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BlackRock Advantage Global Fund, Inc. BlackRock Advantage SMID Cap Fund, Inc. BlackRock Allocation Target Shares BlackRock Balanced Fund, Inc. BlackRock Bond Fund, Inc. BlackRock California Municipal Series Trust BlackRock Capital Appreciation Fund, Inc. BlackRock Emerging Markets Fund, Inc. BlackRock Equity Dividend Fund BlackRock Financial Institutions Series Trust BlackRock Funds SM BlackRock Funds II BlackRock Funds III BlackRock Funds IV BlackRock Funds V BlackRock Funds VI BlackRock Global Allocation Fund, Inc. BlackRock Index Funds, Inc.
BlackRock International Select Equity Fund BlackRock Large Cap Focus Growth Fund, Inc. BlackRock Large Cap Focus Value Fund, Inc. BlackRock Large Cap Series Funds, Inc. BlackRock Liquidity Funds BlackRock Mid-Cap Value Series, Inc. BlackRock Multi-State Municipal Series Trust BlackRock Municipal Bond Fund, Inc. BlackRock Municipal Series Trust BlackRock Natural Resources Trust BlackRock Series Fund, Inc. BlackRock Series Fund II, Inc. BlackRock Series, Inc. BlackRock Strategic Global Bond Fund, Inc. BlackRock Unconstrained Equity Fund BlackRock Variable Series Funds, Inc. BlackRock Variable Series Funds II, Inc.
Supplement dated October 16, 2026 to the Statement of Additional Information (“SAI”) of each of the funds listed in Appendix A (each, a “Fund”), as amended from time to time.
Each Fund’s SAI is amended as follows:
The list in the section entitled “Purchase of Shares - Additional Payments by BlackRock - D. Service Organizations Receiving Additional Payments” in Part II, or in the section entitled “Miscellaneous Additional Payments by BlackRock - D. Service Organizations Receiving Additional Payments,” “Investment Advisory Arrangements - Additional Payments by BlackRock - D. Service Organizations Receiving Additional Payments” or “Investment Adviser and Other Service Providers - Additional Payments by BlackRock - D. Service Organizations Receiving Additional Payments,” as applicable, of each Fund’s current SAI, is deleted in its entirety and replaced with the following:
&Partners AccuTech Systems Corporation ADP Broker-Dealer, Inc. Advisor Credit Exchange, LLC Advisor Group, Inc. AE Wealth Management, LLC Alight Solutions LLC Allianz Life Financial Services, LLC Allianz Life Insurance Company of New York Allianz Life Insurance Company of North America Altruist Financial LLC American Enterprise Investment Services, Inc. American General Life Insurance Company American United Life Insurance Company Annuity Investors Life Insurance Company Anthem Securities LLC Argent Institutional Trust Company Ascensus Broker Dealer Services, Inc. Ascensus, Inc. Atomic Brokerage LLC Avantax Investment Services, LLC Bancroft Capital LLC
Bank of America, N.A. Bank of New York Mellon Barclays Capital Inc. Benefit Plans Administrative Services, Inc. Benefit Trust Company Beta Capital Securities LLC bfinance US Ltd. BlackRock Advisors, LLC BMO Capital Markets Corp. BNP Paribas BNP Paribas Investment Partners UK Limited BNY Mellon, N.A. BofA Securities, Inc. BOKF, N.A. Brighthouse Life Insurance Company Brighthouse Life Insurance Company of NY Broadridge Business Process Outsourcing, LLC Brown Brothers Harriman & Co. Cabrera Capital Markets, LLC Capital One, N.A. Cetera Advisor Networks LLC Cetera Advisors LLC
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Cetera Financial Group Cetera Financial Specialists LLC Cetera Investment Services LLC CF Secured, LLC Charles Schwab & Co., Inc. Charles Schwab Trust Bank Chicago Mercantile Exchange Inc. CIM Investment Management, Inc. Citco Securities, LLC CitiBank, National Association Citigroup Global Markets, Inc. Citizens Bank Citizens Business Bank CME Shareholder Servicing LLC CMFG Life Insurance Company Comerica Bank Commonwealth Financial Network Computershare Trust Company Conduent HR Services, LLC Delaware Life Insurance Company Delaware Trust Company Deutsche Bank AG Deutsche Bank Trust Company Americas Digital Retirement Solutions, Inc. Dunham & Associates Investment Counsel, Inc. Dynasty Financial Partners LLC Edward D. Jones & Co., L.P. Empire Fidelity Investments Life Insurance Company Empower Annuity Insurance Company of America Empower Financial Services, Inc. Empower Life & Annuity Insurance Company of New York Empower Plan Services, LLC Envestnet Asset Management, Inc. Equitable Advisors, LLC Equitable Life Insurance Company E*trade Savings Bank Federal Deposit Insurance Corporation Fidelity Brokerage Services LLC Fidelity Investments Institutional Operations Company, Inc. Fidelity Investments Life Insurance Company Fifth Third Securities, Inc. First Allied Securities, Inc. First Command Financial Planning, Inc. First Hawaiian Bank First Republic Bank First Security Benefit Life Insurance and Annuity Company of New York First Symetra National Life Insurance Company of New York First-Citizens Bank & Trust Company FIS Brokerage & Securities Services LLC
FNEX Capital, LLC Forethought Life Insurance Company FSC Securities Corporation Genworth Life and Annuity Insurance Company Genworth Life Insurance Company of New York Global Atlantic Distributors, LLC Goldman Sachs & Co. Great Pacific Securities, LLC Guardian Insurance & Annuity Co., Inc. Hancock Whitney Bank Hartford Funds Management Company Hartford Securities Distribution Company, Inc. Hazeltree Fund Services, Inc. Hightower Securities, Inc. Hilltop Securities Inc. HSBC Bank USA, N.A. Huntington Securities, Inc. Institutional Cash Distributors, LLC Integrity Life Insurance Company Interactive Brokers, LLC Investment Trust of California J.P. Morgan Institutional Investments Inc. J.P. Morgan Securities LLC Jefferies LLC Jefferson National Life Insurance Company Jefferson National Life Insurance Company of New York John Hancock Life Insurance Company (U.S.A.) John Hancock Life Insurance Company of New York John Hancock Trust Company JPMorgan Chase Bank, N.A. Kestra Investment Services, LLC Lincoln Financial Advisors Corporation Lincoln Financial Securities Corporation Lincoln Life & Annuity Company of New York Lincoln National Life Insurance Company Lincoln Retirement Services LLC Lombard International Life Assurance Company LPL Financial LLC M&T Securities Inc. Manufacturers and Traders Trust Company Massachusetts Mutual Life Insurance Company Members Life Insurance Company Merrill Lynch, Pierce, Fenner & Smith Incorporated Metavante Corporation Metropolitan Life Insurance Company Mid Atlantic Clearing & Settlement Corporation Midland Life Insurance Company Minnesota Life Insurance Company Mischler Financial Group Mizuho Securities USA Inc. MML Distributors, LLC MML Investors Services, LLC Morgan Stanley & Co. LLC
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Morgan Stanley Distribution, Inc. Morgan Stanley Smith Barney LLC MUFG Union Bank, National Association Nassau Life Insurance Company National Financial Services LLC National Integrity Life Insurance Company National Life Insurance Company Nationwide Financial Services, Inc. Nationwide Fund Distributors LLC Nationwide Retirement Solutions NCB Federal Savings Bank New England Pension Plan Systems, LLC New York Life Insurance and Annuity Corporation Newport Retirement Services, Inc. Northbrook Bank & Trust Company Northern Trust Company Northwestern Mutual Investment Services, LLC Northwestern Mutual Life Insurance Company NYLife Distributors LLC Oppenheimer & Co., Inc. Orion Advisor Services, LLC Osaic Wealth, Inc. Pacific Life & Annuity Company Pacific Life Insurance Company Pacific Select Distributors, LLC Park Avenue Securities LLC Penserra Securities LLC Pershing LLC PFPC Inc. Piper Jaffray & Co. PNC Bank, National Association PNC Capital Markets LLC PNC Investments LLC Principal Bank Principal Life Insurance Company Protective Life and Annuity Insurance Company Protective Life Insurance Company Pruco Life Insurance Company Pruco Life Insurance Company of New Jersey Prudential Annuities Distributors, Inc. Prudential Insurance Company of America Raymond James & Associates, Inc. Raymond James Financial Services, Inc. RBC Capital Markets, LLC Regions Bank Reliance Trust Company Reliastar Life Insurance Company Reliastar Life Insurance Company of New York RiverSource Distributors, Inc. RiverSource Life Insurance Co. of New York RiverSource Life Insurance Company SagePoint Financial, Inc. Sammons Retirement Solutions, Inc. Sanctuary Wealth Group, LLC
Santander Bank, N.A. Saturna Trust Company Securities America, Inc. Securities Finance Trust Company Security Benefit Life Insurance Company Security Financial Resources, Inc. Security Life of Denver Insurance Company SEI Private Trust Company SG Americas Securities, LLC Silicon Valley Bank Standard Insurance Company Standard Retirement Services, Inc. State Farm Life and Accident Assurance Company State Farm Life Insurance Company State Farm VP Management Corp. State Street Bank and Trust Company State Street Global Markets, LLC Stern Brothers & Co. Stifel, Nicolaus & Company, Incorporated Summit Brokerage Services, Inc. SVB Asset Management Symetra Life Insurance Company Syntal Capital Partners, LLC T. Rowe Price Retirement Plan Services, Inc. Talcott Resolution Life and Annuity Insurance Company Talcott Resolution Life Insurance Company TD Ameritrade Clearing, Inc. TD Ameritrade, Inc. TD Prime Services (US) LLC Teachers Insurance and Annuity Association of America Tigress Financial Partners, LLC Transamerica Financial Life Insurance Company Transamerica Life Insurance Company Treasury Brokerage Triad Advisors, LLC Truist Bank U.S. Bancorp Investments, Inc. U.S. Bank, National Association UBATCO & Co. UBS Financial Services, Inc. UBS Securities LLC Ultimus Fund Solutions, LLC UMB Bank, National Association United States Life Insurance Company in the City of New York VALIC Retirement Services Company Vanguard Group, Inc. Vanguard Marketing Corporation Voya Financial Advisors, Inc. Voya Financial Partners, LLC Voya Institutional Plan Services, LLC Voya Insurance and Annuity Company
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Voya Investments Distributor, LLC Voya Retirement Insurance and Annuity Company Waddell & Reed, Inc. Wells Fargo Advisors, LLC Wells Fargo Advisors Financial Network, LLC Wells Fargo Bank, N.A.
Wells Fargo Clearing Services, LLC Wells Fargo Investments, LLC Wells Fargo Securities, LLC Wilmington Trust, National Association Woodbury Financial Services, Inc. ZB, National Association
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Appendix A
BlackRock Advantage Global Fund, Inc.
BlackRock Advantage SMID Cap Fund, Inc.
BlackRock Allocation Target Shares BATS: Securitized Total Return Series BATS: Corporate Credit Total Return Series BATS: High Income Municipal Series BATS: High Income Taxable Series BATS: Mortgage Total Return Series BATS: Interest Rate Hedge Series BATS: Short Duration Taxable Total Return Series BATS: Short Term Municipal Income Series
BlackRock Balanced Fund, Inc.
BlackRock Bond Fund, Inc. BlackRock Total Return Fund
BlackRock California Municipal Series Trust BlackRock California Municipal Opportunities Fund
BlackRock Capital Appreciation Fund, Inc.
BlackRock Emerging Markets Fund, Inc.
BlackRock Equity Dividend Fund
BlackRock Financial Institutions Series Trust BlackRock Summit Cash Reserves Fund
BlackRock Funds SM BlackRock Advantage Emerging Markets Fund BlackRock Advantage International Fund BlackRock Advantage Large Cap Growth Fund BlackRock Advantage Small Cap Core Fund BlackRock Advantage Small Cap Growth Fund BlackRock China A Opportunities Fund BlackRock Commodity Strategies Fund BlackRock Daily Reinvestment Stablecoin Reserve Vehicle BlackRock Defensive Advantage Emerging Markets Fund BlackRock Emerging Markets ex-China Fund BlackRock Energy Opportunities Fund BlackRock Exchange Portfolio BlackRock Global Equity Market Neutral Fund BlackRock Health Sciences Opportunities Portfolio BlackRock High Equity Income Fund
BlackRock Mid-Cap Growth Equity Portfolio BlackRock Real Estate Securities Fund BlackRock Short Obligations Fund BlackRock Sustainable Aware Advantage Emerging Markets Equity Fund BlackRock Sustainable Aware Advantage Large Cap Core Fund BlackRock Tactical Opportunities Fund BlackRock Technology Opportunities Fund BlackRock Wealth Liquid Environmentally Aware Fund Circle Reserve Fund iShares Developed Real Estate Index Fund iShares Enhanced Roll Yield Index Fund iShares FTSE NAREIT All Equity REIT Index Fund iShares Municipal Bond Index Fund iShares Russell Mid-Cap Index Fund iShares Russell Small/Mid-Cap Index Fund iShares Short-Term TIPS Bond Index Fund iShares Total U.S. Stock Market Index Fund iShares U.S. Intermediate Credit Bond Index Fund iShares U.S. Intermediate Government Bond Index Fund iShares U.S. Long Credit Bond Index Fund iShares U.S. Long Government Bond Index Fund iShares U.S. Securitized Bond Index Fund
BlackRock Funds II BlackRock 20/80 Target Allocation Fund BlackRock 40/60 Target Allocation Fund BlackRock 60/40 Target Allocation Fund BlackRock 80/20 Target Allocation Fund BlackRock Dynamic High Income Portfolio BlackRock Global Dividend Portfolio BlackRock Managed Income Fund BlackRock Multi-Asset Income Portfolio BlackRock Retirement Income 2030 Fund
BlackRock Funds III BlackRock Cash Funds: Institutional BlackRock Cash Funds: Treasury BlackRock Diversified Equity Alpha Fund BlackRock Diversified Fixed Income Fund BlackRock LifePath ® Dynamic Retirement Fund BlackRock LifePath ® Dynamic 2030 Fund BlackRock LifePath ® Dynamic 2035 Fund BlackRock LifePath ® Dynamic 2040 Fund BlackRock LifePath ® Dynamic 2045 Fund
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BlackRock LifePath ® Dynamic 2050 Fund BlackRock LifePath ® Dynamic 2055 Fund BlackRock LifePath ® Dynamic 2060 Fund BlackRock LifePath ® Dynamic 2065 Fund BlackRock LifePath ® Dynamic 2070 Fund BlackRock LifePath ® Index Retirement Fund BlackRock LifePath ® Index 2030 Fund BlackRock LifePath ® Index 2035 Fund BlackRock LifePath ® Index 2040 Fund BlackRock LifePath ® Index 2045 Fund BlackRock LifePath ® Index 2050 Fund BlackRock LifePath ® Index 2055 Fund BlackRock LifePath ® Index 2060 Fund BlackRock LifePath ® Index 2065 Fund BlackRock LifePath ® Index 2070 Fund iShares MSCI Total International Index Fund iShares Russell 1000 Large-Cap Index Fund iShares S&P 500 Index Fund iShares U.S. Aggregate Bond Index Fund
BlackRock Funds IV BlackRock Credit Relative Value Fund BlackRock Systematic Multi-Strategy Fund
BlackRock Funds V BlackRock Core Bond Portfolio BlackRock Floating Rate Income Portfolio BlackRock High Yield Portfolio BlackRock Income Fund BlackRock Inflation Protected Bond Portfolio BlackRock Low Duration Bond Portfolio BlackRock Strategic Income Opportunities Portfolio
BlackRock Funds VI BlackRock Advantage CoreAlpha Bond Fund
BlackRock Global Allocation Fund, Inc.
BlackRock Index Funds, Inc. iShares MSCI EAFE International Index Fund iShares Russell 2000 Small-Cap Index Fund
BlackRock International Select Equity Fund
BlackRock Large Cap Focus Growth Fund, Inc.
BlackRock Large Cap Focus Value Fund, Inc.
BlackRock Large Cap Series Funds, Inc. BlackRock Advantage Large Cap Core Fund BlackRock Advantage Large Cap Value Fund BlackRock Event Driven Equity Fund
BlackRock Liquidity Funds FedFund MuniCash TempCash BlackRock Select Treasury Based Liquidity Fund T-Fund Treasury Trust Fund
BlackRock Mid-Cap Value Series, Inc. BlackRock Mid-Cap Value Fund
BlackRock Multi-State Municipal Series Trust BlackRock New Jersey Municipal Bond Fund BlackRock New York Municipal Opportunities Fund BlackRock Pennsylvania Municipal Bond Fund
BlackRock Municipal Bond Fund, Inc. BlackRock National Municipal Fund BlackRock Short Duration Muni Fund
BlackRock Municipal Series Trust BlackRock Strategic Municipal Opportunities Fund
BlackRock Natural Resources Trust
BlackRock Series Fund, Inc. BlackRock Advantage Large Cap Core Portfolio BlackRock Balanced Portfolio BlackRock Capital Appreciation Portfolio BlackRock Global Allocation Portfolio BlackRock Government Money Market Portfolio
BlackRock Series Fund II, Inc. BlackRock High Yield Portfolio
BlackRock Series, Inc. BlackRock International Fund
BlackRock Strategic Global Bond Fund, Inc.
BlackRock Unconstrained Equity Fund
BlackRock Variable Series Funds, Inc. BlackRock 60/40 Target Allocation ETF V.I. Fund BlackRock Advantage Large Cap Core V.I. Fund BlackRock Advantage Large Cap Value V.I. Fund BlackRock Advantage SMID Cap V.I. Fund
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BlackRock Basic Value V.I. Fund BlackRock Capital Appreciation V.I. Fund BlackRock Equity Dividend V.I. Fund BlackRock Global Allocation V.I. Fund BlackRock Government Money Market V.I. Fund BlackRock International Index V.I. Fund BlackRock International V.I. Fund
BlackRock Large Cap Focus Growth V.I. Fund BlackRock Managed Volatility V.I. Fund BlackRock S&P 500 Index V.I. Fund BlackRock Small Cap Index V.I. Fund
BlackRock Variable Series Funds II, Inc. BlackRock High Yield V.I. Fund BlackRock Total Return V.I. Fund
Shareholders should retain this Supplement for future reference.
SAI-GLOBAL-1026SUP
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BlackRock Advantage Global Fund, Inc. BlackRock Advantage SMID Cap Fund, Inc. BlackRock Allocation Target Shares BlackRock Balanced Fund, Inc. BlackRock Bond Fund, Inc. BlackRock California Municipal Series Trust BlackRock Capital Appreciation Fund, Inc. BlackRock Emerging Markets Fund, Inc. BlackRock Equity Dividend Fund BlackRock Financial Institutions Series Trust BlackRock Funds SM BlackRock Funds II BlackRock Funds III BlackRock Funds IV BlackRock Funds V BlackRock Funds VI BlackRock Global Allocation Fund, Inc. BlackRock Index Funds, Inc.
BlackRock International Select Equity Fund BlackRock Large Cap Focus Growth Fund, Inc. BlackRock Large Cap Focus Value Fund, Inc. BlackRock Large Cap Series Funds, Inc. BlackRock Liquidity Funds BlackRock Mid-Cap Value Series, Inc. BlackRock Multi-State Municipal Series Trust BlackRock Municipal Bond Fund, Inc. BlackRock Municipal Series Trust BlackRock Natural Resources Trust BlackRock Series Fund, Inc. BlackRock Series Fund II, Inc. BlackRock Series, Inc. BlackRock Strategic Global Bond Fund, Inc. BlackRock Unconstrained Equity Fund BlackRock Variable Series Funds, Inc. BlackRock Variable Series Funds II, Inc.
Supplement dated September 11, 2026 to the Statement of Additional Information (“SAI”) of each of the funds listed in Appendix A (each, a “Fund”), as amended from time to time.
Each Fund’s SAI is amended as follows:
The list in the section entitled “Purchase of Shares - Additional Payments by BlackRock - D. Service Organizations Receiving Additional Payments” in Part II, or in the section entitled “Miscellaneous Additional Payments by BlackRock - D. Service Organizations Receiving Additional Payments,” “Investment Advisory Arrangements - Additional Payments by BlackRock - D. Service Organizations Receiving Additional Payments” or “Investment Adviser and Other Service Providers - Additional Payments by BlackRock - D. Service Organizations Receiving Additional Payments,” as applicable, of each Fund’s current SAI, is deleted in its entirety and replaced with the following:
&Partners AccuTech Systems Corporation ADP Broker-Dealer, Inc. Advisor Credit Exchange, LLC Advisor Group, Inc. AE Wealth Management, LLC Alight Solutions LLC Allianz Life Financial Services, LLC Allianz Life Insurance Company of New York Allianz Life Insurance Company of North America Altruist Financial LLC American Enterprise Investment Services, Inc. American General Life Insurance Company American United Life Insurance Company Annuity Investors Life Insurance Company Anthem Securities LLC Argent Institutional Trust Company Ascensus Broker Dealer Services, Inc. Ascensus, Inc. Atomic Brokerage LLC Avantax Investment Services, LLC
Bancroft Capital LLC Bank of America, N.A. Bank of New York Mellon Barclays Capital Inc. Benefit Plans Administrative Services, Inc. Benefit Trust Company Beta Capital Securities LLC bfinance US Ltd. BlackRock Advisors, LLC BMO Capital Markets Corp. BNP Paribas BNP Paribas Investment Partners UK Limited BNY Mellon, N.A. BofA Securities, Inc. BOKF, N.A. Brighthouse Life Insurance Company Brighthouse Life Insurance Company of NY Broadridge Business Process Outsourcing, LLC Brown Brothers Harriman & Co. Cabrera Capital Markets, LLC Capital One, N.A.
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Cetera Advisor Networks LLC Cetera Advisors LLC Cetera Financial Group Cetera Financial Specialists LLC Cetera Investment Services LLC CF Secured, LLC Charles Schwab & Co., Inc. Charles Schwab Trust Bank Chicago Mercantile Exchange Inc. CIM Investment Management, Inc. Citco Securities, LLC CitiBank, National Association Citigroup Global Markets, Inc. Citizens Bank Citizens Business Bank CME Shareholder Servicing LLC CMFG Life Insurance Company Comerica Bank Commonwealth Financial Network Computershare Trust Company Conduent HR Services, LLC Delaware Life Insurance Company Delaware Trust Company Deutsche Bank AG Deutsche Bank Trust Company Americas Digital Retirement Solutions, Inc. Dunham & Associates Investment Counsel, Inc. Dynasty Financial Partners LLC Edward D. Jones & Co., L.P. Empire Fidelity Investments Life Insurance Company Empower Annuity Insurance Company of America Empower Financial Services, Inc. Empower Life & Annuity Insurance Company of New York Empower Plan Services, LLC Envestnet Asset Management, Inc. Equitable Advisors, LLC Equitable Life Insurance Company E*trade Savings Bank Federal Deposit Insurance Corporation Fidelity Brokerage Services LLC Fidelity Investments Institutional Operations Company, Inc. Fidelity Investments Life Insurance Company Fifth Third Securities, Inc. First Allied Securities, Inc. First Command Financial Planning, Inc. First Hawaiian Bank First Republic Bank First Security Benefit Life Insurance and Annuity Company of New York
First Symetra National Life Insurance Company of New York First-Citizens Bank & Trust Company FIS Brokerage & Securities Services LLC FNEX Capital, LLC Forethought Life Insurance Company FSC Securities Corporation Genworth Life and Annuity Insurance Company Genworth Life Insurance Company of New York Global Atlantic Distributors, LLC Goldman Sachs & Co. Great Pacific Securities, LLC Guardian Insurance & Annuity Co., Inc. Hancock Whitney Bank Hartford Funds Management Company Hartford Securities Distribution Company, Inc. Hazeltree Fund Services, Inc. Hightower Securities, Inc. Hilltop Securities Inc. HSBC Bank USA, N.A. Huntington Securities, Inc. Institutional Cash Distributors, LLC Integrity Life Insurance Company Interactive Brokers, LLC Investment Trust of California J.P. Morgan Institutional Investments Inc. J.P. Morgan Securities LLC Jefferies LLC Jefferson National Life Insurance Company Jefferson National Life Insurance Company of New York John Hancock Life Insurance Company (U.S.A.) John Hancock Life Insurance Company of New York John Hancock Trust Company JPMorgan Chase Bank, N.A. Kestra Investment Services, LLC Lincoln Financial Advisors Corporation Lincoln Financial Securities Corporation Lincoln Life & Annuity Company of New York Lincoln National Life Insurance Company Lincoln Retirement Services LLC Lombard International Life Assurance Company LPL Financial LLC M&T Securities Inc. Manufacturers and Traders Trust Company Massachusetts Mutual Life Insurance Company Members Life Insurance Company Merrill Lynch, Pierce, Fenner & Smith Incorporated Metavante Corporation Metropolitan Life Insurance Company Mid Atlantic Clearing & Settlement Corporation Midland Life Insurance Company
2
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Minnesota Life Insurance Company Mischler Financial Group Mizuho Securities USA Inc. MML Distributors, LLC MML Investors Services, LLC Morgan Stanley & Co. LLC Morgan Stanley Distribution, Inc. Morgan Stanley Smith Barney LLC MUFG Union Bank, National Association Nassau Life Insurance Company National Financial Services LLC National Integrity Life Insurance Company National Life Insurance Company Nationwide Financial Services, Inc. Nationwide Fund Distributors LLC Nationwide Retirement Solutions NCB Federal Savings Bank New England Pension Plan Systems, LLC New York Life Insurance and Annuity Corporation Newport Retirement Services, Inc. Northbrook Bank & Trust Company Northern Trust Company Northwestern Mutual Investment Services, LLC Northwestern Mutual Life Insurance Company NYLife Distributors LLC Oppenheimer & Co., Inc. Orion Advisor Services, LLC Osaic Wealth, Inc. Pacific Life & Annuity Company Pacific Life Insurance Company Pacific Select Distributors, LLC Park Avenue Securities LLC Penserra Securities LLC Pershing LLC PFPC Inc. Piper Jaffray & Co. PNC Bank, National Association PNC Capital Markets LLC PNC Investments LLC Principal Bank Principal Life Insurance Company Protective Life and Annuity Insurance Company Protective Life Insurance Company Pruco Life Insurance Company Pruco Life Insurance Company of New Jersey Prudential Annuities Distributors, Inc. Prudential Insurance Company of America Raymond James & Associates, Inc. Raymond James Financial Services, Inc. RBC Capital Markets, LLC Regions Bank Reliance Trust Company
Reliastar Life Insurance Company Reliastar Life Insurance Company of New York RiverSource Distributors, Inc. RiverSource Life Insurance Co. of New York RiverSource Life Insurance Company SagePoint Financial, Inc. Sammons Retirement Solutions, Inc. Sanctuary Wealth Group, LLC Santander Bank, N.A. Saturna Trust Company Securities America, Inc. Securities Finance Trust Company Security Benefit Life Insurance Company Security Financial Resources, Inc. Security Life of Denver Insurance Company SEI Private Trust Company SG Americas Securities, LLC Silicon Valley Bank Standard Insurance Company State Farm Life and Accident Assurance Company State Farm Life Insurance Company State Farm VP Management Corp. State Street Bank and Trust Company State Street Global Markets, LLC Stern Brothers & Co. Stifel, Nicolaus & Company, Incorporated Summit Brokerage Services, Inc. SVB Asset Management Symetra Life Insurance Company Syntal Capital Partners, LLC T. Rowe Price Retirement Plan Services, Inc. Talcott Resolution Life and Annuity Insurance Company Talcott Resolution Life Insurance Company TD Ameritrade Clearing, Inc. TD Ameritrade, Inc. TD Prime Services (US) LLC Teachers Insurance and Annuity Association of America Tigress Financial Partners, LLC Transamerica Financial Life Insurance Company Transamerica Life Insurance Company Treasury Brokerage Triad Advisors, LLC Truist Bank U.S. Bancorp Investments, Inc. U.S. Bank, National Association UBATCO & Co. UBS Financial Services, Inc. UBS Securities LLC Ultimus Fund Solutions, LLC UMB Bank, National Association
3
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United States Life Insurance Company in the City of New York VALIC Retirement Services Company Vanguard Group, Inc. Vanguard Marketing Corporation Voya Financial Advisors, Inc. Voya Financial Partners, LLC Voya Institutional Plan Services, LLC Voya Insurance and Annuity Company Voya Investments Distributor, LLC Voya Retirement Insurance and Annuity Company
Waddell & Reed, Inc. Wells Fargo Advisors, LLC Wells Fargo Advisors Financial Network, LLC Wells Fargo Bank, N.A. Wells Fargo Clearing Services, LLC Wells Fargo Investments, LLC Wells Fargo Securities, LLC Wilmington Trust, National Association Woodbury Financial Services, Inc. ZB, National Association
4
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Appendix A
BlackRock Advantage Global Fund, Inc.
