Notes to Financial Statements
1. Significant Accounting Policies:
BlackRock Enhanced Equity Yield Fund, Inc. and BlackRock Enhanced Equity Yield & Premium Fund, Inc. (referred to as the Funds or individually as a Fund) are registered under the Investment Company Act of 1940, as amended (the 1940 Act), as diversified, closed-end management investment companies. The Funds financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Funds determine and make available for publication the net asset value of their Common Stock on a daily basis. Each Funds Common Stock is listed on the New York Stock Exchange (NYSE) under the symbol EEF for BlackRock Enhanced Equity Yield Fund, Inc. and ECV for BlackRock Enhanced Equity Yield & Premium Fund, Inc.
The following is a summary of significant accounting policies followed by the Funds.
Valuation of Investments
: The Funds value most of their investments on the basis of last available bid price or current market quotations provided by dealers or pricing services selected under the supervision of each Funds Board of Directors (Directors or a Board). In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, market transactions in comparable investments, various relationships observed in the market between investments, and calculated yield measures based on valuation technology commonly employed in the market for such investments. Effective September 4, 2007, exchange-traded options are valued at the mean between the last bid and ask prices at the close of the options market in which the options trade and previously were valued at the last sales price as of the close of options trading on applicable exchanges. Options traded in the OTC market are valued at the last asked price (options written) and the last bid price (options purchased). Financial futures contracts are traded on exchanges and are valued at their last sale price. Short-term securities may be valued at amortized cost.
In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment, the investment will be valued by, under the direction of or in accordance with a method approved by the Board as reflecting fair value (Fair Value Assets). When determining the price for Fair Value Assets, the investment advisor and/or sub-advisor shall seek to determine the price that the Funds might reasonably expect to receive from the current sale of that asset in an arms-length transaction. Fair value determinations shall be based upon all available factors that the advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets shall be subsequently reported to the Board or a committee thereof.
Derivative Financial Instruments:
The Funds may engage in various portfolio investment strategies to increase the return of the Funds and to hedge, or protect, exposure to interest rate movements and movements in the securities markets. Losses may arise due to changes in the value of the contract due to an unfavorable change in the price of the underlying security or if the counter-party does not perform under the contract.
Options:
The Funds may purchase and write call and put options. When the Funds write an option, an amount equal to the premium received by the Funds is reflected as an asset and an equivalent lia- bility. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. When a security is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the security acquired or deducted from (or added to) the proceeds of the security sold. When an option expires (or the Funds enter into a closing transaction), the Funds realize a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premium received or paid).
Financial
Futures Contracts:
The Funds may purchase or sell financial futures contracts and options on such financial futures contracts.
Financial futures contracts are contracts for delayed delivery of secu- rities at a specific future date and at a specific price or yield. Upon entering into a contract, the Funds deposit and maintain as collateral such initial margin as required by the exchange on which the trans- action is effected. Pursuant to the contract, the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Funds as unrealized gains or losses. When the contract is closed, the Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
Segregation:
In cases in which the 1940 Act, and the interpretive positions of the Securities and Exchange Commission (the SEC) require that each Fund segregate assets in connection with certain investments (e.g., when-issued securities or swap agreements), each Fund will, consistent with certain interpretive letters issued by the SEC, designate on its books and records cash or other liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated.
Income Taxes:
It is the Funds policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment
Notes to Financial Statements (continued)
companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required.
Effective June 29, 2007, the Funds implemented Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 prescribes the minumum recognition threshold a tax position must meet in connection with accounting for uncertainties in income tax positions taken or expected to be taken by an entity, including investment companies, before being measured and recognized in the financial statements. Management has evaluated the application of FIN 48 to the Funds, and has determined that the adoption of FIN 48 does not have a material impact on the Funds financial statements. The Funds file U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Funds U.S. federal tax returns remains open for the years ended December 31, 2005 through December 31, 2006. The statute of limitations on the Funds state and local tax returns may remain open for an additional year depending upon the jurisdiction.
Investment Transactions and Investment Income:
Investment transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on security transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Funds have determined the ex-dividend date. Interest income is recognized on the accrual basis. The Funds amortize all premiums and discounts on debt securities.
Dividends and Distributions:
Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. If the total dividends and distributions made in any tax year exceeds net investment income and accumulated realized capital gains, a portion of the total distribution may be treated as a tax return of capital. For the year ended December 31, 2007, a portion of the dividends and distributions were characterized as a tax return of capital.
Securities Lending:
Each Fund may lend securities to financial institutions that provide cash or securities issued or guaranteed by the U.S. government as collateral, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund typically receives the income on the loaned securities but does not receive the income on the collateral. Where the Fund receives cash collateral, it may invest such collateral and retain the amount earned on such investment, net of any amount rebated to the borrower. The Fund may receive a flat fee for their loans. Loans of securities are terminable at any time
and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.
The Fund may pay reasonable lending agent, administrative and custodial fees in connection with its loans. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Fund could experience delays and costs in gaining access to the collateral. The Fund also could suffer a loss where the value of the collateral falls below the market value of the borrowed securities, in the event of borrower default or in the event of losses on investments made with cash collateral.
Bank Overdraft:
BlackRock Enhanced Equity Yield Fund, Inc. recorded a bank overdraft resulting from a timing difference of a reversal of an incorrect dividend distribution payment.
Estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and such differences may be material.
Other:
Expenses that are directly related to a Fund are charged directly to that Fund. Other operating expenses are generally pro-rated to the Funds on the basis of relative net assets of all the BlackRock Closed-End Funds.
Recent Accounting Pronouncements:
In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (FAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The impact on the Funds financial statement disclosures, if any, is currently being assessed.
In addition, in February 2007, FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (FAS 159), which is effective for fiscal years beginning after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of FAS 157. FAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. FAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. The impact on the Funds financial statement disclosures, if any, is currently being assessed.
Notes to Financial Statements (continued)
Reclassifications:
Accounting principles generally accepted in the U.S. require that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting.
BlackRock Enhanced Equity Yield Fund, Inc.
During the current year, $4,520 has been reclassified between accumulated distributions in excess of net investment income and paid in capital in excess of par and $24,624 has been reclassified between accumulated distributions in excess of net investment income and accumulated net realized capital losses as a result of permanent differences attributable to the tax characterization of income recognized from partnerships and non-deductible expenses. These reclassifications have no effect on net assets or net asset values per share.
BlackRock Enhanced Equity Yield & Premium Fund, Inc.
During the current year, $4,534 has been reclassified between paid in capital in excess of par and accumulated net realized capital losses as a result of permanent differences attributable to the sale of securities with a different basis for book and tax. This reclassification has no effect on net assets or net asset values per share.
2. Investment Advisory Agreement and Other Transactions with Affiliates:
Each Fund has entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the Advisor), an indirect, wholly owned subsidiary of BlackRock, Inc. to provide investment advice and administrative services. Merrill Lynch & Co., Inc. (Merrill Lynch) and The PNC Financial Services Group, Inc. (PNC) are the principal owners of BlackRock, Inc.
The Advisor is responsible for the management of each Funds portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of each Fund. For such services, each Fund pays a fee on a monthly basis at an annual rate equal to 1.0% of the aggregate average daily value of each Funds net assets and the proceeds of any debt securities or borrowings used for leverage. In addition, the Advisor has entered into a sub-advisory agreement with BlackRock Investment Management, LLC (BIM), an affiliate of the Advisor, under which the Advisor pays BIM for its sub-advisory services.
The Funds have received an exemptive order from the SEC permitting them to lend portfolio securities to Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S), a wholly owned subsidiary of Merrill Lynch, or its affiliates. Pursuant to that order, each Fund has retained BIM, as the securities lending agent for a fee based on a share of the returns on investment of cash collateral. BIM may, on behalf of the Funds, invest cash collateral received by the Funds for such loans, among other things, in a private investment company managed by the Advisor or in
registered money market funds advised by the Advisor or its affiliates. For the year ended December 31, 2007, BIM received $4,754 in securities lending agent fees from BlackRock Enhanced Equity Yield Fund, Inc. and none from BlackRock Enhanced Equity Yield and Premium Fund, Inc.
In addition, MLPF&S received $14,127 and $16,900 in commissions on the execution of portfolio security transactions for the year ended December 31, 2007 for BlackRock Enhanced Equity Yield Fund, Inc. and BlackRock Enhanced Equity Yield & Premium Fund, Inc., respectively.
For the year ended December 31, 2007, BlackRock Enhanced Equity Yield Fund, Inc. and BlackRock Enhanced Equity Yield & Premium Fund, Inc. reimbursed the Advisor $7,258 and $6,028, respectively for certain accounting services.
Certain officers and/or directors of the Funds are officers and/or directors of BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the year ended December 31, 2007 were as follows:
|
|
Total
|
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Total
|
|
|
Purchases
|
|
Sales
|
|
|
|
|
|
BlackRock Enhanced Equity Yield
|
|
|
|
|
Fund, Inc
|
|
$174,299,885
|
|
$215,343,267
|
BlackRock Enhanced Equity Yield &
|
|
|
|
|
Premium Fund, Inc
|
|
$178,831,884
|
|
$228,462,262
|
|
|
|
|
|
BlackRock Enhanced Equity Yield Fund, Inc.
