Objective

The investment objective for BlackRock Preferred Partners (the "Fund") is to seek total return. Over an investment cycle, the Fund expects to achieve net returns commensurate with the long-term return on equities with less volatility and relatively low degree of correlation to the equity markets. The Fund cannot guarantee that its investment objective will be achieved, or that its portfolio design and risk monitoring strategies will be successful and investors may lose the entire value of their investment in the Fund.

Strategies

In order to achieve its investment objective, the Fund invests in a portfolio of hedge funds organized outside the United States generally believed not to be highly correlated with the Standard & Poor's 500 Index over a long-term time horizon. The Fund intends to invest in private funds or other pooled investment vehicles or accounts organized outside the United States (collectively, the "Portfolio Funds") managed by third-party investment managers selected by and unaffiliated with BlackRock Advisors, LLC (the "Advisor"), the Fund's investment adviser, and BlackRock Financial Management, Inc. (with the Advisor, the "Advisors"), and the Fund may also invest directly in securities (other than those of Portfolio Funds) or other financial instruments selected by the Advisors. The Fund may invest directly in Portfolio Funds or may do so indirectly by investing in derivative instruments or participating in contractual relationships whereby any associated payments or receipts may be based on some or all of the change in value of one or more Portfolio Funds. The Fund will limit the amount that can be directly or indirectly invested in any single Portfolio Fund to less than 8% of the Fund's total assets measured at the time of investment, and will limit the amount that can be directly or indirectly invested in Portfolio Funds managed by any one Manager to less than 12% of the Fund's total assets measured at the time of investment. If, due to appreciation or other factors, the Fund's combined direct and indirect positions in Portfolio Funds come to exceed the foregoing limits as of any Valuation Date (as defined in the Fund's Prospectus under "Calculation of Net Asset Value; Valuation"), the Advisors will use their reasonable efforts to reduce the Fund's combined direct and indirect positions to within these limits. The Fund will limit the amount that can be invested in any single investment that is not a direct or indirect investment in a Portfolio Fund to 15% of the Fund's total assets measured at the time of investment. The Fund does not follow a rigid investment policy and is not restricted from participating in any market, strategy or investment other than as set forth hereunder or under the terms of the 1940 Act.