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 811-21413
Name of Fund: BlackRock Floating Rate Income Strategies Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief
Executive Officer, BlackRock Floating Rate Income Strategies Fund,
Inc., 800 Scudders Mill Road, Plainsboro, NJ, 08536. Mailing
address: P.O. Box 9011, Princeton, NJ, 08543-9011
Registrant's telephone number, including area code: (800) 882-0052
Date of fiscal year end: 08/31/07
Date of reporting period: 09/01/06 - 08/31/07
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE LIQUIDITY ALTERNATIVES
BLACKROCK SOLUTIONS
BlackRock Floating Rate Income
Strategies Fund, Inc. (FRA)
ANNUAL REPORT AUGUST 31, 2007
(BLACKROCK logo)
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
BlackRock Floating Rate Income Strategies Fund, Inc. seeks a high current
income and such preservation of capital as is consistent with investment in
a diversified, leveraged portfolio consisting primarily of floating rate
debt securities and instruments.
This report, including the financial information herein, is transmitted for
use only to the shareholders of BlackRock Floating Rate Income Strategies
Fund, Inc. for their information. It is not a prospectus, circular or
representation intended for use in the purchase of shares of the Fund or any
securities mentioned in this report. Past performance results shown in this
report should not be considered a representation of future performance. The
Fund leverages its Common Stock to provide Common Stock shareholders with a
potentially higher rate of return. Leverage creates risk for Common Stock
shareholders, including the likelihood of greater volatility of net asset
value and market price of Common Stock shares, and the risk that fluctuations
in short-term interest rates may reduce the Common Stock's yield. Statements
and other information herein are as dated and are subject to change.
A description of the policies and procedures that the Fund uses to determine
how to vote proxies relating to portfolio securities is available (1)
without charge, upon request, by calling toll-free 1-800-441-7762; (2) at
www.blackrock.com; and (3) on the Securities and Exchange Commission's Web
site at http://www.sec.gov. Information about how the Fund voted proxies
relating to securities held in the Fund's portfolio during the most recent
12-month period ended June 30 is available (1) at www.blackrock.com and (2)
on the Securities and Exchange Commission's Web site at http://www.sec.gov.
BlackRock Floating Rate Income Strategies Fund, Inc.
P.O. Box 9011
Princeton, NJ 08543-9011
(GO PAPERLESS... logo)
It's Fast, Convenient, & Timely!
BlackRock Floating Rate Income Strategies Fund, Inc.
The Benefits and Risks of Leveraging
BlackRock Floating Rate Income Strategies Fund, Inc. utilizes leveraging
through borrowings or issuance of short-term debt securities or shares of
Preferred Stock. The concept of leveraging is based on the premise that the
cost of assets to be obtained from leverage will be based on short-term
interest rates, which normally will be lower than the income earned by the
Fund on its longer-term portfolio investments. To the extent that the total
assets of the Fund (including the assets obtained from leverage) are invested
in higher-yielding portfolio investments, the Fund's Common Stock shareholders
will be the beneficiaries of the incremental yield.
Leverage creates risks for holders of Common Stock including the likelihood of
greater net asset value and market price volatility. In addition, there is the
risk that fluctuations in interest rates on borrowings (or in the dividend
rates on any Preferred Stock, if the Fund were to issue the Preferred Stock)
may reduce the Common Stock's yield and negatively impact its market price. If
the income derived from securities purchased with assets received from
leverage exceeds the cost of leverage, the Fund's net income will be greater
than if leverage had not been used. Conversely, if the income from the
securities purchased is not sufficient to cover the cost of leverage, the
Fund's net income will be less than if leverage had not been used, and
therefore the amount available for distribution to Common Stock shareholders
will be reduced.
Proxy Results
During the six-month period ended August 31, 2007, the shareholders of
BlackRock Floating Rate Income Strategies Fund, Inc. voted on the following
proposal, which was approved at an annual shareholders' meeting on August 16,
2007. This proposal was part of the reorganization of the Fund's Board of
Directors to take effect on or about November 1, 2007. A description of the
proposal and number of shares voted are as follows:
Shares Voted Shares Withheld
For From Voting
To elect the Fund's Board of Directors: G. Nicholas Beckwith, III 14,562,769 259,358
Richard E. Cavanagh 14,562,544 259,583
Richard S. Davis 14,562,769 259,358
Kent Dixon 14,562,634 259,494
Frank J. Fabozzi 14,562,325 259,802
Kathleen F. Feldstein 14,563,131 258,996
James T. Flynn 14,562,434 259,694
Henry Gabbay 14,560,883 261,244
Jerrold B. Harris 14,562,769 259,358
R. Glenn Hubbard 14,555,500 266,627
W. Carl Kester 14,562,769 259,358
Karen P. Robards 14,563,992 258,136
Robert S. Salomon, Jr. 14,561,976 260,152
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
A Letter to Shareholders
Dear Shareholder
Financial markets embarked on a wild ride during the August reporting period.
Subprime mortgage troubles intensified in the final months of the period,
spawning a widespread credit and liquidity crisis that crept into other areas
of the market. The U.S. Federal Reserve Board (the Fed) and other countries'
central banks stepped in to inject liquidity into the markets and bolster
investor confidence. In August, the Fed cut the discount rate, the rate
charged to banks to borrow money directly from the Fed, from 6.25% to 5.75%.
Another .50% cut in the discount rate came on September 18, along with a .50%
cut in the more widely followed federal funds rate. This brought the target
short-term interest rate, which had remained unchanged at 5.25% for over a
year, to 4.75%.
Although heightened volatility has been a recurring theme throughout the past
year, the global economy (excluding the U.S. housing market) remained quite
healthy. In general, equity market fundamentals also held firm - second-
quarter corporate earnings exceeded expectations (although future earnings
could be at risk if the economy weakens), dividend payouts and share buybacks
continued to grow, and valuations remained attractive. These tailwinds
generally prevailed over such headwinds as a slowing U.S. economy and troubled
housing market, although the more recent credit crunch dampened corporate
merger-and-acquisition activity, a key source of strength for equity markets.
Stocks recorded their second-worst day of the year in August, yet remained
comfortably in the black year-to-date.
Meanwhile, mixed economic signals and the credit market debacle made for a
volatile backdrop for fixed income, with investors fleeing from bonds
associated with the housing and credit markets in favor of higher-quality
Treasury issues. As a result, the 10-year Treasury yield, which touched 5.30%
in June (its highest level in five years), fell to 4.54% by period-end, while
prices correspondingly rose.
Against this backdrop, financial markets posted mixed results for the six- and
12-month periods ended August 31, 2007:
Total Returns as of August 31, 2007 6-month 12-month
U.S. equities (S&P 500 Index) +5.70% +15.13%
Small cap U.S. equities (Russell 2000 Index) +0.54 +11.36
International equities (MSCI Europe, Australasia, Far East Index) +5.83 +18.71
Fixed income (Lehman Brothers U.S. Aggregate Bond Index) +1.54 + 5.26
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) -0.57 + 2.30
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index) -1.71 + 6.46
Past performance is no guarantee of future results. Index performance shown
for illustrative purposes only. You cannot invest directly in an index.
As you navigate market volatility, we encourage you to review your
investment goals with your financial professional and to make portfolio
changes, as needed. For more market insight, we invite you to visit
www.blackrock.com/funds. We thank you for entrusting BlackRock with your
investment assets, and we look forward to continuing to serve you in the
months and years ahead.
Sincerely,
(Robert C. Doll, Jr.)
Robert C. Doll, Jr.
Fund President and Director
THIS PAGE NOT PART OF YOUR FUND REPORT
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Fund Summary as of August 31, 2007
Fund Information
Symbol on New York Stock Exchange FRA
Initial Offering Date October 31, 2003
Yield on Closing Market Price as of 8/31/07 ($16.70)* 8.68%
Current Monthly Distribution per share of Common Stock** $.120834
Current Annualized Distribution per share of Common Stock** $1.45
Leverage as of 8/31/07*** 24%
* Yield on closing market price is calculated by dividing the current
annualized distribution per share by the closing market price.
Past performance does not guarantee future results.
** The distribution is not constant and is subject to change. A portion of
the distribution may be deemed a tax return of capital or net realized
gain at fiscal year end.
*** As a percentage of managed assets, which is the total assets of the
Fund (including any assets attributable to any borrowing that may be
outstanding) minus the sum of accrued liabilities (other than debt
representing financial leverage).
The table below summarizes the changes in the Fund's market price and net
asset value per share:
8/31/07 8/31/06 Change High Low
Market Price $16.70 $17.49 (4.52%) $19.56 $14.27
Net Asset Value $18.25 $19.32 (5.54%) $19.62 $18.14
The following charts show the portfolio composition and credit quality
allocations of the Fund's long-term investments:
Portfolio Composition
8/31/07 8/31/06
Floating Rate Loan Interests 75% 74%
Corporate Bonds 24 25
Common Stocks 1 1
Warrants _* _*
* Amount is less than 1%.
Credit Quality Allocations*
Credit Rating 8/31/07 8/31/06
BBB/Baa 1% --++
BB/Ba 29 30%
B/B 55 58
CCC/Caa 4 4
D 1 --++
NR (Not Rated) 9 7
Other** 1 1
* Using the highest of S&P's and Moody's ratings.
** Includes portfolio holdings in common stocks and warrants.
++ Amount is less than 1%.
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Schedule of Investments as of August 31, 2007 (in U.S. dollars)
Face
Amount Floating Rate Loan Interests** Value
Aerospace & Defense--3.5%
Avio Holding SpA:
USD 1,950,267 9.375% due 9/25/2016 $ 1,935,640
1,640,000 Term Loan B, 7.695% due 9/25/2014 1,562,100
1,640,000 Term Loan C, 8.07% due 9/25/2015 1,570,300
Hawker Beechcraft:
117,021 Letter of Credit, 5.26% due 3/31/2014 111,170
1,379,521 Term Loan B, 7.36% - 7.508%
due 3/31/2014 1,310,545
2,214,381 IAP Worldwide Services, Inc. First Lien
Term Loan, 11.687% due 12/20/2012 1,902,153
Vought Aircraft Industries, Inc.:
2,870,824 Term Loan, 7.83% due 12/22/2011 2,773,933
560,000 Tranche B Line of Credit Deposit, 7.822%
due 12/22/2010 541,100
--------------
11,706,941
Airlines--1.2%
1,250,000 Delta Airlines First Lien Term Loan, 7.36%
due 5/15/2012 1,186,719
995,000 United Air Lines, Inc. Term Loan B, 7.625%
due 1/30/2014 933,019
2,000,000 US Airways Group, Inc. Term Loan B, 7.86%
due 3/22/2014 1,878,750
--------------
3,998,488
Auto Components--1.4%
2,543,571 Affinia Group Inc. Term Loan B, 8.36%
due 11/30/2011 2,479,982
500,000 Delphi Automotive Systems Term Loan B, 7.625%
due 12/31/2007 491,667
987,500 GPX International Tire Corp. Term Loan B,
10.33% - 10.35% due 4/06/2012 948,000
750,000 Visteon Corp. Term Loan B, 8.38% due 6/13/2013 690,469
--------------
4,610,118
Beverages--0.2%
EUR 500,000 Culligan International Second Lien Term Loan,
7.815% due 10/24/2012 578,956
Building Products--0.8%
USD 2,905,789 PGT Industries, Inc. First Lien Term Loan,
8.62% due 2/14/2012 2,818,615
Chemicals--6.8%
1,000,000 BOC Edwards Ltd. Term Loan B, 7.541%
due 5/21/2014 915,000
1,390,000 Hercules, Inc. Term Loan B, 7.089%
due 10/08/2010 1,362,200
1,000,000 Huish Detergents, Inc. First Lien Term Loan,
7.51% due 4/15/2014 917,500
1,000,000 ISP Chemco Term Loan B, 7.125% - 7.313%
due 5/25/2014 959,167
Invista Term Loan:
960,277 6.86% due 4/29/2011 927,868
2,092,929 B-1, 6.86% due 4/29/2011 2,022,293
1,000,000 KIK Custom Products Inc. First Lien Term Loan,
7.61% due 5/30/2014 910,000
4,490,117 Nalco Co. Tranche B Term Loan, 7.10%
due 11/04/2010 4,376,616
424,000 NuSil Technology Term Loan, 8.07%
due 10/31/2013 415,520
Face
Amount Floating Rate Loan Interests** Value
Chemicals (concluded)
USD 1,950,000 Rockwood Specialties Group, Inc. Tranche D
Term Loan, 6.857% due 7/30/2012 $ 1,885,406
GBP 2,000,000 Viridian Group Plc Term Loan,
8.234% - 10.358% due 12/21/2012 3,929,673
USD 4,750,000 Wellman, Inc. Second Lien Term Loan,12.106%
due 2/10/2010 4,132,500
--------------
22,753,743
Commercial Services & Supplies--3.7%
980,676 American Reprographics Co. Term Loan,
7.11% - 7.25% due 6/18/2009 948,804
Aramark Corp.:
237,029 Letter of Credit, 5.36% due 1/30/2014 228,081
3,369,115 Term Loan B, 7.36% due 1/30/2014 3,241,931
748,125 Brickman Group, Inc. Term Loan, 7.34%
due 1/30/2014 708,848
756,000 Camelbak Products LLC First Lien Term Loan,
9.15% - 9.37% due 8/04/2011 701,190
177,343 Duratek Term Loan C, 7.66% due 6/07/2013 169,584
500,000 Jason, Inc. Term Loan B, 8.03% - 9.50%
due 4/30/2010 475,000
940,525 John Maneely Co. Term Loan B,
8.61% due 12/15/2013 841,378
Kion GmbH:
250,000 Term Loan B, 7.58% due 3/15/2015 236,945
250,000 Term Loan C, 7.83% due 3/15/2016 237,500
549,341 Metokote Corp. Second Lien Term Loan,
8.36% - 8.55% due 11/27/2011 541,101
1,496,250 RiskMetrics Group, Inc. Term Loan, 7.61%
due 1/15/2014 1,455,103
695,474 Waste Services, Inc. Term Loan E, 7.58%
due 3/31/2011 674,609
1,980,075 West Corp. Term Loan B, 7.735% - 7.88%
due 10/31/2013 1,909,947
--------------
12,370,021
Computers & Peripherals--2.1%
Intergraph Corp. Term Loan:
430,893 7.503% due 5/15/2014 412,042
500,000 11.506% due 11/15/2014 478,125
Reynolds and Reynolds Co.:
3,773,042 First Lien Term Loan, 7.36% due 10/31/2012 3,607,971
2,500,000 Second Lien Term Loan,10.86%
due 10/31/2013 2,475,000
--------------
6,973,138
Construction Materials--1.1%
1,345,703 Headwaters, Inc. Term Loan B-1, 7.36%
due 4/30/2011 1,312,061
2,425,000 Nortek, Inc. Term Loan, 7.61%
due 8/27/2011 2,312,844
--------------
3,624,905
Containers & Packaging--2.5%
1,493,049 Anchor Glass Container Corp. Term Loan B,
7.61% - 7.791% due 5/03/2013 1,448,258
1,050,000 Berry Plastics Corp. Term Loan B, 11.61%
due 6/15/2014 903,000
750,000 Consolidated Container Second Lien Term Loan,
10.86% - 11.065% due 10/15/2014 675,000
1,995,000 Graham Packaging Term Loan B, 7.625%
due 4/15/2011 1,938,476
1,789,000 Intertape Polymer US, Inc. Term Loan B,
9.33% - 11.25% due 7/28/2011 1,735,330
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Schedule of Investments (continued) (in U.S. dollars)
Face
Amount Floating Rate Loan Interests** Value
Containers & Packaging (concluded)
Smurfit-Stone Container Corp.:
USD 1,134,672 Term Loan B, 7.375% due 11/01/2011 $ 1,110,028
627,610 Term Loan C, 7.375% due 11/01/2011 613,979
--------------
8,424,071
Distributors--1.2%
2,813,000 Buhrmann USA, Inc. Term Loan C,
7.32% - 7.36% due 12/23/2010 2,739,159
1,492,500 Keystone Automotive Operations, Inc. Term
Loan B, 8.828% - 9% due 1/15/2012 1,361,906
--------------
4,101,065
Diversified Consumer Services--1.2%
1,987,895 Coinmach Laundry Corp. Term Loan B,
7.875% - 8.063% due 12/16/2012 1,943,167
2,231,924 Coinstar, Inc. Term Loan, 7.36% due 7/07/2011 2,187,286
--------------
4,130,453
Diversified Financial Services--0.5%
2,000,000 JG Wentworth Manufacturing Term Loan B,
7.61% due 4/15/2014 1,855,000
Diversified Telecommunication Services--1.1%
1,000,000 Alaska Communications Systems Holdings, Inc.