Transactions in options written for the year ended December 31, 2007 were as follows:
|
|
Number of
|
|
Premiums
|
Call Options Written
|
|
Contracts
|
|
Received
|
|
|
|
|
|
Outstanding call options written,
|
|
|
|
|
beginning of year
|
|
1,950
|
|
$ 3,399,945
|
Options written
|
|
33,027
|
|
62,725,312
|
Options closed
|
|
(30,587)
|
|
(53,597,380)
|
Options expired
|
|
(2,660)
|
|
(6,966,009)
|
|
|
|
|
|
Outstanding call options written,
|
|
|
|
|
end of year
|
|
1,730
|
|
$ 5,561,868
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Premiums
|
Put Options Written
|
|
Contracts
|
|
Received
|
|
|
|
|
|
Outstanding put options written,
|
|
|
|
|
beginning of year
|
|
|
|
|
Options written
|
|
220
|
|
$ 115,929
|
Options closed
|
|
(220)
|
|
(115,929)
|
|
|
|
|
|
Outstanding put options written,
|
|
|
|
|
end of year
|
|
|
|
$
|
|
|
|
|
|
Notes to Financial Statements (concluded)
BlackRock Enhanced Equity Yield & Premium Fund, Inc.
Transactions in options written for the year ended December 31, 2007 were as follows:
|
|
Number of
|
|
Premiums
|
Call Options Written
|
|
Contracts
|
|
Received
|
|
|
|
|
|
Outstanding call options written,
|
|
|
|
|
beginning of year
|
|
1,520
|
|
$ 2,997,557
|
Options written
|
|
26,919
|
|
53,583,263
|
Options closed
|
|
(24,939)
|
|
(47,164,034)
|
Options expired
|
|
(2,110)
|
|
(4,856,551)
|
|
|
|
|
|
Outstanding call options written,
|
|
|
|
|
end of year
|
|
1,390
|
|
$ 4,560,235
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Premiums
|
Put Options Written
|
|
Contracts
|
|
Received
|
|
|
|
|
|
Outstanding put options written,
|
|
|
|
|
beginning of year
|
|
|
|
|
Options written
|
|
180
|
|
$ 94,851
|
Options closed
|
|
(180)
|
|
(94,851)
|
|
|
|
|
|
Outstanding put options written,
|
|
|
|
|
end of year
|
|
|
|
$
|
|
|
|
|
|
|
4. Common Stock Transactions:
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|
|
|
|
Each Fund is authorized to issue 200,000,000 shares of Common Stock, par value $.10 per share, all of which were initially classified as Common Stock. Each Funds Board is authorized, however, to reclassify any unissued shares of stock without approval of holders of Common Stock.
Common Stock
Each Fund will make offers to repurchase its shares at annual (approximately 12-month) intervals. The shares tendered in the repurchase offer will be subject to a repurchase fee retained by the Funds to compensate the Funds for expenses directly related to the repurchase offer.
BlackRock Enhanced Equity Yield Fund, Inc.
Shares issued and outstanding during the year ended December 31, 2007 increased by 266,355 from dividend and distribution reinvestments and decreased by 15,067 as a result of a repurchase offer. Shares issued and outstanding for the year ended December 31, 2006 increased by 298,957 from dividend and distribution reinvestments and decreased by 142,634 as a result of a repurchase offer.
BlackRock Enhanced Equity Yield & Premium Fund, Inc.
Shares issued and outstanding during the year ended December 31, 2007 increased by 163,331 from dividend and distribution reinvestments and decreased by 33,736 as a result of a repurchase offer. Shares issued and outstanding for the year ended December 31, 2006 increased by 23,010 from dividend and distribution reinvestments and decreased by 45,794 as a result of a repurchase offer.
5. Distributions to Shareholders:
BlackRock Enhanced Equity Yield Fund, Inc.
The tax character of distributions paid during the fiscal years ended December 31, 2007 and December 31, 2006 was as follows:
|
|
12/31/2007
|
|
12/31/2006
|
|
|
|
|
|
Distributions paid from:
|
|
|
|
|
Ordinary income
|
|
8,757,113
|
|
$15,202,420
|
Net long-term capital gains
|
|
7,517,648
|
|
12,784,708
|
Tax return of capital
|
|
26,237,858
|
|
17,448,419
|
|
|
|
|
|
Total distributions
|
|
$ 42,512,619
|
|
$45,435,547
|
|
|
|
|
|
As of December 31, 2007, the components of accumulated earnings on a tax basis were as follows:
Unrealized gains net
|
|
$ 11,724,667*
|
|
|
|
Total accumulated earnings net
|
|
$ 11,724,667
|
|
|
|
*
|
The difference between book-basis and tax-basis net unrealized gains is attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains (losses) on certain financial futures contracts.
|
|
BlackRock Enhanced Equity Yield & Premium Fund, Inc.
The tax character of distributions paid during the years ended December 31, 2007 and December 31, 2006 was as follows:
|
|
12/31/2007
|
|
12/31/2006
|
|
|
|
|
|
Distributions paid from:
|
|
|
|
|
Ordinary income
|
|
11,664,049
|
|
$ 5,591,107
|
Net long-term capital gains
|
|
9,175,867
|
|
9,104,793
|
Tax return of capital
|
|
15,306,196
|
|
21,317,145
|
|
|
|
|
|
Total distributions
|
|
$ 36,146,112
|
|
$36,013,045
|
|
|
|
|
|
As of December 31, 2007, the components of accumulated earnings on a
tax basis were as follows:
|
Unrealized gains net
|
|
$ 8,067,212*
|
|
|
|
Total accumulated earnings net
|
|
$ 8,067,212
|
|
|
|
*
|
The difference between book-basis and tax-basis net unrealized gains is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of losses on straddles and the realization for tax purposes of unrealized gains (losses) on certain financial futures contracts.
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Report of Independent Registered Public Accounting Firm
To the Shareholders and Boards of Directors of BlackRock Enhanced Equity Yield Fund, Inc. and BlackRock Enhanced Equity Yield & Premium Fund, Inc.:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of BlackRock Enhanced Equity Yield Fund, Inc. and BlackRock Enhanced Equity Yield & Premium Fund, Inc. (the Funds), as of December 31, 2007, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for the respective periods then ended. These financial statements and financial highlights are the responsibility of the Funds management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, audits of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing opinions on the effectiveness of the respective Funds internal control over
financial reporting. Accordingly, we express no such opinions. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2007, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the respective financial positions of BlackRock Enhanced Equity Yield Fund, Inc. and BlackRock Enhanced Equity Yield & Premium Fund, Inc. as of December 31, 2007, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and their financial highlights for the respective periods then ended, in conformity with accounting principles generally accepted in the United States of America.
Deloitte & Touche
LLP
Princeton, New Jersey
February 27, 2008
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Important Tax Information
The information set forth below is provided with respect to the distributions paid during the year-ended December 31, 2007:
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|
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Dividends
|
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Short-Term
|
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|
|
|
|
|
|
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Qualifying
|
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Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for the
|
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Gain
|
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|
|
|
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Non-Taxable
|
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Long-Term
|
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|
|
Qualifying
|
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Dividends
|
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Dividends
|
|
|
|
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Ordinary
|
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Return of
|
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Capital
|
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|
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Dividend
|
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Received
|
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for
|
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Payable
|
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Income Per
|
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Capital
|
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Gains
|
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Income for
|
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Deduction for
|
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Non-U.S.
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Date
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Share
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Per Share
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Per Share
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Total
|
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Individuals
|
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Corporations
|
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Residents
|
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BlackRock Enhanced Equity Yield Fund, Inc.
|
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3/30/2007
|
|
|
|
$.308589
|
|
$.191411
|
|
$ .500000
|
|
|
|
|
|
|
|
|
6/29/2007
|
|
$.027534
|
|
$.308589
|
|
$.163877
|
|
$ .500000
|
|
100.00%
|
|
98.08%
|
|
|
|
|
9/28/2007
|
|
$.191411
|
|
$.308589
|
|
|
|
$ .500000
|
|
100.00%
|
|
98.08%
|
|
66.77%
|
|
|
12/31/2007
|
|
$.191411
|
|
$.308589
|
|
|
|
$ .500000
|
|
100.00%
|
|
98.08%
|
|
|
|
|
|
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BlackRock Enhanced Equity Yield &
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Premium Fund, Inc.
|
|
6/29/2007
|
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$.068638
|
|
$.434040
|
|
$.522322
|
|
$1.025000
|
|
49.34%
|
|
49.11%
|
|
100.00%
|
|
|
12/31/2007
|
|
$.590960
|
|
$.434040
|
|
|
|
$1.025000
|
|
49.34%
|
|
49.11%
|
|
65.05%
|
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Expressed as a percentage of the ordinary income distributions paid. Each Fund hereby designates the amount indicated above or the maximum amount allowable by law.
Fundamental Periodic Repurchase Policy
The Boards of Directors approved a fundamental policy whereby the Funds have adopted an interval fund structure pursuant to Rule 23c-3 under the Investment Company Act of 1940, as amended (the 1940 Act). As an interval fund, each Fund will make annual repurchase offers at net asset value (less repurchase fee not to exceed 2%) to all Fund shareholders. The percentage of outstanding shares that the Funds can repurchase in each offer will be established by the Funds Board of Directors shortly before the commencement of each offer, and will be between 5% and 25% of the Funds then outstanding shares.