BlackRock Advantage SMID Cap Fund, Inc.
BlackRock Allocation Target Shares BATS: Securitized Total Return Series BATS: Corporate Credit Total Return Series BATS: High Income Municipal Series BATS: High Income Taxable Series BATS: Mortgage Total Return Series BATS: Interest Rate Hedge Series BATS: Short Duration Taxable Total Return Series BATS: Short Term Municipal Income Series
BlackRock Balanced Fund, Inc.
BlackRock Bond Fund, Inc. BlackRock Total Return Fund
BlackRock California Municipal Series Trust BlackRock California Municipal Opportunities Fund
BlackRock Capital Appreciation Fund, Inc.
BlackRock Emerging Markets Fund, Inc.
BlackRock Equity Dividend Fund
BlackRock Financial Institutions Series Trust BlackRock Summit Cash Reserves Fund
BlackRock Funds SM BlackRock Advantage Emerging Markets Fund BlackRock Advantage International Fund BlackRock Advantage Large Cap Growth Fund BlackRock Advantage Small Cap Core Fund BlackRock Advantage Small Cap Growth Fund BlackRock China A Opportunities Fund BlackRock Commodity Strategies Fund BlackRock Daily Reinvestment Stablecoin Reserve Vehicle BlackRock Defensive Advantage Emerging Markets Fund BlackRock Emerging Markets ex-China Fund BlackRock Energy Opportunities Fund BlackRock Exchange Portfolio BlackRock Global Equity Market Neutral Fund BlackRock Health Sciences Opportunities Portfolio
BlackRock High Equity Income Fund BlackRock Mid-Cap Growth Equity Portfolio BlackRock Real Estate Securities Fund BlackRock Short Obligations Fund BlackRock Sustainable Aware Advantage Emerging Markets Equity Fund BlackRock Sustainable Aware Advantage Large Cap Core Fund BlackRock Tactical Opportunities Fund BlackRock Technology Opportunities Fund BlackRock Wealth Liquid Environmentally Aware Fund Circle Reserve Fund iShares Developed Real Estate Index Fund iShares Enhanced Roll Yield Index Fund iShares FTSE NAREIT All Equity REIT Index Fund iShares Municipal Bond Index Fund iShares Russell Mid-Cap Index Fund iShares Russell Small/Mid-Cap Index Fund iShares Short-Term TIPS Bond Index Fund iShares Total U.S. Stock Market Index Fund iShares U.S. Intermediate Credit Bond Index Fund iShares U.S. Intermediate Government Bond Index Fund iShares U.S. Long Credit Bond Index Fund iShares U.S. Long Government Bond Index Fund iShares U.S. Securitized Bond Index Fund
BlackRock Funds II BlackRock 20/80 Target Allocation Fund BlackRock 40/60 Target Allocation Fund BlackRock 60/40 Target Allocation Fund BlackRock 80/20 Target Allocation Fund BlackRock Dynamic High Income Portfolio BlackRock Global Dividend Portfolio BlackRock Managed Income Fund BlackRock Multi-Asset Income Portfolio BlackRock Retirement Income 2030 Fund
BlackRock Funds III BlackRock Cash Funds: Institutional BlackRock Cash Funds: Treasury BlackRock Diversified Equity Alpha Fund BlackRock Diversified Fixed Income Fund BlackRock LifePath ® Dynamic Retirement Fund BlackRock LifePath ® Dynamic 2030 Fund BlackRock LifePath ® Dynamic 2035 Fund BlackRock LifePath ® Dynamic 2040 Fund BlackRock LifePath ® Dynamic 2045 Fund
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BlackRock LifePath ® Dynamic 2050 Fund BlackRock LifePath ® Dynamic 2055 Fund BlackRock LifePath ® Dynamic 2060 Fund BlackRock LifePath ® Dynamic 2065 Fund BlackRock LifePath ® Dynamic 2070 Fund BlackRock LifePath ® ESG Index Retirement Fund BlackRock LifePath ® ESG Index 2030 Fund BlackRock LifePath ® ESG Index 2035 Fund BlackRock LifePath ® ESG Index 2040 Fund BlackRock LifePath ® ESG Index 2045 Fund BlackRock LifePath ® ESG Index 2050 Fund BlackRock LifePath ® ESG Index 2055 Fund BlackRock LifePath ® ESG Index 2060 Fund BlackRock LifePath ® ESG Index 2065 Fund BlackRock LifePath ® ESG Index 2070 Fund BlackRock LifePath ® Index Retirement Fund BlackRock LifePath ® Index 2030 Fund BlackRock LifePath ® Index 2035 Fund BlackRock LifePath ® Index 2040 Fund BlackRock LifePath ® Index 2045 Fund BlackRock LifePath ® Index 2050 Fund BlackRock LifePath ® Index 2055 Fund BlackRock LifePath ® Index 2060 Fund BlackRock LifePath ® Index 2065 Fund BlackRock LifePath ® Index 2070 Fund iShares MSCI Total International Index Fund iShares Russell 1000 Large-Cap Index Fund iShares S&P 500 Index Fund iShares U.S. Aggregate Bond Index Fund
BlackRock Funds IV BlackRock Credit Relative Value Fund BlackRock Systematic Multi-Strategy Fund
BlackRock Funds V BlackRock Core Bond Portfolio BlackRock Floating Rate Income Portfolio BlackRock High Yield Portfolio BlackRock Income Fund BlackRock Inflation Protected Bond Portfolio BlackRock Low Duration Bond Portfolio BlackRock Strategic Income Opportunities Portfolio
BlackRock Funds VI BlackRock Advantage CoreAlpha Bond Fund
BlackRock Global Allocation Fund, Inc.
BlackRock Index Funds, Inc. iShares MSCI EAFE International Index Fund iShares Russell 2000 Small-Cap Index Fund
BlackRock International Select Equity Fund
BlackRock Large Cap Focus Growth Fund, Inc.
BlackRock Large Cap Focus Value Fund, Inc.
BlackRock Large Cap Series Funds, Inc. BlackRock Advantage Large Cap Core Fund BlackRock Advantage Large Cap Value Fund BlackRock Event Driven Equity Fund
BlackRock Liquidity Funds FedFund MuniCash TempCash BlackRock Select Treasury Based Liquidity Fund T-Fund Treasury Trust Fund
BlackRock Mid-Cap Value Series, Inc. BlackRock Mid-Cap Value Fund
BlackRock Multi-State Municipal Series Trust BlackRock New Jersey Municipal Bond Fund BlackRock New York Municipal Opportunities Fund BlackRock Pennsylvania Municipal Bond Fund
BlackRock Municipal Bond Fund, Inc. BlackRock National Municipal Fund BlackRock Short Duration Muni Fund
BlackRock Municipal Series Trust BlackRock Strategic Municipal Opportunities Fund
BlackRock Natural Resources Trust
BlackRock Series Fund, Inc. BlackRock Advantage Large Cap Core Portfolio BlackRock Balanced Portfolio BlackRock Capital Appreciation Portfolio BlackRock Global Allocation Portfolio BlackRock Government Money Market Portfolio
BlackRock Series Fund II, Inc. BlackRock High Yield Portfolio
BlackRock Series, Inc. BlackRock International Fund
BlackRock Strategic Global Bond Fund, Inc.
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BlackRock Unconstrained Equity Fund
BlackRock Variable Series Funds, Inc. BlackRock 60/40 Target Allocation ETF V.I. Fund BlackRock Advantage Large Cap Core V.I. Fund BlackRock Advantage Large Cap Value V.I. Fund BlackRock Advantage SMID Cap V.I. Fund BlackRock Basic Value V.I. Fund BlackRock Capital Appreciation V.I. Fund BlackRock Equity Dividend V.I. Fund BlackRock Global Allocation V.I. Fund
BlackRock Government Money Market V.I. Fund BlackRock International Index V.I. Fund BlackRock International V.I. Fund BlackRock Large Cap Focus Growth V.I. Fund BlackRock Managed Volatility V.I. Fund BlackRock S&P 500 Index V.I. Fund BlackRock Small Cap Index V.I. Fund
BlackRock Variable Series Funds II, Inc. BlackRock High Yield V.I. Fund BlackRock Total Return V.I. Fund
Shareholders should retain this Supplement for future reference.
SAI-GLOBAL-0926SUP
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BlackRock Advantage Global Fund, Inc.
BlackRock Advantage SMID Cap Fund, Inc.
BlackRock Allocation Target Shares BATS: Securitized Total Return Series BATS: Corporate Credit Total Return Series BATS: High Income Municipal Series BATS: High Income Taxable Series BATS: Mortgage Total Return Series BATS: Interest Rate Hedge Series BATS: Short Duration Taxable Total Return Series BATS: Short Term Municipal Income Series
BlackRock Balanced Fund, Inc.
BlackRock Bond Fund, Inc. BlackRock Total Return Fund
BlackRock California Municipal Series Trust BlackRock California Municipal Opportunities Fund
BlackRock Capital Appreciation Fund, Inc.
BlackRock Emerging Markets Fund, Inc.
BlackRock Equity Dividend Fund
BlackRock Financial Institutions Series Trust BlackRock Summit Cash Reserves Fund
BlackRock Funds SM BlackRock Advantage Emerging Markets Fund BlackRock Advantage International Fund BlackRock Advantage Large Cap Growth Fund BlackRock Advantage Small Cap Core Fund BlackRock Advantage Small Cap Growth Fund BlackRock China A Opportunities Fund BlackRock Commodity Strategies Fund BlackRock Defensive Advantage Emerging Markets Fund BlackRock Emerging Markets ex-China Fund BlackRock Energy Opportunities Fund BlackRock Exchange Portfolio BlackRock Global Equity Market Neutral Fund BlackRock Health Sciences Opportunities Portfolio BlackRock High Equity Income Fund BlackRock Mid-Cap Growth Equity Portfolio BlackRock Real Estate Securities Fund BlackRock Short Obligations Fund BlackRock Sustainable Aware Advantage Emerging Markets Equity Fund
BlackRock Sustainable Aware Advantage International Equity Fund BlackRock Sustainable Aware Advantage Large Cap Core Fund BlackRock Tactical Opportunities Fund BlackRock Technology Opportunities Fund BlackRock Wealth Liquid Environmentally Aware Fund Circle Reserve Fund iShares Developed Real Estate Index Fund iShares Enhanced Roll Yield Index Fund iShares FTSE NAREIT All Equity REIT Index Fund iShares Municipal Bond Index Fund iShares Russell Mid-Cap Index Fund iShares Russell Small/Mid-Cap Index Fund iShares Short-Term TIPS Bond Index Fund iShares Total U.S. Stock Market Index Fund iShares U.S. Intermediate Credit Bond Index Fund iShares U.S. Intermediate Government Bond Index Fund iShares U.S. Long Credit Bond Index Fund iShares U.S. Long Government Bond Index Fund iShares U.S. Securitized Bond Index Fund
BlackRock Funds II BlackRock 20/80 Target Allocation Fund BlackRock 40/60 Target Allocation Fund BlackRock 60/40 Target Allocation Fund BlackRock 80/20 Target Allocation Fund BlackRock Dynamic High Income Portfolio BlackRock Global Dividend Portfolio BlackRock Managed Income Fund BlackRock Multi-Asset Income Portfolio BlackRock Retirement Income 2030 Fund
BlackRock Funds III BlackRock Cash Funds: Institutional BlackRock Cash Funds: Treasury BlackRock Diversified Equity Fund BlackRock Diversified Fixed Income Fund BlackRock LifePath ® Dynamic Retirement Fund BlackRock LifePath ® Dynamic 2030 Fund BlackRock LifePath ® Dynamic 2035 Fund BlackRock LifePath ® Dynamic 2040 Fund BlackRock LifePath ® Dynamic 2045 Fund BlackRock LifePath ® Dynamic 2050 Fund BlackRock LifePath ® Dynamic 2055 Fund BlackRock LifePath ® Dynamic 2060 Fund BlackRock LifePath ® Dynamic 2065 Fund BlackRock LifePath ® Dynamic 2070 Fund
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BlackRock LifePath ® ESG Index Retirement Fund BlackRock LifePath ® ESG Index 2030 Fund BlackRock LifePath ® ESG Index 2035 Fund BlackRock LifePath ® ESG Index 2040 Fund BlackRock LifePath ® ESG Index 2045 Fund BlackRock LifePath ® ESG Index 2050 Fund BlackRock LifePath ® ESG Index 2055 Fund BlackRock LifePath ® ESG Index 2060 Fund BlackRock LifePath ® ESG Index 2065 Fund BlackRock LifePath ® ESG Index 2070 Fund BlackRock LifePath ® Index Retirement Fund BlackRock LifePath ® Index 2030 Fund BlackRock LifePath ® Index 2035 Fund BlackRock LifePath ® Index 2040 Fund BlackRock LifePath ® Index 2045 Fund BlackRock LifePath ® Index 2050 Fund BlackRock LifePath ® Index 2055 Fund BlackRock LifePath ® Index 2060 Fund BlackRock LifePath ® Index 2065 Fund BlackRock LifePath ® Index 2070 Fund iShares MSCI Total International Index Fund iShares Russell 1000 Large-Cap Index Fund iShares S&P 500 Index Fund iShares U.S. Aggregate Bond Index Fund
BlackRock Funds IV BlackRock Credit Relative Value Fund BlackRock Systematic Multi-Strategy Fund
BlackRock Funds V BlackRock Core Bond Portfolio BlackRock Floating Rate Income Portfolio BlackRock High Yield Portfolio BlackRock Income Fund BlackRock Inflation Protected Bond Portfolio BlackRock Low Duration Bond Portfolio BlackRock Strategic Income Opportunities Portfolio
BlackRock Funds VI BlackRock Advantage CoreAlpha Bond Fund
BlackRock Global Allocation Fund, Inc.
BlackRock Index Funds, Inc. iShares MSCI EAFE International Index Fund iShares Russell 2000 Small-Cap Index Fund
BlackRock International Select Equity Fund
BlackRock Large Cap Focus Growth Fund, Inc.
BlackRock Large Cap Focus Value Fund, Inc.
BlackRock Large Cap Series Funds, Inc. BlackRock Advantage Large Cap Core Fund BlackRock Advantage Large Cap Value Fund BlackRock Event Driven Equity Fund
BlackRock Liquidity Funds FedFund MuniCash TempCash BlackRock Select Treasury Based Liquidity Fund T-Fund Treasury Trust Fund
BlackRock Mid-Cap Value Series, Inc. BlackRock Mid-Cap Value Fund
BlackRock Multi-State Municipal Series Trust BlackRock New Jersey Municipal Bond Fund BlackRock New York Municipal Opportunities Fund BlackRock Pennsylvania Municipal Bond Fund
BlackRock Municipal Bond Fund, Inc. BlackRock National Municipal Fund BlackRock Short Duration Muni Fund
BlackRock Municipal Series Trust BlackRock Strategic Municipal Opportunities Fund
BlackRock Natural Resources Trust
BlackRock Series Fund, Inc. BlackRock Advantage Large Cap Core Portfolio BlackRock Balanced Portfolio BlackRock Capital Appreciation Portfolio BlackRock Global Allocation Portfolio BlackRock Government Money Market Portfolio
BlackRock Series Fund II, Inc. BlackRock High Yield Portfolio
BlackRock Series, Inc. BlackRock International Fund
BlackRock Strategic Global Bond Fund, Inc.
BlackRock Unconstrained Equity Fund
BlackRock Variable Series Funds, Inc. BlackRock 60/40 Target Allocation ETF V.I. Fund
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BlackRock Advantage Large Cap Core V.I. Fund BlackRock Advantage Large Cap Value V.I. Fund BlackRock Advantage SMID Cap V.I. Fund BlackRock Basic Value V.I. Fund BlackRock Capital Appreciation V.I. Fund BlackRock Equity Dividend V.I. Fund BlackRock Global Allocation V.I. Fund BlackRock Government Money Market V.I. Fund BlackRock International Index V.I. Fund BlackRock International V.I. Fund
BlackRock Large Cap Focus Growth V.I. Fund BlackRock Managed Volatility V.I. Fund BlackRock S&P 500 Index V.I. Fund BlackRock Small Cap Index V.I. Fund
BlackRock Variable Series Funds II, Inc. BlackRock High Yield V.I. Fund BlackRock Total Return V.I. Fund
Managed Account Series BlackRock GA Disciplined Volatility Equity Fund BlackRock GA Dynamic Equity Fund
(each, a “Fund” and collectively, the “Funds”)
Supplement dated March 6, 2026 to the Statement of Additional Information (“SAI”) of each Fund, as amended from time to time.
Each Fund’s SAI is amended as follows:
The list in the section entitled “Purchase of Shares — Additional Payments by BlackRock — D. Service Organizations Receiving Additional Payments” in Part II, or in the section entitled “Miscellaneous — Additional Payments by BlackRock — D. Service Organizations Receiving Additional Payments,” “Investment Advisory Arrangements — Additional Payments by BlackRock — D. Service Organizations Receiving Additional Payments” or “Investment Adviser and Other Service Providers — Additional Payments by BlackRock — D. Service Organizations Receiving Additional Payments,” as applicable, of each Fund’s current SAI, is deleted in its entirety and replaced with the following:
&Partners AccuTech Systems Corporation ADP Broker-Dealer, Inc. Advisor Credit Exchange, LLC Advisor Group, Inc. AE Wealth Management, LLC Alight Solutions LLC Allianz Life Financial Services, LLC Allianz Life Insurance Company of New York Allianz Life Insurance Company of North America Altruist Financial LLC American Enterprise Investment Services, Inc. American General Life Insurance Company American United Life Insurance Company Annuity Investors Life Insurance Company Argent Institutional Trust Company Ascensus Broker Dealer Services, Inc. Ascensus, Inc. Atomic Brokerage LLC Avantax Investment Services, LLC Bancroft Capital LLC Bank of America, N.A. Bank of New York Mellon
Barclays Capital Inc. Benefit Plans Administrative Services, Inc. Benefit Trust Company Beta Capital Securities LLC bfinance US Ltd. BlackRock Advisors, LLC BMO Capital Markets Corp. BNP Paribas BNP Paribas Investment Partners UK Limited BNY Mellon, N.A. BofA Securities, Inc. BOKF, N.A. Brighthouse Life Insurance Company Brighthouse Life Insurance Company of NY Broadridge Business Process Outsourcing, LLC Brown Brothers Harriman & Co. Cabrera Capital Markets, LLC Capital One, N.A. Cetera Advisor Networks LLC Cetera Advisors LLC Cetera Financial Group Cetera Financial Specialists LLC Cetera Investment Services LLC
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CF Secured, LLC Charles Schwab & Co., Inc. Charles Schwab Trust Bank Chicago Mercantile Exchange Inc. CIM Investment Management, Inc. Citco Securities, LLC CitiBank, National Association Citigroup Global Markets, Inc. Citizens Bank Citizens Business Bank CME Shareholder Servicing LLC CMFG Life Insurance Company Comerica Bank Commonwealth Financial Network Computershare Trust Company Conduent HR Services, LLC Delaware Life Insurance Company Delaware Trust Company Deutsche Bank AG Deutsche Bank Trust Company Americas Digital Retirement Solutions, Inc. Dunham & Associates Investment Counsel, Inc. Dynasty Financial Partners LLC Edward D. Jones & Co., L.P. Empire Fidelity Investments Life Insurance Company Empower Annuity Insurance Company of America Empower Financial Services, Inc. Empower Life & Annuity Insurance Company of New York Empower Plan Services, LLC Envestnet Asset Management, Inc. Equitable Advisors, LLC Equitable Life Insurance Company E*trade Savings Bank Federal Deposit Insurance Corporation Fidelity Brokerage Services LLC Fidelity Investments Institutional Operations Company, Inc. Fidelity Investments Life Insurance Company Fifth Third Securities, Inc. First Allied Securities, Inc. First Command Financial Planning, Inc. First Hawaiian Bank First Republic Bank First Security Benefit Life Insurance and Annuity Company of New York First Symetra National Life Insurance Company of New York First-Citizens Bank & Trust Company FIS Brokerage & Securities Services LLC FNEX Capital, LLC
Forethought Life Insurance Company FSC Securities Corporation Genworth Life and Annuity Insurance Company Genworth Life Insurance Company of New York Global Atlantic Distributors, LLC Goldman Sachs & Co. Great Pacific Securities, LLC Guardian Insurance & Annuity Co., Inc. Hancock Whitney Bank Hartford Funds Management Company Hartford Securities Distribution Company, Inc. Hazeltree Fund Services, Inc. Hightower Securities, Inc. Hilltop Securities Inc. HSBC Bank USA, N.A. Huntington Securities, Inc. Institutional Cash Distributors, LLC Integrity Life Insurance Company Interactive Brokers, LLC Investment Trust of California J.P. Morgan Institutional Investments Inc. J.P. Morgan Securities LLC Jefferies LLC Jefferson National Life Insurance Company Jefferson National Life Insurance Company of New York John Hancock Life Insurance Company (U.S.A.) John Hancock Life Insurance Company of New York John Hancock Trust Company JPMorgan Chase Bank, N.A. Kestra Investment Services, LLC Lincoln Financial Advisors Corporation Lincoln Financial Securities Corporation Lincoln Life & Annuity Company of New York Lincoln National Life Insurance Company Lincoln Retirement Services LLC Lombard International Life Assurance Company LPL Financial LLC M&T Securities Inc. Manufacturers and Traders Trust Company Massachusetts Mutual Life Insurance Company Members Life Insurance Company Merrill Lynch, Pierce, Fenner & Smith Incorporated Metavante Corporation Metropolitan Life Insurance Company Mid Atlantic Clearing & Settlement Corporation Midland Life Insurance Company Minnesota Life Insurance Company Mischler Financial Group Mizuho Securities USA Inc. MML Distributors, LLC MML Investors Services, LLC
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Morgan Stanley & Co. LLC Morgan Stanley Distribution, Inc. Morgan Stanley Smith Barney LLC MUFG Union Bank, National Association Nassau Life Insurance Company National Financial Services LLC National Integrity Life Insurance Company National Life Insurance Company Nationwide Financial Services, Inc. Nationwide Fund Distributors LLC Nationwide Retirement Solutions NCB Federal Savings Bank New England Pension Plan Systems, LLC New York Life Insurance and Annuity Corporation Newport Retirement Services, Inc. Northbrook Bank & Trust Company Northern Trust Company Northwestern Mutual Investment Services, LLC Northwestern Mutual Life Insurance Company NYLife Distributors LLC Oppenheimer & Co., Inc. Orion Advisor Services, LLC Osaic Wealth, Inc. Pacific Life & Annuity Company Pacific Life Insurance Company Pacific Select Distributors, LLC Park Avenue Securities LLC Penserra Securities LLC Pershing LLC PFPC Inc. Piper Jaffray & Co. PNC Bank, National Association PNC Capital Markets LLC PNC Investments LLC Principal Bank Principal Life Insurance Company Protective Life and Annuity Insurance Company Protective Life Insurance Company Pruco Life Insurance Company Pruco Life Insurance Company of New Jersey Prudential Annuities Distributors, Inc. Prudential Insurance Company of America Raymond James & Associates, Inc. Raymond James Financial Services, Inc. RBC Capital Markets, LLC Regions Bank Reliance Trust Company Reliastar Life Insurance Company Reliastar Life Insurance Company of New York RiverSource Distributors, Inc. RiverSource Life Insurance Co. of New York RiverSource Life Insurance Company
SagePoint Financial, Inc. Sammons Retirement Solutions, Inc. Sanctuary Wealth Group, LLC Santander Bank, N.A. Saturna Trust Company Securities America, Inc. Securities Finance Trust Company Security Benefit Life Insurance Company Security Financial Resources, Inc. Security Life of Denver Insurance Company SEI Private Trust Company SG Americas Securities, LLC Silicon Valley Bank Standard Insurance Company State Farm Life and Accident Assurance Company State Farm Life Insurance Company State Farm VP Management Corp. State Street Bank and Trust Company State Street Global Markets, LLC Stern Brothers & Co. Stifel, Nicolaus & Company, Incorporated Summit Brokerage Services, Inc. SVB Asset Management Symetra Life Insurance Company Syntal Capital Partners, LLC T. Rowe Price Retirement Plan Services, Inc. Talcott Resolution Life and Annuity Insurance Company Talcott Resolution Life Insurance Company TD Ameritrade Clearing, Inc. TD Ameritrade, Inc. TD Prime Services (US) LLC Teachers Insurance and Annuity Association of America Tigress Financial Partners, LLC Transamerica Financial Life Insurance Company Transamerica Life Insurance Company Treasury Brokerage Triad Advisors, LLC Truist Bank U.S. Bancorp Investments, Inc. U.S. Bank, National Association UBATCO & Co. UBS Financial Services, Inc. UBS Securities LLC Ultimus Fund Solutions, LLC UMB Bank, National Association United States Life Insurance Company in the City of New York VALIC Retirement Services Company Vanguard Group, Inc. Vanguard Marketing Corporation
5
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Voya Financial Advisors, Inc. Voya Financial Partners, LLC Voya Institutional Plan Services, LLC Voya Insurance and Annuity Company Voya Investments Distributor, LLC Voya Retirement Insurance and Annuity Company Waddell & Reed, Inc. Wells Fargo Advisors, LLC
Wells Fargo Advisors Financial Network, LLC Wells Fargo Bank, N.A. Wells Fargo Clearing Services, LLC Wells Fargo Investments, LLC Wells Fargo Securities, LLC Wilmington Trust, National Association Woodbury Financial Services, Inc. ZB, National Association
Shareholders should retain this Supplement for future reference.