Incremental Term Loan, 7.114% due 2/01/2012 964,500
2,172,500 Consolidated Communications, Inc. Term Loan D,
7.11% due 10/14/2011 2,107,325
497,500 Kentucky Data Link, Inc. Term Loan B, 7.815%
due 2/26/2014 478,844
--------------
3,550,669
Electrical Equipment--2.0%
Generac Portable Products, Inc.:
990,000 First Lien Term Loan, 7.86% due 11/15/2013 875,443
750,000 Second Lien Term Loan, 11.36%
due 5/15/2014 499,375
Sensus Metering Systems, Inc.:
4,860,870 Term Loan B-1, 7.122% - 7.495%
due 12/17/2010 4,715,043
457,120 Term Loan B-2, 7.36% - 7.383%
due 12/19/2010 443,406
--------------
6,533,267
Energy Equipment & Services--1.1%
1,000,000 Bobcat Gas Storage Term Loan B, 7.485%
due 9/15/2014 950,000
EnergySolutions:
18,868 Letter of Credit, 7.839% due 6/07/2013 18,042
369,953 Term Loan B, 7.66% due 6/07/2013 353,768
1,477,500 Key Energy Services, Inc. Term Loan B,
7.856% - 8.065% due 6/30/2012 1,444,256
987,500 MEG Energy Corp. Term Loan B, 7.36%
due 4/03/2013 952,938
--------------
3,719,004
Food & Staples Retailing--3.3%
1,481,858 Advantage Sales & Marketing Term Loan B,
7.36% - 7.51% due 4/15/2013 1,405,913
1,000,000 Bolthouse Farms, Inc. Second Lien Term Loan,
10.86% due 12/01/2013 967,500
995,000 DS Waters LP Term Loan B, 7.61% - 7.753%
due 3/31/2012 935,300
Face
Amount Floating Rate Loan Interests** Value
Food & Staples Retailing (concluded)
Dole Food Co., Inc.:
USD 256,292 Letter of Credit, 5.23% due 4/12/2013 $ 240,914
569,448 Term Loan B, 7.438% - 9.25%
due 4/12/2013 535,281
1,898,161 Term Loan C, 7.438% - 9.25%
due 4/04/2013 1,784,271
484,608 Eight O'Clock Coffee Second Lien Term Loan,
8.125% due 7/21/2012 460,378
Iglo Birds Eye:
EUR 500,000 Term Loan B, 6.55% - 6.605%
due 10/31/2014 661,649
500,000 Term Loan C, 6.925% - 6.98%
due 10/27/2015 664,629
USD 736,250 McJunkin Corp. Term Loan B, 7.815%
due 1/30/2014 715,083
1,192,323 Pierre Foods, Inc. Term Loan B, 7.78%
due 6/30/2010 1,171,458
Sturm Foods, Inc.:
500,000 First Lien Term Loan, 7.875% - 7.938%
due 1/30/2014 465,000
998,750 Second Lien Term Loan, 11.438%
due 6/30/2014 931,334
--------------
10,938,710
Food Products--0.6%
1,984,810 Chiquita Brands International Term Loan C,
8.563% due 6/28/2012 1,931,881
Health Care Providers & Services--1.9%
488,011 CCS Medical First Lien Term Loan, 8.82%
due 10/31/2012 471,541
2,000,000 DaVita, Inc. Term Loan B, 6.86% - 7.01%
due 7/30/2012 1,935,000
878,330 HCA, Inc. Term Loan B, 7.36% due 11/17/2012 844,775
1,995,000 Health Management Associates, Inc. Term
Loan B, 7.11% due 1/15/2014 1,870,937
453,661 LifePoint Hospitals, Inc. Term Loan B,
6.985% due 4/15/2012 437,310
744,375 Sterigenics International, Inc. Term Loan B,
7.61% due 11/30/2013 714,600
--------------
6,274,163
Hotels, Restaurants & Leisure--4.4%
Golden Nugget, Inc. Term Loan:
318,182 7.51% - 7.59% due 5/30/2014 301,477
500,000 Second Lien, 8.84%
due 11/30/2014 467,500
500,000 Green Valley Ranch Gaming LLC Term Loan,
8.791% due 8/30/2014 470,000
497,500 Greenwood Racing, Inc. Term Loan,
7.80% - 7.82% due 11/15/2013 476,356
1,750,000 Hallmark Entertainment Second Lien Term Loan,
9.32% due 10/15/2014 1,575,000
1,600,000 Las Vegas Sands Term Loan B, 7.11%
due 5/04/2014 1,518,200
1,213,276 Penn National Gaming, Inc. Term Loan B, 7.11%
due 10/03/2012 1,194,066
495,000 QCE LLC First Lien Term Loan, 7.61%
due 5/05/2013 471,488
Travelport, Inc.:
178,444 Standby Letter of Credit, 7.61%
due 8/31/2013 170,860
889,327 Term Loan B, 7.753% due 8/31/2013 851,530
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Schedule of Investments (continued) (in U.S. dollars)
Face
Amount Floating Rate Loan Interests** Value
Hotels, Restaurants & Leisure (concluded)
Trump Entertainment Resorts Holdings LP:
USD 2,450,000 Delay Draw Term Loan, 7.86% - 8.01%
due 4/28/2012 $ 2,397,938
345,000 Revolving Credit, 7.83% due 5/01/2010 327,750
2,450,000 Term Loan B-1, 7.86% - 7.90%
due 5/01/2012 2,397,938
Venetian Macau US Finance Co. LLC:
750,000 Delay Draw Term Loan, 7.61% - 7.76%
due 5/25/2012 724,286
1,500,000 Term Loan B, 7.61% due 5/25/2013 1,448,571
--------------
14,792,960
Household Durables--1.9%
1,120,669 American Achievement Corp. Term Loan B,
7.58% - 9.50% due 3/22/2011 1,087,049
2,000,000 American Residential Services Second Lien Term
Loan, 12% due 4/17/2015 1,980,000
3,268,092 Simmons Co. Tranche B Term Loan,
7.25% - 7.56% due 12/19/2011 3,170,049
--------------
6,237,098
Household Products--0.6%
Spectrum Brands, Inc.:
80,548 Letter of Credit, 5.17% due 4/15/2013 78,064
1,629,480 Term Loan B-1, 9.34% - 9.53%
due 4/15/2013 1,579,239
289,972 Term Loan B-2, 9.565% due 4/15/2013 272,574
--------------
1,929,877
IT Services--1.7%
2,047,974 Activant Solutions Term Loan B, 7.375%
due 5/02/2013 1,909,736
Audio Visual Services Corp.:
1,000,000 Second Lien Term Loan,10.86%
due 2/28/2014 950,000
1,500,000 Term Loan B, 7.61% due 2/28/2014 1,410,000
RedPrairie Corp. Term Loan:
646,110 8.50% - 10.25% due 7/31/2012 616,315
300,000 11.859% due 7/31/2012 288,000
475,000 Verifone, Inc. Term Loan B, 7.09% - 7.11%
due 10/31/2013 456,000
--------------
5,630,051
Independent Power Producers & Energy Traders--2.2%
1,571,429 AES Corp. Term Loan, 7% - 7.25%
due 4/30/2008 1,542,620
4,902,199 Calpine Corp. Term Loan B, 10.35%
due 7/16/2007 (i) 5,185,610
555,881 Calpine Generating Company LLC Second Lien
Term Loan, 11.07% due 3/11/2010 578,116
--------------
7,306,346
Industrial Conglomerates--0.6%
Trimas Corp.:
375,000 Letter of Credit, 7.91% due 8/02/2011 365,625
1,612,813 Term Loan B, 7.59% - 7.61% due 2/28/2012 1,572,492
--------------
1,938,117
Internet Software & Services--0.6%
1,948,052 Billing Services Group LLC First Lien
Term Loan, 7.938% due 5/05/2012 1,928,571
Leisure Equipment & Products--1.2%
3,950,000 24 Hour Fitness Term Loan B, 7.86% - 7.88%
due 6/08/2014 3,880,875
Face
Amount Floating Rate Loan Interests** Value
Machinery--4.1%
USD 997,500 Harrington Holdings, Inc. Term Loan, 7.61%
due 1/15/2014 $ 947,625
Invensys Plc:
2,470,588 Bonding Tranche, 7.356% due 12/15/2010 2,408,824
2,779,412 Term Loan, 7.36% due 1/15/2011 2,713,401
1,485,000 NACCO Materials Handling Group Term Loan B,
7.558% due 3/21/2013 1,418,175
Navistar International Transportation Corp.:
1,333,333 Revolving Credit, 5.17% - 8.61%
due 1/19/2012 1,280,000
3,666,667 Term Loan, 8.61% due 1/19/2012 3,520,000
1,990,000 OshKosh Truck Corp. Term Loan B, 7.11%
due 11/30/2013 1,908,529
--------------
14,196,554
Media--27.1%
959,038 ACS Media Canada Term Loan B,
7.86% - 8.07% due 11/30/2014 906,291
2,000,000 Affinion Group, Inc. Term Loan,11.678%
due 3/01/2012 1,846,666
1,641,750 Alix Partners Term Loan B, 7.36%
due 10/30/2013 1,608,915
1,500,000 Bresnan Telecommunications Term Loan B,
7.36% due 9/29/2013 1,440,535
Cequel Communications LLC:
2,000,000 Second Lien Term Loan, 9.856%
due 3/31/2015 1,930,000
1,649,784 Term Loan B, 7.36% - 7.505%
due 4/04/2013 1,555,839
14,000,000 Charter Communications, Inc. Term Loan B,
7.361% due 4/30/2014 13,223,756
1,000,000 Clarke American Corp. Term Loan B, 7.86%
due 6/30/2014 912,500
973,460 ClientLogic Holding Corp. Term Loan B,
7.86% - 8.065% due 1/30/2014 934,522
1,974,811 DIRECTV Holdings, Inc. Tranche B Term Loan,
7% due 4/13/2013 1,936,857
500,000 Discovery Communications Term Loan B, 7.36%
due 5/14/2014 485,417
969,000 EMMIS Communications Term Loan B,
7.36% due 10/31/2013 931,209
GateHouse Media, Inc.:
591,667 Delay Draw Term Loan, 7.36% - 7.51%
due 9/15/2014 535,458
2,000,000 Term Loan B, 7.51% due 9/15/2014 1,810,000
Gray Communications Systems, Inc.:
348,799 First Lien Delay Draw Term Loan,
6.86% due 9/18/2014 326,781
650,000 Term Loan B, 6.86% due 9/18/2014 608,969
1,201 Term Loan D, 6.86% due 9/18/2014 1,125
980,012 HIT Entertainment Ltd. First Lien Term Loan,
7.34% due 8/31/2012 916,311
1,500,000 Hanley-Wood LLC Term Loan B, 7.59% - 7.61%
due 3/07/2014 1,345,001
7,960,000 Idearc, Inc. Term Loan B, 7.36% due 11/15/2014 7,692,257
5,000,000 Insight Midwest Holdings LLC Delay Draw Term
Loan, 7.11% due 4/03/2014 4,858,595
6,843,288 Intelsat Corp. Term Loan B, 7.36% due 1/03/2014 6,614,037
2,940,281 Intelsat Ltd. Term Loan B, 7.36% due 12/03/2013 2,855,748
750,000 Knology, Inc. Term Loan B, 7.61% due 3/15/2012 723,750
1,240,625 MediMedia International Term Loan B,
7.522% - 7.63% due 11/15/2013 1,194,102
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Schedule of Investments (continued) (in U.S. dollars)
Face
Amount Floating Rate Loan Interests** Value
Media (concluded)
USD 1,637,500 Mediacom Broadband Group Tranche A Term
Loan, 7.02% - 7.07% due 3/31/2010 $ 1,531,063
3,144,200 Mediacom LLC Term Loan C, 7.32%
due 1/31/2015 2,964,531
4,375,000 Metro-Goldwyn-Mayer Studios, Inc. Term
Loan B, 8.61% due 4/08/2012 4,119,461
388,000 Multicultural Radio Broadcasting Inc.