Each Fund has adopted the following fundamental policy regarding periodic repurchases:
(a)
|
The Fund will make repurchase offers at periodic intervals pursuant to Rule 23c-3 under the 1940 Act.
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(b)
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The periodic interval between repurchase request deadlines will be approximately 12 months.
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(c)
|
The repurchase request deadline for each repurchase offer will be 14 days prior to the last Friday in June for BlackRock Enhanced Equity Yield Fund, Inc. and 14 days prior to the last Friday in September for BlackRock Enhanced Equity Yield & Premium Fund, Inc., provided that in the event that such day is not a business day, the repurchase request deadline will be the subsequent business day.
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(d)
|
The maximum number of days between a repurchase request deadline and the next repurchase pricing date will be 14 days; provided that if the 14
th
day after a repurchase request deadline is not a business day, the repurchase pricing date shall be the next business day.
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|
Each Funds Board of Directors may place such conditions and limitations on a repurchase offer as may be permitted under Rule 23c-3. Repurchase offers may be suspended or postponed under certain circumstances, as provided in Rule 23c-3.
During the fiscal year ended December 31, 2007, each Fund conducted a repurchase offer for its shares pursuant to Rule 23c-3 under the 1940 Act. These repurchase offers are summarized in the following table:
|
|
Number of
|
|
Amount of
|
|
Number of Shares
|
|
|
Repurchase Offers
|
|
Repurchase Offers
|
|
Tendered
|
|
|
|
|
|
|
|
BlackRock Enhanced Equity Yield Fund, Inc.
|
|
1
|
|
1,061,620
|
|
15,067
|
|
|
|
|
|
|
|
BlackRock Enhanced Equity Yield & Premium Fund, Inc.
|
|
1
|
|
886,539
|
|
33,736
|
|
|
|
|
|
|
|
Automatic Dividend Reinvestment Plan
How the Plan Works
The Funds offer a Dividend Reinvestment Plan (the Plan) under which income and capital gains dividends paid by each Fund are automatically reinvested in additional shares of Common Stock of each Fund. The Plan is administered on behalf of the shareholders by The Bank of New York Mellon (the Plan Agent). Under the Plan, whenever the Funds declare a dividend, participants in the Plan will receive the equivalent in shares of Common Stock of each Fund. The Plan Agent will acquire the shares for the participants account either (i) through receipt of additional unissued but authorized shares of each Fund (newly issued shares) or (ii) by purchase of outstanding shares of Common Stock on the open market on the New York Stock Exchange or elsewhere. If, on the dividend payment date, each Funds net asset value per share is equal to or less than the market price per share plus estimated brokerage commissions (a condition often referred to as a market premium), the Plan Agent will invest the dividend amount in newly issued shares. If the Funds net asset value per share is greater than the market price per share (a condition often referred to as a market discount), the Plan Agent will invest the dividend amount by purchasing on the open market additional shares. If the Plan Agent is unable to invest the full dividend amount in open market purchases, or if the market discount shifts to a market premium during the purchase period, the Plan Agent will invest any uninvested portion in newly issued shares. The shares acquired are credited to each shareholders account. The amount credited is determined by dividing the dollar amount of the dividend by either (i) when the shares are newly issued, the net asset value per share on the date the shares are issued or (ii) when shares are purchased in the open market, the average purchase price per share.
Participation in the Plan
Participation in the Plan is automatic, that is, a shareholder is automatically enrolled in the Plan when he or she purchases shares of Common Stock of the Funds unless the shareholder specifically elects not to participate in the Plan. Shareholders who elect not to participate will receive all dividend distributions in cash. Shareholders who do not wish to participate in the Plan must advise the Plan Agent in writing (at the address set forth below) that they elect not to participate in the Plan. Participation in the Plan is completely voluntary and may be terminated or resumed at any time without penalty by writing to the Plan Agent.
Benefits of the Plan
The Plan provides an easy, convenient way for shareholders to make additional, regular investments in the Funds. The Plan promotes a long-term strategy of investing at a lower cost. All shares acquired pursuant to the Plan receive voting rights. In addition, if the market price plus commissions of each Funds shares is above the net asset value, participants in the Plan will receive shares of the Funds for less than they could otherwise purchase them and with a cash value greater than the value of any cash distribution they would have received. However, there may not be enough shares available in the market to make distributions in shares at prices below the net asset value. Also, since each Fund does not redeem shares, the price on resale may be more or less than the net asset value.
Plan Fees
There are no enrollment fees or brokerage fees for participating in the Plan. The Plan Agents service fees for handling the reinvestment of distributions are paid for by the Funds. However, brokerage commissions may be incurred when the Funds purchase shares on the open market and shareholders will pay a pro rata share of any such commissions.
Tax Implications
The automatic reinvestment of dividends and distributions will not relieve participants of any federal, state or local income tax that may be payable (or required to be withheld) on such dividends. Therefore, income and capital gains may still be realized even though shareholders do not receive cash. Participation in the Plan generally will not affect the tax-exempt status of exempt interest dividends paid by the Funds. If, when the Funds shares are trading at a market premium, the Funds issue shares pursuant to the Plan that have a greater fair market value than the amount of cash reinvested, it is possible that all or a portion of the discount from the market value (which may not exceed 5% of the fair market value of each Funds shares) could be viewed as a taxable distribution. If the discount is viewed as a taxable distribution, it is also possible that the taxable character of this discount would be allocable to all the shareholders, including shareholders who do not participate in the Plan. Thus, shareholders who do not participate in the Plan might be required to report as ordinary income a portion of their distributions equal to their allocable share of the discount.
Contact Information
All correspondence concerning the Plan, including any questions about the Plan, should be directed to the Plan Agent at The Bank of New York Mellon, One Wall Street, New York, NY 10286, Telephone: 800-432-8224.
Officers and Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
BlackRock-
|
|
|
|
|
Position(s)
|
|
|
|
|
|
Advised Funds
|
|
|
Name, Address
|
|
Held with
|
|
Length of
|
|
|
|
and Portfolios
|
|
Public
|
and Year of Birth
|
|
Funds
|
|
Time Served
|
|
Principal Occupation(s) During Past 5 Years
|
|
Overseen
|
|
Directorships
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Interested Directors*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Nicholas Beckwith, III
|
|
Director
|
|
2007 to
|
|
Chairman and Chief Executive Officer, Arch Street Management, LLC
|
|
111 Funds
|
|
None
|
40 East 52nd Street
|
|
|
|
present
|
|
since 2005; Chairman and CEO, Beckwith Blawnox Property LLC since
|
|
108 Portfolios
|
|
|
New York, NY 10022
|
|
|
|
|
|
2005; Chairman and CEO, Beckwith Clearfield Property LLC since
|
|
|
|
|
1945
|
|
|
|
|
|
2005; Chairman and CEO, Beckwith Delmont Property LLC since
|
|
|
|
|
|
|
|
|
|
|
2005; Chairman and CEO, Beckwith Erie Property LLC since 2005;
|
|
|
|
|
|
|
|
|
|
|
Chairman, Penn West Industrial Trucks LLC since 2005; Chairman,
|
|
|
|
|
|
|
|
|
|
|
President and Chief Executive Officer, Beckwith Machinery Company
|
|
|
|
|
|
|
|
|
|
|
from 1969 to 2005; Chairman of the Board of Directors, University
|
|
|
|
|
|
|
|
|
|
|
of Pittsburgh Medical Center since 2002; Board of Directors, Shady
|
|
|
|
|
|
|
|
|
|
|
Side Hospital Foundation since 1977; Beckwith Institute for Innovation
|
|
|
|
|
|
|
|
|
|
|
In Patient Care since 1991; Member, Advisory Council on Biology and
|
|
|
|
|
|
|
|
|
|
|
Medicine, Brown University since 2002; Trustee, Claude Worthington
|
|
|
|
|
|
|
|
|
|
|
Benedum Foundation since 1977; Board of Trustees, Chatham College,
|
|
|
|
|
|
|
|
|
|
|
University of Pittsburgh since 2003; Emeritus Trustee, Shady Side
|
|
|
|
|
|
|
|
|
|
|
Academy since 1977.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard E. Cavanagh
|
|
Director
|
|
2007 to
|
|
Trustee, Aircraft Finance Trust (AFT) since 1999; Director, The Guardian
|
|
112 Funds
|
|
Arch Chemical
|
40 East 52nd Street
|
|
and
|
|
present
|
|
Life Insurance Company of America since 1998; Chairman and
|
|
109 Portfolios
|
|
(chemicals and
|
New York, NY 10022
|
|
Chairman of
|
|
|
|
Trustee, Educational Testing Service (ETS) since 1997; Director, the
|
|
|
|
allied products)
|
1946
|
|
the Board of
|
|
|
|
Fremont Group since 1996; President and Chief Executive Officer of
|
|
|
|
|
|
|
Directors
|
|
|
|
The Conferences Board, Inc. (global business research) from 1995
|
|
|
|
|
|
|
|
|
|
|
to 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kent Dixon
|
|
Director
|
|
2007 to
|
|
Consultant/Investor since 1988.
