc.
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 1940 Act, the Fund pays the Distributor ongoing service and
distribution fees. The fees are accrued daily and paid monthly at annual rates
based upon the average daily net assets of the shares as follows:
- --------------------------------------------------------------------------------
Distribution
Service 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 year ended September 30, 2008, affiliates earned underwriting discounts,
direct commissions and dealer concessions on sales of the Fund's Investor A
Shares, which totaled $119,334. Affiliates received contingent deferred sales
charges of $59,903 and $29,106 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 year. Furthermore,
affiliates received contingent deferred sales charges of $126 relating to
transactions subject to front-end sales charge waivers on Investor A Shares.
Pursuant to written agreements, certain affiliates provide the Fund with
sub-accounting, recordkeeping, sub-transfer agency and other administrative
services with respect to sub-accounts they service. For these services, these
affiliates receive an annual fee per shareholder account which will vary
depending on share class. For the year ended September 30, 2008, the Fund paid
$124,899 in return for these services, which are a component of the transfer
agent fees in the accompanying Statement of Operations.
PNC Global Investment Servicing (U.S.) Inc., formerly PFPC Inc., an indirect,
wholly owned subsidiary of PNC and an affiliate of the Administrator, 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 Fund may earn income on positive cash balances in demand deposit accounts
that are maintained by the transfer agent on behalf of the Fund. For the year
ended September 30, 2008, the Fund earned $119, which is included in income from
affiliates in the Statement of Operations.
The Administrator maintains a call center, which is responsible for providing
certain shareholder services to the Fund, such as responding to shareholder
inquiries and processing transactions based upon instructions from shareholders
with respect to the subscription and redemption of Fund shares. For the year
ended September 30, 2008, the Fund reimbursed the Administrator the following
amounts for costs incurred running the call center, which are a component of the
transfer agent fees in the accompanying Statement of Operations.
- --------------------------------------------------------------------------------
Call Center
Fees
- --------------------------------------------------------------------------------
Institutional .......................................... $ 872
Investor A ............................................. $6,300
Investor B ............................................. $1,204
Investor C ............................................. $2,688
Class R ................................................ $ 203
- --------------------------------------------------------------------------------
Certain officers and/or directors of the Fund are officers and/or directors of
BlackRock, Inc. or its affiliates. The Fund reimburses the Administrator for
compensation paid to the Fund's Chief Compliance Officer.
14 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
Notes to Financial Statements (continued)
BlackRock Global Financial Services Fund, Inc.
3. Income Tax Information:
Reclassifications: 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. These
reclassifications have no effect on net assets or on net asset values per share.
The following permanent differences as of September 30, 2008 attributable to
foreign currency transactions, characterization of expenses and reclassification
of distributions, were reclassified to the following accounts:
- --------------------------------------------------------------------------------
Decrease undistributed net investment income ..................... $(40,191)
Increase accumulated net realized gain (loss) allocated from
the Portfolio .................................................. 40,191
- --------------------------------------------------------------------------------
The tax character of distributions paid during the years ended September 30,
2008 and September 30, 2007 were as follows:
- --------------------------------------------------------------------------------
9/30/2008 9/30/2007
- --------------------------------------------------------------------------------
Ordinary income ...................... $ 5,916,473 $ 2,168,985
Long-term capital gain ............... 14,565,963 2,766,405
--------------------------------
Total ................................ $20,482,436 $ 4,935,390
================================
As of September 30, 2008, the tax components of distributable
earnings/accumulated losses were as follows:
- --------------------------------------------------------------------------------
Undistributed ordinary income ........................ $ 1,437,592
Capital loss carryforward ............................ (114,096)
Net unrealized losses ................................ (43,724,187)*
------------
Total accumulated net losses ......................... $(42,400,691)
============
* The difference between book-basis and tax-basis net unrealized losses is
attribut-able primarily to the tax deferral of losses on wash sales, the
realization for tax purposes of unrealized gains (losses) on certain
foreign currency contracts, the deferral of post-October capital losses
for tax purposes and the timing of income recognition on partnership
interests.
As of September 30, 2008, the Fund had a capital loss carryforward available to
offset future realized capital gains through the indicated expiration dates:
- --------------------------------------------------------------------------------
2016 ............................................... $(114,096)
---------
Total .............................................. $(114,096)
=========
4. Capital Share Transactions:
Transactions in shares for each class were as follows:
Year Ended Year Ended
September 30, 2008 September 30, 2007
---------------------------- ---------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
Institutional
- -----------------------------------------------------------------------------------------------------------------------------------
Shares sold ............................................ 1,172,153 $ 13,274,856 283,669 $ 4,712,330
Shares issued to shareholders in reinvestment
of dividends and distributions ....................... 234,928 2,833,141 50,016 828,755
----------------------------- ---------------------------
Total issued ........................................... 1,407,081 16,107,997 333,685 5,541,085
Shares redeemed ........................................ (1,040,912) (10,944,995) (483,819) (8,031,720)
----------------------------- ---------------------------
Net increase (decrease) ................................ 366,169 $ 5,163,002 (150,134) $ (2,490,635)
============================= ===========================
- -----------------------------------------------------------------------------------------------------------------------------------
Investor A
- -----------------------------------------------------------------------------------------------------------------------------------
Shares sold and automatic conversion of shares ......... 6,349,523 $ 73,467,405 811,607 $ 13,332,012
Shares issued to shareholders in reinvestment
of dividends and distributions ....................... 635,582 7,594,996 70,448 1,161,692
----------------------------- ---------------------------
Total issued ........................................... 6,985,105 81,062,401 882,055 14,493,704
Shares redeemed ........................................ (2,097,789) (22,726,530) (794,059) (13,109,942)
----------------------------- ---------------------------
Net increase ........................................... 4,887,316 $ 58,335,871 87,996 $ 1,383,762
============================= ===========================
BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008 15
Notes to Financial Statements (concluded)
BlackRock Global Financial Services Fund, Inc.
Year Ended Year Ended
September 30, 2008 September 30, 2007
---------------------------- ---------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
Investor B
- -----------------------------------------------------------------------------------------------------------------------------------
Shares sold ............................................ 680,700 $ 7,275,836 149,244 $ 2,420,721
Shares issued to shareholders in reinvestment
of dividends and distributions ....................... 169,298 2,011,212 68,311 1,111,411
----------------------------- ---------------------------
Total issued ........................................... 849,998 9,287,048 217,555 3,532,132
Shares redeemed and automatic conversion of shares ..... (1,300,675) (16,706,885) (598,252) (9,714,361)
----------------------------- ---------------------------
Net decrease ........................................... (450,677) $ (7,419,837) (380,697) $ (6,182,229)
============================= ===========================
- -----------------------------------------------------------------------------------------------------------------------------------
Investor C
- -----------------------------------------------------------------------------------------------------------------------------------
Shares sold ............................................ 5,164,909 $ 56,236,991 504,395 $ 8,083,175
Shares issued to shareholders in reinvestment
of dividends and distributions ....................... 387,068 4,497,683 60,728 981,357
----------------------------- ---------------------------
Total issued ........................................... 5,551,977 60,734,674 565,123 9,064,532
Shares redeemed ........................................ (1,144,659) (12,005,649) (717,194) (11,576,636)
----------------------------- ---------------------------
Net increase (decrease) ................................ 4,407,318 $ 48,729,025 (152,071) $ (2,512,104)
============================= ===========================
- -----------------------------------------------------------------------------------------------------------------------------------
Class R
- -----------------------------------------------------------------------------------------------------------------------------------
Shares sold ............................................ 521,810 $ 5,521,426 408,902 $ 6,625,640
Shares issued to shareholders in reinvestment
of dividends and distributions ....................... 152,841 1,783,651 21,019 340,088
----------------------------- ---------------------------
Total issued ........................................... 674,651 7,305,077 429,921 6,965,728
Shares redeemed ........................................ (286,523) (3,258,857) (219,414) (3,557,377)
----------------------------- ---------------------------
Net increase ........................................... 388,128 $ 4,046,220 210,507 $ 3,408,351
============================= ===========================
There is a 2% redemption fee on shares redeemed or exchanged that have been held
for 30 days or less. The redemption fees are collected and retained by the Fund
for the benefit of the remaining shareholders. The redemption fees are recorded
as a credit to paid in capital.
5. Subsequent Events:
On September 15, 2008, Bank of America Corporation announced that it has agreed
to acquire Merrill Lynch, one of the principal owners of BlackRock, Inc. The
purchase has been approved by the directors of both companies. Subject to
shareholder and regulatory approvals, the transaction is expected to close on or
before December 31, 2008.
