Merrill Lynch Investment Managers/BlackRock
Merger Overview Update
June 2006
MLIM/BRK-0606
For Informational Purposes Only. This material is not intended to be a solicitation for any investment product referenced herein.
- We’ve been working hand-in-hand with BlackRock during the integration process– creating business models, finalizing teams and incorporating best practices in the industry (Phase 1).
- We are now clearly in Phase 2, integrating functions and products.
- This presentation will discuss what the new BlackRock will look like post-merger, and propose the combining of select BRK and ML funds.
- We are very excited from the industry’s positive feedback.
- June 19, 2006: Being change of control proxy materials
BlackRock Overview
Combined Assets of US$1 Trillion
Fixed Income
Equity /
Balanced
Real Estate
Alternatives
$433 Billion
$354 Billion
$27 Billion
$13 Billion
Liquidity
$212 Billion
Combined as of March 31, 2006
Risk Management
Investment
Accounting
$3.5 Trillion
$50 Billion
Announced merger of BlackRock and Merrill Lynch Investment Managers (MLIM) on
February 15, 2006
Independent firm in ownership and governance
Public company (NYSE: BLK) with over 4,000 employees
Headquartered in NYC
Laurence Fink continues as Chairman and CEO
All founding partners remain affiliated with BlackRock
No majority owners
Merrill Lynch 49%, PNC 34%, employees and public 17%
Majority of Board of Directors is independent
Achieve scale in multiple products and markets
Combine complementary US retail platforms with mutual funds, managed
accounts, and enhanced client service
Institutional client base to benefit from additional US dollar and non-dollar
products
Non-US business to span institutional and retail clients in over 50 countries
Spectrum of products across asset classes to broaden with global and non-
US products, non-US real estate, and alternative investment strategies
Operating in 18 countries and more than 35 cities
Investment centers in Boston, Edinburgh, Eindhoven, Florham Park, London,
Melbourne, Newport Beach, New York City, Philadelphia, Princeton, San
Francisco, Sydney, Tokyo, and Wilmington
Client service presence in local markets
Expected closing date on September 30, 2006
2
- A snapshot of what the new BRK will look like post-merger
3 points to emphasize:
1. Ownership and governance of structure.
- The merger is clearly beneficial to both firms.
- New BRK will be very independent
- Ownership: ML = 49%, PNC = 34%, employees and public = 17%-- there is no majority holder of the stock.
- ML and PNC each get 2 seats on the Board (out of 17 members)
- New structure gives BRK control of strategic direction and important decisions. We want to focus only on asset management.
2. Idea of scale
- Our combined suite of products will have depth in each class.
- Spectrum of products will broaden with global, U.S. and AI strategies– very favorable.
- Our new menu of products will bring more solutions to the table to meet our clients’ specific needs.
3. Global company
- The old BRK was international. MLIM-US was Americas-focused. MLIM-EMEA was a non-US focused.
- The new BRK will be entirely global.
- 1/3 of our employees will be working from our global investment centers.
BlackRock and MLIM Combined
Diversified product mix
Scale across asset classes
Products tailored to client needs
Selected mergers proposed to rationalize fund families
Competitive performance
82%* of BlackRock composites outperformed their
benchmark as of December 31, 2005
77% of MLIM composites outperformed their
benchmark as of December 31, 2005
84 funds of the combined offerings as of May 31, 2006
have Morningstar ratings of 4 or 5 stars**
Global asset management company
Over one-third of employees based outside the U.S.
Fourteen investment centers in US, UK, Europe,
Japan, and Australia
Marketing and client service offices in 35 cities plus
regional wholesalers
Extensive fund offerings registered in domiciles around
the world
Local resources for operations, administration, and
compliance
*Based on annualized 3-year gross of fee returns for products with at least a 3-year track record
**Ratings are based on historical risk-adjusted performance and the overall rating is derived from
a weighted average of the funds' 3-, 5-, and 10-year Morningstar Rating Metrics
Combined assets as of March 31, 2006
433
127
306
Fixed Income
212
126
86
Liquidity
27
10
17
Alternatives
TOTAL
Real Estate
Equity(1)
13
3
10
$1 Trillion AUM by Asset Class
US$ Billions
354
310
44
$1,039
$576
$463
Combined
MLIM
BlackRock
1 Includes Balanced assets
$1 Trillion AUM by Client Geography
3
- This slide is a very good roadmap on how decisions were made.
- Table is a very good starting point to show where we are headed.
- If you look at Equities, MLIM has $310 trillion AUM, where BRK has only $44 trillion AUM.
- Both firms have excellent equity solutions and management teams, however it’s clear that Equities is one of MLIM’s fortes. One of our decisions that reflects this is that President and CIO of MLIM, Bob Doll, will become the new BRK’s Global CIO of Equities.
- However, if you look at Fixed Income, the results are inverse– BRK has been and continues to be a leader in fixed income.
- Hence, decisions to spearhead fund families have been made logically.
- Looking at a performance and competitive perspective, we have 84 of our combined funds have Morningstar ratings of 4 or 5-stars, as of May 31, 2006. In a recent meeting with Morningstar, we’ve expressed our commitment to maintain quality in our products and practices, affirmed that we are the company to watch.
Combining BlackRock and MLIM Equity Capabilities
Equity Investment Centers
As of March 31, 2006
$3.4
Philadelphia
$165.2
Princeton
$17.2
Boston
$2.9
Australia
$313.5
TOTAL
$91.4
London
$10.1
Edinburgh
$11.1
Tokyo
$12.2
New York
Combined Equity AUM
Excluding Balanced
Assets
(US$ billions)
Office Location
Similar business philosophy in equities
Culture of investment excellence
Distinct portfolio teams accountable for investment results in specific products
Structure of regional investment centers with integrated research supplemented
by shared global investment perspectives
Process that enhances returns through careful risk and performance analysis
Pay for performance compensation model that aligns portfolio managers with
clients
In general, the MLIM and BlackRock equity teams remain unchanged
Broad and deep resources for managing equities
Bob Doll, Global CIO for Equities
Quintin Price, CIO for EMEA Pacific Equities
46 Equity Portfolio Management Teams
Global Equity Trading team
Risk and Quantitative Analysis Group
BlackRock Solutions Technology Platform
Investment decision-making
Decentralized team decision-making
Centralized dialogue resulting in knowledge sharing
Differentiated and diverse product line tailored to investor's needs
Equity and balanced products
Institutional and retail products
Global and local market products
4
- In regards to equity capabilities, you’ll notice that there will be very little change.
- The reason for this is because our business philosophies (BRK and MLIM) are very similar:
- Investment performance comes first
- Both use a team approach for investment research
- Both believe that information-sharing across platforms is value-added to all teams
- Both pay attention to risk management attribution
- Both both implement a pay-for-performance compensation
- As previously noted, Bob Doll will become the Global CIO for Equities. Quintin Price, CIO for EMEA Pacific Equities will be reporting directly to Bob.
- At MLIM, currently 80% of our investment research occurs in Princeton and Australia. Our Australia and Tokyo equity investment centers will remain for the new BRK. Boston, Edinburgh, London, New York and Philadelphia are currently investment centers on the BRK end.
- We will continue to rely on our partners in equities trading and risk and quantitative analysis teams.
- We will incorporate the BlackRock Solutions Technology Platform to assist in reporting and information exchange, making it more timely and transparent.