SAI-GLOBAL-0326SUP
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BlackRock Advantage Global Fund, Inc.
BlackRock Advantage SMID Cap Fund, Inc.
BlackRock Allocation Target Shares BATS: Securitized Total Return Series BATS: Corporate Credit Total Return Series BATS: High Income Municipal Series BATS: High Income Taxable Series BATS: Mortgage Total Return Series BATS: Interest Rate Hedge Series BATS: Short Duration Taxable Total Return Series BATS: Short Term Municipal Income Series
BlackRock Balanced Fund, Inc.
BlackRock Bond Fund, Inc. BlackRock Total Return Fund
BlackRock California Municipal Series Trust BlackRock California Municipal Opportunities Fund
BlackRock Capital Appreciation Fund, Inc.
BlackRock Emerging Markets Fund, Inc.
BlackRock Equity Dividend Fund
BlackRock Financial Institutions Series Trust BlackRock Summit Cash Reserves Fund
BlackRock Funds SM BlackRock Advantage Emerging Markets Fund BlackRock Advantage International Fund BlackRock Advantage Large Cap Growth Fund BlackRock Advantage Small Cap Core Fund BlackRock Advantage Small Cap Growth Fund BlackRock China A Opportunities Fund BlackRock Commodity Strategies Fund BlackRock Defensive Advantage Emerging Markets Fund BlackRock Emerging Markets ex-China Fund BlackRock Energy Opportunities Fund BlackRock Exchange Portfolio BlackRock Global Equity Market Neutral Fund BlackRock Health Sciences Opportunities Portfolio BlackRock High Equity Income Fund BlackRock Mid-Cap Growth Equity Portfolio BlackRock Real Estate Securities Fund BlackRock Sustainable Aware Advantage Emerging Markets Equity Fund
BlackRock Sustainable Aware Advantage International Equity Fund BlackRock Sustainable Aware Advantage Large Cap Core Fund BlackRock Tactical Opportunities Fund BlackRock Technology Opportunities Fund BlackRock U.S. Insights Long/Short Equity Fund BlackRock Wealth Liquid Environmentally Aware Fund Circle Reserve Fund iShares Developed Real Estate Index Fund iShares Enhanced Roll Yield Index Fund iShares FTSE NAREIT All Equity REIT Index Fund iShares Municipal Bond Index Fund iShares Short-Term TIPS Bond Index Fund iShares U.S. Intermediate Credit Bond Index Fund iShares U.S. Intermediate Government Bond Index Fund iShares U.S. Long Credit Bond Index Fund iShares U.S. Long Government Bond Index Fund iShares U.S. Securitized Bond Index Fund
BlackRock Funds II BlackRock 20/80 Target Allocation Fund BlackRock 40/60 Target Allocation Fund BlackRock 60/40 Target Allocation Fund BlackRock 80/20 Target Allocation Fund BlackRock Global Dividend Portfolio BlackRock Managed Income Fund BlackRock Retirement Income 2030 Fund
BlackRock Funds III BlackRock Cash Funds: Institutional BlackRock Cash Funds: Treasury BlackRock Diversified Equity Fund BlackRock Diversified Fixed Income Fund BlackRock LifePath ® Dynamic Retirement Fund BlackRock LifePath ® Dynamic 2030 Fund BlackRock LifePath ® Dynamic 2035 Fund BlackRock LifePath ® Dynamic 2040 Fund BlackRock LifePath ® Dynamic 2045 Fund BlackRock LifePath ® Dynamic 2050 Fund BlackRock LifePath ® Dynamic 2055 Fund BlackRock LifePath ® Dynamic 2060 Fund BlackRock LifePath ® Dynamic 2065 Fund BlackRock LifePath ® Dynamic 2070 Fund
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BlackRock LifePath ® ESG Index Retirement Fund BlackRock LifePath ® ESG Index 2030 Fund BlackRock LifePath ® ESG Index 2035 Fund BlackRock LifePath ® ESG Index 2040 Fund BlackRock LifePath ® ESG Index 2045 Fund BlackRock LifePath ® ESG Index 2050 Fund BlackRock LifePath ® ESG Index 2055 Fund BlackRock LifePath ® ESG Index 2060 Fund BlackRock LifePath ® ESG Index 2065 Fund BlackRock LifePath ® ESG Index 2070 Fund BlackRock LifePath ® Index Retirement Fund BlackRock LifePath ® Index 2030 Fund BlackRock LifePath ® Index 2035 Fund BlackRock LifePath ® Index 2040 Fund BlackRock LifePath ® Index 2045 Fund BlackRock LifePath ® Index 2050 Fund BlackRock LifePath ® Index 2055 Fund BlackRock LifePath ® Index 2060 Fund BlackRock LifePath ® Index 2065 Fund BlackRock LifePath ® Index 2070 Fund iShares MSCI Total International Index Fund iShares Russell 1000 Large-Cap Index Fund iShares S&P 500 Index Fund iShares U.S. Aggregate Bond Index Fund
BlackRock Funds IV BlackRock Systematic Multi-Strategy Fund
BlackRock Funds V BlackRock Core Bond Portfolio BlackRock High Yield Portfolio BlackRock Income Fund BlackRock Inflation Protected Bond Portfolio BlackRock Low Duration Bond Portfolio BlackRock Mortgage-Backed Securities Fund BlackRock Strategic Income Opportunities Portfolio BlackRock Sustainable High Yield Bond Fund
BlackRock Funds VI BlackRock Advantage CoreAlpha Bond Fund
BlackRock Global Allocation Fund, Inc.
BlackRock Index Funds, Inc. iShares MSCI EAFE International Index Fund iShares Russell 2000 Small-Cap Index Fund
BlackRock International Select Equity Fund
BlackRock Large Cap Focus Growth Fund, Inc.
BlackRock Large Cap Focus Value Fund, Inc.
BlackRock Large Cap Series Funds, Inc. BlackRock Advantage Large Cap Core Fund BlackRock Advantage Large Cap Value Fund BlackRock Event Driven Equity Fund
BlackRock Liquidity Funds FedFund MuniCash TempCash BlackRock Select Treasury Based Liquidity Fund T-Fund Treasury Trust Fund
BlackRock Mid-Cap Value Series, Inc. BlackRock Mid-Cap Value Fund
BlackRock Multi-State Municipal Series Trust BlackRock New Jersey Municipal Bond Fund BlackRock New York Municipal Opportunities Fund BlackRock Pennsylvania Municipal Bond Fund
BlackRock Municipal Bond Fund, Inc. BlackRock National Municipal Fund BlackRock Short Duration Muni Fund
BlackRock Municipal Series Trust BlackRock Strategic Municipal Opportunities Fund
BlackRock Natural Resources Trust
BlackRock Series Fund, Inc. BlackRock Advantage Large Cap Core Portfolio BlackRock Balanced Portfolio BlackRock Capital Appreciation Portfolio BlackRock Global Allocation Portfolio BlackRock Government Money Market Portfolio
BlackRock Series Fund II, Inc. BlackRock High Yield Portfolio
BlackRock Series, Inc. BlackRock International Fund
BlackRock Strategic Global Bond Fund, Inc.
BlackRock Unconstrained Equity Fund
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BlackRock Variable Series Funds, Inc. BlackRock 60/40 Target Allocation ETF V.I. Fund BlackRock Advantage Large Cap Core V.I. Fund BlackRock Advantage Large Cap Value V.I. Fund BlackRock Advantage SMID Cap V.I. Fund BlackRock Basic Value V.I. Fund BlackRock Capital Appreciation V.I. Fund BlackRock Equity Dividend V.I. Fund BlackRock Global Allocation V.I. Fund BlackRock Government Money Market V.I. Fund BlackRock International Index V.I. Fund BlackRock International V.I. Fund
BlackRock Large Cap Focus Growth V.I. Fund BlackRock Managed Volatility V.I. Fund BlackRock S&P 500 Index V.I. Fund BlackRock Small Cap Index V.I. Fund
BlackRock Variable Series Funds II, Inc. BlackRock High Yield V.I. Fund BlackRock Total Return V.I. Fund
Managed Account Series BlackRock GA Disciplined Volatility Equity Fund BlackRock GA Dynamic Equity Fund
Managed Account Series II BlackRock Securitized Income Fund
(each, a “Fund” and collectively, the “Funds”)
Supplement dated December 2, 2025 to the Statement of Additional Information (“SAI”) of each Fund, as amended from time to time.
Each Fund’s SAI is amended as follows:
The list in the section entitled “Purchase of Shares — Additional Payments by BlackRock — D. Service Organizations Receiving Additional Payments” in Part II, or in the section entitled “Miscellaneous — Additional Payments by BlackRock — D. Service Organizations Receiving Additional Payments,” “Investment Advisory Arrangements — Additional Payments by BlackRock — D. Service Organizations Receiving Additional Payments” or “Investment Adviser and Other Service Providers — Additional Payments by BlackRock — D. Service Organizations Receiving Additional Payments,” as applicable, of each Fund’s current SAI, is deleted in its entirety and replaced with the following:
&Partners AccuTech Systems Corporation ADP Broker-Dealer, Inc. Advisor Credit Exchange, LLC Advisor Group, Inc. AE Wealth Management, LLC Alight Solutions LLC Allianz Life Financial Services, LLC Allianz Life Insurance Company of New York Allianz Life Insurance Company of North America Altruist Financial LLC American Enterprise Investment Services, Inc. American General Life Insurance Company American United Life Insurance Company Annuity Investors Life Insurance Company Argent Institutional Trust Company Ascensus Broker Dealer Services, Inc. Ascensus, Inc. Atomic Brokerage LLC Avantax Investment Services, LLC
Bancroft Capital LLC Bank of America, N.A. Bank of New York Mellon Barclays Capital Inc. Benefit Plans Administrative Services, Inc. Benefit Trust Company Beta Capital Securities LLC BlackRock Advisors, LLC BMO Capital Markets Corp. BNP Paribas BNP Paribas Investment Partners UK Limited BNY Mellon, N.A. BofA Securities, Inc. BOKF, N.A. Brighthouse Life Insurance Company Brighthouse Life Insurance Company of NY Broadridge Business Process Outsourcing, LLC Brown Brothers Harriman & Co. Cabrera Capital Markets, LLC Capital One, N.A.
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Cetera Advisor Networks LLC Cetera Advisors LLC Cetera Financial Group Cetera Financial Specialists LLC Cetera Investment Services LLC CF Secured, LLC Charles Schwab & Co., Inc. Charles Schwab Trust Bank Chicago Mercantile Exchange Inc. CIM Investment Management, Inc. Citco Securities, LLC CitiBank, National Association Citigroup Global Markets, Inc. Citizens Bank Citizens Business Bank CME Shareholder Servicing LLC CMFG Life Insurance Company Comerica Bank Commonwealth Financial Network Computershare Trust Company Conduent HR Services, LLC Delaware Life Insurance Company Delaware Trust Company Deutsche Bank AG Deutsche Bank Trust Company Americas Digital Retirement Solutions, Inc. Dunham & Associates Investment Counsel, Inc. Dynasty Financial Partners LLC Edward D. Jones & Co., L.P. Empire Fidelity Investments Life Insurance Company Empower Annuity Insurance Company of America Empower Financial Services, Inc. Empower Life & Annuity Insurance Company of New York Empower Plan Services, LLC Envestnet Asset Management, Inc. Equitable Advisors, LLC Equitable Life Insurance Company E*trade Savings Bank Federal Deposit Insurance Corporation Fidelity Brokerage Services LLC Fidelity Investments Institutional Operations Company, Inc. Fidelity Investments Life Insurance Company Fifth Third Securities, Inc. First Allied Securities, Inc. First Command Financial Planning, Inc. First Hawaiian Bank First Republic Bank First Security Benefit Life Insurance and Annuity Company of New York
First Symetra National Life Insurance Company of New York First-Citizens Bank & Trust Company FIS Brokerage & Securities Services LLC FNEX Capital, LLC Forethought Life Insurance Company FSC Securities Corporation Genworth Life and Annuity Insurance Company Genworth Life Insurance Company of New York Global Atlantic Distributors, LLC Goldman Sachs & Co. Great Pacific Securities, LLC Guardian Insurance & Annuity Co., Inc. Hancock Whitney Bank Hartford Funds Management Company Hartford Securities Distribution Company, Inc. Hazeltree Fund Services, Inc. Hightower Securities, Inc. Hilltop Securities Inc. HSBC Bank USA, N.A. Huntington Securities, Inc. Institutional Cash Distributors, LLC Integrity Life Insurance Company Interactive Brokers, LLC Investment Trust of California J.P. Morgan Institutional Investments Inc. J.P. Morgan Securities LLC Jefferies LLC Jefferson National Life Insurance Company Jefferson National Life Insurance Company of New York John Hancock Life Insurance Company (U.S.A.) John Hancock Life Insurance Company of New York John Hancock Trust Company JPMorgan Chase Bank, N.A. Kestra Investment Services, LLC Lincoln Financial Advisors Corporation Lincoln Financial Securities Corporation Lincoln Life & Annuity Company of New York Lincoln National Life Insurance Company Lincoln Retirement Services LLC Lombard International Life Assurance Company LPL Financial LLC M&T Securities Inc. Manufacturers and Traders Trust Company Massachusetts Mutual Life Insurance Company Members Life Insurance Company Merrill Lynch, Pierce, Fenner & Smith Incorporated Metavante Corporation Metropolitan Life Insurance Company Mid Atlantic Clearing & Settlement Corporation Midland Life Insurance Company
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Minnesota Life Insurance Company Mischler Financial Group Mizuho Securities USA Inc. MML Distributors, LLC MML Investors Services, LLC Morgan Stanley & Co. LLC Morgan Stanley Distribution, Inc. Morgan Stanley Smith Barney LLC MUFG Union Bank, National Association Nassau Life Insurance Company National Financial Services LLC National Integrity Life Insurance Company National Life Insurance Company Nationwide Financial Services, Inc. Nationwide Fund Distributors LLC Nationwide Retirement Solutions NCB Federal Savings Bank New England Pension Plan Systems, LLC New York Life Insurance and Annuity Corporation Newport Retirement Services, Inc. Northbrook Bank & Trust Company Northern Trust Company Northwestern Mutual Investment Services, LLC Northwestern Mutual Life Insurance Company NYLife Distributors LLC Oppenheimer & Co., Inc. Orion Advisor Services, LLC Osaic Wealth, Inc. Pacific Life & Annuity Company Pacific Life Insurance Company Pacific Select Distributors, LLC Park Avenue Securities LLC Penserra Securities LLC Pershing LLC PFPC Inc. Piper Jaffray & Co. PNC Bank, National Association PNC Capital Markets LLC PNC Investments LLC Principal Bank Principal Life Insurance Company Protective Life and Annuity Insurance Company Protective Life Insurance Company Pruco Life Insurance Company Pruco Life Insurance Company of New Jersey Prudential Annuities Distributors, Inc. Prudential Insurance Company of America Raymond James & Associates, Inc. Raymond James Financial Services, Inc. RBC Capital Markets, LLC Regions Bank Reliance Trust Company
Reliastar Life Insurance Company Reliastar Life Insurance Company of New York RiverSource Distributors, Inc. RiverSource Life Insurance Co. of New York RiverSource Life Insurance Company SagePoint Financial, Inc. Sammons Retirement Solutions, Inc. Sanctuary Wealth Group, LLC Santander Bank, N.A. Saturna Trust Company Securities America, Inc. Securities Finance Trust Company Security Benefit Life Insurance Company Security Financial Resources, Inc. Security Life of Denver Insurance Company SEI Private Trust Company SG Americas Securities, LLC Silicon Valley Bank Standard Insurance Company State Farm Life and Accident Assurance Company State Farm Life Insurance Company State Farm VP Management Corp. State Street Bank and Trust Company State Street Global Markets, LLC Stern Brothers & Co. Stifel, Nicolaus & Company, Incorporated Summit Brokerage Services, Inc. SVB Asset Management Symetra Life Insurance Company Syntal Capital Partners, LLC T. Rowe Price Retirement Plan Services, Inc. Talcott Resolution Life and Annuity Insurance Company Talcott Resolution Life Insurance Company TD Ameritrade Clearing, Inc. TD Ameritrade, Inc. TD Prime Services (US) LLC Teachers Insurance and Annuity Association of America Tigress Financial Partners, LLC Transamerica Financial Life Insurance Company Transamerica Life Insurance Company Treasury Brokerage Triad Advisors, LLC Truist Bank U.S. Bancorp Investments, Inc. U.S. Bank, National Association UBATCO & Co. UBS Financial Services, Inc. UBS Securities LLC Ultimus Fund Solutions, LLC UMB Bank, National Association
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United States Life Insurance Company in the City of New York VALIC Retirement Services Company Vanguard Group, Inc. Vanguard Marketing Corporation Voya Financial Advisors, Inc. Voya Financial Partners, LLC Voya Institutional Plan Services, LLC Voya Insurance and Annuity Company Voya Investments Distributor, LLC Voya Retirement Insurance and Annuity Company
Waddell & Reed, Inc. Wells Fargo Advisors, LLC Wells Fargo Advisors Financial Network, LLC Wells Fargo Bank, N.A. Wells Fargo Clearing Services, LLC Wells Fargo Investments, LLC Wells Fargo Securities, LLC Wilmington Trust, National Association Woodbury Financial Services, Inc. ZB, National Association
Shareholders should retain this Supplement for future reference.
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BLACKROCK MUNICIPAL BOND FUND, INC. BlackRock National Municipal Fund BlackRock Short Duration Muni Fund (each, a “Fund and together, the “Funds”)
Supplement dated December 1, 2025 to the Statement of Additional Information of the Funds (the “SAI”), dated October 28, 2025, as amended or supplemented to date
Effective immediately, the following change is made to the Funds’ SAI:
The chart listing investments and investment strategies in the section of the Funds’ SAI entitled “I. Investment Objectives and Policies” as it relates to each Fund is deleted in its entirety and replaced with the following:
National Fund
Short Duration Fund Asset-Backed Securities Asset-Based Securities Precious Metal-Related Securities Borrowing and Leverage X X Cash Management Collateralized Debt Obligations Collateralized Bond Obligations Collateralized Loan Obligations Commercial Paper Commodity-Linked Derivative Instruments and Hybrid Instruments Qualifying Hybrid Instruments Hybrid Instruments Without Principal Protection Limitations on Leverage Counterparty Risk Convertible Securities Corporate Loans Direct Lending Credit Linked Securities X X Cyber Security Issues X X Debt Securities X X Floating Rate and Variable Rate Securities X X Inflation-Indexed Bonds Investment Grade Debt Obligations X X High Yield Investments (“Junk Bonds”) X X Mezzanine Investments Pay-in-kind Bonds X Supranational Entities Depositary Receipts (ADRs, EDRs and GDRs) Derivatives X X Hedging X X Speculation X X
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National Fund
Short Duration Fund Risk Factors in Derivatives X X Correlation Risk X X Counterparty Risk X X Credit Risk X X Currency Risk Illiquidity Risk X X Leverage Risk X X Market Risk X X Valuation Risk X X Volatility Risk X X Futures X X Swap Agreements X X Credit Default Swaps and Similar Instruments X X Interest Rate Swaps, Floors and Caps X X Total Return Swaps X X Options X X Options on Securities and Securities Indices X X Call Options X X Put Options X X Options on Government National Mortgage Association (“GNMA”) Certificates Options on Swaps (“Swaptions”) X X FLEX Options Foreign Exchange Transactions Spot Transactions and FX Forwards Currency Futures Currency Options Currency Swaps Distressed Securities Environmental, Social and Governance (“ESG”) Integration X X Equity Securities X X Real Estate-Related Securities Securities of Smaller or Emerging Growth Companies Tracking Stocks Exchange-Traded Notes (“ETNs”) Foreign Investments Foreign Investment Risks Foreign Market Risk Foreign Economy Risk Currency Risk and Exchange Risk Governmental Supervision and Regulation/Accounting Standards Certain Risks of Holding Fund Assets Outside the United States Publicly Available Information
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National Fund
Short Duration Fund Settlement Risk Sovereign Debt Withholding Tax Reclaims Risk U.S. Economic Trading Partners Risk Funding Agreements Guarantees X X Illiquid Investments X X Index Funds Cash Flows; Expenses Tracking Error Risk S&P 500 Index Russell Indexes MSCI Indexes FTSE Indexes Bloomberg Indexes ICE BofA Indexes Indexed and Inverse Securities X X Inflation Risk X X Initial Public Offering (“IPO”) Risk Investment in Emerging Markets Brady Bonds China Investments Risk Investment in Other Investment Companies X X Exchange-Traded Funds X X Issuer Insolvency Risk Lease Obligations Life Settlement Investments Liquidity Risk Management X X Master Limited Partnerships Merger Transaction Risk Money Market Obligations of Domestic Banks, Foreign Banks and Foreign Branches of U.S. Banks X X Money Market Securities X X Mortgage-Related Securities Mortgage-Backed Securities Collateralized Mortgage Obligations (“CMOs”) Adjustable Rate Mortgage Securities CMO Residuals Stripped Mortgage-Backed Securities Tiered Index Bonds TBA Commitments Mortgage Dollar Rolls Net Interest Margin (NIM) Securities
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National Fund
Short Duration Fund Municipal Investments X X Risk Factors and Special Considerations Relating to Municipal Bonds X X Description of Municipal Bonds X X General Obligation Bonds X X Revenue Bonds X X Private Activity Bonds (“PABs”) X X Moral Obligation Bonds X X Municipal Notes X X Municipal Commercial Paper X X Municipal Lease Obligations X X Tender Option Bonds X X Yields X X Variable Rate Demand Obligations (“VRDOs”) X X Transactions in Financial Futures Contracts on Municipal Indexes X X Call Rights X X Municipal Interest Rate Swap Transactions X X Insured Municipal Bonds X X Build America Bonds X X Tax-Exempt Municipal Investments X X Participation Notes Portfolio Turnover Rates X X Preferred Stock Tax-Exempt Preferred Shares X X Trust Preferred Securities X X Proxy Voting Policies Open-End Active and Fixed Income Index Fund Proxy Voting Policy X X BlackRock Active Investment Stewardship Climate and Decarbonization Stewardship Guidelines Index Equity Fund Proxy Voting Policy BlackRock Investment Stewardship Climate and Decarbonization Stewardship Guidelines Real Estate Investment Trusts (“REITs”) Recent Market Events X X Reference Rate Replacement Risk X X Repurchase Agreements and Purchase and Sale Contracts X X Restricted Securities X X Reverse Repurchase Agreements X X Rights Offerings and Warrants to Purchase X X Rule 144A Securities X X Securities Lending X X
Short Sales See note 1 below See note 1 below Special Purpose Acquisition Companies Standby Commitment Agreements Stripped Securities
- 4 -
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National Fund
Short Duration Fund Structured Notes Taxability Risk X X Temporary Defensive Measures U.S. Government Obligations X X U.S. Treasury Obligations X X U.S. Treasury Rolls X X Utility Industries X X When-Issued Securities, Delayed Delivery Securities and Forward Commitments X X Yields and Ratings X X Zero Coupon Securities X X
1 The Fund may only make short sales against-the-box.
Shareholders should retain this Supplement for future reference.
