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: 811-06669
Name of Fund: BlackRock Capital Appreciation Fund, Inc.
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Capital Appreciation Fund, Inc., 55 East 52nd Street, New York, NY 10055
Registrants telephone number, including area code: (800) 441-7762
Date of fiscal year end: 09/30/2015
Date of reporting period: 03/31/2015
Item 1 Report to Stockholders
MARCH 31, 2015
SEMI-ANNUAL REPORT (UNAUDITED)
|
BLACKROCK® |
BlackRock Capital Appreciation Fund, Inc.
Not FDIC Insured ¡ May Lose Value ¡ No Bank Guarantee |
Table of Contents |
Page | ||||
3 | ||||
Semi-Annual Report: |
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4 | ||||
6 | ||||
7 | ||||
7 | ||||
8 | ||||
Financial Statements: |
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9 | ||||
13 | ||||
14 | ||||
15 | ||||
16 | ||||
22 | ||||
31 | ||||
32 |
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Shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual shareholder reports and prospectuses by enrolling in the electronic delivery program. Electronic copies of shareholder reports and prospectuses are also available on BlackRocks website.
TO ENROLL IN ELECTRONIC DELIVERY:
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 blackrock.com 2. Select Access Your Account 3. Next, select eDelivery in the Related Resources box and follow the sign-up instructions |
2 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 |
THIS PAGE NOT PART OF YOUR FUND REPORT | 3 |
Fund Summary as of March 31, 2015 |
Investment Objective |
BlackRock Capital Appreciation Fund, Inc.s (the Fund) investment objective is to seek long-term growth of capital.
Portfolio Management Commentary |
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.
4 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 |
Total Return Based on a $10,000 Investment |
1 | Assuming maximum sales charges, if any, transaction costs and other operating expenses, including investment advisory fees and administration fees, if any. Institutional Shares do not have a sales charge. |
2 | The Fund invests primarily in a diversified portfolio consisting primarily of common stock of U.S. companies that the investment advisor believes have exhibited above-average growth rates in earnings over the long-term. |
3 | An unmanaged index that measures the performance of the large cap growth segment of the U.S. equity universe and consists of those Russell 1000® securities with higher price-to-book ratios and higher forecasted growth values. |
4 | An unmanaged index that covers 500 leading companies and captures approximately 80% coverage of available market capitalization. |
Performance Summary for the Period Ended March 31, 2015 | ||||||||||||||||||||||||||||||||
Average Annual Total Returns5 | ||||||||||||||||||||||||||||||||
1 Year | 5 Years | 10 Years | ||||||||||||||||||||||||||||||
6-Month Total Returns |
w/o sales charge |
w/sales charge |
w/o sales charge |
w/sales charge |
w/o sales charge |
w/sales charge |
||||||||||||||||||||||||||
BlackRock |
9.89 | % | 15.83 | % | N/A | 12.79 | % | N/A | 8.73 | % | N/A | |||||||||||||||||||||
Institutional |
9.80 | 15.68 | N/A | 12.68 | N/A | 8.59 | N/A | |||||||||||||||||||||||||
Investor A |
9.69 | 15.40 | 9.34 | % | 12.38 | 11.17 | % | 8.28 | 7.70 | % | ||||||||||||||||||||||
Investor B |
9.06 | 14.25 | 10.23 | 11.28 | 11.01 | 7.54 | 7.54 | |||||||||||||||||||||||||
Investor C |
9.24 | 14.48 | 13.59 | 11.47 | 11.47 | 7.48 | 7.48 | |||||||||||||||||||||||||
Class R |
9.55 | 15.11 | N/A | 12.04 | N/A | 7.90 | N/A | |||||||||||||||||||||||||
Russell 1000® Growth Index |
8.81 | 16.09 | N/A | 15.63 | N/A | 9.36 | N/A | |||||||||||||||||||||||||
S&P 500® Index |
5.93 | 12.73 | N/A | 14.47 | N/A | 8.01 | N/A |
5 | Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See About Fund Performance on page 7 for a detailed description of share classes, including any related sales charges and fees. |
N/ANot applicable as share class and index do not have a sales charge. |
Past performance is not indicative of future results. |
Expense Example | ||||||||||||||
Actual |
Hypothetical7 |
|||||||||||||
Beginning Account Value |
Ending Account Value |
Expenses Paid During the Period6 |
Beginning Account Value |
Ending Account Value |
Expenses Paid During the Period6 |
Annualized Expense Ratio | ||||||||
BlackRock |
$1,000.00 | $1,098.90 | $3.56 | $1,000.00 | $1,021.54 | $3.43 | 0.68% | |||||||
Institutional |
$1,000.00 | $1,098.00 | $4.29 | $1,000.00 | $1,020.84 | $4.13 | 0.82% | |||||||
Investor A |
$1,000.00 | $1,096.90 | $5.59 | $1,000.00 | $1,019.60 | $5.39 | 1.07% | |||||||
Investor B |
$1,000.00 | $1,090.60 | $11.00 | $1,000.00 | $1,014.41 | $10.60 | 2.11% | |||||||
Investor C |
$1,000.00 | $1,092.40 | $9.70 | $1,000.00 | $1,015.66 | $9.35 | 1.86% | |||||||
Class R |
$1,000.00 | $1,095.50 | $7.00 | $1,000.00 | $1,018.25 | $6.74 | 1.34% |
6 | For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period shown). |
7 | Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365. |
See Disclosure of Expenses on page 7 for further information on how expenses were calculated. |
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 | 5 |
About Fund Performance |
6 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 |
Disclosure of Expenses |
Derivative Financial Instruments |
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 | 7 |
|
As of March 31, 2015 |
8 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 |
Schedule of Investments March 31, 2015 (Unaudited) | (Percentages shown are based on Net Assets) |
Portfolio Abbreviation | ||
ADR | American Depositary Receipts |
See Notes to Financial Statements.
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 | 9 |
Schedule of Investments (continued) | (Percentages shown are based on Net Assets) |
Notes to Schedule of Investments |
(a) | Non-income producing security. |
(b) | Security, or a portion of security, is on loan. |
(c) | Restricted security as to resale. As of report date, the Fund held restricted securities with a current value of $45,280,326 and an original cost of $31,222,542 which was 1.2% of its net assets. |
(d) | During the six months ended March 31, 2015, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows: |
Affiliate | Shares/Beneficial Interest Held at September 30, 2014 |
Net Activity |
Shares/Beneficial Interest Held at March 31, 2015 |
Income | Realized Gain |
|||||||||||||||
BlackRock Liquidity Funds, TempFund, Institutional Class |
| 22,578,118 | 13,657,687 | $ | 8,265 | $ | 2,243 | |||||||||||||
BlackRock Liquidity Series, LLC, Money Market Series |
$ | 93,425,140 | $ | (8,397,822 | ) | $ | 85,027,318 | $ | 110,119 | |
(e) | Represents the current yield as of report date. |
(f) | Security was purchased with the cash collateral from loaned securities. The Fund may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC, Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day. |
| For Fund compliance purposes, the Funds 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 the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease. |
| Fair Value Measurements Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The categorization of a value determined for investments is based on the pricing transparency of the investment and is not necessarily an indication of the risks associated with investing in those securities. The three levels of the fair value hierarchy are as follows: |
| Level 1 unadjusted quoted prices in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access |
| Level 2 other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates or other marketcorroborated inputs) |
| Level 3 unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Funds own assumptions used in determining the fair value of investments) |
Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Funds policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. For information about the Funds policy regarding valuation of investments, refer to Note 2 of the Notes to Financial Statements.
See Notes to Financial Statements.