BlackRock Equity Platform
BlackRock Equity Investment Philosophy
Integrated research and fund management teams, where performance is the primary focus
Shared investment ideas, common view of risk management and portfolio attribution
Risk and Quantitative Analysis Group
• Leaders: Golub, Fishwick, Patti, Damm
•
Locations: NY, Princeton, Philadelphia, London,
Edinburgh, Tokyo, Melbourne
Bob Doll, Global CIO, Equities
Global Equity Trading
• Leaders: Mahoney, Gitlin, Walker-Duncalf
•
Locations: Princeton, NY, Philadelphia, Boston,
London, Edinburgh, Tokyo, Singapore, Melbourne
BlackRock Solutions
Technology Platform
Aladdin®
Straight-through processing
Galileo™
Shared Research Database
Green Package®
Risk Management Tools
Philadelphia Team
• Global Opportunities: Callan, Carey, Rosenbaum
London Teams
Edinburgh Teams
Tokyo Teams
Melbourne Teams
Quintin Price, CIO
EMEA Pacific Equities
• Japan Large Cap: Desmidt
• Japan Small Cap: Tateda
• Australian Equities: Himpoo
Quantitative Teams
• New York: Byrket, Herrmann
• Tokyo: Hosaka
• Melbourne: Liow
• Princeton: Bertani, Clark, Jelilian, Roisenberg, Russo
• Portable Alpha: Green, Struthers
• Large Cap Series: Doll
• Basic/Focus Value: Rendino, Martorelli
• US Active Large Cap Value: Gaskin
• Balanced Capital: Schansinger
• Equity Dividend: Shearer
• Fundamental Growth: Burke
• Global Allocation: Stattman, Chamby
• Global Value: Bell, Kassem, Berman
• Global Small Cap: Coyle, Balaraman
• Value Opportunities: Baum
• Latin America: Landers
• Pacific: Moyer
• Healthcare: Schreiber, Hodgson
• Natural Resources: Shearer
• Utilities: Anderson
• Global Technology: Vignola, Zidar
• Financials: Kassem
• Private Investors: Willoughby
• Small to Mid Value: Archambo, Forcione
• Small to Mid Growth: Wagner, Leary
• Small Cap Core: O’Connor
• Fundamental Large Growth: Lindsey, Dowd
• Energy: Rice, Walsh
• Health Sciences: Xie
• Asset Allocation: Zhang
• EAFE: Anderson, Low
• European Large Cap GARP: Morillo
• Pacific Basin: Barry
Boston Teams
Princeton Teams
• UK Equity: Macpherson
• UK Specialist: Chappell
• European Style Diversified: Macmillan
• European Specialist: Lee
• Emerging Europe: Bourrier , Monovski
• Natural Resources: Birch
• Large Cap Global: Turnill
• Asia Pacific: Moakes
• Strategic Investment Group: Cameron-Watt
5
- This slide summarizes the new BRK’s equity investment philosophy and structure.
- You’ll notice where each fund’s investment teams will be centrally located– Virtually no change on the Princeton list.
- From the MLIM perspective, we will be supplemented with the Boston and Philadelphia teams (investment processes and products) and also some good global capabilities.
- In addition, there will be extensive product training for both firms to familiarize themselves with each others’ products.
Combining BlackRock and MLIM Fixed Income and Liquidity Teams
$433 Billion Combined Fixed Income AUM
Assets as of March 31, 2006
“One BlackRock” approach will incorporate MLIM’s strengths
Keith Anderson, Global CIO for Fixed Income, and Scott Amero continue to
lead the fixed income effort
Expect to combine teams in several disciplines
Jeff Gary and Mark Williams will continue to lead the High Yield and Bank
Loan team
Kevin Booth will join the team as a portfolio manager
Additional analysts will augment our existing efforts in bank loans
and distressed debt
John Loffredo and Bob DiMella of MLIM will lead the tax-exempt team
Team members will be located in Princeton and New York
BlackRock Solutions’ Aladdin platform being installed at MLIM to facilitate
global information sharing
BlackRock/MLIM combination accelerates global bond expansion
Large, experienced MLIM team in London facilitates our European
expansion
Significant local presences in Sydney and Tokyo enhance our capabilities
MLIM’s non-US cash management complements BlackRock’s product line
Differentiated and diverse product line
Products provide range of risk/reward characteristics
Global and local market products
Institutional and retail products
Dedicated “on-balance sheet” capabilities for Financial Institutions and
Corporate Cash
Strong Liability-Driven Investing products for Europe and the U.S.
$212 Billion Combined Liquidity AUM
* Excludes balanced mandates
*
6
- The “One BlackRock” approach to Fixed Income will be a more centralized one, but one that also incorporates MLIM’s strengths.
- Keith Anderson will act as Global CIO for Fixed Income, and Scott Amero will continue to lead the fixed income effort.
- The breadth and depth of the product line will be strengthened with the addition of MLIM products and people
- Kevin Booth of MLIM will be joining the High Yield and Bank Loan team as a portfolio manager
- John Loffredo and Bob DiMella of MLIM will lead the tax-exempt team– the majority of the team will be in Princeton, and some in NY.
- BlackRock’s Solutions’ Aladdin database platform is currently being installed at MLIM to facilitate in the information-sharing and management of portfolios.
- As we see a demand for Fixed Income in the Institutional market, we are looking to strengthen our products with enhancement in our global bond capabilities and a diverse range of risk/reward characteristics.
Combined U.S. Private Client Group
Private Client Industry Leader
4th largest broker-sold open-end fund family
2nd largest closed-end fund provider
3rd largest SMA provider
3rd largest provider of subadvisory strategies
Over 10 million individual investors
Resulting business has significant scale and breadth of product
Combined business is responsible for $268 billion
Strong, broad product line
Strength in equity, fixed income and cash management
Investment management provided through multiple wrappers
Anticipate ongoing reinvestment and product development
Competitive performance
84 funds of the combined offerings as of May 31, 2006 have Morningstar
ratings of 4 or 5 stars**
Extensive Resources focused on serving individual investors
Over 400 professionals focused on product, sales, servicing, and marketing
Award winning call center and shareholder statements
Data as of 3/31/06
**Ratings are based on historical risk-adjusted performance and the overall rating is derived from a weighted average of the funds' 3-, 5-, and 10-year Morningstar Rating Metrics
Products Managed
$268 bil Combined AUM
As of 3/31/06
7
- MLIM has focus on GPC, and also supports the Non Proprietary and Subadvisory channels.
- For BRK, it is primarily a “Non Proprietary” world, including a slice of ML.
- Our commitment to the new “U.S. Private Client” channel remains, with a combined business responsible for $268 billion and a strong and broad product line.
- We will continue to be an industry leader with highly-rated products.
- As a result of our expanded business, our internal, external and support functions will all increase favorably.
A World-Class Mutual Fund Family with Scale
1Fund closed to new investors
Bold denotes 4 and 5 star funds as of 5.31.06
Equity product breadth – $70.6 bil in AUM
High performing large cap equity funds
Selected global funds & strong sector fund line-up
8
Fixed income product breadth - $20.0 bil in AUM
High performing municipal funds
Multiple core taxable funds
Strong performing sector funds, including High Yield and
GNMA
Short Term Muni
Fixed Income
Inflation Protected
Municipals
PA Tax-Free
Ohio Tax-Free
New York Muni
AMT-Free Muni
New Jersey Muni
National Muni
Kentucky Tax-Free
Insured Muni
Florida Muni
Muni Int Term
Delaware Tax-Free
California Muni
STATE SPECIFIC
NATIONAL
SHORT
World Income
High Income
International Bond
High Yield
Other
GLOBAL
HIGH YIELD
TIPS
Aggregate Bond Index
Managed Income
Total Return II
Sr. Float II
Government Income
Bond Fund
Sr. Float
GNMA Accumulation
Total Return
Low Duration
GNMA
Intermediate Bond II
Short Term Bond
Intermediate Govt
Intermediate Bond
Enhanced Income
GOVERNMENT
LONG
INTERMEDIATE/
SHORT
Domestic Equity
VALUE
CORE
GROWTH
Large Cap Value
Large Cap Core
Large Cap Growth
Basic Value
S&P 500 Fund
Fundamental Growth
Focus Value
Investment Trust
Focus 20
Equity Dividend Fund
Index Equity
Legacy
Exchange
Mid-Cap Value
US Opportunities
Mid-Cap Growth
Mid Cap Value Opps
SMID
Aurora
SMID Growth
Value Opportunities
Small Cap Index
Small Cap Growth
Small Cap Value(1)
Small Cap Core
Small Cap Growth II
Global &
International
VALUE
CORE
GROWTH
Global Value
International
Global Growth
International Value
International Index
Global Opps
Global Dynamic Equity
Developing Capital Mkts
Global Small Cap
Intl. Opps
Global Technology
Natural Resources
Global Financial Svcs.
Global Science & Tech.
All-Cap Global Resources
Utilities and Telecom
Healthcare
Global Resources(1)
Basic Value Prin.
Prtd.(1)
Health Sciences Opps.
