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: 09/30/2017
Date of reporting period: 03/31/2017
Item 1 Report to Stockholders
MARCH 31, 2017
SEMI-ANNUAL REPORT (UNAUDITED)
|
BLACKROCK® |
BlackRock Capital Appreciation Fund, Inc.
Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee |
2 | THIS PAGE NOT PART OF YOUR FUND REPORT |
Table of Contents |
Page | ||||
2 | ||||
Semi-Annual Report: |
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4 | ||||
6 | ||||
6 | ||||
7 | ||||
Financial Statements: |
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8 | ||||
11 | ||||
12 | ||||
13 | ||||
14 | ||||
20 | ||||
29 | ||||
30 |
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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
|
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 | 3 |
Fund Summary as of March 31, 2017 |
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, 2017 |
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 adviser 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, 2017 | |||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||
Institutional |
6.74 | % | 15.90 | % | N/A | 11.15 | % | N/A | 8.03 | % | N/A | ||||||||||||||||||||||||
Investor A |
6.58 | 15.58 | 9.51 | % | 10.84 | 9.65 | % | 7.70 | 7.12 | % | |||||||||||||||||||||||||
Investor B |
5.80 | 14.16 | 9.66 | 9.66 | 9.42 | 6.91 | 6.91 | ||||||||||||||||||||||||||||
Investor C |
6.17 | 14.65 | 13.65 | 9.96 | 9.96 | 6.89 | 6.89 | ||||||||||||||||||||||||||||
Class K |
6.83 | 16.07 | N/A | 11.27 | N/A | 8.16 | N/A | ||||||||||||||||||||||||||||
Class R |
6.48 | 15.28 | N/A | 10.54 | N/A | 7.37 | N/A | ||||||||||||||||||||||||||||
Russell 1000® Growth Index |
10.01 | 15.76 | N/A | 13.32 | N/A | 9.13 | N/A | ||||||||||||||||||||||||||||
S&P 500® Index |
10.12 | 17.17 | N/A | 13.30 | N/A | 7.51 | 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 6 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. |
Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles. |
Expense Example | ||||||||||||||
Actual | Hypothetical7 | |||||||||||||
Beginning Account Value October 1, 2016 |
Ending Account Value March 31, 2017 |
Expenses Paid During the Period6 |
Beginning Account Value October 1, 2016 |
Ending Account Value March 31, 2017 |
Expenses Paid During the Period6 |
Annualized Expense Ratio | ||||||||
Institutional |
$1,000.00 | $1,067.40 | $ 4.06 | $1,000.00 | $1,020.93 | $ 3.97 | 0.79% | |||||||
Investor A |
$1,000.00 | $1,065.80 | $ 5.55 | $1,000.00 | $1,019.49 | $ 5.42 | 1.08% | |||||||
Investor B |
$1,000.00 | $1,058.00 | $13.25 | $1,000.00 | $1,011.98 | $12.96 | 2.59% | |||||||
Investor C |
$1,000.00 | $1,061.70 | $ 9.69 | $1,000.00 | $1,015.47 | $ 9.47 | 1.89% | |||||||
Class K |
$1,000.00 | $1,068.30 | $ 3.45 | $1,000.00 | $1,021.53 | $ 3.37 | 0.67% | |||||||
Class R |
$1,000.00 | $1,064.80 | $ 6.93 | $1,000.00 | $1,018.15 | $ 6.77 | 1.35% |
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 6 for further information on how expenses were calculated. |
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 | 5 |
About Fund Performance |
Disclosure of Expenses |
6 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 |
As of March 31, 2017 |
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 | 7 |
Schedule of Investments March 31, 2017 (Unaudited) | (Percentages shown are based on Net Assets) | |||
Portfolio Abbreviation | ||||||||||
ADR | American Depositary Receipts |
See Notes to Financial Statements.
8 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 |
Schedule of Investments (continued) | ||||
Notes to Schedule of Investments |
(a) | Security, or a portion of the security, is on loan. |
(b) | Non-income producing security. |
(c) | Restricted security as to resale, excluding 144A securities. The Fund held restricted securities with a current value of $40,441,596, representing 1.4% of its net assets as of period end, and an original cost of $31,222,542. |
(d) | During the six months ended March 31, 2017, 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 Held at September 30, 2016 |
Net Activity |
Shares Held at March 31, 2017 |
Value at March 31, 2017 |
Income | Net Realized Gain1 |
Change in Unrealized Appreciation (Depreciation) |
|||||||||||||||||||||
BlackRock Liquidity Funds, T-Fund, Institutional Class |
55,871,989 | (49,038,425 | ) | 6,833,564 | $ | 6,833,564 | $ | 30,124 | $ | 160 | | |||||||||||||||||
SL Liquidity Series, LLC, Money Market Series |
63,321,635 | (5,974,483 | ) | 57,347,152 | 57,352,887 | 63,731 | 2 | 4,066 | $ | (655 | ) | |||||||||||||||||
Total |
$ | 64,186,451 | $ | 93,855 | $ | 4,226 | $ | (655 | ) | |||||||||||||||||||
|
|
1 | Includes net capital gain distributions. |
2 | Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities. |
(e) | Current yield as of period end. |
(f) | Security was purchased with the cash collateral from loaned securities. |
| For Fund compliance purposes, the Funds industry classifications refer to one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease. |
Fair Value Hierarchy as of Period End |
Various inputs are used in determining the fair value of investments. For information about the Funds policy regarding valuation of investments, refer to the Notes to Financial Statements.
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 |
$ | 27,176,110 | | | $ | 27,176,110 | ||||||||||
Banks |
143,950,627 | | | 143,950,627 | ||||||||||||
Beverages |
71,163,640 | | | 71,163,640 | ||||||||||||
Biotechnology |
198,270,005 | | | 198,270,005 | ||||||||||||
Chemicals |
58,546,169 | | | 58,546,169 | ||||||||||||
Diversified Financial Services |
40,433,901 | | | 40,433,901 | ||||||||||||
Diversified Telecommunication Services |
13,373,751 | | | 13,373,751 | ||||||||||||
Electrical Equipment |
49,493,052 | | | 49,493,052 | ||||||||||||
Equity Real Estate Investment Trusts (REITs) |
73,878,652 | | | 73,878,652 |
See Notes to Financial Statements.