SAI-MUNIB-1225SUP
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BlackRock Advantage Global Fund, Inc.
BlackRock Advantage SMID Cap Fund, Inc.
BlackRock Allocation Target Shares BATS: Securitized Total Return Series BATS: Corporate Credit Total Return Series BATS: High Income Municipal Series BATS: High Income Taxable Series BATS: Mortgage Total Return Series BATS: Interest Rate Hedge Series BATS: Short Duration Taxable Total Return Series BATS: Short Term Municipal Income Series
BlackRock Balanced Fund, Inc.
BlackRock Bond Fund, Inc. BlackRock Total Return Fund
BlackRock California Municipal Series Trust BlackRock California Municipal Opportunities Fund
BlackRock Capital Appreciation Fund, Inc.
BlackRock Emerging Markets Fund, Inc.
BlackRock Equity Dividend Fund
BlackRock Funds SM BlackRock Advantage Emerging Markets Fund BlackRock Advantage International Fund BlackRock Advantage Large Cap Growth Fund BlackRock Advantage Small Cap Core Fund BlackRock Advantage Small Cap Growth Fund BlackRock China A Opportunities Fund BlackRock Commodity Strategies Fund BlackRock Defensive Advantage Emerging Markets Fund BlackRock Emerging Markets ex-China Fund BlackRock Energy Opportunities Fund BlackRock Exchange Portfolio BlackRock Global Equity Market Neutral Fund BlackRock Health Sciences Opportunities Portfolio BlackRock High Equity Income Fund BlackRock Mid-Cap Growth Equity Portfolio
BlackRock Real Estate Securities Fund BlackRock Short Obligations Fund BlackRock Sustainable Aware Advantage Emerging Markets Equity Fund BlackRock Sustainable Aware Advantage International Equity Fund BlackRock Sustainable Aware Advantage Large Cap Core Fund BlackRock Tactical Opportunities Fund BlackRock Technology Opportunities Fund BlackRock U.S. Insights Long/Short Equity Fund BlackRock Wealth Liquid Environmentally Aware Fund Circle Reserve Fund iShares Developed Real Estate Index Fund iShares Enhanced Roll Yield Index Fund iShares FTSE NAREIT All Equity REIT Index Fund iShares Municipal Bond Index Fund iShares Russell Mid-Cap Index Fund iShares Russell Small/Mid-Cap Index Fund iShares Short-Term TIPS Bond Index Fund iShares Total U.S. Stock Market Index Fund iShares U.S. Intermediate Credit Bond Index Fund iShares U.S. Intermediate Government Bond Index Fund iShares U.S. Long Credit Bond Index Fund iShares U.S. Long Government Bond Index Fund iShares U.S. Securitized Bond Index Fund
BlackRock Funds II BlackRock 20/80 Target Allocation Fund BlackRock 40/60 Target Allocation Fund BlackRock 60/40 Target Allocation Fund BlackRock 80/20 Target Allocation Fund BlackRock Dynamic High Income Portfolio BlackRock Global Dividend Portfolio BlackRock Managed Income Fund BlackRock Multi-Asset Income Portfolio BlackRock Retirement Income 2030 Fund
BlackRock Funds III BlackRock Cash Funds: Institutional BlackRock Diversified Equity Fund BlackRock Diversified Fixed Income Fund
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BlackRock LifePath ® Dynamic Retirement Fund BlackRock LifePath ® Dynamic 2030 Fund BlackRock LifePath ® Dynamic 2035 Fund BlackRock LifePath ® Dynamic 2040 Fund BlackRock LifePath ® Dynamic 2045 Fund BlackRock LifePath ® Dynamic 2050 Fund BlackRock LifePath ® Dynamic 2055 Fund BlackRock LifePath ® Dynamic 2060 Fund BlackRock LifePath ® Dynamic 2065 Fund BlackRock LifePath ® Dynamic 2070 Fund BlackRock LifePath ® ESG Index 2030 Fund BlackRock LifePath ® ESG Index 2035 Fund BlackRock LifePath ® ESG Index 2040 Fund BlackRock LifePath ® ESG Index 2045 Fund BlackRock LifePath ® ESG Index 2050 Fund BlackRock LifePath ® ESG Index 2055 Fund BlackRock LifePath ® ESG Index 2060 Fund BlackRock LifePath ® ESG Index 2065 Fund BlackRock LifePath ® ESG Index 2070 Fund BlackRock LifePath ® ESG Index Retirement Fund BlackRock LifePath ® Index Retirement Fund BlackRock LifePath ® Index 2030 Fund BlackRock LifePath ® Index 2035 Fund BlackRock LifePath ® Index 2040 Fund BlackRock LifePath ® Index 2045 Fund BlackRock LifePath ® Index 2050 Fund BlackRock LifePath ® Index 2055 Fund BlackRock LifePath ® Index 2060 Fund BlackRock LifePath ® Index 2065 Fund BlackRock LifePath ® Index 2070 Fund iShares MSCI Total International Index Fund iShares Russell 1000 Large-Cap Index Fund iShares S&P 500 Index Fund iShares U.S. Aggregate Bond Index Fund
BlackRock Funds IV BlackRock Systematic Multi-Strategy Fund
BlackRock Funds V BlackRock Core Bond Portfolio BlackRock High Yield Portfolio BlackRock Income Fund BlackRock Inflation Protected Bond Portfolio BlackRock Low Duration Bond Portfolio BlackRock Mortgage-Backed Securities Fund BlackRock Strategic Income Opportunities Portfolio BlackRock Sustainable High Yield Bond Fund
BlackRock Funds VI BlackRock Advantage CoreAlpha Bond Fund
BlackRock Global Allocation Fund, Inc.
BlackRock Index Funds, Inc. iShares MSCI EAFE International Index Fund iShares Russell 2000 Small-Cap Index Fund
BlackRock International Select Equity Fund
BlackRock Large Cap Focus Growth Fund, Inc.
BlackRock Large Cap Focus Value Fund, Inc.
BlackRock Large Cap Series Funds, Inc. BlackRock Advantage Large Cap Core Fund BlackRock Advantage Large Cap Value Fund BlackRock Event Driven Equity Fund
BlackRock Liquidity Funds FedFund MuniCash TempCash BlackRock Select Treasury Based Liquidity Fund T-Fund Treasury Trust Fund
BlackRock Mid-Cap Value Series, Inc. BlackRock Mid-Cap Value Fund
BlackRock Multi-State Municipal Series Trust BlackRock New Jersey Municipal Bond Fund BlackRock New York Municipal Opportunities Fund BlackRock Pennsylvania Municipal Bond Fund
BlackRock Municipal Bond Fund, Inc. BlackRock National Municipal Fund BlackRock Short Duration Muni Fund
BlackRock Municipal Series Trust BlackRock Strategic Municipal Opportunities Fund
BlackRock Natural Resources Trust
BlackRock Series Fund, Inc. BlackRock Advantage Large Cap Core Portfolio BlackRock Balanced Portfolio
2
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BlackRock Capital Appreciation Portfolio BlackRock Global Allocation Portfolio BlackRock Government Money Market Portfolio BlackRock Balanced Portfolio
BlackRock Series Fund II, Inc. BlackRock High Yield Portfolio
BlackRock Series, Inc. BlackRock International Fund
BlackRock Strategic Global Bond Fund, Inc.
BlackRock Unconstrained Equity Fund
BlackRock Variable Series Funds, Inc. BlackRock 60/40 Target Allocation ETF V.I. Fund BlackRock Advantage Large Cap Core V.I. Fund BlackRock Advantage Large Cap Value V.I. Fund
BlackRock Advantage SMID Cap V.I. Fund BlackRock Basic Value V.I. Fund BlackRock Capital Appreciation V.I. Fund BlackRock Equity Dividend V.I. Fund BlackRock Global Allocation V.I. Fund BlackRock Government Money Market V.I. Fund BlackRock International Index V.I. Fund BlackRock International V.I. Fund BlackRock Large Cap Focus Growth V.I. Fund BlackRock Managed Volatility V.I. Fund BlackRock S&P 500 Index V.I. Fund BlackRock Small Cap Index V.I. Fund
BlackRock Variable Series Funds II, Inc. BlackRock High Yield V.I. Fund BlackRock Total Return V.I. Fund
Managed Account Series II BlackRock Securitized Income Fund
(each, a “Fund” and collectively, the “Funds”)
Supplement dated November 26, 2025 to the Prospectuses and Statement of Additional Information (“SAI”) of each Fund, as amended from time to time
Effective December 1, 2025, each Fund’s Prospectus is amended as follows:
The following information amends and supersedes any corresponding disclosure, if applicable for a Fund, in the section entitled “Valuation of Fund Investments” in each Prospectus relating to the valuation of equity securities and fixed-income securities:
Equity securities and other equity instruments (except ETF options, equity index options or those that are customized) for which market quotations are readily available are valued at market value, which is generally determined using the last reported official closing price or, if a reported closing price is not available, the last traded price on the exchange or market on which the security or instrument is primarily traded at the time of valuation. Shares of underlying open-end funds (including money market funds) are valued at net asset value. Shares of underlying exchange-traded closed-end funds or other ETFs are valued at their most recent closing price.
Each Fund values fixed-income portfolio securities and certain derivative instruments using bid prices provided by dealers or prices (including evaluated prices) supplied by the Fund’s approved independent third-party pricing services, each in accordance with BlackRock’s valuation policies and procedures. Pricing services may use valuation models that utilize certain inputs and assumptions to derive values. Pricing services generally value fixed-income securities assuming orderly transactions of an institutional round lot size, but a Fund may hold or transact in such securities in smaller odd lot sizes. Odd lots of securities in certain asset classes may trade at lower prices than institutional round lots, and the value ultimately realized when the securities are sold could differ from the prices used by the Fund. The amortized cost method of valuation may be used with respect to debt obligations with 60 days or less remaining to maturity unless BlackRock determines in good faith that such method does not represent fair value.
3
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Effective December 1, 2025, each Fund’s SAI is amended as follows:
The section entitled “Pricing of Shares—Determination of Net Asset Value—Options, Futures, Swaps and Other Derivatives” in each Fund’s SAI, as applicable for a Fund, is deleted in its entirety and replaced with the following:
Options, Futures, Swaps and Other Derivatives. Exchange-traded equity options (except ETF options, equity index options or those that are customized) for which market quotations are readily available are valued at the mean of the last bid and ask prices as quoted on the Exchange or the board of trade on which such options are traded. In the event that there is no mean price available for such exchange-traded equity option held by a Fund on a day on which the Fund values such option, the last bid (long positions) or ask (short positions) price, if available, will be used as the value of such option. If no bid or ask price is available on a day on which a Fund values such option, the prior day’s price will be used, unless BlackRock determines that such prior day’s price no longer reflects the fair value of the option, in which case such option will be treated as a fair value asset. Customized exchange-traded equity options, ETF options, equity index options and OTC derivatives may be valued using a mathematical model which may incorporate a number of market data factors. Financial futures contracts and options thereon, which are traded on exchanges, are valued at their last sale price or settle price as of the close of such exchanges. Swap agreements and other derivatives are generally valued daily based upon quotations from market makers or by a pricing service in accordance with the Valuation Procedures.
Shareholders should retain this Supplement for future reference.
PRSAI-MF-1125SUP
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STATEMENT OF ADDITIONAL INFORMATION
BlackRock Municipal Bond Fund, Inc.
100 Bellevue Parkway, Wilmington, Delaware 19809 • Phone No. (800) 441-7762
This Statement of Additional Information of the BlackRock National Municipal Fund and BlackRock Short Duration Muni Fund (formerly, BlackRock Short-Term Municipal Fund) (collectively, the “Funds” and each, a “Fund”), each a series of BlackRock Municipal Bond Fund, Inc. (the “Corporation”), is not a prospectus and should be read in conjunction with the Prospectuses of the Funds, dated October 28, 2025, as they may be amended or supplemented from time to time (each, a “Prospectus”) which have been filed with the Securities and Exchange Commission (the “Commission” or the “SEC”) and can be obtained, without charge, by calling (800) 441-7762 or by writing to the Funds at the above address. The Funds’ Prospectuses are incorporated by reference into this Statement of Additional Information, and Part I of this Statement of Additional Information and the portions of Part II of this Statement of Additional Information that relate to the Funds have been incorporated by reference into the Funds’ Prospectuses. The portions of Part II of this Statement of Additional Information that do not relate to the Funds do not form a part of the Funds’ Statement of Additional Information, have not been incorporated by reference into the Funds’ Prospectuses and should not be relied upon by investors in the Funds. The audited financial statements of the Funds are incorporated into this Statement of Additional Information by reference to the Funds’ Annual Financial Statements and Additional Information for the fiscal year ended June 30, 2025, as filed with the SEC on Form N-CSR (the “2025 Annual Financial Statements”). You may request a copy of the 2025 Annual Financial Statements at no charge by calling (800) 441-7762 between 8:00 a.m. and 6:00 p.m. Eastern time on any business day.
References to the Investment Company Act of 1940, as amended (the “Investment Company Act” or the “1940 Act”), or other applicable law, will include any rules promulgated thereunder and any guidance, interpretations or modifications by the Commission, Commission staff or other authority with appropriate jurisdiction, including court interpretations, and exemptive, no-action or other relief or permission from the Commission, Commission staff or other authority.
Ticker Symbol
Class
BlackRock National Municipal Fund
BlackRock Short Duration Muni Fund Investor A Shares . . ..................................................... M DNLX MELMX Investor C Shares ....................................................... M FNLX MFLMX Institutional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MANLX MALMX Service Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BNMSX N/A Investor A1 Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A MDLMX Class K Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BNMLX MPLMX
BlackRock Advisors, LLC — Manager
BlackRock Investments, LLC — Distributor
The date of this Statement of Additional Information is October 28, 2025.
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TABLE OF CONTENTS
Page PART I Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1 Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8 Information on Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9 Management, Advisory and Other Service Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-19 Information on Sales Charges and Distribution Related Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25 Computation of Offering Price Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27 Portfolio Transactions and Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-29 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-32
PART II Investment Risks and Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1 Management and Other Service Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-79 Selective Disclosure of Portfolio Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-81 Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-95 Redemption of Shares . . ........................................................................... I I-112 Shareholder Services . . ............................................................................ I I-115 Pricing of Shares .................................................................................. I I-119 Portfolio Transactions and Brokerage . . .............................................................. I I-121 Dividends and Taxes . . ............................................................................. I I-125 Performance Data ................................................................................. I I-132 Proxy Voting Policies and Procedures. . . . . . . . . . . . . . . . . . . . . . ........................................... I I-134 General Information ............................................................................... I I-135 Appendix A — Description of Bond Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1 Appendix B — Proxy Voting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
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PART I: INFORMATION ABOUT BLACKROCK MUNICIPAL BOND FUND, INC.
Part I of this Statement of Additional Information (“SAI”) sets forth information about the BlackRock National Municipal Fund (the “National Fund”) and the BlackRock Short Duration Muni Fund (formerly, BlackRock Short-Term Municipal Fund) (the “Short Duration Fund,” and, with the National Fund, the “Funds”), each a series of BlackRock Municipal Bond Fund, Inc. (the “Corporation”). It includes information about the Corporation’s Board of Directors (the “Board” or the “Board of Directors”), the management services provided to and the management fees paid by each Fund and information about other fees applicable to and services provided to each Fund. This Part I of this SAI should be read in conjunction with the Funds’ Prospectuses and those portions of Part II of this SAI that pertain to such Fund.
I. Investment Objectives and Policies
In implementing each Fund’s investment strategy, from time to time, BlackRock Advisors, LLC (“BlackRock” or the “Manager”), each Fund’s investment manager, may consider and employ techniques and strategies designed to minimize and defer the U.S. federal income taxes which may be incurred by shareholders in connection with their investment in such Fund.
Set forth below is a listing of some of the types of investments and investment strategies that a Fund may use, and the risks and considerations associated with those investments and investment strategies. Please see Part II of this SAI for further information on these investments and investment strategies. Information contained in Part II about the risks and considerations associated with investments and/or investment strategies applies only to the extent a Fund makes each type of investment or uses each investment strategy.
In addition, set forth below is a listing of the proxy voting policy and related guidelines applicable to the Fund. Please see the “Proxy Voting Policies and Procedures” in Part II of this SAI for further information about these policies. A copy of each policy is included in Appendix B.
Information that does not apply to the Fund does not form a part of the Fund’s SAI and should not be relied on by investors in the Fund. Only information that is clearly identified as applicable to a Fund is considered to form a part of that Fund’s SAI.
National Fund Short Duration Fund Asset-Backed Securities Asset-Based Securities Precious Metal-Related Securities Borrowing and Leverage XX
Cash Management Collateralized Debt Obligations Collateralized Bond Obligations Collateralized Loan Obligations Commercial Paper Commodity-Linked Derivative Instruments and Hybrid Instruments Qualifying Hybrid Instruments
Hybrid Instruments Without Principal Protection Limitations on Leverage Counterparty Risk Convertible Securities Corporate Loans
Direct Lending Credit Linked Securities XX Cyber Security Issues XX Debt Securities XX
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National Fund Short Duration Fund Floating Rate and Variable Rate Securities X X Inflation-Indexed Bonds Investment Grade Debt Obligations X X
High Yield Investments (“Junk Bonds”) XX Mezzanine Investments Pay-in-kind Bonds X Supranational Entities Depositary Receipts (ADRs, EDRs and GDRs) Derivatives XX Hedging XX
Speculation XX Risk Factors in Derivatives XX Correlation Risk XX Counterparty Risk X X Credit Risk XX Currency Risk
Illiquidity Risk XX Leverage Risk XX Market Risk XX Valuation Risk XX Volatility Risk XX Futures XX Swap Agreements XX Credit Default Swaps and Similar Instruments X X
Interest Rate Swaps, Floors and Caps X X Total Return Swaps X X Options XX Options on Securities and Securities Indices X X Call Options XX Put Options XX Options on Government National Mortgage Association (“GNMA”) Certificates Options on Swaps (“Swaptions”) X X FLEX Options
Foreign Exchange Transactions Spot Transactions and FX Forwards Currency Futures Currency Options Currency Swaps Distressed Securities Environmental, Social and Governance (“ESG”) Integration XX Equity Securities Real Estate-Related Securities
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National Fund Short Duration Fund Securities of Smaller or Emerging Growth Companies Tracking Stocks Exchange-Traded Notes (“ETNs”) Foreign Investments
Foreign Investment Risks Foreign Market Risk Foreign Economy Risk Currency Risk and Exchange Risk Governmental Supervision and Regulation/Accounting Standards Certain Risks of Holding Fund Assets Outside the United States Publicly Available Information
Settlement Risk Sovereign Debt Withholding Tax Reclaims Risk U.S. Economic Trading Partners Risk Funding Agreements Guarantees XX Illiquid Investments XX Index Funds Cash Flows; Expenses Tracking Error Risk S&P 500 Index
Russell Indexes MSCI Indexes FTSE Indexes Bloomberg Indexes ICE BofA Indexes Indexed and Inverse Securities XX Inflation Risk XX Initial Public Offering (“IPO”) Risk
Investment in Emerging Markets Brady Bonds China Investments Risk Investment in Other Investment Companies XX Exchange-Traded Funds X X Issuer Insolvency Risk
Lease Obligations Life Settlement Investments Liquidity Risk Management XX Master Limited Partnerships Merger Transaction Risk
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National Fund Short Duration Fund Money Market Obligations of Domestic Banks, Foreign Banks and Foreign Branches of U.S. Banks XX Money Market Securities XX Mortgage-Related Securities Mortgage-Backed Securities Collateralized Mortgage Obligations (“CMOs”)
Adjustable Rate Mortgage Securities CMO Residuals Stripped Mortgage-Backed Securities Tiered Index Bonds TBA Commitments Mortgage Dollar Rolls
Net Interest Margin (NIM) Securities Municipal Investments XX Risk Factors and Special Considerations Relating to Municipal Bonds X X Description of Municipal Bonds XX General Obligation Bonds X X Revenue Bonds XX
Private Activity Bonds (“PABs”) X X Moral Obligation Bonds X X Municipal Notes XX Municipal Commercial Paper X X Municipal Lease Obligations X X Tender Option Bonds X X
Yields XX Variable Rate Demand Obligations (“VRDOs”) X X Transactions in Financial Futures Contracts on Municipal Indexes X X Call Rights XX Municipal Interest Rate Swap Transactions X X Insured Municipal Bonds X X Build America Bonds X X
Tax-Exempt Municipal Investments X X Participation Notes Portfolio Turnover Rates XX Preferred Stock Tax-Exempt Preferred Shares X X Trust Preferred Securities X X Proxy Voting Policies
Open-End Active and Fixed Income Index Fund Proxy Voting Policy X X BlackRock Active Investment Stewardship Climate and Decarbonization Stewardship Guidelines Index Equity Fund Proxy Voting Policy
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National Fund Short Duration Fund BlackRock Investment Stewardship Climate and Decarbonization Stewardship Guidelines
Real Estate Investment Trusts (“REITs”) Recent Market Events XX Reference Rate Replacement Risk XX Repurchase Agreements and Purchase and Sale Contracts XX Restricted Securities XX Reverse Repurchase Agreements XX Rights Offerings and Warrants to Purchase
Rule 144A Securities XX Securities Lending XX Short Sales See note 1 below See note 1 below Special Purpose Acquisition Companies Standby Commitment Agreements Stripped Securities Structured Notes
Taxability Risk XX Temporary Defensive Measures U.S. Government Obligations XX U.S. Treasury Obligations X X U.S. Treasury Rolls XX Utility Industries XX When-Issued Securities, Delayed Delivery Securities and Forward Commitments XX Yields and Ratings XX Zero Coupon Securities XX
1 The Fund may only make short sales against-the-box.
The investment objective of the Corporation is to provide shareholders with as high a level of income exempt from Federal income taxes as is consistent with the investment policies of each Fund. The Corporation is classified as a diversified open-end management investment company under the Investment Company Act. The Corporation is comprised of two separate series, each of which is, in effect, a separate fund issuing its own shares. Each Fund seeks to achieve its objective by investing in a diversified portfolio of debt obligations issued by or on behalf of states, territories and possessions of the United States and the District of Columbia and their political subdivisions, agencies and instrumentalities, the interest on which, in the opinion of bond counsel to the issuer, is generally excludable from gross income for Federal income tax purposes, except that the interest may be includable in taxable income for purposes of the Federal alternative minimum tax (such obligations are herein referred to as “Municipal Bonds”). Municipal Bonds include general obligation bonds, revenue or special obligation bonds, private activity bonds, variable rate demand notes, and short-term tax-exempt municipal obligations such as tax anticipation notes. Under normal circumstances, each Fund invests at least 80% of its net assets in Municipal Bonds. For this purpose, net assets include any borrowings for investment purposes. This is a fundamental policy of each Fund and may not be changed without a vote of the majority of the outstanding shares of the Fund as defined in the Investment Company Act. No Fund may purchase securities other than Municipal Bonds and certain temporary investments described below. Each Fund currently contemplates that it will not invest more than 25% of its total assets (taken at market value) in Municipal Bonds whose issuers are located in the same state. There can be no assurance that the investment objective of any Fund can be attained.
While no Fund intends to realize significant taxable investment income, each Fund has the authority to invest as much as 20% of its assets on a temporary basis in taxable money market securities with remaining maturities not in excess of one year from the date of purchase (“Temporary Investments”) for liquidity purposes or as a temporary
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investment of cash pending investment of such cash in Municipal Bonds. In addition, each Fund reserves the right to temporarily invest a greater portion of its assets in Temporary Investments for defensive purposes, when, in the judgment of the Manager, market conditions warrant such action. Temporary Investments consist of U.S. Government securities, U.S. Government Agency securities, domestic bank certificates of deposit and bankers’ acceptances, and short-term corporate debt securities such as commercial paper and repurchase agreements. From time to time, a Fund may realize capital gains that will constitute taxable income.
Each Fund may invest in certain tax-exempt securities that are classified as “private activity bonds,” which may subject certain investors to an alternative minimum tax.
Certain instruments in which a Fund may invest may be characterized as derivative instruments. Each Fund is authorized to engage in transactions in financial futures contracts and options thereon, indexed and inverse floating rate obligations and swap agreements, including credit default swap agreements. The Funds may use derivative instruments to hedge their investments or to seek to enhance returns.