Real Investment
Core Prin. Protected(1)
Fndmntl Gr. Prin. Prtd.(1)
Global Allocation
Balanced Capital
Asset Allocation
EuroFund
Latin America
Pacific
Large
Small
Large
Mid
Small
BLENDED
REGIONAL
Other
SPECIALTY
- This slide shows a world-class mutual fund family that is broad and deep.
- You’ll notice about 60% of the new firm’s funds are Morningstar ranked 4 or 5-stars.
- Goes to show our funds are competitive and world-class.
- Our fixed income products range across maturity and credit spectrums.
- In equities, we have strong global products, and more will be added.
- Our product range is rich in depth– in specialty, blended and regional to complement the product line.
Consolidating BlackRock and MLIM Fund Families
Currently, BlackRock has 43 open-end funds and MLIM has 59 open-end funds (excluding money market funds)
As we considered different fund mergers, we did so with several goals:
Provide shareholders with strongest products
Reduce number of funds that overlap
Generally, shareholders would maintain or improve expense ratios
Considered a variety of administrative impacts
We are proposing the following fund mergers:
9
1 Surviving fund track record
Portfolio
Name
Acquired by
1
PM Team
Portfolio
Name
Acquired by
1
PM Team
Portfolio
Name
Acquired
by
1
PM Team
ML U.S. High Yield
BR High Yield
Gary/Amero
BR UltraShort
Municipal
ML Short Term
Municipal
Hayes
ML Intermediate
Term
ML Core
Bond
Anderson/Amero/
Marra/Phillips
ML Inflation
Protected
BR Inflation
Protected
Spodek/
Weinstein
BR New Jersey
Tax-Free
ML New Jersey
Municipal
Jaeckel
ML Strategy All
Equity
ML Large Cap
Core
Doll
ML Short Term
U.S. Government
BR Low Duration
Anderson/
Amero/Kopstein
BR Pennsylvania
Tax-Free
ML Pennsylvania
Municipal
Bock
ML Disciplined
Equity
ML Large Cap
Core
Doll
BR Dividend
Achievers
TM
ML Equity Dividend
Shearer
ML Strategy
Growth & Income
ML Global
Allocation
Stattman/
Chamby
BR Large Cap
Growth
ML Large Cap
Growth
Doll
BR Large Cap
Value
ML Large Cap
Value
Doll
MLIM To BlackRock
BlackRock to MLIM
MLIM to MLIM
ML Strategy Long-
Term Growth
ML Global
Allocation
Stattman/
Chamby
ML U.S.
Government
BR Government
Income
Phillips/
Pellicciaro
- This slide shows the consolidation of BRK and MLIM’s funds.
- As you’ll see, we have very little overlap.
- Keeping our shareholders’ best interest in mind, we want to provide them the strongest products, reduce overlaps and keep close watch over changes in expense ratios and redemption fees.
- Our goal is to maintain continuity during all administrative impacts and demonstrate best practices while doing so.
- The charts below show which funds will funds will be merged– MLIM to BRK, BRK to MLIM.
- We are also taking this opportunity to merge some of our smaller funds within MLIM.
Enhancements to Fund Family
Proposed mergers are shareholder friendly
Generally, shareholders invested at same or lower
fees in each product
Conformed redemption fees for combined fund family
Fee is 2% for redemptions or exchanges made in 30
days (Exemptions for certain investors)
Fee assessed on small, SMID, International, global
and certain fixed income and sector funds
Shareholder-friendly actions taken proactively by
BlackRock
Closing B shares to new purchases in all fixed income funds
(still available for exchanges)
Aligned A share sales loads and breakpoints to be more
competitive with the industry
R shares will be added to selected BlackRock funds:
Fixed income: High Yield, Government Income, Core
Bond Total Return (Total Return II), and Core PLUS
Total Return (Total Return)
Equity: Small/Mid-Cap Growth, Aurora, and Mid-Cap
Growth
10
(1) 2% redemption fee is assessed to redemptions or exchanges made within 30 days; exemptions for certain investors.
Sector/Fixed Income
Global/International
Small/SMID
All Cap Global Rscs
Global Resources
Global Science & Tech
Global Technology
Health Sciences
High Income
High
Yield
International Bond
Real Investment
World Income
Developing Captl Mkts
EuroFund
Global Value
Global Allocation
Global Dynamic Equity
Global Financial Services
Global Growth
Global Opportunities
Global Small Cap
International
International Index
Intl Opportunities
International Value
Latin America
Pacific
Aurora
Small Cap Core
Small Cap Growth
Small Cap Growth II
Small Cap Index
Small Cap Value
SMID Growth
U.S. Opportunities
Value Opportunities
Redemption Fees(1) For Combined Fund Family
Acquired Fund
Surviving Fund
Institutional
Class A
Institutional
Class A
ML U.S. High Yield
High Yield
0.87%
1.12%
0.62%
0.96%
ML Inflation Protected
Inflation Protected
0.98%
1.23%
0.38%
0.66%
ML Short-Term U.S. Govt
Low Duration
0.69%
0.94%
0.45%
0.81%
ML US Government
Govt Income
0.83%
1.08%
0.70%
0.95%
BR UltraShort Muni
Short Term Muni
0.38%
0.80%
0.35%
0.60%
BR NJ Tax-Free
NJ Muni
0.60%
0.90%
0.60%
0.85%
BR PA Tax-Free
PA Muni
0.60%
0.90%
0.60%
0.85%
BR Lg Cap Value
Lg Cap Value
0.77%
1.24%
0.95%
1.20%
BR Lg Cap Growth
Lg Cap Growth
0.82%
1.29%
1.02%
1.27%
BR Dividend Achievers
TM
Equity Dividend Fund
0.90%
1.30%
0.82%
1.07%
Pre-Merger of
Acquired Fund
Post-Merger of
Acquired Fund
Merged Funds' Net Expenses
- Looking forward, we want to be competitive and shareholder-friendly
- We will implement conformed redemption fees for combined fund families
- We are closing B shares to new investors in all fixed income funds
- We are aligning A share sales loads and breakpoints to be more competitive with the industry
- And on the BRK side, R shares will be added to select funds.
Summary of Fund Mergers
11
RESULTING
FUND NAME
ML Strategy All Equity
ML Large Cap Core
BR Large Cap Core
Doll
ML Strategy Growth & Income
ML Global Allocation
BR Global Allocation
Stattman/Chamby
ML Strategy Long-Term Growth
ML Global Allocation
BR Global Allocation
Stattman/Chamby
ML Disciplined Equity
ML Large Cap Core
BR Large Cap Core
Doll
BR Dividend Achievers™
ML Equity Dividend
BR Equity Dividend
Shearer
BR Large Cap Growth
ML Large Cap Growth
BR Large Cap Growth
Doll
BR Large Cap Value
ML Large Cap Value
BR Large Cap Value
Doll
ML Inflation Protected
BR Inflation Protected
BR Inflation Protected
Spodek/Weinstein
ML Intermediate Term
ML Core Bond Fund
BR Bond Fund
Anderson/Amero/Marra/Phillips
ML Short Term U.S. Government
BR Low Duration
BR Low Duration
Anderson/Amero/Kopstein
ML U.S. Government
BR Government Income
BR Government Income
Phillips/Pellicciaro
ML U.S. High Yield
BR High Yield
BR High Yield
Gary/Amero
BR New Jersey Tax-Free
ML New Jersey Municipal
BR New Jersey Municipal
Jaeckel
BR Pennsylvania Tax-Free
ML Pennsylvania Municipal
BR Pennsylvania Municipal
Bock
BR UltraShort Municipal
ML Short Term Municipal
BR Short Term Municipal
Hayes
Taxable Fixed Income Funds
Municipal Funds
PORTFOLIO IMPACTED
ACQUIRED BY
PORTFOLIO MANAGEMENT TEAM
Equity Funds
- This slide summarizes the previous slides on fund mergers, presented in a different way.