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 | 9 |
Schedule of Investments (concluded) |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Health Care Equipment & Supplies |
$ | 80,270,626 | | | $ | 80,270,626 | ||||||||||
Health Care Providers & Services |
163,848,441 | | | 163,848,441 | ||||||||||||
Hotels, Restaurants & Leisure |
42,914,357 | | | 42,914,357 | ||||||||||||
Industrial Conglomerates |
32,330,759 | | | 32,330,759 | ||||||||||||
Internet & Direct Marketing Retail |
407,679,805 | | | 407,679,805 | ||||||||||||
Internet Software & Services |
328,110,601 | $ | 77,958,563 | | 406,069,164 | |||||||||||
IT Services |
241,801,757 | | | 241,801,757 | ||||||||||||
Multiline Retail |
11,808,073 | | | 11,808,073 | ||||||||||||
Oil, Gas & Consumable Fuels |
38,155,173 | | | 38,155,173 | ||||||||||||
Pharmaceuticals |
24,018,475 | | | 24,018,475 | ||||||||||||
Professional Services |
43,438,743 | | | 43,438,743 | ||||||||||||
Semiconductors & Semiconductor Equipment |
127,307,621 | | | 127,307,621 | ||||||||||||
Software |
315,012,032 | | | 315,012,032 | ||||||||||||
Specialty Retail |
87,000,458 | | | 87,000,458 | ||||||||||||
Technology Hardware, Storage & Peripherals |
72,608,493 | | | 72,608,493 | ||||||||||||
Textiles, Apparel & Luxury Goods |
85,295,322 | | | 85,295,322 | ||||||||||||
Preferred Stocks: |
||||||||||||||||
Software |
| | $ | 40,441,596 | 40,441,596 | |||||||||||
Short-Term Securities |
6,833,564 | | | 6,833,564 | ||||||||||||
|
|
|||||||||||||||
Subtotal |
$ | 2,784,720,207 | $ | 77,958,563 | $ | 40,441,596 | $ | 2,903,120,366 | ||||||||
|
|
|||||||||||||||
Investments Valued at NAV1 |
57,352,887 | |||||||||||||||
|
|
|||||||||||||||
Total Investments |
$ | 2,960,473,253 | ||||||||||||||
|
|
1 | As of March 31, 2017, certain investments of the Fund were fair valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy. |
During the six months ended March 31, 2017, there were no transfers between Level 1 and Level 2.
A reconciliation of Level 3 investments is presented when the Fund had a significant amount of Level 3 investments 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 Stocks |
||||
Assets: |
||||
Opening balance, as of September 30, 2016 |
$ | 46,757,412 | ||
Transfers into Level 3 |
| |||
Transfers out of Level 3 |
| |||
Accrued discounts/premiums |
| |||
Net realized gain (loss) |
| |||
Net change in unrealized appreciation (depreciation)1,2 |
(6,315,816 | ) | ||
Purchases |
| |||
Sales |
| |||
|
|
|||
Closing Balance, as of March 31, 2017 |
$ | 40,441,596 | ||
|
|
|||
Net change in unrealized appreciation (depreciation) on investments still held at March 31, 20172 |
$ | (6,315,816 | ) | |
|
|
1 | Included in the related net change in unrealized appreciation (depreciation) in the Statement of Operations. |
2 | Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at March 31, 2017 is generally due to investments no longer held or categorized as Level 3 at period end. |
The following table summarizes the valuation approaches 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 period end.
Value | Valuation Approach |
Unobservable Inputs |
Range of Unobservable Inputs Utilized |
|||||||||
Assets: | ||||||||||||
Preferred Stocks |
$ | 40,441,596 | Market | Revenue Multiple1 | 10.75 | x | ||||||
Revenue Growth Rate1 | 133.00 | % |
1 | 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.
10 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 |
Statement of Assets and Liabilities |
March 31, 2017 (Unaudited) | ||||
Assets | ||||
Investments at value unaffiliated (including securities loaned at value of $56,159,124) (cost $2,101,482,926) |
$ | 2,896,286,802 | ||
Investments at value affiliated (cost $64,187,106) |
64,186,451 | |||
Cash |
1,641 | |||
Receivables: |
||||
Investments sold |
51,345 | |||
Securities lending income affiliated |
9,112 | |||
Capital shares sold |
4,332,426 | |||
Dividends affiliated |
4,114 | |||
Dividends unaffiliated |
666,779 | |||
Prepaid expenses |
82,252 | |||
|
|
|||
Total assets |
2,965,620,922 | |||
|
|
|||
Liabilities | ||||
Cash collateral on securities loaned at value |
57,349,476 | |||
Payables: |
||||
Capital shares redeemed |
9,403,378 | |||
Investment advisory fees |
1,538,086 | |||
Officers and Directors fees |
19,058 | |||
Other accrued expenses |
1,516,414 | |||
Other affiliates |
65,390 | |||
Service and distribution fees |
741,551 | |||
|
|
|||
Total liabilities |
70,633,353 | |||
|
|
|||
Net Assets |
$ | 2,894,987,569 | ||
|
|
|||
Net Assets Consist of | ||||
Paid-in capital |
$ | 1,966,335,781 | ||
Accumulated net investment loss |
(15,048,405 | ) | ||
Undistributed net realized gain |
148,896,972 | |||
Net unrealized appreciation (depreciation) |
794,803,221 | |||
|
|
|||
Net Assets |
$ | 2,894,987,569 | ||
|
|
|||
Net Asset Value | ||||
Institutional Based on net assets of $460,935,263 and 17,802,446 shares outstanding, 300,000,000 shares authorized, $0.10 par value |
$ | 25.89 | ||
|
|
|||
Investor A Based on net assets of $1,442,669,870 and 59,583,529 shares outstanding, 300,000,000 shares authorized, $0.10 par value |
$ | 24.21 | ||
|
|
|||
Investor B Based on net assets of $957,985 and 52,113 shares outstanding, 500,000,000 shares authorized, $0.10 par value |
$ | 18.38 | ||
|
|
|||
Investor C Based on net assets of $455,106,290 and 24,353,750 shares outstanding, 300,000,000 shares authorized, $0.10 par value |
$ | 18.69 | ||
|
|
|||
Class K Based on net assets of $461,099,737 and 17,723,329 shares outstanding, 300,000,000 shares authorized, $0.10 par value |
$ | 26.02 | ||
|
|
|||
Class R Based on net assets of $74,218,424 and 3,596,412 shares outstanding, 500,000,000 shares authorized, $0.10 par value |
$ | 20.64 | ||
|
|
See Notes to Financial Statements.