Investment Policies of the Funds
Each Fund pursues its investment objective through the separate investment policies described below. These policies differ with respect to the maturity and quality of portfolio securities in which a Fund may invest, and these policies can be expected to affect the yield on each Fund and the degree of market, financial, credit and interest rate risk to which the Fund is subject. Generally, Municipal Bonds with longer maturities tend to produce higher yields and are subject to greater market fluctuations as a result of changes in interest rates (“interest rate risk”) than are Municipal Bonds with shorter maturities. In addition, lower rated Municipal Bonds generally will provide a higher yield than higher rated Municipal Bonds of similar maturity but are also generally subject to greater market risk and to a greater degree of risk with respect to the ability of the issuer to meet its principal and interest obligations (“credit risk”). A Fund’s net asset value may fall when interest rates rise and rise when interest rates fall. Because of its emphasis on investments in Municipal Bonds, each Fund should be considered as a means of diversifying an investment portfolio and not in itself a balanced investment plan.
National Fund
The National Fund may invest in Municipal Bonds rated in any rating category or unrated Municipal Bonds. The Manager considers ratings as one of several factors in its independent credit analysis of issuers. This Fund normally can be expected to offer the higher yields of the two Funds, but also to be subject to the highest market and financial risks.
The investment policies of the National Fund are not governed by specific rating categories. The National Fund may invest in Municipal Bonds rated in any rating category or in unrated Municipal Bonds. The Fund will primarily usually invest in Municipal Bonds having a maturity of five years or longer. Fund management will choose Municipal Bond investments that it believes offer a relatively high potential for total return relative to their total risk. Although the Fund’s investment policies are not governed by specific rating categories, Fund management does not presently intend to invest more than 35% of the Fund’s net assets in Municipal Bonds rated below investment grade (below BBB by S&P Global Ratings (“S&P”) or Fitch Ratings, Inc. (“Fitch”) or below Baa by Moody’s Investors Service, Inc. (“Moody’s”)) or in unrated Municipal Bonds that Fund management believes are of comparable quality. These lower rated obligations are commonly known as “junk bonds.” Junk bonds have a high level of financial risk and there is a greater potential for the Fund to lose income and principal on these investments. The 35% limitation on junk bond investments reflects only the present intention of Fund management, and may be changed by the Board of Directors of the Corporation without shareholder approval. Therefore, it is possible that the Fund could invest up to 100% of its assets in junk bonds. Because investment in medium to lower rated Municipal Bonds entails relatively greater risks of loss of income or principal than an investment in higher rated securities, an investment in the National Fund may not be appropriate for all investors. Investors should consider these risks before investing.
Short Duration Fund
The Short Duration Fund invests primarily in a portfolio of short-term investment grade Municipal Bonds. Municipal Bonds in the Short Duration Fund will be either Municipal Bonds with a remaining maturity of less than ten years, short-term municipal notes, which typically are issued with a maturity of not more than one year or variable rate demand notes (“VRDN”), which typically are issued with a maturity of longer than ten years, but have a one-day or seven-day put demand feature at par. The Short Duration Fund will treat Municipal Bonds that it has the option to require the issuer to redeem within ten years as having a remaining maturity of less than ten years, even if the period to the stated maturity date of such Municipal Bonds is greater than ten years. Municipal notes include tax
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anticipation notes, bond anticipation notes and revenue anticipation notes. The Short Duration Fund may generally be expected to offer a lower yield than the other Funds. Interest rates on short-term Municipal Bonds may fluctuate more widely from time to time than interest rates on longer term Municipal Bonds. However, because of the shorter maturities, the market value of the Municipal Bonds held by the Short Duration Fund may generally be expected to fluctuate less as a result of changes in prevailing interest rates.
The Short Duration Fund will invest primarily in Municipal Bonds rated at the date of purchase in the four highest rating categories by S&P (AAA, AA, A and BBB), Fitch (AAA, AA, A and BBB) or Moody’s (Aaa, Aa, A and Baa) in the case of long-term debt, rated as MIG 1 through MIG 3 by Moody’s, F-1+ through F-3 by Fitch, or SP-1+ through SP-2 by S&P in the case of short-term tax-exempt notes, rated P-1 through P-2 by Moody’s, F-1+ through F-3 by Fitch or A-1+ through A-3 by S&P in the case of tax-exempt commercial paper and rated VMIG-1 or VMIG-2 by Moody’s, F-1+ through F-2 by Fitch or A-1+ through A-2 by S&P in the case of VRDNs or, if unrated, judged to be of comparable quality by the Manager. The Short Duration Fund will primarily invest in other Municipal Bonds deemed to qualify for such ratings and in variable rate tax-exempt demand notes. Securities rated in the lowest of these categories are considered to have some speculative characteristics. The Short Duration Fund may continue to hold securities that, after being purchased by the Fund, are downgraded to a rating lower than those set forth above.
Regulation Regarding Derivatives. The Commodity Futures Trading Commission (“CFTC”) subjects advisers to registered investment companies to regulation by the CFTC if a fund that is advised by the investment adviser either (i) invests, directly or indirectly, more than a prescribed level of its liquidation value in CFTC-regulated futures, options and swaps (“CFTC Derivatives”), or (ii) markets itself as providing investment exposure to such instruments. To the extent a Fund uses CFTC Derivatives, they intend to do so below such prescribed levels and will not market themselves as a “commodity pool” or a vehicle for trading such instruments. Accordingly, BlackRock has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act (“CEA”) pursuant to Rule 4.5 under the CEA. BlackRock is not, therefore, subject to registration or regulation as a “commodity pool operator” under the CEA in respect of the Funds.
Investments in Puerto Rico Municipal Securities . The Funds may invest in municipal securities issued in Puerto Rico, subject to market, economic and political conditions. Like many other U.S. states and municipalities, Puerto Rico experienced a significant downturn during the recession. Puerto Rico continues to face significant fiscal challenges, including persistent government deficits, under-funded public pension benefit obligations, underfunded government retirement systems, sizable debt service obligations and a high unemployment rate. In 2016, Puerto Rico and its authorities began defaulting on various debt payments, leading to the creation of the Puerto Rico Oversight, Management and Economic Stability Act (“PROMESA”). PROMESA established a seven-member federal oversight board (the “Oversight Board”) and a bankruptcy restructuring mechanism for Puerto Rico to oversee Puerto Rico’s financial operations and to assist the government of Puerto Rico in establishing a fiscal recovery plan and facilitating debt restructuring negotiations. As of the date of this SAI, Puerto Rico has reached agreements with some of its bondholders for managing outstanding debt and is amidst negotiations for its remaining obligations. All voluntary agreements to resolve Puerto Rico’s outstanding debt must be approved by the court handling Puerto Rico’s debt restructuring; as a result, the timing and manner of any resolution to the PROMESA proceedings is unclear. A restructuring of some or all of Puerto Rico’s debt, or a further decline in market prices of Puerto Rico debt obligations, may affect a Fund investment in these securities and its overall performance. If the economic situation in Puerto Rico persists or worsens, the volatility, credit quality and performance of the Fund could be adversely affected.
On February 15, 2019, the U.S. Court of Appeals for the First Circuit held that the organization of the Oversight Board was unconstitutional and set a ninety-day period to either validate or reconstitute the appointment of the board’s existing members, pursuant to the appointment process of the U.S. Constitution. The First Circuit’s decision was appealed, and the U.S. Supreme Court agreed to hear the case on October 15, 2019. The findings of the U.S. Supreme Court regarding the Oversight Board could significantly affect the operations of the Oversight Board and therefore Puerto Rico’s ability to restructure its debt.
In August of 2019, Ricardo Roselló, the governor of Puerto Rico, resigned and Wanda Vázquez was sworn in as governor after the Supreme Court of Puerto Rico held that Mr. Roselló’s successor, Pedro Pierluisi, unconstitutionally assumed the office of governor. It is unclear whether Governor Vázquez will serve the remainder of her term through January 2021. These gubernatorial changes, and any further potential political instability, could place additional pressure on Puerto Rico’s financial situation and negatively impact the outcome of its debt restructuring initiatives, the liquidity of its municipal bonds and Puerto Rico’s market stability.
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II. Investment Restrictions
The Corporation, on behalf of each Fund, has adopted restrictions and policies relating to the investment of each Fund’s assets and its activities. Certain of the restrictions are fundamental policies of the Corporation and may not be changed without the approval of the holders of a majority of the Corporation’s outstanding voting securities (which for this purpose and under the Investment Company Act, means the lesser of (i) 67% of the shares represented at a meeting at which more than 50% of the outstanding shares are represented or (ii) more than 50% of the outstanding shares). The Corporation, on behalf of each Fund, has also adopted certain non-fundamental investment restrictions, which may be changed by the Board of Directors without shareholder approval.
Set forth below are each Fund’s fundamental and non-fundamental investment restrictions. Unless otherwise provided, all references below to the assets of a Fund are in terms of current market value.
Under the fundamental investment restrictions of the National Fund and the Short Duration Fund, no Fund may:
1. Make any investment inconsistent with the Corporation’s classification as a diversified company under the Investment Company Act.
2. Invest more than 25% of its assets, taken at market value, in the securities of issuers in any particular industry (excluding the U.S. Government and its agencies and instrumentalities).
3. Make investments for the purpose of exercising control or management.
4. Purchase or sell real estate, except that, to the extent permitted by applicable law, each Fund may invest in securities directly or indirectly secured by real estate or interests therein or issued by companies which invest in real estate or interests therein.
5. Make loans to other persons, except that the acquisition of bonds, debentures or other corporate debt securities and investments in government obligations, commercial paper, pass-through instruments, certificates of deposit, bankers’ acceptances, repurchase agreements or any similar instruments shall not be deemed to be the making of a loan, and except further that each Fund may lend its portfolio securities, provided that the lending of portfolio securities may be made only in accordance with applicable law and the guidelines set forth in the Corporation’s Prospectus and Statement of Additional Information, as they may be amended from time to time.
6. Issue senior securities to the extent such issuance would violate applicable law.
7. Borrow money, except that (i) each Fund may borrow from banks (as defined in the Investment Company Act) in amounts up to 33 1⁄ 1⁄3 ⁄3 % of its total assets (including the amount borrowed), (ii) each Fund may, to the extent permitted by applicable law, borrow up to an additional 5% of its total assets for temporary purposes, (iii) each Fund may obtain such short term credit as may be necessary for the clearance of purchases and sales of portfolio securities and (iv) each Fund may purchase securities on margin to the extent permitted by applicable law. The Corporation may not pledge its assets other than to secure such borrowings or, to the extent permitted by a Fund’s investment policies as set forth in the Corporation’s Prospectus and Statement of Additional Information, as they may be amended from time to time, in connection with hedging transactions, short sales, when-issued and forward commitment transactions and similar investment strategies.
8. Underwrite securities of other issuers except insofar as a Fund technically may be deemed an underwriter under the Securities Act of 1933, as amended (the “Securities Act”), in selling portfolio securities.
9. Purchase or sell commodities or contracts on commodities, except to the extent that a Fund may do so in accordance with applicable law and the Corporation’s Prospectus and Statement of Additional Information, as they may be amended from time to time, and without registering as a commodity pool operator under the Commodity Exchange Act.
Under the non-fundamental investment restrictions of the National Fund and the Short Duration Fund, no Fund may:
a. Purchase securities of other investment companies, except to the extent permitted by the Investment Company Act. As a matter of policy, however, the Fund will not purchase shares of any registered open-end investment company or registered unit investment trust, in reliance on Section 12(d)(1)(F) or (G) (the “fund of funds” provisions) of the Investment Company Act, at any time the Fund has knowledge that its shares are purchased by another investment company investor in reliance on the provisions of subparagraph (G) of Section 12(d)(1).
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b. Make short sales of securities or maintain a short position, except to the extent permitted by the Fund’s Prospectus and Statement of Additional Information, as amended from time to time, and applicable law.
Except with respect to restriction (7), if a percentage restriction on the investment or use of assets set forth above is adhered to at the time a transaction is effected, later changes in percentages resulting from changing values will not be considered a violation.
Also for purposes of investment restriction (2), tax-exempt securities issued by states, municipalities and their political subdivisions are not considered to be part of any industry.
Notations Regarding each Fund’s Fundamental Investment Restrictions
The following notations are not considered to be part of each Fund’s fundamental investment restrictions and are subject to change without shareholder approval.
For purposes of applying each Fund’s fundamental policy relating to concentration set forth in (2) above, municipal securities issued to finance a specific project, such as industrial development bonds and private activity bonds, are not excluded from the Fund’s 25% industry concentration limit, as they are considered to be in the industry of the relevant project. There also will be no limit on investment in issuers domiciled in a single jurisdiction or country. Finance companies will be considered to be in the industries of their parents if their activities are primarily related to financing the activities of the parents. Each foreign government will be considered to be a member of a separate industry. With respect to the Fund’s industry classifications, the Fund currently utilizes any one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/ or as defined by Fund management. The policy also will be interpreted to give broad authority to the Fund as to how to classify issuers within or among industries.
With respect to each Fund’s fundamental policy relating to borrowing set forth in (7) above, the policy does not restrict the Fund from obtaining leverage through tender option bond trust transactions, provided that the Fund either (i) complies with the 300% asset coverage ratio with respect to such transactions and any other borrowings in the aggregate, or (ii) treats such transactions as Derivatives Transactions under Rule 18f-4. See “Investment Risks and Considerations -- Derivatives -- Regulation of Derivatives -- Rule 18f-4 under the Investment Company Act” below.
With respect to each Fund’s fundamental policy relating to underwriting set forth in (8) above, the Investment Company Act does not prohibit the Fund from engaging in the underwriting business or from underwriting the securities of other issuers; in fact, in the case of diversified funds, the Investment Company Act permits the Fund to have underwriting commitments of up to 25% of its assets under certain circumstances. Those circumstances currently are that the amount of the Fund’s underwriting commitments, when added to the value of the Fund’s investments in issuers where the Fund owns more than 10% of the outstanding voting securities of those issuers, cannot exceed the 25% cap. A fund engaging in transactions involving the acquisition or disposition of portfolio securities may be considered to be an underwriter under the Securities Act. Although it is not believed that the application of the Securities Act provisions described above would cause the Fund to be engaged in the business of underwriting, the policy in (8) above will be interpreted not to prevent the Fund from engaging in transactions involving the acquisition or disposition of portfolio securities, regardless of whether the Fund may be considered to be an underwriter under the Securities Act or is otherwise engaged in the underwriting business to the extent permitted by applicable law.
Unless otherwise indicated, all limitations under each Fund’s fundamental or non-fundamental investment restrictions apply only at the time that a transaction is undertaken. Any change in the percentage of the Fund’s assets invested in certain securities or other instruments resulting from market fluctuations or other changes in the Fund’s total assets will not require the Fund to dispose of an investment until BlackRock determines that it is practicable to sell or close out the investment without undue market or tax consequences.
III. Information on Directors and Officers
The Board consists of ten individuals (each a “Director”), eight of whom are not “interested persons” of the Corporation as defined in the Investment Company Act (the “Independent Directors”). The registered investment companies advised by the Manager or its affiliates (the “BlackRock-advised Funds”) are organized into the BlackRock Multi-Asset Complex, the BlackRock Fixed-Income Complex, and the iShares Complex (each, a “BlackRock Fund Complex”). The Funds are included in the BlackRock Fund Complex referred to as the BlackRock Fixed-Income Complex. The Directors also oversee as board members the operations of the other open-end and closed-end registered investment companies included in the BlackRock Fixed-Income Complex.
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The Board has overall responsibility for the oversight of the Corporation and the Funds. The Chair of the Board and the Chief Executive Officer are different people. Not only is the Chair of the Board an Independent Director, but also the Chair of each Board committee (each, a “Committee”) is an Independent Director. The Board has six standing Committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee, a Securities Lending Committee and an Executive Committee. The role of the Chair of the Board is to preside over all meetings of the Board and to act as a liaison with service providers, officers, attorneys, and other Directors between meetings. The Chair of each Committee performs a similar role with respect to the Committee. The Chair of the Board or a Committee may also perform such other functions as may be delegated by the Board or the Committee from time to time. The Independent Directors meet regularly outside the presence of Fund management, in executive sessions or with other service providers to the Funds. The Board has regular meetings five times a year, including a meeting to consider the approval of the Funds’ investment management agreement, and, if necessary, may hold special meetings before its next regular meeting. The Audit Committee, the Governance and Nominating Committee, the Compliance Committee, the Performance Oversight Committee and the Securities Lending Committee each meets regularly and the Executive Committee meets on an ad hoc basis to conduct the oversight functions delegated to that Committee by the Board and reports its findings to the Board. The Board and each standing Committee conduct annual assessments of their oversight function and structure. The Board has determined that the Board’s leadership structure is appropriate because it allows the Board to exercise independent judgment over management and to allocate areas of responsibility among Committees and the Board to enhance oversight.
The Board decided to separate the roles of Chief Executive Officer from the Chair because it believes that having an independent Chair:
• increases the independent oversight of the Funds and enhances the Board’s objective evaluation of the Chief Executive Officer;
• allows the Chief Executive Officer to focus on the Funds’ operations instead of Board administration;
• provides greater opportunities for direct and independent communication between shareholders and the Board; and
• provides an independent spokesman for the Funds.
The Board has engaged the Manager to manage each Fund on a day-to-day basis. The Board is responsible for overseeing the Manager, other service providers, the operations of each Fund and associated risks in accordance with the provisions of the Investment Company Act, state law, other applicable laws, the Funds’ charter, and the Funds’ investment objectives and strategies. The Board reviews, on an ongoing basis, each Fund’s performance, operations, and investment strategies and techniques. The Board also conducts reviews of the Manager and its role in running the operations of the Funds.
Day-to-day risk management with respect to each Fund is the responsibility of the Manager, sub-advisers or other service providers (depending on the nature of the risk), subject to the supervision of the Manager. The Funds are subject to a number of risks, including investment, compliance, operational and valuation risks, among others. While there are a number of risk management functions performed by the Manager, sub-advisers or other service providers, as applicable, it is not possible to eliminate all of the risks applicable to the Funds. Risk oversight is part of the Board’s general oversight of each Fund and is addressed as part of various Board and Committee activities. The Board, directly or through Committees, also reviews reports from, among others, management, the independent registered public accounting firm for each Fund, the Manager, sub-advisers and internal auditors for the Manager or its affiliates, as appropriate, regarding risks faced by each Fund and management’s or the service provider’s risk functions. The Committee system facilitates the timely and efficient consideration of matters by the Directors and facilitates effective oversight of compliance with legal and regulatory requirements and of each Fund’s activities and associated risks. The Board has approved the appointment of a Chief Compliance Officer (“CCO”), who oversees the implementation and testing of the Funds’ compliance program and reports regularly to the Board regarding compliance matters for the Funds and their service providers. The Independent Directors have engaged independent legal counsel to assist them in performing their oversight responsibilities.
Audit Committee. The Board has a standing Audit Committee composed of Catherine A. Lynch (Chair), Lorenzo A. Flores, J. Phillip Holloman and Arthur P. Steinmetz, all of whom are Independent Directors. The principal responsibilities of the Audit Committee are to assist the Board in fulfilling its oversight responsibilities relating to the accounting and financial reporting policies and practices of the Funds. The Audit Committee’s responsibilities include, without limitation: (i) approving, and recommending to the full Board for approval, the selection, retention, termination and compensation of the Funds’ independent registered public accounting firm (the “Independent Registered Public Accounting Firm”) and evaluating the independence and objectivity of the Independent Registered
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Public Accounting Firm; (ii) approving all audit engagement terms and fees for the Funds; (iii) reviewing the conduct and results of each audit; (iv) reviewing any issues raised by the Funds’ Independent Registered Public Accounting Firm or management regarding the accounting or financial reporting policies and practices of the Funds, their internal controls, and, as appropriate, the internal controls of certain service providers and management’s response to any such issues; (v) reviewing and discussing the Funds’ audited and unaudited financial statements and disclosure in the Funds’ shareholder reports relating to the Funds’ performance; (vi) assisting the Board’s responsibilities with respect to the internal controls of the Funds and their service providers with respect to accounting and financial matters; and (vii) resolving any disagreements between the Funds’ management and the Funds’ Independent Registered Public Accounting Firm regarding financial reporting. The Board has adopted a written charter for the Board’s Audit Committee. During the fiscal year ended June 30, 2025, the Audit Committee met nine times.
Governance and Nominating Committee. The Board has a standing Governance and Nominating Committee composed of W. Carl Kester (Chair), Cynthia L. Egan, J. Phillip Holloman, R. Glenn Hubbard and Catherine A. Lynch, all of whom are Independent Directors. The principal responsibilities of the Governance and Nominating Committee are: (i) identifying individuals qualified to serve as Independent Directors and recommending Board nominees that are not “interested persons” of the Funds (as defined in the Investment Company Act) for election by shareholders or appointment by the Board; (ii) advising the Board with respect to Board composition, procedures and Committees of the Board (other than the Audit Committee); (iii) overseeing periodic self-assessments of the Board and Committees of the Board (other than the Audit Committee); (iv) reviewing and making recommendations in respect to Independent Director compensation; (v) monitoring corporate governance matters and making recommendations in respect thereof to the Board; (vi) acting as the administrative committee with respect to Board policies and procedures, committee policies and procedures (other than the Audit Committee) and codes of ethics as they relate to the Independent Directors; and (vii) reviewing and making recommendations to the Board in respect of Fund share ownership by the Independent Directors. The Board has adopted a written charter for the Board’s Governance and Nominating Committee. During the fiscal year ended June 30, 2025, the Governance and Nominating Committee met four times.
The Governance and Nominating Committee of the Board seeks to identify individuals to serve on the Board who have a diverse range of viewpoints, qualifications, experiences, backgrounds and skill sets so that the Board will be better suited to fulfill its responsibility of overseeing the Funds’ activities. In so doing, the Governance and Nominating Committee reviews the size of the Board, the ages of the current Directors and their tenure on the Board, and the skills, background and experiences of the Directors in light of the issues facing the Funds in determining whether one or more new directors should be added to the Board. The Board as a group strives to achieve diversity in terms of gender, race and geographic location. The Governance and Nominating Committee believes that the Directors as a group possess the array of skills, experiences and backgrounds necessary to guide the Funds. The Directors biographies included herein highlight the diversity and breadth of skills, qualifications and expertise that the Directors bring to the Funds.
The Governance and Nominating Committee may consider nominations for Directors made by the Funds’ shareholders as it deems appropriate. Under each Corporation’s Bylaws, shareholders must follow certain procedures to nominate a person for election as a Director at a shareholder meeting at which Directors are to be elected. Under these advance notice procedures, shareholders must submit the proposed nominee by delivering a notice to the Secretary of each Fund at its principal executive offices no later than the close of business on the fifth (5th) day following the day on which notice of the date of the meeting was mailed or public disclosure of the date of the meeting was made, whichever first occurs.
The Corporation’s Bylaws provide that notice of a proposed nomination must include certain information about the shareholder and the nominee, as well as certain other information, including a written consent of the proposed nominee to serve if elected. Reference is made to each Corporation’s Bylaws for more details.
Compliance Committee. The Board has a Compliance Committee composed of Cynthia L. Egan (Chair), Stayce D. Harris, R. Glenn Hubbard and W. Carl Kester, all of whom are Independent Directors. The Compliance Committee’s purpose is to assist the Board in fulfilling its responsibility with respect to the oversight of regulatory and fiduciary compliance matters involving the Corporation, the fund-related activities of BlackRock, and any sub-adviser and the Corporation’s other third party service providers. The Compliance Committee’s responsibilities include, without limitation: (i) overseeing the compliance policies and procedures of the Corporation and its service providers and recommending changes or additions to such policies and procedures; (ii) reviewing information on and, where appropriate, recommending policies concerning the Corporation’s compliance with applicable law; (iii) reviewing information on any significant correspondence with or other actions by regulators or governmental agencies with respect to each Funds and any employee complaints or published reports that raise concerns regarding compliance matters; and (iv) reviewing reports from, overseeing the annual performance review of, and making certain
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recommendations in respect of, the Corporation’s CCO, including, without limitation, determining the amount and structure of the CCO’s compensation. The Board has adopted a written charter for the Board’s Compliance Committee. During the fiscal year ended June 30, 2025, the Compliance Committee met four times.
Per formance Oversight Committee. The Board has a Performance Oversight Committee composed of Arthur P. Steinmetz (Chair), Cynthia L. Egan, Lorenzo A. Flores, Stayce D. Harris, J. Phillip Holloman, R. Glenn Hubbard, W. Carl Kester and Catherine A. Lynch, all of whom are Independent Directors. The Performance Oversight Committee’s purpose is to assist the Board in fulfilling its responsibility to oversee the Funds’ investment performance relative to the Funds’ investment objective, policies and practices. The Performance Oversight Committee’s responsibilities include, without limitation: (i) reviewing the Funds’ investment objective, policies and practices; (ii) recommending to the Board any required action in respect of changes in fundamental and non-fundamental investment restrictions; (iii) reviewing information on appropriate benchmarks and competitive universes; (iv) reviewing the Funds’ investment performance relative to such benchmarks; (v) reviewing information on unusual or exceptional investment matters; (vi) reviewing whether each Fund has complied with its investment policies and restrictions; and (vii) overseeing policies, procedures and controls regarding valuation of the Funds’ investments. The Board has adopted a written charter for the Board’s Performance Oversight Committee. During the fiscal year ended June 30, 2025, the Performance Oversight Committee met four times.