10 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 |
Schedule of Investments (continued) |
As of March 31, 2015, the following table summarizes the Funds investments categorized in the disclosure hierarchy:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: |
||||||||||||||||
Investments: |
||||||||||||||||
Long-Term Investments: |
||||||||||||||||
Common Stocks: |
||||||||||||||||
Aerospace & Defense |
$ | 18,749,430 | | | $ | 18,749,430 | ||||||||||
Airlines |
52,512,200 | | | 52,512,200 | ||||||||||||
Auto Components |
28,572,118 | | | 28,572,118 | ||||||||||||
Banks |
47,585,590 | | | 47,585,590 | ||||||||||||
Beverages |
43,297,987 | | | 43,297,987 | ||||||||||||
Biotechnology |
306,175,371 | | | 306,175,371 | ||||||||||||
Chemicals |
23,720,010 | | | 23,720,010 | ||||||||||||
Consumer Finance |
46,811,466 | | | 46,811,466 | ||||||||||||
Diversified Financial Services |
105,487,734 | | | 105,487,734 | ||||||||||||
Food & Staples Retailing |
60,661,561 | | | 60,661,561 | ||||||||||||
Food Products |
42,311,765 | | | 42,311,765 | ||||||||||||
Health Care Providers & Services |
161,069,529 | | | 161,069,529 | ||||||||||||
Health Care Technology |
16,556,289 | | | 16,556,289 | ||||||||||||
Internet & Catalog Retail |
182,576,966 | | | 182,576,966 | ||||||||||||
Internet Software & Services |
565,026,218 | $ | 67,163,540 | | 632,189,758 | |||||||||||
IT Services |
278,353,426 | | | 278,353,426 | ||||||||||||
Media |
259,483,533 | | | 259,483,533 | ||||||||||||
Multiline Retail |
101,125,587 | | | 101,125,587 | ||||||||||||
Oil, Gas & Consumable Fuels |
102,330,717 | | | 102,330,717 | ||||||||||||
Pharmaceuticals |
364,698,602 | | | 364,698,602 | ||||||||||||
Real Estate Investment Trusts (REITs) |
38,501,196 | | | 38,501,196 | ||||||||||||
Road & Rail |
92,952,292 | | | 92,952,292 | ||||||||||||
Software |
227,676,312 | | | 227,676,312 | ||||||||||||
Specialty Retail |
94,972,725 | | | 94,972,725 | ||||||||||||
Technology Hardware, Storage & Peripherals |
218,156,221 | | | 218,156,221 | ||||||||||||
Textiles, Apparel & Luxury Goods |
82,451,809 | | | 82,451,809 | ||||||||||||
Preferred Stock: |
||||||||||||||||
Software |
| | $ | 45,280,326 | 45,280,326 | |||||||||||
Short-Term Securities |
13,657,687 | 85,027,318 | | 98,685,005 | ||||||||||||
|
|
|||||||||||||||
Total |
$ | 3,575,474,341 | $ | 152,190,858 | $ | 45,280,326 | $ | 3,772,945,525 | ||||||||
|
|
The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of March 31, 2015, collateral on securities loaned at value of $85,027,318 is categorized as Level 2 within the disclosure hierarchy.
During the six months ended March 31, 2015, there were no transfers between Level 1 and Level 2.
See Notes to Financial Statements.
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 | 11 |
Schedule of Investments (concluded) |
A reconciliation of Level 3 investments is presented when the Fund had a significant amount of Level 3 investments and derivative financial instruments at the beginning and/or end of the period in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:
Preferred Securities |
||||
Assets: |
||||
Opening balance, as of September 30, 2014 |
$ | 31,222,542 | ||
Transfers into Level 3 |
| |||
Transfers out of Level 3 |
| |||
Accrued discounts/premiums |
| |||
Net realized gain (loss) |
| |||
Net change in unrealized appreciation/depreciation1 |
14,057,784 | |||
Purchases |
| |||
Sales |
| |||
Closing balance, as of March 31, 2015 |
$ | 45,280,326 | ||
|
|
|||
Net change in unrealized appreciation/depreciation on investments still held at March 31, 20151 |
$ | 14,057,784 | ||
|
|
1 | Any difference between Net change in unrealized appreciation/depreciation and Net change in unrealized appreciation/depreciation on investments still held at March 31, 2015 is generally due to investments no longer held or categorized as Level 3 at period end. |
The following table summarizes the valuation techniques used and unobservable inputs utilized by the BlackRock Global Valuation Methodologies Committee (the Global Valuation Committee) to determine the value of certain of the Funds Level 3 investments as of March 31, 2015.
Value | Valuation Techniques | Unobservable Inputs |
Range of Unobservable Inputs Utilized |
|||||||||||
Assets: |
||||||||||||||
Preferred Stocks2 |
$ | 45,280,326 | Probability-Weighted Expected Return Model | Years to IPO3 IPO Exit Probability4 Discount Rate3 Revenue Multiple4 |
|
1.4-2.9 95.00% 21.30% 14.0x-16.0x |
|
2 | For the period ended March 31, 2015, the valuation technique for an investment classified as preferred stocks changed to a Probability-Weighted Expected Return Model. The investment was previously valued utilizing a market comparable company and option pricing model approach. A Probability-Weighted Expected Return Model was considered to be a more relevant measure of fair value for this investment which leverages the most recent equity raise pre-money valuation. |
3 | Decrease in unobservable input may result in a significant increase to value, while an increase in the unobservable input may result in a significant decrease to value. |
4 | Increase in unobservable input may result in a significant increase to value, while a decrease in the unobservable input may result in a significant decrease to value. |
See Notes to Financial Statements.
12 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 |
Statement of Assets and Liabilities |
March 31, 2015 (Unaudited) | ||||
Assets | ||||
Investments at value unaffiliated (including securities loaned at value of $82,486,277) (cost $2,834,711,961) |
$ | 3,674,260,520 | ||
Investments at value affiliated (cost $98,685,005) |
98,685,005 | |||
Capital shares sold receivable |
2,365,829 | |||
Dividends receivable unaffiliated |
665,332 | |||
Dividends receivable affiliated |
1,242 | |||
Securities lending income receivable affiliated |
8,795 | |||
Prepaid expenses |
99,408 | |||
|
|
|||
Total assets |
3,776,086,131 | |||
|
|
|||
Liabilities | ||||
Collateral on securities loaned at value |
85,027,318 | |||
Capital shares redeemed payable |
16,370,241 | |||
Investment advisory fees payable |
1,948,467 | |||
Service and distribution fees payable |
966,501 | |||
Other affiliates payable |
94,162 | |||
Officers and Directors fees payable |
16,638 | |||
Other accrued expenses payable |
1,767,255 | |||
|
|
|||
Total liabilities |
106,190,582 | |||
|
|
|||
Net Assets |
$ | 3,669,895,549 | ||
|
|
|||
Net Assets Consist of | ||||
Paid-in capital |
$ | 2,637,520,660 | ||
Accumulated net investment loss |
(11,701,701 | ) | ||
Accumulated net realized gain |
204,528,031 | |||
Net unrealized appreciation/depreciation |
839,548,559 | |||
|
|
|||
Net Assets |
$ | 3,669,895,549 | ||
|
|
|||
Net Asset Value | ||||
BlackRock Based on net assets of $454,272,144 and 17,295,503 shares outstanding, 300,000,000 shares authorized, $0.10 par value |
$ | 26.27 | ||
|
|
|||
Institutional Based on net assets of $768,152,443 and 29,307,489 shares outstanding, 300,000,000 shares authorized, $0.10 par value |
$ | 26.21 | ||
|
|
|||
Investor A Based on net assets of $1,718,760,782 and 69,113,105 shares outstanding, 300,000,000 shares authorized, $0.10 par value |
$ | 24.87 | ||
|
|
|||
Investor B Based on net assets of $14,871,635 and 739,740 shares outstanding, 500,000,000 shares authorized, $0.10 par value |
$ | 20.10 | ||
|
|
|||
Investor C Based on net assets of $638,223,960 and 31,507,064 shares outstanding, 300,000,000 shares authorized, $0.10 par value |
$ | 20.26 | ||
|
|
|||
Class R Based on net assets of $75,614,585 and 3,469,107 shares outstanding, 500,000,000 shares authorized, $0.10 par value |
$ | 21.80 | ||
|
|
See Notes to Financial Statements.
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 | 13 |
Six Months Ended March 31, 2015 (Unaudited) | ||||
Investment Income | ||||
Dividends unaffiliated |
$ | 9,667,645 | ||
Securities lending affiliated net |
110,119 | |||
Dividends affiliated |
8,265 | |||
|
|
|||
Total income |
9,786,029 | |||
|
|
|||
Expenses | ||||
Investment advisory |
11,394,142 | |||
Service and distribution Investor A |
2,157,043 | |||
Service and distribution Investor B |
78,376 | |||
Service and distribution Investor C |
3,177,241 | |||
Service and distribution Class R |
197,352 | |||
Transfer agent BlackRock |
121,624 | |||
Transfer agent Institutional |
677,914 | |||
Transfer agent Investor A |
1,472,659 | |||
Transfer agent Investor B |
36,335 | |||
Transfer agent Investor C |
676,527 | |||
Transfer agent Class R |
74,609 | |||
Accounting services |
249,315 | |||
Custodian |
81,907 | |||
Professional |
76,123 | |||
Printing |
53,632 | |||
Registration |
52,327 | |||
Officer and Directors |
32,651 | |||
Miscellaneous |
45,714 | |||
|
|
|||
Total expenses |
20,655,491 | |||
Less fees waived by the Manager |
(10,722 | ) | ||
Less transfer agent fees waived BlackRock |
(538 | ) | ||
Less transfer agent fees reimbursed BlackRock |
(51,914 | ) | ||
|
|
|||
Total expenses after fees waived and reimbursed |
20,592,317 | |||
|
|
|||
Net investment loss |
(10,806,288 | ) | ||
|
|
|||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain from: |
||||
Investments |
214,030,913 | |||
Capital gain distributions received from affiliated investment companies |
2,243 | |||
Foreign currency transactions |
180,902 | |||
|
|
|||
214,214,058 | ||||
|
|
|||
Net change in unrealized appreciation/depreciation on: |
||||
Investments |
138,033,320 | |||
Foreign currency translations |
(895,116 | ) | ||
|
|
|||
137,138,204 | ||||
|
|
|||
Net realized and unrealized gain |
351,352,262 | |||
|
|
|||
Net Increase in Net Assets Resulting from Operations |
$ | 340,545,974 | ||
|
|
See Notes to Financial Statements.