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 | 11 |
Statement of Operations |
Six Months Ended March 31, 2017 (Unaudited) | ||||
Investment Income | ||||
Dividends affiliated |
$ | 30,124 | ||
Dividends unaffiliated1 |
11,684,178 | |||
Securities lending income affiliated net |
63,731 | |||
Foreign taxes withheld |
(113,207 | ) | ||
|
|
|||
Total investment income |
11,664,826 | |||
|
|
|||
Expenses | ||||
Investment advisory |
8,936,447 | |||
Service and distribution class specific |
4,362,600 | |||
Transfer agent class specific |
2,103,490 | |||
Accounting services |
218,246 | |||
Custodian |
145,134 | |||
Registration |
74,864 | |||
Professional |
64,593 | |||
Printing |
42,199 | |||
Officer and Directors |
31,044 | |||
Miscellaneous |
34,374 | |||
|
|
|||
Total expenses |
16,012,991 | |||
Less fees waived by the Manager |
(6,256 | ) | ||
|
|
|||
Total expenses after fees waived |
16,006,735 | |||
|
|
|||
Net investment loss |
(4,341,909 | ) | ||
|
|
|||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) from: |
||||
Investments unaffiliated |
162,452,226 | |||
Investments affiliated |
4,066 | |||
Capital gain distributions from investment companies affiliated |
160 | |||
Foreign currency transactions |
(62 | ) | ||
|
|
|||
162,456,390 | ||||
|
|
|||
Net change in unrealized appreciation (depreciation): |
||||
Investments unaffiliated |
21,370,639 | |||
Investments affiliated |
(655 | ) | ||
|
|
|||
21,369,984 | ||||
|
|
|||
Net realized and unrealized gain |
183,826,374 | |||
|
|
|||
Net Increase in Net Assets Resulting from Operations |
$ | 179,484,465 | ||
|
|
1 | Includes non-recurring dividends in the amount of $2,275,944. |
See Notes to Financial Statements.
12 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 |
Statements of Changes in Net Assets |
Increase (Decrease) in Net Assets: | Six Months March 31, 2017 |
Year Ended |
||||||
Operations | ||||||||
Net investment loss |
$ | (4,341,909 | ) | $ | (14,411,675 | ) | ||
Net realized gain |
162,456,390 | 142,482,599 | ||||||
Net change in unrealized appreciation (depreciation) |
21,369,984 | 203,332,166 | ||||||
|
|
|||||||
Net increase in net assets resulting from operations |
179,484,465 | 331,403,090 | ||||||
|
|
|||||||
Distributions to Shareholders1 | ||||||||
From net realized gain: |
||||||||
Institutional |
(17,197,420 | ) | (65,022,644 | ) | ||||
Investor A |
(54,170,703 | ) | (165,189,442 | ) | ||||
Investor B |
(75,900 | ) | (545,105 | ) | ||||
Investor C |
(23,283,372 | ) | (74,938,970 | ) | ||||
Class K |
(14,053,513 | ) | (41,266,118 | ) | ||||
Class R |
(3,271,734 | ) | (9,237,383 | ) | ||||
|
|
|||||||
Decrease in net assets resulting from distributions to shareholders |
(112,052,642 | ) | (356,199,662 | ) | ||||
|
|
|||||||
Capital Share Transactions | ||||||||
Net decrease in net assets derived from capital share transactions |
(222,729,734 | ) | (152,910,600 | ) | ||||
|
|
|||||||
Net Assets | ||||||||
Total decrease in net assets |
(155,297,911 | ) | (177,707,172 | ) | ||||
Beginning of period |
3,050,285,480 | 3,227,992,652 | ||||||
|
|
|||||||
End of period |
$ | 2,894,987,569 | $ | 3,050,285,480 | ||||
|
|
|||||||
Accumulated net investment loss, end of period |
$ | (15,048,405 | ) | $ | (10,706,496 | ) | ||
|
|
1 | Distributions for annual periods determined in accordance with U.S. federal income tax regulations. |
See Notes to Financial Statements.
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 | 13 |
Financial Highlights |
Institutional | ||||||||||||||||||||||||
Six Months Ended March 31, 2017 |
Year Ended September 30, | |||||||||||||||||||||||
(Unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||
Net asset value, beginning of period |
$ | 25.17 | $ | 24.97 | $ | 29.34 | $ | 29.39 | $ | 25.06 | $ | 20.24 | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment income (loss)1 |
0.00 | 2,3 | (0.03 | ) | (0.04 | ) | (0.02 | ) | 0.13 | 0.11 | ||||||||||||||
Net realized and unrealized gain |
1.60 | 2.81 | 1.31 | 4.23 | 4.35 | 4.71 | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Net increase from investment operations |
1.60 | 2.78 | 1.27 | 4.21 | 4.48 | 4.82 | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Distributions:4 |
||||||||||||||||||||||||
From net investment income |
| | | | (0.15 | ) | | |||||||||||||||||
From net realized gain |
(0.88 | ) | (2.58 | ) | (5.64 | ) | (4.26 | ) | | | ||||||||||||||
|
|
|||||||||||||||||||||||
Total distributions |
(0.88 | ) | (2.58 | ) | (5.64 | ) | (4.26 | ) | (0.15 | ) | | |||||||||||||
|
|
|||||||||||||||||||||||
Net asset value, end of period |
$ | 25.89 | $ | 25.17 | $ | 24.97 | $ | 29.34 | $ | 29.39 | $ | 25.06 | ||||||||||||
|
|
|||||||||||||||||||||||
Total Return5 | ||||||||||||||||||||||||
Based on net asset value |
6.74 | %6 | 11.41 | % | 4.61 | % | 15.60 | % | 17.99 | % | 23.81 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Ratios to Average Net Assets | ||||||||||||||||||||||||
Total expenses |
0.79 | %7 | 0.77 | % | 0.79 | % | 0.79 | % | 0.83 | % | 0.84 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Total expenses after fees waived, and/or reimbursed and paid indirectly |
0.79 | %7 | 0.77 | % | 0.79 | % | 0.79 | % | 0.83 | % | 0.84 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment income (loss) |
0.03 | %2,7 | (0.11 | )% | (0.16 | )% | (0.06 | )% | 0.51 | % | 0.48 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000) |
$ | 460,935 | $ | 524,492 | $ | 638,860 | $ | 878,301 | $ | 1,043,889 | $ | 1,514,881 | ||||||||||||
|
|
|||||||||||||||||||||||
Portfolio turnover rate |
40 | % | 78 | % | 77 | % | 100 | % | 134 | % | 77 | % | ||||||||||||
|
|
1 | Based on average shares outstanding. |
2 | Net investment income per share and the ratio of net investment income to average net assets includes $0.02 per share and 0.08%, respectively, resulting from a special dividend. |
3 | Amount is less than $0.005 per share. |
4 | Distributions for annual periods determined in accordance with U.S. federal income tax regulations. |
5 | Where applicable, assumes the reinvestment of distributions. |
6 | Aggregate total return. |
7 | Annualized. |
See Notes to Financial Statements.