Effective October 1, 2008, BlackRock Investments, Inc., an affiliate of the
Administrator, replaced FAM Distributors, Inc. and BlackRock Distributors, Inc.
as the sole distributor of the Fund.
16 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
Report of Independent Registered Public Accounting Firm
BlackRock Global Financial Services Fund, Inc.
To the Shareholders and Board of Directors of
BlackRock Global Financial Services Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
BlackRock Global Financial Services Fund, Inc. (the "Fund") as of September 30,
2008, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and financial highlights are the
responsibility of the 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. 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 Global Financial Services Fund, Inc. as of September 30, 2008, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended, in conformity with
accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
November 24, 2008
Important Tax Information (Unaudited)
The following information is provided with respect to the ordinary income
distributions paid by BlackRock Global Financial Services Fund, Inc. to
shareholders of record on December 17, 2007:
- --------------------------------------------------------------------------------
Qualified Dividend Income for Individuals(1) ................... 31.35%
Dividends Qualifying for the Dividends Received Deduction
for Corporations(1) .......................................... 10.43%
Foreign Source Income(2) ....................................... 16.75%
Short-Term Capital Gain Dividends for Non-U.S. Residents(3) .... 92.72%
Foreign Taxes Paid Per Share ................................... $0.019408
- --------------------------------------------------------------------------------
(1) The Fund hereby designates the percentage indicated above or the maximum
amount allowable by law.
(2) Expressed as a percentage of the cash distribution grossed-up for foreign
taxes.
(3) Represents the portion of the taxable ordinary income dividends eligible
for exemption from U.S. withholding tax for nonresident aliens and foreign
corporations.
The foreign taxes paid represent taxes incurred by the Fund on income received
by the Fund from foreign sources. Foreign taxes paid may be included in taxable
income with an offsetting deduction from gross income or may be taken as a
credit for taxes paid to foreign governments. You should consult your tax
advisor regarding the appropriate treatment of foreign taxes paid.
Additionally, the Fund distributed long-term capital gains of $2.263288 per
share to shareholders of record on December 17, 2007.
BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008 17
Portfolio Information Global Financial Services Portfolio
================================================================================
September 30, 2008
- --------------------------------------------------------------------------------
Percent of
Ten Largest Equity Holdings Net Assets
================================================================================
JPMorgan Chase & Co. ............................................ 5%
Bank of America Corp. ........................................... 4
Banco Santander SA .............................................. 4
The Travelers Cos., Inc. ........................................ 3
BNP Paribas SA .................................................. 3
Standard Chartered Plc .......................................... 3
ACE Ltd. ........................................................ 3
Sumitomo Mitsui Financial Group, Inc. ........................... 3
Wells Fargo & Co. ............................................... 2
AXA SA .......................................................... 2
- --------------------------------------------------------------------------------
Industries Represented in Percent of
the Portfolio Net Assets*
================================================================================
Commercial Banks ................................................ 38%
Insurance ....................................................... 22
Diversified Financial Services .................................. 12
Capital Markets ................................................. 10
Real Estate Investment Trusts (REITs) ........................... 3
IT Services ..................................................... 2
Real Estate Management & Development ............................ 2
Consumer Finance ................................................ 1
- --------------------------------------------------------------------------------
* Total may not equal 100%.
For Portfolio compliance purposes, the Portfolio's industry
classifications refer to any one or more of the industry
sub-classifications used by one or more widely recognized market indexes
or ratings group indexes, and/or as defined by Portfolio management. This
definition may not apply for purposes of this report, which may combine
industry sub-classifications for reporting ease.
Geographic Allocation Percent of
by Country Long-Term Investments
================================================================================
United States ................................................... 40%
Japan ........................................................... 8
France .......................................................... 6
United Kingdom .................................................. 5
Switzerland ..................................................... 5
Spain ........................................................... 4
Hong Kong ....................................................... 3
Germany ......................................................... 2
Singapore ....................................................... 2
Canada .......................................................... 2
Indonesia ....................................................... 2
Malaysia ........................................................ 2
South Korea ..................................................... 2
Italy ........................................................... 2
Thailand ........................................................ 2
India ........................................................... 2
Bermuda ......................................................... 2
China ........................................................... 2
Netherlands ..................................................... 1
Denmark ......................................................... 1
Belgium ......................................................... 1
Brazil .......................................................... 1
Taiwan .......................................................... 1
Turkey .......................................................... 1
Egypt ........................................................... 1
- --------------------------------------------------------------------------------
18 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
Schedule of Investments September 30, 2008 Global Financial Services Portfolio
(Percentages shown are based on Net Assets)
Common Stocks Shares Value
===============================================================================
Belgium -- 1.0%
Commercial Banks -- 1.0%
KBC Bancassurance Holding 15,200 $ 1,322,268
- -------------------------------------------------------------------------------
Total Common Stocks in Belgium 1,322,268
===============================================================================
Bermuda -- 1.4%
Insurance -- 1.4%
RenaissanceRe Holdings Ltd. 35,000 1,820,000
- -------------------------------------------------------------------------------
Total Common Stocks in Bermuda 1,820,000
===============================================================================
Brazil -- 1.0%
Commercial Banks -- 1.0%
Uniao de Bancos Brasileiros SA (a) 12,500 1,261,500
- -------------------------------------------------------------------------------
Total Common Stocks in Brazil 1,261,500
===============================================================================
Canada -- 2.1 %
Insurance -- 2.1%
Manulife Financial Corp. 73,400 2,693,046
- -------------------------------------------------------------------------------
Total Common Stocks in Canada 2,693,046
===============================================================================
China -- 1.4%
Commercial Banks -- 0.9%
China Merchants Bank Co. Ltd. 485,600 1,172,673
- -------------------------------------------------------------------------------
Real Estate Management & Development -- 0.5%
Guangzhou R&F Properties Co. Ltd. 678,400 622,946
- -------------------------------------------------------------------------------
Total Common Stocks in China 1,795,619
===============================================================================
Denmark -- 1.1%
Commercial Banks -- 1.1%
Danske Bank A/S 58,700 1,413,351
- -------------------------------------------------------------------------------
Total Common Stocks in Denmark 1,413,351
===============================================================================
Egypt -- 0.5%
Commercial Banks -- 0.5%
Commercial International Bank 82,650 599,009
- -------------------------------------------------------------------------------
Total Common Stocks in Egypt 599,009
===============================================================================
France -- 5.2%
Commercial Banks -- 2.8%
BNP Paribas SA 38,000 3,627,375
- -------------------------------------------------------------------------------
Insurance -- 2.4%
AXA SA 92,200 3,018,101
- -------------------------------------------------------------------------------
Total Common Stocks in France 6,645,476
===============================================================================
Germany -- 2.2%
Insurance -- 2.2%
Allianz AG Registered Shares 12,900 1,768,563
Hannover Rueckversicherungs AG Registered Shares 30,100 1,101,601
- -------------------------------------------------------------------------------
Total Common Stocks in Germany 2,870,164
===============================================================================
Hong Kong -- 3.0%
Commercial Banks -- 1.3%
Industrial & Commercial Bank of China 2,762,300 1,669,521
- -------------------------------------------------------------------------------
Insurance -- 1.0%
Ping An Insurance Group Co. of China Ltd. 228,500 1,338,088
- -------------------------------------------------------------------------------
Real Estate Management & Development -- 0.7%
China Resources Land Ltd. 828,000 879,318
- -------------------------------------------------------------------------------
Total Common Stocks in Hong Kong 3,886,927
===============================================================================
India -- 1.5%
Commercial Banks -- 1.0%
HDFC Bank Ltd. 48,900 1,285,618
- -------------------------------------------------------------------------------
Diversified Financial Services -- 0.5%
Infrastructure Development Finance Co. Ltd. 387,600 604,233
- -------------------------------------------------------------------------------
Total Common Stocks in India 1,889,851
===============================================================================
Indonesia -- 2.0%
Commercial Banks -- 2.0%
Bank Central Asia Tbk PT 3,505,200 1,154,544
Bank Mandiri Persero Tbk PT 2,118,600 587,230
Bank Rakyat Indonesia Tbk PT 1,353,400 764,664
- -------------------------------------------------------------------------------
Total Common Stocks in Indonesia 2,506,438
===============================================================================
Italy -- 1.6%
Commercial Banks -- 1.6%
Unicredit SpA 548,700 2,052,169
- -------------------------------------------------------------------------------
Total Common Stocks in Italy 2,052,169
===============================================================================
Japan -- 7.2%
Capital Markets -- 1.4%
Nomura Holdings, Inc. 135,300 1,765,679
- -------------------------------------------------------------------------------
Commercial Banks -- 4.2%
Mitsubishi UFJ Financial Group, Inc. 218,500 1,905,374
Sumitomo Mitsui Financial Group, Inc. 545 3,416,967
------------
5,322,341
- -------------------------------------------------------------------------------
Insurance -- 1.2%
Tokio Marine Holdings, Inc. 42,100 1,545,652
- -------------------------------------------------------------------------------
Real Estate Management & Development -- 0.4%
Sumitomo Real Estate Sales 16,700 466,826
- -------------------------------------------------------------------------------
Total Common Stocks in Japan 9,100,498
===============================================================================
Malaysia -- 1.9%
Commercial Banks -- 1.1%
Public Bank Bhd 467,400 1,365,517
- -------------------------------------------------------------------------------
Diversified Financial Services -- 0.8%
AMMB Holdings Bhd 1,159,950 1,005,808
- -------------------------------------------------------------------------------
Total Common Stocks in Malaysia 2,371,325
===============================================================================
Netherlands -- 1.2%
Diversified Financial Services -- 1.2%
ING Groep NV CVA 72,600 1,556,380
- -------------------------------------------------------------------------------
Total Common Stocks in the Netherlands 1,556,380
===============================================================================
Singapore -- 2.1%
Commercial Banks -- 2.1%
DBS Group Holdings Ltd. 104,000 1,239,393
United Overseas Bank Ltd. 123,800 1,480,008
- -------------------------------------------------------------------------------
Total Common Stocks in Singapore 2,719,401
===============================================================================
See Notes to Financial Statements.
BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 3008 19
Schedule of Investments (continued) Global Financial ServiPortfolio
(Percentages shown are based ot Assets)
Common Stocks Shares Value
===============================================================================
South Korea -- 1.7%
Commercial Banks -- 1.0%
Daegu Bank 25,300 $ 225,972
Kookmin Bank 11,000 502,590
Shinhan Financial Group Co. Ltd. 15,600 558,131
------------
1,286,693
- -------------------------------------------------------------------------------
Insurance -- 0.7%
Korean Reinsurance Co. 38,845 305,549
Samsung Fire & Marine Insurance Co. Ltd. 3,500 612,696
------------
918,245
- -------------------------------------------------------------------------------
Total Common Stocks in South Korea 2,204,938
===============================================================================
Spain -- 3.8%
Commercial Banks -- 3.8%
Banco Santander SA 328,100 4,919,624
- -------------------------------------------------------------------------------
Total Common Stocks in Spain 4,919,624
===============================================================================
Switzerland -- 4.0%
Capital Markets -- 1.3%
Julius Baer Holding AG Class B 33,700 1,675,916
- -------------------------------------------------------------------------------
Insurance -- 2.7%
ACE Ltd. 64,300 3,480,559
- -------------------------------------------------------------------------------
Total Common Stocks in Switzerland 5,156,475
===============================================================================
Taiwan -- 0.9%
Commercial Banks -- 0.3%
SinoPac Financial Holdings Co., Ltd. 1,507,000 420,982
- -------------------------------------------------------------------------------
Insurance -- 0.6%
Cathay Financial Holding Co., Ltd. 533,100 736,131
- -------------------------------------------------------------------------------
Total Common Stocks in Taiwan 1,157,113
===============================================================================
Thailand -- 1.6%
Commercial Banks -- 1.6%
Bangkok Bank PCL Foreign Shares 341,000 1,044,754
Siam Commercial Bank PCL 484,300 979,756
- -------------------------------------------------------------------------------
Total Common Stocks in Thailand 2,024,510
===============================================================================
Turkey -- 0.6%
Commercial Banks -- 0.6%
Akbank T.A.S. 155,383 795,488
- -------------------------------------------------------------------------------
Total Common Stocks in Turkey 795,488
===============================================================================
United Kingdom -- 4.8%
Commercial Banks -- 4.8%
HSBC Holdings Plc 151,500 2,450,994
Standard Chartered Plc 147,100 3,619,459
- -------------------------------------------------------------------------------
Total Common Stocks in the United Kingdom 6,070,453
===============================================================================
United States -- 36.2%
Capital Markets -- 7.7%
Affiliated Managers Group, Inc. (b) 21,500 1,781,275
The Bank of New York Mellon Corp. 84,800 2,762,784
Franklin Resources, Inc. 18,500 1,630,405
The Goldman Sachs Group, Inc. 21,100 2,700,800
Northern Trust Corp. 12,700 916,940
------------
9,792,204
- -------------------------------------------------------------------------------
Commercial Banks -- 5.3%
BB&T Corp. 40,700 1,538,460
U.S. Bancorp 58,700 2,114,374
Wells Fargo & Co. 81,700 3,066,201
------------
6,719,035
- -------------------------------------------------------------------------------
Consumer Finance -- 1.3%
American Express Co. 48,065 1,702,943
- -------------------------------------------------------------------------------
Diversified Financial Services -- 9.8%
Bank of America Corp. 160,968 5,633,880
JPMorgan Chase & Co. 146,675 6,849,723
------------
12,483,603
- -------------------------------------------------------------------------------
IT Services -- 1.7%
Visa, Inc. Class A 34,900 2,142,511
- -------------------------------------------------------------------------------
Insurance -- 7.8%
Hartford Financial Services Group, Inc. 28,511 1,168,666
MetLife, Inc. 48,700 2,727,200
Prudential Financial, Inc. 33,724 2,428,128
The Travelers Cos., Inc. 81,500 3,683,800
------------
10,007,794
- -------------------------------------------------------------------------------
Real Estate Investment Trusts (REITs) -- 2.6%
Boston Properties, Inc. 18,400 1,723,344
ProLogis (c) 40,300 1,663,181
------------
3,386,525
- -------------------------------------------------------------------------------
Total Common Stocks in the United States 46,234,615
===============================================================================
Total Long-Term Investments (Cost -- $132,563,213) -- 90.0% 115,066,638
===============================================================================
===============================================================================
Beneficial
Interest
Short-Term Securities (000)
===============================================================================
BlackRock Liquidity Series, LLC
Cash Sweep Series, 2.59% (d)(e) $11,571 11,570,781
BlackRock Liquidity Series, LLC
Money Market Series, 2.66% (d)(e)(f) 1,500 1,500,000
- -------------------------------------------------------------------------------
Total Short-Term Securities (Cost -- $13,070,781) -- 10.3% 13,070,781
===============================================================================
Total Investments (Cost -- $145,633,994*) -- 100.3% 128,137,419
Liabilities in Excess of Other Assets -- (0.3)% (351,193)
------------
Net Assets -- 100.0% $127,786,226
============
See Notes to Financial Statements.
20 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
Schedule of Investments (concluded) Global Financial Services Portfolio
* The cost and unrealized appreciation (depreciation) of investments as of
September 30, 2008, as computed for federal income tax purposes, were as
follows:
Aggregate cost .............................. $ 148,428,383
=============
Gross unrealized appreciation ............... $ 4,034,362
Gross unrealized depreciation ............... (24,325,326)
-------------
Net unrealized depreciation ................. $ (20,290,964)
=============
(a) Depositary receipts.
(b) Non-income producing security.
(c) Security, or a portion of security, is on loan.
(d) Investments in companies considered to be an affiliate of the Portfolio,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
were as follows:
--------------------------------------------------------------------------
Net
Activity
Affiliate (000) Income
--------------------------------------------------------------------------
BlackRock Liquidity Series, LLC
Cash Sweep Series $ 7,003 $ 319,611
BlackRock Liquidity Series, LLC
Money Market Series $ 225 $ 7,200
--------------------------------------------------------------------------
(e) Represents the current yield as of report date.
(f) Security was purchased with the cash proceeds from securities loans.
o For Portfolio compliance purposes, the Portfolio's industry
classifications refer to any one or more of the industry
sub-classifications used by one or more widely recognized market indexes
or ratings group indexes, and/or as defined by Portfolio management. This
definition may not apply for purposes of this report, which may combine
industry sub-classifications for reporting ease. These industry
classifications are unaudited.
See Notes to Financial Statements.
BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008 21
Statement of Assets and Liabilities Global Financial Services Portfolio
September 30, 2008
===================================================================================================================================
Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Investments at value -- unaffiliated (including securities loaned of $1,650,800) (cost -- $132,563,213) .......... $115, 066,638
Investments at value -- affiliated (cost -- $13,070,781) ......................................................... 13,070,781
Cash ............................................................................................................. 3,786
Foreign currency at value (cost -- $36,542) ...................................................................... 35,956
Investments sold receivable ...................................................................................... 2,865,711
Dividends receivable ............................................................................................. 456,998
Securities lending income receivable -- affiliated ............................................................... 1,520
Prepaid expenses ................................................................................................. 1,738
-------------
Total assets ..................................................................................................... 131,503,128
-------------
===================================================================================================================================
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------------
Collateral at value -- securities loaned ......................................................................... 1,500,000
Investments purchased payable -- unaffiliated .................................................................... 1,809,128
Investments purchased payable -- affiliates ...................................................................... 270,656
Investment advisory fees payable ................................................................................. 44,197
Withdrawals payable from investor ................................................................................ 25,481
Officer's and Directors' fees payable ............................................................................ 12
Other liabilities ................................................................................................ 1,531
Other affiliates payable ......................................................................................... 1,130
Other accrued expenses payable ................................................................................... 64,767
-------------
Total liabilities ................................................................................................ 3,716,902
-------------
Net Assets ....................................................................................................... $ 127,786,226
=============
===================================================================================================================================
Net Assets Consist of
- -----------------------------------------------------------------------------------------------------------------------------------
Investors' capital ............................................................................................... $ 145,294,447
Net unrealized depreciation ...................................................................................... (17,508,221)
-------------
Net Assets ....................................................................................................... $ 127,786,226
=============
See Notes to Financial Statements.
22 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
Statement of Operations Global Financial Services Portfolio
Year Ended September 30, 2008
===================================================================================================================================
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends (net of $283,335 foreign withholding tax) ........................................................ $ 3,781,057
Income from affiliates ..................................................................................... 319,730
Securities lending from affiliates ......................................................................... 7,200
------------
Total income ............................................................................................... 4,107,987
------------
===================================================================================================================================
Expenses
- -----------------------------------------------------------------------------------------------------------------------------------
Investment advisory ........................................................................................ 492,358
Custodian .................................................................................................. 108,568
Accounting services ........................................................................................ 100,398
Professional ............................................................................................... 52,560
Officer and Directors ...................................................................................... 19,399
Printing ................................................................................................... 3,328
Miscellaneous .............................................................................................. 12,037
------------
Total expenses ............................................................................................. 788,648
------------
Net investment income ...................................................................................... 3,319,339
------------
===================================================================================================================================
Realized and Unrealized Loss
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized loss from:
Investments (including $11,967 from foreign capital gains tax) ........................................ (26,284,702)
Foreign currency ...................................................................................... (28,215)
------------
(26,312,917)
------------
Net change in unrealized appreciation/depreciation on:
Investments (including $27,994 from deferred capital gain tax credit) ................................. (31,349,856)
Foreign currency ...................................................................................... (19,446)
------------
(31,369,302)
------------
Total realized and unrealized loss ......................................................................... (57,682,219)
------------
Net Decrease in Net Assets Resulting from Operations ....................................................... $(54,362,880)
============
See Notes to Financial Statements.
BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008 23
Statements of Changes in Net Assets Global Financial Services Portfolio
Year Ended
September 30,
------------------------------------
Increase (Decrease) in Net Assets: 2008 2007
===================================================================================================================================
Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income ................................................................ $ 3,319,339 $ 1,803,324
Net realized gain (loss) ............................................................. (26,312,917) 22,294,403
Net change in unrealized appreciation/depreciation ................................... (31,369,302) (12,906,995)
------------------------------------
Net increase (decrease) in net assets resulting from operations ...................... (54,362,880) 11,190,732
------------------------------------
===================================================================================================================================
Capital Transactions
- -----------------------------------------------------------------------------------------------------------------------------------
Proceeds from contributions .......................................................... 168,086,737 35,173,878
Fair value of withdrawals ............................................................ (81,143,368) (47,759,892)
------------------------------------
Net increase (decrease) in net assets derived from capital transactions .............. 86,943,369 (12,586,014)
------------------------------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets .............................................. 32,580,489 (1,395,282)
Beginning of year .................................................................... 95,205,737 96,601,019
------------------------------------
End of year .......................................................................... $ 127,786,226 $ 95,205,737
====================================
Financial Highlights Global Financial Services Portfolio
Year Ended September 30,
--------------------------------------------------------------------------------------
2008 2007 2006 2005 2004
==================================================================================================================================
Total Investment Return
- ----------------------------------------------------------------------------------------------------------------------------------
Total investment return ............... (34.83)% 11.91% 16.07% 28.02% 25.86%
======================================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses ........................ 0.64% 0.71% 0.66% 0.70% 0.78%
======================================================================================
Net investment income ................. 2.69% 1.89% 3.62% 3.05% 2.23%
======================================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) ......... $ 127,786 $ 95,206 $ 96,601 $ 107,953 $ 70,762
======================================================================================
Portfolio turnover .................... 31% 55% 79% 80% 115%
======================================================================================
See Notes to Financial Statements.
24 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
Notes to Financial Statements Global Financial Services Portfolio
1. Significant Accounting Policies:
Global Financial Services Portfolio (the "Portfolio") is part of Global
Financial Services Master LLC (the "Master LLC"). The Master LLC is registered
under the Investment Company Act of 1940, as amended, (the "1940 Act"), and is
organized as a Delaware limited liability company. The Limited Liability Company
Agreement permits the Board of Directors (the "Board") to issue non-transferable
interests in the Master LLC, subject to certain limitations. The Portfolio's
financial statements are prepared in conformity with accounting principles
generally accepted in the United States of America, which may require the use of
management accruals and estimates. Actual results may differ from these
estimates.
The following is a summary of significant accounting policies followed by the
Portfolio:
Valuation of Investments: Equity investments traded on a recognized securities
exchange or the NASDAQ Global Market System are valued at the last reported sale
price that day or the NASDAQ official closing price, if applicable. 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 positions) or ask (short positions) 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 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 as reflecting fair value ("Fair Value Assets"). When determining the price
for Fair Value Assets, the investment advisor and/or sub-advisor seeks to
determine the price that the Portfolio might reasonably expect to receive from
the current sale of that asset in an arm's-length transaction. Fair value
determinations shall be based upon all available factors that the investment
advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets
is subsequently reported to the Board or a committee thereof.
Generally, trading in foreign securities is substantially completed each day at
various times prior to the close of business on the New York Stock Exchange
("NYSE"). The values of such securities used in computing the net assets of the
Portfolio are determined as of such times. Foreign currency exchange rates will
be determined as of the close of business on the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of business on the
NYSE that may not be reflected in the computation of the Portfolio's net assets.
If events (for example, a company announcement, market volatility or a natural
disaster) occur during such periods that are expected to materially affect the
value of such securities, those securities will be valued at their fair value as
determined in good faith by the Board or by the investment advisor using a
pricing service and/or procedures approved by the Board.
Derivative Financial Instruments: The Portfolio may engage in various portfolio
investment strategies to increase the return of the Portfolio and to hedge, or
protect, its exposure to interest rate movements and movements in the securities
markets. Losses may arise if the value of the contract decreases due to an
unfavorable change in price of the underlying security, or if the counterparty
does not perform under the contract.
o Foreign currency exchange contracts -- The Portfolio may enter into
foreign currency exchange contracts as a hedge against either specific
transactions or portfolio positions. Foreign currency exchange contracts,
when used by the Portfolio, help to manage the overall exposure to the
foreign currency backing some of the investments held by the Portfolio.
The contract is marked-to-market daily and the change in market value is
recorded by the Portfolio as an unrealized gain or loss. When the contract
is closed, the Portfolio records a realized gain or loss equal to the
difference between the value at the time it was opened and the value at
the time it was closed.
o Options -- The Portfolio may purchase and write call and put options. When
the Portfolio writes an option, an amount equal to the premium received by
the Portfolio 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 Portfolio enters into a closing
transaction), the Portfolio 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 received or paid).
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
BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008 25
Notes to Financial Statements (continued) Global Financial Services Portfolio
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.
Foreign Currency Transactions: Foreign currency amounts are translated into
United States dollars on the following basis: (i) market value of investment
securities, assets and liabilities at the current rate of exchange; and (ii)
purchases and sales of investment securities, income and expenses at the rates
of exchange prevailing on the respective dates of such transactions.
The Portfolio reports foreign currency related transactions as components of
realized gains for financial reporting purposes, whereas such components are
treated as ordinary income for federal income tax purposes.