14 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 |
Statements of Changes in Net Assets |
Increase (Decrease) in Net Assets: | Six Months Ended March 31, 2015 (Unaudited) |
Year Ended September 30, 2014 |
||||||
Operations | ||||||||
Net investment loss |
$ | (10,806,288 | ) | $ | (14,393,270 | ) | ||
Net realized gain |
214,214,058 | 807,231,185 | ||||||
Net change in unrealized appreciation/depreciation |
137,138,204 | (202,701,621 | ) | |||||
|
|
|||||||
Net increase in net assets resulting from operations |
340,545,974 | 590,136,294 | ||||||
|
|
|||||||
Distributions to Shareholders From1 | ||||||||
Net realized gain: |
||||||||
BlackRock |
(82,790,392 | ) | (75,564,333 | ) | ||||
Institutional |
(149,440,525 | ) | (140,169,800 | ) | ||||
Investor A |
(332,730,711 | ) | (262,649,073 | ) | ||||
Investor B |
(3,448,082 | ) | (3,890,530 | ) | ||||
Investor C |
(140,999,089 | ) | (99,584,571 | ) | ||||
Class R |
(17,147,448 | ) | (14,352,101 | ) | ||||
|
|
|||||||
Decrease in net assets resulting from distributions to shareholders |
(726,556,247 | ) | (596,210,408 | ) | ||||
|
|
|||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets derived from capital share transactions |
320,976,100 | (404,447,902 | ) | |||||
|
|
|||||||
Net Assets | ||||||||
Total decrease in net assets |
(65,034,173 | ) | (410,522,016 | ) | ||||
Beginning of period |
3,734,929,722 | 4,145,451,738 | ||||||
|
|
|||||||
End of period |
$ | 3,669,895,549 | $ | 3,734,929,722 | ||||
|
|
|||||||
Accumulated net investment loss, end of period |
$ | (11,701,701 | ) | $ | (895,413 | ) | ||
|
|
1 | Distributions for annual periods determined in accordance with federal income tax regulations. |
See Notes to Financial Statements.
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 | 15 |
Financial Highlights |
BlackRock | ||||||||||||||||||||||||
Six Months (Unaudited) |
Year Ended September 30, | |||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 20101 | ||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||
Net asset value, beginning of period |
$ | 29.40 | $ | 29.44 | $ | 25.11 | $ | 20.25 | $ | 20.86 | $ | 18.72 | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment income (loss)2 |
(0.02 | ) | 0.00 | 3 | 0.16 | 0.14 | 0.07 | 0.05 | ||||||||||||||||
Net realized and unrealized gain (loss) |
2.55 | 4.24 | 4.35 | 4.72 | (0.68 | ) | 2.16 | |||||||||||||||||
|
|
|||||||||||||||||||||||
Net increase (decrease) from investment operations |
2.53 | 4.24 | 4.51 | 4.86 | (0.61 | ) | 2.21 | |||||||||||||||||
|
|
|||||||||||||||||||||||
Distributions from:4 |
||||||||||||||||||||||||
Net investment income |
| | (0.18 | ) | | | (0.07 | ) | ||||||||||||||||
Net realized gain |
(5.66 | ) | (4.28 | ) | | | | | ||||||||||||||||
|
|
|||||||||||||||||||||||
Total distributions |
(5.66 | ) | (4.28 | ) | (0.18 | ) | | | (0.07 | ) | ||||||||||||||
|
|
|||||||||||||||||||||||
Net asset value, end of period |
$ | 26.27 | $ | 29.40 | $ | 29.44 | $ | 25.11 | $ | 20.25 | $ | 20.86 | ||||||||||||
|
|
|||||||||||||||||||||||
Total Return5 | ||||||||||||||||||||||||
Based on net asset value |
9.89 | %6 | 15.70 | % | 18.12 | % | 24.00 | % | (2.92 | )% | 11.93 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Ratios to Average Net Assets | ||||||||||||||||||||||||
Total expenses |
0.70 | %7 | 0.76 | % | 0.79 | % | 0.77 | % | 0.76 | % | 0.87 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Total expenses after fees waived, reimbursed and paid indirectly |
0.68 | %7 | 0.72 | % | 0.72 | % | 0.72 | % | 0.72 | % | 0.72 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment income (loss) |
(0.16 | )%7 | 0.01 | % | 0.63 | % | 0.60 | % | 0.28 | % | 0.25 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000) |
$ | 454,272 | $ | 395,387 | $ | 523,231 | $ | 1,010,259 | $ | 883,370 | $ | 292,967 | ||||||||||||
|
|
|||||||||||||||||||||||
Portfolio turnover rate |
44 | % | 100 | % | 134 | % | 77 | % | 81 | % | 71 | % | ||||||||||||
|
|
1 | On June 28, 2010, BlackRock Capital Appreciation Portfolio was reorganized into the Fund. The activity in the table above is for the accounting survivor, BlackRock Capital Appreciation Portfolio, for the periods prior to the date of the reorganization, and for the post-reorganization combined fund thereafter. The net asset values and other per share information have been restated for periods prior to the reorganization to reflect the share conversion ratio of 0.80500157. |
2 | Based on average shares outstanding. |
3 | Amount is less than $0.005 per share. |
4 | Distributions for annual periods determined in accordance with federal income tax regulations. |
5 | Where applicable, assumes the reinvestment of distributions. |
6 | Aggregate total return. |
7 | Annualized. |
See Notes to Financial Statements.
16 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 |
Financial Highlights (continued) |
Institutional | ||||||||||||||||||||||||
Six Months (Unaudited) |
Year Ended September 30, | Period 20101 to September 30, |
||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | |||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||
Net asset value, beginning of period |
$ | 29.34 | $ | 29.39 | $ | 25.06 | $ | 20.24 | $ | 20.86 | $ | 19.39 | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment income (loss)2 |
(0.04 | ) | (0.02 | ) | 0.13 | 0.11 | 0.05 | 0.01 | ||||||||||||||||
Net realized and unrealized gain (loss) |
2.55 | 4.23 | 4.35 | 4.71 | (0.67 | ) | 1.46 | |||||||||||||||||
|
|
|||||||||||||||||||||||
Net increase (decrease) from investment operations |
2.51 | 4.21 | 4.48 | 4.82 | (0.62 | ) | 1.47 | |||||||||||||||||
|
|
|||||||||||||||||||||||
Distributions from:3 |
||||||||||||||||||||||||
Net investment income |
| | (0.15 | ) | | | | |||||||||||||||||
Net realized gain |
(5.64 | ) | (4.26 | ) | | | | | ||||||||||||||||
|
|
|||||||||||||||||||||||
Total distributions |
(5.64 | ) | (4.26 | ) | (0.15 | ) | | | | |||||||||||||||
|
|
|||||||||||||||||||||||
Net asset value, end of period |
$ | 26.21 | $ | 29.34 | $ | 29.39 | $ | 25.06 | $ | 20.24 | $ | 20.86 | ||||||||||||
|
|
|||||||||||||||||||||||
Total Return4 | ||||||||||||||||||||||||
Based on net asset value |
9.80 | %5 | 15.60 | % | 17.99 | % | 23.81 | % | (2.97 | )% | 7.58 | %5 | ||||||||||||
|
|
|||||||||||||||||||||||
Ratios to Average Net Assets | ||||||||||||||||||||||||
Total expenses |
0.82 | %6 | 0.79 | % | 0.83 | % | 0.84 | % | 0.78 | % | 0.80 | %6 | ||||||||||||
|
|
|||||||||||||||||||||||
Total expenses after fees waived, reimbursed and paid indirectly |
0.82 | %6 | 0.79 | % | 0.83 | % | 0.84 | % | 0.78 | % | 0.80 | %6 | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment income (loss) |
(0.28 | )%6 | (0.06 | )% | 0.51 | % | 0.48 | % | 0.21 | % | 0.08 | %6 | ||||||||||||
|
|
|||||||||||||||||||||||
Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000) |
$ | 768,152 | $ | 878,301 | $ | 1,043,889 | $ | 1,514,881 | $ | 1,025,307 | $ | 728,129 | ||||||||||||
|
|
|||||||||||||||||||||||
Portfolio turnover rate |
44 | % | 100 | % | 134 | % | 77 | % | 81 | % | 71 | % | ||||||||||||
|
|
1 | Commencement of operations. |
2 | Based on average shares outstanding. |
3 | Distributions for annual periods determined in accordance with federal income tax regulations. |
4 | Where applicable, assumes the reinvestment of distributions. |
5 | Aggregate total return. |
6 | Annualized. |
See Notes to Financial Statements.