Term Loan, 8.288% due 12/15/2012 376,360
1,000,000 National Cinemedia LLC Term Loan B, 7.11%
due 2/28/2015 940,000
NextMedia Group, Inc.:
370,603 Delay Draw Term Loan, 7.33%
due 11/15/2012 348,367
493,857 First Lien Term Loan, 7.569%
due 11/15/2012 464,225
1,750,000 Second Lien Term Loan, 10.01%
due 11/15/2013 1,671,250
Nielsen Finance LLC Term Loan B:
3,985,000 7.36% due 8/09/2013 3,826,708
1,970,000 7.36% due 8/15/2013 1,891,748
PagesJaunes Group:
EUR 500,000 8.39% due 4/08/2016 650,134
1,000,000 Term Loan B, 6.39% due 1/11/2015 1,286,474
500,000 Term Loan C, 6.89% due 1/11/2016 646,643
USD 3,250,000 Paxson Communications Corp. First Lien Term
Loan, 8.61% due 1/15/2012 3,144,375
1,000,000 Penton Media Term Loan, 10.36% due 2/15/2014 937,500
ProSiebenSat.1 Media AG Term Loan B:
EUR 500,000 6.796% due 6/30/2015 620,675
500,000 7.039% due 6/30/2016 611,097
USD 997,494 Riverdeep Group Ltd. Term Loan B, 8.11%
due 12/21/2013 976,048
1,000,000 San Juan Cable Term Loan B,11.82%
due 3/15/2013 957,500
1,500,000 Thomson Learning Inc. Term Loan, 8.10%
due 7/04/2014 1,416,251
Univision Communications, Inc.:
2,583,893 Delay Draw Term Loan, 7.61% due 9/30/2014 2,385,793
1,500,000 First Lien Term Loan, 8.008% due 3/31/2016 1,464,000
--------------
90,424,844
Multi-Utilities--4.3%
500,000 Brand Energy Term Loan B, 11.375% -11.563%
due 2/15/2015 484,166
1,309,963 Cogentrix Delaware Holdings, Inc. Term Loan,
6.86% due 4/15/2012 1,270,664
Coleto Creek:
1,858,532 Letter of Credit, 8.11% due 7/31/2013 1,784,190
127,389 Term Loan B, 5.26% due 7/31/2013 122,293
1,000,000 Energy Transfer Equity LP Term Loan B, 7.106%
due 11/01/2012 968,750
KGen Partners:
375,000 Letter of Credit, 7.125% due 2/15/2014 356,250
621,875 Term Loan B, 7.125% due 2/15/2014 590,781
NE Energy:
500,000 Second Lien Term Loan, 9.875%
due 10/31/2014 482,500
1,970,256 Term Loan B, 7.86% due 10/31/2013 1,909,508
1,642,211 Riverside Energy Center Term Loan, 9.815%
due 6/24/2011 1,628,526
Face
Amount Floating Rate Loan Interests** Value
Multi-Utilities (concluded)
Rocky Mountain Energy Center LLC:
USD 133,966 Credit Linked Deposit, 5.22%
due 6/24/2011 $ 132,850
1,008,546 Term Loan, 9.815% due 6/24/2011 1,000,142
Wolf Hollow I LP:
1,414,979 First Lien Term Loan, 7.61% due 6/22/2012 1,273,481
1,200,000 Letter of Credit, 7.75% due 6/22/2012 1,080,000
300,000 Revolving Credit, 7.57% - 7.755%
due 6/22/2012 270,000
1,000,000 Second Lien Term Loan, 9.864%
due 12/22/2012 940,000
--------------
14,294,101
Multiline Retail--0.3%
1,234,177 Neiman Marcus Group, Inc. Term Loan,
7.09% - 7.11% due 4/06/2013 1,196,711
Oil, Gas & Consumable Fuels--2.6%
450,000 Big West Oil & Gas Term Loan B, 7.61%
due 5/15/2014 425,250
Coffeyville Resources LLC:
486,486 Letter of Credit, 5.26% due 12/21/2013 468,091
2,500,962 Term Loan B, 8.609% - 10.50%
due 12/21/2013 2,406,395
989,940 Helix Energy Solutions Term Loan B,
7.33% - 7.541% due 7/01/2013 957,458
1,000,000 Petroleum Geo-Services ASA Term Loan B, 7.11%
due 6/30/2015 965,833
1,600,000 SandRidge Energy, Inc. Term Loan B, 8.985%
due 3/01/2014 1,580,000
Western Refining Co. LP:
250,000 Delay Draw Term Loan, 7.07%
due 3/15/2014 237,500
1,607,143 Term Loan B, 7.07% due 3/15/2014 1,526,786
--------------
8,567,313
Paper & Forest Products--1.2%
Cenveo, Inc.:
888 Delay Draw Term Loan, 7.11%
due 9/07/2013 845
26,630 Term Loan C, 7.11% due 9/07/2013 25,365
985,000 Georgia-Pacific Corp. First Lien Term Loan B,
7.264% due 12/20/2012 941,149
1,972,738 SP Newsprint Co. Tranche B-1 Credit Linked
Deposit, 5.565% due 1/09/2010 1,874,101
1,130,000 Verso Paper Holdings LLC, Term Loan B,11.606%
due 2/01/2013 1,124,350
--------------
3,965,810
Pharmaceuticals--0.8%
Pharmaceutical Technologies & Services (PTS)
Term Loan:
EUR 1,000,000 6.414% due 4/15/2014 1,294,137
USD 1,500,000 7.61% due 4/15/2014 1,368,750
--------------
2,662,887
Real Estate Management & Development--0.8%
987,500 Mattamy Group Term Loan B, 7.813%
due 4/11/2013 952,938
2,000,000 Realogy Corp. Term Loan B, 8.36%
due 10/10/2013 1,813,334
--------------
2,766,272
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Schedule of Investments (continued) (in U.S. dollars)
Face
Amount Floating Rate Loan Interests** Value
Road & Rail--0.8%
USD 1,000,000 Rail America, Inc. Term Loan, 7.81%
due 8/14/2008 $ 967,500
2,093,023 Swift Transportation Co., Inc. Term
Loan B, 8.375% due 5/15/2014 1,850,145
--------------
2,817,645
Semiconductors & Semiconductor Equipment--0.6%
1,983,750 Marvell Technology Group Term Loan B,
8.003% due 11/15/2009 1,904,400
Specialty Retail--0.8%
1,500,000 ADESA, Inc. Term Loan B, 7.61% due 10/30/2013 1,403,437
1,500,000 Claire's Stores Term Loan B, 8.11%
due 5/24/2014 1,373,125
--------------
2,776,562
Textiles, Apparel & Luxury Goods--0.3%
748,125 David's Bridal, Inc. Term Loan B, 7.36%
due 1/30/2014 695,756
497,155 Renfro Corp. Term Loan B, 8.61% - 8.76%
due 9/30/2013 479,755
--------------
1,175,511
Trading Companies & Distributors--0.2%
United Rentals, Inc.:
361,380 Term Loan, 7.32% due 2/14/2011 356,637
164,912 Tranche B Credit Linked Deposit, 5.32%
due 2/14/2011 162,748
--------------
519,385
Wireless Telecommunication Services--1.7%
997,500 American Cellular Network Term Loan B, 7.36%
due 3/15/2014 986,777
931,470 Centennial Cellular Operating Co. Term Loan,
7.36% - 7.541% due 2/09/2011 903,991
2,493,750 Crown Castle Operating Co. Term Loan,
6.82% - 6.84% due 3/15/2014 2,369,063
1,000,000 IPC Systems First Lien Term Loan, 7.61%
due 5/25/2014 888,333
406,417 Ng Wireless Term Loan,10% due 7/31/2014 398,289
--------------
5,546,453
Total Floating Rate Loan Interests
(Cost--$331,632,771)--95.0% 317,351,551
Corporate Bonds
Auto Components--0.3%
1,000,000 The Goodyear Tire & Rubber Co., 9.135%
due 12/01/2009 (a)(b) 1,000,000
Biotechnology--0.3%
1,000,000 Angiotech Pharmaceuticals, Inc., 9.371%
due 12/01/2013 (a) 990,000
Building Products--1.5%
3,000,000 CPG International I, Inc.,10.50% due 7/01/2013 2,940,000
2,500,000 Masonite International Corp.,11%
due 4/06/2015 2,037,500
--------------
4,977,500
Face
Amount Corporate Bonds Value
Chemicals--1.2%
USD 2,011,000 GEO Specialty Chemicals, Inc., 13.85%
due 12/31/2009 (a)(b)(c) $ 1,659,075
1,500,000 Hexion U.S. Finance Corp.,10.058%
due 11/15/2014 (a) 1,530,000
1,040,000 NOVA Chemicals Corp., 8.484%
due 11/15/2013 (a) 1,008,800
--------------
4,197,875
Commercial Services & Supplies--1.1%
3,375,000 Allied Waste North America, Inc. Series B,
7.375% due 4/15/2014 3,290,625
290,000 Yankee Acquisition Corp., 9.75% due 2/15/2017 259,550
--------------
3,550,175
Communications Equipment--0.2%
600,000 Dycom Industries, Inc., 8.125% due 10/15/2015 600,000
Containers & Packaging--2.3%
1,450,000 Berry Plastics Holding Corp., 9.235%
due 9/15/2014 (a) 1,435,500
4,000,000 Clondalkin Acquisition BV, 7.359%
due 12/15/2013 (a)(b) 3,800,000
2,350,000 Packaging Dynamics Finance Corp.,10%
due 5/01/2016 (b) 2,352,937
--------------
7,588,437
Diversified Financial Services--0.2%
750,000 Ford Motor Credit Co. LLC, 9.81%
due 4/15/2012 (a) 755,516
Diversified Telecommunication Services--0.5%
1,450,000 Qwest Corp., 8.61% due 6/15/2013 (a)(h) 1,529,750
Electric Utilities--0.7%
2,375,000 Edison Mission Energy, 7.50% due 6/15/2013 2,392,812
Electronic Equipment & Instruments--0.7%
2,390,000 NXP BV, 8.11% due 10/15/2013 (a) 2,165,937
180,000 Sanmina-SCI Corp., 8.125% due 3/01/2016 155,700
--------------
2,321,637
Energy Equipment & Services--1.8%
3,000,000 Ocean RIG ASA, 9.36% due 4/04/2011 (a) 2,962,500
3,000,000 Parker Drilling Co.,10.33% due 9/01/2010 (a) 3,026,250
--------------
5,988,750
Food & Staples Retailing--0.3%
250,000 AmeriQual Group LLC, 9.50% due 4/01/2012 (b) 232,500
720,000 Rite Aid Corp., 9.375% due 12/15/2015 (b) 655,200
--------------
887,700
Health Care Providers & Services--0.8%
2,000,000 Tenet Healthcare Corp., 6.50% due 6/01/2012 1,660,000
575,000 US Oncology, Inc., 9% due 8/15/2012 575,000
460,000 Universal Hospital Services, Inc., 8.759%
due 6/01/2015 (a)(b) 443,900
--------------
2,678,900
Hotels, Restaurants & Leisure--1.9%
5,000,000 American Real Estate Partners LP, 7.125%
due 2/15/2013 (b) 4,700,000
175,000 Galaxy Entertainment Finance Co. Ltd.,10.409%
due 12/15/2010 (a)(b) 176,750
1,565,000 Little Traverse Bay Bands of Odawa Indians,
10.25% due 2/15/2014 (b) 1,572,825
--------------
6,449,575
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Schedule of Investments (continued) (in U.S. dollars)
Face
Amount Corporate Bonds Value
IT Services--0.6%
USD 1,900,000 SunGard Data Systems, Inc.,10.25%
due 8/15/2015 (b) $ 1,957,000
Independent Power Producers & Energy Traders--1.5%
2,000,000 Calpine Corp., 9.875% due 12/01/2011 (b)(f) 2,070,000
3,000,000 NRG Energy, Inc., 7.25% due 2/01/2014 2,970,000
--------------
5,040,000
Machinery--1.1%
250,000 Ahern Rentals, Inc., 9.25% due 8/15/2013 (b) 246,250
1,346,000 Invensys Plc. 9.875% due 3/15/2011 (b) 1,430,125
2,000,000 Sunstate Equipment Co. LLC,10.50%
due 4/01/2013 (b) 1,950,000
--------------
3,626,375
Media--4.5%
2,000,000 CSC Holdings, Inc. Series B, 7.625%
due 4/01/2011 1,970,000
Cablevision Systems Corp. Series B:
2,000,000 9.82% due 4/01/2009 (a) 2,050,000
575,000 8% due 4/15/2012 550,562
5,055,000 Intelsat Bermuda Ltd., 8.886%
due 1/15/2015 (a) 5,092,912
375,000 NTL Cable Plc, 8.75% due 4/15/2014 379,687
4,000,000 Nielsen Finance LLC, 10% due 8/01/2014 4,100,000
800,000 Quebecor Media, Inc., 7.75% due 3/15/2016 761,000
175,000 Quebecor World Capital Corp., 8.75%
due 3/15/2016 (b) 157,500
--------------
15,061,661
Metals & Mining--2.2%
3,000,000 CSN Islands VIII Corp., 9.75%
due 12/16/2013 (b) 3,315,000
265,000 FMG Finance Pty Ltd., 9.621%
due 9/01/2011 (a)(b) 274,275
3,120,000 Freeport-McMoRan Copper & Gold, Inc., 8.564%
due 4/01/2015 (a) 3,213,600
700,000 Novelis, Inc., 7.25% due 2/15/2015 679,000
--------------
7,481,875
Paper & Forest Products--2.2%
2,650,000 Abitibi-Consolidated, Inc., 8.86%
due 6/15/2011 (a) 2,279,000
700,000 Ainsworth Lumber Co. Ltd., 9.11%
due 10/01/2010 (a) 539,000
725,000 Domtar, Inc., 7.125% due 8/15/2015 674,250
925,000 NewPage Corp.,11.606% due 5/01/2012 (a) 980,500
3,000,000 Verso Paper Holdings LLC, Series B, 9.106%
due 8/01/2014 (a) 2,985,000
--------------
7,457,750
Real Estate Management & Development--1.0%
4,000,000 Realogy Corp., 11% due 4/15/2014 (b)(g) 3,240,000
Road & Rail--0.6%
1,000,000 Atlantic Express Transportation Corp.,12.609%
due 4/15/2012 (a) 970,000
1,350,000 St. Acquisition Corp.,13.107%
due 5/15/2015 (a)(b) 938,250
--------------
1,908,250
Face
Amount Corporate Bonds Value
Semiconductors & Semiconductor Equipment--2.5%
USD 4,500,000 Avago Technologies Finance Pte. Ltd.,
10.86% due 6/01/2013 (a) $ 4,567,500
1,250,000 Freescale Semiconductor, Inc., 9.235%
due 12/15/2014 (a) 1,150,000
2,870,000 Spansion, Inc., 8.746% due 6/01/2013 (a)(b) 2,726,500
--------------
8,444,000
Specialty Retail--0.3%
250,000 AutoNation, Inc., 7.36% due 4/15/2013 (a) 235,000
700,000 General Nutrition Centers, Inc., 9.85%
due 3/15/2014 (a)(b)(g) 665,000
--------------
900,000
Wireless Telecommunication Services--0.3%
750,000 Cricket Communications, Inc., 9.375%
due 11/01/2014 735,000
378,000 Digicel Group Ltd., 9.125% due 1/15/2015 (b)(g) 345,416
--------------
1,080,416
Total Corporate Bonds
(Cost--$105,912,395)--30.6% 102,105,954
Shares
Held Common Stocks
Chemicals--0.0%
13,117 GEO Specialty Chemicals, Inc. (e) 13,117
Electrical Equipment--0.2%
71,654 Medis Technologies Ltd. (e) 755,950
Energy Equipment & Services--1.2%
119,185 Trico Marine Services, Inc. (e) 3,916,419
Paper & Forest Products--0.0%
84,448 Western Forest Products, Inc. (e) 181,531
Total Common Stocks
(Cost--$4,322,547)--1.4% 4,867,017
Warrants (d)
Electric Utilities--0.0%
4,558 Reliant Resources (expires 10/25/2008) 88,881
Total Warrants
(Cost--$0)--0.0% 88,881
Total Investments (Cost--$441,867,713*)--127.0% 424,413,403
Liabilities in Excess of Other Assets--(27.0%) (90,348,676)
--------------
Net Assets--100.0% $ 334,064,727
==============
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Schedule of Investments (concluded) (in U.S. dollars)
* The cost and unrealized appreciation (depreciation) of investments
as of August 31, 2007, as computed for federal income tax purposes,
were as follows:
Aggregate cost $ 441,971,196
=================
Gross unrealized appreciation $ 2,856,629
Gross unrealized depreciation (20,414,422)
-----------------
Net unrealized depreciation $ (17,557,793)
=================
** Floating rate loan interests in which the Fund invests generally
pay interest at rates that are periodically redetermined by reference
to a base lending rate plus a premium. The base lending rates are
generally (i) the lending rate offered by one or more major European
banks, such as LIBOR (London InterBank Offered Rate), (ii) the prime
rate offered by one or more major U.S. banks or (iii) the certificate
of deposit rate.
(a) Floating rate security.
(b) The security may be offered and sold to "qualified institutional buyers"
under Rule 144A of the Securities Act of 1933.
(c) Convertible security.
(d) Warrants entitle the Fund to purchase a predetermined number of shares
of common stock and are non-income producing. The purchase price and
number of shares are subject to adjustment under certain conditions
until the expiration date.
(e) Non-income producing security.
(f) Issuer filed for bankruptcy or is in default of interest payments.
(g) Represents a pay-in-kind security, which may pay interest/dividends
in additional face/shares.
(h) All or a portion of security held as collateral in connection with
open swap contracts.
(i) As a result of bankruptcy proceedings, the issuer did not repay the
principal amount of the security upon maturity.
o For Fund compliance purposes, the Fund's industry classifications refer
to any one or more of the industry sub-classifications used by one or
more widely recognized market indexes or ratings group indexes, and/or
as defined by Fund management. This definition may not apply for purposes
of this report, which may combine industry sub-classifications for
reporting ease. Industries are shown as a percent of net assets. These
industry classifications are unaudited.
o Investments in companies considered to be an affiliate of the Fund,
for purposes of Section 2 (a)(3) of the Investment Company Act of 1940,
were as follows:
Net Interest
Affiliate Activity Income
BlackRock Liquidity Series, LLC
Cash Sweep Series $(70,094) $460,189
o Forward foreign exchange contracts as of August 31, 2007 were as follows:
Foreign Currency Settlement Unrealized
Sold Date Appreciation
EUR 7,625,000 October 2007 $ 114,878
GBP 2,203,000 October 2007 23,016
----------
Total Unrealized Appreciation on Forward Foreign
Exchange Contracts (USD Commitment--$14,983,586) $ 137,894
==========
o Swaps outstanding as of August 31, 2007 were as follows:
Unrealized
Notional Appreciation
Amount (Depreciation)
Sold credit default protection on
Ford Motor Co. and receive 3.80%
Broker, UBS Warburg
Expires March 2010 $10,000,000 $ (674,890)
Bought credit default protection on
LCDX Index and pay 1.2%
Broker, JPMorgan Chase
Expires June 2012 $ 2,000,000 (22,801)
Bought credit default protection on
LCDX Index and pay 1.2%
Broker, Morgan Stanley Capital Services Inc.