Additional Name, Portfolio Manager and/or Investment Changes
As a result of the announced combination of BLK and MLIM, we evaluated the names of funds
All MLIM funds will be rebranded as BlackRock
We are recommending a number of name changes to assist in competitive positioning
Certain funds portfolio management teams will change or have additional members named
Selected municipal funds will expand their guidelines to have greater latitude to purchase AMT bonds and/or
below investment grade municipal bonds
1 It is anticipated that following the closing of the MLIM and BlackRock transaction, Matthew Marra and Andrew J. Phillips
will join Keith Anderson and Scott Amero in the day-to-day
management of the Portfolios
2 Portfolio guidelines will be expanded to allow greater latitude to purchase AMT bonds (shareholder vote required) and bonds rated below investment grade
3 Portfolio guidelines will be expanded to allow the purchase of bonds rated below investment grade.
12
PORTFOLIO IMPACTED
NAME CHANGE
PORTFOLIO MANAGEMENT
TEAM
ML Global Equity Opportunities
BR Global Dynamic Equity
No Change
ML Small Cap Growth
BR Small Cap Growth II
Wagner/Leary/Thut
BR Health Sciences
BR Health Sciences Opportunities
No Change
ML High Income
BR High Income
Gary/Amero
ML Real Investment
BR Real Investment
Spodek/Weinstein
ML Low Duration
BR Short Term Bond
Anderson/Amero/Kopstein
ML World Income
BR World Income
Gordon/Hussain/Gary
ML Core Bond
BR Bond Fund
Anderson/Amero/Marra/Phillips
BR Intermediate Bond
BR Intermediate Bond II
No Change(1)
BR Intermediate PLUS Bond
BR Intermediate Bond
No Change(1)
BR Core Bond Total Return
BR Total Return II
No Change(1)
BR Core PLUS Total Return
BR Total Return
No Change(1)
BR Delaware Tax-Free(2)
BR Delaware Municipal
O’Connor
BR Kentucky Tax-Free(2)
BR Kentucky Municipal
O’Connor
BR Ohio Tax-Free(2)
BR Ohio Municipal
O’Connor
BR Tax-Free Income(3)
BR AMT-Free Municipal
O’Connor
Equity Funds
Taxable Fixed Income Funds
Municipal Funds
- All of the MLIM funds will be rebranded with the BlackRock name.
- Proud of the independent asset manager name.
- BlackRock’s name resonates as a leader in the fixed income and institutional markets. The power of the BlackRock brand will be leveraged to our retail end, particularly in our third party efforts.
Combined Closed-End Fund Complex
Combined closed-end fund complex with over $44 billion in assets
2nd largest closed-end fund provider
Resulting business has significant scale and breadth of product
13 equity funds
24 taxable fixed income funds
67 municipal funds
Committed to continuing leadership and innovation
Continued focus on supporting the funds in the secondary market
Dedicated team of closed-end fund professionals
Focused on building relationships with closed-end fund
research analysts
Maintain strong relationships with financial advisors,
institutions, and broker-dealer home offices
Data as of 3/31/06
$44 Billion Combined AUM
As of 3/31/06
13
- Like our open-ends, we have a large suite of offerings on the closed-end side.
- The new BRK will be the #2 provider of closed-end funds in the world.
- Our combined closed-end fund complex has over $44 billion in assets, including tax-exempt, taxable, municipals and a small amount of equity funds.
- We will have a continued and committed focus on supporting the funds in the secondary market. Likewise in the open-end side, we look to provide best practices in dividend policies, marketing, etc.
Closed-End Fund Line-Up*
* Names reflect BlackRock branding post transaction.
1 Shareholders are being asked to approve a merger into the open-end EuroFund.
1
14
BlackRock Apex Municipal Fund, Inc.
APX
BlackRock Florida Municipal Income Trust
BBF
BlackRock Muni New York Intermediate Duration Fund, Inc.
MJI
BlackRock Investment Quality Municipal Trust
BKN
BlackRock Florida Municipal Bond Trust
BIE
BlackRock New York Investment Quality Municipal Trust
RNY
BlackRock Muni Intermediate Duration Fund, Inc.
MUI
BlackRock Florida Investment Quality Municipal Trust
RFA
BlackRock New York Municipal Bond Trust
BQH
BlackRock MuniAssets Fund, Inc.
MUA
BlackRock MuniYield Florida Fund, Inc.
MYF
BlackRock New York Municipal Income Trust
BNY
BlackRock Municipal Bond Trust
BBK
BlackRock New York Municipal Income Trust II
BFY
BlackRock Municipal Income Trust
BFK
BlackRock Florida Insured Municipal Income Trust
BAF
BlackRock Municipal Income Trust II
BLE
BlackRock MuniHoldings Florida Insured Fund, Inc.
MFL
BlackRock MuniHoldings New York Insured Fund, Inc.
MUJ
BlackRock MuniEnhanced Fund, Inc.
MEN
BlackRock MuniYield Florida Insured Fund, Inc.
MFT
BlackRock MuniYield New York Insured Fund, Inc.
MYJ
BlackRock MuniHoldings Fund II, Inc.
MUH
BlackRock New York Insured Municipal Income Trust
BSE
BlackRock MuniHoldings Fund, Inc.
MHD
BlackRock Florida Municipal 2020 Term Trust
BFO
BlackRock MuniVest Fund II, Inc.
MVT
BlackRock Florida Insured Municipal 2008 Term Trust
BRF
BlackRock New York Insured Municipal 2008 Term Trust
BLN
BlackRock MuniVest Fund, Inc.
MVF
BlackRock New York Municipal 2018 Term Trust
BLH
BlackRock MuniYield Fund, Inc.
MYD
BlackRock California Municipal Income Trust II
BCL
BlackRock MuniYield Quality Fund II, Inc.
MQT
BlackRock California Municipal Income Trust
BFZ
BlackRock MuniYield New Jersey Fund, Inc.
MYN
BlackRock MuniYield Quality Fund, Inc.
MQY
BlackRock California Municipal Bond Trust
BZA
BlackRock New Jersey Investment Quality Municipal Trust
RNJ
BlackRock Strategic Municipal Trust
BSD
BlackRock California Investment Quality Municipal Trust
RAA
BlackRock New Jersey Municipal Bond Trust
BLJ
BlackRock Long-Term Municipal Advantage Trust
BTA
BlackRock MuniHoldings California Insured Fund, Inc.
MUC
BlackRock New Jersey Municipal Income Trust
BNJ
BlackRock MuniYield California Fund, Inc.
MYC
BlackRock MuniHoldings Insured Fund II, Inc.
MUE
BlackRock MuniHoldings New Jersey Insured Fund, Inc.
MHN
BlackRock MuniHoldings Insured Fund, Inc.
MUS
BlackRock California Insured Municipal Income Trust
BCK
BlackRock MuniYield New Jersey Insured Fund, Inc.
MNE
BlackRock Insured Municipal Income Trust
BYM
BlackRock MuniYield California Insured Fund, Inc.
MCA
BlackRock MuniYield Insured Fund, Inc.
MYI
BlackRock Maryland Municipal Bond Trust
BZM
BlackRock California Municipal 2018 Term Trust
BJZ
BlackRock MuniYield Arizona Fund, Inc.
MZA
BlackRock Insured Municipal Term Trust
BMT
BlackRock California insured Municipal 2008 Term Trust
BFC
BlackRock MuniYield Michigan Insured Fund II, Inc.
MYM
BlackRock Insured Municipal 2008 Term Trust
BRM
BlackRock MuniYield Michigan Insured Fund, Inc.
MIY
BlackRock Municipal 2018 Term Trust
BPK
BlackRock Pennsylvania Strategic Municipal Trust
BPS
BlackRock Municipal 2020 Term Trust
BKK
BlackRock Massachussetts Health and Education
MHE
BlackRock Municipal Target Term Trust
BMN
BlackRock Virginia Municipal Bond Trust
BHV
Equity Funds
BlackRock Global Resources Trust
BGR
BlackRock Core Bond Trust
BHK
BlackRock Senior High Income Fund, Inc.
ARK
BlackRock World Investment Trust
BWC
BlackRock Income Opportunity Trust Inc.
BNA
BlackRock Floating Rate Income Strategies Fund, Inc.
FRA
BlackRock S&P Quality Ranking Global Equity Managed
BQY
BlackRock Diversified Income Strategies Fund, Inc.
DVF
BlackRock Floating Rate Income Strategies Fund II, Inc.
FRB
BlackRock Global Equity Opportunities Trust
BOE
BlackRock Enhanced Government Fund, Inc.