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 | 17 |
Financial Highlights (continued) |
Investor A | ||||||||||||||||||||||||
Six Months Ended March
31, (Unaudited) |
Year Ended September 30, | |||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 20101 | ||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||
Net asset value, beginning of period |
$ | 28.08 | $ | 28.31 | $ | 24.11 | $ | 19.51 | $ | 20.17 | $ | 18.12 | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment income (loss)2 |
(0.07 | ) | (0.09 | ) | 0.04 | 0.05 | (0.02 | ) | (0.04 | ) | ||||||||||||||
Net realized and unrealized gain (loss) |
2.43 | 4.06 | 4.21 | 4.55 | (0.64 | ) | 2.09 | |||||||||||||||||
|
|
|||||||||||||||||||||||
Net increase (decrease) from investment operations |
2.36 | 3.97 | 4.25 | 4.60 | (0.66 | ) | 2.05 | |||||||||||||||||
|
|
|||||||||||||||||||||||
Distributions from:3 |
||||||||||||||||||||||||
Net investment income |
| | (0.05 | ) | | | (0.00 | )4 | ||||||||||||||||
Net realized gain |
(5.57 | ) | (4.20 | ) | | | | | ||||||||||||||||
|
|
|||||||||||||||||||||||
Total distributions |
(5.57 | ) | (4.20 | ) | (0.05 | ) | | | | |||||||||||||||
|
|
|||||||||||||||||||||||
Net asset value, end of period |
$ | 24.87 | $ | 28.08 | $ | 28.31 | $ | 24.11 | $ | 19.51 | $ | 20.17 | ||||||||||||
|
|
|||||||||||||||||||||||
Total Return5 | ||||||||||||||||||||||||
Based on net asset value |
9.69 | %6 | 15.29 | % | 17.67 | % | 23.58 | % | (3.27 | )% | 11.37 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Ratios to Average Net Assets | ||||||||||||||||||||||||
Total expenses |
1.07 | %7 | 1.07 | % | 1.09 | % | 1.09 | % | 1.08 | % | 1.15 | %8 | ||||||||||||
|
|
|||||||||||||||||||||||
Total expenses after fees waived, reimbursed and paid indirectly |
1.07 | %7 | 1.07 | % | 1.09 | % | 1.09 | % | 1.07 | % | 1.13 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment income (loss) |
(0.54 | )%7 | (0.33 | )% | 0.14 | % | 0.23 | % | (0.09 | )% | (0.21 | )% | ||||||||||||
|
|
|||||||||||||||||||||||
Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000) |
$ | 1,718,761 | $ | 1,729,475 | $ | 1,845,224 | $ | 2,085,079 | $ | 1,848,149 | $ | 1,583,570 | ||||||||||||
|
|
|||||||||||||||||||||||
Portfolio turnover rate |
44 | % | 100 | % | 134 | % | 77 | % | 81 | % | 71 | % | ||||||||||||
|
|
1 | On June 28, 2010, BlackRock Capital Appreciation Portfolio was reorganized into the Fund. The activity in the table above is for the accounting survivor, BlackRock Capital Appreciation Portfolio, for the periods prior to the date of the reorganization, and for the post-reorganization combined fund thereafter. The net asset values and other per share information have been restated for periods prior to the reorganization to reflect the share conversion ratio of 0.79434657. |
2 | Based on average shares outstanding. |
3 | Distributions for annual periods determined in accordance with federal income tax regulations. |
4 | Amount is greater than $(0.005) per share. |
5 | Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions. |
6 | Aggregate total return. |
7 | Annualized. |
8 | Includes recoupment of past waived and/or reimbursed fees. There was no financial impact to the expense ratios. |
See Notes to Financial Statements.
18 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 |
Financial Highlights (continued) |
Investor B | ||||||||||||||||||||||||
Six Months Ended March
31, (Unaudited) |
Year Ended September 30, | |||||||||||||||||||||||
2014 | 2013 |
2012 |
2011 |
20101 | ||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||
Net asset value, beginning of period |
$ | 23.55 | $ | 24.40 | $ | 20.95 | $ | 17.13 | $ | 17.87 | $ | 16.18 | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment loss2 |
(0.17 | ) | (0.32 | ) | (0.17 | ) | (0.14 | ) | (0.20 | ) | (0.18 | ) | ||||||||||||
Net realized and unrealized gain (loss) |
1.98 | 3.47 | 3.62 | 3.96 | (0.54 | ) | 1.87 | |||||||||||||||||
|
|
|||||||||||||||||||||||
Net increase (decrease) from investment operations |
1.81 | 3.15 | 3.45 | 3.82 | (0.74 | ) | 1.69 | |||||||||||||||||
|
|
|||||||||||||||||||||||
Distributions from net realized gain3 |
(5.26 | ) | (4.00 | ) | | | | | ||||||||||||||||
|
|
|||||||||||||||||||||||
Net asset value, end of period |
$ | 20.10 | $ | 23.55 | $ | 24.40 | $ | 20.95 | $ | 17.13 | $ | 17.87 | ||||||||||||
|
|
|||||||||||||||||||||||
Total Return4 | ||||||||||||||||||||||||
Based on net asset value |
9.06 | %5 | 14.15 | % | 16.47 | % | 22.30 | % | (4.14 | )% | 10.34 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Ratios to Average Net Assets | ||||||||||||||||||||||||
Total expenses |
2.11 | %6 | 2.10 | % | 2.16 | % | 2.04 | % | 1.99 | % | 2.01 | %7 | ||||||||||||
|
|
|||||||||||||||||||||||
Total expenses after fees waived, reimbursed and paid indirectly |
2.11 | %6 | 2.10 | % | 2.16 | % | 2.04 | % | 1.99 | % | 2.00 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment loss |
(1.58 | )%6 | (1.37 | )% | (0.79 | )% | (0.72 | )% | (1.01 | )% | (1.10 | )% | ||||||||||||
|
|
|||||||||||||||||||||||
Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000) |
$ | 14,872 | $ | 16,844 | $ | 26,552 | $ | 60,559 | $ | 96,030 | $ | 171,808 | ||||||||||||
|
|
|||||||||||||||||||||||
Portfolio turnover rate |
44 | % | 100 | % | 134 | % | 77 | % | 81 | % | 71 | % | ||||||||||||
|
|
1 | On June 28, 2010, BlackRock Capital Appreciation Portfolio was reorganized into the Fund. The activity in the table above is for the accounting survivor, BlackRock Capital Appreciation Portfolio, for the periods prior to the date of the reorganization, and for the post-reorganization combined fund thereafter. The net asset values and other per share information have been restated for periods prior to the reorganization to reflect the share conversion ratio of 0.81383276. |
2 | Based on average shares outstanding. |
3 | Distributions for annual periods determined in accordance with federal income tax regulations. |
4 | Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions. |
5 | Aggregate total return. |
6 | Annualized. |
7 | Includes recoupment of past waived and/or reimbursed fees. There was no financial impact to the expense ratios. |
See Notes to Financial Statements.