14 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 |
Financial Highlights (continued) |
Investor A | ||||||||||||||||||||||||
Six Months Ended March 31, 2017 |
Year Ended September 30, | |||||||||||||||||||||||
(Unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||
Net asset value, beginning of period |
$ | 23.63 | $ | 23.66 | $ | 28.08 | $ | 28.31 | $ | 24.11 | $ | 19.51 | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment income (loss)1 |
(0.03 | )2 | (0.10 | ) | (0.11 | ) | (0.09 | ) | 0.04 | 0.05 | ||||||||||||||
Net realized and unrealized gain |
1.49 | 2.65 | 1.26 | 4.06 | 4.21 | 4.55 | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Net increase from investment operations |
1.46 | 2.55 | 1.15 | 3.97 | 4.25 | 4.60 | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Distributions:3 |
||||||||||||||||||||||||
From net investment income |
| | | | (0.05 | ) | | |||||||||||||||||
From net realized gain |
(0.88 | ) | (2.58 | ) | (5.57 | ) | (4.20 | ) | | | ||||||||||||||
|
|
|||||||||||||||||||||||
Total distributions |
(0.88 | ) | (2.58 | ) | (5.57 | ) | (4.20 | ) | (0.05 | ) | | |||||||||||||
|
|
|||||||||||||||||||||||
Net asset value, end of period |
$ | 24.21 | $ | 23.63 | $ | 23.66 | $ | 28.08 | $ | 28.31 | $ | 24.11 | ||||||||||||
|
|
|||||||||||||||||||||||
Total Return4 | ||||||||||||||||||||||||
Based on net asset value |
6.58 | %5 | 11.04 | % | 4.35 | % | 15.29 | % | 17.67 | % | 23.58 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Ratios to Average Net Assets | ||||||||||||||||||||||||
Total expenses |
1.08 | %6 | 1.08 | % | 1.07 | % | 1.07 | % | 1.09 | % | 1.09 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Total expenses after fees waived, and/or reimbursed and paid indirectly |
1.08 | %6 | 1.08 | % | 1.06 | % | 1.07 | % | 1.09 | % | 1.09 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment income (loss) |
(0.27 | )%2,6 | (0.42 | )% | (0.44 | )% | (0.33 | )% | 0.14 | % | 0.23 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000) |
$ | 1,442,670 | $ | 1,521,267 | $ | 1,532,090 | $ | 1,729,475 | $ | 1,845,224 | $ | 2,085,079 | ||||||||||||
|
|
|||||||||||||||||||||||
Portfolio turnover rate |
40 | % | 78 | % | 77 | % | 100 | % | 134 | % | 77 | % | ||||||||||||
|
|
1 | Based on average shares outstanding. |
2 | Net investment income per share and the ratio of net investment income to average net assets includes $0.02 per share and 0.08%, respectively, resulting from a special dividend. |
3 | Distributions for annual periods determined in accordance with U.S. 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.
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 | 15 |
Financial Highlights (continued) |
Investor B | ||||||||||||||||||||||||
Six Months Ended March 31, 2017 |
Year Ended September 30, | |||||||||||||||||||||||
(Unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||
Net asset value, beginning of period |
$ | 18.29 | $ | 19.03 | $ | 23.55 | $ | 24.40 | $ | 20.95 | $ | 17.13 | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment loss1 |
(0.15 | )2 | (0.27 | ) | (0.30 | ) | (0.32 | ) | (0.17 | ) | (0.14 | ) | ||||||||||||
Net realized and unrealized gain |
1.12 | 2.11 | 1.04 | 3.47 | 3.62 | 3.96 | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Net increase from investment operations |
0.97 | 1.84 | 0.74 | 3.15 | 3.45 | 3.82 | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Distributions from net realized gain3 |
(0.88 | ) | (2.58 | ) | (5.26 | ) | (4.00 | ) | | | ||||||||||||||
|
|
|||||||||||||||||||||||
Net asset value, end of period |
$ | 18.38 | $ | 18.29 | $ | 19.03 | $ | 23.55 | $ | 24.40 | $ | 20.95 | ||||||||||||
|
|
|||||||||||||||||||||||
Total Return4 | ||||||||||||||||||||||||
Based on net asset value |
5.80 | %5 | 9.88 | % | 3.26 | % | 14.15 | % | 16.47 | % | 22.30 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Ratios to Average Net Assets | ||||||||||||||||||||||||
Total expenses |
2.59 | %6 | 2.16 | % | 2.04 | % | 2.10 | % | 2.16 | % | 2.04 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Total expenses after fees waived, and/or reimbursed and paid indirectly |
2.59 | %6 | 2.16 | % | 2.04 | % | 2.10 | % | 2.16 | % | 2.04 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment loss |
(1.75 | )%2,6 | (1.49 | )% | (1.45 | )% | (1.37 | )% | (0.79 | )% | (0.72 | )% | ||||||||||||
|
|
|||||||||||||||||||||||
Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000) |
$ | 958 | $ | 2,089 | $ | 4,616 | $ | 16,844 | $ | 26,552 | $ | 60,559 | ||||||||||||
|
|
|||||||||||||||||||||||
Portfolio turnover rate |
40 | % | 78 | % | 77 | % | 100 | % | 134 | % | 77 | % | ||||||||||||
|
|
1 | Based on average shares outstanding. |
2 | Net investment income per share and the ratio of net investment income to average net assets includes $0.02 per share and 0.08%, respectively, resulting from a special dividend. |
3 | Distributions for annual periods determined in accordance with U.S. 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.
16 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 |
Financial Highlights (continued) |
Investor C | ||||||||||||||||||||||||
Six Months Ended March 31, 2017 |
Year Ended September 30, | |||||||||||||||||||||||
(Unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||
Net asset value, beginning of period |
$ | 18.52 | $ | 19.19 | $ | 23.81 | $ | 24.64 | $ | 21.11 | $ | 17.23 | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment loss1 |
(0.10 | )2 | (0.22 | ) | (0.26 | ) | (0.26 | ) | (0.15 | ) | (0.12 | ) | ||||||||||||
Net realized and unrealized gain |
1.15 | 2.13 | 1.06 | 3.49 | 3.68 | 4.00 | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Net increase from investment operations |
1.05 | 1.91 | 0.80 | 3.23 | 3.53 | 3.88 | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Distributions from net realized gain3 |
(0.88 | ) | (2.58 | ) | (5.42 | ) | (4.06 | ) | | | ||||||||||||||
|
|
|||||||||||||||||||||||
Net asset value, end of period |
$ | 18.69 | $ | 18.52 | $ | 19.19 | $ | 23.81 | $ | 24.64 | $ | 21.11 | ||||||||||||
|
|
|||||||||||||||||||||||
Total Return4 | ||||||||||||||||||||||||
Based on net asset value |
6.17 | %5 | 10.19 | % | 3.47 | % | 14.39 | % | 16.72 | % | 22.52 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Ratios to Average Net Assets | ||||||||||||||||||||||||
Total expenses |
1.89 | %6 | 1.89 | % | 1.86 | % | 1.86 | % | 1.90 | % | 1.92 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Total expenses after fees waived, and/or reimbursed and paid indirectly |
1.89 | %6 | 1.89 | % | 1.86 | % | 1.86 | % | 1.90 | % | 1.92 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment loss |
(1.07 | )%2,6 | (1.23 | )% | (1.23 | )% | (1.12 | )% | (0.68 | )% | (0.60 | )% | ||||||||||||
|
|
|||||||||||||||||||||||
Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000) |
$ | 455,106 | $ | 515,154 | $ | 573,035 | $ | 634,176 | $ | 613,338 | $ | 586,862 | ||||||||||||
|
|
|||||||||||||||||||||||
Portfolio turnover rate |
40 | % | 78 | % | 77 | % | 100 | % | 134 | % | 77 | % | ||||||||||||
|
|
1 | Based on average shares outstanding. |
2 | Net investment income per share and the ratio of net investment income to average net assets includes $0.02 per share and 0.08%, respectively, resulting from a special dividend. |
3 | Distributions for annual periods determined in accordance with U.S. 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.