EGF
BlackRock High Yield Trust
BHY
BlackRock Dividend Achievers™ Trust
BDV
BlackRock Capital & Income Strategies Fund, Inc.
CII
BlackRock Corporate High Yield Fund, Inc.
COY
BlackRock Enhanced Dividend Achievers™ Trust
BDJ
BlackRock Limited Duration Income Trust
BLW
BlackRock Corporate High Yield Fund III, Inc.
CYE
BlackRock Strategic Dividend Achievers™ Trust
BSD
BlackRock Investment Grade 2009 Term Trust
BCT
BlackRock Corporate High Yield Fund V, Inc.
HYV
BlackRock Enhanced Equity Yield Fund, Inc.
EEF
BlackRock Income Trust
BKT
BlackRock Corporate High Yield Fund VI, Inc.
HYT
BlackRock Enhanced Equity Yield & Premium Fund, Inc.
ECV
BlackRock Debt Strategies Fund, Inc.
DSU
BlackRock High Income Shares
HIS
BlackRock S&P 500 Protected Equity Fund, Inc.
PEFX
BlackRock Preferred Opportunity Trust
BPP
BlackRock Strategic Bond Trust
BHD
BlackRock Europe Fund, Inc.
EF
BlackRock Preferred Income Strategies Fund, Inc.
PSY
BlackRock Global Floating Rate Income Tust
BGT
BlackRock Health Sciences Trust
BME
BlackRock Preferred & Corp. Income Strategies Fund, Inc.
PSW
New Jersey Insured Municipal Funds
Other State Funds
National Municipal Funds
National Insured Municipal Funds
New York Municipal Funds
New York Insured Municipal Funds
New York Municipal Term Trusts
New Jersey Municipal Funds
Florida Municipal Funds
Florida Insured Municipal Funds
Florida Municipal Term Trusts
California Municipal Funds
Taxable Fixed Income Funds
California Insured Municipal Funds
Taxable Fixed Income Funds
California Municipal Term Trusts
National Municipal Term Trust Funds
- Here is a full closed-end line up
- You’ll notice some very specific strategies– as we get to know our clients and their investment needs, we continue to provide many choices.
Current MLIM Closed-End Funds with Portfolio Manager Changes
15
Fund
Ticker
Portfolio Managers
Debt Strategies Fund, Inc.
DSU
Booth (ML)/Williams
Floating Rate Income Strategies Fund, Inc.
FRA
Booth (ML)/Williams
Floating Rate Income Strategies Fund II, Inc.
FRB
Booth (ML)/Williams
Senior High Income Portfolio, Inc.
ARK
Booth (ML)/Williams
Diversified Income Strategies Portfolio, Inc.
DVF
Booth (ML)/Williams
Corporate High Yield Fund III, Inc.
CYE
Gary/Amero
Corporate High Yield Fund V, Inc.
HYV
Gary/Amero
Corporate High Yield Fund VI, Inc.
HYT
Gary/Amero
Corporate High Yield Fund, Inc.
COY
Gary/Amero
Capital and Income Strategies Fund, Inc.
CII
Burger (ML)/Amero/Chen
Preferred Income Strategies Fund, Inc.
PSY
Burger (ML)/Amero/Chen
Preferred and Corporate Income Strategies Fund, Inc.
PSW
Burger (ML)/Amero/Chen
Enhanced Government Fund, Inc.
EGF
Phillips/Pellicciaro/Spodek
- This slide illustrates MLIM’s current closed-end funds with portfolio manager changes.
Current BlackRock Closed-End Funds with Portfolio Manager Changes
16
Fund
Ticker
BlackRock Long-Term Municipal Advantage Trust
BTA
O'Connor
BlackRock Municipal Income Trust II
BLE
O'Connor
BlackRock Municipal Bond Trust
BBK
O'Connor
BlackRock Municipal Income Trust
BFK
O'Connor
BlackRock Strategic Municipal Trust
BSD
O'Connor
BlackRock Investment Quality Municipal Trust Inc.
BKN
O'Connor
BlackRock Insured Municipal Income Trust
BYM
DiMella
BlackRock Municipal 2020 Term Trust
BKK
O'Connor
BlackRock Municipal 2018 Term Trust
BPK
O'Connor
BlackRock Insured Municipal 2008 Term Trust Inc.
BRM
DiMella
BlackRock Insured Municipal Term Trust Inc. (2010)
BMT
DiMella
BlackRock Municipal Target Term Trust Inc. (2006)
BMN
DiMella
BlackRock California Insured Municipal Income Trust
BCK
O'Connor
BlackRock California Municipal Income Trust II
BCL
O'Connor
BlackRock California Municipal Bond Trust
BZA
O'Connor
BlackRock California Municipal Income Trust
BFZ
O'Connor
BlackRock California Investment Quality Municipal Trust Inc.
RAA
O'Connor
BlackRock Florida Insured Municipal Income Trust
BAF
Sneeden
BlackRock Florida Municipal Bond Trust
BIE
Sneeden
BlackRock Florida Municipal Income Trust
BBF
Sneeden
BlackRock Florida Investment Quality Municipal Trust
RFA
Sneeden
BlackRock Maryland Municipal Bond Trust
BZM
O'Connor
BlackRock New Jersey Municipal Bond Trust
BLJ
Jaeckel
BlackRock New Jersey Municipal Income Trust
BNJ
Jaeckel
BlackRock New Jersey Investment Quality Municipal Trust
RNJ
Jaeckel
BlackRock New York Insured Municipal Income Trust
BSE
O'Connor/Browse
BlackRock New York Municipal Income Trust II
BFY
O'Connor/Browse
BlackRock New York Municipal Bond Trust
BQH
O'Connor/Browse
BlackRock New York Municipal Income Trust
BNY
O'Connor/Browse
BlackRock New York Investment Quality Municipal Trust Inc.
RNY
O'Connor/Browse
BlackRock Pennsylvania Strategic Municipal Trust
BPS
Bock
BlackRock Virginia Municipal Bond Trust
BHV
O'Connor
BlackRock California Municipal 2018 Term Trust
BJZ
O'Connor
BlackRock California Insured Municipal 2008 Term Trust Inc.
BFC
O'Connor
BlackRock Florida Municipal 2020 Term Trust
BFO
Sneeden
BlackRock Florida Insured Municipal 2008 Term Trust
BRF
Sneeden
BlackRock New York Municipal 2018 Term Trust
BLH
O'Connor
BlackRock New York Insured Municipal 2008 Term Trust Inc.
BLN
O'Connor
Portfolio Managers
- A continuation…
- As previously mentioned, Bob DiMella and John Loffredo will be heading the municipals.
- Aren’t too many portfolio manager changes.
Under SEC proxy rules and firm policy, FAs & support personnel – anyone for that matter - may only discuss the proxy once your clients have received proxy material. At that point, you may not advise them how to vote or try to persuade them how to vote. You may answer factual questions about the transaction or about the mechanics of voting proxies.
Disclosure
In connection with the proposed transaction, a registration statement of New BlackRock Inc. (“New BlackRock”) which
includes a preliminary proxy statement of New BlackRock and other
materials have been filed with the Securities and
Exchange Commission (the “SEC”) and are publicly available. Investors are urged to read the registration statement and
other materials when they are available because they contain
important information. Investors will be able to obtain free
copies of the registration statement and proxy statement, when they become available, as well as other filings containing
information about BlackRock and Merrill Lynch & Co., Inc. (“Merrill
Lynch”), at the SEC’s Internet site (http://www.sec.gov).
Merrill Lynch, BlackRock and their respective directors and executive officers and other members of management and
employees may be deemed to be participants in the solicitation of proxies from
BlackRock stockholders in respect of the
proposed transaction. Information regarding Merrill Lynch’s directors and executive officers is available in its proxy
statement for its 2006 annual meeting of stockholders, dated March 10, 2006, and information
regarding BlackRock’s
directors and executive officers is available in its proxy statement for its 2006 annual meeting of stockholders, dated April
28, 2006. Additional information regarding the interests of such potential participants will be
included in the registration
statement and the other relevant documents filed with the SEC when they become available.