Expires June 2012 $ 2,000,000 (22,801)
Sold credit default protection on
LCDX Index and receive 1.20%
Broker, Morgan Stanley Capital Services Inc.
Expires June 2012 $ 2,000,000 42,934
Sold credit default protection on
Dow Jones CDX North America High Yield
Series 8 and receive 2.75%
Broker, JPMorgan Chase
Expires June 2012 $ 2,850,000 (8,785)
Sold credit default protection on
Dow Jones CDX North America High Yield
Index Series 8 and receive 2.75%
Broker, JPMorgan Chase
Expires June 2012 $ 2,850,000 (7,003)
------------
Total $ (693,346)
============
o Currency abbreviations:
EUR Euro
GBP British Pound
USD U.S. Dollar
See Notes to Financial Statements.
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Statement of Assets, Liabilities and Capital
As of August 31, 2007
Assets
Investments in unaffiliated securities, at value (identified cost--$441,867,713) $ 424,413,403
Unrealized appreciation on forward foreign exchange contracts 137,894
Unrealized appreciation on swaps 42,934
Cash 9,606,041
Foreign cash (cost--$10,295) 10,173
Swap premium paid 241,458
Receivables:
Securities sold $ 7,123,440
Interest (including $16,486 from affiliates) 6,454,860
Swaps 215,493
Principal paydowns 32,983
Commitment fees 13,381 13,840,157
---------------
Prepaid expenses 7,413
---------------
Total assets 448,299,473
---------------
Liabilities
Loans 107,000,000
Unrealized depreciation on swaps 736,280
Unfunded loan commitment 480,308
Swap premium received 400,982
Payables:
Securities purchased 4,642,249
Investment adviser 311,502
Dividends to shareholders 284,933
Interest on loans 163,150
Swaps 13,867
Other affiliates 2,618 5,418,319
---------------
Accrued expenses and other liabilities 198,857
---------------
Total liabilities 114,234,746
---------------
Net Assets
Net assets $ 334,064,727
===============
Capital
Common Stock, par value $.10 per share; 200,000,000 shares authorized
(18,305,029 shares issued and outstanding) $ 1,830,503
Paid-in capital in excess of par 347,369,214
Undistributed investment income--net $ 4,037,077
Accumulated realized capital losses--net (691,829)
Unrealized depreciation--net (18,480,238)
---------------
Total accumulated losses--net (15,134,990)
---------------
Total capital--Equivalent to $18.25 net asset value per share of Common Stock
(market price--$16.70) $ 334,064,727
===============
See Notes to Financial Statements.
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Statement of Operations
For the Year Ended August 31, 2007
Investment Income
Interest (including $460,189 from affiliates) $ 39,556,578
Facility and other fees 409,529
---------------
Total income 39,966,107
---------------
Expenses
Loan interest expense $ 7,584,918
Investment advisory fees 3,685,728
Borrowing costs 182,659
Accounting services 116,430
Professional fees 113,792
Printing and shareholder reports 43,190
Directors' fees and expenses 40,217
Custodian fees 23,786
Transfer agent fees 20,689
Pricing services 15,881
Listing fees 9,379
Other 26,933
---------------
Total expenses 11,863,602
---------------
Investment income--net 28,102,505
---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain (loss) on:
Investments--net 373,930
Swaps--net 2,320,099
Foreign currency transactions--net (352,957) 2,341,072
---------------
Change in unrealized appreciation/depreciation on:
Investments--net (20,990,162)
Swaps--net (826,614)
Unfunded corporate loans--net (271,716)
Foreign currency transactions--net 138,580 (21,949,912)
--------------- ---------------
Total realized and unrealized losses--net (19,608,840)
---------------
Net Increase in Net Assets Resulting from Operations $ 8,493,665
===============
See Notes to Financial Statements.
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Statements of Changes in Net Assets
For the Year Ended
August 31,
Increase (Decrease) in Net Assets: 2007 2006
Operations
Investment income--net $ 28,102,505 $ 25,710,397
Realized gain (loss)--net 2,341,072 (219,568)
Change in unrealized appreciation/depreciation--net (21,949,912) (994,964)
--------------- ---------------
Net increase in net assets resulting from operations 8,493,665 24,495,865
--------------- ---------------
Dividends to Shareholders
Investment income--net (28,142,426) (25,022,792)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (28,142,426) (25,022,792)
--------------- ---------------
Common Stock Transactions
Value of shares issued to Common Stock shareholders in reinvestment of dividends -- 126,000
--------------- ---------------
Net increase in net assets resulting from Common Stock transactions -- 126,000
--------------- ---------------
Net Assets
Total decrease in net assets (19,648,761) (400,927)
Beginning of year 353,713,488 354,114,415
--------------- ---------------
End of year* $ 334,064,727 $ 353,713,488
=============== ===============
* Undistributed investment income--net $ 4,037,077 $ 3,564,973
=============== ===============
See Notes to Financial Statements.
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Statement of Cash Flows
For the Year Ended August 31, 2007
Cash Provided By Operating Activities
Net increase in net assets resulting from operations $ 8,493,665
Adjustments to reconcile net increase in net assets resulting from operations to net cash
provided by operating activities:
Increase in receivables and prepaid expenses (1,198,056)
Increase in other liabilities 173,525
Realized and unrealized loss--net 22,279,517
Amortization of premium and discount (185,470)
Proceeds from sales and paydowns of long-term securities 334,617,251
Purchases of long-term securities (327,945,466)
Proceeds from sales of short-term securities--net 30,174,060
Realized loss on foreign currency--net (352,957)
---------------
Cash provided by operating activities 66,056,069
---------------
Cash Used for Financing Activities
Cash receipts from borrowings 192,000,000
Cash payments on borrowings (220,200,000)
Dividends paid to shareholders (28,271,973)
---------------
Cash used for financing activities (56,471,973)
---------------
Cash
Net increase in cash 9,584,096
Cash at beginning of year 32,118
---------------
Cash at end of year $ 9,616,214
===============
Cash Flow Information
Cash paid for interest $ 7,558,960
===============
See Notes to Financial Statements.
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Financial Highlights
For the Period
October 31,
2003++ to
The following per share data and ratios have been derived For the Year Ended August 31, August 31,
from information provided in the financial statements. 2007 2006 2005 2004
Per Share Operating Performance
Net asset value, beginning of period $ 19.32 $ 19.35 $ 19.16 $ 19.10
------------ ------------ ------------ ------------
Investment income--net 1.54*** 1.40*** 1.23*** .66
Realized and unrealized gain (loss)--net (1.07) (.06) .08 .02
------------ ------------ ------------ ------------
Total from investment operations .47 1.34 1.31 .68
------------ ------------ ------------ ------------
Less dividends and distributions from:
Investment income--net (1.54) (1.37) (1.11) (.60)
Realized gain--net -- -- (.01) --
------------ ------------ ------------ ------------
Total dividends and distributions (1.54) (1.37) (1.12) (.60)
------------ ------------ ------------ ------------
Offering costs resulting from the issuance of Common Stock -- -- -- (.02)
------------ ------------ ------------ ------------
Net asset value, end of period $ 18.25 $ 19.32 $ 19.35 $ 19.16
============ ============ ============ ============
Market price per share, end of period $ 16.70 $ 17.49 $ 17.85 $ 19.44
============ ============ ============ ============
Total Investment Return**
Based on net asset value per share 2.74% 7.92% 7.27% 3.50%+++
============ ============ ============ ============
Based on market price per share 3.85% 5.91% (2.47%) .29%+++
============ ============ ============ ============
Ratios to Average Net Assets
Expenses, net of waiver and excluding interest expense 1.20% 1.14% 1.22% .71%*
============ ============ ============ ============
Expenses, net of waiver 3.33% 2.54% 2.18% .87%*
============ ============ ============ ============
Expenses 3.33% 2.54% 2.18% 1.08%*
============ ============ ============ ============
Investment income--net 7.88% 7.30% 6.34% 3.80%*
============ ============ ============ ============
Leverage
Amount of borrowings, end of period (in thousands) $ 107,000 $ 135,200 $ 123,600 $ 123,225
============ ============ ============ ============
Average amount of borrowings outstanding during the
period (in thousands) $ 133,763 $ 101,916 $ 117,702 $ 38,654
============ ============ ============ ============
Average amount of borrowings outstanding per share
during the period*** $ 7.31 $ 5.57 $ 6.43 $ 2.11
============ ============ ============ ============
Supplemental Data
Net assets, end of period (in thousands) $ 334,065 $ 353,713 $ 354,114 $ 350,254
============ ============ ============ ============
Portfolio turnover 69% 57% 48% 43%
============ ============ ============ ============
* Annualized.
** Total investment returns based on market price, which can be significantly greater or lesser than
the net asset value, may result in substantially different returns. Total investment returns exclude
the effects of sales charges.
*** Based on average shares outstanding.
++ Commencement of operations.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Notes to Financial Statements
1. Significant Accounting Policies:
BlackRock Floating Rate Income Strategies Fund, Inc. (the "Fund") is
registered under the Investment Company Act of 1940, as amended, as a
diversified, closed-end management investment company. The Fund's financial
statements are prepared in conformity with U.S. generally accepted accounting
principles, which may require the use of management accruals and estimates.
Actual results may differ from these estimates. The Fund determines and makes
available for publication the net asset value of its Common Stock on a daily
basis. The Fund's Common Stock shares are listed on the New York Stock
Exchange ("NYSE") under the symbol FRA.
(a) Corporate debt obligations--The Fund invests principally in floating rate
debt obligations of companies, including floating rate loans made by banks and
other financial institutions and both privately and publicly offered corporate
bonds and notes. The Fund's investments in loan participation interests
involve the risk of insolvency of the financial intermediaries who are parties
to the transactions.
(b) Valuation of investments--Floating rate loans are valued in accordance
with guidelines established by the Fund's Board of Directors. As of October 2,
2006, floating rate loan interests are valued at the mean between the last
available bid prices from one or more brokers or dealers as obtained from Loan
Pricing Corporation. Previously floating rate loan interests were valued at
the mean between the last available bid and asked prices as obtained from the
same pricing source. This change had no significant effect on the valuation of
these loans. For the limited number of floating rate loans for which no
reliable price quotes are available, such floating rate loans may be valued by
Loan Pricing Corporation through the use of pricing matrixes to determine
valuations. If the pricing service does not provide a value for a floating
rate loan, BlackRock Advisors, LLC (the "Manager") an indirect, wholly owned
subsidiary of BlackRock, Inc., will value the floating rate loan at fair
value, which is intended to approximate market value.
Debt securities are traded primarily in the over-the-counter ("OTC") markets
and are valued at the last available bid price in the OTC market or on the
basis of values obtained by a pricing service. Pricing services use valuation
matrixes that incorporate both dealer-supplied valuations and valuation
models. The procedures of the pricing service and its valuations are reviewed
by the officers of the Fund under the general direction of the Board of
Directors. Such valuations and procedures will be reviewed periodically by the
Board of Directors of the Fund.
Securities held by the Fund that are traded on stock exchanges or the NASDAQ
Global Market are valued at the last sale price or official close price on the
exchange on which such securities are traded, as of the close of business on
the day the securities are being valued or, lacking any sales, at the last
available bid price for long positions, and at the last available asked price
for short positions. In cases where securities are traded on more than one
exchange, the securities are valued on the exchange designated as the primary
market by or under the authority of the Board of Directors of the Fund. Long
positions in securities traded in the OTC market, NASDAQ Capital Market or
Bulletin Board are valued at the last available bid price or yield equivalent
obtained from one or more dealers or pricing services approved by the Board of
Directors of the Fund. Short positions traded in the OTC market are valued at
the last available asked price. Portfolio securities that are traded both in
the OTC market and on a stock exchange are valued according to the broadest
and most representative market. When the Fund writes an option, the amount of
the premium received is recorded on the books of the Fund as an asset and an
equivalent liability. The amount of the liability is subsequently valued to
reflect the current market value of the option written, based on the last sale
price in the case of exchange-traded options or, in the case of options traded
in the OTC markets, the last asked price. Options written or purchased are
valued at the last sale price in the case of exchange-traded options. Options
traded in the OTC market are valued at the last asked price (options written)
or last bid price (options purchased). Swap agreements are valued based upon
quoted fair valuations received daily by the Fund from a pricing service or
counterparty. Other investments, including futures contracts and related
options, are stated at market value. Valuation of short-term investment
vehicles is generally based on the net asset value of the underlying investment
vehicle or amortized cost. Repurchase agreements will be valued at cost plus
accrued interest.
Generally, trading in foreign securities, as well as U.S. government
securities, money market instruments and certain fixed income securities, is
substantially completed each day at various times prior to the close of
business on the NYSE. The values of such securities used in computing the net
asset value of the Fund's shares are determined as of such times. Foreign
currency exchange rates will generally be determined as of the close of
business on the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which they
are determined and the close of business on the NYSE that may not be reflected
in the computation of the Fund's net asset value. If events (for example, a
company announcement, market volatility or a natural disaster) occur during
such periods that are expected to materially affect the value of such
securities, those securities will be valued at their fair value as determined
in good faith by the Fund's Board of Directors or by the Manager using a
pricing service and/or procedures approved by the Fund's Board of Directors.
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Notes to Financial Statements (continued)
(c) Derivative financial instruments--The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movements and movements in the
securities markets. Losses may arise due to changes in the value of the
contract due to an unfavorable change in the price of the underlying security
or index, or if the counterparty does not perform under the contract. The
counterparty for certain instruments may pledge cash or securities as
collateral.
* Financial futures contracts--The Fund may purchase or sell financial futures
contracts and options on such financial futures contracts. Financial futures
contracts are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a contract,
the Fund deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to the
contract, the Fund agrees to receive from or pay to the broker an amount of
cash equal to the daily fluctuation in value of the contract. Such receipts or
payments are known as variation margin and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
* Options--The Fund may write and purchase call and put options. When the Fund
writes an option, an amount equal to the premium received by the Fund is
reflected as an asset and an equivalent liability. The amount of the liability
is subsequently marked-to-market to reflect the current market value of the
option written. When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or deducted from)
the basis of the security acquired or deducted from (or added to) the proceeds
of the security sold. When an option expires (or the Fund enters into a
closing transaction), the Fund realizes a gain or loss on the option to the
extent of the premiums received or paid (or gain or loss to the extent the
cost of the closing transaction is less than or exceeds the premiums paid or
received).
Written and purchased options are non-income producing investments.
* Swaps--The Fund may enter into swap agreements, which are OTC contracts in
which the Fund and a counterparty agree to make periodic net payments on a
specified notional amount. The net payments can be made for a set period of
time or may be triggered by a predetermined credit event. The net periodic
payments may be based on a fixed or variable interest rate; the change in
market value of a specified security, basket of securities, or index; or the
return generated by a security. These periodic payments received or made by
the Fund are recorded in the accompanying Statement of Operations as realized
gains or losses, respectively. Gains or losses are also realized upon
termination of swap agreements. Swaps are marked-to-market daily and changes
in value are recorded as unrealized appreciation (depreciation). Risks include
changes in the returns of the underlying instruments, failure of the
counterparties to perform under the contracts' terms and the possible lack of
liquidity with respect to the swap agreements.
* Forward foreign exchange contracts--The Fund may enter into forward foreign
exchange contracts as a hedge against either specific transactions or
portfolio positions. The contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
contract is closed, the Fund records a realized gain or loss equal to the
difference between the value at the time it was opened and the value at the
time it was closed.
(d) Foreign currency transactions--Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized.
Assets and liabilities denominated in foreign currencies are valued at the
exchange rate at the end of the period. Foreign currency transactions are the
result of settling (realized) or valuing (unrealized) assets or liabilities
expressed in foreign currencies into U.S. dollars. Realized and unrealized
gains or losses from investments include the effects of foreign exchange rates
on investments. The Fund invests in foreign securities, which may involve a
number of risk factors and special considerations not present with investments
in securities of U.S. corporations.
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Notes to Financial Statements (continued)
(e) Income taxes--It is the Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
(f) Security transactions and investment income--Security transactions are
recorded on the dates the trans-actions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Interest income is recognized on the accrual basis. The
Fund amortizes all premiums and discounts on debt securities. The Fund earns
facility and other fees on loan participation interests. Other fees earned
include amendment, consent and prepayment fees.
