Merrill Lynch International Investment Funds Audited Annual Report ...

Notes to the Financial Statements continued
• Effective 15 December 2006, the Global Enhanced Equity Yield
Fund made available hedged share versions of Class A and E.
Dealing Currency launches:
• Effective 1 December 2006, the Asian Tiger Bond, US Dollar
Core Bond, US Dollar High Yield Bond, US Government
Mortgage and World Bond Funds launched Class E shares
with a Euro dealing currency.
Activation of new share classes
Effective 29 May 2006, Classes A, B, C and E were activated for
the European Focus Fund. Dealing currencies in Euro and US$
are available.
Fund Launches
• On 28 February 2006, Global Dynamic Equity Fund –
denominated in USD, was launched;
• On 28 April 2006, Global Capital Securities Absolute Return
Fund – denominated in EUR, was launched;
• On 2 May 2006, India Fund – denominated in USD, was
launched. In normal market conditions, this Fund invests
exclusively via the subsidiary – Merrill Lynch India Equities
Fund (Mauritius) Limited;
• On 13 October 2006, Global Enhanced Equity Yield Fund –
denominated in USD, was launched.
Fund Name Changes
Effective 31 July 2006, the Corporate Bond Fund (Euro), changed
its name to Euro Corporate Bond Fund;
Effective 2 October 2006, the Short Duration Bond Fund (Euro)
changed its name to Euro Short Duration Bond Fund, the Global
Equity Core Fund changed its name to Global Equity Fund and
Continental European Growth Fund changed its name to
Continental European Flexible Fund.
Fund Mergers
Effective 8 September 2006, the following Funds from the MLB (S)
(LUX) International Portfolios series merged into MLIIF:
MLB(S) (LUX) Worldwide Equity Portfolio (USD) into MLIIF Global
Equity Core Fund (renamed to Global Equity Fund);
MLB(S) (LUX) Balanced Portfolio (Euro) into MLIIF Strategic
Allocation (Euro) Fund;
MLB(S) (LUX) Balanced Portfolio (USD) into MLIIF Strategic
Allocation (US Dollar) Fund;
MLB(S) (LUX) Fixed Income Portfolio (Euro) into MLIIF Euro
Bond Fund; and
MLB(S) (LUX) Fixed Income Portfolio (USD) into MLIIF US Dollar
Core Bond Fund.
Effective 29 September 2006, the Global Equity Diversified Fund
merged into the Global Equity Core Fund (renamed to Global
Equity Fund).
Japanese Funds – Base Currency change
With effect from 29 May 2006 the following Funds changed their
base currency from US$ to Yen using an exchange rate of 1US$
= ¥111.8882
• Japan, Japan Opportunities and Japan Value Funds.
For the purposes of these accounts, the “net assets at the
beginning of the period”, as documented in the Statement of
Operations and Changes in Net Assets, have been restated
using the 30 December 2005 year end exchange rate of 1US$ =
¥117.588.
2. Summary of Significant Accounting Policies
The financial statements have been prepared in accordance with
the format and regulations prescribed by the Luxembourg
authorities for Luxembourg investment companies and the
following significant accounting policies:
(a) Valuation of Investments and Other Assets
The Company’s investments and other assets are valued as
follows:
• the market values of quoted securities forming any particular
Fund’s portfolio are determined by the last known prices
upon close of the exchange on which those securities or
assets are traded or admitted for trading. For quoted
securities traded on markets closing after the time of the
valuation pricing slots on 29 December 2006, last known
prices as of this time or such other time may be used. Where
such quoted securities are quoted or dealt in on or by more
than one stock exchange or regulated market the Directors
may in their discretion select one of such stock exchanges or
regulated markets for such purposes;
However, on the advice of the Manager, the Board of
Directors has identified certain investments held by the
Company, for which the quoted market values do not
represent the fair market value due to market illiquidity or
restrictions in the repatriation of capital. In recognition of
this, the Board of Directors has on the advice of the Manager
and local brokers, applied a discount to the market prices to
reflect their estimated realisable value. The valuation of these
investments and the discounts applied are subject to regular
review by the Board;
• securities lending: securities are delivered to a third party
broker as per lending agent BlackRock Investment
Management LLC instructions, the assets of which continue
to be valued as part of the portfolio of the Fund;
• the valuation of unquoted securities (securities not traded on
or admitted to any official stock exchange or any regulated
market), or in the case of securities so traded or admitted
214 Merrill Lynch International Investment Funds