# # #
Cautionary Language Concerning Forward-Looking Statements
Information contained in this document may contain forward-looking
statements, including, for example, statements about
management expectations, strategic objectives, growth opportunities, business prospects and regulatory proceedings,
transaction synergies, and other similar matters. These forward-looking statements
are not statements of historical facts and
represent only Merrill Lynch’s beliefs regarding future performance, which is inherently uncertain. There are a variety of
factors, many of which are beyond Merrill Lynch’s control, which affect the
operations, performance, business strategy and
results and could cause actual results and experience to differ materially from the expectations and objectives expressed in
any forward-looking statements. Investors are cautioned not to place undue reliance
on forward-looking statements, which
speak only to the date on which they are made, and may be impacted by a variety of factors that are beyond Merrill Lynch’s
and BlackRock’s control. Merrill Lynch and BlackRock do not undertake to update
these statements to reflect the impact of
circumstances or events that arise after the date on which they were made. Investors should consult Merrill Lynch’s and
BlackRock’s reports filed with the SEC for any additional information.
17
| [LOGO] Merrill Lynch Investment Managers |
June 20, 2006
Dear Colleague:
In February, we announced our intention to combine our investment management business with BlackRock, with an anticipated closing date at the end of the third quarter of 2006. Once finalized, the combined organization will be responsible for managing approximately $1 trillion in client assets. We will offer clients worldwide a full range of equity, fixed income, liquidity and alternative investment products.
Since the announcement, we have been establishing teams, products and business models in an effort to create a firm that incorporates the best practices in the industry. While everything is still subject to closing, we thought it would be helpful to provide you with an update on our progress thus far.
Governance
The new BlackRock organization will be an independent firm in terms of both ownership and governance. BlackRock will remain a publicly traded asset management company for which Larry Fink will continue as Chairman and CEO. There will be no single majority shareholder, and the board will continue to have a majority of independent directors. We believe this structure will enable us to continue to focus on building a premier global asset management company. In reviewing the new structure, we also decided to formally announce the creation of an Executive Committee charged with setting the strategic direction of the firm and streamlining decision-making as the business grows in scope and complexity. The Executive Committee is comprised of 10 senior BlackRock executives (including seven founders) and upon closing, two senior executives of Merrill Lynch Investment Managers (MLIM®) are expected to join this committee.
Portfolio Management
BlackRock and MLIM share a similar business philosophy in equities, which makes it relatively straightforward to combine our equity teams under Bob Doll’s leadership as Global CIO for equities. As you know, Bob has over 26 years of investment experience and currently manages several successful large cap portfolios at MLIM, in addition to serving as President and CIO. We are excited to have a global CIO for equities with such exceptional credentials. Each current BlackRock and MLIM dedicated equity team will continue to manage its products utilizing its current investment philosophy and process. The combined firm will manage in excess of $300 billion across a wide range of equity products, including large cap, mid cap, small cap, global and sector mandates.
We are pleased to report that Keith Anderson, a founder of BlackRock’s fixed income team with over 20 years of investment experience, will continue as Global CIO for Fixed Income and Scott Amero will continue as Co-Head of the fixed income team. The combined firm will manage over $400 billion in fixed income assets across a variety of mandates. The combined firm will offer several new strategies, and the team is being selectively expanded to add resources and expertise. Finally, our process will be enhanced with additional insights globally and open sharing of information on trends, flows, sectors and companies.
Private Client Business
Post-merger, BlackRock will be an industry leader in U.S. retail asset management with over $270 billion in assets invested for over 10 million individual investors. Our product line will feature considerable strength in equity, fixed income and liquidity products. The firm will manage $98 billion in open-end and variable funds, $44 billion in closed-end funds and $41 billion in separately managed accounts. Additionally, the firm will act as sub-adviser to $37 billion of assets and manage $48 billion in open-end liquidity funds.* We are proud to report that 84 funds in the combined open-end and closed-end fund families have Morningstar Ratings of 4 or 5 stars as of May 31, 2006.†
The combined firm’s extensive resources, including BlackRock’s award-winning call center and shareholder statements, will allow BlackRock to focus on serving financial advisors and their individual clients, and other financial intermediaries. We also anticipate ongoing product innovations as we continue to serve our investors’ needs.
Mutual Fund Family
We are pleased to announce our mutual fund line-up for the combined firm, which we believe will offer investors world-class products in 87 funds across multiple asset classes. The new fund family, which will be branded “BlackRock,” will include a number of high-performing large cap equity funds, multiple global funds and a strong sector fund line-up, including Energy and Health Sciences. Our equity fund AUM will total more than $70 billion. Additionally, we will feature 33 fixed income products with over $20 billion in AUM, inclusive of BlackRock’s flagship taxable fixed income funds and strong performing municipal bond funds.
We have filed several fund reorganization proxy statements (N-14s) with the SEC as part of our initiative to consolidate certain comparable MLIM and BlackRock mutual funds. These consolidations are designed to reduce overlap in the product range, and they include consolidations of MLIM funds into BlackRock funds, BlackRock funds into MLIM funds, and MLIM funds into other MLIM funds. Exhibit A shows the complete open-end fund family as we expect it to look as of October 1, 2006.
As part of this process, we are changing the names of selected funds and naming new portfolio managers of selected funds. Exhibit B identifies the funds that will have changes.
Closed-End Funds
The combined closed-end fund family will feature over 100 funds with approximately $44 billion in assets. The family will include equity, taxable and tax-exempt funds and benefit from extensive resources focused on supporting the funds in the secondary market. As part of the process of combining the firms, we will make some changes to portfolio managers on selected funds, which are identified in Exhibit C.
Proxy Solicitation
During the week of June 19, both BlackRock fund shareholders and MLIM fund shareholders will be mailed proxy materials asking them to vote on, among other things, new investment advisory agreements, a new investment sub-advisory agreement for certain funds and for certain BlackRock municipal funds, a fundamental investment policy change.
Additionally, shareholders of certain funds will be sent proxies asking them to approve the reorganization of selected BlackRock and MLIM funds. Only shareholders of the funds that are being acquired are required to approve these changes.
Exhibit D presents commonly asked questions and answers to help you respond to any inquiries you may receive.
Over the coming weeks, we will continue to update you on our progress and provide you with the information and tools you need to serve your clients. In early July, we will provide to all operations contacts details on new CUSIPs, fund symbols and fund rule/service changes in anticipation of fund mergers to be effective in mid-October.
Please know that we remain focused on investment performance and client service, as we recognize the importance of the trust you have placed with us. We appreciate your business and hope to continue to serve you and your clients for many years. As always, please contact your relationship manager if you have any additional questions around our upcoming combination with BlackRock.