(g) Dividends and distributions--Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates. The Fund may at times pay out less than the entire amount
of net investment income earned in any particular period and may at times pay
out such accumulated undistributed income in other periods to permit the Fund
to maintain a more stable level of dividends.
(h) Securities lending--The Fund may lend securities to financial institutions
that provide cash or securities issued or guaranteed by the U.S. government as
collateral, which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. The market
value of the loaned securities is determined at the close of business of the
Fund and any additional required collateral is delivered to the Fund on the
next business day. Where the Fund receives securities as collateral for the
loaned securities, it collects a fee from the borrower. The Fund typically
receives the income on the loaned securities but does not receive the income
on the collateral. Where the Fund receives cash collateral, it may invest such
collateral and retain the amount earned on such investment, net of any amount
rebated to the borrower. Loans of securities are terminable at any time and
the borrower, after notice, is required to return borrowed securities within
five business days. The Fund may pay reasonable finder's, lending agent,
administrative and custodial fees in connection with its loans. In the event
that the borrower defaults on its obligation to return borrowed securities
because of insolvency or for any other reason, the Fund could experience
delays and costs in gaining access to the collateral. The Fund also could
suffer a loss where the value of the collateral falls below the market value
of the borrowed securities, in the event of borrower default or in the event
of losses on investments made with cash collateral.
(i) Recent accounting pronouncements--In July 2006, the Financial Accounting
Standards Board ("FASB") issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes - an interpretation of FASB Statement No.
109." FIN 48 prescribes the minimum recognition threshold a tax position must
meet in connection with accounting for uncertainties in income tax positions
taken or expected to be taken by an entity including mutual funds before being
measured and recognized in the financial statements. Adoption of FIN 48 is
required for the last net asset value calculation in the first required
financial statement reporting period for fiscal years beginning after December
15, 2006. The impact on the Fund's financial statements, if any, is currently
being assessed.
In September 2006, Statement of Financial Accounting Standards No. 157, "Fair
Value Measurements" ("FAS 157"), was issued and is effective for fiscal years
beginning after November 15, 2007. FAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. At this time management is evaluating the implications of FAS
157 and its impact on the Fund's financial statements, if any, has not been
determined.
In addition, in February 2007, Statement of Financial Accounting Standards
No. 159, "The Fair Value Option for Financial Assets and Financial
Liabilities" ("FAS 159"), was issued and is effective for fiscal years
beginning after November 15, 2007. Early adoption is permitted as of the
beginning of a fiscal year that begins on or before November 15, 2007,
provided the entity also elects to apply the provisions of FAS 157. FAS 159
permits entities to choose to measure many financial instruments and certain
other items at fair value that are not currently required to be measured at
fair value. FAS 159 also establishes presentation and disclosure requirements
designed to facilitate comparisons between entities that choose different
measurement attributes for similar types of assets and liabilities. At this
time, management is evaluating the implications of FAS 159 and its impact on
the Fund's financial statements, if any, has not been determined.
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Notes to Financial Statements (continued)
(j) Reclassification--U.S. generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, during the
current year, $512,025 has been reclassified between accumulated net realized
capital losses and undistributed net investment income as a result of
permanent differences attributable to swap agreements and foreign currency
transactions. This reclassification has no effect on net assets or net asset
value per share.
2. Investment Advisory Agreement and Transactions with Affiliates:
On September 29, 2006, BlackRock, Inc. and Merrill Lynch & Co., Inc. ("Merrill
Lynch") combined Merrill Lynch's investment management business, Merrill Lynch
Investment Managers, L.P. ("MLIM"), and its affiliates, including Fund Asset
Management, L.P. ("FAM"), with BlackRock, Inc. to create a new independent
company. Merrill Lynch has a 49.8% economic interest and a 45% voting interest
in the combined company and The PNC Financial Services Group, Inc., has
approximately a 34% economic and voting interest. The new company operates
under the BlackRock name and is governed by a board of directors with a
majority of independent members.
On August 31, 2006, shareholders of the Fund approved a new Investment
Advisory Agreement with BlackRock Advisors, Inc. BlackRock Advisors, Inc. was
reorganized into a limited liability company and renamed BlackRock Advisors,
LLC. The new Investment Advisory Agreement between the Fund and the Manager
became effective on September 29, 2006. Prior to September 29, 2006, FAM was
the Fund's manager. The general partner of FAM is an indirect, wholly owned
subsidiary of Merrill Lynch, which is the limited partner.
The Manager is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Fund. For such services, the Fund
pays a monthly fee of .75% of the average daily value of the Fund's net assets
plus the proceeds of any outstanding borrowings used for leverage. In
addition, the Manager has entered into a Sub-Advisory Agreement with BlackRock
Financial Management, Inc., an affiliate of the Manager, under which the
Manager pays the Sub-Adviser for services it provides a monthly fee on an
annual basis that is a percentage of the management fee paid by the Fund to
the Manager.
The Fund has received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("MLPF&S"), a wholly owned subsidiary of
Merrill Lynch, or its affiliates. Pursuant to that order, the Fund has
retained BlackRock Investment Management, LLC ("BIM"), an affiliate of the
Manager, as the securities lending agent for a fee based on a share of the
returns on investment of cash collateral. Prior to September 29, 2006, BIM was
organized as Merrill Lynch Investment Managers, LLC ("MLIM, LLC"), an
affiliate of FAM, and MLIM, LLC was the securities lending agent. BIM may, on
behalf of the Fund, invest cash collateral received by the Fund for such
loans, among other things, in a private investment company managed by the
Manager or in registered money market funds advised by the Manager or its
affiliates.
For the year ended August 31, 2007, the Fund reimbursed FAM and the Manager
$954 and $6,076, respectively, for certain accounting services.
Prior to September 29, 2006, certain officers and/or directors of the Fund
were officers and/or directors of FAM, MLIM, Merrill Lynch, and/or MLIM, LLC.
Commencing September 29, 2006, certain officers and/or directors of the Fund
are officers and/or directors of BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales (including paydowns) of investments, excluding short-term
securities, for the year ended August 31, 2007 were $332,587,715 and
$341,407,380, respectively.
4. Capital Share Transactions:
The Fund is authorized to issue 200,000,000 shares of stock, par value $.10
per share, all of which are initially classified as Common Stock. The Board of
Directors is authorized, however, to classify and reclassify any unissued
shares of capital stock without approval of the holders of Common Stock.
Shares issued and outstanding for the year ended August 31, 2007 remained
constant. Shares issued and outstanding for the year ended August 31, 2006
increased by 6,590 from reinvestment of dividends.
5. Unfunded Loan Commitments:
As of August 31, 2007, the Fund had unfunded loan commitments of approximately
$9,047,000, which would be extended at the option of the borrower, pursuant to
the following loan agreements:
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Notes to Financial Statements (concluded)
(in Thousands)
Value of
Unfunded Underlying
Borrower Commitment Loan
American Greetings Corp. $1,000 $ 980
Big West Oil & Gas $ 550 $ 520
Golden Nugget, Inc. $ 182 $ 172
Las Vegas Sands $ 400 $ 380
MEG Energy Corp. $1,000 $ 957
Ng Wireless $ 94 $ 92
Trump Casino Revolving Credit $2,655 $2,522
Univision Communications, Inc. $ 166 $ 154
Vought Aircraft Industries, Inc. $3,000 $2,790
6. Short-Term Borrowings:
On May 16, 2007, the Fund renewed its revolving credit and security agreement
funded by a commercial paper asset securitization program with Citicorp North
America, Inc. ("Citicorp") as Agent, certain secondary backstop lenders, and
certain asset securitization conduits as lenders (the "Lenders"). The
agreement was renewed for one year and has a maximum limit of $172,500,000.
Under the Citicorp program, the conduits will fund advances to the Fund
through the issuance of highly rated commercial paper. As security for its
obligations to the Lenders under the revolving securitization facility, the
Fund has granted a security interest in substantially all of its assets to and
in favor of the Lenders. The interest rate on the Fund's borrowings is based
on the interest rate carried by the commercial paper plus a program fee. The
Fund pays additional borrowing costs including a backstop commitment fee.
The weighted average annual interest rate was 5.63% and the average borrowing
was approximately $133,763,000 for the year ended August 31, 2007.
7. Distributions to Shareholders:
The Fund paid an ordinary income dividend in the amount of $.124835 per share
on September 28, 2007 to shareholders of record on September 14, 2007.
The tax character of distributions paid during the fiscal years ended August
31, 2007 and August 31, 2006 was as follows:
8/31/2007 8/31/2006
Distributions paid from:
Ordinary income $ 28,142,426 $ 25,022,792
--------------- ---------------
Total taxable distributions $ 28,142,426 $ 25,022,792
=============== ===============
As of August 31, 2007, the components of accumulated losses on a tax
basis were as follows:
Undistributed ordinary income--net $ 4,278,454
Undistributed long-term capital gains--net --
---------------
Total undistributed earnings--net $ 4,278,454
Capital loss carryforward (691,829)*
Unrealized losses--net (18,721,615)**
---------------
Total accumulated losses--net $ (15,134,990)
===============
* On August 31, 2007, the Fund had a capital loss carryforward of
$691,829, all of which expires in 2013. This amount will be available
to offset like amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized losses
is attributable primarily to the book/tax differences in the accrual of
income on securities in default and the realization for tax purposes
of unrealized gains (losses) on certain foreign currency contracts.
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
BlackRock Floating Rate Income Strategies Fund, Inc.:
We have audited the accompanying statement of assets, liabilities and capital,
including the schedule of investments, of BlackRock Floating Rate Income
Strategies Fund, Inc. (the "Fund") as of August 31, 2007, the related
statements of operations and cash flows for the year then ended, and the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the respective periods
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. The Fund is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Fund's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. Our
procedures included confirmation of securities owned as of August 31, 2007,
and by correspondence with the custodian and financial intermediaries; where
replies were not received from financial intermediaries, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
BlackRock Floating Rate Income Strategies Fund, Inc. as of August 31, 2007,
the results of its operations and its cash flows for the year then ended, and
the changes in its net assets for each of the two years in the period then
ended, and its financial highlights for each of the respective periods then
ended, in conformity with U.S. generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
October 26, 2007
Fund Certification (unaudited)
In September 2007, the Fund filed its Chief Executive Officer Certification
for the prior year with the New York Stock Exchange pursuant to Section
303A.12(a) of the New York Stock Exchange Corporate Governance Listing
Standards.
The Fund's Chief Executive Officer and Chief Financial Officer Certifications
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 were filed with the
Fund's Form N-CSR and are available on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
Important Tax Information (unaudited)
The following information is provided with respect to the ordinary income
distributions paid monthly by BlackRock Floating Rate Income Strategies Fund,
Inc. for the fiscal year ended August 31, 2007:
Interest-Related Dividends for Non-U.S. Residents*
Month Paid: September 2006 84.91%
October 2006 87.73%
November 2006 - January 2007 92.43%
February 2007 - August 2007 83.13%
* Represents the portion of the taxable ordinary income dividends eligible
for exemption from U.S. withholding tax for nonresident aliens and foreign
corporations.
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Automatic Dividend Reinvestment Policy
How the Plan Works--The Fund offers a Dividend Reinvestment Plan (the "Plan")
under which income and capital gains dividends paid by the Fund are
automatically reinvested in additional shares of Common Stock of the Fund. The
Plan is administered on behalf of the shareholders by Computershare Trust
Company, N.A. (the "Plan Agent"). Under the Plan, whenever the Fund declares a
dividend, participants in the Plan will receive the equivalent in shares of
Common Stock of the Fund. The Plan Agent will acquire the shares for the
participant's account either (i) through receipt of additional unissued but
authorized shares of the Fund ("newly issued shares") or (ii) by purchase of
outstanding shares of Common Stock on the open market on the New York Stock
Exchange or elsewhere. If, on the dividend payment date, the Fund's net asset
value per share is equal to or less than the market price per share plus
estimated brokerage commissions (a condition often referred to as a "market
premium"), the Plan Agent will invest the dividend amount in newly issued
shares. If the Fund's net asset value per share is greater than the market
price per share (a condition often referred to as a "market discount"), the
Plan Agent will invest the dividend amount by purchasing on the open market
additional shares. If the Plan Agent is unable to invest the full dividend
amount in open market purchases, or if the market discount shifts to a market
premium during the purchase period, the Plan Agent will invest any uninvested
portion in newly issued shares. The shares acquired are credited to each
shareholder's account. The amount credited is determined by dividing the
dollar amount of the dividend by either (i) when the shares are newly issued,
the net asset value per share on the date the shares are issued or (ii) when
shares are purchased in the open market, the average purchase price per share.
Participation in the Plan--Participation in the Plan is automatic, that is, a
shareholder is automatically enrolled in the Plan when he or she purchases
shares of Common Stock of the Fund unless the shareholder specifically elects
not to participate in the Plan. Shareholders who elect not to participate will
receive all dividend distributions in cash. Shareholders who do not wish to
participate in the Plan must advise the Plan Agent in writing (at the address
set forth below) that they elect not to participate in the Plan. Participation
in the Plan is completely voluntary and may be terminated or resumed at any
time without penalty by writing to the Plan Agent.
Benefits of the Plan--The Plan provides an easy, convenient way for
shareholders to make additional, regular investments in the Fund. The Plan
promotes a long-term strategy of investing at a lower cost. All shares
acquired pursuant to the Plan receive voting rights. In addition, if the
market price plus commissions of the Fund's shares is above the net asset
value, participants in the Plan will receive shares of the Fund for less than
they could otherwise purchase them and with a cash value greater than the
value of any cash distribution they would have received. However, there may
not be enough shares available in the market to make distributions in shares
at prices below the net asset value. Also, since the Fund does not redeem
shares, the price on resale may be more or less than the net asset value.
Plan Fees--There are no enrollment fees or brokerage fees for participating in
the Plan. The Plan Agent's service fees for handling the reinvestment of
distributions are paid for by the Fund. However, brokerage commissions may be
incurred when the Fund purchases shares on the open market and shareholders
will pay a pro rata share of any such commissions.
Tax Implications--The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income tax that
may be payable (or required to be withheld) on such dividends. Therefore,
income and capital gains may still be realized even though shareholders do not
receive cash. The value of shares acquired pursuant to the Plan will generally
be excluded from gross income to the extent that the cash amount reinvested
would be excluded from gross income. If, when the Fund's shares are trading at
a market premium, the Fund issues shares pursuant to the Plan that have a
greater fair market value than the amount of cash reinvested, it is possible
that all or a portion of the discount from the market value (which may not
exceed 5% of the fair market value of the Fund's shares) could be viewed as a
taxable distribution. If the discount is viewed as a taxable distribution, it
is also possible that the taxable character of this discount would be allocable
to all the shareholders, including shareholders who do not participate in the
Plan. Thus, shareholders who do not participate in the Plan might be required
to report as ordinary income a portion of their distributions equal to their
allocable share of the discount.
Contact Information--All correspondence concerning the Plan, including
any questions about the Plan, should be directed to the Plan Agent at
Computershare Trust Company, N.A. P.O. Box 43010, Providence, RI 02940-3010,
Telephone: 800-426-5523.
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Officers and Directors
Number of
Funds and
Portfolios in
Position(s) Length of Fund Complex Other Public
Name, Address Held with Time Overseen by Directorships
and Year of Birth Fund Served Principal Occupation(s) During Past 5 Years Director Held by Director
Interested Director
Robert C. Doll, Jr.* Fund 2005 to Vice Chairman and Director of BlackRock, Inc., 120 Funds None
P.O. Box 9011 President present Global Chief Investment Officer for Equities, 161 Portfolios
Princeton, NJ and Chairman of the BlackRock Retail Operating
08543-9011 Director Committee, and member of the BlackRock Executive
1954 Committee since 2006; President of the funds
advised by Merrill Lynch Investment Managers,
L.P. ("MLIM") and its affiliates ("MLIM/FAM-advised
funds") from 2005 to 2006 and Chief Investment
Officer thereof from 2001 to 2006; President of
MLIM and Fund Asset Management, L.P. ("FAM") from
2001 to 2006; Co-Head (Americas Region) thereof
from 2000 to 2001 and Senior Vice President from
1999 to 2001; President and Director of Princeton
Services, Inc. ("Princeton Services") and President
of Princeton Administrators, L.P. ("Princeton
Administrators") from 2001 to 2006; Chief Investment
Officer of OppenheimerFunds, Inc. in 1999 and Executive
Vice President thereof from 1991 to 1999.