Investment Transactions and Investment Income: Investment transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Dividends from foreign securities where the ex-dividend date may have passed are
subsequently recorded when the Portfolio has determined the ex-dividend date.
Interest income is recognized on the accrual basis.
Securities Lending: The Portfolio may lend securities to financial institutions
that provide cash or securities issued or guaranteed by the U.S. government as
collateral, which will be maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities. The market value of
the loaned securities is determined at the close of business of the Portfolio
and any additional required collateral is delivered to the Portfolio on the next
business day. The Portfolio typically receives the income on the loaned
securities but does not receive the income on the collateral. Where the
Portfolio 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
Portfolio 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 Portfolio 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 Portfolio could experience delays and costs in
gaining access to the collateral. The Portfolio also could suffer a loss where
the value of the invested collateral falls below the market value of the
borrowed securities, either in the event of borrower default or in the event of
losses on investments made with cash collateral.
Income Taxes: The Portfolio is classified as a "pass-through entity" for federal
income tax purposes. As such, each investor in the Portfolio is treated as owner
of its proportionate share of the net assets, income, expenses and realized and
unrealized gains and losses of the Portfolio. Therefore, no federal income tax
provision is required. It is intended that the Portfolio's assets will be
managed so an investor in the Portfolio can satisfy the requirements of
Subchapter M of the Internal Revenue Code. Under the applicable foreign tax
laws, a withholding tax may be imposed on interest, dividends and capital gains
at various rates.
Effective March 31, 2008, the Portfolio implemented Financial Accounting
Standards Board ("FASB") Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes -- an interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48
prescribes the minimum recognition threshold a tax position must meet in
connection with accounting for uncertainties in income tax positions taken or
expected to be taken by an entity, including investment companies, before being
measured and recognized in the financial statements. The investment advisor has
evaluated the application of FIN 48 to the Portfolio, and has determined that
the adoption of FIN 48 does not have a material impact on the Portfolio's
financial statements. The Portfolio files U.S. federal and various state and
local tax returns. No income tax returns are currently under examination. The
statute of limitations on the Portfolio's U.S. federal tax returns remains open
for the years ended September 30, 2005 through September 30, 2007. The statutes
of limitations on the Portfolio's state and local tax returns may remain open
for an additional year depending upon the jurisdiction.
Recent Accounting Pronouncements: In September 2006, Statement of Financial
Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"), was issued
and is effective for fiscal years beginning after November 15, 2007. FAS 157
defines fair value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements. The impact on the Portfolio's
financial statement disclosures, if any, is currently being assessed.
In March 2008, Statement of Financial Accounting Standards No. 161, "Disclosures
about Derivative Instruments and Hedging Activities -- an amendment of FASB
Statement No. 133" ("FAS 161"), was issued. 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. In September 2008, FASB Staff
Position No. 133-1 and FASB Interpretation No. 45-4 (the "FSP"), "Disclosures
about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement
No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date
of FASB Statement No. 161," was issued and is effective for fiscal years and
interim periods ending after November 15, 2008. The FSP amends FASB Statement
No. 133, "Accounting for Derivative Instruments and Hedging Activities," to
require disclosures by sellers of credit derivatives, including credit
derivatives embedded in hybrid instruments. The FSP also clarifies the effective
date of FAS 161, whereby disclosures required by FAS 161 are effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008.
26 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
Notes to Financial Statements (concluded) Global Financial Services Portfolio
The impact on the Portfolio's financial statement disclosures, if any, is
currently being assessed.
Other: Expenses directly related to the Portfolio are charged to that Portfolio.
Other operating expenses shared by several funds are pro-rated among those funds
on the basis of relative net assets or other appropriate methods.
2. Investment Advisory Agreement and Other Transactions with Affiliates:
The Master LLC has entered into an Investment Advisory Agreement with BlackRock
Advisors, LLC (the "Advisor"), an indirect, wholly owned subsidiary of
BlackRock, Inc. to provide investment advisory and administration services.
Merrill Lynch & Co. Inc. ("Merrill Lynch") and The PNC Financial Services Group,
Inc. are principal owners of BlackRock, Inc.
The Advisor is responsible for the management of the Portfolio's investments and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Portfolio. For such services, the
Portfolio pays the Advisor a monthly fee at an annual rate of 0.40%, of the
Portfolio's average daily net assets.
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 Portfolio to the Advisor.
For the year ended September 30, 2008, the Portfolio reimbursed the Advisor
$2,075 for certain accounting services, which is included in accounting services
in the Statement of Operations.
The Master LLC has received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S"), a wholly owned subsidiary of Merrill
Lynch, or its affiliates. Pursuant to that order, the Portfolio 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 Portfolio, invest cash
collateral received by the Portfolio 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 year ended September 30,
2008, BIM received $1,598 in securities lending agent fees.
In addition, MLPF&S received $22,087 in commissions on the execution of
portfolio security transactions for the Portfolio for the year ended September
30, 2008.
Certain officers and/or directors of the Master LLC are officers and/or
directors of BlackRock, Inc. or its affiliates. The Master LLC reimburses the
Advisor for compensation paid to the Master LLC's Chief Compliance Officer.
3. Investments:
Purchases and sales of investments, excluding short-term securities for the year
ended September 30, 2008 were $116,121,745 and $35,250,476, respectively.
4. Short-Term Borrowings:
The Master LLC, on behalf of the Portfolio, along with certain other funds
managed by the Advisor and its affiliates, is a party to a $500,000,000 credit
agreement with a group of lenders, which expires November 2008 and was
subsequently renewed. The Portfolio may borrow under the credit agreement to
fund shareholder redemptions and for other lawful purposes other than for
leverage. The Portfolio may borrow up to the maximum amount allowable under the
Portfolio's current Prospectus and Statement of Additional Information, subject
to various other legal, regulatory or contractual limits. The Portfolio pays a
commitment fee of 0.06% per annum based on the Portfolio's pro rata share of the
unused portion of the credit agreement, which is included in miscellaneous in
the Statement of Operations. Amounts borrowed under the credit agreement bear
interest at a rate equal to, at each fund's election, the federal funds rate
plus 0.35% or a base rate as defined in the credit agreement. The Portfolio did
not borrow under the credit agreement during the year ended September 30, 2008.
5. Commitments:
At September 30, 2008, the Portfolio had entered into foreign currency exchange
contracts, under which it had agreed to sell various foreign currencies with an
approximate value of $1,369,000.
6. Subsequent Event:
On September 15, 2008, Bank of America Corporation announced that it has agreed
to acquire Merrill Lynch, one of the principal owners of BlackRock, Inc. The
purchase has been approved by the directors of both companies. Subject to
shareholder and regulatory approvals, the transaction is expected to close on or
before December 31, 2008.
BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008 27
Report of Independent Registered Public Accounting Firm
Global Financial Services Master LLC
To the Investor and Board of Directors of
Global Financial Services Master LLC:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Global Financial Services Portfolio of Global
Financial Services Master LLC (the "Master LLC") as of September 30, 2008, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Master LLC's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The
Master LLC is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Master LLC's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of September 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 Global
Financial Services Portfolio of Global Financial Services Master LLC as of
September 30, 2008, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended, in conformity with accounting principles generally accepted in the United
States of America.
Deloitte & Touche LLP
Princeton, New Jersey
November 24, 2008
28 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
BlackRock Global Financial Services Fund, Inc. (the "Fund") currently invests
all of its investable assets in Global Financial Services Portfolio (the
"Portfolio") of Global Financial Services Master LLC (the "Master LLC").
Accordingly, the Fund does not require investment advisory services, since all
investments are made at the Portfolio level.
The Board of Directors of the Master LLC met in person in April and June 2008 to
consider the approval of the Master LLC's investment advisory agreement entered
into on behalf of the Portfolio with BlackRock Advisors, LLC (the "Advisor")
(the "Advisory Agreement"). The Board of the Master LLC also considered the
approval of the separate subadvisory agreements with respect to the Portfolio
(i) between the Advisor and BlackRock Asset Management U.K. Limited ("BAM UK")
and (ii) between the Advisor and BlackRock Investment Management, LLC ("BIM" and
collectively with BAM UK, the "Subadvisors") (the "Subadvisory Agreements"). The
Advisor and the Subadvisors are referred to herein as "BlackRock." The Advisory
Agreement and the Subadvisory Agreements are referred to herein as the
"Agreements." Since the Fund invests all of its investable assets in the
Portfolio, the Board of Directors of the Fund also considered the approval of
the Agreements. For ease and clarity of presentation, the Board of Directors of
the Master LLC and the Board of Directors of the Fund, which are comprised of
the same thirteen individuals, are herein referred to collectively as the
"Boards," the members of which are referred to as "Directors."