Sincerely,
/s/ Frank Porcelli
Frank Porcelli
Chief Operating Officer
Merrill Lynch Investment Managers, Americas
Attachments (4)
| * | Data as of 3.31.06. |
| † | Overall Morningstar Ratings are based on historical risk-adjusted performance and are derived from a weighted average of the funds’ 3-, 5- and 10-year Morningstar Rating Metrics. Past performance is no guarantee of future results. |
EXHIBIT A
PROPOSED OPEN-END FUND FAMILY AS OF OCTOBER 2006
|
EQUITY |
|||
|
Domestic Equity |
Value |
Core |
Growth |
|
|
|||
|
Large |
Large Cap Value |
Large Cap Core |
Large Cap Growth |
|
|
Basic Value |
S&P 500 Fund |
Fundamental Growth |
|
|
Focus Value |
Investment Trust |
Focus 20 |
|
|
Equity Dividend Fund |
Index Equity |
Legacy |
|
|
|
Exchange |
|
|
|
|||
|
Mid |
Mid-Cap Value |
US Opportunities |
Mid-Cap Growth |
|
|
Mid Cap Value Opps |
|
|
|
|
|||
|
SMID |
Aurora |
|
SMID Growth |
|
|
|
|
|
|
|
|||
|
Small |
Value Opportunities |
Small Cap Index |
Small Cap Growth |
|
|
Small Cap Value1 |
Small Cap Core |
Small Cap Growth II |
|
|
|
|
|
|
|
|||
|
Global & International |
Value |
Core |
Growth |
|
|
|||
|
Large |
Global Value |
International |
Global Growth |
|
|
International Value |
International Index |
Global Opps |
|
|
|
Global Dynamic Equity |
|
|
|
|
|
|
|
|
|||
|
Small |
Developing Capital Markets |
|
Global Small Cap |
|
|
|
|
Intl. Opps |
|
|
|||
|
Specialty |
|||
|
|
|||
|
Other |
Global Technology |
Basic Value Prin. Prtd.1 |
Global Science & Tech |
|
|
Global Financial Svcs. |
Real Investment |
Utilities and Telecom |
|
|
All-Cap Global Resources |
Fndmntl Gr. Prin. Prtd.1 |
Global Resources1 |
|
|
Healthcare |
Natural Resources |
Health Sciences Opportunities |
|
|
|
|
Core Prin. Protected1 |
|
|
|||
|
Blended |
|||
|
|
|||
|
|
Global Allocation |
Balanced Capital |
Asset Allocation |
|
|
|||
|
Regional |
|||
|
|
|||
|
|
EuroFund |
Latin America |
Pacific |
|
FIXED INCOME |
|||
|
|
Short |
Intermediate/Long |
Government |
|
|
|||
|
Fixed Income |
Enhanced Income |
Intermediate Bond |
Intermediate Govt. |
|
|
Short Term Bond |
Intermediate Bond II |
GNMA |
|
|
Low Duration |
Total Return |
GNMA Accumulation |
|
|
Sr. Float |
Bond Fund |
Government Income |
|
|
Sr. Float II |
Total Return II |
|
|
|
|
Managed Income |
|
|
|
|
Aggregate Bond Index |
|
|
|
|
|
|
|
|
|||
|
|
Tips |
High Yield |
Global |
|
|
|||
|
Other |
Inflation Protected |
High Yield |
International Bond |
|
|
|
High Income |
World Income |
|
|
|
|
|
|
|
|||
|
|
Short |
National |
State Specific |
|
|
|||
|
Municipals |
Short Term Muni |
Muni Int Term |
California Muni |
|
|
|
Insured Muni |
Delaware Muni |
|
|
|
National Muni |
Florida Muni |
|
|
|
AMT-Free Muni |
Kentucky Muni |
|
|
|
|
New Jersey Muni |
|
|
|
|
New York Muni |
|
|
|
|
Ohio Muni |
|
|
|
|
Pennsylvania Muni |
|
|
|||
| 1 | Fund closed to new investors. Bold denotes Morningstar 4 and 5 star Overall Rating as of 5.31.06. |
For Informational Purposes Only. This material is not intended to be a solicitation for any investment product referenced herein.
EXHIBIT B
PROPOSED FUND REORGANIZATIONS
| PORTFOLIO IMPACTED | ACQUIRED BY | RESULTING FUND NAME |
PORTFOLIO MANAGEMENT TEAM |
|
Equity Funds |
|||
|
|
|||
|
ML Strategy All Equity |
ML Large Cap Core |
BR Large Cap Core |
Doll |
|
ML Strategy Growth & Income |
ML Global Allocation |
BR Global Allocation |
Stattman/Chamby |
|
ML Strategy Long-Term Growth |
ML Global Allocation |
BR Global Allocation |
Stattman/Chamby |
|
ML Disciplined Equity |
ML Large Cap Core |
BR Large Cap Core |
Doll |
|
BR Dividend Achievers™ |
ML Equity Dividend |
BR Equity Dividend |
Shearer |
|
BR Large Cap Growth |
ML Large Cap Growth |
BR Large Cap Growth |
Doll |
|
BR Large Cap Value |
ML Large Cap Value |
BR Large Cap Value |
Doll |
|
|
|||
| Taxable Fixed Income Funds | |||
|
|
|||
|
ML Inflation Protected |
BR Inflation Protected |
BR Inflation Protected |
Spodek/Weinstein |
|
ML Intermediate Term |
ML Core Bond |
BR Bond |
Anderson/Amero/Marra/Phillips |
|
ML Short Term U.S. Government |
BR Low Duration |
BR Low Duration |
Anderson/Amero/Kopstein |
|
ML U.S. Government |
BR Government Income |
BR Government Income |
Phillips/Pellicciaro |
|
ML U.S. High Yield |
BR High Yield |
BR High Yield |
Gary/Amero |
|
|
|||
| Municipal Funds | |||
|
|
|||
|
BR New Jersey Tax-Free |
ML New Jersey Municipal |
BR New Jersey Municipal |
Jaeckel |
|
BR Pennsylvania Tax-Free |
ML Pennsylvania Municipal |
BR Pennsylvania Municipal |
Bock |
|
BR UltraShort Municipal |
ML Short Term Municipal |
BR Short Term Municipal |
Hayes |
|
|
|||
PROPOSED MUTUAL FUND NAME AND/OR PORTFOLIO MANAGER CHANGES
| PORTFOLIO IMPACTED | NAME CHANGE | PORTFOLIO MANAGEMENT TEAM |
| Equity Funds | ||
|
|
||
|
ML Global Equity Opportunities |
BR Global Dynamic Equity |
No Change |
|
ML Small Cap Growth |
BR Small Cap Growth II |
Wagner/Leary/Thut |
|
BR Health Sciences |
BR Health Sciences Opportunities |
No Change |
|
|
||
| Taxable Fixed Income Funds | ||
|
|
||
|
ML High Income |
BR High Income |
Gary/Amero |
|
ML Real Investment |
BR Real Investment |
Spodek/Weinstein |
|
ML Low Duration |
BR Short Term Bond |
Anderson/Amero/Kopstein |
|
ML World Income |
BR World Income |
Gordon/Hussain/Gary |
|
ML Core Bond |
BR Bond |
Anderson/Amero/Marra/Phillips |
|
BR Intermediate Bond |
BR Intermediate Bond II |
No Change1 |
|
BR Intermediate PLUS Bond |
BR Intermediate Bond |
No Change1 |
|
BR Core Bond Total Return |
BR Total Return II |
No Change1 |
|
BR Core PLUS Total Return |
BR Total Return |
No Change1 |
|
|
||
| Municipal Funds | ||
|
|
||
|
BR Delaware Tax-Free2 |
BR Delaware Municipal |
O’Connor |
|
BR Kentucky Tax-Free2 |
BR Kentucky Municipal |
O’Connor |
|
BR Ohio Tax-Free2 |
BR Ohio Municipal |
O’Connor |
|
BR Tax-Free Income3 |
BR AMT-Free Municipal |
O’Connor |
|
|
||
| 1 | It is anticipated that following the closing of the MLIM and BlackRock transaction, Matthew Marra and Andrew J. Phillips will join Keith Anderson and Scott Amero in the day-to-day management of the portfolios. |
| 2 | Portfolio guidelines will be expanded to allow greater latitude to purchase AMT bonds (shareholder vote required) and bonds rated below investment grade. |
| 3 | Portfolio guidelines will be expanded to allow bonds rated below investment grade. |
For Informational Purposes Only. This material is not intended to be a solicitation for any investment product referenced herein.