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 | 17 |
Financial Highlights (continued) |
Class K | ||||||||||||||||||||||||
Six Months Ended BlackRock March 31, 2017 |
Year Ended September 30, | |||||||||||||||||||||||
(Unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||
Net asset value, beginning of period |
$ | 25.27 | $ | 25.04 | $ | 29.40 | $ | 29.44 | $ | 25.11 | $ | 20.25 | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment income (loss)1 |
0.02 | 2 | (0.00 | )3 | (0.01 | ) | 0.00 | 4 | 0.16 | 0.14 | ||||||||||||||
Net realized and unrealized gain |
1.61 | 2.81 | 1.31 | 4.24 | 4.35 | 4.72 | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Net increase from investment operations |
1.63 | 2.81 | 1.30 | 4.24 | 4.51 | 4.86 | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Distributions:5 |
||||||||||||||||||||||||
From net investment income |
| | | | (0.18 | ) | | |||||||||||||||||
From net realized gain |
(0.88 | ) | (2.58 | ) | (5.66 | ) | (4.28 | ) | | | ||||||||||||||
|
|
|||||||||||||||||||||||
Total distributions |
(0.88 | ) | (2.58 | ) | (5.66 | ) | (4.28 | ) | (0.18 | ) | | |||||||||||||
|
|
|||||||||||||||||||||||
Net asset value, end of period |
$ | 26.02 | $ | 25.27 | $ | 25.04 | $ | 29.40 | $ | 29.44 | $ | 25.11 | ||||||||||||
|
|
|||||||||||||||||||||||
Total Return6 | ||||||||||||||||||||||||
Based on net asset value |
6.83 | %7 | 11.50 | % | 4.74 | % | 15.70 | % | 18.12 | % | 24.00 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Ratios to Average Net Assets | ||||||||||||||||||||||||
Total expenses |
0.67 | %8 | 0.67 | % | 0.68 | % | 0.76 | % | 0.79 | % | 0.77 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Total expenses after fees waived, and/or reimbursed and paid indirectly |
0.67 | %8 | 0.66 | % | 0.67 | % | 0.72 | % | 0.72 | % | 0.72 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment income (loss) |
0.14 | %2,8 | (0.00 | )%9 | (0.04 | )% | 0.01 | % | 0.63 | % | 0.60 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000) |
$ | 461,100 | $ | 411,146 | $ | 406,665 | $ | 395,387 | $ | 523,231 | $ | 1,010,259 | ||||||||||||
|
|
|||||||||||||||||||||||
Portfolio turnover rate |
40 | % | 78 | % | 77 | % | 100 | % | 134 | % | 77 | % | ||||||||||||
|
|
1 | Based on average shares outstanding. |
2 | Net investment income per share and the ratio of net investment income to average net assets includes $0.02 per share and 0.08%, respectively, resulting from a special dividend. |
3 | Amount is greater than $(0.005) per share. |
4 | Amount is less than $0.005 per share. |
5 | Distributions for annual periods determined in accordance with U.S. federal income tax regulations. |
6 | Where applicable, assumes the reinvestment of distributions. |
7 | Aggregate total return. |
8 | Annualized. |
9 | Amount is greater than (0.005)%. |
See Notes to Financial Statements.
18 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 |
Financial Highlights (concluded) |
Class R | ||||||||||||||||||||||||
Six Months Ended March 31, 2017 |
Year Ended September 30, | |||||||||||||||||||||||
(Unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||
Net asset value, beginning of period |
$ | 20.30 | $ | 20.71 | $ | 25.25 | $ | 25.86 | $ | 22.03 | $ | 17.88 | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment loss1 |
(0.05 | )2 | (0.13 | ) | (0.16 | ) | (0.15 | ) | (0.03 | ) | (0.01 | ) | ||||||||||||
Net realized and unrealized gain |
1.27 | 2.30 | 1.13 | 3.68 | 3.86 | 4.16 | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Net increase from investment operations |
1.22 | 2.17 | 0.97 | 3.53 | 3.83 | 4.15 | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Distributions from net realized gain3 |
(0.88 | ) | (2.58 | ) | (5.51 | ) | (4.14 | ) | | | ||||||||||||||
|
|
|||||||||||||||||||||||
Net asset value, end of period |
$ | 20.64 | $ | 20.30 | $ | 20.71 | $ | 25.25 | $ | 25.86 | $ | 22.03 | ||||||||||||
|
|
|||||||||||||||||||||||
Total Return4 | ||||||||||||||||||||||||
Based on net asset value |
6.48 | %5 | 10.75 | % | 4.07 | % | 14.96 | % | 17.39 | % | 23.21 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Ratios to Average Net Assets | ||||||||||||||||||||||||
Total expenses |
1.35 | %6 | 1.35 | % | 1.32 | % | 1.33 | % | 1.38 | % | 1.39 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Total expenses after fees waived, and/or reimbursed and paid indirectly |
1.35 | %6 | 1.34 | % | 1.32 | % | 1.33 | % | 1.38 | % | 1.39 | % | ||||||||||||
|
|
|||||||||||||||||||||||
Net investment loss |
(0.54 | )%2,6 | (0.69 | )% | (0.70 | )% | (0.59 | )% | (0.13 | )% | (0.07 | )% | ||||||||||||
|
|
|||||||||||||||||||||||
Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000) |
$ | 74,218 | $ | 76,138 | $ | 72,727 | $ | 80,747 | $ | 93,218 | $ | 116,598 | ||||||||||||
|
|
|||||||||||||||||||||||
Portfolio turnover rate |
40 | % | 78 | % | 77 | % | 100 | % | 134 | % | 77 | % | ||||||||||||
|
|
1 | Based on average shares outstanding. |
2 | Net investment income per share and the ratio of net investment income to average net assets includes $0.02 per share and 0.08%, respectively, resulting from a special dividend. |
3 | Distributions for annual periods determined in accordance with U.S. 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, 2017 | 19 |
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 an open-end management investment company. The Fund is classified as diversified. 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 and Class K Shares are sold only to certain eligible investors. Class R Shares are available only to certain employer-sponsored retirement plans. Investor A and Investor C Shares are generally available through financial intermediaries. Investor B Shares are available only through exchanges and dividend reinvestments by existing shareholders, and for purchase by certain employer-sponsored retirement plans. 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 | |||
Institutional, Class K 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 contingent deferred sales charge (CDSC) for certain redemptions 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 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, disclosure of contingent assets and liabilities at the date of 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. Below is a summary of significant accounting policies:
Foreign Currency: The Funds books and records are maintained in U.S. dollars. Purchases and sales of investments 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 investments denominated in that currency will lose value; 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 exchange rates from the changes in the market prices of investments held or sold for financial reporting purposes. Accordingly, the effects of changes in 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.
