Merrill Lynch International Investment Funds Audited Annual Report ...

Notes to the Financial Statements
1. Organisation
Merrill Lynch International Investment Funds “the Company” is
an open-ended investment company (Société d’Investissement
à Capital Variable or SICAV) and formed under Part I of the
Luxembourg Law dated 20 December 2002 (the “2002 Law”).
The merger of the MLIM Group with BlackRock, Inc. (“BlackRock”)
completed on 29 September 2006. As a result, a management
company under the BlackRock name has been created. The
Company is managed by investment companies which form part of
the BlackRock Group.
As at 29 December 2006, the Company offered shares in
61 Funds. Each Fund is a separate pool of assets and is
represented by separate shares of each Fund which are divided
into share classes representing different charging structures:
Classes of Shares
Class ‘A’ – distributing (monthly and daily) – certain Funds only,
and non-distributing;
Class A UK Distributor Status Distributing shares (annual
distribution) – for the following funds only:
Asian Dragon, Continental European Flexible, Emerging Europe,
European Value, Global Equity (28 April 2006), India (28 April
2006) Japan Opportunities, Japan Value, Latin American, New
Energy (28 February 2006), Sterling Reserve, United Kingdom,
US Basic Value, US Flexible Equity, US Focused Value, World
Energy and World Mining Funds;
Class ‘B’ – distributing (daily) – certain Funds only, and nondistributing;
Class ‘C’ – distributing (monthly and daily) – certain Funds only,
and non-distributing – certain Funds only;
Class ‘D’ – non-distributing – certain Funds only;
Class ‘E’ – non-distributing;
Class ‘J’ – distributing (monthly), and non-distributing (available
to certain subscribers – certain Funds only);
Class ‘Q’ (grandfathered share class available to investors
previously holding shares in other Funds sponsored by entities
within the BlackRock Group. Within the Company they are no
longer available for subscription) – distributing and nondistributing
– certain Funds only; and
Class ‘X’ – non-distributing – (available to certain subscribers) –
certain Funds only.
Hedged share classes divided into Class A Shares, Class B
Shares, Class C Shares, Class D Shares, Class E Shares and
Class X (certain funds only) are available to holders of shares
denominated in the additional dealing currency of the following
funds only: Global Allocation, Global Enhanced Equity Yield
(activated 15 December 2006), Japan, Japan Opportunities, Japan
Value (Class X activated 29 May 2006 and Class E activated
2 October 2006), US Basic Value, US Flexible Equity (Class D
activated 22 June 2006), US Focused Value, US Government
Mortgage (Classes A, B, C and E activated 29 May 2006) and
Class X for US Government Mortgage (activated 16 August 2006).
The classes of shares have similar right in the Company but
carry different charging structures, which are more fully
described in the Company’s Prospectus.
India Fund
Effective 28 April 2006, the India Fund of Merrill Lynch Specialist
Investment Funds ('MLSIF') was merged with MLIIF India Fund
of the Company. The ownership of Merrill Lynch India Equities
Fund (Mauritius) Limited (the 'Subsidiary'), a wholly owned
subsidiary of MLSIF transferred to the Company effective
28 April 2006.
The subsidiary was incorporated on 1 September 2004, under
the laws of Mauritius as an open ended investment company
with limited liability. Currently, the Subsidiary benefits from
relief of India/Mauritius double tax treaty. This might change in
the future.
The MLIIF India Fund invests substantially all of its net assets in
India through the Mauritian Subsidiary in accordance with its
investment objectives and policies.
All assets and liabilities, income and expenses of the Subsidiary
are consolidated in the statement of net assets and operations
of the Company. All investments held by the Subsidiary are
disclosed in the Accounts of the Company.
Share Class launches:
• Effective 28 April 2006, the US Government Mortgage Fund
launched Class A Euro hedged share class.
• On 19 May 2006, Class D were launched (but not all activated)
for the following Funds:
Emerging Europe, Emerging Markets, Euro-Markets, European,
European Growth, European Opportunities, Global Capital
Securities Absolute Return (activated 1 December 2006), Japan,
Japan Opportunities, Latin American, New Energy, Pacific Equity,
US Flexible Equity, World Gold, World Mining and World Energy
Funds, and US Flexible Equity Fund hedged share class.
• Effective 29 May 2006, Japan, Japan Opportunities, and Japan
Value Funds – Class A – hedged share classes were made
available.
• Effective 17 November 2006, the US Basic Fund launched
Class D (non distributing) share class;
• Effective 22 November 2006, the US Flexible Equity Fund
launched Class X share class;
• Effective 1 December 2006, the Japan Value Fund launched
Euro hedged share version of Class E share class and,
Audited Annual Report and Accounts 213