* Mr. Doll is a director, trustee or member of an advisory board of certain other
investment companies for which BlackRock Advisors, LLC and its affiliates act as
investment adviser. Mr. Doll is an "interested person," as defined in the
Investment Company Act, of the Fund based on his positions with BlackRock, Inc.
and its affiliates. Directors serve until their resignation, removal or death, or
until December 31 of the year in which they turn 72. As Fund President, Mr. Doll
serves at the pleasure of the Board of Directors.
Independent Directors*
Ronald W. Forbes** Director 2003 to Professor Emeritus of Finance, School of 37 Funds None
P.O. Box 9095 present Business, State University of New York at 57 Portfolios
Princeton, NJ Albany since 2000 and Professor thereof from
08543-9095 1989 to 2000; International Consultant, Urban
1940 Institute, Washington, D.C. from 1995 to 1999.
Cynthia A. Montgomery Director 2003 to Professor, Harvard Business School since 1989; 37 Funds Newell
P.O. Box 9095 present Associate Professor, J.L. Kellogg Graduate 57 Portfolios Rubbermaid, Inc.
Princeton, NJ School of Management, Northwestern University (manufacturing)
08543-9095 from 1985 to 1989; Associate Professor, Graduate
1952 School of Business Administration, University of
Michigan from 1979 to 1985; Director, Harvard
Business School Publishing since 2005; Director,
McLean Hospital since 2005.
Jean Margo Reid Director 2004 to Self-employed consultant since 2001; Counsel 37 Funds None
P.O. Box 9095 present of Alliance Capital Management (investment 57 Portfolios
Princeton, NJ adviser) in 2000; General Counsel, Director
08543-9095 and Secretary of Sanford C. Bernstein & Co.,
1945 Inc. (investment adviser/broker-dealer) from
1997 to 2000; Secretary, Sanford C. Bernstein
Fund, Inc. from 1994 to 2000; Director and
Secretary of SCB, Inc. since 1998; Director
and Secretary of SCB Partners, Inc. since 2000;
and Director of Covenant House from 2001 to 2004.
Roscoe S. Suddarth Director 2003 to President, Middle East Institute, from 1995 37 Funds None
P.O. Box 9095 present to 2001; Foreign Service Officer, United 57 Portfolios
Princeton, NJ States Foreign Service, from 1961 to 1995
08543-9095 and Career Minister from 1989 to 1995; Deputy
1935 Inspector General, U.S. Department of State,
from 1991 to 1994; U.S. Ambassador to the
Hashemite Kingdom of Jordan from 1987 to 1990.
Richard R. West Director 2003 to Professor of Finance from 1984 to 1995, Dean 37 Funds Bowne & Co., Inc.
P.O. Box 9095 present from 1984 to 1993 and since 1995 Dean Emeritus 57 Portfolios (financial
Princeton, NJ of New York University's Leonard N. Stern printers);
08543-9095 School of Business Administration. Vornado Realty
1938 Trust (real
estate company );
Alexander's, Inc.
(real estate
company)
* Directors serve until their resignation, removal or death, or until December 31
of the year in which they turn 72.
** Chairman of the Board of Directors and the Audit Committee.
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Officers and Directors (concluded)
Position(s) Length of
Name, Address Held with Time
and Year of Birth Fund Served Principal Occupation(s) During Past 5 Years
Fund Officers*
Donald C. Burke Vice 2003 to Managing Director of BlackRock, Inc. since 2006; Managing Director of Merrill
P.O. Box 9011 President present Lynch Investment Managers, L.P. ("MLIM") and Fund Asset Management, L.P. ("FAM")
Princeton, NJ and in 2006; First Vice President of MLIM and FAM from 1997 to 2005 and Treasurer
08543-9011 Treasurer thereof from 1999 to 2006); Vice President of MLIM and FAM from 1990 to 1997.
1960
Karen Clark Fund Chief 2007 to Managing Director of BlackRock, Inc. and Chief Compliance Officer of certain
P.O. Box 9011 Compliance present BlackRock-advised funds since 2007; Director of BlackRock, Inc. from 2005 to
Princeton, NJ Officer 2007; Principal and Senior Compliance Officer, State Street Global Advisors,
08543-9011 from 2001 to 2005; Principal Consultant, PricewaterhouseCoopers, LLP from 1998
1965 to 2001; and Branch Chief, Division of Investment Management and Office of
Compliance Inspections and Examinations, U.S. Securities and Exchange Commission,
from 1993 to 1998.
Alice A. Pellegrino Fund 2004 to Director of BlackRock, Inc. from 2006 to 2007; Director (Legal Advisory) of
P.O. Box 9011 Secretary 2007 MLIM from 2002 to 2006; Vice President of MLIM from 1999 to 2002; Attorney
Princeton, NJ associated with MLIM from 1997 to 1999; Secretary of MLIM, FAM, FAM
08543-9011 Distributors, Inc. and Princeton Services from 2004 to 2006.
1960
Howard Surloff Fund 2007 to Managing Director of BlackRock, Inc. and General Counsel of U.S. Funds at
P.O. Box 9011 Secretary present BlackRock, Inc. since 2006; General Counsel (U.S.), Goldman Sachs Asset
Princeton, NJ Management from 1993 to 2006.
08543-9011
1965
* Officers of the Fund serve at the pleasure of the Board of Directors.
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Computershare Trust Company, N.A.
P.O. Box 43010
Providence, RI 02940-3010
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
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 Web sites.
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 nonaffiliated third parties are required to protect the
confidentiality and security of this information and to use it only for its
intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that
may be of interest to you. In addition, BlackRock restricts access to non-
public personal information about its Clients to those BlackRock employees
with a legitimate business need for the information. BlackRock maintains
physical, electronic and procedural safeguards that are designed to protect
the non-public personal information of its Clients, including procedures
relating to the proper storage and disposal of such information.
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at
http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the
SEC's Public Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Electronic Delivery
Electronic copies of most financial reports and prospectuses are available on
the Fund's Web site. Shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Fund's electronic delivery program.
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor to enroll. Please note that not all
investment advisers, banks or brokerages may offer this service.
BLACKROCK FLOATING RATE INCOME STRATEGIES FUND, INC. AUGUST 31, 2007
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as
of the end of the period covered by this report, applicable to
the registrant's principal executive officer, principal
financial officer and principal accounting officer, or persons
performing similar functions. During the period covered by this
report, there have been no amendments to or waivers granted
under the code of ethics. A copy of the code of ethics is
available without charge at www.blackrock.com.
Item 3 - Audit Committee Financial Expert - The registrant's board of
directors or trustees, as applicable (the "board of directors")
has determined that (i) the registrant has the following audit
committee financial experts serving on its audit committee and
(ii) each audit committee financial expert is independent: (1)
Ronald W. Forbes, (2) Richard R. West, and (3) Edward D. Zinbarg
(retired as of December 31, 2006).
Under applicable securities laws, a person determined to be an
audit committee financial expert will not be deemed an "expert"
for any purpose, including without limitation for the purposes
of Section 11 of the Securities Act of 1933, as a result of
being designated or identified as an audit committee financial
expert. The designation or identification as an audit committee
financial expert does not impose on such person any duties,
obligations, or liabilities greater than the duties, obligations,
and liabilities imposed on such person as a member of the audit
committee and board of directors in the absence of such designation
or identification.
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees (b) Audit-Related Fees (1) (c) Tax Fees (2) (d) All Other Fees (3)
Current Previous Current Previous Current Previous Current Previous
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year
Entity Name End End End End End End End End
BlackRock
Floating
Rate Income $39,900 $39,900 $0 $8,000 $6,100 $6,000 $1,042 $0
Strategies
Fund, Inc
(1) The nature of the services include assurance and related services reasonably
related to the performance of the audit of financial statements not included in
Audit Fees.
(2) The nature of the services include tax compliance, tax advice and tax planning.
(3) The nature of the services include a review of compliance procedures and
attestation thereto.
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The registrant's audit committee (the "Committee") has
adopted policies and procedures with regard to the pre-approval
of services. Audit, audit-related and tax compliance services
provided to the registrant on an annual basis require specific
pre-approval by the Committee. The Committee also must approve
other non-audit services provided to the registrant and those
non-audit services provided to the registrant's affiliated
service providers that relate directly to the operations and the
financial reporting of the registrant. Certain of these non-
audit services that the Committee believes are a) consistent
with the SEC's auditor independence rules and b) routine and
recurring services that will not impair the independence of the
independent accountants may be approved by the Committee without
consideration on a specific case-by-case basis ("general pre-
approval"). However, such services will only be deemed pre-
approved provided that any individual project does not exceed
$5,000 attributable to the registrant or $50,000 for all of the
registrants the Committee oversees. Any proposed services
exceeding the pre-approved cost levels will require specific pre-
approval by the Committee, as will any other services not subject
to general pre-approval (e.g., unanticipated but permissible
services). The Committee is informed of each service approved
subject to general pre-approval at the next regularly scheduled
in-person board meeting.
(e)(2) None of the services described in each of Items 4(b)
through (d) were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not Applicable
(g) Affiliates' Aggregate Non-Audit Fees:
Current Previous
Fiscal Year Fiscal Year
Entity Name End End
BlackRock Floating Rate
Income Strategies Fund, Inc. $291,642 $3,112,500
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any non-affiliated
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by the registrant's investment
adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services
to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $284,500, 0%
Item 5 - Audit Committee of Listed Registrants - The following individuals
are members of the registrant's separately-designated standing audit
committee established in accordance with Section 3(a)(58)(A) of the
Exchange Act (15 U.S.C. 78c(a)(58)(A)):
Ronald W. Forbes
Cynthia A. Montgomery
Jean Margo Reid
Roscoe S. Suddarth
Richard R. West
Edward D. Zinbarg (retired as of December 31, 2006)
Item 6 - Schedule of Investments - The registrant's Schedule of Investments
is included as part of the Report to Stockholders filed under Item 1
of this form.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - The registrant has delegated the
voting of proxies relating to Fund portfolio securities to its
investment adviser, BlackRock Advisors, LLC and its sub-adviser, as
applicable. The Proxy Voting Policies and Procedures of the adviser
and sub-adviser are attached hereto as Exhibit 99.PROXYPOL.
Proxy Voting Policies and Procedures
For BlackRock Advisors, LLC
And Its Affiliated SEC Registered Investment Advisers
September 30, 2006
Table of Contents
Page
Introduction
Scope of Committee Responsibilities
Special Circumstances
Voting Guidelines
Boards of Directors
Auditors
Compensation and Benefits
Capital Structure
Corporate Charter and By-Laws
Corporate Meetings
Investment Companies
Environmental and Social Issues
Notice to Clients
Proxy Voting Policies and Procedures
These Proxy Voting Policies and Procedures ("Policy") for BlackRock
Advisors, LLC and its affiliated U.S. registered investment advisers (1)
("BlackRock") reflect our duty as a fiduciary under the Investment Advisers Act
of 1940 (the "Advisers Act") to vote proxies in the best interests of our
clients. BlackRock serves as the investment manager for investment companies,
other commingled investment vehicles and/or separate accounts of institutional
and other clients. The right to vote proxies for securities held in such
accounts belongs to BlackRock's clients. Certain clients of BlackRock have
retained the right to vote such proxies in general or in specific
circumstances. (2) Other clients, however, have delegated to BlackRock the
right to vote proxies for securities held in their accounts as part of
BlackRock's authority to manage, acquire and dispose of account assets.
When BlackRock votes proxies for a client that has delegated to
BlackRock proxy voting authority, BlackRock acts as the client's agent. Under
the Advisers Act, an investment adviser is a fiduciary that owes each of its
clients a duty of care and loyalty with respect to all services the adviser
undertakes on the client's behalf, including proxy voting. BlackRock is
therefore subject to a fiduciary duty to vote proxies in a manner BlackRock
believes is consistent with the client's best interests, (3) whether or not the
client's proxy voting is subject to the fiduciary standards of the Employee
Retirement Income Security Act of 1974 ("ERISA"). (4) When voting proxies for
client accounts (including investment companies), BlackRock's primary objective
is to make voting decisions solely in the best interests of clients and ERISA
clients' plan beneficiaries and participants. In fulfilling its obligations to
clients, BlackRock will seek to act in a manner that it believes is most likely
to enhance the economic value of the underlying securities held in client
accounts. (5) It is imperative that BlackRock considers the interests of its
clients, and not the interests of BlackRock, when voting proxies and that real
(or perceived) material conflicts that may arise between BlackRock's interest
and those of BlackRock's clients are properly addressed and resolved.
(1) The Policy does not apply to BlackRock Asset Management U.K. Limited and
BlackRock Investment Managers International Limited, which are U.S.
registered investment advisers based in the United Kingdom.
(2) In certain situations, a client may direct BlackRock to vote in accordance
with the client's proxy voting policies. In these situations, BlackRock
will seek to comply with such policies to the extent it would not be
inconsistent with other BlackRock legal responsibilities.
(3) Letter from Harvey L. Pitt, Chairman, SEC, to John P.M. Higgins,
President, Ram Trust Services (February 12, 2002) (Section 206 of the
Investment Advisers Act imposes a fiduciary responsibility to vote proxies
fairly and in the best interests of clients); SEC Release No. IA-2106
(February 3, 2003).
(4) DOL Interpretative Bulletin of Sections 402, 403 and 404 of ERISA at 29
C.F.R. 2509.94-2
(5) Other considerations, such as social, labor, environmental or other
policies, may be of interest to particular clients. While BlackRock is
cognizant of the importance of such considerations, when voting proxies it
will generally take such matters into account only to the extent that they
have a direct bearing on the economic value of the underlying securities.
To the extent that a BlackRock client desires to pursue a particular
social, labor, environmental or other agenda through the proxy votes made
for its securities held through BlackRock as investment adviser, BlackRock
encourages the client to consider retaining direct proxy voting authority
or to appoint independently a special proxy voting fiduciary other than
BlackRock.
Advisers Act Rule 206(4)-6 was adopted by the SEC in 2003 and requires,
among other things, that an investment adviser that exercises voting authority
over clients' proxy voting adopt policies and procedures reasonably designed to
ensure that the adviser votes proxies in the best interests of clients,
discloses to its clients information about those policies and procedures and
also discloses to clients how they may obtain information on how the adviser
has voted their proxies.
In light of such fiduciary duties, the requirements of Rule 206(4)-6,
and given the complexity of the issues that may be raised in connection with
proxy votes, BlackRock has adopted these policies and procedures. BlackRock's
Equity Investment Policy Oversight Committee, or a sub-committee thereof (the
"Committee"), addresses proxy voting issues on behalf of BlackRock and its
clients. (6) The Committee is comprised of senior members of BlackRock's
Portfolio Management Group and advised by BlackRock's Legal and Compliance
Department.
(6) Subject to the Proxy Voting Policies of Merrill Lynch Bank & Trust
Company FSB, the Committee may also function jointly as the Proxy Voting
Committee for Merrill Lynch Bank & Trust Company FSB trust accounts
managed by personnel dually-employed by BlackRock.