|
|
112 Funds
|
|
None
|
40 East 52nd Street
|
|
and Member
|
|
present
|
|
|
|
109 Portfolios
|
|
|
New York, NY 10022
|
|
of the Audit
|
|
|
|
|
|
|
|
|
1937
|
|
Committee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank J. Fabozzi
|
|
Director
|
|
2007 to
|
|
Consultant/Editor of The Journal of Portfolio Management; Yale
|
|
112 Funds
|
|
None
|
40 East 52nd Street
|
|
and Member
|
|
present
|
|
University, School of Management, Professor in the Practice of
|
|
109 Portfolios
|
|
|
New York, NY 10022
|
|
of the Audit
|
|
|
|
Finance and Becton Fellow since 2006; Adjunct Professor of
|
|
|
|
|
1948
|
|
Committee
|
|
|
|
Finance and Becton Fellow from 2005 to 2006; Professor in the
|
|
|
|
|
|
|
|
|
|
|
practice of Finance from 2003 to 2005; Adjunct Professor of
|
|
|
|
|
Finance from 1994 to 2003; Author and Editor.
|
|
|
Kathleen F. Feldstein
|
|
Director
|
|
2007 to
|
|
President of Economic Studies, Inc. (a Belmont MA-based private
|
|
112 Funds
|
|
The McClatchy
|
40 East 52nd Street
|
|
|
|
present
|
|
economic consulting firm) since 1987; Chair, Board of Trustees,
|
|
109 Portfolios
|
|
Company
|
New York, NY 10022
|
|
|
|
|
|
McLean Hospital since 2000; Member of the Board of Partners
|
|
|
|
|
1941
|
|
|
|
|
|
Community Healthcare, Inc. since 2005; Member of the Board of
|
|
|
|
|
|
|
|
|
|
|
Partners HealthCare and Sherrill House since 1990; Trustee, Museum
|
|
|
|
|
|
|
|
|
|
|
of Fine Arts, Boston since 1992 and a Member of the Visiting
|
|
|
|
|
|
|
|
|
|
|
Committee to the Harvard University Art Museum since 2003;
|
|
|
|
|
|
|
|
|
|
|
Trustee, The Committee for Economic Development (research
|
|
|
|
|
|
|
|
|
|
|
organization of business leaders and educators) since 1990;
|
|
|
|
|
|
|
|
|
|
|
Member of the Advisory Board to the International School of Business,
|
|
|
|
|
|
|
|
|
|
|
Brandeis University since 2002.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James T. Flynn
|
|
Director,
|
|
2004 to
|
|
Chief Financial Officer of JP Morgan & Co., Inc. from 1990 to 1995
|
|
111 Funds
|
|
None
|
40 East 52nd Street
|
|
and Member
|
|
present
|
|
and an employee of JP Morgan in various capacities from 1967
|
|
108 Portfolios
|
|
|
New York, NY 10022
|
|
of the Audit
|
|
|
|
to 1995.
|
|
|
|
|
1939
|
|
Committee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerrold B. Harris
|
|
Director
|
|
2007 to
|
|
President and Chief Executive Officer, VWR Scientific Products
|
|
111 Funds
|
|
BlackRock Kelso
|
40 East 52nd Street
|
|
|
|
present
|
|
Corporation from 1989 to 1999; Trustee, Ursinus College (education)
|
|
108 Portfolios
|
|
Capital Corp.
|
New York, NY 10022
|
|
|
|
|
|
since 2000; Director, Troemner LLC (scientific equipment) since 2000.
|
|
|
|
|
1942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.
|
Officers and Directors (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
BlackRock-
|
|
|
|
|
Position(s)
|
|
|
|
|
|
Advised Funds
|
|
|
Name, Address
|
|
Held with
|
|
Length of
|
|
|
|
and Portfolios
|
|
Public
|
and Year of Birth
|
|
Funds
|
|
Time Served
|
|
Principal Occupation(s) During Past 5 Years
|
|
Overseen
|
|
Directorships
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Interested Directors* (concluded)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Glenn Hubbard
|
|
Director
|
|
2007 to
|
|
Dean of Columbia Business School since 2004; Columbia faculty
|
|
112 Funds
|
|
ADP (data and
|
40 East 52nd Street
|
|
|
|
present
|
|
member since 1988; Co-director of Columbia Business School's
|
|
109 Portfolios
|
|
information services),
|
New York, NY 10022
|
|
|
|
|
|
Entrepreneurship Program 1997 to 2004; Visiting Professor at the
|
|
|
|
KKR Financial
|
1958
|
|
|
|
|
|
John F. Kennedy School of Government at Harvard University and the
|
|
|
|
Corporation, Duke
|
|
|
|
|
|
|
Harvard Business School since 1985, as well as the University of
|
|
|
|
Realty, Metropolitan
|
|
|
|
|
|
|
Chicago since 1994; Deputy Assistant Secretary of the U.S. Treasury
|
|
|
|
Life Insurance
|
|
|
|
|
|
|
Department for Tax Policy from 1991 to 1993; Chairman of the U.S.
|
|
|
|
Company
|
|
|
|
|
|
|
Council of Economic Advisers under the President of the United States
|
|
|
|
|
|
|
|
|
|
|
from 2001 to 2003.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. Carl Kester
|
|
Director
|
|
2004 to
|
|
Deputy Dean for Academic Affairs, Harvard Business School since
|
|
111 Funds
|
|
None
|
40 East 52nd Street
|
|
and Member
|
|
present
|
|
2006; Mizuho Financial Group, Professor of Finance, Harvard Business
|
|
108 Portfolios
|
|
|
New York, NY 10022
|
|
of the Audit
|
|
|
|
School; Unit Head, Finance from 2005 to 2006; Senior Associate Dean
|
|
|
|
|
1951
|
|
Committee
|
|
|
|
and Chairman of the MBA Program of Harvard Business School from
|
|
|
|
|
|
|
|
|
|
|
1999 to 2005, Member of the faculty of Harvard Business School since
|
|
|
|
|
|
|
|
|
|
|
1981. Independent Consultant since 1978.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen P. Robards
|
|
Director
|
|
2004 to
|
|
Partner of Robards & Company, LLC (financial advisory firm) since
|
|
111 Funds
|
|
ArtiCure, Inc.
|
40 East 52nd Street
|
|
and
|
|
present
|
|
1987; Formerly an investment banker with Morgan Stanley for more
|
|
108 Portfolios
|
|
(medical devices)
|
New York, NY 10022
|
|
Chairperson
|
|
|
|
than ten years; Director of Enable Medical Corp. from 1996 to 2005;
|
|
|
|
Care Investment
|
1950
|
|
of the Audit
|
|
|
|
Director of AtriCure, Inc. (medical devices) since 2000; Director of
|
|
|
|
Trust, Inc.
|
|
|
Committee
|
|
|
|
Care Investment Trust, Inc. (healthcare REIT) since 2007; Co-founder
|
|
|
|
(healthcare REIT)
|
|
|
|
|
|
|
and Director of the Cooke Center for Learning and Development
|
|
|
|
|
|
|
|
|
|
|
(not-for-profit organization) since 1987.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert S. Salomon, Jr.
|
|
Director,
|
|
2007 to
|
|
Principal of STI Management (investment adviser) from 1994 to 2005;
|
|
111 Funds
|
|
None
|
40 East 52nd Street
|
|
and Member
|
|
present
|
|
Chairman and CEO of Salomon Brothers Asset Management Inc. from
|
|
108 Portfolios
|
|
|
New York, NY 10022
|
|
of the Audit
|
|
|
|
1992 to 1995; Chairman of Salomon Brothers Equity Mutual Funds
|
|
|
|
|
1936
|
|
Committee
|
|
|
|
from 1992 to 1995; regular columnist with Forbes Magazine from 1992
|
|
|
|
|
|
|
|
|
|
|
to 2002; Director of Stock Research and U.S. Equity Strategist at
|
|
|
|
|
|
|
|
|
|
|
Salomon Brothers Inc. from 1975 to 1991; Trustee, Commonfund from
|
|
|
|
|
|
|
|
|
|
|
1980 to 2001.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.
|
|
|
|
|
|
|
|
|
|
|
Interested Directors*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard S. Davis
|
|
Director
|
|
2007 to
|
|
Managing Director, BlackRock, Inc. since 2005; Chief Executive Officer,
|
|
184 Funds
|
|
None
|
40 East 52nd Street
|
|
|
|
present
|
|
State Street Research & Management Company from 2000 to 2005;
|
|
289 Portfolios
|
|
|
New York, NY 10022
|
|
|
|
|
|
Chairman of the Board of Trustees, State Street Research mutual funds
|
|
|
|
|
1945
|
|
|
|
|
|
("SSR Funds") from 2000 to 2005; Senior Vice President, Metropolitan
|
|
|
|
|
|
|
|
|
|
|
Life Insurance Company from 1999 to 2000; Chairman SSR Realty from
|
|
|
|
|
|
|
|
|
|
|
2000 to 2004.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry Gabbay
|
|
Director
|
|
2007 to
|
|
Consultant, BlackRock since 2007; Managing Director, BlackRock, Inc.
|
|
183 Funds
|
|
None
|
40 East 52nd Street
|
|
|
|
present
|
|
from 1989 to 2007; Chief Administrative Officer, BlackRock Advisors,
|
|
288 Portfolios
|
|
|
New York, NY 10022
|
|
|
|
|
|
LLC from 1998 to 2007; President of BlackRock Funds and BlackRock
|
|
|
|
|
1947
|
|
|
|
|
|
Bond Allocation Target Shares from 2005 to 2007; Treasurer of certain
|
|
|
|
|
|
|
|
|
|
|
closed-end funds in the Fund complex from 1989 to 2006.
