Prospectus (4.96 Mb) - BlackRock International

iskier or more speculative than would be the case if such arrangements were not in effect. In addition, because
performance-based compensation is calculated on a basis that includes unrealised appreciation of a Fund Investment’s
assets, such performance-based compensation may be greater than if such compensation were based solely on realised
gains. Furthermore, External Investment Advisors may receive compensation calculated by reference to their assets
under management. Such compensation arrangements may create an incentive to increase their assets under
management regardless of their ability to effectively and optimally invest them.
MULTIPLE LEVELS OF EXPENSE
Both the Company and Fund Investments impose management and performance fees. In addition to a fixed management
fee, External Investment Advisors typically will also be paid or allocated amounts based upon a share of the profits of the
Fund Investment. External Investment Advisors of such Fund Investments may receive substantially higher payments than
would otherwise be the case under alternative arrangements. Other service providers of Fund Investments will normally
be compensated or will receive allocations on terms that may include fixed and/or performance-based fees or allocations.
As a result, the Company, and indirectly Shareholders, will pay multiple investment management and other service
provider fees. In addition to the fees paid by the Company to the Manager, fees paid in relation to Fund Investments will
generally, for fixed fees, if applicable, range from 1 per cent. to 2 per cent. per annum of the average net asset value of the
Fund Investments and performance fees or allocations are likely to range from 20 per cent. to 25 per cent. of the net
capital appreciation in the Fund Investments for the relevant performance fee measurement period. Performance figures
issued by the Company and stated performance targets will be net of these.
When the Company holds a Fund Investment through a conduit fund as described below under “Investment in conduit
entities”, the “high water mark” for an investment in a Fund Investment may not correspond to the Company’s holding
period in the conduit fund. Therefore, the Company may pay a performance fee to an External Investment Advisor when it
has not received the same positive performance as a whole and it may benefit from a “loss carry forward” where the
conduit fund incurred the loss prior to the Company’s investment in the conduit fund.
EFFECT OF REDEMPTIONS AND BUY-BACKS ON DIVERSIFICATION
Although the Company plans to seek diversification in the investment of its assets, if the Directors elect to operate the
Redemption Facility and as a result a significant number of Shares are redeemed on the relevant Redemption Date, the
Company may not be able to satisfy such redemption requests from a variety of its Fund Investments and be required to
make disproportionate redemptions from select Fund Investments, resulting in a temporary imbalance in its
diversification strategy. Similarly, if the Company executes a share buy-back, raising the necessary funds may adversely
affect the diversification of the Company’s investments.
EFFECT OF LIQUIDATION ON INVESTMENT GUIDELINES
If the Company is in the process of a complete liquidation pursuant to its Articles of Association, in order to effect an
orderly liquidation of the Company’s assets, the Company may not comply with the investment guidelines described in this
Registration Document during liquidation.
PORTFOLIO ADJUSTMENTS
Redemption restrictions imposed by Fund Investments or the provisions of the governing documents of Fund Investments
that permit suspension of redemptions may delay or preclude portfolio adjustments the Investment Manager would
otherwise implement. Fund Investments could depreciate in value during the time a redemption is delayed, and the
Company would be precluded from redeploying its capital to more advantageous investment opportunities.
SECONDARY MARKET
The Company may sell Fund Investments in the secondary market. This may include, at the discretion of the Investment
Manager, selling such Fund Investments at a discount, thereby triggering the same economic effect as a redemption
penalty.
PORTFOLIO VALUATION
The Company values its Fund Investments at fair value. Interests in Fund Investments generally will be valued at
estimated prices provided to the Company by the External Investment Advisor (or administrator) of the relevant Fund
Investment based on interim unaudited financial statements. Such estimates may be subject to little independent
verification or other due diligence and may not comply with generally accepted accounting practices or other valuation
principles. In addition, these entities may not provide estimates of the value of Fund Investments, or may do so irregularly,
with the result that the values of such investments may be estimated by and at the discretion of the Sub-Administrator.
Certain securities or investments, particularly those for which market quotations may not be readily available, may be
difficult to value. Because of overall size, concentration in particular markets and maturities of positions held by the
Company through the Fund Investments, the value at which its investments can be liquidated may differ, sometimes
significantly, from the interim valuations obtained by the Company. In addition, the timing of liquidations may also affect
the values obtained on liquidation. Securities held by Fund Investments may routinely trade with bid-offer spreads that
may be significant. In addition, the Fund Investments may hold loans or privately placed securities for which no public
market exists. Accordingly, the values of Fund Investments provided to the Company may be subject to an upward or
downward adjustment based on information reasonably available at that time or following the auditing of a Fund
Investment’s financial records. There can therefore be no guarantee that the Company’s investments could ultimately be
realised at the Company’s valuation of such investments.
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