Securities Lending Committee. The Board has a Securities Lending Committee composed of Catherine A. Lynch (Chair), Cynthia L. Egan and W. Carl Kester, all of whom are Independent Directors. The principal responsibilities of the Securities Lending Committee include, without limitation: (i) supporting, overseeing and organizing on behalf of the Board the process for oversight of the Fund’s securities lending activities; and (ii) providing a recommendation to the Board regarding the annual approval of the Fund’s Securities Lending Guidelines and the Fund’s agreement with the lending agent. The Board has adopted a written charter for the Board’s Securities Lending Committee. During fiscal year ended June 30, 2025, the Securities Lending Committee met two times.
Executive Committee. The Board has an Executive Committee composed of R. Glenn Hubbard (Chair) and W. Carl Kester, both of whom are Independent Directors, and John M. Perlowski, who serves as an interested Director. The principal responsibilities of the Executive Committee include, without limitation: (i) acting on routine matters between meetings of the Board; (ii) acting on such matters as may require urgent action between meetings of the Board; and (iii) exercising such other authority as may from time to time be delegated to the Executive Committee by the Board. The Board has adopted a written charter for the Board’s Executive Committee. During the fiscal year ended June 30, 2025, the Executive Committee did not met.
The Independent Directors have adopted a statement of policy that describes the experiences, qualifications, skills and attributes that are necessary and desirable for potential Independent Director candidates (the “Statement of Policy”). The Board believes that each Independent Director satisfied, at the time he or she was initially elected or appointed a Director, and continues to satisfy, the standards contemplated by the Statement of Policy as well as the standards set forth in the Corporation’s Bylaws. Furthermore, in determining that a particular Director was and continues to be qualified to serve as a Director, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Directors have balanced and diverse experiences, skills, attributes and qualifications, which allow the Board to operate effectively in governing each Fund and protecting the interests of shareholders. Among the attributes common to all Directors is their ability to review critically, evaluate, question and discuss information provided to them, to interact effectively with the Manager, sub advisers, other service providers, counsel and independent auditors, and to exercise effective business judgment in the performance of their duties as Directors. Each Director’s ability to perform his or her duties effectively is evidenced by his or her educational background or professional training; business, consulting, public service or academic positions; experience from service as a board member of the Corporation or the other funds in the BlackRock Fund Complexes (and any predecessor funds), other investment funds, public companies, or not-for-profit entities or other organizations; ongoing commitment and participation in Board and Committee meetings, as well as his or her leadership of standing and other committees throughout the years; or other relevant life experiences.
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The table below discusses some of the experiences, qualifications and skills of each Director that support the conclusion that he or she should serve on the Board.
Directors Experience, Qualifications and Skills Independent Directors R. Glenn Hubbard R. Glenn Hubbard has served in numerous roles in the field of economics, including as the Chairman of the U.S. Council of Economic Advisers of the President of the United States. Dr. Hubbard has served as the Dean of Columbia Business School, as a member of the Columbia Faculty and as a Visiting Professor at the John F. Kennedy School of Government at Harvard University, the Harvard Business School and the University of Chicago. Dr. Hubbard’s experience as an adviser to the President of the United States adds a dimension of balance to the Funds governance and provides perspective on economic issues. Dr. Hubbard’s service on the boards of ADP and Metropolitan Life Insurance Company provides the Board with the benefit of his experience with the management practices of other financial companies. Dr. Hubbard’s long-standing service on the boards of directors/trustees of the closed-end funds in the BlackRock Fixed Income Complex also provides him with a specific understanding of the Funds, their operations, and the business and regulatory issues facing the Funds. Dr. Hubbard’s independence from the Funds and the Manager enhances his service as Chair of the Board, Chair of the Executive Committee and a member of the Governance and Nominating Committee, the Compliance Committee and the Performance Oversight Committee.
W. Carl Kester The Board benefits from W. Carl Kester’s experiences as a professor and author in finance, and his experience as the George Fisher Baker Jr. Professor of Business Administration at Harvard Business School and as Deputy Dean of Academic Affairs at Harvard Business School from 2006 through 2010 adds to the Board a wealth of expertise in corporate finance and corporate governance. Dr. Kester has authored and edited numerous books and research papers on both subject matters, including co-editing a leading volume of finance case studies used worldwide. Dr. Kester’s long-standing service on the boards of directors/trustees of the closed-end funds in the BlackRock Fixed-Income Complex also provides him with a specific understanding of the Funds, their operations, and the business and regulatory issues facing the Funds. Dr. Kester’s independence from the Funds and the Manager enhances his service as Vice Chair of the Board, Chair of the Governance and Nominating Committee and a member of the Executive Committee, the Compliance Committee, the Performance Oversight Committee and the Securities Lending Committee.
Cynthia L. Egan Cynthia L. Egan brings to the Board a broad and diverse knowledge of investment companies and the retirement industry as a result of her many years of experience as President, Retirement Plan Services, for T. Rowe Price Group, Inc. and her various senior operating officer positions at Fidelity Investments, including her service as Executive Vice President of FMR Co., President of Fidelity Institutional Services Company and President of the Fidelity Charitable Gift Fund. Ms. Egan has also served as an advisor to the U.S. Department of Treasury as an expert in domestic retirement security. Ms. Egan began her professional career at the Board of Governors of the Federal Reserve and the Federal Reserve Bank of New York. Ms. Egan is also a director of UNUM Corporation, a publicly traded insurance company providing personal risk reinsurance, and a director and Chair of the Board of The Hanover Group, a public property casualty insurance company. Ms. Egan is also the lead independent director and non-executive Vice Chair of the Board of Huntsman Corporation, a publicly traded manufacturer and marketer of chemical products. Ms. Egan’s independence from the Funds and the Manager enhances her service as Chair of the Compliance Committee and a member of the Governance and Nominating Committee, the Performance Oversight Committee and the Securities Lending Committee.
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Directors Experience, Qualifications and Skills Lorenzo A. Flores The Board benefits from Lorenzo A. Flores’s many years of business, leadership and financial experience in his roles at various public and private companies. In particular, Mr. Flores’s service as Chief Financial Officer of Lattice Semiconductor Corporation, a semiconductor company that designs, develops, and markets programmable logic products and related software, Chief Financial Officer of Intel Foundry, a semiconductor manufacturing unit of Intel Corporation, Chief Financial Officer and Corporate Controller of Xilinx, Inc., a technology and semiconductor company that supplies programmable logic devices, and Vice Chairman of Kioxia, Inc., a manufacturer and supplier of flash memory and solid state drives, and his long experience in the technology industry allow him to provide insight to into financial, business and technology trends. Mr. Flores’s knowledge of financial and accounting matters qualifies him to serve as a member of the Audit Committee. Mr. Flores’s independence from the Funds and the Manager enhances his service as a member of the Performance Oversight Committee.
Stayce D. Harris The Board benefits from Stayce D. Harris’s leadership and governance experience gained during her extensive military career, including as a three-star Lieutenant General of the United States Air Force. In her most recent role, Ms. Harris reported to the Secretary and Chief of Staff of the Air Force on matters concerning Air Force effectiveness, efficiency and the military discipline of active duty, Air Force Reserve and Air National Guard forces. Ms. Harris’s experience on governance matters includes oversight of inspection policy and the inspection and evaluation system for all Air Force nuclear and conventional forces; oversight of Air Force counterintelligence operations and service on the Air Force Intelligence Oversight Panel; investigation of fraud, waste and abuse; and oversight of criminal investigations and complaints resolution programs. Ms. Harris is also a director of The Boeing Company. Ms. Harris’s independence from the Funds and the Manager enhances her service as a member of the Compliance Committee and the Performance Oversight Committee.
J. Phillip Holloman The Board benefits from J. Phillip Holloman’s many years of business and leadership experience as an executive, director and advisory board member of various public and private companies. In particular, Mr. Holloman’s service as Interim Executive Chairman, President and Chief Executive Officer of Vestis Corporation, President and Chief Operating Officer of Cintas Corporation allows him to provide insight into business trends and conditions. Mr. Holloman’s knowledge of financial and accounting matters qualifies him to serve as a member of the Audit Committee. Mr. Holloman’s independence from the Funds and the Manager enhances his service as a member of the Governance and Nominating Committee and the Performance Oversight Committee.
Catherine A. Lynch Catherine A. Lynch, who served as the Chief Executive Officer and Chief Investment Officer of the National Railroad Retirement Investment Trust, benefits the Board by providing business leadership and experience and a diverse knowledge of pensions and endowments. Ms. Lynch is also a trustee of PennyMac Mortgage Investment Trust, a specialty finance company that invests primarily in mortgage-related assets. Ms. Lynch also holds the designation of Chartered Financial Analyst. Ms. Lynch’s knowledge of financial and accounting matters qualifies her to serve as Chair of the Audit Committee. Ms. Lynch’s independence from the Funds and the Manager enhances her service as the Chair of the Securities Lending Committee, and a member of the Governance and Nominating Committee and the Performance Oversight Committee.
Arthur P. Steinmetz The Board benefits from Arthur P. Steinmetz’s many years of business and leadership experience as an executive, chairman and director of various companies in the financial industry. Mr. Steinmetz’s service as Chairman, Chief Executive Officer and President of the OppenheimerFunds, Inc. and as Trustee, President and Principal Executive Officer of certain OppenheimerFunds funds provides insight into the asset management industry. He has also served as a Director of ScotiaBank (U.S.). Mr. Steinmetz’s knowledge of financial and accounting matters qualifies him to serve as a member of the Audit Committee. Mr. Steinmetz’s independence from the Funds and the Manager enhances his service as Chair of the Performance Oversight Committee.
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Directors Experience, Qualifications and Skills Interested Directors Robert Fairbairn Robert Fairbairn has more than 25 years of experience with BlackRock, Inc. and over 30 years of experience in finance and asset management. In particular, Mr. Fairbairn’s positions as Vice Chairman of BlackRock, Inc., Member of BlackRock’s Global Operating Committee and Co-Chair of BlackRock’s Human Capital Committee provide the Board with a wealth of practical business knowledge and leadership. In addition, Mr. Fairbairn has global investment management and oversight experience through his former positions as Member of BlackRock’s Global Executive Committee, Global Head of BlackRock’s Retail and iShares ® businesses, Head of BlackRock’s Global Client Group, Chairman of BlackRock’s international businesses and his previous oversight over BlackRock’s Strategic Partner Program and Strategic Product Management Group. Mr. Fairbairn also serves as a board member for the funds in the BlackRock Multi-Asset Complex.
John M. Perlowski John M. Perlowski’s experience as Managing Director of BlackRock, Inc. since 2009, as the Head of BlackRock Global Accounting and Product Services since 2009, and as President and Chief Executive Officer of the Funds provides him with a strong understanding of the Funds, their operations, and the business and regulatory issues facing the Funds. Mr. Perlowski’s prior position as Managing Director and Chief Operating Officer of the Global Product Group at Goldman Sachs Asset Management, and his former service as Treasurer and Senior Vice President of the Goldman Sachs Mutual Funds and as Director of the Goldman Sachs Offshore Funds provides the Board with the benefit of his experience with the management practices of other financial companies. Mr. Perlowski also serves as a board member for the funds in the BlackRock Multi-Asset Complex. Mr. Perlowski is a member of BlackRock’s Global Executive Committee. Mr. Perlowski is a member of BlackRock’s Global Executive Committee. Mr. Perlowski’s experience with BlackRock enhances his service as a member of the Executive Committee.
Biographical Information
Certain biographical and other information relating to the Directors is set forth below, including their address and year of birth, principal occupations for at least the last five years, length of time served, total number of registered investment companies and investment portfolios overseen in the BlackRock-advised Funds and any currently held public company and other investment company directorships.
Name and Year of Birth 1,2
Position(s) Held (Length of Service) 3 Principal Occupation(s) During Past Five Years
Number of BlackRock Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen
Public Company and Other Investment Company Directorships Held During Past Five Years Independent Directors R. Glenn Hubbard 1958
Chair of the Board (Since 2022) and Director (Since 2019)
Dean, Columbia Business School from 2004 to 2019; Faculty member, Columbia Business School since 1988.
66 RICs consisting of 101 Portfolios
ADP (data and information services) from 2004 to 2020; Metropolitan Life Insurance Company (insurance); TotalEnergies SE (multi-energy)
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Name and Year of Birth 1,2
Position(s) Held (Length of Service) 3 Principal Occupation(s) During Past Five Years
Number of BlackRock Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen
Public Company and Other Investment Company Directorships Held During Past Five Years W. Carl Kester4 r4 1951
Vice Chair of the Board (Since 2022) and Director (Since 2019)
Baker Foundation Professor and George Fisher Baker Jr. Professor of Business Administration, Emeritus, Harvard Business School since 2022; George Fisher Baker Jr. Professor of Business Administration, Harvard Business School from 2008 to 2022; Deputy Dean for Academic Affairs from 2006 to 2010; Chairman of the Finance Unit, from 2005 to 2006; Senior Associate Dean and Chairman of the MBA Program from 1999 to 2005; Member of the faculty of Harvard Business School since 1981.
68 RICs consisting of 103 Portfolios
None
Cynthia L. Egan 4 1955
Director (Since 2019)
Advisor, U.S. Department of the Treasury from 2014 to 2015; President, Retirement Plan Services, for T. Rowe Price Group, Inc. from 2007 to 2012; executive positions within Fidelity Investments from 1989 to 2007.
68 RICs consisting of 103 Portfolios
Unum (insurance); The Hanover Insurance Group (Board Chair); Huntsman Corporation (Lead Independent Director and non Executive Vice Chair of the Board) (chemical products) Lorenzo A. Flores 1964
Director (Since 2021)
Chief Financial Officer, Lattice Semiconductor Corporation (LSCC) since 2025; Chief Financial Officer, Intel Foundry from 2024 to 2025; Vice Chairman, Kioxia, Inc. from 2019 to 2024; Chief Financial Officer, Xilinx, Inc. from 2016 to 2019; Corporate Controller, Xilinx, Inc. from 2008 to 2016.
66 RICs consisting of 101 Portfolios
None
Stayce D. Harris 1959
Director (Since 2021)
Lieutenant General, Inspector General of the United States Air Force from 2017 to 2019; Lieutenant General, Assistant Vice Chief of Staff and Director, Air Staff, United States Air Force from 2016 to 2017; Major General, Commander, 22nd Air Force, AFRC, Dobbins Air Reserve Base, Georgia from 2014 to 2016; Pilot, United Airlines from 1990 to 2020.
66 RICs consisting of 101 Portfolios
KULR Technology Group, Inc. in 2021; The Boeing Company (airplane manufacturer)
J. Phillip Holloman 1955
Director (Since 2021)
Interim Executive Chairman, President and Chief Executive Officer of Vestis Corporation since 2025; President and Chief Operating Officer, Cintas Corporation from 2008 to 2018.
66 RICs consisting of 101 Portfolios
Vestis Corporation (uniforms and facilities services)
Catherine A. Lynch 4 1961
Director (Since 2019)
Chief Executive Officer, Chief Investment Officer and various other positions, National Railroad Retirement Investment Trust from 2003 to 2016; Associate Vice President for Treasury Management, The George Washington University from 1999 to 2003; Assistant Treasurer, Episcopal Church of America from 1995 to 1999.
68 RICs consisting of 103 Portfolios
PennyMac Mortgage Investment Trust
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Name and Year of Birth 1,2
Position(s) Held (Length of Service) 3 Principal Occupation(s) During Past Five Years
Number of BlackRock Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen
Public Company and Other Investment Company Directorships Held During Past Five Years Arthur P. Steinmetz 4 1958
Trustee (Since 2023)
Trustee of Denison University since 2020; Consultant, Posit PBC (enterprise data science) since 2020; Director, ScotiaBank (U.S.) from 2020 to 2023; Chairman, Chief Executive Officer and President of OppenheimerFunds, Inc. from 2015, 2014 and 2013, respectively to 2019; Trustee, President and Principal Executive Officer of 104 OppenheimerFunds funds from 2014 to 2019. Portfolio manager of various OppenheimerFunds fixed income mutual funds from 1986 to 2014.
68 RICs consisting of 103 Portfolios
None
Interested Directors 5 Robert Fairbairn 1965
Director (Since 2015)
Vice Chairman of BlackRock, Inc. since 2019; Member of BlackRock’s Global Operating Committee; Co-Chair of BlackRock’s Human Capital Committee; Senior Managing Director of BlackRock, Inc. from 2010 to 2019; oversaw BlackRock’s Strategic Partner Program and Strategic Product Management Group from 2012 to 2019; Member of the Board of Managers of BlackRock Investments, LLC from 2011 to 2018; Global Head of BlackRock’s Retail and iShares ® businesses from 2012 to 2016.
92 RICs consisting of 266 Portfolios
None
John M. Perlowski 4 1964
Director (Since 2015) and President and Chief Executive Officer (Since 2010)
Managing Director of BlackRock, Inc. since 2009; Head of BlackRock Global Accounting and Product Services since 2009; Member of BlackRock’s Global Executive Committee; Advisory Director of Family Resource Network (charitable foundation) since 2009.
94 RICs consisting of 268 Portfolios
None
1 The address of each Director is c/o BlackRock, Inc., 50 Hudson Yards, New York, New York 10001. 2 Each Independent Director holds office until his or her successor is duly elected and qualifies or until his or her earlier death, resignation, retirement or removal as provided by the Corporation’s by-laws or charter or statute, or until December 31 of the year in which he or she turns 75. Directors who are “interested persons,” as defined in the Investment Company Act (each, an “Interested Director”), serve until their successor is duly elected and qualifies or until their earlier death, resignation, retirement or removal as provided by the Corporation’s by-laws or statute, or until December 31 of the year in which they turn 72. The Board may determine to extend the terms of Independent Directors on a case-by-case basis, as appropriate. 3 Following the combination of MLIM and BlackRock, Inc. in September 2006, the various legacy MLIM and legacy BlackRock fund boards were realigned and consolidated into three new fund boards in 2007. Certain Independent Directors first became members of the boards of other legacy MLIM or legacy BlackRock funds as follows: R. Glenn Hubbard, 2004 and W. Carl Kester, 1995. Certain other Independent Directors became members of the boards of the closed-end funds in the BlackRock Fixed-Income Complex as follows: Cynthia L. Egan, 2016 and Catherine A. Lynch, 2016. 4 Ms. Egan, Dr. Kester, Ms. Lynch, Mr. Steinmetz and Mr. Perlowski are also trustees of the BlackRock Credit Strategies Fund and BlackRock Private Investments Fund. 5 Mr. Fairbairn and Mr. Perlowski are both “interested persons,” as defined in the Investment Company Act, of the Corporation based on their positions with BlackRock, Inc. and its affiliates. Mr. Fairbairn and Mr. Perlowski are also board members of the BlackRock Multi-Asset Complex.
Certain biographical and other information relating to the officers of the Corporation who are not Directors is set forth below, including their address and year of birth, principal occupations for at least the last five years and length of time served.
Name and Year of Birth 1,2
Position(s) Held (Length of Service) Principal Occupation(s) During Past Five Years Officers Who Are Not Directors Jennifer McGovern 1977
Vice President (Since 2014)
Managing Director of BlackRock, Inc. since 2016.
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Name and Year of Birth 1,2 Position(s) Held (Length of Service) Principal Occupation(s) During Past Five Years Trent Walker 1974
Chief Financial Officer (Since 2021)
Managing Director of BlackRock, Inc. since 2019; Executive Vice President of PIMCO from 2016 to 2019.
Jay M. Fife 1970
Treasurer (Since 2007)
Managing Director of BlackRock, Inc. since 2007.
Aaron Wasserman 1974
Chief Compliance Officer (Since 2023)
Managing Director of BlackRock, Inc. since 2018; Chief Compliance Officer of the BlackRock-advised funds in the BlackRock Multi-Asset Complex, the BlackRock Fixed-Income Complex and the iShares Complex since 2023; Deputy Chief Compliance Officer for the BlackRock-advised funds in the BlackRock Multi-Asset Complex, the BlackRock Fixed-Income Complex and the iShares Complex from 2014 to 2023. Lisa Belle 1968
Anti-Money Laundering Compliance Officer (Since 2019)
Managing Director of BlackRock, Inc. since 2019; Global Financial Crime Head for Asset and Wealth Management of JP Morgan from 2013 to 2019. Janey Ahn 1975
Secretary (Since 2019)
Managing Director of BlackRock, Inc. since 2018.
1 The address of each Officer is c/o BlackRock, Inc., 50 Hudson Yards, New York, New York 10001. 2 Officers of the Corporation serve at the pleasure of the Board.
Share Ownership
Information relating to each Director’s share ownership in the Funds and in all BlackRock-advised Funds that are currently overseen by the respective Director (“Supervised Funds”) as of December 31, 2024 is set forth in the chart below. Amounts shown may include shares as to which a Director has indirect beneficial ownership, such as through participation in certain family accounts, 529 college savings plan interests, or similar arrangements where the Director has beneficial economic interest but not a direct ownership interest.
Name
Dollar Range of Equity Securities in the National Fund
Dollar Range of Equity Securities in the Short Duration Fund Aggregate Dollar Range in Supervised Funds* Independent Directors Cynthia L. Egan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None None Over $100,000 Lorenzo A. Flores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None None Over $100,000 Stayce D. Harris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1 - $10,000 $1 - $10,000 Over $100,000 J. Phillip Holloman . . . . . . . . . . . . . . . . . . . . . . . . . . . . None None Over $100,000 R. Glenn Hubbard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None None Over $100,000 W. Carl Kester . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None None Over $100,000 Catherine A. Lynch . . . . . . . . . . . . . . . . . . . . . . . . . . . . None None Over $100,000 Arthur P. Steinmetz** . . . . . . . . . . . . . . . . . . . . . . . . . None None Over $100,000 Interested Directors ........................... Robert Fairbairn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None None Over $100,000 John M. Perlowski . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None None Over $100,000
* Includes share equivalents owned under the deferred compensation plan in the Supervised Funds by certain Independent Directors who have participated in the deferred compensation plan of the Supervised Funds. ** Elected as a Director of the Funds effective November 9, 2023.
As of October 2, 2025, the Directors and officers of the Corporation as a group directly or indirectly beneficially owned an aggregate of less than 1% of any class of the outstanding shares of each Fund. As of December 31, 2024, none of the Independent Directors of the Corporation or their immediate family members owned beneficially or of record any securities of the Funds’ investment adviser, principal underwriter, or any person directly or indirectly controlling, controlled by, or under common control with such entities.
Compensation of Directors
Each Independent Director is paid an annual retainer of $370,000 per year for his or her services as a Board member of the BlackRock-advised Funds, including the Funds, together with out-of-pocket expenses in accordance with a Board policy on travel and other business expenses relating to attendance at meetings. In addition, the Chair
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of the Board and the Vice Chair of the Board are paid an additional annual retainer of $140,000 and $84,000, respectively. The Chairs of the Audit Committee, Performance Oversight Committee, Compliance Committee, Governance and Nominating Committee, and Securities Lending Committee are paid an additional annual retainer of $55,000, $42,500, $50,000, $42,500 and $20,000, respectively. Each of the other members of the Audit Committee, Compliance Committee, Governance and Nominating Committee, and Securities Lending Committee are paid an additional annual retainer of $30,000, $25,000, $25,000 and $15,000, respectively, for his or her service on such committee. An Independent Director may receive additional compensation for his or her service as a member or Chair, as applicable, of one or more ad hoc committees of the Board. The Fund will pay a pro rata portion quarterly (based on relative net assets) of the foregoing Director fees paid by the funds in the BlackRock Fixed-Income Complex.
The Independent Directors have agreed that a maximum of 50% of each Independent Director’s total compensation paid by funds in the BlackRock Fixed-Income Complex may be deferred pursuant to the BlackRock Fixed-Income Complex’s deferred compensation plan. Under the deferred compensation plan, deferred amounts earn a return for the Independent Directors as though equivalent dollar amounts had been invested in shares of certain funds in the BlackRock Fixed-Income Complex selected by the Independent Directors. This has approximately the same economic effect for the Independent Directors as if they had invested the deferred amounts in such funds in the BlackRock Fixed-Income Complex. The deferred compensation plan is not funded and obligations thereunder represent general unsecured claims against the general assets of a fund and are recorded as a liability for accounting purposes.
The following table sets forth the compensation paid to the Directors by the Corporation, on behalf of the Funds, for the fiscal year ended June 30, 2025, and the aggregate compensation, including deferred compensation amounts, paid to them by all BlackRock-advised Funds for the calendar year ended December 31, 2024.
Name 1
Compensation from the National Fund
Compensation from the Short Duration Fund
Estimated Annual Benefits Upon Retirement
Aggregate Compensation from the Funds and Other BlackRock Advised Funds 2,3 Independent Directors Cynthia L. Egan . . ........................... $12,767 $968 None $655,000 Lorenzo A. Flores. . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,158 $806 None $420,000 Stayce D. Harris . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,537 $768 None $395,000 J. Phillip Holloman ........................... $10,282 $814 None $425,000 R. Glenn Hubbard ........................... $14,134 $1,053 None $600,000 W. Carl Kester . . ............................ $14,668 $1,086 None $746,500 Catherine A. Lynch . . . . . . . . . . . . . . . . . . . . . . . . . . $13,264 $999 None $695,000 Arthur Steinmetz 4 ........................... $11,214 $872 None $534,206 Interested Directors ......................... Robert Fairbairn. . . . . . . . . . . . . . . . . . . . . . . . . . . . . None None None None John M. Perlowski . . . . . . . . . . . . . . . . . . . . . . . . . . . None None None None
1 For the number of BlackRock-advised Funds from which each Director receives compensation see the Biographical Information Chart beginning on page I-15. 2 For the Independent Directors, this amount represents the aggregate compensation earned from the funds in the BlackRock Fixed-Income Complex during the calendar year ended December 31, 2024. Of this amount, Mr. Flores, Ms. Harris, Mr. Holloman, Dr. Hubbard, Dr. Kester, Ms. Lynch and Mr. Steinmetz deferred $210,000, $197,500, $212,500, $300,000, $58,641, $34,750 and $266,957, respectively, pursuant to the BlackRock Fixed-Income Complex’s deferred compensation plan. 3 Total amount of deferred compensation payable by the BlackRock Fixed-Income Complex to Mr. Flores, Ms. Harris, Mr. Holloman, Dr. Hubbard, Dr. Kester, Ms. Lynch and Mr. Steinmetz is $743,845, $726,494, $773,663, $5,010,835, $2,155,608, $631,953 and $278,737, respectively, as of December 31, 2024. Ms. Egan did not participate in the deferred compensation plan as of December 31, 2024. 4 Mr. Steinmetz was elected as a Director of the Corporation effective November 9, 2023, appointed as a member and Chair of the Performance Oversight Committee effective January 1, 2024 and January 19, 2024, respectively, and appointed as a member of the Audit Committee effective January 19, 2024.