I. Scope of Committee Responsibilities
The Committee shall have the responsibility for determining how to
address proxy votes made on behalf of all BlackRock clients, except for clients
who have retained the right to vote their own proxies, either generally or on
any specific matter. In so doing, the Committee shall seek to ensure that proxy
votes are made in the best interests of clients, and that proxy votes are
determined in a manner free from unwarranted or inappropriate influences. The
Committee shall also oversee the overall administration of proxy voting for
BlackRock accounts. (7)
The Committee shall establish BlackRock's proxy voting guidelines, with
such advice, participation and research as the Committee deems appropriate from
portfolio managers, proxy voting services or other knowledgeable interested
parties. As it is anticipated that there will not necessarily be a "right" way
to vote proxies on any given issue applicable to all facts and circumstances,
the Committee shall also be responsible for determining how the proxy voting
guidelines will be applied to specific proxy votes, in light of each issuer's
unique structure, management, strategic options and, in certain circumstances,
probable economic and other anticipated consequences of alternative actions. In
so doing, the Committee may determine to vote a particular proxy in a manner
contrary to its generally stated guidelines.
The Committee may determine that the subject matter of certain proxy
issues are not suitable for general voting guidelines and requires a case-by-
case determination, in which case the Committee may elect not to adopt a
specific voting guideline applicable to such issues. BlackRock believes that
certain proxy voting issues - such as approval of mergers and other significant
corporate transactions - require investment analysis akin to investment
decisions, and are therefore not suitable for general guidelines. The Committee
may elect to adopt a common BlackRock position on certain proxy votes that are
akin to investment decisions, or determine to permit portfolio managers to make
individual decisions on how best to maximize economic value for the accounts
for which they are responsible (similar to normal buy/sell investment decisions
made by such portfolio managers). (8)
While it is expected that BlackRock, as a fiduciary, will generally seek
to vote proxies over which BlackRock exercises voting authority in a uniform
manner for all BlackRock clients, the Committee, in conjunction with the
portfolio manager of an account, may determine that the specific circumstances
of such account require that such account's proxies be voted differently due to
such account's investment objective or other factors that differentiate it from
other accounts. In addition, on proxy votes that are akin to investment
decisions, BlackRock believes portfolio managers may from time to time
legitimately reach differing but equally valid views, as fiduciaries for
BlackRock's clients, on how best to maximize economic value in respect of a
particular investment.
(7) The Committee may delegate day-to-day administrative responsibilities
to other BlackRock personnel and/or outside service providers, as
appropriate.
(8) The Committee will normally defer to portfolio managers on proxy votes
that are akin to investment decisions except for proxy votes that
involve a material conflict of interest, in which case it will
determine, in its discretion, the appropriate voting process so as to
address such conflict.
The Committee will also be responsible for ensuring the maintenance of
records of each proxy vote, as required by Advisers Act Rule 204-2. (9) All
records will be maintained in accordance with applicable law. Except as may be
required by applicable legal requirements, or as otherwise set forth herein,
the Committee's determinations and records shall be treated as proprietary,
nonpublic and confidential.
The Committee shall be assisted by other BlackRock personnel, as may be
appropriate. In particular, the Committee has delegated to the BlackRock
Operations Department responsibility for monitoring corporate actions and
ensuring that proxy votes are submitted in a timely fashion. The Operations
Department shall ensure that proxy voting issues are promptly brought to the
Committee's attention and that the Committee's proxy voting decisions are
appropriately disseminated and implemented.
To assist BlackRock in voting proxies, the Committee may retain the
services of a firm providing such services. BlackRock has currently retained
Institutional Shareholder Services ("ISS") in that role. ISS is an independent
adviser that specializes in providing a variety of fiduciary-level proxy-
related services to institutional investment managers, plan sponsors,
custodians, consultants, and other institutional investors. The services
provided to BlackRock may include, but are not limited to, in-depth research,
voting recommendations (which the Committee is not obligated to follow), vote
execution, and recordkeeping.
(9) The Committee may delegate the actual maintenance of such records to an
outside service provider. Currently, the Committee has delegated the
maintenance of such records to Institutional Shareholder Services.
II Special Circumstances
Routine Consents. BlackRock may be asked from time to time to consent
to an amendment to, or grant a waiver under, a loan agreement, partnership
agreement, indenture or other governing document of a specific financial
instrument held by BlackRock clients. BlackRock will generally treat such
requests for consents not as "proxies" subject to these Proxy Voting Policies
and Procedures but as investment matters to be dealt with by the responsible
BlackRock investment professionals would, provided that such consents (i) do
not relate to the election of a board of directors or appointment of auditors
of a public company, and (ii) either (A) would not otherwise materially affect
the structure, management or control of a public company, or (B) relate to a
company in which BlackRock clients hold only interests in bank loans or debt
securities and are consistent with customary standards and practices for such
instruments.
Securities on Loan. Registered investment companies that are advised by
BlackRock as well as certain of our advisory clients may participate in
securities lending programs. Under most securities lending arrangements,
securities on loan may not be voted by the lender (unless the loan is
recalled). BlackRock believes that each client has the right to determine
whether participating in a securities lending program enhances returns, to
contract with the securities lending agent of its choice and to structure a
securities lending program, through its lending agent, that balances any
tension between loaning and voting securities in a matter that satisfies such
client. If client has decided to participate in a securities lending program,
BlackRock will therefore defer to the client's determination and not attempt to
seek recalls solely for the purpose of voting routine proxies as this could
impact the returns received from securities lending and make the client a less
desirable lender in a marketplace. Where a client retains a lending agent that
is unaffiliated with BlackRock, BlackRock will generally not seek to vote
proxies relating to securities on loan because BlackRock does not have a
contractual right to recall such loaned securities for the purpose of voting
proxies. Where BlackRock or an affiliate acts as the lending agent, BlackRock
will also generally not seek to recall loaned securities for proxy voting
purposes, unless the portfolio manager responsible for the account or the
Committee determines that voting the proxy is in the client's best interest and
requests that the security be recalled.
Voting Proxies for Non-US Companies. While the proxy voting process is
well established in the United States, voting proxies of non-US companies
frequently involves logistical issues which can affect BlackRock's ability to
vote such proxies, as well as the desirability of voting such proxies. These
issues include (but are not limited to): (i) untimely notice of shareholder
meetings, (ii) restrictions on a foreigner's ability to exercise votes, (iii)
requirements to vote proxies in person, (iv) "shareblocking" (requirements that
investors who exercise their voting rights surrender the right to dispose of
their holdings for some specified period in proximity to the shareholder
meeting), (v) potential difficulties in translating the proxy, and (vi)
requirements to provide local agents with unrestricted powers of attorney to
facilitate voting instructions.
As a consequence, BlackRock votes proxies of non-US companies only on a
"best-efforts" basis. In addition, the Committee may determine that it is
generally in the best interests of BlackRock clients not to vote proxies of
companies in certain countries if the Committee determines that the costs
(including but not limited to opportunity costs associated with shareblocking
constraints) associated with exercising a vote generally are expected to
outweigh the benefit the client will derive by voting on the issuer's proposal.
If the Committee so determines in the case of a particular country, the
Committee (upon advice from BlackRock portfolio managers) may override such
determination with respect to a particular issuer's shareholder meeting if the
Committee believes the benefits of seeking to exercise a vote at such meeting
outweighs the costs, in which case BlackRock will seek to vote on a best-
efforts basis.
Securities Sold After Record Date. With respect to votes in connection
with securities held on a particular record date but sold from a client account
prior to the holding of the related meeting, BlackRock may take no action on
proposals to be voted on in such meeting.
Conflicts of Interest. From time to time, BlackRock may be required to
vote proxies in respect of an issuer that is an affiliate of BlackRock (a
"BlackRock Affiliate"), or a money management or other client of BlackRock (a
"BlackRock Client").(10) In such event, provided that the Committee is aware of
the real or potential conflict, the following procedures apply:
* The Committee intends to adhere to the voting guidelines set forth
herein for all proxy issues including matters involving BlackRock
Affiliates and BlackRock Clients. The Committee may, in its
discretion for the purposes of ensuring that an independent
determination is reached, retain an independent fiduciary to advise
the Committee on how to vote or to cast votes on behalf of
BlackRock's clients; and
* if the Committee determines not to retain an independent fiduciary,
or does not desire to follow the advice of such independent
fiduciary, the Committee shall determine how to vote the proxy after
consulting with the BlackRock Legal and Compliance Department and
concluding that the vote cast is in the client's best interest
notwithstanding the conflict.
(10) Such issuers may include investment companies for which BlackRock
provides investment advisory, administrative and/or other services.
III. Voting Guidelines
The Committee has determined that it is appropriate and in the best
interests of BlackRock's clients to adopt the following voting guidelines,
which represent the Committee's usual voting position on certain recurring
proxy issues that are not expected to involve unusual circumstances. With
respect to any particular proxy issue, however, the Committee may elect to vote
differently than a voting guideline if the Committee determines that doing so
is, in the Committee's judgment, in the best interest of its clients. The
guidelines may be reviewed at any time upon the request of any Committee member
and may be amended or deleted upon the vote of a majority of voting Committee
members present at a Committee meeting for which there is a quorum.
A. Boards of Directors
These proposals concern those issues submitted to shareholders relating
to the composition of the Board of Directors of companies other than investment
companies. As a general matter, the Committee believes that a company's Board
of Directors (rather than shareholders) is most likely to have access to
important, nonpublic information regarding a company's business and prospects,
and is therefore best-positioned to set corporate policy and oversee
management. The Committee therefore believes that the foundation of good
corporate governance is the election of qualified, independent corporate
directors who are likely to diligently represent the interests of shareholders
and oversee management of the corporation in a manner that will seek to
maximize shareholder value over time. In individual cases, the Committee may
look at a Director nominee's history of representing shareholder interests as a
director of other companies, or other factors to the extent the Committee deems
relevant.
The Committee's general policy is to vote:
# VOTE and DESCRIPTION
A.1 FOR nominees for director of United States companies in uncontested
elections, except for nominees who
* have missed at least two meetings and, as a result, attended less
than 75% of meetings of the Board of Directors and its committees
the previous year, unless the nominee missed the meeting(s) due to
illness or company business
* voted to implement or renew a "dead-hand" poison pill
* ignored a shareholder proposal that was approved by either a
majority of the shares outstanding in any year or by the majority of
votes cast for two consecutive years
* failed to act on takeover offers where the majority of the
shareholders have tendered their shares
* are corporate insiders who serve on the audit, compensation or
nominating committees or on a full Board that does not have such
committees composed exclusively of independent directors
* on a case-by-case basis, have served as directors of other companies
with allegedly poor corporate governance
* sit on more than six boards of public companies
A.2 FOR nominees for directors of non-U.S. companies in uncontested
elections, except for nominees from whom the Committee determines to
withhold votes due to the nominees' poor records of representing
shareholder interests, on a case-by-case basis
A.3 FOR proposals to declassify Boards of Directors, except where there
exists a legitimate purpose for classifying boards
A.4 AGAINST proposals to classify Boards of Directors, except where there
exists a legitimate purpose for classifying boards
A.5 AGAINST proposals supporting cumulative voting
A.6 FOR proposals eliminating cumulative voting
A.7 FOR proposals supporting confidential voting
A.8 FOR proposals seeking election of supervisory board members
A.9 AGAINST shareholder proposals seeking additional representation of
women and/or minorities generally (i.e., not specific individuals) to a
Board of Directors
A.10 AGAINST shareholder proposals for term limits for directors
A.11 FOR shareholder proposals to establish a mandatory retirement age for
directors who attain the age of 72 or older
A.12 AGAINST shareholder proposals requiring directors to own a minimum
amount of company stock
A.13 FOR proposals requiring a majority of independent directors on a Board
of Directors
A.14 FOR proposals to allow a Board of Directors to delegate powers to a
committee or committees
A.15 FOR proposals to require audit, compensation and/or nominating
committees of a Board of Directors to consist exclusively of independent
directors
A.16 AGAINST shareholder proposals seeking to prohibit a single person from
occupying the roles of chairman and chief executive officer
A.17 FOR proposals to elect account inspectors
A.18 FOR proposals to fix the membership of a Board of Directors at a
specified size
A.19 FOR proposals permitting shareholder ability to nominate directors
directly
A.20 AGAINST proposals to eliminate shareholder ability to nominate directors
directly
A.21 FOR proposals permitting shareholder ability to remove directors
directly
A.22 AGAINST proposals to eliminate shareholder ability to remove directors
directly
B. Auditors
These proposals concern those issues submitted to shareholders related
to the selection of auditors. As a general matter, the Committee believes that
corporate auditors have a responsibility to represent the interests of
shareholders and provide an independent view on the propriety of financial
reporting decisions of corporate management. While the Committee will generally
defer to a corporation's choice of auditor, in individual cases, the Committee
may look at an auditors' history of representing shareholder interests as
auditor of other companies, to the extent the Committee deems relevant.
The Committee's general policy is to vote:
B.1 FOR approval of independent auditors, except for
* auditors that have a financial interest in, or material association
with, the company they are auditing, and are therefore believed by
the Committee not to be independent
* auditors who have rendered an opinion to any company which in the
Committee's opinion is either not consistent with best accounting
practices or not indicative of the company's financial situation
* on a case-by-case basis, auditors who in the Committee's opinion
provide a significant amount of non-audit services to the company
B.2 FOR proposals seeking authorization to fix the remuneration of auditors
B.3 FOR approving internal statutory auditors
B.4 FOR proposals for audit firm rotation, except for proposals that would
require rotation after a period of less than 5 years
C. Compensation and Benefits
These proposals concern those issues submitted to shareholders related
to management compensation and employee benefits. As a general matter, the
Committee favors disclosure of a company's compensation and benefit policies
and opposes excessive compensation, but believes that compensation matters are
normally best determined by a corporation's board of directors, rather than
shareholders. Proposals to "micro-manage" a company's compensation practices or
to set arbitrary restrictions on compensation or benefits will therefore
generally not be supported.
The Committee's general policy is to vote:
C.1 IN ACCORDANCE WITH THE RECOMMENDATION OF ISS on compensation plans if
the ISS recommendation is based solely on whether or not the company's
plan satisfies the allowable cap as calculated by ISS. If the
recommendation of ISS is based on factors other than whether the plan
satisfies the allowable cap the Committee will analyze the particular
proposed plan. This policy applies to amendments of plans as well as to
initial approvals.
C.2 FOR proposals to eliminate retirement benefits for outside directors
C.3 AGAINST proposals to establish retirement benefits for outside directors
C.4 FOR proposals approving the remuneration of directors or of supervisory
board members
C.5 AGAINST proposals to reprice stock options
C.6 FOR proposals to approve employee stock purchase plans that apply to all
employees. This policy applies to proposals to amend ESPPs if the plan
as amended applies to all employees.
C.7 FOR proposals to pay retirement bonuses to directors of Japanese
companies unless the directors have served less than three years
C.8 AGAINST proposals seeking to pay outside directors only in stock
C.9 FOR proposals seeking further disclosure of executive pay or requiring
companies to report on their supplemental executive retirement benefits
C.10 AGAINST proposals to ban all future stock or stock option grants to
executives
C.11 AGAINST option plans or grants that apply to directors or employees of
"related companies" without adequate disclosure of the corporate
relationship and justification of the option policy
C.12 FOR proposals to exclude pension plan income in the calculation of
earnings used in determining executive bonuses/compensation
D. Capital Structure
These proposals relate to various requests, principally from management,
for approval of amendments that would alter the capital structure of a company,
such as an increase in authorized shares. As a general matter, the Committee
will support requests that it believes enhance the rights of common
shareholders and oppose requests that appear to be unreasonably dilutive.
The Committee's general policy is to vote:
D.1 AGAINST proposals seeking authorization to issue shares without
preemptive rights except for issuances up to 10% of a non-US company's total
outstanding capital
D.2 FOR management proposals seeking preemptive rights or seeking
authorization to issue shares with preemptive rights
D.3 FOR management proposals approving share repurchase programs
D.4 FOR management proposals to split a company's stock
D.5 FOR management proposals to denominate or authorize denomination of
securities or other obligations or assets in Euros
D.6 FOR proposals requiring a company to expense stock options (unless the
company has already publicly committed to do so by a certain date).
E. Corporate Charter and By-Laws
These proposals relate to various requests for approval of amendments to
a corporation's charter or by-laws, principally for the purpose of adopting or
redeeming "poison pills". As a general matter, the Committee opposes poison
pill provisions.