|
|
|
|
|
*
|
Messrs. Davis and Gabbay are both interested persons, as defined in the Investment Company Act, of the Fund based on their positions with BlackRock, Inc. and its affiliates. Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.
|
|
Officers and Directors (concluded)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlackRock-
|
|
|
|
|
Position(s)
|
|
|
|
|
|
|
|
|
|
Advised Funds
|
|
|
Name, Address
|
|
Held with
|
|
Length of
|
|
|
|
|
|
|
|
and Portfolios
|
|
Public
|
and Year of Birth
|
|
Funds
|
|
Time Served
|
|
Principal Occupation(s) During Past 5 Years
|
|
Overseen
|
|
Directorships
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory Board Member
|
|
|
|
|
|
|
|
|
|
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Roscoe S. Suddarth*
|
|
Member of
|
|
2007
|
|
President, Middle East Institute, from 1995 to 2001; Foreign Service
|
|
111 Funds
|
|
None
|
40 East 52nd Street
|
|
the Advisory
|
|
|
|
Officer, United States Foreign Service, from 1961 to 1995 and
|
|
108 Portfolios
|
|
|
New York, NY 10022
|
|
Board
|
|
|
|
Career Minister from 1989 to 1995; Deputy Inspector General, U.S.
|
|
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1935
|
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|
Department of State, from 1991 to 1994; U.S. Ambassador to the
|
|
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|
Hashemite Kingdom of Jordan from 1987 to 1990.
|
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|
* Roscoe Suddarth resigned from the Advisory Boards of the Funds, effective December 31, 2007.
|
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Fund Officers*
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Donald C. Burke
|
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Fund
|
|
2007 to
|
|
Managing Director of BlackRock, Inc. since 2006; Formerly Managing Director of Merrill Lynch Investment
|
40 East 52nd Street
|
|
President
|
|
present
|
|
Managers, L (MLIM) and Fund Asset Management, L (FAM) in 2006; First Vice President thereof from
|
New York, NY 10022
|
|
and Chief
|
|
|
|
1997 to 2005; Treasurer thereof from 1999 to 2006 and Vice President thereof from 1990 to 1997.
|
1960
|
|
Executive
|
|
|
|
|
|
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|
Officer
|
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|
|
|
|
Anne F. Ackerley
|
|
Vice
|
|
2007 to
|
|
Managing Director of BlackRock, Inc. since 2000 and First Vice President and Chief Operating Officer of Mergers
|
40 East 52nd Street
|
|
President
|
|
present
|
|
and Acquisitions Group from 1997 to 2000; First Vice President and Chief Operating Officer of Public Finance
|
New York, NY 10022
|
|
|
|
|
|
Group thereof from 1995 to 1997; Formerly First Vice President of Emerging Markets Fixed Income Research
|
1962
|
|
|
|
|
|
of Merrill Lynch & Co., Inc. from 1994 to 1995.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neal J. Andrews
|
|
Chief
|
|
2007 to
|
|
Managing Director of BlackRock, Inc. since 2006; Formerly Senior Vice President and Line of Business Head
|
40 East 52nd Street
|
|
Financial
|
|
present
|
|
of Fund Accounting and Administration at PFPC Inc. from 1992 to 2006.
|
|
|
|
|
New York, NY 10022
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
1966
|
|
|
|
|
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|
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|
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|
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|
|
|
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|
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|
|
|
|
|
Jay M. Fife
|
|
Treasurer
|
|
2007 to
|
|
Managing Director of BlackRock, Inc. since 2007 and Director in 2006; Formerly Assistant Treasurer of the
|
40 East 52nd Street
|
|
|
|
present
|
|
MLIM/FAM advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.
|
New York, NY 10022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
Brian P. Kindelan
|
|
Chief
|
|
2007 to
|
|
Chief Compliance Officer of the Funds since 2007; Managing Director and Senior Counsel thereof since 2005;
|
40 East 52nd Street
|
|
Compliance
|
|
present
|
|
Director and Senior Counsel of BlackRock Advisors, Inc. from 2001 to 2004 and Vice President and Senior
|
New York, NY 10022
|
|
Officer
|
|
|
|
Counsel thereof from 1998 to 2000; Senior Counsel of The PNC Bank Corp. from 1995 to 1998.
|
1959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Howard Surloff
|
|
Secretary
|
|
2007 to
|
|
Managing Director of BlackRock, Inc. and General Counsel of U.S. Funds at BlackRock, Inc. since 2006; Formerly
|
40 East 52nd Street
|
|
|
|
present
|
|
General Counsel (U.S.) of Goldman Sachs Asset Management, L from 1993 to 2006.
|
|
|
New York, NY 10022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
* Officers of the Funds serve at the pleasure of the Boards of Directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Custodian
|
|
Transfer Agent
|
|
|
|
Accounting Agent
|
|
Independent Registered Public
|
|
Legal Counsel
|
State Street Bank and
|
|
The Bank of New York Mellon
|
|
State Street Bank and
|
|
Accounting Firm
|
|
|
|
Skadden, Arps, Slate,
|
Trust Company
|
|
New York, NY 10286
|
|
|
|
Trust Company
|
|
Deloitte & Touche
LLP
|
|
|
|
Meagher & Flom
LLP
|
Boston MA 02101
|
|
|
|
|
|
|
|
Princeton, NJ 08540
|
|
Princeton, NJ 08540
|
|
|
|
New York, NY 10036
|
Additional Information
|
|
|
|
|
|
Proxy Results
|
|
BlackRock Enhanced Equity Yield Fund, Inc.
|
|
|
|
During the six-month period ended December 31, 2007, the shareholders of BlackRock Enhanced Equity Yield Fund, Inc. voted on the following proposal, which was approved at an
annual shareholders meeting on August 16, 2007. This proposal was part of the reorganization of the Funds Board of Directors which took effect on November 1, 2007. A description of the proposal and number of shares voted are as
follows:
|
|
|
|
Shares Voted
|
|
Shares Withheld
|
|
|
|
|
For
|
|
From Voting
|
|
|
|
|
|
|
|
To elect the Funds Directors:
|
|
G. Nicholas Beckwith, III
|
|
18,839,692
|
|
305,449
|
|
|
Richard E. Cavanagh
|
|
18,840,896
|
|
304,245
|
|
|
Richard S. Davis
|
|
18,839,381
|
|
305,760
|
|
|
Kent Dixon
|
|
18,838,060
|
|
307,081
|
|
|
Frank J. Fabozzi
|
|
18,839,857
|
|
305,284
|
|
|
Kathleen F. Feldstein
|
|
18,837,900
|
|
307,241
|
|
|
James T. Flynn
|
|
18,839,265
|
|
305,876
|
|
|
Henry Gabbay
|
|
18,839,136
|
|
306,005
|
|
|
Jerrold B. Harris
|
|
18,841,671
|
|
303,470
|
|
|
R. Glenn Hubbard
|
|
18,840,532
|
|
304,609
|
|
|
W. Carl Kester
|
|
18,841,462
|
|
303,679
|
|
|
Karen . Robards
|
|
18,840,817
|
|
304,324
|
|
|
Robert S. Salomon, Jr.
|
|
18,836,735
|
|
308,406
|
|
|
|
|
|
|
|
|
|
|
Proxy Results
|
|
|
|
Enhanced Equity Yield & Premium Fund, Inc.
|
|
|
|
|
|
During the six-month period ended December 31, 2007, the shareholders of BlackRock Enhanced Equity Yield and Premium Fund, Inc. voted on the following proposal, which was approved
at an annual shareholders meeting on August 16, 2007. This proposal was part of the reorganization of the Funds Board of Directors which took effect on November 1, 2007. A description of the proposal and number of shares voted are as
follows:
|
|
|
|
Shares Voted
|
|
Shares Withheld
|
|
|
|
|
For
|
|
From Voting
|
|
|
|
|
|
|
|
To elect the Funds Directors:
|
|
G. Nicholas Beckwith, III
|
|
14,586,941
|
|
420,164
|
|
|
Richard E. Cavanagh
|
|
14,585,583
|
|
421,522
|
|
|
Richard S. Davis
|
|
14,588,615
|
|
418,490
|
|
|
Kent Dixon
|
|
14,588,525
|
|
418,580
|
|
|
Frank J. Fabozzi
|
|
14,590,843
|
|
416,262
|
|
|
Kathleen F. Feldstein
|
|
14,584,813
|
|
422,292
|
|
|
James T. Flynn
|
|
14,589,215
|
|
417,890
|
|
|
Henry Gabbay
|
|
14,588,923
|
|
418,182
|
|
|
Jerrold B. Harris
|
|
14,587,993
|
|
419,112
|
|
|
R. Glenn Hubbard
|
|
14,584,241
|
|
422,864
|
|
|
W. Carl Kester
|
|
14,589,593
|
|
417,512
|
|
|
Karen . Robards
|
|
14,589,143
|
|
417,962
|
|
|
Robert S. Salomon, Jr.
|
|
14,589,393
|
|
417,712
|
|
|
|
|
|
|
|
Fund Certifications
In November 2007 Enhanced Equity Yield Fund, Inc. and Enhanced
Equity Yield & Premium Fund, Inc. filed their Chief Executive Officer
Certifications for the prior year with the New York Stock Exchange pur-
suant to Section 303A.12(a) of the New York Stock Exchange Corporate
Governance Listing Standards.