IV. Management, Advisory and Other Service Arrangements
The Corporation, on behalf of each Fund, has entered into investment advisory agreements with BlackRock Advisors, LLC (the “Management Agreements”), pursuant to which the Manager provides investment management services and administrative services to the Funds.
Under the Management Agreements, the administrative services provided by the Manager to each Fund include, but are not limited to, the following: maintaining office facilities for the Fund; furnishing the Fund with clerical,
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bookkeeping and administrative services; overseeing the determination and publication of the Fund’s net asset value; overseeing the preparation and filing of Federal, state and local income tax returns; preparing certain reports required by regulatory authorities; determining the amount of dividends and distributions available for payment by the Fund to its shareholders; preparing and arranging for the printing of dividend notices to shareholders; providing the Fund’s service providers with such information as is required to effect the payment of dividends and distributions; and consulting with the Fund’s officers, independent accountants, legal counsel, custodian, accounting agent and transfer and dividend disbursing agent in establishing the accounting policies of each entity and monitoring financial and shareholder accounting services.
BlackRock has contractually agreed to waive the management fee with respect to any portion of each Fund’s assets estimated to be attributable to investments in other equity and fixed-income mutual funds and exchange traded funds managed by BlackRock or its affiliates that have a contractual management fee, through June 30, 2027. In addition, BlackRock has contractually agreed to waive its management fees by the amount of investment advisory fees each Fund pays to BlackRock indirectly through its investment in money market funds managed by BlackRock or its affiliates, through June 30, 2027. The contractual agreements may be terminated upon 90 days’ notice by a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of a Fund.
With respect to each Fund, the Manager has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Interest Expense, Dividend Expense, Acquired Fund Fees and Expenses and certain other Fund expenses (as defined in the Funds’ prospectuses)) as a percentage of average daily net assets to the amounts noted in the table below through June 30, 2027. The contractual agreement may be terminated with respect to a Fund upon 90 days’ notice by a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of such Fund.
Contractual Caps on Total Annual Fund Operating Expenses (Excluding Interest Expense, Dividend Expense, Acquired Fund Fees and Expenses and certain other Fund Expenses) National Fund Investor A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.68% Investor C Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.43% Institutional Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.43% Class K Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.38% Service Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.68% Short Duration Fund Investor A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.61% Investor C Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.36% Institutional Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.36% Class K Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.31% Investor A1 Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.46%
The table below sets forth information about the total management fees paid by each Fund to the Manager, and the amounts waived and/or reimbursed by the Manager, for the periods indicated.
National Fund Fees Paid to the Manager Fees Waived by the Manager Fees Reimbursements by the Manager Fiscal Year Ended June 30, 2025 . . . . . . . . . . . . . . . . . . . . . . . . $27,210,198 $1,777,660 $2,122,174 Fiscal Year Ended June 30, 2024 . . . . . . . . . . . . . . . . . . . . . . . . $34,195,861 $2,342,554 $1,999,866 Fiscal Year Ended June 30, 2023 . . . . . . . . . . . . . . . . . . . . . . . . $39,294,603 $2,666,304 $1,988,177
Short Duration Fund Fees Paid to the Manager Fees Waived by the Manager Fees Reimbursements by the Manager Fiscal Year Ended June 30, 2025 . . . . . . . . . . . . . . . . . . . . . . . . . $1,334,695 $250,580 $133,337 Fiscal Year Ended June 30, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . $1,568,551 $296,896 $159,980 Fiscal Year Ended June 30, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . $2,027,551 $399,813 $146,007
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Pursuant to the Management Agreements, the Manager may from time to time, in its sole discretion to the extent permitted by applicable law, appoint one or more sub-advisers, including, without limitation, affiliates of the Manager, to perform investment advisory services with respect to the Funds. In addition, the Manager may delegate certain of its investment advisory functions under the Management Agreements to one or more of its affiliates to the extent permitted by applicable law. The Manager may terminate any or all sub-advisers or such delegation arrangements in its sole discretion at any time to the extent permitted by applicable law.
Information Regarding the Portfolio Managers
Walter O’Connor, CFA, Michael Kalinoski, CFA, Kevin Maloney, CFA, Phillip Soccio, CFA and Sean Carney are the portfolio managers of the National Fund and are jointly and primarily responsible for the day-to-day operations of the Fund.
Kristi Manidis, Christian Romaglino, CFA, Kevin Maloney, CFA and Alicia De Lorenzo are the portfolio managers of the Short Duration Fund and are jointly and primarily responsible for the day-to-day operations of the Fund.
Other Funds and Accounts Managed
The following table sets forth information about funds and accounts other than the Funds for which each Fund’s portfolio managers are primarily responsible for the day-to-day portfolio management as of June 30, 2025 (except as otherwise noted).
BlackRock National Municipal Fund
Number of Other Accounts Managed and Assets by Account Type Number of Other Accounts and Assets for Which Advisory Fee is Performance-Based
Name of Portfolio Manager
Other Registered Investment Companies
Other Pooled Investment Vehicles Other Accounts
Other Registered Investment Companies
Other Pooled Investment Vehicles Other Accounts Sean Carney 3 0 0 0 0 0 $6.96 Billion $0 $0 $0 $0 $0 Michael Kalinoski, CFA 33 0 0 0 0 0 $24.46 Billion $0 $0 $0 $0 $0 Kevin Maloney, CFA 42 0 0 0 0 0 $33.56 Billion $0 $0 $0 $0 $0 Walter O’Connor, CFA* 33 0 0 0 0 0 $23.10 Billion $0 $0 $0 $0 $0 Phillip Soccio, CFA 34 0 0 0 0 0 $19.59 Billion $0 $0 $0 $0 $0
BlackRock Short Duration Muni Fund
Number of Other Accounts Managed and Assets by Account Type
Number of Other Accounts and Assets for Which Advisory Fee is Performance-Based
Name of Portfolio Manager
Other Registered Investment Companies
Other Pooled Investment Vehicles Other Accounts
Other Registered Investment Companies
Other Pooled Investment Vehicles Other Accounts Alicia De Lorenzo 5 0 0 0 0 0 $5.41 Billion $0 $0 $0 $0 $0 Kevin Maloney, CFA 42 0 0 0 0 0 $39.13 Billion $0 $0 $0 $0 $0 Kristi Manidis 35 0 2 0 0 0 $23.47 Billion $0 $701.65 Million $0 $0 $0 Christian Romaglino, CFA 36 0 0 0 0 0 $15.78 Billion $0 $0 $0 $0 $0
* On or about March 17, 2026, Walter O’Connor, CFA, will no longer serve as a portfolio manager of the Fund.
Por tfolio Manager Compensation Overview
The discussion below describes the portfolio managers’ compensation as of June 30, 2025.
BlackRock’s financial arrangements with its portfolio managers, its competitive compensation and its career path emphasis at all levels reflect the value senior management places on key resources. Compensation may include a variety of components and may vary from year to year based on a number of factors. The principal components of
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compensation include a base salary, a performance-based discretionary bonus, participation in various benefits programs and one or more of the incentive compensation programs established by BlackRock.
Base Compensation. Generally, portfolio managers receive base compensation based on their position with the firm.
Discretionary Incentive Compensation
Discretionary incentive compensation is a function of several components: the performance of BlackRock, Inc., the performance of the portfolio manager’s group within BlackRock, the investment performance, including risk adjusted returns, of the firm’s assets under management or supervision by that portfolio manager relative to predetermined benchmarks, and the individual’s performance and contribution to the overall performance of these portfolios and BlackRock. In most cases, these benchmarks are the same as the benchmark or benchmarks against which the performance of the Funds or other accounts managed by the portfolio managers are measured. Among other things, BlackRock’s Chief Investment Officers make a subjective determination with respect to each portfolio manager’s compensation based on the performance of the Funds and other accounts managed by each portfolio manager relative to the various benchmarks. Performance of fixed-income funds is measured on a pre-tax and/or after-tax basis over various time periods including 1-, 3- and 5-year periods, as applicable. With respect to these portfolio managers, such benchmarks for the Funds and other accounts are:
Portfolio Manager Benchmark Walter O’Connor, CFA 1 Michael Kalinoski, CFA Kevin Maloney, CFA Phillip Soccio, CFA Alicia De Lorenzo Kristi Manidis Christian Romaglino, CFA
A combination of market-based indices (e.g., Bloomberg Municipal Bond Index), certain customized indices and certain fund industry peer groups.
Sean Carney A combination of market-based indices (e.g., Bloomberg Municipal Bond Index), certain customized indices and certain fund industry peer groups. Due to Portfolio Manager Sean Carney’s unique position (Portfolio Manager and Co-Chief Investment Officer of Tax Exempt Fixed Income) his compensation does not solely reflect his role as PM of the funds managed by him. The performance of his fund(s) are included in consideration of his incentive compensation but given his unique role it is not the sole driver of compensation.
1 On or about March 17, 2026, Walter O’Connor, CFA, will no longer serve as a portfolio manager of the Fund.
Distribution of Discretionary Incentive Compensation. Discretionary incentive compensation is distributed to portfolio managers in a combination of cash, deferred BlackRock, Inc. stock awards, and/or deferred cash awards that notionally track the return of certain BlackRock investment products.
Portfolio managers receive their annual discretionary incentive compensation in the form of cash. Portfolio managers whose total compensation is above a specified threshold also receive deferred BlackRock, Inc. stock awards annually as part of their discretionary incentive compensation. Paying a portion of discretionary incentive compensation in the form of deferred BlackRock, Inc. stock puts compensation earned by a portfolio manager for a given year “at risk” based on BlackRock’s ability to sustain and improve its performance over future periods. In some cases, additional deferred BlackRock, Inc. stock may be granted to certain key employees as part of a long-term incentive award to aid in retention, align interests with long-term shareholders and motivate performance. Deferred BlackRock, Inc. stock awards are generally granted in the form of BlackRock, Inc. restricted stock units that vest pursuant to the terms of the applicable plan and, once vested, settle in BlackRock, Inc. common stock. The portfolio managers of these Funds have deferred BlackRock, Inc. stock awards.
For certain portfolio managers, a portion of the discretionary incentive compensation is also distributed in the form of deferred cash awards that notionally track the returns of select BlackRock investment products they manage, which provides direct alignment of portfolio manager discretionary incentive compensation with investment product results. Deferred cash awards vest ratably over a number of years and, once vested, settle in the form of cash. Only portfolio managers who manage specified products and whose total compensation is above a specified threshold are eligible to participate in the deferred cash award program.
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Other Compensation Benefits. In addition to base salary and discretionary incentive compensation, portfolio managers may be eligible to receive or participate in one or more of the following:
Incentive Savings Plans — BlackRock, Inc. has created a variety of incentive savings plans in which BlackRock employees are eligible to participate, including a 401(k) plan, the BlackRock Retirement Savings Plan (RSP), and the BlackRock Employee Stock Purchase Plan (ESPP). The employer contribution components of the RSP include a company match equal to 50% of the first 8% of eligible pay contributed to the plan capped at $5,000 per year, and a company retirement contribution equal to 3-5% of eligible compensation up to the Internal Revenue Service limit ($350,000 for 2025). The RSP offers a range of investment options, including registered investment companies and collective investment funds managed by the firm. BlackRock contributions follow the investment direction set by participants for their own contributions or, absent participant investment direction, are invested into a target date fund that corresponds to, or is closest to, the year in which the participant attains age 65. The ESPP allows for investment in BlackRock common stock at a 5% discount on the fair market value of the stock on the purchase date. Annual participation in the ESPP is limited to the purchase of 1,000 shares of common stock or a dollar value of $25,000 based on its fair market value on the purchase date. All of the eligible portfolio managers are eligible to participate in these plans.
Por tfolio Manager Beneficial Holdings The following table sets forth the dollar range of equity securities of the Funds beneficially owned by each portfolio manager of the Funds as of June 30, 2025.
Portfolio Manager Fund Managed Dollar Range of Equity Securities Beneficially Owned Walter O’Connor, CFA 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nati onal Fund $10,001 – $50,000 Kristi Manidis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short Duration Fund $1 – $10,000 Michael Kalinoski, CFA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nati onal Fund $10,001 – $50,000 Christian Romaglino, CFA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short Duration Fund $1 – $10,000 Kevin Maloney, CFA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nati onal Fund $1 – $10,000 Short Duration Fund $1 – $10,000 Phillip Soccio, CFA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nati onal Fund $1 – $10,000 Alicia De Lorenzo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short Duration Fund None Sean Carney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nati onal Fund None
1 On or about March 17, 2026, Walter O’Connor, CFA, will no longer serve as a portfolio manager of the Fund.
Por tfolio Manager Potential Material Conflicts of Interest
BlackRock has built a professional working environment, firm-wide compliance culture and compliance procedures and systems designed to protect against potential incentives that may favor one account over another. BlackRock has adopted policies and procedures that address the allocation of investment opportunities, execution of portfolio transactions, personal trading by employees and other potential conflicts of interest that are designed to ensure that all client accounts are treated equitably over time. Nevertheless, BlackRock furnishes investment management and advisory services to numerous clients in addition to the Funds, and BlackRock may, consistent with applicable law, make investment recommendations to other clients or accounts (including accounts which are hedge funds or have performance or higher fees paid to BlackRock, or in which portfolio managers have a personal interest in the receipt of such fees), which may be the same as or different from those made to the Funds. In addition, BlackRock, its affiliates and significant shareholders and any officer, director, shareholder or employee may or may not have an interest in the securities whose purchase and sale BlackRock recommends to the Funds. BlackRock, or any of its affiliates or significant shareholders, or any officer, director, shareholder, employee or any member of their families may take different actions than those recommended to the Funds by BlackRock with respect to the same securities. Moreover, BlackRock may refrain from rendering any advice or services concerning securities of companies of which any of BlackRock’s (or its affiliates’ or significant shareholders’) officers, directors or employees are directors or officers, or companies as to which BlackRock or any of its affiliates or significant shareholders or the officers, directors and employees of any of them has any substantial economic interest or possesses material non public information. Certain portfolio managers also may manage accounts whose investment strategies may at times be opposed to the strategy utilized for a Fund. It should also be noted that a portfolio manager may be managing hedge fund and/or long only accounts, or may be part of a team managing hedge fund and/or long only accounts, subject to incentive fees. Such portfolio managers may therefore be entitled to receive a portion of any incentive fees earned on such accounts. Currently, the portfolio managers of these funds are not entitled to receive a portion of incentive fees of other accounts.
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As a fiduciary, BlackRock owes a duty of loyalty to its clients and must treat each client fairly. When BlackRock purchases or sells securities for more than one account, the trades must be allocated in a manner consistent with its fiduciary duties. BlackRock attempts to allocate investments in a fair and equitable manner among client accounts, with no account receiving preferential treatment. To this end, BlackRock has adopted policies that are intended to ensure reasonable efficiency in client transactions and provide BlackRock with sufficient flexibility to allocate investments in a manner that is consistent with the particular investment discipline and client base, as appropriate.
Custodian Services
State Street Bank and Trust Company (“State Street”) has been retained to act as custodian for each Fund and is located at One Congress Street, Suite 1, Boston, Massachusetts 02114-2016. The custodian, among other things, maintains a custody account or accounts in the name of each Fund, receives and delivers all assets for each Fund upon purchase and upon sale or maturity, and collects and receives all income and other payments and distributions on account of the assets of each Fund.
Transfer Agency and Shareholders’ Administrative Services
BNY Mellon Investment Servicing (US) Inc., which has its principal place of business at 301 Bellevue Parkway, Wilmington, Delaware 19809, serves as the transfer and dividend disbursement agent for the Funds.
Pursuant to a Shareholders’ Administrative Services Agreement, the Manager provides certain shareholder liaison services in connection with the Funds’ investor service center. Each Fund reimburses the Manager for its costs in maintaining the service center, which costs include, among other things, employee salaries, leasehold expenses, and other out-of-pocket expenses which are a component of the transfer agency fees in the Funds’ annual report.
Set forth below are the amounts each Fund reimbursed BlackRock pursuant to the Shareholders’ Administrative Services Agreement for the periods indicated:
National Fund Short Duration Fund
Fiscal Year Ended June 30, 2025 .......................................... Fees Paid to the Manager . . . . ............................................. $64,872 $2,515 Fees Waived by the Manager. .............................................. $64,829 $1,443 Fiscal Year Ended June 30, 2024 Fees Paid to the Manager . . . . ............................................. $54,710 $2,371 Fees Waived by the Manager. .............................................. $54,710 $1,330 Fiscal Year Ended June 30, 2023 Fees Paid to the Manager . . . . ............................................. $96,838 $4,383 Fees Waived by the Manager. .............................................. $96,782 $2,622
Accounting Services
The table below shows the amounts paid by the Funds to State Street and the Manager for accounting services for the periods indicated:
National Fund Short Duration Fund Fiscal Year Ended June 30, 2025 ....................................... Fees Paid to State Street . ............................................. $582,888 $ 80,310 Fees Paid to the Manager. . . . .......................................... $ 0 $ 0 Fiscal Year Ended June 30, 2024 Fees Paid to State Street . ............................................. $752,771 $ 95,696 Fees Paid to the Manager. . . . .......................................... $ 0 $ 0
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National Fund Short Duration Fund Fiscal Year Ended June 30, 2023 Fees Paid to State Street . ............................................. $770,838 $115,496 Fees Paid to the Manager. . . . .......................................... $ 0 $ 0
Credit Agreement
The Corporation, on behalf of the Funds, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.4 billion credit agreement with a group of lenders, which facility terminates on April 9, 2026 unless otherwise extended or renewed (the “Credit Agreement”). Excluding commitments designated for certain Participating Funds, the Participating Funds, including the Funds, can borrow up to an aggregate commitment amount of $1.75 billion at any time outstanding, subject to asset coverage and other limitations as specified in the Credit Agreement. The Funds may borrow under the Credit Agreement to meet shareholder redemptions and for other lawful purposes. However, the Funds may not borrow under the Credit Agreement for leverage. The Funds may borrow up to the maximum amount allowable under the Funds’ current Prospectuses and SAI, subject to various other legal, regulatory or contractual limits. Borrowing results in interest expense and other fees and expenses for the Funds which may impact the Funds’ net expenses. The costs of borrowing may reduce the Funds’ returns. Each Fund is charged its pro rata share of upfront fees and commitment fees on the aggregate commitment amount based on its net assets. If the Funds borrow pursuant to the Credit Agreement, the Funds are charged interest at a variable rate.
V. Information on Sales Charges and Distribution Related Expenses
Set forth below is information on sales charges (including any contingent deferred sales charges (“CDSCs”)) received by each Fund, including the amounts paid to affiliates of the Manager (“Affiliates”) for each Fund’s last three fiscal years. BlackRock Investments, LLC (“BRIL” or the “Distributor”), an affiliate of the Manager, acts as each Fund’s sole distributor.
Investor A and A1 Sales Charge Information
Investor A Shares
Gross Sales Charges Collected Sales Charges Retained by BRIL Sales Charges Paid To Affiliates
CDSCs Received on Redemption of Load-Waived Shares National Fund Fiscal Year Ended June 30, 2025 .......... $165,062 $11,019 $11,019 $ 61,215 Fiscal Year Ended June 30, 2024 .......... $183,382 $12,385 $12,385 $ 69,983 Fiscal Year Ended June 30, 2023 .......... $178,926 $12,365 $12,365 $148,092
Short Duration Fund Fiscal Year Ended June 30, 2025 . . . . . . . . . . $ 15,059 $ 1,415 $ 1,415 $ 1,920 Fiscal Year Ended June 30, 2024 . . . . . . . . . . $ 5,395 $ 498 $ 498 $ 6,803 Fiscal Year Ended June 30, 2023 . . . . . . . . . . $ 14,534 $ 1,386 $ 1,386 $ 17,609
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Investor A1 Shares
Gross Sales Charges Collected Sales Charges Retained by BRIL Sales Charges Paid To Affiliates
CDSCs Received on Redemption of Load-Waived Shares Short Duration Fund Fiscal Year Ended June 30, 2025 . . . . . . . . . . $0 $0 $0 $0 Fiscal Year Ended June 30, 2024 . . . . . . . . . . $0 $0 $0 $0 Fiscal Year Ended June 30, 2023 . . . . . . . . . . $0 $0 $0 $0
Investor C and Investor C1 Sales Charge Information
Investor C Shares CDSCs Received by BRIL CDSCs paid to Affiliates National Fund Fiscal Year Ended June 30, 2025. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,105 $3,105 Fiscal Year Ended June 30, 2024. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,614 $4,614 Fiscal Year Ended June 30, 2023. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,546 $5,546
Short Duration Fund Fiscal Year Ended June 30, 2025. . . . . . . ........................................ $ 5 $ 5 Fiscal Year Ended June 30, 2024. . . . . . . ........................................ $ 0 $ 0 Fiscal Year Ended June 30, 2023. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 251 $ 251
Investor C1 Shares 1 CDSCs Received by BRIL CDSCs paid to Affiliates National Fund Fiscal Year Ended June 30, 2025. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0 $0 Fiscal Year Ended June 30, 2024. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0 $0 Fiscal Year Ended June 30, 2023. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0 $0
1 Effective on the close of business on February 24, 2020, all issued and outstanding Investor C1 Shares of the Fund were converted into
IA Shf hFd Investor A Shares of the Fund. The table below provides information for the fiscal year ended June 30, 2025 about the 12b-1 fees the Funds paid to BRIL under the Funds’ 12b-1 plans. A significant amount of the fees collected by BRIL were paid to affiliates for providing shareholder servicing activities for Investor A and Investor A1 Shares and for providing shareholder servicing and distribution related activities and services for Investor C and Investor C1 Shares.
Fees Paid to BRIL Class Name National Fund 1 Short Duration Fund Investor A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4, 880,548 $478,967 Investor A1 Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A $ 8,384 Investor C Shares . . . ................................................ $ 386,692 $ 29,416 Service Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,682 N/A
1 Effective on the close of business on February 24, 2020, all issued and outstanding Investor C1 Shares of the National Fund were converted into Investor A Shares of the National Fund.
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VI. Computation of Offering Price Per Share
An illustration of the computation of the public offering price of the Investor A Shares of each Fund and Investor A1 Shares of the Short Duration Fund based on the value of each Fund’s Investor A Shares’ and the Short Duration Fund’s Investor A1 Shares’ net assets and number of Investor A and Investor A1 Shares outstanding as of June 30, 2025 follows:
Investor A Shares National Fund Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1, 780,630,078 Number of Shares Outstanding . . . . . . . . . . ........................................... 181,458,881 Net Asset Value Per Share (net assets divided by number of shares outstanding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9.81 Sales Charge (4.25% of offering price; 4.44% of net asset value per share) 1 . . . . . . . . . . . . . . $0.44 Offering Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10.25
Short Duration Fund Investor A Shares Investor A1 Shares Net Assets ........................................................... $195,639,700 $7,969,234 Number of Shares Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 772,725 805,261 Net Asset Value Per Share (net assets divided by number of shares outstanding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9.89 $9.90 Sales Charge (for Investor A and Investor A1 Shares: 3.00% and 1.00% of offering price; 3.09% and 1.01% of net asset value per share, respectively) 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.31 $0.10 Offering Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10.20 $10.00
1 Assumes maximum sales charge is applicable.
The offering price for the Funds’ other share classes is equal to the share class’ net asset value computed as set forth above for Investor A and Investor A1 Shares. Though not subject to a sales charge, certain share classes may be subject to a CDSC on redemption. For more information on the purchasing and valuation of shares, please see “Purchase of Shares” and “Pricing of Shares” in Part II of this SAI.
VII. Portfolio Transactions and Brokerage
See “Portfolio Transactions and Brokerage” in Part II of this SAI for more information.
For the periods indicated, each Fund paid total brokerage commissions as set forth below.
Total Brokerage Commissions Paid Brokerage Commissions Paid to Affiliates National Fund Fiscal Year Ended June 30, 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,331 $0 Fiscal Year Ended June 30, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $158,704 $0 Fiscal Year Ended June 30, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $304,715 $0
Short Duration Fund Fiscal Year Ended June 30, 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0 $0 Fiscal Year Ended June 30, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0 $0 Fiscal Year Ended June 30, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0 $0
The decrease in brokerage commissions paid by the National Fund during the fiscal year ended June 30, 2025, was due to a decrease in trading of certain derivative instruments.
As of June 30, 2025, the Funds held no securities of their regular brokers or dealers (as defined in Rule 10b-1 under the Investment Company Act) whose shares were purchased during the fiscal year ended June 30, 2025.
