Prospectus (4.96 Mb) - BlackRock International

Merrill Lynch’s ownership interest in BlackRock
Merrill Lynch’s ownership of a significant amount of BlackRock’s outstanding common stock gives rise to a presumption
that BlackRock is controlled by Merrill Lynch for purposes of certain laws and regulations governing BlackRock’s
investment management activities. However, pursuant to contractual agreement between Merrill Lynch and BlackRock,
Merrill Lynch’s right to vote BlackRock common stock is severely restricted and, among other things, Merrill Lynch is
specifically prohibited from seeking to influence or control BlackRock. Accordingly, BlackRock does not believe that
Merrill Lynch is in fact a controlling person of BlackRock.
BlackRock has filed an application for an order of the US Securities and Exchange Commission determining that Merrill
Lynch does not control BlackRock. There can be no assurance that the Commission will in fact grant such order. In the
event that BlackRock obtains such an order, it will cease to subject client transactions with or involving Merrill Lynch to
the restrictions and limitations applicable to client transactions with or involving BlackRock itself and BlackRock’s control
persons to the extent permitted by law. With respect to the Company, this step will primarily have the effect of enabling
BlackRock to trade on behalf of the Company with Merrill Lynch as a broker or dealer subject to normal principles of best
execution and as an underwriter in public and private offerings, in each case without special consent by the Company. Due
to the possibility that Merrill Lynch’s continuing economic interest in BlackRock would incentivise BlackRock to favour
Merrill Lynch in some manner, BlackRock will utilise enhanced compliance procedures to govern and assess its use of
Merrill Lynch on behalf of the Company and its other clients.
Investment in entities advised, managed or offered by related entities
The Company may invest in Fund Investments advised, managed or sold by the Investment Manager, Merrill Lynch, PNC
or any of their respective affiliates. Such transactions are expected to occur at the relevant net asset value and otherwise
in a manner substantially similar to an investment in a Fund Investment not involving an affiliate. Other than with respect
to ARS Affiliated Funds and conduit funds, it is expected that management and/or performance fees will be charged to the
Company by the Fund Investment and paid to the Fund Investment’s service providers, including the Investment Manager,
Merrill Lynch, PNC or any of their respective affiliates, without offset to the management or performance fees paid to the
Company’s Investment Manager or other service providers other than as an expense of the Company.
Brokerage and other services and activities
Each of Merrill Lynch and PNC may provide a variety of other services, including fund administration, valuation, research,
advisory, brokerage or support services, to the Fund Investments or, to the extent permitted by applicable law, to the
Company. Each of BlackRock, Merrill Lynch and PNC may also engage in proprietary investment activities from time to
time. Subsidiaries and affiliates of BlackRock and Merrill Lynch, including Merrill Lynch Alternative Investments, LLC,
may also sponsor and manage investment funds or other client accounts that compete directly or indirectly with the
investment programme of the Company or the Fund Investments. Information obtained or used by the Investment
Manager or its affiliates for proprietary investment activities, or investment activities on behalf of other client accounts,
including investment strategies used for proprietary investing or other client accounts, may not be made available to
persons involved in the management of the Company, nor is there an obligation to provide this information for the benefit
of the Company. There can be no assurance that any of the foregoing arrangements will not, in whole or in part, give rise
to conflicts of interest affecting the investment activities of the Company.
In addition, situations may arise in which a Merrill Lynch counterparty believes that, to protect its own commercial
interests, it may be necessary to take action with respect to the Company or a Fund Investment that may be detrimental to
the Company (such as foreclosing on collateral in the event a Merrill Lynch counterparty is a lender or counterparty to the
Company or a Fund Investment). The Company and each Fund Investment will not be entitled to, and may not receive, any
special consideration or forbearance by a Merrill Lynch counterparty in the exercise of its rights as a result of the
Investment Manager’s relationship with Merrill Lynch.
Retail banking, investment services and other businesses of PNC
PNC and its affiliates may provide deposit, lending, cash management, trust and investment services, brokerage, fund
administration, valuation, financial advisory services and other commercial and private banking products to the Fund
Investments as well as to Other Clients. PNC and its affiliates serve as investment managers and trustees for various
employee benefit plans and charitable and endowment assets that could invest in the Fund Investments. PNC and its
affiliates also engage in asset-based lending and real estate financing to the Fund Investments. PNC and its affiliates also
provide fund accounting and administration, transfer agency services, global custody securities lending services,
sub-accounting services, marketing and distribution services, managed account services, alternative investment services,
banking transaction services and advanced output solutions. Through any of the foregoing, PNC and its affiliates may
receive fees from the Fund Investments as well as Other Clients.
Ownership interests in or by third party financial services firms
In the event that BlackRock acquires an ownership interest in a third party financial services firm or acquires the business
or operating assets of such firm or if a third party financial services firm acquires an ownership interest in BlackRock,
each of the conflicts described above may be relevant. In addition, subject to all applicable laws, the Company may trade
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