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 | 19 |
Financial Highlights (continued) |
Investor C | ||||||||||||||||||||||||
Six Months Ended March 31, 2015 (Unaudited) |
Year Ended September 30, | |||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 20101 | ||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||
Net asset value, beginning of period |
$ | 23.81 | $ | 24.64 | $ | 21.11 | $ | 17.23 | $ | 17.96 | $ | 16.25 | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment loss2 |
(0.14 | ) | (0.26 | ) | (0.15 | ) | (0.12 | ) | (0.19 | ) | (0.17 | ) | ||||||||||||
Net realized and unrealized gain (loss) |
2.01 | 3.49 | 3.68 | 4.00 | (0.54 | ) | 1.88 | |||||||||||||||||
|
|
|||||||||||||||||||||||
Net increase (decrease) from investment operations |
1.87 | 3.23 | 3.53 | 3.88 | (0.73 | ) | 1.71 | |||||||||||||||||
|
|
|||||||||||||||||||||||
Distributions from net realized gain3 |
(5.42 | ) | (4.06 | ) | | | | | ||||||||||||||||
|
|
|||||||||||||||||||||||
Net asset value, end of period |
$ | 20.26 | $ | 23.81 | $ | 24.64 | $ | 21.11 | $ | 17.23 | $ | 17.96 | ||||||||||||
|
|
|||||||||||||||||||||||
Total Return4 | ||||||||||||||||||||||||
Based on net asset value |
9.24 | %5 | 14.39 | % | 16.72 | % | 22.52 | % | (4.07 | )% | 10.52 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Ratios to Average Net Assets | ||||||||||||||||||||||||
Total expenses |
1.86 | %6 | 1.86 | % | 1.90 | % | 1.92 | % | 1.91 | % | 1.97 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Total expenses after fees waived, reimbursed and paid indirectly |
1.86 | %6 | 1.86 | % | 1.90 | % | 1.92 | % | 1.91 | % | 1.94 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment loss |
(1.33 | )%6 | (1.12 | )% | (0.68 | )% | (0.60 | )% | (0.93 | )% | (1.04 | )% | ||||||||||||
|
|
|||||||||||||||||||||||
Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000) |
$ | 638,224 | $ | 634,176 | $ | 613,338 | $ | 586,862 | $ | 552,456 | $ | 608,137 | ||||||||||||
|
|
|||||||||||||||||||||||
Portfolio turnover rate |
44 | % | 100 | % | 134 | % | 77 | % | 81 | % | 71 | % | ||||||||||||
|
|
1 | On June 28, 2010, BlackRock Capital Appreciation Portfolio was reorganized into the Fund. The activity in the table above is for the accounting survivor, BlackRock Capital Appreciation Portfolio, for the periods prior to the date of the reorganization, and for the post-reorganization combined fund thereafter. The net asset values and other per share information have been restated for periods prior to the reorganization to reflect the share conversion ratio of 0.81539389. |
2 | Based on average shares outstanding. |
3 | Distributions for annual periods determined in accordance with federal income tax regulations. |
4 | Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions. |
5 | Aggregate total return. |
6 | Annualized. |
See Notes to Financial Statements.
20 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 |
Financial Highlights (concluded) |
Class R | ||||||||||||||||||||||||
Six Months Ended 2015 (Unaudited) |
Year Ended September 30, | Period 20101 to September 30, 2010 |
||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | |||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||
Net asset value, beginning of period |
$ | 25.25 | $ | 25.86 | $ | 22.03 | $ | 17.88 | $ | 18.56 | $ | 17.28 | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment loss2 |
(0.09 | ) | (0.15 | ) | (0.03 | ) | (0.01 | ) | (0.09 | ) | (0.03 | ) | ||||||||||||
Net realized and unrealized gain (loss) |
2.15 | 3.68 | 3.86 | 4.16 | (0.59 | ) | 1.31 | |||||||||||||||||
|
|
|||||||||||||||||||||||
Net increase (decrease) from investment operations |
2.06 | 3.53 | 3.83 | 4.15 | (0.68 | ) | 1.28 | |||||||||||||||||
|
|
|||||||||||||||||||||||
Distributions from net realized gain3 |
(5.51 | ) | (4.14 | ) | | | | | ||||||||||||||||
|
|
|||||||||||||||||||||||
Net asset value, end of period |
$ | 21.80 | $ | 25.25 | $ | 25.86 | $ | 22.03 | $ | 17.88 | $ | 18.56 | ||||||||||||
|
|
|||||||||||||||||||||||
Total Return4 | ||||||||||||||||||||||||
Based on net asset value |
9.55 | %5 | 14.96 | % | 17.39 | % | 23.21 | % | (3.66 | )% | 7.41 | %5 | ||||||||||||
|
|
|||||||||||||||||||||||
Ratios to Average Net Assets | ||||||||||||||||||||||||
Total expenses |
1.34 | %6 | 1.33 | % | 1.38 | % | 1.39 | % | 1.40 | % | 1.44 | %6 | ||||||||||||
|
|
|||||||||||||||||||||||
Total expenses after fees waived, reimbursed and paid indirectly |
1.34 | %6 | 1.33 | % | 1.38 | % | 1.39 | % | 1.40 | % | 1.43 | %6 | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment loss |
(0.81 | )%6 | (0.59 | )% | (0.13 | )% | (0.07 | )% | (0.42 | )% | (0.55 | )%6 | ||||||||||||
|
|
|||||||||||||||||||||||
Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000) |
$ | 75,615 | $ | 80,747 | $ | 93,218 | $ | 116,598 | $ | 87,400 | $ | 74,677 | ||||||||||||
|
|
|||||||||||||||||||||||
Portfolio turnover rate |
44 | % | 100 | % | 134 | % | 77 | % | 81 | % | 71 | % | ||||||||||||
|
|
1 | Commencement of operations. |
2 | Based on average shares outstanding. |
3 | Distributions for annual periods determined in accordance with federal income tax regulations. |
4 | Where applicable, assumes the reinvestment of distributions. |
5 | Aggregate total return. |
6 | Annualized. |
See Notes to Financial Statements.
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 | 21 |
Notes to Financial Statements (Unaudited) |
1. Organization:
BlackRock Capital Appreciation 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 is organized as a Maryland corporation.
The Fund offers multiple classes of shares. All classes of shares have identical voting, dividend, liquidation and other rights and are subject to the same terms and conditions, except that certain classes bear expenses related to the shareholder servicing and distribution of such shares. Institutional Shares are sold only to certain eligible investors. Investor B Shares are only available through exchanges and distribution reinvestments by current holders and for purchase by certain employer-sponsored retirement plans. Class R Shares are available only to certain employer-sponsored retirement plans. Investor A and Investor C Shares are generally available through financial intermediaries. 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 and service plan).
Share Class | Initial Sales Charge | CDSC | Conversion Privilege | |||
BlackRock, Institutional, and Class R Shares |
No | No | None | |||
Investor A Shares |
Yes | No1 | None | |||
Investor B Shares |
No | Yes | To Investor A Shares after approximately 8 years | |||
Investor C Shares |
No | Yes | None |
1 | Investor A Shares may be subject to a CDSC where no initial sales charge was paid at the time of purchase. |
The Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the Manager) or its affiliates, is included in a complex of open-end funds referred to as the Equity-Bond Complex.
2. Significant Accounting Policies:
The Funds financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Fund:
Valuation: The Funds investments are valued at fair value as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m., Eastern time). U.S. GAAP defines fair value as the price the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Fund determines the fair values of its financial instruments at market value using independent dealers or pricing services under policies approved by the Board of Directors of the Fund (the Board). The BlackRock Global Valuation Methodologies Committee (the Global Valuation Committee) is the committee formed by management to develop global pricing policies and procedures and to provide oversight of the pricing function for the Fund for all financial instruments.
Equity investments traded on a recognized securities exchange are valued at the official close price each day, if available. For equity investments traded on more than one exchange, the official close 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 may be valued at the last available bid (long positions) or ask (short positions) price. Investments in open-end registered investment companies are valued at NAV each business day.
Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of business on the NYSE. Forward foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of business on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.
The Fund values its investment in BlackRock Liquidity Series, LLC, Money Market Series (the Money Market Series) at fair value, which is ordinarily based upon its pro rata ownership in the underlying funds net assets. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments will follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act. The Fund may withdraw up to 25% of its investment daily, although the Manager of the Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.
22 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 |
Notes to Financial Statements (continued) |
In the event that the application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (Fair Value Investments). When determining the price for Fair Value Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that the Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arms-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant consistent with the principles of fair value measurement, which include the market approach, income approach and/or in the case of recent investments, the cost approach, as appropriate. The market approach generally consists of using comparable market transactions. The income approach generally is used to discount future cash flows to present value and is adjusted for liquidity as appropriate. These factors include but are not limited to: (i) attributes specific to the investment or asset; (ii) the principal market for the investment or asset; (iii) the customary participants in the principal market for the investment or asset; (iv) data assumptions by market participants for the investment or asset, if reasonably available; (v) quoted prices for similar investments or assets in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates. Due to the inherent uncertainty of valuations of such investments, the fair values may differ from the values that would have been used had an active market existed. The Global Valuation Committee, or its delegate, employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Funds pricing vendors, regular reviews of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values and reviews of any market related activity. The pricing of all Fair Value Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.
Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of business on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of business on the NYSE that may not be reflected in the computation of the Funds net assets. If events (e.g., a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such instruments, those instruments may be Fair Value Investments and be valued at their fair value, as determined in good faith by the Global Valuation Committee, or its delegate, using a pricing service and/or policies approved by the Board. Each business day, the Fund uses a pricing service to assist with the valuation of certain foreign exchange-traded equity securities and foreign exchange-traded and over-the-counter (OTC) options (the Systematic Fair Value Price). Using current market factors, the Systematic Fair Value Price is designed to value such foreign securities and foreign options at fair value as of the close of business on the NYSE, which follows the close of the local markets.