Activities and Composition of the Boards
The Boards each consist of thirteen individuals, eleven of whom are not
"interested persons" of either the Fund or the Master LLC as defined in the
Investment Company Act of 1940, as amended (the "1940 Act") (the "Independent
Directors"). The Boards are responsible for the oversight of the operations of
the Fund and the Portfolio, as pertinent, 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 Co-Chairs of each Board are both Independent Directors.
The Boards 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 Master LLC entered into an Advisory Agreement with the
Advisor with respect to the Portfolio with an initial two-year term and the
Advisor entered into a Subadvisory Agreement with respect to the Portfolio with
each of the Subadvisors with an initial two-year term. Consistent with the 1940
Act, prior to the expiration of each Agreement's initial two-year term, the
Boards are required to consider the continuation of the Agreements on an annual
basis. In connection with this process, the Boards assessed, among other things,
the nature, scope and quality of the services provided to the Fund and/or the
Portfolio 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 Boards also received and assessed information
regarding the services provided to the Fund and/or the Portfolio by certain
unaffiliated service providers.
Throughout the year, the Boards, acting directly and through their committees,
consider at each of their respective meetings factors that are relevant to their
annual consideration of the renewal of the Agreements, including the services
and support provided to the Fund and/or the Portfolio and their shareholders.
Among the matters the Boards considered, as pertinent, were: (a) investment
performance for one, three and five years, as applicable, against peer funds, as
well as senior management's 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
and/or the Portfolio, such as transfer agency fees and fees for marketing and
distribution; (c) Fund and/or Portfolio operating expenses; (d) the resources
devoted to and compliance reports relating to the Fund's and the Portfolio's
investment objective, policies and restrictions; (e) the Master LLC's and the
Fund's compliance with their respective 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 Boards; (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.
BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008 29
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
(continued)
Board Considerations in Approving the Agreements
The Approval Process: Prior to the April 16, 2008 meeting at which approval of
the Agreements was to be considered, the Boards requested and received materials
specifically relating to the Agreements. The Boards are engaged in an ongoing
process with BlackRock to continuously review the nature and scope of the
information provided to better assist their deliberations. These materials
included (a) information independently compiled and prepared by Lipper, Inc.
("Lipper") on the Fund's 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/or the
Portfolio, 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 the Portfolio's interests; and (f) an internal comparison of management fees
classified by Lipper, if applicable. At the April 16, 2008 meeting, the Boards
requested and subsequently received from BlackRock (i) comprehensive analysis of
total expenses on a fund-by-fund basis; (ii) further analysis of investment
performance; (iii) further data regarding Fund and Portfolio profitability, Fund
and Portfolio size and Fund and Portfolio fee levels; and (iv) additional
information on sales and redemptions.
The Boards also considered other matters they deemed important to the approval
process, such as payments made to BlackRock or its affiliates relating to the
distribution of the Fund's shares, services related to the valuation and pricing
of portfolio holdings of the Portfolio, allocation of the Portfolio's brokerage
fees (including the benefits of "soft dollars"), and direct and indirect
benefits to BlackRock and its affiliates from their relationship with the Fund
and the Portfolio. The Boards did not identify any particular information as
controlling, and each Director may have attributed different weights to the
various items considered.
At an in-person meeting held on April 16, 2008, the Boards discussed and
considered the proposed renewal of the Agreements. As a result of the
discussions, the Boards requested and BlackRock provided additional information,
as detailed above, in advance of the June 3 - 4, 2008 Board meeting. At an
in-person meeting held on June 3 - 4, 2008, the Boards, including the
Independent Directors, unanimously approved the continuation of (a) the Advisory
Agreement between the Advisor and the Master LLC with respect to the Portfolio
for a one-year term ending June 30, 2009; (b) the Subadvisory Agreement between
the Advisor and BAM UK with respect to the Portfolio for a one-year term ending
June 30, 2009; and (c) the Subadvisory Agreement between the Advisor and BIM
with respect to the Portfolio for a one-year term ending June 30, 2009. The
Boards considered all factors they believed relevant with respect to the Fund
and the Portfolio, as applicable, including, among other factors: (i) the
nature, extent and quality of the services provided by BlackRock; (ii) the
investment performance of the Fund, the Portfolio and BlackRock portfolio
management; (iii) the advisory fee and the cost of the services and profits to
be realized by BlackRock and certain affiliates from the relationships with the
Fund and the Portfolio; and (iv) economies of scale.
A. Nature, Extent and Quality of the Services: The Boards, 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. The Boards compared the Fund's performance 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 Boards met with BlackRock's senior management personnel responsible for
investment operations, including the senior investment officers. The Boards also
reviewed the materials provided by the Portfolio's portfolio management team
discussing the Portfolio performance and the Portfolio's investment objective,
strategies and outlook.
The Boards considered, among other factors, the number, education and experience
of BlackRock's investment personnel generally, and of the Portfolio'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 Boards also reviewed BlackRock's compensation
structure with respect to the portfolio management team of the Portfolio and
BlackRock's ability to attract and retain high-quality talent.
In addition to advisory services, the Boards considered the quality of the
administrative and non-investment advisory services provided to the
Fund/Portfolio. BlackRock and its affiliates provide the Fund and the Portfolio
with certain administrative, transfer agency, shareholder and other services (in
addition to any such services provided to the Fund and the Portfolio by third
parties) and officers and other personnel as are necessary for the operations of
the Fund and the Portfolio. In addition to investment advisory services,
BlackRock and its affiliates provide the Fund and the Portfolio with other
services, including, as pertinent, (a) preparing disclosure documents, such as
the prospectus, the statement of additional information and shareholder reports;
(b) assisting
30 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
(continued)
with daily accounting and pricing; (c) overseeing and coordinating the
activities of other service providers; (d) organizing Board meetings and
preparing the materials for such Board meetings; (e) providing legal and
compliance support; and (f) performing other administrative functions necessary
for the operation of the Fund and the Portfolio, such as tax reporting and
fulfilling regulatory filing requirements. The Boards reviewed the structure and
duties of BlackRock's fund administration, accounting, legal and compliance
departments.
B. The Investment Performance of the Fund, the Portfolio and BlackRock: The
Boards, including the Independent Directors, also reviewed and considered the
performance history of the Fund and the Portfolio. In preparation for the April
16, 2008 meeting, the Boards were provided with reports, independently prepared
by Lipper, which included a comprehensive analysis of the Fund performance. The
Boards also reviewed a narrative and statistical analysis of the Lipper data
that was prepared by BlackRock, which analyzed various factors that affect
Lipper rankings. In connection with their review, the Boards received and
reviewed information regarding the investment performance of the Fund (and the
related performance of the Portfolio) 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 Boards were provided with a description of the methodology
used by Lipper to select peer funds. The Boards regularly review the performance
of the Fund and the Portfolio throughout the year. The Boards attach more
importance to performance over relatively long periods of time, typically three
to five years.
The Boards noted that the Fund's/Portfolio's performance was at or above the
median for the Fund's Peers during each of the one-, three- and five-year
periods reported.
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 and the Portfolio: The Boards, including the Independent Directors,
reviewed the Portfolio's contractual advisory fee rates compared with the other
funds in the Fund's Lipper category. They also compared the Fund's total
expenses to those of other comparable funds. The Boards 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 Boards received and reviewed statements relating to BlackRock's financial
condition and profitability with respect to the services it provided to the
Portfolio. The Boards were 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 Portfolio. The Boards reviewed
BlackRock's profitability with respect to the Portfolio and each fund the Boards
currently oversee for the year ended December 31, 2007 compared to aggregated
profitability data provided for the year ended December 31, 2005.
In addition, the Boards considered the cost of the services provided to the Fund
and the Portfolio by BlackRock, and BlackRock's and its affiliates' profits
relating to the management and distribution of the Fund and the Portfolio and
the other funds advised by BlackRock and its affiliates. As part of their
analysis, the Boards reviewed BlackRock's methodology in allocating its costs to
the management of the Fund and the Portfolio and concluded that there was a
reasonable basis for the allocation. The Boards 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 Boards.
The Boards noted that the Fund/Portfolio paid contractual advisory fees, prior
to any expense reimbursements, lower than or equal to the median of the Fund's
Peers.