|
Each Funds Chief Executive Officer and Chief Financial Officer
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 were filed with each Funds Form N-CSR and are available on the
Securities and Exchange Commissions website at http://www.sec.gov.
|
Availability of Quarterly Schedule of Investments
The Funds file their complete schedules of portfolio holdings with the
Securities and Exchange Commission (SEC) for the first and third quar-
ters of each fiscal year on Form N-Q. The Funds Forms N-Q are available
on the SECs website at http://www.sec.gov. The Funds Forms N-Q may
also be reviewed and copied at the SECs Public Reference Room
|
in Washington, DC. Information on the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330. The Funds Forms
N-Q may also be obtained upon request and without charge by calling
(800) 441-7762.
|
Electronic Delivery
Electronic copies of most financial reports are available on each Funds
website. Shareholders can sign up for e-mail notifications of quarterly
statements, annual and semi-annual reports and prospectuses by
enrolling in the Funds electronic delivery program.
|
Shareholders Who Hold Accounts with Investment Advisors, Banks or
Brokerages:
Please contact your financial advisor. Please note that not all investment
advisors, banks or brokerages may offer this service.
|
General Information
The Fund does not make available copies of its Statements of Additional
Information because the Funds shares are not continuously offered,
which means that the Statement of Additional Information of the Fund
has not been updated after completion of the Funds offering and the
information contained in the Funds Statement of Additional Information
may have become outdated.
|
During the period, there were no material changes in the Funds invest-
ment objective or policies or to the Funds character or by-laws that
were not approved by the shareholders or in the principal risk factors
associated with investment in the Fund. There have been no changes
in the persons who are primarily responsible for the day-to-day manage-
ment of the Funds portfolio.
|
Additional Information (concluded)
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and
former fund investors and individual clients (collectively, Clients) and
to safeguarding their nonpublic personal information. The following infor-
mation is provided to help you understand what personal information
BlackRock collects, how we protect that information and why in certain
cases we share such information with select parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with
those specific laws, rules or regulations.
BlackRock obtains or verifies personal nonpublic information from and
about you from different sources, including the following: (i) information
we receive from you or, if applicable, your financial intermediary, on appli-
cations, forms or other documents; (ii) information about your trans-
actions with us, our affiliates, or others; (iii) information we receive from
a consumer reporting agency; and (iv) from visits to our websites.
|
BlackRock does not sell or disclose to nonaffiliated third parties any non-
public personal information about its Clients, except as permitted by law
or as is necessary to respond to regulatory requests or to service Client
accounts. These nonaffiliated third parties are required to protect the
confidentiality and security of this information and to use it only for its
intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services
that may be of interest to you. In addition, BlackRock restricts access
to nonpublic personal information about its Clients to those BlackRock
employees with a legitimate business need for the information. BlackRock
maintains physical, electronic and procedural safeguards that are designed
to protect the nonpublic personal information of its Clients, including pro-
cedures relating to the proper storage and disposal of such information.
|
These reports, including the financial information herein, are
transmitted to shareholders of BlackRock Enhanced Equity Yield
Fund, Inc. and BlackRock Enhanced Equity Yield & Premium Fund,
Inc. for their information. This is not a prospectus. Past performance
results shown in these reports should not be considered a repre-
sentation of future performance. Statements and other information
herein are as dated and are subject to change.
A description of the policies and procedures that the Funds
use to determine how to vote proxies relating to portfolio
securities is available (1) without charge, upon request, by calling
toll-free (800) 441-7762; (2) at www.blackrock.com; and
(3) on the Securities and Exchange Commissions website at
http://www.sec.gov. Information about how the Funds voted
proxies relating to securities held in the Funds portfolios during
the most recent 12-month period ended June 30 is available
upon request and without charge (1) at www.blackrock.com or by
calling (800) 441-7762 and (2) on the Securities and Exchange
Commissions website at http://www.sec.gov.
BlackRock Enhanced Equity Yield Fund, Inc.
BlackRock Enhanced Equity Yield & Premium Fund, Inc.
100 Bellevue Parkway
Wilmington, DE 19809
|
Item 2 Code of Ethics The registrant (or the Fund) has adopted a code of ethics, as of the end
of the period covered by this report, applicable to the registrant's principal executive officer,
principal financial officer and principal accounting officer, or persons performing similar
functions. During the period covered by this report, there have been no amendments to or
waivers granted under the code of ethics. A copy of the code of ethics is available without
charge at www.blackrock.com.
Item 3 Audit Committee Financial Expert The registrant's board of directors or trustees, as
applicable (the board of directors) has determined that (i) the registrant has the following
audit committee financial experts serving on its audit committee and (ii) each audit
committee financial expert is independent: independent:
David O. Beim (term ended effective November 1, 2007)
W. Carl Kester
James T. Flynn
Karen P. Robards
Robert S. Salomon, Jr. (term began effective November 1, 2007)
Kent Dixon (term began effective November 1, 2007)
Frank J. Fabozzi (term began effective November 1, 2007)
The registrant's board of directors has determined that W. Carl Kester and Karen P. Robards
qualify as financial experts pursuant to Item 3(c)(4) of Form N-CSR.
Prof. Kester has a thorough understanding of generally accepted accounting principles,
financial statements and internal control over financial reporting as well as audit committee
functions. Prof. Kester has been involved in providing valuation and other financial
consulting services to corporate clients since 1978. Prof. Kesters financial consulting
services present a breadth and level of complexity of accounting issues that are generally
comparable to the breadth and complexity of issues that can reasonably be expected to be
raised by the registrants financial statements.
Ms. Robards has a thorough understanding of generally accepted accounting principles,
financial statements and internal control over financial reporting as well as audit committee
functions. Ms. Robards has been President of Robards & Company, a financial advisory
firm, since 1987. Ms. Robards was formerly an investment banker for more than 10 years
where she was responsible for evaluating and assessing the performance of companies based
on their financial results. Ms. Robards has over 30 years of experience analyzing financial
statements. She also is a member of the audit committee of one publicly held company and
a non-profit organization.
Under applicable securities laws, a person determined to be an audit committee financial
expert will not be deemed an expert for any purpose, including without limitation for the
purposes of Section 11 of the Securities Act of 1933, as a result of being designated or
identified as an audit committee financial expert. The designation or identification as an
audit committee financial expert does not impose on such person any duties, obligations, or
liabilities greater than the duties, obligations, and liabilities imposed on such person as a
member of the audit committee and board of directors in the absence of such designation or
identification.
|
Item 4 Principal Accountant Fees and Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Audit Fees
|
|
(b) Audit-Related Fees
1
|
|
(c) Tax Fees
2
|
|
(d) All Other Fees
3
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
Previous
|
|
Current
|
|
Previous
|
|
Current
|
|
Previous
|
|
Current
|
|
Previous
|
|
|
Fiscal Year
|
|
Fiscal Year
|
|
Fiscal Year
|
|
Fiscal Year
|
|
Fiscal Year
|
|
Fiscal Year
|
|
Fiscal Year
|
|
Fiscal Year
|
Entity Name
|
|
End
|
|
End
|
|
End
|
|
End
|
|
End
|
|
End
|
|
End
|
|
End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlackRock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enhanced Equity
|
|
$32,500
|
|
$32,500
|
|
$0
|
|
$0
|
|
$6,100
|
|
$6,000
|
|
$1,042
|
|
$0
|
Yield Fund, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 The nature of the services include assurance and related services reasonably related to the performance of the audit of
financial statements not included in Audit Fees.
2 The nature of the services include tax compliance, tax advice and tax planning.
3 The nature of the services include a review of compliance procedures and attestation thereto.
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The registrants audit committee (the Committee) has adopted policies and
procedures with regard to the pre-approval of services. Audit, audit-related and tax
compliance services provided to the registrant on an annual basis require specific pre-
approval by the Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to the registrants affiliated
service providers that relate directly to the operations and the financial reporting of the
registrant. Certain of these non-audit services that the Committee believes are a) consistent
with the SECs auditor independence rules and b) routine and recurring services that will
not impair the independence of the independent accountants may be approved by the
Committee without consideration on a specific case-by-case basis (general pre-approval).
However, such services will only be deemed pre-approved provided that any individual
project does not exceed $5,000 attributable to the registrant or $50,000 for all of the
registrants the Committee oversees. Any proposed services exceeding the pre-approved
cost levels will require specific pre-approval by the Committee, as will any other services
not subject to general pre-approval (e.g., unanticipated but permissible services). The
Committee is informed of each service approved subject to general pre-approval at the next
regularly scheduled in-person board meeting.
(e)(2) None of the services described in each of Items 4(b) through (d) were approved by
the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
|
(f) Not Applicable
|
|
|
|
|
(g)
Affiliates Aggregate Non-Audit Fees:
|
|
|
|
|
|
|
|
Current Fiscal Year
|
|
Previous Fiscal Year
|
Entity Name
|
|
End
|
|
End
|
|
|
|
|
|
BlackRock Enhanced Equity
|
|
$291,642
|
|
$3,077,450
|
Yield Fund, Inc.
|
|
|
|
|
|
|
|
|
|
|
(h) The registrants audit committee has considered and determined that the provision of
non-audit services that were rendered to the registrants investment adviser (not including
any non-affiliated sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by the registrants investment adviser), and any entity
controlling, controlled by, or under common control with the investment adviser that
provides ongoing services to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal
|
accountants independence.