Foreign Currency: The Funds books and records are maintained in U.S. dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the Funds investments denominated in that currency will lose value because that currency is worth fewer U.S. dollars; the opposite effect occurs if the U.S. dollar falls in relative value.
The Fund does not isolate the portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of investments held or sold for financial reporting purposes. Accordingly, the effects of changes in foreign currency exchange rates on investments are not segregated in the Statement of Operations from the effects of changes in market prices of those investments, but are included as a component of net realized and unrealized gain (loss) from investments. The Fund reports realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for federal income tax purposes.
Segregation and Collateralization: In cases where the Fund enters into certain investments (e.g., forward foreign currency exchange contracts), that would be senior securities for 1940 Act purposes, the Fund may segregate or designate on its books and records cash or liquid securities having a market value at least equal to the amount of the Funds future obligations under such investments. Doing so allows the investment to be excluded from treatment as a senior security. Furthermore, if required by an exchange or counterparty agreement, the Fund may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.
Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend date. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Fund is informed of the ex-dividend date. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be redesignated
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 | 23 |
Notes to Financial Statements (continued) |
as a reduction of cost of the related investment and/or realized gain. Income, expenses and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.
Distributions: Distributions paid by the Fund are recorded on the ex-dividend date. The character and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP.
Recent Accounting Standard: In June 2014, the Financial Accounting Standards Board issued guidance to improve the financial reporting of reverse repurchase agreements and other similar transactions. The guidance will require expanded disclosure for entities that enter into reverse repurchase agreements and similar transactions accounted for as secured borrowings. It is effective for financial statements with fiscal years beginning on or after December 15, 2014 and for interim periods beginning after March 15, 2015. Management is evaluating the impact, if any, of this guidance on the Funds financial statement disclosures.
Other: Expenses directly related to the Fund or its classes are charged to the Fund or the applicable class. Other operating expenses shared by several funds are prorated among those funds on the basis of relative net assets or other appropriate methods. Expenses directly related to the Fund and other shared expenses prorated to the Fund are allocated daily to each class based on its relative net assets or other appropriate methods.
The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which, if applicable, are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.
3. Securities and Other Investments:
Preferred Stock: The Fund may invest in preferred stock. Preferred stock has a preference over common stock in liquidation (and generally in receiving dividends as well) but is subordinated to the liabilities of the issuer in all respects. As a general rule, the market value of preferred stock with a fixed dividend rate and no conversion element varies inversely with interest rates and perceived credit risk, while the market price of convertible preferred stock generally also reflects some element of conversion value. Because preferred stock is junior to debt securities and other obligations of the issuer, deterioration in the credit quality of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similar stated yield characteristics. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuers board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions.
Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities. 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 market value of securities on loan and the value of the related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value unaffiliated, and collateral on securities loaned at value, respectively. As of March 31, 2015, any securities on loan were collateralized by cash. The cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (BIM), if any, is disclosed in the Schedule of Investments.
Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an MSLA) which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterpartys bankruptcy or insolvency. Under the MSLA, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral, or, upon an event of default, resell or re-pledge the collateral.
24 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 |
Notes to Financial Statements (continued) |
As of March 31, 2015, the following table is a summary of the Funds securities lending agreements by counterparty, which are subject to offset under an MSLA:
Counterparty |
Securities Loaned at Value |
Cash Collateral Received1 |
Net Amount |
|||||||||
Deutsche Bank Securities Inc. |
$ | 16,295,108 | $ | (16,295,108 | ) | | ||||||
Goldman Sachs & Co. |
11,347,900 | (11,347,900 | ) | | ||||||||
J.P. Morgan Securities LLC |
31,880,920 | (31,880,920 | ) | | ||||||||
UBS Securities LLC |
22,962,349 | (22,962,349 | ) | | ||||||||
Total |
$ | 82,486,277 | $ | (82,486,277 | ) | |
1 | Collateral with a value of $85,027,318 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes. |
The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIMs indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received.
4. Derivative Financial Instruments:
The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and/or to economically manage their exposure to certain risks such as foreign currency exchange rate risk. These contracts may be transacted on an exchange or OTC.
Forward Foreign Currency Exchange Contracts: The Fund enters into forward foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to obtain exposure to, or hedge exposure away from, foreign currencies (foreign currency exchange rate risk). A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Forward foreign currency exchange contracts, when used by the Fund, help to manage the overall exposure to the currencies in which some of the investments held by the Fund are denominated. The contract is marked-to-market daily and the change in market value is recorded by the Fund as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of forward foreign currency exchange contracts involves the risk that the value of a forward foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies.
The following is a summary of the Funds derivative financial instruments categorized by risk exposure:
The Effect of Derivative Financial Instruments in the Statement of
Operations Six Months Ended March 31, 2015 | ||||
Net Realized Gain From | Net Change in Unrealized Appreciation/Depreciation on | |||
Foreign currency exchange contracts: |
||||
Foreign currency transactions/translations |
$151,587 | $(895,412) |
For the six months ended March 31, 2015, the average quarterly balances of outstanding derivative financial instruments were as follows:
Forward foreign currency exchange contracts: |
||||
Average amounts sold in USD |
$ | 20,747,364 | 1 |
1 | Actual amounts for the period are shown due to limited outstanding derivative financial instruments as of each quarter. |
Counterparty Credit Risk: A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.
A Funds risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain less the value of any collateral held by such Fund.
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 | 25 |
Notes to Financial Statements (continued) |
In order to better define its contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or similar agreement with its counterparties. An ISDA Master Agreement is a bilateral agreement between each Fund and a counterparty that governs certain OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, each Fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. Bankruptcy or insolvency laws of a particular jurisdiction may restrictor prohibit the right of offset in bankruptcy, insolvency or other events. In addition, certain ISDA Master Agreements allow counterparties to terminate derivative contracts prior to maturity in the event the Funds net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA Master Agreements, which would cause the Fund to accelerate payment of any net liability owed to the counterparty.
Collateral Requirements: For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the mark-to-market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by the Fund and the counterparty.
Cash collateral that has been pledged to cover obligations of the Fund and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as cash pledged as collateral and cash received as collateral, respectively. Non-cash collateral pledged by the Fund, if any, is noted in the Schedule of Investments. Generally, the amount of collateral due from or to a party has to exceed a minimum transfer amount threshold (typically either $250,000 or $500,000) before a transfer is required, which is determined at the close of business of the Fund. Any additional required collateral is delivered to/pledged by the Fund on the next business day. Typically, the Fund and counterparties are not permitted to sell, re-pledge or use the collateral they receive. To the extent amounts due to the Fund from its counterparties are not fully collateralized, the Fund bears the risk of loss from counterparty non-performance. Likewise, to the extent the Fund has delivered collateral to a counterparty and stands ready to perform under the terms of its agreement with such counterparty, the Fund bears the risk of loss from a counterparty in the amount of the value of the collateral in the event the counterparty fails to return such collateral.
5. Investment Advisory Agreement and Other Transactions with Affiliates:
The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (BlackRock) for 1940 Act purposes.
The Fund entered into an Investment Advisory Agreement with the Manager, the Funds investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Funds portfolio and provides the necessary personnel, facilities, equipment and certain other services to the operations of the Fund. For such services, the Fund pays the Manager a monthly fee based on a percentage of the Funds average daily net assets at the following annual rates:
Average Daily Net Assets |
Investment Advisory Fee |
|||
First $1 Billion |
0.650 | % | ||
$1 Billion - $1.5 Billion |
0.625 | % | ||
$1.5 Billion - $5 Billion |
0.600 | % | ||
$5 Billion - $7.5 Billion |
0.575 | % | ||
Greater than $7.5 Billion |
0.550 | % |
The Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds. However, the Manager does not waive its investment advisory fees by the amount of investment advisory fees paid in connection with the Funds investment in other affiliated investment companies, if any. This amount is shown as fees waived by the Manager in the Statement of Operations.
The Fund entered into a Distribution Agreement and a Distribution and Service Plan with BlackRock Investments, LLC (BRIL), an affiliate of the Manager. Pursuant to the Distribution and Service Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays BRIL 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 relevant share class of the Fund as follows:
Service Fee |
Distribution Fee |
|||||||
Investor A |
0.25 | % | | |||||
Investor B |
0.25 | % | 0.75 | % | ||||
Investor C |
0.25 | % | 0.75 | % | ||||
Class R |
0.25 | % | 0.25 | % |
26 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 |
Notes to Financial Statements (continued) |
Pursuant to sub-agreements with BRIL, broker-dealers and BRIL provide shareholder servicing and distribution services to the Fund. The ongoing service and/or distribution fee compensates BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to Investor A, Investor B, Investor C and Class R shareholders.