D. Economies of Scale: The Boards, including the Independent Directors,
considered the extent to which economies of scale might be realized as the
assets of the Fund and the Portfolio increase and whether there should be
changes in the advisory fee rate or structure in order to enable the Fund and
the Portfolio to participate in these economies of scale. The Boards, 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 and the Portfolio. The Boards 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 a stand-alone entity. The Boards
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 Boards found, based on their review of comparable
funds, that the Fund's/Portfolio's management fee is appropriate in light of the
scale of the Fund/Portfolio.
E. Other Factors: The Boards also took into account other ancillary or
"fall-out" benefits that BlackRock may derive from its relationship with the
Fund and the Portfolio, both tangible and intangible, such as BlackRock's
ability to leverage its investment professionals who 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 and the
Portfolio, including for administrative, transfer agency and distribution
services. The Boards also noted that BlackRock may use third party research,
obtained by soft dollars generated by transactions in the Portfolio, to assist
itself in managing all or a number of its other client accounts.
In connection with its consideration of the Agreements, the Boards also received
information regarding BlackRock's brokerage and soft dollar practices. The
Boards received reports from BlackRock which included information on brokerage
commissions and trade execution practices throughout the year.
BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008 31
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
(concluded)
Conclusion
The Boards approved the continuation of (a) the Advisory Agreement between the
Advisor and the Master LLC with respect to the Portfolio for a one-year term
ending June 30, 2009; (b) the Subadvisory Agreement between the Advisor and BAM
UK with respect to the Portfolio for a one-year term ending June 30, 2009; and
(c) the Subadvisory Agreement between the Advisor and BIM with respect to the
Portfolio for a one-year term ending June 30, 2009. Based upon their evaluation
of all these factors in their totality, the Boards, including the Independent
Directors, were satisfied that the terms of the Agreements were fair and
reasonable and in the best interest of the Fund and the Portfolio and the Fund's
shareholders. In arriving at a decision to approve the Agreements, the Boards
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 and the Portfolio
reflect the results of several years of review by the Directors and predecessor
Directors, and discussions between the Directors (and predecessor Directors) and
BlackRock (and predecessor advisors). 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.
32 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
Officers and Directors
Number of
Position(s) BlackRock-
Held with Length of Advised Funds
Name, Address Fund/ Time Served Principal Occupation(s) and Portfolios Public
and Year of Birth Master LLC as a Director 2 During Past Five Years Overseen Directorships
===============================================================================================================================
Non-Interested Directors 1
- -------------------------------------------------------------------------------------------------------------------------------
Ronald W. Forbes Director and Since 1999 Professor Emeritus of Finance, School of 34 Funds None
40 East 52nd Street Co-Chair of Business, State University of New York at 81 Portfolios
New York, NY 10022 the Board of Albany since 2000.
1940 Directors
- -------------------------------------------------------------------------------------------------------------------------------
Rodney D. Johnson Director and Since 2007 President, Fairmount Capital Advisors, 34 Funds None
40 East 52nd Street Co-Chair of Inc. since 1987; Director, Fox Chase 81 Portfolios
New York, NY 10022 the Board of Cancer Center since 2002; Member of the
1941 Directors Archdiocesan Investment Committee of the
Archdiocese of Philadelphia since 2003;
Director, The Committee of Seventy (civic)
since 2006.
- -------------------------------------------------------------------------------------------------------------------------------
David O. Beim Director Since 2007 Professor of Finance and Economics at the 34 Funds None
40 East 52nd Street Columbia University Graduate School of 81 Portfolios
New York, NY 10022 Business since 1991; Trustee, Phillips
1940 Exeter Academy since 2002; Formerly
Chairman, Wave Hill Inc. (public garden
and cultural center) from 1990 to 2006.
- -------------------------------------------------------------------------------------------------------------------------------
Dr. Matina Horner Director Since 2007 Formerly Executive Vice President of 34 Funds NSTAR
40 East 52nd Street Teachers Insurance and Annuity Association 81 Portfolios (electric
New York, NY 10022 and College Retirement Equities Fund from and gas
1939 1989 to 2003. utility)
- -------------------------------------------------------------------------------------------------------------------------------
Herbert I. London Director and Since 2007 Professor Emeritus, New York University 34 Funds AIMS
40 East 52nd Street Member of since 2005; John M. Olin Professor of 81 Portfolios Worldwide,
New York, NY 10022 the Audit Humanities, New York University from 1993 Inc.
1939 Committee to 2005 and Professor thereof from 1980 to (marketing)
2005; President, Hudson Institute (policy
research organization) since 1997 and
Trustee thereof since 1980; Chairman of
the Board of Trustees for Grantham
University since 2006; Director,
InnoCentive, Inc. (strategic solutions
company) since 2005; Director of Cerego,
LLC (software development and design)
since 2005.
- -------------------------------------------------------------------------------------------------------------------------------
Cynthia A. Montgomery Director Since 2004 Professor, Harvard Business School since 34 Funds Newell
40 East 52nd Street 1989; Director, Harvard Business School 81 Portfolios Rubbermaid,
New York, NY 10022 Publishing since 2005; Director, McLean Inc. (manu-
1952 Hospital since 2005. facturing)
- -------------------------------------------------------------------------------------------------------------------------------
Joseph P. Platt, Jr. Director Since 2007 Director, The West Penn Allegheny Health 34 Funds Greenlight
40 East 52nd Street System (a not-for-profit health system) 81 Portfolios Capital Re,
New York, NY 10022 since 2008; Partner, Amarna Corporation, Ltd (rein-
1947 LLC (private investment company) since surance
2002; Director, WQED Multimedia (PBS and company)
Multimedia, a not-for-profit company)
since 2002; Director, Jones and Brown
(Canadian insurance broker) since 1998;
General Partner, Thorn Partner, LP
(private investment) since 1998.
- -------------------------------------------------------------------------------------------------------------------------------
Robert C. Robb, Jr. Director Since 2007 Partner, Lewis, Eckert, Robb and Company 34 Funds None
40 East 52nd Street (management and financial consulting firm) 81 Portfolios
New York, NY 10022 since 1981.
1945
- -------------------------------------------------------------------------------------------------------------------------------
Toby Rosenblatt Director Since 2007 President, Founders Investments Ltd. 34 Funds A.P. Pharma,
40 East 52nd Street (private investments) since 1999; Director 81 Portfolios Inc.
New York, NY 10022 of Forward Management, LLC since 2007; (specialty
1938 Director, The James Irvine Foundation pharmaceuti-
(philanthropic foundation) since 1997; cals)
Formerly Trustee, State Street Research
Mutual Funds from 1990 to 2005; Formerly,
Trustee, Metropolitan Series Funds, Inc.
from 2001 to 2005.
BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008 33
Officers and Directors (continued)
Number of
Position(s) BlackRock-
Held with Length of Advised Funds
Name, Address Fund/ Time Served Principal Occupation(s) and Portfolios Public
and Year of Birth Master LLC as a Director 2 During Past Five Years Overseen Directorships
===============================================================================================================================
Non-Interested Directors 1 (concluded)
- -------------------------------------------------------------------------------------------------------------------------------
Kenneth L. Urish Director and Since 2007 Managing Partner, Urish Popeck & Co., LLC 34 Funds None
40 East 52nd Street Chair of (certified public accountants and 81 Portfolios
New York, NY 10022 the Audit consultants) since 1976; Member of
1951 Committee External Advisory Board, The Pennsylvania
State University Accounting Department
since 2001; Trustee, The Holy Family
Foundation since 2001; Committee Member/
Professional Ethics Committee of the
Pennsylvania Institute of Certified Public
Accountants since 2007; President and
Trustee, Pittsburgh Catholic Publishing
Associates since 2003; Formerly Director,
Inter-Tel from 2006 to 2007.
- -------------------------------------------------------------------------------------------------------------------------------
Frederick W. Winter Director and Since 2007 Professor and Dean Emeritus of the Joseph 34 Funds None
40 East 52nd Street Member of M. Katz School of Business, University of 81 Portfolios
New York, NY 10022 the Audit Pittsburgh since 2005 and Dean thereof
1945 Committee from 1997 to 2005. Director, Alkon
Corporation (pneumatics) since 1992;
Director, Indotronix International (IT
services) since 2004; Director, Tippman
Sports (recreation) since 2005.
----------------------------------------------------------------------------------------------------
1 Directors serve until their resignation, removal or death, or until December 31 of the year in
which they turn 72.