EXHIBIT C
CLOSED-END FUNDS WITH PORTFOLIO MANAGER AND NAME CHANGES
|
NATIONAL MUNICIPAL PORTFOLIOS |
PM TEAM |
|
BlackRock Long-Term Municipal Advantage Trust |
O’Connor |
|
BlackRock Municipal Income Trust II |
O’Connor |
|
BlackRock Municipal Bond Trust |
O’Connor |
|
BlackRock Municipal Income Trust |
O’Connor |
|
BlackRock Strategic Municipal Trust |
O’Connor |
|
BlackRock Investment Quality Municipal Trust Inc. |
O’Connor |
|
BlackRock Insured Municipal Income Trust |
DiMella |
|
NATIONAL MUNICIPAL TERM TRUSTS |
PM TEAM |
|
BlackRock Insured Municipal 2008 Term Trust Inc. |
DiMella |
|
BlackRock Municipal 2020 Term Trust |
O’Connor |
|
BlackRock Municipal 2018 Term Trust |
O’Connor |
|
BlackRock Insured Municipal Term Trust Inc. (2010) |
DiMella |
|
BlackRock Municipal Target Term Trust Inc. (2006) |
DiMella |
|
STATE-SPECIFIC MUNICIPAL PORTFOLIOS |
PM TEAM |
|
BlackRock California Insured Municipal Income Trust |
O’Connor |
|
BlackRock California Municipal Income Trust II |
O’Connor |
|
BlackRock California Municipal Bond Trust |
O’Connor |
|
BlackRock California Municipal Income Trust |
O’Connor |
|
BlackRock California Investment Quality Municipal Trust, Inc. |
O’Connor |
|
BlackRock Florida Insured Municipal Income Trust |
Sneeden |
|
BlackRock Florida Municipal Bond Trust |
Sneeden |
|
BlackRock Florida Municipal Income Trust |
Sneeden |
|
BlackRock Florida Investment Quality Municipal Trust |
Sneeden |
|
BlackRock Maryland Municipal Bond Trust |
O’Connor |
|
BlackRock New Jersey Municipal Bond Trust |
Jaeckel |
|
BlackRock New Jersey Municipal Income Trust |
Jaeckel |
|
BlackRock New Jersey Investment Quality Municipal Trust |
Jaeckel |
|
BlackRock New York Insured Municipal Income Trust |
O’Connor, Browse |
|
BlackRock New York Municipal Income Trust II |
O’Connor, Browse |
|
BlackRock New York Municipal Bond Trust |
O’Connor, Browse |
|
BlackRock New York Municipal Income Trust |
O’Connor, Browse |
|
BlackRock New York Investment Quality Municipal Trust Inc. |
O’Connor, Browse |
|
BlackRock Pennsylvania Strategic Municipal Trust |
Bock |
|
BlackRock Virginia Municipal Bond Trust |
O’Connor |
|
STATE-SPECIFIC MUNICIPAL TERM TRUSTS |
PM TEAM |
|
BlackRock California Municipal 2018 Term Trust |
O’Connor |
|
BlackRock California Insured Municipal 2008 Term Trust Inc. |
O’Connor |
|
BlackRock Florida Municipal 2020 Term Trust |
Sneeden |
|
BlackRock Florida Insured Municipal 2008 Term Trust |
Sneeden |
|
BlackRock New York Municipal 2018 Term Trust |
O’Connor |
|
BlackRock New York Insured Municipal 2008 Term Trust Inc. |
O’Connor |
|
|
|
For Informational Purposes Only. This material is not intended to be a solicitation for any investment product referenced herein.
EXHIBIT D
This brief Q&A is provided to assist financial professionals in best answering questions their clients might have regarding an upcoming proxy solicitation and other transaction-related information.
QUESTIONS RELATING TO NEW ADVISORY AGREEMENTS
| Q. | Why am I being asked to vote on a new advisory agreement and sub-advisory agreement, if applicable? |
| A. | BlackRock and Merrill Lynch announced on February 15, 2006 that they had reached an agreement pursuant to which Merrill Lynch will contribute its investment management business, Merrill Lynch Investment Managers (“MLIM”), to BlackRock. With this change, the existing MLIM advisory agreements will terminate at the closing of the transaction. Therefore, new advisory agreements must be approved by shareholders. |
| Q. | What is the rationale for the merger of MLIM to BlackRock? |
| A. | The new company will offer a full range of equity, fixed income, cash management and alternative investment products with strong representation in both retail and institutional channels, in the United States and internationally. |
| Q. | What does the combination of MLIM and BlackRock mean to shareholders? |
| A. | The new company will offer you even greater access to a well-diversified product mix across asset classes and an enhanced ability to serve your investment needs. |
| Q. | How does the proposed new investment advisory agreement for my Portfolio differ from the current agreement? |
| A. | The advisory fees payable by each Portfolio to its investment adviser and services provided under its new investment advisory agreement are identical to those under the current agreement. While the other terms of the new investment advisory agreement generally are substantially similar to those of the current agreement, certain changes are being proposed in the new investment advisory agreement in order to standardize terms and language across all BlackRock- and MLIM-sponsored funds. |
| Q. | How does the proposed new sub-advisory agreement for my Portfolio differ from the current agreement? |
| A. | The sub-advisory fees payable by the adviser to the sub-adviser and services provided under each new sub-advisory agreement are identical to those under the current agreements. While the other terms of the new sub-advisory agreements generally are substantially similar to those of the current agreements, certain changes are being proposed in the new sub-advisory agreements in order to standardize terms and language across all BlackRock- and MLIM-sponsored funds. |
| Q. | Will my Portfolio’s total fees for advisory services increase? |
| A. | No. The total fees payable under your fund’s current investment advisory agreement will remain the same. Any additional fees incurred under the new sub-advisory agreement will be paid by your fund’s advisor at no additional cost to you or your Portfolio |
For Informational Purposes Only. This material is not intended to be a solicitation for any investment product referenced herein.
QUESTIONS RELATING TO FUND REORGANIZATIONS
| Q. | When will the reorganization of BlackRock and MLIM funds occur? |
| A. | If approved by shareholders, the reorganization is expected to occur contemporaneously, or shortly thereafter, with the combination of MLIM and BlackRock, which is expected to occur at the end of the third quarter of 2006. |
| Q. | How will the reorganization affect fund shareholders? |
| A. | If the proposed reorganization of funds is approved, the assets and certain stated liabilities of certain Merrill Lynch and BlackRock funds will be combined with those of the Surviving Merrill Lynch or BlackRock funds, and shareholders will receive shares of the Surviving Fund. Shareholders will receive the same or a similar class of shares of the Surviving Fund as they currently hold of the Merging Fund. The aggregate net asset value of the shares they receive in the reorganization will equal the aggregate net asset value of the shares they own immediately prior to the reorganization. |
| Q. | Will shareholders have to pay any sales load, commission or other similar fee in connection with the reorganization? |
| A. | No, shareholders will not pay any sales load, commission or other similar fee in connection with the reorganization. |
| Q. | Will shareholders have to pay any federal taxes as a result of the reorganization? |
| A. | The reorganization is expected to qualify as a tax-free “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended. |
| Q. | Who will be responsible for leading the portfolio management teams of the BlackRock Funds after the reorganization? |
| A. | Overall, the funds’ portfolio management teams are expected to be led by a combination of BlackRock and MLIM managers. See the attached exhibits for more information on the proposed fund line-up and portfolio management teams after the reorganization. |
For Informational Purposes Only. This material is not intended to be a solicitation for any investment product referenced herein.
DISCLOSURE
In connection with the proposed transaction, a registration statement of New BlackRock Inc. (“New BlackRock”) which includes a preliminary proxy statement of New BlackRock and other materials have been filed with the Securities and Exchange Commission (the “SEC”) and are publicly available. Investors are urged to read the registration statement and other materials when they are available because they contain important information. Investors will be able to obtain free copies of the registration statement and proxy statement, when they become available, as well as other filings containing information about BlackRock and Merrill Lynch & Co., Inc. (“Merrill Lynch”), at the SEC’s Internet site (http://www.sec.gov).
Merrill Lynch, BlackRock and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from BlackRock stockholders in respect of the proposed transaction. Information regarding Merrill Lynch’s directors and executive officers is available in its proxy statement for its 2006 annual meeting of stockholders, dated March 10, 2006, and information regarding BlackRock’s directors and executive officers is available in its proxy statement for its 2006 annual meeting of stockholders, dated April 28, 2006. Additional information regarding the interests of such potential participants will be included in the registration statement and the other relevant documents filed with the SEC when they become available.
Cautionary Language Concerning Forward-Looking Statements
Information contained in this document may contain forward-looking statements, including, for example, statements about management expectations, strategic objectives, growth opportunities, business prospects and regulatory proceedings, transaction synergies, and other similar matters. These forward-looking statements are not statements of historical facts and represent only Merrill Lynch’s beliefs regarding future performance, which is inherently uncertain. There are a variety of factors, many of which are beyond Merrill Lynch’s control, which affect the operations, performance, business strategy and results and could cause actual results and experience to differ materially from the expectations and objectives expressed in any forward-looking statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only to the date on which they are made, and may be impacted by a variety of factors that are beyond Merrill Lynch’s and BlackRock’s control. Merrill Lynch and BlackRock do not undertake to update these statements to reflect the impact of circumstances or events that arise after the date on which they were made. Investors should consult Merrill Lynch’s and BlackRock’s reports filed with the SEC for any additional information.
For Informational Purposes Only. This material is not intended to be a solicitation for any investment product referenced herein.