Pursuant to written agreements, certain financial intermediaries, some of which may be 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 entities receive an asset-based fee or an annual fee per shareholder account, which will vary depending on share class and/or net assets. For the six months ended March 31, 2015, the Fund paid $78,031 to the affiliates of BlackRock in return for these services, which is included in transfer agent class specific in the Statement of Operations.
The Manager maintains a call center, which is responsible for providing certain shareholder services to the Fund, such as responding to shareholder inquiries and processing transactions based upon instructions from shareholders with respect to the subscription and redemption of Fund shares. For the six months ended March 31, 2015, the Fund reimbursed the Manager the following amounts for costs incurred in running the call center, which are included in transfer agent class specific in the Statement of Operations:
BlackRock |
$ | 1,769 | ||
Institutional |
1,822 | |||
Investor A |
38,794 | |||
Investor B |
1,462 | |||
Investor C |
5,272 | |||
Class R |
243 | |||
Total |
$ | 49,362 | ||
|
|
The Manager contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses, excluding interest expense, dividend expense, tax expense, acquired fund fees and expenses and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Funds business. The expense limitations as a percentage of average daily net assets are as follows:
BlackRock |
0.72 | % | ||
Investor C |
1.94 | % |
The Manager has agreed not to reduce or discontinue this contractual waiver or reimbursement prior to February 1, 2025 unless approved by the Board, including a majority of the Independent Directors. On February 1 of each year, the waiver will renew automatically, so that the agreement will have a perpetual ten-year term. These amounts waived or reimbursed are shown as transfer agent fees waived BlackRock and transfer agent fees reimbursed BlackRock, respectively, in the Statement of Operations.
For the six months ended March 31, 2015, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of the Funds Investor A Shares of $56,340.
For the six months ended March 31, 2015, affiliates received CDSCs relating to transactions in Investor A, Investor B, and Investor C Shares of $3,749, $446 and $20,917, respectively.
The U.S. Securities and Exchange Commission has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the collateral investment expenses). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment advisor to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund.
Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.
Pursuant to a securities lending agreement effective January 1, 2015, the Fund retains 71.5% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 | 27 |
Notes to Financial Statements (continued) |
In addition, commencing the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income as follows:
75% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.
For the period February 1, 2014 through December 31, 2014, the Fund retained 70% (75% commencing on the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in the calendar year 2014 exceeded a specified threshold and for the remainder of that calendar year) of securities lending income, and this amount retained could never be less than 65% of the total securities lending income plus the collateral investment expenses.
The share of securities lending income earned by the Fund is shown as securities lending affiliated net in the Statement of Operations. For the six months ended March 31, 2015, the Fund paid BIM $34,900 for securities lending agent services.
Certain officers and/or directors of the Fund are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for a portion of the compensation paid to the Funds Chief Compliance Officer, which is included in officer and directors in the Statement of Operations.
The Fund may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment advisor, common officers, or common trustees. For the six months ended March 31, 2015, the sale transactions with an affiliated fund in compliance with Rule 17a-7 under the 1940 Act were $5,520,977.
6. Purchases and Sales:
For the six months ended March 31, 2015, purchases and sales of investments, excluding short-term securities, were $1,620,709,242 and $2,012,085,276, respectively.
7. Income Tax Information:
It is the Funds policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, 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.
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 Funds U.S. federal tax returns remains open for each of the four years ended September 30, 2014. The statutes of limitations on the Funds state and local tax returns may remain open for an additional year depending upon the jurisdiction.
Management has analyzed tax laws and regulations and their application to the Fund as of March 31, 2015, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Funds financial statements.
As of March 31, 2015, gross unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:
Tax cost |
$ | 2,943,082,834 | ||
|
|
|||
Gross unrealized appreciation |
$ | 840,074,100 | ||
Gross unrealized depreciation |
(10,211,409 | ) | ||
|
|
|||
Net unrealized appreciation |
$ | 829,862,691 | ||
|
|
8. Bank Borrowings:
The Fund, along with certain other funds managed by the Manager and its affiliates (Participating Funds), was a party to a 364-day, $1.1 billion credit agreement with a group of lenders, under which the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for a certain individual fund, the Participating Funds, including the Fund, could borrow up to an aggregate commitment amount of $650 million, subject to asset coverage and other limitations as specified in the agreement. Effective November 25, 2014, the credit agreement was amended to an aggregate commitment amount of $2.1 billion, of which the Participating Funds, including the Fund, can borrow up to $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The agreement terminates on April 23, 2015, unless otherwise extended to November 24, 2015 or renewed for a period of 364 days from April 23, 2015. The amended agreement has the following terms: a fee of 0.06% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus
28 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 |
Notes to Financial Statements (continued) |
0.80% per annum on amounts borrowed. Participating Funds paid administration, legal and arrangement fees, which are included in miscellaneous expenses in the Statement of Operations, and along with commitment fees, were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended March 31, 2015, the Fund did not borrow under the credit agreement.
9. Principal Risks:
In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency, interest rate and price fluctuations. Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Fund to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded in the Statement of Assets and Liabilities, less any collateral held by the Fund.
As of March 31, 2015, the Fund invested a significant portion of its assets in securities in the information technology, health care, and consumer discretionary sectors. Changes in economic conditions affecting such sectors would have a greater impact on the Fund and could affect the value, income and/or liquidity of positions in such securities.
10. Capital Share Transactions:
Transactions in capital shares for each class were as follows:
|
Six Months Ended March 31, 2015 |
|
|
Year Ended September 30, 2014 |
| |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||
BlackRock |
||||||||||||||||||
Shares sold |
3,042,368 | $ | 87,016,017 | 5,358,588 | $ | 154,298,100 | ||||||||||||
Shares issued in reinvestment of distributions |
3,252,508 | 80,174,309 | 2,689,621 | 72,700,462 | ||||||||||||||
Shares redeemed |
(2,448,465 | ) | (65,525,265 | ) | (12,371,182 | ) | (358,497,033 | ) | ||||||||||
|
|
|
|
|||||||||||||||
Net increase (decrease) |
3,846,411 | $ | 101,665,061 | (4,322,973 | ) | $ | (131,498,471 | ) | ||||||||||
|
|
|
|
|||||||||||||||
Institutional |
||||||||||||||||||
Shares sold |
3,003,139 | $ | 79,228,868 | 5,738,124 | $ | 165,084,421 | ||||||||||||
Shares issued in reinvestment of distributions |
5,449,774 | 134,119,071 | 4,721,193 | 127,424,932 | ||||||||||||||
Shares redeemed |
(9,077,584 | ) | (250,183,225 | ) | (16,043,989 | ) | (466,063,292 | ) | ||||||||||
|
|
|
|
|||||||||||||||
Net decrease |
(624,671 | ) | $ | (36,835,286 | ) | (5,584,672 | ) | $ | (173,553,939 | ) | ||||||||
|
|
|
|
|||||||||||||||
Investor A |
||||||||||||||||||
Shares sold and automatic conversion of shares |
3,575,091 | $ | 91,367,406 | 8,582,598 | $ | 236,023,544 | ||||||||||||
Shares issued in reinvestment of distributions |
13,221,436 | 308,986,498 | 9,416,838 | 243,798,760 | ||||||||||||||
Shares redeemed |
(9,265,644 | ) | (238,101,226 | ) | (21,590,773 | ) | (594,610,045 | ) | ||||||||||
|
|
|
|
|||||||||||||||
Net increase (decrease) |
7,530,883 | $ | 162,252,678 | (3,591,337 | ) | $ | (114,787,741 | ) | ||||||||||
|
|
|
|
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 | 29 |
Notes to Financial Statements (concluded) |
|
Six Months Ended March 31, 2015 |
|
|
Year Ended September 30, 2014 |
| |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||
Investor B |
||||||||||||||||||
Shares sold |
18,513 | $ | 401,573 | 42,385 | $ | 994,554 | ||||||||||||
Shares issued in reinvestment of distributions |
169,681 | 3,215,449 | 158,330 | 3,464,260 | ||||||||||||||
Shares redeemed and automatic conversion of shares |
(163,778 | ) | (3,508,579 | ) | (573,414 | ) | (13,427,564 | ) | ||||||||||
|
|
|
|
|||||||||||||||
Net increase (decrease) |
24,416 | $ | 108,443 | (372,699 | ) | $ | (8,968,750 | ) | ||||||||||
|
|
|
|
|||||||||||||||
Investor C |
||||||||||||||||||
Shares sold |
2,031,870 | $ | 42,867,049 | 3,854,305 | $ | 90,562,928 | ||||||||||||
Shares issued in reinvestment of distributions |
6,675,683 | 127,373,031 | 4,012,867 | 88,643,465 | ||||||||||||||
Shares redeemed |
(3,835,139 | ) | (81,311,523 | ) | (6,121,344 | ) | (143,992,294 | ) | ||||||||||
|
|
|
|
|||||||||||||||
Net increase |
4,872,414 | $ | 88,928,557 | 1,745,828 | $ | 35,214,099 | ||||||||||||
|
|
|
|
|||||||||||||||
Class R |
||||||||||||||||||
Shares sold |
404,817 | $ | 9,204,245 | 875,379 | $ | 21,787,376 | ||||||||||||
Shares issued in reinvestment of distributions |
835,638 | 17,130,566 | 614,635 | 14,339,430 | ||||||||||||||
Shares redeemed |
(968,735 | ) | (21,478,164 | ) | (1,897,301 | ) | (46,979,906 | ) | ||||||||||
|
|
|
|
|||||||||||||||
Net increase (decrease) |
271,720 | $ | 4,856,647 | (407,287 | ) | $ | (10,853,100 | ) | ||||||||||
Total Net Increase (Decrease) |
15,921,173 | $ | 320,976,100 | (12,533,140 | ) | $ | (404,447,902 | ) | ||||||||||
|
|
|
|
11. Subsequent Events:
Managements evaluation of the impact of all subsequent events on the Funds financial statements was completed through the date the financial statements were issued and the following item was noted:
Effective April 23, 2015, the 364-day, $2.1 billion credit agreement to which the Fund is a party, was further amended to expire on April 21, 2016, unless otherwise extended or renewed.