2 Following the combination of Merrill Lynch Investment Managers, L.P. ("MLIM") and BlackRock,
Inc. ("BlackRock") in September 2006, the various legacy MLIM and legacy BlackRock Fund boards
were realigned and consolidated into three new Fund boards in 2007. As a result, although the
chart shows certain directors as joining the Fund's board in 2007, each director first became
a member of the board of directors of other legacy MLIM or legacy BlackRock Funds as follows:
David O. Beim since 1998; Ronald W. Forbes since 1977; Matina Horner since 2004; Rodney D.
Johnson since 1995; Herbert I. London since 1987; Cynthia A. Montgomery since 1994; Joseph P.
Platt since 1999; Robert C. Robb, Jr. since 1999; Toby Rosenblatt since 2005; Kenneth L. Urish
since 1999; and Frederick W. Winter since 1999.
===============================================================================================================================
Interested Directors 3
- -------------------------------------------------------------------------------------------------------------------------------
Richard S. Davis Director Since 2007 Managing Director, BlackRock, Inc. since 184 Funds None
40 East 52nd Street 2005; Formerly Chief Executive Officer, 295 Portfolios
New York, NY 10022 State Street Research & Management Company
1945 from 2000 to 2005; Formerly Chairman of
the Board of Trustees, State Street
Research Mutual Funds from 2000 to 2005;
Formerly Chairman, SSR Realty from 2000 to
2004
- -------------------------------------------------------------------------------------------------------------------------------
Henry Gabbay Director Since 2007 Consultant, BlackRock, Inc. since 2007; 184 Funds None
40 East 52nd Street Formerly Managing Director, BlackRock, 295 Portfolios
New York, NY 10022 Inc. from 1989 to 2007; Formerly Chief
1947 Administrative Officer, BlackRock
Advisors, LLC from 1998 to 2007; Formerly
President of BlackRock Funds and BlackRock
Bond Allocation Target Shares from 2005 to
2007 and Treasurer of certain closed-end
Funds in the BlackRock fund complex from
1989 to 2006.
----------------------------------------------------------------------------------------------------
3 Mr. Davis is an "interested person," as defined in the Investment Company Act of 1940, of the
Fund based on his position with BlackRock, Inc. and its affiliates. Mr. Gabbay is an
"interested person" of the Fund due to his consulting arrangement with BlackRock, Inc. as well
as his ownership of BlackRock, Inc. and PNC securities. Directors serve until their
resignation, removal or death, or until December 31 of the year in which they turn 72.
34 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
Officers and Directors (concluded)
Position(s)
Held with
Name, Address Fund/ Length of
and Year of Birth Master LLC Time Served Principal Occupation(s) During Past Five Years
====================================================================================================================================
Fund/Master LLC Officers 1
- ------------------------------------------------------------------------------------------------------------------------------------
Donald C. Burke Fund Since 2007 Managing Director of BlackRock, Inc. since 2006; Formerly Managing
40 East 52nd Street President and Director of Merrill Lynch Investment Managers, L.P. ("MLIM") and Fund
New York, NY 10022 Chief Executive Asset Management, L.P. ("FAM") in 2006; First Vice President thereof
1960 Officer from 1997 to 2005; Treasurer 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
40 East 52nd Street President Officer of BlackRock's U.S. Retail Group since 2006; Head of
New York, NY 10022 BlackRock's Mutual Fund Group from 2000 to 2006; Merrill Lynch & Co.,
1962 Inc. from 1984 to 1986 and from 1988 to 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
40 East 52nd Street Financial President and Line of Business Head of Fund Accounting and
New York, NY 10022 Officer Administration at PNC Global Investment Servicing (U.S.) Inc.
1966 (formerly PFPC Inc.) from 1992 to 2006.
- ------------------------------------------------------------------------------------------------------------------------------------
Jay M. Fife Treasurer Since 2007 Managing Director of BlackRock, Inc. since 2007 and Director in 2006;
40 East 52nd Street Formerly Assistant Treasurer of the MLIM/FAM-advised Funds from 2005
New York, NY 10022 to 2006; Director 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;
40 East 52nd Street Compliance Anti-Money Laundering Officer of the BlackRock-advised Funds since
New York, NY 10022 Officer of 2007; Managing Director and Senior Counsel of BlackRock, Inc. since
1959 the Fund 2005; Director and Senior Counsel 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 B. Surloff Secretary Since 2007 Managing Director of BlackRock, Inc. and General Counsel of U.S.
40 East 52nd Street Funds at BlackRock, Inc. since 2006; Formerly General Counsel (U.S.)
New York, NY 10022 of Goldman Sachs Asset Management, L.P. from 1993 to 2006.
1965
---------------------------------------------------------------------------------------------------------
1 Officers of the Fund/Master LLC serve at the pleasure of the Boards of Directors.
---------------------------------------------------------------------------------------------------------
Further information about the Fund's Officers and Directors is available in the Fund's Statement of
Additional Information, which can be obtained without charge by calling (800) 441-7762.
- ------------------------------------------------------------------------------------------------------------------------------------
Custodian
Brown Brothers Harriman & Co.
Boston, MA 02109
Transfer Agent
PNC Global Investment
Servicing (U.S.) Inc.
Wilmington, DE 19809
Accounting Agent
State Street Bank and
Trust Company
Princeton, NJ 08540
Independent Registered Public
Accounting Firm
Deloitte & Touche LLP
Princeton, NJ 08540
Legal Counsel
Sidley Austin LLP
New York, NY 10019
BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008 35
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.
36 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
Additional Information (concluded)
Availability of Additional Information (concluded)
Availability of Proxy Voting Policies and Procedures
A description of the policies and procedures that the Fund/Master LLC uses to
determine how to vote proxies relating to portfolio securities is available (1)
without charge, upon request, by calling toll-free (800) 441-7762; (2) at
www.blackrock.com; and (3) on the Securities and Exchange Commission's (the
"SEC") website at http://www.sec.gov.
Availability of Proxy Voting Record
Information about how the Fund/Master LLC votes proxies relating to securities
held in the Fund's/Master LLC's portfolios 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/Master LLC 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/Master LLC'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.
BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008 37
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 SmallCap Fund
BlackRock Health Sciences Opportunities Portfolio*
BlackRock Healthcare Fund
BlackRock Index Equity Portfolio*
BlackRock International Fund
BlackRock International Diversification Fund
BlackRock International Index Fund
BlackRock International Opportunities Portfolio
BlackRock International Value Fund
BlackRock Large Cap Core Fund
BlackRock Large Cap Core Plus 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 Science & Technology Opportunities Portfolio
BlackRock Small Cap Core Equity Portfolio
BlackRock Small Cap Growth Equity Portfolio
BlackRock Small Cap Growth Fund II
BlackRock Small Cap Index Fund
BlackRock Small Cap Value Equity Portfolio*
BlackRock Small/Mid-Cap Growth Portfolio
BlackRock S&P 500 Index Fund
BlackRock U.S. Opportunities Portfolio
BlackRock Utilities and Telecommunications Fund
BlackRock Value Opportunities Fund
Fixed Income Funds
BlackRock 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 currently distributed by BlackRock Investments, 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.
38 BLACKROCK GLOBAL FINANCIAL SERVICES FUND, INC. SEPTEMBER 30, 2008
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. Please see the Fund's prospectus
for a description of risks associated with global investments.
BlackRock Global Financial Services Fund, Inc.
100 Bellevue Parkway
Wilmington, DE 19809
BLACKROCK
#MLGFSF-9/08
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:
Ronald W. Forbes (not reappointed to audit committee, effective
November 1, 2007)
Kenneth L. Urish (term began, effective November 1, 2007)
Richard R. West (term ended, 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 Global
Financial Services $6,800 $6,600 $0 $0 $6,100 $6,100 $1,049 $1,042
Fund, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Global Financial
Services Master LLC $25,300 $27,400 $0 $0 $0 $0 $0 $0
- -----------------------------------------------------------------------------------------------------------------------------------
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 Global Financial
Services Fund, Inc. $294,649 $291,642
--------------------------------------------------------------------
Global Financial Services
Master LLC $287,500 $284,500
--------------------------------------------------------------------
(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 Global Financial Services Fund, Inc. and
Global Financial Services Master LLC
By: /s/ Donald C. Burke
-----------------------------------
Donald C. Burke
Chief Executive Officer of
BlackRock Global Financial Services Fund, Inc. and
Global Financial Services Master LLC
Date: November 24, 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 Global Financial Services Fund, Inc. and
Global Financial Services Master LLC
Date: November 24, 2008
By: /s/ Neal J. Andrews
-----------------------------------
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock Global Financial Services Fund, Inc. and
Global Financial Services Master LLC
Date: November 24, 2008