Regulation S-X Rule 2-01(c)(7)(ii) $284,500, 0%
Item 5 Audit Committee of Listed Registrants The following individuals are members of the
registrants separately-designated standing audit committee established in accordance with
Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)):
David O. Beim (term ended effective November 1, 2007)
W. Carl Kester
James T. Flynn
Karen P. Robards
Robert S. Salomon, Jr. (term began effective November 1, 2007)
Kent Dixon (term began effective November 1, 2007)
Frank J. Fabozzi (term began effective November 1, 2007)
Item 6 Schedule of Investments The registrants Schedule of Investments is included as part of
the Report to Stockholders filed under Item 1 of this form.
Item 7 Disclosure of Proxy Voting Policies and Procedures for Closed-End Management
Investment Companies The registrant has delegated the voting of proxies relating to Fund
portfolio securities to its investment adviser, BlackRock Advisors, LLC and its sub-adviser,
as applicable. The Proxy Voting Policies and Procedures of the adviser and sub-adviser are
attached hereto as Exhibit 99.PROXYPOL.
|
Proxy Voting Policies and
Procedures
For BlackRock Advisors, LLC
And Its Affiliated SEC Registered Investment Advisers
September 30, 2006
|
Introduction
Scope of Committee Responsibilities
Special Circumstances
Voting Guidelines
Boards of Directors
Auditors
Compensation and Benefits
Capital Structure
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Notice to Clients
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Proxy Voting Policies and Procedures
These Proxy Voting Policies and Procedures (Policy) for BlackRock Advisors,
LLC and its affiliated U.S. registered investment advisers
1
(BlackRock) reflect our
duty as a fiduciary under the Investment Advisers Act of 1940 (the Advisers Act) to
vote proxies in the best interests of our clients. BlackRock serves as the investment
manager for investment companies, other commingled investment vehicles and/or
separate accounts of institutional and other clients. The right to vote proxies for securities
held in such accounts belongs to BlackRocks clients. Certain clients of BlackRock have
retained the right to vote such proxies in general or in specific circumstances.
2
Other
clients, however, have delegated to BlackRock the right to vote proxies for securities held
in their accounts as part of BlackRocks authority to manage, acquire and dispose of
account assets.
When BlackRock votes proxies for a client that has delegated to BlackRock proxy
voting authority, BlackRock acts as the clients agent. Under the Advisers Act, an
investment adviser is a fiduciary that owes each of its clients a duty of care and loyalty
with respect to all services the adviser undertakes on the clients behalf, including proxy
voting. BlackRock is therefore subject to a fiduciary duty to vote proxies in a manner
BlackRock believes is consistent with the clients best interests,
3
whether or not the
clients proxy voting is subject to the fiduciary standards of the Employee Retirement
Income Security Act of 1974 (ERISA).
4
When voting proxies for client accounts
(including investment companies), BlackRocks primary objective is to make voting
decisions solely in the best interests of clients and ERISA clients plan beneficiaries and
participants. In fulfilling its obligations to clients, BlackRock will seek to act in a manner
that it believes is most likely to enhance the economic value of the underlying securities
held in client accounts.
5
It is imperative that
BlackRock considers the interests of its
clients, and not the interests of BlackRock, when voting proxies and that real (or
1
The Policy does not apply to BlackRock Asset Management U.K. Limited and BlackRock Investment
Managers International Limited, which are U.S. registered investment advisers based in the United
Kingdom.
2
In certain situations, a client may direct BlackRock to vote in accordance with the clients
proxy voting
policies. In these situations, BlackRock will seek to comply with such policies to the extent it would not be
inconsistent with other BlackRock legal responsibilities.
3
Letter from Harvey L. Pitt, Chairman, SEC, to John P.M. Higgins, President, Ram Trust Services
(February 12, 2002) (Section 206 of the Investment Advisers Act imposes a fiduciary responsibility to vote
proxies fairly and in the best interests of clients); SEC Release No. IA-2106 (February 3, 2003).
4
DOL Interpretative Bulletin of Sections 402, 403 and 404 of ERISA at 29 C.F.R. 2509.94
-2
5
Other considerations, such as social, labor, environmental or other policies, may be of interest
to
particular clients. While BlackRock is cognizant of the importance of such considerations, when voting
proxies it will generally take such matters into account only to the extent that they have a direct bearing on
the economic value of the underlying securities. To the extent that a BlackRock client desires to pursue a
particular social, labor, environmental or other agenda through the proxy votes made for its securities held
through BlackRock as investment adviser, BlackRock encourages the client to consider retaining direct
proxy voting authority or to appoint independently a special proxy voting fiduciary other than BlackRock.
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perceived) material conflicts that may arise between BlackRocks interest and those of
BlackRocks clients are properly addressed and resolved.
Advisers Act Rule 206(4)-6 was adopted by the SEC in 2003 and requires, among
other things, that an investment adviser that exercises voting authority over clients proxy
voting adopt policies and procedures reasonably designed to ensure that the adviser votes
proxies in the best interests of clients, discloses to its clients information about those
policies and procedures and also discloses to clients how they may obtain information on
how the adviser has voted their proxies.
In light of such fiduciary duties, the requirements of Rule 206(4)-6, and given the
complexity of the issues that may be raised in connection with proxy votes, BlackRock
has adopted these policies and procedures. BlackRocks Equity Investment Policy
Oversight Committee, or a sub-committee thereof (the Committee), addresses proxy
voting issues on behalf of BlackRock and its clients.
6
The Committee is comprised of
senior members of BlackRocks Portfolio Management Group and advised by
BlackRocks Legal and Compliance Department.
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6
Subject to the Proxy Voting Policies of Merrill Lynch Bank & Trust Company FSB, the Committee
may
also function jointly as the Proxy Voting Committee for Merrill Lynch Bank & Trust Company FSB trust
accounts managed by personnel dually-employed by BlackRock.
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I.
Scope of Committee Responsibilities
The Committee shall have the responsibility for determining how to address
proxy votes made on behalf of all BlackRock clients, except for clients who have retained
the right to vote their own proxies, either generally or on any specific matter. In so doing,
the Committee shall seek to ensure that proxy votes are made in the best interests of
clients, and that proxy votes are determined in a manner free from unwarranted or
inappropriate influences. The Committee shall also oversee the overall administration of
proxy voting for BlackRock accounts.
7
The Committee shall establish BlackRocks proxy voting guidelines, with such
advice, participation and research as the Committee deems appropriate from portfolio
managers, proxy voting services or other knowledgeable interested parties. As it is
anticipated that there will not necessarily be a right way to vote proxies on any given
issue applicable to all facts and circumstances, the Committee shall also be responsible
for determining how the proxy voting guidelines will be applied to specific proxy votes,
in light of each issuers unique structure, management, strategic options and, in certain
circumstances, probable economic and other anticipated consequences of alternative
actions. In so doing, the Committee may determine to vote a particular proxy in a manner
contrary to its generally stated guidelines.
The Committee may determine that the subject matter of certain proxy issues are
not suitable for general voting guidelines and requires a case-by-case determination, in
which case the Committee may elect not to adopt a specific voting guideline applicable to
such issues. BlackRock believes that certain proxy voting issues such as approval of
mergers and other significant corporate transactions require investment analysis akin to
investment decisions, and are therefore not suitable for general guidelines. The
Committee may elect to adopt a common BlackRock position on certain proxy votes that
are akin to investment decisions, or determine to permit portfolio managers to make
individual decisions on how best to maximize economic value for the accounts for which
they are responsible (similar to normal buy/sell investment decisions made by such
portfolio managers).
8
While it is expected that BlackRock, as a fiduciary, will generally seek to vote
proxies over which BlackRock exercises voting authority in a uniform manner for all
BlackRock clients, the Committee, in conjunction with the portfolio manager of an
account, may determine that the specific circumstances of such account require that such
accounts proxies be voted differently due to such accounts investment objective or other
factors that differentiate it from other accounts. In addition, on proxy votes that are akin
7
The Committee may delegate day-to-day administrative responsibilities to other BlackRock
personnel
and/or outside service providers, as appropriate.
8
The Committee will normally defer to portfolio managers on proxy votes that are akin to
investment
decisions
except for
proxy votes that involve a material conflict of interest, in which case it will determine,
in its discretion, the appropriate voting process so as to address such conflict.
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to investment decisions, BlackRock believes portfolio managers may from time to time
legitimately reach differing but equally valid views, as fiduciaries for BlackRocks
clients, on how best to maximize economic value in respect of a particular investment.
The Committee will also be responsible for ensuring the maintenance of records
of each proxy vote, as required by Advisers Act Rule 204-2.
9
All records will be
maintained in accordance with applicable law. Except as may be required by applicable
legal requirements, or as otherwise set forth herein, the Committees determinations and
records shall be treated as proprietary, nonpublic and confidential.
The Committee shall be assisted by other BlackRock personnel, as may be
appropriate. In particular, the Committee has delegated to the BlackRock Operations
Department responsibility for monitoring corporate actions and ensuring that proxy votes
are submitted in a timely fashion. The Operations Department shall ensure that proxy
voting issues are promptly brought to the Committees attention and that the Committees
proxy voting decisions are appropriately disseminated and implemented.