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 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 U.S. federal income tax regulations, which may differ from U.S. GAAP.
Recent Accounting Standards: In April 2015, the Financial Accounting Standards Board issued Disclosures for Investments in Certain Entities that Calculate Net Asset Value (NAV) per Share which eliminates the requirement to categorize investments within the fair value hierarchy when fair value is based on the NAV per share and no quoted market value is available. As of March 31, 2017, certain investments of the Fund were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.
20 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 |
Notes to Financial Statements (continued) |
Indemnifications: In the normal course of business, the Fund enters into contracts that contain a variety of representations that provide general indemnification. The Funds maximum exposure under these arrangements is unknown because it involves future potential claims against the Fund, which cannot be predicted with any certainty.
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, including other funds managed by the Manager, 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 its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.
3. Investment Valuation and Fair Value Measurements:
Investment Valuation Policies: The Funds investments are valued at fair value (also referred to as market value within the financial statements) 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 using various 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 oversee the pricing function for all financial instruments.
Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of the Funds assets and liabilities:
| Equity investments traded on a recognized securities exchange are valued at the official closing price each day, if available. For equity investments traded on more than one exchange, the official closing 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. |
| Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of trading on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of trading on the NYSE that may not be reflected in the computation of the Funds net assets. 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 trading on the NYSE, which follows the close of the local markets. |
| Investments in open-end U.S. mutual funds are valued at NAV each business day. |
| The Fund values its investment in SL 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 may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act. |
| 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 trading 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 trading on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available. |
If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investments, or 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 Valued Investments). The fair valuation approaches that may be used by the Global Valuation Committee will include Market approach, Income approach and Cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and typically used in determining fair value. When determining the price for Fair Valued 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 and consistent with the principles of fair value measurement.
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
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 | 21 |
Notes to Financial Statements (continued) |
market values and reviews of any market related activity. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis. As a result of the inherent uncertainty in valuation of these investments, the fair values may differ from the values that would have been used had an active market existed.
For investments in equity or debt issued by privately-held companies or funds (Private Company or collectively, the Private Companies) and other Fair Valued Investments, the fair valuation approaches that are used by third party pricing services utilize one or a combination of, but not limited to, the following inputs.
Standard Inputs Generally Considered By Third Party Pricing Services | ||||
Market approach | (i) | recent market transactions, including subsequent rounds of financing, in the underlying investment or comparable issuers; | ||
(ii) | recapitalizations and other transactions across the capital structure; and | |||
(iii) | market multiples of comparable issuers. | |||
Income approach | (i) | future cash flows discounted to present and adjusted as appropriate for liquidity, credit and/or market risks; | ||
(ii) | quoted prices for similar investments or assets in active markets; and | |||
(iii) |
other risk factors, such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates. | |||
Cost approach | (i) | audited or unaudited financial statements, investor communications and financial or operational metrics issued by the Private Company; | ||
(ii) | changes in the valuation of relevant indices or publicly traded companies comparable to the Private Company; | |||
(iii) | relevant news and other public sources; and | |||
(iv) |
known secondary market transactions in the Private Companys interests and merger or acquisition activity in companies comparable to the Private Company. | |||
Investments in series of preferred stock issued by Private Companies are typically valued utilizing Market approach in determining the enterprise value of the company. Such investments often contain rights and preferences that differ from other series of preferred and common stock of the same issuer. Valuation techniques such as an option pricing model (OPM), a probability weighted expected return model (PWERM) or a hybrid of those techniques are used in allocating enterprise value of the company, as deemed appropriate under the circumstances. The use of OPM and PWERM techniques involve a determination of the exit scenarios of the investment in order to appropriately allocate the enterprise value of the company among the various parts of its capital structure.
The Private Companies are not subject to the public company disclosure, timing, and reporting standards as other investments held by the Fund. Typically, the most recently available information by a Private Company is as of a date that is earlier than the date the Fund is calculating its NAV. This factor may result in a difference between the value of the investment and the price the Fund could receive upon the sale of the investment.
Fair Value Hierarchy: Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial statement purposes as follows:
| Level 1 unadjusted price quotations 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) |
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. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by Private Companies. There may not be a secondary market, and/or there are a limited number of investors. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Global Valuation Committee in the absence of market information.
22 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 |
Notes to Financial Statements (continued) |
Changes in valuation techniques may result in transfers into or out of an assigned level within the hierarchy. In accordance with the Funds policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments is based on the pricing transparency of the investments and is not necessarily an indication of the risks associated with investing in those securities.
4. Securities and Other Investments:
Preferred Stocks: 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 guaranteedby 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, or excess collateral returned by 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 but does not receive interest income on securities received as collateral. 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 any securities on loan, all of which were classified as common stocks in the Funds Schedule of Investments, and the value of any 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 period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. 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, absent an event of default the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting partys net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 | 23 |
Notes to Financial Statements (continued) |
As of period end, the following table is a summary of the Funds securities lending agreements by counterparty which are subject to offset under an MSLA:
Counterparty |
Securities at Value |
Cash Collateral |
Net Amount |
|||||||||||||||||||||||||
Barclays Capital, Inc. |
$ | 1,513,926 | $ | (1,513,926 | ) | | ||||||||||||||||||||||
Citigroup Global Markets, Inc. |
1,129,871 | (1,129,871 | ) | |||||||||||||||||||||||||
Goldman Sachs & Co. |
21,116,565 | (21,116,565 | ) | | ||||||||||||||||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. |
13,894,620 | (13,894,620 | ) | | ||||||||||||||||||||||||
State Street Bank & Trust Co. |
11,347,826 | (11,347,826 | ) | | ||||||||||||||||||||||||
UBS Securities LLC |
7,156,316 | (7,156,316 | ) | | ||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||
Total |
$ | 56,159,124 | $ | (56,159,124 | ) | | ||||||||||||||||||||||
|
|
1 | Cash collateral with a value of $57,352,887 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 in the table above. |
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 incur 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.