The Committee's general policy is to vote:
E.1 AGAINST proposals seeking to adopt a poison pill
E.2 FOR proposals seeking to redeem a poison pill
E.3 FOR proposals seeking to have poison pills submitted to shareholders for
ratification
E.4 FOR management proposals to change the company's name
F. Corporate Meetings
These are routine proposals relating to various requests regarding the
formalities of corporate meetings.
The Committee's general policy is to vote:
F.1 AGAINST proposals that seek authority to act on "any other business that
may arise"
F.2 FOR proposals designating two shareholders to keep minutes of the
meeting
F.3 FOR proposals concerning accepting or approving financial statements and
statutory reports
F.4 FOR proposals approving the discharge of management and the supervisory
board
F.5 FOR proposals approving the allocation of income and the dividend
F.6 FOR proposals seeking authorization to file required documents/other
formalities
F.7 FOR proposals to authorize the corporate board to ratify and execute
approved resolutions
F.8 FOR proposals appointing inspectors of elections
F.9 FOR proposals electing a chair of the meeting
F.10 FOR proposals to permit "virtual" shareholder meetings over the Internet
F.11 AGAINST proposals to require rotating sites for shareholder meetings
G. Investment Companies
These proposals relate to proxy issues that are associated solely with
holdings of shares of investment companies, including, but not limited to,
investment companies for which BlackRock provides investment advisory,
administrative and/or other services. As with other types of companies, the
Committee believes that a fund's Board of Directors (rather than its
shareholders) is best-positioned to set fund policy and oversee management.
However, the Committee opposes granting Boards of Directors authority over
certain matters, such as changes to a fund's investment objective, that the
Investment Company Act of 1940 envisions will be approved directly by
shareholders.
The Committee's general policy is to vote:
G.1 FOR nominees for director of mutual funds in uncontested elections,
except for nominees who
* have missed at least two meetings and, as a result, attended less
than 75% of meetings of the Board of Directors and its committees
the previous year, unless the nominee missed the meeting due to
illness or fund business
* ignore a shareholder proposal that was approved by either a majority
of the shares outstanding in any year or by the majority of votes
cast for two consecutive years
* are interested directors who serve on the audit or nominating
committees or on a full Board that does not have such committees
composed exclusively of independent directors
* on a case-by-case basis, have served as directors of companies with
allegedly poor corporate governance
G.2 FOR the establishment of new series or classes of shares
G.3 AGAINST proposals to change a fund's investment objective to
nonfundamental
G.4 FOR proposals to establish a master-feeder structure or authorizing the
Board to approve a master-feeder structure without a further shareholder
vote
G.5 AGAINST a shareholder proposal for the establishment of a director
ownership requirement
G.6 FOR classified boards of closed-end investment companies
H. Environmental and Social Issues
These are shareholder proposals to limit corporate conduct in some
manner that relates to the shareholder's environmental or social concerns. The
Committee generally believes that annual shareholder meetings are inappropriate
forums for the discussion of larger social issues, and opposes shareholder
resolutions "micromanaging" corporate conduct or requesting release of
information that would not help a shareholder evaluate an investment in the
corporation as an economic matter. While the Committee is generally supportive
of proposals to require corporate disclosure of matters that seem relevant and
material to the economic interests of shareholders, the Committee is generally
not supportive of proposals to require disclosure of corporate matters for
other purposes.
The Committee's general policy is to vote:
H.1 AGAINST proposals seeking to have companies adopt international codes
of conduct
H.2 AGAINST proposals seeking to have companies provide non-required
reports on:
* environmental liabilities;
* bank lending policies;
* corporate political contributions or activities;
* alcohol advertising and efforts to discourage drinking by minors;
* costs and risk of doing business in any individual country;
* involvement in nuclear defense systems
H.3 AGAINST proposals requesting reports on Maquiladora operations or
on CERES principles
H.4 AGAINST proposals seeking implementation of the CERES principles
Notice to Clients
BlackRock will make records of any proxy vote it has made on behalf of a
client available to such client upon request.(11) BlackRock will use its best
efforts to treat proxy votes of clients as confidential, except as it may
decide to best serve its clients' interests or as may be necessary to effect
such votes or as may be required by law.
BlackRock encourage clients with an interest in particular proxy voting
issues to make their views known to BlackRock, provided that, in the absence of
specific written direction from a client on how to vote that client's proxies,
BlackRock reserves the right to vote any proxy in a manner it deems in the best
interests of its clients, as it determines in its sole discretion.
These policies are as of the date indicated on the cover hereof. The
Committee may subsequently amend these policies at any time, without notice.
(11) Such request may be made to the client's portfolio or relationship
manager or addressed in writing to Secretary, BlackRock Equity
Investment Policy Oversight Committee, Legal and Compliance Department,
BlackRock Inc., 40 East 52nd Street, New York, New York 10022.
Information about how a Fund voted proxies relating to
securities held in the Fund's portfolio during the most recent
12 month period ended June 30 is available without charge (1) at
www.blackrock.com and (2) on the Commission's web site at
http://www.sec.gov.
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
as of August 31, 2007.
(a)(1) The Fund is managed by a team of investment professionals
that is responsible for the day-to-day management of the Fund's
portfolio. The lead members of this team are Mark J. Williams,
Managing Director at BlackRock, and Kevin J. Booth, Managing
Director at BlackRock. Mr. Williams and Mr. Booth each has been
a portfolio manager of the Fund since 2006. Mr. Williams is
responsible for setting the Fund's overall investment strategy
and overseeing the management of the Fund. Mr. Booth is responsible
for the day-to-day management of the Fund's portfolio and the
selection of its investments.
Mr. Williams is the head of BlackRock's bank loan group and a
member of the Investment Strategy Group. His primary responsibility
is originating and evaluating bank loan investments for the firm's
collateralized bond obligations. He is also involved in the
evaluation and sourcing of mezzanine investments. Prior to joining
BlackRock in 1998, Mr. Williams spent eight years with PNC Bank's
New York office and was a founding member of the bank's Leveraged
Finance Group. In that capacity he was responsible for structuring
proprietary middle market leveraged deals and sourcing and
evaluating broadly syndicated leveraged loans in the primary and
secondary markets for PNC Bank's investment portfolio. From 1984
until 1990, Mr. Williams worked in PNC Bank's Philadelphia office
in a variety of marketing and corporate finance positions.
Mr. Booth is a member of BlackRock's bank loan group. He joined
BlackRock in 2006. Prior to joining BlackRock, Mr. Booth was a
Managing Director (Global Fixed Income) of Merrill Lynch
Investment Managers, L.P. ("MLIM") since 2006 and a member of
MLIM's bank loan group from 2000 to 2006. He was a Director of
MLIM from 2000 to 2006 and was a Vice President of MLIM from
1994 to 2000. He has been portfolio manager with BlackRock or
MLIM since 2000.
(a)(2) As of August 31, 2007:
(iii) Number of Other Accounts and
(ii) Number of Other Accounts Managed Assets for Which Advisory Fee is
and Assets by Account Type Performance-Based
Other Other
(i) Name of Registered Other Pooled Registered Other Pooled
Portfolio Investment Investment Other Investment Investment Other
Manager Companies Vehicles Accounts Companies Vehicles Accounts
Mark Williams 9 16 2 0 11 1
$ 4,202,105,955 $5,753,879,192 $ 178,074,057 $0 $4,071,710,403 $ 27,207,438
Kevin Booth 22 9 7 0 4 3
$11,031,400,532 $3,305,024,401 $1,224,383,989 $0 $1,483,112,004 $539,887,685
(iv) Potential Material Conflicts of Interest
BlackRock has built a professional working environment, firm-wide
compliance culture and compliance procedures and systems designed
to protect against potential incentives that may favor one account
over another. BlackRock has adopted policies and procedures that
address the allocation of investment opportunities, execution of
portfolio transactions, personal trading by employees and other
potential conflicts of interest that are designed to ensure that
all client accounts are treated equitably over time. Nevertheless,
BlackRock furnishes investment management and advisory services to
numerous clients in addition to the Fund, and BlackRock may,
consistent with applicable law, make investment recommendations to
other clients or accounts (including accounts which are hedge funds
or have performance or higher fees paid to BlackRock, or in which
portfolio managers have a personal interest in the receipt of such
fees), which may be the same as or different from those made to the
Fund. In addition, BlackRock, its affiliates and any officer,
director, stockholder or employee may or may not have an interest in
the securities whose purchase and sale BlackRock recommends to the
Fund. BlackRock, or any of its affiliates, or any officer, director,
stockholder, employee or any member of their families may take
different actions than those recommended to the Fund by BlackRock
with respect to the same securities. Moreover, BlackRock may refrain
from rendering any advice or services concerning securities of
companies of which any of BlackRock's (or its affiliates') officers,
directors or employees are directors or officers, or companies as to
which BlackRock or any of its affiliates or the officers, directors
and employees of any of them has any substantial economic interest
or possesses material non-public information. Each portfolio manager
also may manage accounts whose investment strategies may at times be
opposed to the strategy utilized for the Fund. In this connection,
it should be noted that certain portfolio managers currently manage
certain accounts that are subject to performance fees. In addition,
certain portfolio managers assist in managing certain hedge funds
and may be entitled to receive a portion of any incentive fees
earned on such funds and a portion of such incentive fees may be
voluntarily or involuntarily deferred. Additional portfolio managers
may in the future manage other such accounts or funds and may be
entitled to receive incentive fees.
As a fiduciary, BlackRock owes a duty of loyalty to its clients
and must treat each client fairly. When BlackRock purchases or
sells securities for more than one account, the trades must be
allocated in a manner consistent with its fiduciary duties.
BlackRock attempts to allocate investments in a fair and equitable
manner among client accounts, with no account receiving preferential
treatment. To this end, BlackRock has adopted a policy that is
intended to ensure that investment opportunities are allocated
fairly and equitably among client accounts over time. This policy
also seeks to achieve reasonable efficiency in client transactions
and provide BlackRock with sufficient flexibility to allocate
investments in a manner that is consistent with the particular
investment discipline and client base.
(a)(3) As of August 31, 2007:
Portfolio Manager Compensation
BlackRock's financial arrangements with its portfolio managers,
its competitive compensation and its career path emphasis at all
levels reflect the value senior management places on key resources.
Compensation may include a variety of components and may vary from
year to year based on a number of factors. The principal components
of compensation include a base salary, a discretionary bonus,
participation in various benefits programs and one or more of the
incentive compensation programs established by BlackRock such as its
Long-Term Retention and Incentive Plan and Restricted Stock Program.
Base compensation
Generally, portfolio managers receive base compensation based on
their seniority and/or their position with the firm.
Discretionary compensation
In addition to base compensation, portfolio managers may receive
discretionary compensation, which can be a substantial portion
of total compensation. Discretionary compensation can include a
discretionary cash bonus as well as one or more of the following:
Long-Term Retention and Incentive Plan (LTIP)
The LTIP is a long-term incentive plan that seeks to reward
certain key employees. The plan provides for the grant of awards
that are expressed as an amount of cash that, if properly vested
and subject to the attainment of certain performance goals, will
be settled in cash and/or in BlackRock, Inc. common stock.
Deferred Compensation Program
A portion of the compensation paid to each portfolio manager may
be voluntarily deferred by the portfolio manager into an account
that tracks the performance of certain of the firm's investment
products. Each portfolio manager is permitted to allocate his
deferred amounts among various options, including to certain of
the firm's hedge funds and other unregistered products. In
addition, prior to 2005, a portion of the annual compensation of
certain senior managers was mandatorily deferred in a similar
manner for a number of years. Beginning in 2005, a portion of
the annual compensation of certain senior managers was paid in
the form of BlackRock, Inc. restricted stock units which vest
ratably over a number of years.
Options and Restricted Stock Awards
While incentive stock options are not currently being awarded to
BlackRock employees, BlackRock, Inc. previously granted stock
options to key employees, including certain portfolio managers
who may still hold unexercised or unvested options. BlackRock,
Inc. also has a restricted stock award program designed to
reward certain key employees as an incentive to contribute to
the long-term success of BlackRock. These awards vest over a
period of years.
Incentive Savings Plans
BlackRock, Inc. has created a variety of incentive savings plans
in which BlackRock employees are eligible to participate,
including an Employee Stock Purchase Plan (ESPP) and a 401(k)
plan. The 401(k) plan may involve a company match of 50% of the
employee's pre-tax contribution of up to 6% of the employee's
salary, limited to $4,000 per year. BlackRock also offers a
Company Retirement Contribution equal to 3% to 5% of eligible
compensation, depending on BlackRock, Inc.'s overall net
operating income. The company match is made in cash. The firm's
401(k) plan offers a range of investment options, including
registered investment companies managed by the firm. Each
portfolio manager is eligible to participate in these plans.
Annual incentive compensation for each portfolio manager is a
function of several components: the performance of BlackRock,
Inc., the performance of the portfolio manager's group within
BlackRock, the investment performance, including risk-adjusted
returns and income generation, of the firm's assets under
management or supervision by that portfolio manager relative to
predetermined benchmarks, and the individual's teamwork and
contribution to the overall performance of these portfolios and
BlackRock. Unlike many other firms, portfolio managers at
BlackRock compete against benchmarks rather than each other. In
most cases, including for the portfolio managers of the
Registrant, these benchmarks are the same as the benchmark or
benchmarks against which the investment performance, including
risk-adjusted returns and income generation, of the Registrant
or other accounts are measured. These benchmarks include
customized benchmarks, Lipper peer groups and a subset of other
closed-end taxable debt funds. A group of BlackRock, Inc.'s
officers determines which benchmarks against which to compare
the performance of funds and other accounts managed by each
portfolio manager. With respect to the Registrant, such
benchmarks include the Credit Suisse Leveraged Loan Index and
the Credit Suisse High Yield Index.
The group of BlackRock, Inc.'s officers then makes a subjective
determination with respect to the portfolio manager's
compensation based on the performance of the funds and other
accounts managed by each portfolio manager relative to the
various benchmarks. This determination may take into
consideration the fact that a benchmark may not perfectly
correlate to the way the Registrant or other accounts are
managed, even if it is the benchmark that is most appropriate
for the Registrant or other account. For example, a benchmark's
return may be based on the total return of the securities
comprising the benchmark, but the Registrant or other account
may be managed to maximize income and not total return. Senior
portfolio managers who perform additional management functions
within BlackRock may receive additional compensation for serving
in these other capacities.
(a)(4) Beneficial Ownership of Securities. As of August 31,
2007, Mr.Williams did not beneficially own any stock issued by
the Fund. As of August 31, 2007, Mr. Booth owned stock issued by
the Fund valued in the range: $100,001-$500,000.
Item 9 - Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers - Not Applicable
due to no such purchases during the period covered by this
report.
Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating Committee will consider nominees to the
Board recommended by shareholders when a vacancy becomes
available. Shareholders who wish to recommend a nominee should
send nominations which include biographical information and set
forth the qualifications of the proposed nominee to the
registrant's Secretary. There have been no material changes to
these procedures.
Item 11 - Controls and Procedures
11(a) - The registrant's principal executive and principal financial
officers or persons performing similar functions have concluded
that the registrant's disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of
1940, as amended (the "1940 Act")) are effective as of a date
within 90 days of the filing of this report based on the
evaluation of these controls and procedures required by Rule
30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities
and Exchange Act of 1934, as amended.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940
Act) that occurred during the second fiscal quarter of the
period covered by this report that have materially affected, or
are reasonably likely to materially affect, the registrant's
internal control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock Floating Rate Income Strategies Fund, Inc.
By: /s/ Robert C. Doll, Jr.
-----------------------
Robert C. Doll, Jr.,
Chief Executive Officer (principal executive officer) of
BlackRock Floating Rate Income Strategies Fund, Inc.
Date: October 22, 2007
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/ Robert C. Doll, Jr.
-----------------------
Robert C. Doll, Jr.,
Chief Executive Officer (principal executive officer) of
BlackRock Floating Rate Income Strategies Fund, Inc.
Date: October 22, 2007
By: /s/ Donald C. Burke
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Donald C. Burke,
Chief Financial Officer (principal financial officer) of
BlackRock Floating Rate Income Strategies Fund, Inc.
Date: October 22, 2007