To assist BlackRock in voting proxies, the Committee may retain the services of a
firm providing such services. BlackRock has currently retained Institutional Shareholder
Services (ISS) in that role. ISS is an independent adviser that specializes in providing a
variety of fiduciary-level proxy-related services to institutional investment managers,
plan sponsors, custodians, consultants, and other institutional investors. The services
provided to BlackRock may include, but are not limited to, in-depth research, voting
recommendations (which the Committee is not obligated to follow), vote execution, and
recordkeeping.
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9
The Committee may delegate the actual maintenance of such records to an outside service
provider.
Currently, the Committee has delegated the maintenance of such records to Institutional Shareholder
Services.
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II.
Special Circumstances
Routine Consents
. BlackRock may be asked from time to time to consent to an
amendment to, or grant a waiver under, a loan agreement, partnership agreement,
indenture or other governing document of a specific financial instrument held by
BlackRock clients. BlackRock will generally treat such requests for consents not as
proxies subject to these Proxy Voting Policies and Procedures but as investment
matters to be dealt with by the responsible BlackRock investment professionals would,
provided that such consents (i) do not relate to the election of a board of directors or
appointment of auditors of a public company, and (ii) either (A) would not otherwise
materially affect the structure, management or control of a public company, or (B) relate
to a company in which BlackRock clients hold only interests in bank loans or debt
securities and are consistent with customary standards and practices for such instruments.
Securities on Loan
. Registered investment companies that are advised by
BlackRock as well as certain of our advisory clients may participate in securities lending
programs. Under most securities lending arrangements, securities on loan may not be
voted by the lender (unless the loan is recalled). BlackRock believes that each client has
the right to determine whether participating in a securities lending program enhances
returns, to contract with the securities lending agent of its choice and to structure a
securities lending program, through its lending agent, that balances any tension between
loaning and voting securities in a matter that satisfies such client. If client has decided to
participate in a securities lending program, BlackRock will therefore defer to the clients
determination and not attempt to seek recalls solely for the purpose of voting routine
proxies as this could impact the returns received from securities lending and make the
client a less desirable lender in a marketplace. Where a client retains a lending agent that
is unaffiliated with BlackRock, BlackRock will generally not seek to vote proxies
relating to securities on loan because BlackRock does not have a contractual right to
recall such loaned securities for the purpose of voting proxies. Where BlackRock or an
affiliate acts as the lending agent, BlackRock will also generally not seek to recall loaned
securities for proxy voting purposes, unless the portfolio manager responsible for the
account or the Committee determines that voting the proxy is in the clients best interest
and requests that the security be recalled.
Voting Proxies for Non-US Companies
. While the proxy voting process is well
established in the United States, voting proxies of non-US companies frequently involves
logistical issues which can affect BlackRocks ability to vote such proxies, as well as the
desirability of voting such proxies. These issues include (but are not limited to): (i)
untimely notice of shareholder meetings, (ii) restrictions on a foreigners ability to
exercise votes, (iii) requirements to vote proxies in person, (iv) shareblocking
(requirements that investors who exercise their voting rights surrender the right to dispose
of their holdings for some specified period in proximity to the shareholder meeting), (v)
potential difficulties in translating the proxy, and (vi) requirements to provide local
agents with unrestricted powers of attorney to facilitate voting instructions.
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As a consequence, BlackRock votes proxies of non-US companies only on a
best-efforts basis. In addition, the Committee may determine that it is generally in the
best interests of BlackRock clients
not
to
vote proxies of companies in certain countries
if the Committee determines that the costs (including but not limited to opportunity costs
associated with shareblocking constraints) associated with exercising a vote generally are
expected to outweigh the benefit the client will derive by voting on the issuers proposal.
If the Committee so determines in the case of a particular country, the Committee (upon
advice from BlackRock portfolio managers) may override such determination with
respect to a particular issuers shareholder meeting if the Committee believes the benefits
of seeking to exercise a vote at such meeting outweighs the costs, in which case
BlackRock will seek to vote on a best-efforts basis.
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Securities Sold After Record Date
. With respect to votes in connection with
securities held on a particular record date but sold from a client account prior to the
holding of the related meeting, BlackRock may take no action on proposals to be voted
on in such meeting.
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Conflicts of Interest.
From time to time, BlackRock may be required to vote proxies in respect of an issuer that is an affiliate of BlackRock (a BlackRock Affiliate),
or a money management or other client of BlackRock (a BlackRock Client).
10
In such event,
provided that the Committee is aware of the real or potential conflict, the following procedures apply:
§
The Committee intends to adhere to the voting guidelines set forth herein for all proxy issues including matters involving BlackRock
Affiliates and BlackRock Clients. The Committee may, in its discretion for the purposes of ensuring that an independent determination is reached, retain an independent fiduciary to advise the Committee on how to vote or to cast votes on behalf of
BlackRocks clients; and
§
if the Committee determines not to retain an independent fiduciary, or does not desire to follow the advice of such independent
fiduciary, the Committee shall determine how to vote the proxy after consulting with the BlackRock Legal and Compliance Department and concluding that the vote cast is in the clients best interest notwithstanding the conflict.
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10
Such issuers may include investment companies for which BlackRock provides investment
advisory,
administrative and/or other services.
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III.
Voting Guidelines
The Committee has determined that it is appropriate and in the best interests of BlackRocks clients to adopt the following voting guidelines, which
represent the Committees usual voting position on certain recurring proxy issues that are not expected to involve unusual circumstances. With respect to any particular proxy issue, however, the Committee may elect to vote differently than a
voting guideline if the Committee determines that doing so is, in the Committees judgment, in the best interest of its clients. The guidelines may be reviewed at any time upon the request of any Committee member and may be amended or deleted
upon the vote of a majority of voting Committee members present at a Committee meeting for which there is a quorum.
8
A. Boards of Directors
These proposals concern those issues submitted to shareholders relating to the
composition of the Board of Directors of companies other than investment companies.
As a general matter, the Committee believes that a companys Board of Directors (rather
than shareholders) is most likely to have access to important, nonpublic information
regarding a companys business and prospects, and is therefore best-positioned to set
corporate policy and oversee management. The Committee therefore believes that the
foundation of good corporate governance is the election of qualified, independent
corporate directors who are likely to diligently represent the interests of shareholders and
oversee management of the corporation in a manner that will seek to maximize
shareholder value over time. In individual cases, the Committee may look at a Director
nominees history of representing shareholder interests as a director of other companies,
or other factors to the extent the Committee deems relevant.
The Committees general policy is to vote:
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VOTE and DESCRIPTION
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A.1
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FOR nominees for director of United States companies in
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uncontested elections,
except for
nominees who
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§
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have missed at least two meetings and, as a result,
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attended less than 75% of meetings of the Board of
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Directors and its committees the previous year, unless the
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nominee missed the meeting(s) due to illness or company
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business
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§
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voted to implement or renew a dead-hand poison pill
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§
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ignored a shareholder proposal that was approved by
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either a majority of the shares outstanding in any year or
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by the majority of votes cast for two consecutive years
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§
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failed to act on takeover offers where the majority of the
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shareholders have tendered their shares
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§
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are corporate insiders who serve on the audit,
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compensation or nominating committees or on a full
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Board that does not have such committees composed
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exclusively of independent directors
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§
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on a case-by-case basis, have served as directors of other
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companies with allegedly poor corporate governance
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§
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sit on more than six boards of public companies
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A.2
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FOR nominees for directors of non-U.S. companies in uncontested
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elections,
except for
nominees from whom the Committee
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determines to withhold votes due to the nominees poor records of
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representing shareholder interests, on a case-by-case basis
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A.3
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FOR proposals to declassify Boards of Directors, except where
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there exists a legitimate purpose for classifying boards
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A.4
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AGAINST proposals to classify Boards of Directors, except where
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there exists a legitimate purpose for classifying boards
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A.5
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AGAINST proposals supporting cumulative voting
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A.6
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FOR proposals eliminating cumulative voting
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A.7
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FOR proposals supporting confidential voting
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A.8
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FOR proposals seeking election of supervisory board members
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A.9
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AGAINST shareholder proposals seeking additional
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representation of women and/or minorities generally (i.e., not
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specific individuals) to a Board of Directors
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A.10
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AGAINST shareholder proposals for term limits for directors
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A.11
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FOR shareholder proposals to establish a mandatory retirement
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age for directors who attain the age of 72 or older
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A.12
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AGAINST shareholder proposals requiring directors to own a
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minimum amount of company stock
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A.13
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FOR proposals requiring a majority of independent directors on a
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Board of Directors
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A.14
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FOR proposals to allow a Board of Directors to delegate powers to
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a committee or committees
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A.15
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FOR proposals to require audit, compensation and/or nominating
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committees of a Board of Directors to consist
exclusively
of
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independent directors
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A.16
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AGAINST shareholder proposals seeking to prohibit a single
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person from occupying the roles of chairman and chief executive
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officer
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A.17
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FOR proposals to elect account inspectors
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A.18
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FOR proposals to fix the membership of a Board of Directors at a
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specified size
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A.19
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FOR proposals permitting shareholder ability to nominate
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directors directly
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A.20
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AGAINST proposals to eliminate shareholder ability to nominate
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directors directly
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A.21
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FOR proposals permitting shareholder ability to remove directors
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directly
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A.22
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AGAINST proposals to eliminate shareholder ability to remove
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directors directly
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