30 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 |
Officers and Directors |
Robert M. Hernandez, Chairman of the Board and Director
Fred G. Weiss, Vice Chairman of the Board and Director
James H. Bodurtha, Director
Bruce R. Bond, Director
Donald W. Burton, Director
Honorable Stuart E. Eizenstat, Director
Robert Fairbairn, Director
Kenneth A. Froot, Director
Henry Gabbay, Director
John F. OBrien, Director
Roberta Cooper Ramo, Director
David H. Walsh, Director
John M. Perlowski, Director, President and Chief Executive Officer
Jennifer McGovern, Vice President
Neal Andrews, Chief Financial Officer
Jay Fife, Treasurer
Charles Park, Chief Compliance Officer
Fernanda Piedra, Anti-Money Laundering Compliance Officer
Benjamin Archibald, Secretary
Effective December 31, 2014, Paul L. Audet and Laurence D. Fink resigned as Directors of the Fund. Effective January 1, 2015, Robert Fairbairn and John M. Perlowski were appointed to serve as Directors of the Fund.
Effective March 1, 2015, Charles Park resigned as Anti-Money Laundering Compliance Officer of the Fund and Fernanda Piedra became Anti-Money Laundering Compliance Officer of the Fund.
Effective as of the close of business on May 13, 2015, Valerie G. Brown and Donald C. Opatrny were appointed to serve as Directors of the Fund.
Investment Advisor | Custodian | Distributor | Address of the Fund | |||
BlackRock Advisors, LLC Wilmington, DE 19809 |
The Bank of New York Mellon New York, NY 10286 |
BlackRock Investments, LLC New York, NY 10022 |
100 Bellevue Parkway Wilmington, DE 19809 | |||
Accounting Agent and Transfer Agent BNY Mellon Investment Servicing (US) Inc. Wilmington, DE 19809 |
Legal Counsel Willkie Farr & Gallagher LLP New York, NY 10019 |
Independent Registered Public Accounting Firm Deloitte & Touche LLP Philadelphia, PA 19103 |
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 | 31 |
Additional Information |
General Information |
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 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 call the Fund at (800) 441-7762.
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds Forms N-Q are available on the SECs website at http://www.sec.gov and may also be reviewed and copied at the SECs Public Reference Room in Washington, D.C. Information on how to access documents on the SECs website without charge may be obtained by calling (800) SEC-0330. The Funds Forms N-Q may also be obtained upon request and without charge by calling (800) 441-7762.
Availability of Proxy Voting Policies and Procedures
A description of the policies and procedures that the Fund use to determine how to vote proxies relating to portfolio securities is available upon request and without charge (1) by calling (800) 441-7762; (2) at http://www.blackrock.com; and (3) on the SECs website at http://www.sec.gov.
Availability of Proxy Voting Record
Information about how the Fund voted proxies relating to securities held in the Funds portfolios during the most recent 12-month period ended June 30 is available, upon request and without charge (1) at http://www.blackrock.com or by calling (800) 441-7762 and (2) on the SECs website at http://www.sec.gov.
BlackRocks 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. Visit http://www.blackrock.com for more information.
Shareholder Privileges |
Account Information
Call us at (800) 441-7762 from 8:00 AM to 6:00 PM EST on any business day to get information about your account balances, recent transactions and share prices. You can also reach us on the Web at http://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 portfolios, as long as their account balance 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.
32 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 |
Additional Information (concluded) |
BlackRock Privacy Principles |
BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, Clients) and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.
If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.
BlackRock does not sell or disclose to non-affiliated third parties any non-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. These non-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2015 | 33 |
This report is intended for current holders. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless preceded or accompanied by the Funds 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. |
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CapApp-3/15-SAR |
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Item 2 | Code of Ethics Not Applicable to this semi-annual report |
Item 3 | Audit Committee Financial Expert Not Applicable to this semi-annual report |
Item 4 | Principal Accountant Fees and Services Not Applicable to this semi-annual report |
Item 5 | Audit Committee of Listed Registrants Not Applicable |
Item 6 | Investments |
(a) The registrants 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 There have been no material changes to these procedures. |
Item 11 | Controls and Procedures |
(a) The registrants principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrants 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. |
(b) There were no changes in the registrants 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 registrants internal control over financial reporting. |
Item 12 | Exhibits attached hereto |
(a)(1) Code of Ethics Not Applicable to this semi-annual report |
(a)(2) Certifications Attached hereto |
(a)(3) Not Applicable |
(b) Certifications Attached hereto |
2
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 Capital Appreciation Fund, Inc.
By: | /s/ John M. Perlowski | |
John M. Perlowski | ||
Chief Executive Officer (principal executive officer) of | ||
BlackRock Capital Appreciation Fund, Inc. |
Date: June 2, 2015
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/ John M. Perlowski | |
John M. Perlowski | ||
Chief Executive Officer (principal executive officer) of | ||
BlackRock Capital Appreciation Fund, Inc. | ||
Date: June 2, 2015
| ||
By: | /s/ Neal J. Andrews | |
Neal J. Andrews | ||
Chief Financial Officer (principal financial officer) of | ||
BlackRock Capital Appreciation Fund, Inc. |
Date: June 2, 2015
3
EX-99.CERT
CERTIFICATION PURSUANT TO RULE 30a-2(a) UNDER THE 1940 ACT AND SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, John M. Perlowski, Chief Executive Officer (principal executive officer) of BlackRock Capital Appreciation Fund, Inc., certify that:
1. I have reviewed this report on Form N-CSR of BlackRock Capital Appreciation Fund, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
d) disclosed in this report any change in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: June 2, 2015
/s/ John M. Perlowski |
John M. Perlowski |
Chief Executive Officer (principal executive officer) of |
BlackRock Capital Appreciation Fund, Inc. |
EX-99.CERT
CERTIFICATION PURSUANT TO RULE 30a-2(a) UNDER THE 1940 ACT AND SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Neal J. Andrews, Chief Financial Officer (principal financial officer) of BlackRock Capital Appreciation Fund, Inc., certify that:
1. I have reviewed this report on Form N-CSR of BlackRock Capital Appreciation Fund, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
d) disclosed in this report any change in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: June 2, 2015
/s/ Neal J. Andrews |
Neal J. Andrews |
Chief Financial Officer (principal financial officer) of |
BlackRock Capital Appreciation Fund, Inc.
Exhibit 99.906CERT
Certification Pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. § 1350, the undersigned officer of BlackRock Capital Appreciation Fund, Inc. (the registrant), hereby certifies, to the best of his knowledge, that the registrants Report on Form N-CSR for the period ended March 31, 2015 (the Report) fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.
Date: June 2, 2015
/s/ John M. Perlowski |
John M. Perlowski |
Chief Executive Officer (principal executive officer) of
BlackRock Capital Appreciation Fund, Inc.
Pursuant to 18 U.S.C. § 1350, the undersigned officer of BlackRock Capital Appreciation Fund, Inc. (the registrant), hereby certifies, to the best of his knowledge, that the registrants Report on Form N-CSR for the period ended March 31, 2015 (the Report) fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.
Date: June 2, 2015
/s/ Neal J. Andrews |
Neal J. Andrews |
Chief Financial Officer (principal financial officer) of
BlackRock Capital Appreciation Fund, Inc.
This certification is being furnished pursuant to Rule 30a-2(b) under the Investment Company Act of 1940, as amended, and 18 U.S.C. Section 1350 and is not being filed as part of the Form N-CSR with the Securities and Exchange Commission.
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