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.
Investment Advisory: The Fund entered into an Investment Advisory Agreement with the Manager, the Funds investment adviser, 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 personnel, facilities, equipment and certain other services necessary to the operations of the Fund.
For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Funds net assets:
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% |
Service and Distribution Fees: 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:
Investor A | Investor B | Investor C | Class R | ||||||||||||||||||||||||||||||||
Distribution Fee |
| 0.75 | % | 0.75 | % | 0.25 | % | ||||||||||||||||||||||||||||
Service Fee |
0.25 | % | 0.25 | % | 0.25 | % | 0.25 | % |
BRIL and broker-dealers, pursuant to sub-agreements with 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 the shareholders.
For the six months ended March 31, 2017, the following table shows the class specific service and distribution fees borne directly by each share class of the Fund:
Investor A | Investor B | Investor C | Class R | Total | ||||||||||
$1,793,169 | $7,072 | $ | 2,376,973 | $ | 185,386 | $ | 4,362,600 |
Transfer Agent: 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
24 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 |
Notes to Financial Statements (continued) |
ended March 31, 2017, the Fund paid Investor A $155 to affiliates of BlackRock in return for these services, which are included in transfer agent class specific in the Statement of Operations.
The Manager maintains a call center that is responsible for providing certain shareholder services to the Fund. Shareholder services include responding to inquiries and processing subscriptions and redemptions based upon instructions from shareholders. For the six months ended March 31, 2017, 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:
Institutional | Investor A | Investor B | Investor C | Class K | Class R | Total | ||||||
$1,107 |
$27,663 | $748 | $4,235 | $1,231 | $198 | $35,182 |
For the six months ended March 31, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:
Institutional | Investor A | Investor B | Investor C | Class K | Class R | Total | ||||||
$287,913 |
$1,200,672 | $6,521 | $531,717 | $6,779 | $69,888 | $2,103,490 |
Other Fees: For the six months ended March 31, 2017, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of the Funds Investor A Shares of $13,758.
For the six months ended March 31, 2017, affiliates received CDSCs as follows:
Investor A |
$ | 6,619 | ||
Investor B |
$ | 17 | ||
Investor C |
$ | 15,818 |
Expense Limitations and Waivers: 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 (expense limitation). The expense limitations as a percentage of average daily net assets are as follows:
Investor C |
1.94 | % | ||
Class K |
0.72 | % |
The Manager has agreed not to reduce or discontinue these contractual expense limitations prior to February 1, 2027, unless approved by the Board, including a majority of the independent directors who are not interested persons of the Fund, as defined in the 1940 Act (Independent Directors) or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended March 31, 2017, there were no fees waived and/or reimbursed by the Manager.
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 (the affiliated money market fund waiver). This amount is shown as fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended March 31, 2017, the amount waived was $6,256.
The Manager has voluntarily agreed to waive its investment advisory fee with respect to any portion of the Funds assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee. Effective January 27, 2017, the waiver became contractual through January 31, 2018. This contractual agreement may be terminated upon 90 days notice by a majority of Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended March 31, 2017, there were no fees waived by the Manager.
Securities Lending: 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 adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. If the private investment companys weekly liquid assets fall below 30% of its total assets, BIM, as managing member of the private investment company, is permitted at any time, if it determines it to be in the best interests of the private investment company, to impose a liquidity fee of up to 2% of the value of units withdrawn or impose a redemption gate that temporarily suspends the right of withdrawal out of the private investment company. In addition, if the private investment companys weekly liquid assets fall below 10% of its total assets at the end of any business day, the private investment company will impose a
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 | 25 |
Notes to Financial Statements (continued) |
liquidity fee in the default amount of 1% of the amount withdrawn, generally effective as of the next business day, unless BIM determines that a higher (not to exceed 2%) or lower fee level or not imposing a liquidity fee is in the best interests of the private investment company. The shares of the private investment company purchased by the Fund would be subject to any such liquidity fee or redemption gate imposed.
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, 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.
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.
The share of securities lending income earned by the Fund is shown as securities lending income affiliated net in the Statement of Operations. For the six months ended March 31, 2017, the Fund paid BIM $22,506 for securities lending agent services.
Officers and Directors: 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.
Other Transactions: The Fund may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common directors. For the six months ended March 31, 2017, the purchase and sale transactions and any net realized gains (losses) with an affiliated fund in compliance with Rule 17a-7 under the 1940 Act were as follows:
Purchases | Sales | Net Realized Gain | ||||||||||||||
|
$25,785,524 | $2,103,397 |
6. Purchases and Sales:
For the six months ended March 31, 2017, purchases and sales of investments, excluding short-term securities, were $1,145,862,760 and $1,428,347,366, 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 U.S. 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 generally remains open for each of the four years ended September 30, 2016. 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, 2017, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds financial statements.
As of March 31, 2017, gross unrealized appreciation and depreciation based on cost for U.S. federal income tax purposes were as follows:
Tax cost |
$ | 2,179,229,402 | ||
|
|
|||
Gross unrealized appreciation |
$ | 785,284,680 | ||
Gross unrealized depreciation |
(4,040,829 | ) | ||
|
|
|||
Net unrealized appreciation |
$ | 781,243,851 | ||
|
|
8. Bank Borrowings:
The Fund, along with certain other funds managed by the Manager and its affiliates (Participating Funds), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% 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
26 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 |
Notes to Financial Statements (continued) |
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 0.80% per annum on amounts borrowed. The agreement expires in April 2017 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Statement of Operations. These 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, 2017, 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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities value.
On October 11, 2016, BlackRock implemented certain changes required by amendments to Rule 2a-7 under the 1940 Act, which governs the operations of U.S. money market funds. The Fund may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00 and which may be subject to redemption gates or liquidity fees under certain circumstances.
Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. The Fund may invest in illiquid investments and may experience difficulty in selling those investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause the Funds NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of the Fund may lose value, regardless of the individual results of the securities and other instruments in which the Fund invests.
The price the Fund could receive upon the sale of any particular portfolio investment may differ from the Funds valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Funds results of operations. As a result, the price received upon the sale of an investment may be less than the value ascribed by the Fund, and the Fund could realize a greater than expected loss or lesser than expected gain upon the sale of the investment. The Funds ability to value its investments may also be impacted by technological issues and/or errors by pricing services or other third party service providers.
Counterparty Credit Risk: Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions. The Fund manages counterparty credit risk by entering into transactions only with counterparties that the Manager 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 approximately their value recorded in the Statement of Assets and Liabilities, less any collateral held by the Fund.
Concentration Risk: As of period end, the Fund invested a significant portion of its assets in securities in the information technology sector. Changes in economic conditions affecting such sector would have a greater impact on the Fund and could affect the value, income and/or liquidity of positions in such securities.
BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 | 27 |
Notes to Financial Statements (concluded) |
10. Capital Share Transactions:
Transactions in capital shares for each class were as follows:
Six Months Ended March 31, 2017 |
Year Ended September 30, 2016 |
|||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Institutional |
||||||||||||||||||||
Shares sold |
2,672,457 | $ | 66,394,296 | 5,590,616 | $ | 134,137,586 | ||||||||||||||
Shares issued in reinvestment of distributions |
616,180 | 14,423,826 | 2,267,570 | 55,578,153 | ||||||||||||||||
Shares redeemed |
(6,326,066 | ) | (155,798,740 | ) | (12,599,057 | ) | (302,474,929 | ) | ||||||||||||
|
|
|
|
|||||||||||||||||
Net decrease |
(3,037,429 | ) | $ | (74,980,618 | ) | (4,740,871 | ) | $ | (112,759,190 | ) | ||||||||||
|
|
|
|
|||||||||||||||||
Investor A |
||||||||||||||||||||
Shares sold and automatic conversion of shares |
4,072,846 | $ | 94,847,363 | 7,805,063 | $ | 175,180,567 | ||||||||||||||
Shares issued in reinvestment of distributions |
2,311,682 | 50,642,838 | 6,703,432 | 154,647,607 | ||||||||||||||||
Shares redeemed |
(11,184,132 | ) | (259,580,839 | ) | (14,885,070 | ) | (337,209,305 | ) | ||||||||||||
|
|
|
|
|||||||||||||||||
Net decrease |
(4,799,604 | ) | $ | (114,090,638 | ) | (376,575 | ) | $ | (7,381,131 | ) | ||||||||||
|
|
|
|
|||||||||||||||||
Investor B |
||||||||||||||||||||
Shares sold |
16 | $ | 289 | 2,983 | $ | 49,747 | ||||||||||||||
Shares issued in reinvestment of distributions |
4,036 | 67,486 | 26,992 | 486,129 | ||||||||||||||||
Shares redeemed and automatic conversion of shares |
(66,121 | ) | (1,170,656 | ) | (158,291 | ) | (2,795,084 | ) | ||||||||||||
|
|
|
|
|||||||||||||||||
Net decrease |
(62,069 | ) | $ | (1,102,881 | ) | (128,316 | ) | $ | (2,259,208 | ) | ||||||||||
|
|
|
|
|||||||||||||||||
Investor C |
||||||||||||||||||||
Shares sold |
677,339 | $ | 12,108,038 | 3,621,953 | $ | 65,243,387 | ||||||||||||||
Shares issued in reinvestment of distributions |
1,249,342 | 21,188,237 | 3,759,289 | 68,419,060 | ||||||||||||||||
Shares redeemed |
(5,393,469 | ) | (96,928,579 | ) | (9,415,285 | ) | (168,621,936 | ) | ||||||||||||
|
|
|
|
|||||||||||||||||
Net decrease |
(3,466,788 | ) | $ | (63,632,304 | ) | (2,034,043 | ) | $ | (34,959,489 | ) | ||||||||||
|
|
|
|
|||||||||||||||||
Class K |
||||||||||||||||||||
Shares sold |
3,174,173 | $ | 78,012,063 | 2,042,984 | $ | 50,475,540 | ||||||||||||||
Shares issued in reinvestment of distributions |
571,536 | 13,436,820 | 1,630,776 | 40,100,776 | ||||||||||||||||
Shares redeemed |
(2,293,705 | ) | (57,029,307 | ) | (3,643,756 | ) | (91,081,553 | ) | ||||||||||||
|
|
|
|
|||||||||||||||||
Net increase (decrease) |
1,452,004 | $ | 34,419,576 | 30,004 | $ | (505,237 | ) | |||||||||||||
|
|
|
|
|||||||||||||||||
Class R |
||||||||||||||||||||
Shares sold |
349,448 | $ | 6,918,841 | 1,238,661 | $ | 24,179,468 | ||||||||||||||
Shares issued in reinvestment of distributions |
174,882 | 3,268,537 | 464,485 | 9,229,329 | ||||||||||||||||
Shares redeemed |
(678,430 | ) | (13,530,247 | ) | (1,464,421 | ) | (28,455,142 | ) | ||||||||||||
|
|
|
|
|||||||||||||||||
Net increase (decrease) |
(154,100 | ) | $ | (3,342,869 | ) | 238,725 | $ | 4,953,655 | ||||||||||||
|
|
|
|
|||||||||||||||||
Total Net Decrease |
(10,067,986 | ) | $ | (222,729,734 | ) | (7,011,076 | ) | $ | (152,910,600 | ) | ||||||||||
|
|
|
|
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 20, 2017, the credit agreement was extended until April 2018 under the same terms.
28 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 |
Officers and Directors |
Robert M. Hernandez, Chair 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
Henry Gabbay, Director
Lena G. Goldberg, Director
Henry R. Keizer, Director
John F. OBrien, Director
Donald C. Opatrny, Director
Roberta Cooper Ramo, Director
John M. Perlowski, Director, President and Chief Executive Officer
Jennifer McGovern, Vice President
Neal J. Andrews, Chief Financial Officer
Jay M. Fife, Treasurer
Charles Park, Chief Compliance Officer
Fernanda Piedra, Anti-Money Laundering Compliance Officer
Benjamin Archibald, Secretary
Effective January 31, 2017, David H. Walsh and Fred G. Weiss retired as Directors of the Fund.
Investment Adviser BlackRock Advisors, LLC Wilmington, DE 19809 |
Custodian The Bank of New York Mellon New York, NY 10286 |
Distributor BlackRock Investments, LLC New York, NY 10022 |
Address of the Fund 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, 2017 | 29 |
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 the operation of the Public Reference Room or 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 uses 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 portfolio 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 ET 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 funds, 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.
30 | BLACKROCK CAPITAL APPRECIATION FUND, INC. | MARCH 31, 2017 |
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, 2017 | 31 |
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.
CapApp-3/17-SAR |
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, 2017
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, 2017 | ||
By: | /s/ Neal J. Andrews | |
Neal J. Andrews | ||
Chief Financial Officer (principal financial officer) of | ||
BlackRock Capital Appreciation Fund, Inc. |
Date: June 2, 2017
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, 2017
/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, 2017
/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, 2017 (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, 2017
/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, 2017 (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, 2017
/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. § 1350 and is not being filed as part of the Form N-CSR with the Securities and Exchange Commission.
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