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Securities Lending
To the extent that a Fund engages in securities lending, each Fund conducts its securities lending pursuant to an exemptive order from the Commission permitting it to lend portfolio securities to borrowers affiliated with the Fund and to retain an affiliate of the Fund as securities lending agent. To the extent that the Fund engages in securities lending, BlackRock Investment Management, LLC (“BIM”) acts as securities lending agent for the Fund, subject to the overall supervision of the Manager, pursuant to a written agreement (the “Securities Lending Agency Agreement”). BIM administers the lending program in accordance with guidelines approved by the Board.
To the extent the Funds engage in securities lending, the Funds retain a portion of the securities lending income and remit the remaining portion to BIM as compensation for its services as securities lending agent. Securities lending income is generally equal to the total of income earned from the reinvestment of cash collateral (and excludes collateral investment fees as defined below), and any fees or other payments to and from borrowers of securities. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan in a money market fund managed by BlackRock (the “collateral investment fees”); however, the securities lending agent has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees a Fund bears to an annual rate of 0.04%. Such money market fund shares will not be subject to a sales load, distribution fee or service fee.
To the extent that a Fund invests cash collateral in a non-government money market fund, the Fund may be subject to a discretionary liquidity fee of up to 2% on all redemptions. Discretionary liquidity fees may be imposed or terminated at any time at the discretion of the board of directors of the money market fund, or its delegate, if it is determined that such fee would be, or would not be, respectively, in the best interest of the money market fund. Additionally, a Fund will be subject to a mandatory liquidity fee if the money market fund’s total net redemptions on a single day exceed 5% of the money market fund’s net assets, unless the liquidity costs are de minimis (i.e., less than one basis point (0.01%)). The money market fund will determine the size of the mandatory liquidity fee by making a good faith estimate of certain costs the money market fund would incur if it were to sell a pro rata amount of each security in the portfolio to satisfy the amount of net redemptions on that day. There is no limit to the size of a mandatory liquidity fee. If the money market fund cannot estimate the costs of selling a pro rata amount of each portfolio security in good faith and supported by data, it is required to apply a default liquidity fee of 1% on the value of shares redeemed on that day. The imposition of any such discretionary or mandatory liquidity fee would reduce the Fund’s returns on securities lending.
Additionally, the board of directors of the money market fund or its delegate must impose a mandatory liquidity fee upon the redemption of the money market fund shares if the money market fund’s total net redemptions on any business day exceed 5% of the money market fund’s net assets, unless the liquidity costs are de minimis. The mandatory liquidity fee would apply to all shares that are redeemed at a price computed on that day.
The money market fund will determine the size of the mandatory liquidity fee by making a good faith estimate of the spread, other transaction, and market impact costs (the “liquidity costs”) the money market fund would incur if it were to sell a pro rata amount of each security in its portfolio to satisfy the amount of net redemptions on that day. There is no upper limit to this mandatory liquidity fee, but the money market fund expects that typically during normal market conditions, estimated liquidity costs would be less than one basis point (0.01%) of the value of the shares redeemed. If estimated liquidity costs are less than one basis point (0.01%) of the value of the shares redeemed, the money market fund will deem liquidity costs de minimis and will not apply a mandatory liquidity fee to redemptions on that day.
There may be occasions when the money market fund cannot estimate the costs of selling a pro rata amount of each portfolio security in good faith and supported by data. If this occurs, the money market fund is required to apply a default liquidity fee of 1% on the value of shares redeemed on that day.
Under the securities lending program, the Funds are categorized into one of several specific asset classes. The determination of a Fund’s asset class category (fixed income, domestic equity, international equity, or fund of funds), each of which may be subject to a different fee arrangement, is based on a methodology agreed to by the Corporation and BIM.
Pursuant to the current securities lending agreement: (i) if the Funds were to engage in securities lending, the Funds retain 82% of securities lending income (which excludes collateral investment expenses), and (ii) this amount can never be less than 70% of the sum of securities lending income plus collateral investment expenses.
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In addition, commencing the business day following the date that the aggregate securities lending income earned across the BlackRock Fixed-Income Complex in a calendar year exceeds specified thresholds, the Funds, pursuant to the current securities lending agreement, will receive for the remainder of that calendar year securities lending income as follows: (i) if the Funds were to engage in securities lending, 85% of securities lending income (which excludes collateral investment expenses); and (ii) this amount can never be less than 70% of the sum of securities lending income plus collateral investment expenses.
Each Fund had no income and fees/compensation related to its securities lending activities during its most recent fiscal year ended June 30, 2025.
VIII. Additional Information
Description of Shares
The Corporation is a diversified, open-end management investment company organized under the laws of the State of Maryland that commenced operations on October 21, 1977. Prior to September 21, 1979, the Corporation consisted solely of the Municipal Fund. Currently, the Corporation is comprised of two separate funds: National Fund and Short Duration Fund.
Effective September 29, 2006, the Corporation changed its name to BlackRock Municipal Bond Fund, Inc., and National Portfolio and Short-Term Portfolio changed their names to BlackRock National Municipal Fund and BlackRock Short-Term Municipal Fund, respectively. Effective February 1, 2025, BlackRock Short-Term Municipal Fund changed its name to BlackRock Short Duration Muni Fund.
The authorized capital stock of the National Fund consists of 3,700,000,000 shares of Common Stock, par value $0.10 per share, divided into five classes. The Investor A and Institutional classes each consist of 800,000,000 shares. The Investor C and Service classes each consist of 375,000,000 shares. The Class K class consists of 1,350,000,000 shares. The authorized capital stock of the Short Duration Fund consists of 750,000,000 shares of Common Stock, par value $0.10 per share, divided into five classes. The Investor A, Investor A1, Investor C, Institutional, and Class K classes each consist of 150,000,000 shares. Effective on the close of business on December 27, 2017, all of the issued and outstanding Investor B Shares of the National Fund converted into Investor A Shares of the Fund. Effective on the close of business of February 24, 2020, all of the issued and outstanding Investor C1 Shares of the National Fund converted into Investor A Shares of the Fund.
Each of the Corporation’s shares have equal dividend, distribution, liquidation and voting rights, except that only shares of each respective Fund are entitled to vote on matters concerning only that Fund and Investor A, Investor A1, Investor C and Investor C1 Share bear certain shareholder servicing expenses and/or expenses related to the distribution of such shares and have exclusive voting rights with respect to matters relating to such shareholder servicing and distribution expenditures.
Miscellaneous
Counsel. Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, New York 10019 serves as the Funds’ counsel.
Independent Registered Public Accounting Firm. Deloitte & Touche LLP, with offices at 115 Federal Street, Boston, Massachusetts 02110, serves as the Funds’ independent registered public accounting firm.
Principal Shareholders
To the knowledge of the Corporation, the following entities owned of record or beneficially 5% or more of a class of each Fund’s shares as of October 1, 2025:
National Fund
Name Address % Class National Financial Services LLC 499 Washington Blvd, Floor 5 Jersey City, NJ 07310-2010
32.52% Investor A Shares
Edward D. Jones and Co. 12555 Manchester Road St. Louis, MO 63131-3710
32.34% Investor A Shares
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Name Address % Class Merrill Lynch Pierce Fenner & Smith Incorporated
4800 East Deer Lake Drive, 3 rd Floor Jacksonville, FL 32246-6484
12.92% Investor A Shares
Wells Fargo Clearing Services 2801 Market Street St. Louis, MO 63103
20.40% Investor C Shares
Morgan Stanley Smith Barney LLC 1 New York Plaza 12th Floor New York, NY 10004-1901
16.94% Investor C Shares
Edward D. Jones and Co. 12555 Manchester Road St. Louis, MO 63131-3710
15.98% Investor C Shares
American Enterprise Investment Svc. 707 2nd Avenue Street Minneapolis, MN 55402-2405
8.67% Investor C Shares
Merrill Lynch Pierce Fenner & Smith Incorporated
4800 East Deer Lake Drive, 3 rd Floor Jacksonville, FL 32246-6484
8.56% Investor C Shares
National Financial Services LLC 499 Washington Blvd, Floor 5 Jersey City, NJ 07310-2010
6.49% Investor C Shares
Pershing LLC 1 Pershing Plaza Jersey City, NJ 07399-0001
5.14% Investor C Shares
LPL Financial 4707 Executive Drive San Diego CA 92121-3091
5.14% Investor C Shares
Morgan Stanley Smith Barney LLC 1 New York Plaza 12th Floor New York, NY 10004-1901
24.01% Institutional Class
National Financial Services LLC 499 Washington Blvd Jersey City, NJ 07310
18.07% Institutional Class
Charles Schwab & Co. Inc. 101 Montgomery Street San Francisco, CA 94104-4122
13.82% Institutional Class
Merrill Lynch Pierce Fenner & Smith Incorporated
4800 East Deer Lake Drive, 3 rd Floor Jacksonville, FL 32246-6484
11.68% Institutional Class
American Enterprise Investment Svc. 707 2nd Avenue Street Minneapolis, MN 55402-2405
6.12% Institutional Class
Pershing LLC 1 Pershing Plaza Jersey City, NJ 07399-0001
6.09% Institutional Class
LPL Financial 4707 Executive Drive San Diego CA 92121-3091
5.72% Institutional Class
Edward D. Jones and Co. 12555 Manchester Road St. Louis, MO 63131-3710
62.96% Class K Shares
J P Morgan Securities LLC 4 Chase MetroTech Center Brooklyn, NY 11245
12.06% Class K Shares
National Financial Services LLC 499 Washington Blvd Jersey City, NJ 07310
5.63% Class K Shares
National Financial Services LLC 499 Washington Blvd Floor 5 Jersey City, NJ 07310-2010
31.79% Service Shares
BNYM I S Trust CO CUST 301 Bellevue Parkway Wilmington, DE 19809
30.89% Service Shares
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Name Address % Class Edward D. Jones and Co. 12555 Manchester Road St. Louis, MO 63131-3710
6.94% Service Shares
BNYM I S Trust CO CUST 301 Bellevue Parkway Wilmington, DE 19809
6.81% Service Shares
BNYM I S Trust CO CUST 301 Bellevue Parkway Wilmington, DE 19809
6.63% Service Shares
Wells Fargo Clearing Services 2801 Market Street St. Louis, MO 63103
6.53% Service Shares
Shor t Duration Fund
Name Address % Class Edward D. Jones and Co. 12555 Manchester Road St. Louis, MO 63131-3710
48.76% Investor A Shares
Merrill Lynch Pierce Fenner & Smith Incorporated
4800 East Deer Lake Drive, 3 rd Floor Jacksonville, FL 32246-6484
21.11% Investor A Shares
Morgan Stanley Smith Barney LLC 1 New York Plaza Floor 12 New York, NY 10004-1901
15.61% Investor A Shares
Merrill Lynch Pierce Fenner & Smith Incorporated
4800 East Deer Lake Drive, 3 rd Floor Jacksonville, FL 32246-6484
80.71% Investor A1 Shares
UBS Financial Services Inc. 1000 Harbor Blvd Weehawken, NJ 07086-6761
5.88% Investor A1 Shares
Merrill Lynch Pierce Fenner & Smith Incorporated
4800 East Deer Lake Drive, 3 rd Floor Jacksonville, FL 32246-6484
29.65% Investor C Shares
Morgan Stanley Smith Barney LLC 1 New York Plaza Floor 12 New York, NY 10004-1901
24.17% Investor C Shares
LPL Financial 4707 Executive Drive San Diego CA 92121-3091
11.69% Investor C Shares
Edward D. Jones and Co. 12555 Manchester Road St. Louis, MO 63131-3710
6.96% Investor C Shares
Charles Schwab & Co. Inc. 211 Main Street San Francisco, CA 94105
5.57% Investor C Shares
Raymond James 880 Carillon Parkway Saint Petersburg 33716-1102
5.23% Investor C Shares
National Financial Services LLC 499 Washington Blvd, Floor 5 Jersey City, NJ 07310-2010
5.12% Investor C Shares
Merrill Lynch Pierce Fenner & Smith Incorporated
4800 East Deer Lake Drive, 3 rd Floor Jacksonville, FL 32246-6484
21.98% Institutional Class
Saxon and Co. PO Box 94597 Cleveland, OH 44101-4597
20.63% Institutional Class
Morgan Stanley Smith Barney LLC 1 New York Plaza Floor 12 New York, NY 10004-1901
13.40% Institutional Class
National Financial Services LLC 499 Washington Blvd Jersey City, NJ 07310
10.01% Institutional Class
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Name Address % Class LPL Financial 4707 Executive Drive San Diego CA 92121-3091
9.31% Institutional Class
Charles Schwab & Co. Inc. 101 Montgomery St. San Francisco, CA 94104-4122
9.00% Institutional Class
Merrill Lynch Pierce Fenner & Smith Incorporated
4800 East Deer Lake Drive, 3 rd Floor Jacksonville, FL 32246-6484
66.00% Class K Shares
Edward D. Jones and Co. 12555 Manchester Road St. Louis, MO 63131-3710
27.34% Class K Shares
National Financial Services LLC 499 Washington Blvd Jersey City, NJ 07310
5.51% Class K Shares
IX. Financial Statements
The audited financial statements, financial highlights and notes thereto in the Funds’ Annual Financial Statements and Additional Information for the fiscal year ended June 30, 2025, as filed with the SEC on Form N-CSR (the “2025 Annual Financial Statements”), are incorporated in this SAI by reference. No other parts of the 2025 Annual Financial Statements are incorporated by reference herein. The 2025 Annual Financial Statements have been audited by Deloitte & Touche LLP. The report of Deloitte & Touche LLP is incorporated herein by reference. Such 2025 Annual Financial Statements have been incorporated herein in reliance upon the report of such firm given their authority as experts in accounting and auditing. Additional copies of Fund’s annual and semi-annual reports to shareholders and Fund’s Annual and Semi-Annual Financial Statements and Additional Information may be obtained at no charge by telephoning the Distributor at the telephone number appearing on the front page of this SAI.
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PART II
Throughout this Statement of Additional Information (“SAI”), each BlackRock-advised fund may be referred to as a “Fund” or collectively with others as the “Funds.” Certain Funds may also be referred to as “Municipal Funds” if they invest certain of their assets in municipal investments described below.
Each Fund is organized either as a Maryland corporation, a Massachusetts business trust or a Delaware statutory trust. In each jurisdiction, nomenclature varies. For ease and clarity of presentation, shares of common stock and shares of beneficial interest are referred to herein as “shares” or “Common Stock,” holders of shares of Common Stock are referred to as “shareholders,” the trustees or directors of each Fund are referred to as “Directors,” the boards of trustees/directors of each Fund are referred to as the “Board of Directors” or the “Board,” BlackRock Advisors, LLC, BlackRock Fund Advisors or their respective affiliates is the investment adviser or manager of each Fund and is referred to herein as the “Manager” or “BlackRock,” and the investment advisory agreement or management agreement applicable to each Fund is referred to as the “Management Agreement.” Each Fund’s Articles of Incorporation or Declaration of Trust, together with all amendments thereto, is referred to as its “charter.” The Investment Company Act of 1940, as amended, is referred to herein as the “Investment Company Act.” The Securities Act of 1933, as amended, is referred to herein as the “Securities Act.” The Securities and Exchange Commission is referred to herein as the “Commission” or the “SEC.”
Certain Funds are “feeder” funds (each, a “Feeder Fund”) that invest all or a portion of their assets in a corresponding “master” portfolio (each, a “Master Portfolio”) of a master limited liability company (each, a “Master LLC”), a mutual fund that has the same objective and strategies as the Feeder Fund. All investments are generally made at the level of the Master Portfolio. This structure is sometimes called a “master/feeder” structure. A Feeder Fund’s investment results will correspond directly to the investment results of the underlying Master Portfolio in which it invests. For simplicity, this SAI uses the term “Fund” to include both a Feeder Fund and its Master Portfolio.
In addition to containing information about the Funds, Part II of this SAI contains general information about all funds in the BlackRock-advised fund complex. Certain information contained herein may not be relevant to a particular Fund.
INVESTMENT RISKS AND CONSIDERATIONS
Set forth below are descriptions of some of the types of investments and investment strategies that one or more of the Funds may use, and the risks and considerations associated with those investments and investment strategies. Please see each Fund’s prospectuses (the “Prospectus”) and the “Investment Objective and Policies,” “Investment Objectives and Policies” or “Investment Strategies and Risks of the Fund” section, as applicable, of Part I of this SAI for further information on each Fund’s investment policies and risks. Information contained in this section about the risks and considerations associated with a Fund’s investments and/or investment strategies applies only to those Funds specifically identified in Part I of this SAI as making each type of investment or using each investment strategy (each, a “Covered Fund”). Information that does not apply to a Covered Fund does not form a part of that Covered Fund’s SAI and should not be relied on by investors in that Covered Fund. Only information that is clearly identified as applicable to a Covered Fund is considered to form a part of that Covered Fund’s SAI.
Asset-Backed Securities. Asset-backed securities are securities backed by home equity loans, installment sale contracts, credit card receivables or other assets. Asset-backed securities are “pass-through” securities, meaning that principal and interest payments — net of expenses — made by the borrower on the underlying assets (such as credit card receivables) are passed through to a Fund. The value of asset-backed securities, like that of traditional fixed-income securities, typically increases when interest rates fall and decreases when interest rates rise. However, asset-backed securities differ from traditional fixed-income securities because of their potential for prepayment. The price paid by a Fund for its asset-backed securities, the yield the Fund expects to receive from such securities and the average life of the securities are based on a number of factors, including the anticipated rate of prepayment of the underlying assets. In a period of declining interest rates, borrowers may prepay the underlying assets more quickly than anticipated, thereby reducing the yield to maturity and the average life of the asset-backed securities. Moreover, when a Fund reinvests the proceeds of a prepayment in these circumstances, it will likely receive a rate of interest that is lower than the rate on the security that was prepaid. To the extent that a Fund purchases asset backed securities at a premium, prepayments may result in a loss to the extent of the premium paid. If a Fund buys such securities at a discount, both scheduled payments and unscheduled prepayments will increase current and total returns and unscheduled prepayments will also accelerate the recognition of income which, when distributed to shareholders, will be taxable as ordinary income. In a period of rising interest rates, prepayments of the underlying assets may occur at a slower than expected rate, creating maturity extension risk. This particular risk may effectively change a security that was considered short- or intermediate-term at the time of purchase into a longer term security.
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Since the value of longer-term securities generally fluctuates more widely in response to changes in interest rates than does the value of shorter-term securities, maturity extension risk could increase the volatility of the Fund. When interest rates decline, the value of an asset-backed security with prepayment features may not increase as much as that of other fixed-income securities, and, as noted above, changes in market rates of interest may accelerate or retard prepayments and thus affect maturities.
Asset-Based Securities. Certain Funds may invest in debt, preferred or convertible securities, the principal amount, redemption terms or conversion terms of which are related to the market price of some natural resource asset such as gold bullion. These securities are referred to as “asset-based securities.” A Fund will purchase only asset-based securities that are rated, or are issued by issuers that have outstanding debt obligations rated, investment grade (for example, AAA, AA, A or BBB by S&P Global Ratings (“S&P”) or Fitch Ratings (“Fitch”), or Baa by Moody’s Investors Service, Inc. (“Moody’s”) or commercial paper rated A-1 by S&P or Prime-1 by Moody’s) or by issuers that the Manager has determined to be of similar creditworthiness. Obligations ranked in the fourth highest rating category, while considered “investment grade,” may have certain speculative characteristics and may be more likely to be downgraded than securities rated in the three highest rating categories. If an asset-based security is backed by a bank letter of credit or other similar facility, the Manager may take such backing into account in determining the creditworthiness of the issuer. While the market prices for an asset-based security and the related natural resource asset generally are expected to move in the same direction, there may not be perfect correlation in the two price movements. Asset-based securities may not be secured by a security interest in or claim on the underlying natural resource asset. The asset-based securities in which a Fund may invest may bear interest or pay preferred dividends at below market (or even relatively nominal) rates. Certain asset-based securities may be payable at maturity in cash at the stated principal amount or, at the option of the holder, directly in a stated amount of the asset to which it is related. In such instance, because no Fund presently intends to invest directly in natural resource assets, a Fund would sell the asset-based security in the secondary market, to the extent one exists, prior to maturity if the value of the stated amount of the asset exceeds the stated principal amount and thereby realize the appreciation in the underlying asset.
Precious Metal-Related Securities. A Fund may invest in the equity and other securities of companies that explore for, extract, process or deal in precious metals ( e.g. , gold, silver and platinum), and in asset-based securities indexed to the value of such metals. Such securities may be purchased when they are believed to be attractively priced in relation to the value of a company’s precious metal-related assets or when the values of precious metals are expected to benefit from inflationary pressure or other economic, political or financial uncertainty or instability. Based on historical experience, during periods of economic or financial instability the securities of companies involved in precious metals may be subject to extreme price fluctuations, reflecting the high volatility of precious metal prices during such periods. In addition, the instability of precious metal prices may result in volatile earnings of precious metal-related companies, which may, in turn, adversely affect the financial condition of such companies. The major producers of gold include the Republic of South Africa, Russia, Canada, the United States, Brazil and Australia. Sales of gold by Russia are largely unpredictable and often relate to political and economic considerations rather than to market forces. Economic, financial, social and political factors within South Africa may significantly affect South African gold production.
Borrowing and Leverage. Each Fund may borrow as a temporary measure for extraordinary or emergency purposes, including to meet redemptions or to settle securities transactions. Certain Funds will not purchase securities at any time when borrowings exceed 5% of their total assets, except (a) to honor prior commitments or (b) to exercise subscription rights when outstanding borrowings have been obtained exclusively for settlements of other securities transactions.
Certain Funds may also borrow in order to make investments, to the extent disclosed in such Fund’s Prospectus. The purchase of securities while borrowings are outstanding will have the effect of leveraging the Fund. Such leveraging increases the Fund’s exposure to capital risk, and borrowed funds are subject to interest costs that will reduce net income. The use of leverage by a Fund creates an opportunity for greater total return, but, at the same time, creates special risks. For example, leveraging may exaggerate changes in the net asset value (“NAV”) of Fund shares and in the yield on the Fund’s portfolio. Although the principal of such borrowings will be fixed, the Fund’s assets may change in value during the time the borrowings are outstanding. Borrowings will create interest expenses for the Fund that can exceed the income from the assets purchased with the borrowings. To the extent the income or capital appreciation derived from securities purchased with borrowed funds exceeds the interest the Fund will have to pay on the borrowings, the Fund’s return will be greater than if leverage had not been used. Conversely, if the income or capital appreciation from the securities purchased with such borrowed funds is not sufficient to cover the cost of borrowing, the return to the Fund will be less than if leverage had not been used and, therefore, the amount available for distribution to shareholders as dividends will be reduced. In the latter case, the Manager in its best judgment
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nevertheless may determine to maintain the Fund’s leveraged position if it expects that the benefits to the Fund’s shareholders of maintaining the leveraged position will outweigh the current reduced return.
Certain types of borrowings by a Fund may result in the Fund being subject to covenants in credit agreements relating to asset coverage, portfolio composition requirements and other matters. It is not anticipated that observance of such covenants would impede the Manager from managing a Fund’s portfolio in accordance with the Fund’s investment objectives and policies. However, a breach of any such covenants not cured within the specified cure period may result in acceleration of outstanding indebtedness and require the Fund to dispose of portfolio investments at a time when it may be disadvantageous to do so.
Each Fund may at times borrow from affiliates of the Manager, provided that the terms of such borrowings are no less favorable than those available from comparable sources of funds in the marketplace.
Cash Management. Generally, the Manager will employ futures and options on futures to provide liquidity necessary to meet anticipated redemptions or for day-to-day operating purposes. However, if considered appropriate in the opinion of the Manager, a portion of a Fund’s assets may be invested in certain types of instruments with remaining maturities of 397 days or less for liquidity purposes. Such instruments would consist of: (i) obligations of the U.S. Government, its agencies, instrumentalities, authorities or political subdivisions (“U.S. Government Securities”); (ii) other fixed-income securities rated Aa or higher by Moody’s or AA or higher by S&P or, if unrated, of comparable quality in the opinion of the Manager; (iii) commercial paper; (iv) bank obligations, including negotiable certificates of deposit, time deposits and bankers’ acceptances; and (v) repurchase agreements. At the time the Fund invests in commercial paper, bank obligations or repurchase agreements, the issuer or the issuer’s parent must have outstanding debt rated Aa or higher by Moody’s or AA or higher by S&P or outstanding commercial paper, bank obligations or other short-term obligations rated Prime-1 by Moody’s or A-1 by S&P; or, if no such ratings are available, the instrument must be of comparable quality in the opinion of the Manager. For more information on money market instruments, see “Money Market Securities” below.
Collateralized Debt Obligations. Certain Funds may invest in collateralized debt obligations (“CDOs”), which include collateralized bond obligations (“CBOs”), collateralized loan obligations (“CLOs”) and other similarly structured securities. CDOs are types of asset-backed securities. A CBO is ordinarily issued by a trust or other special purpose entity (“SPE”) and is typically backed by a diversified pool of fixed-income securities (which may include high risk, below investment grade securities) held by such issuer. A CLO is ordinarily issued by a trust or other SPE and is typically collateralized by a pool of loans, which may include, among others, domestic and non-U.S. senior secured loans, senior unsecured loans, and subordinate corporate loans, including loans that may be rated below investment grade or equivalent unrated loans, held by such issuer. Investments in a CLO organized outside of the United States may not be deemed to be foreign securities if the CLO is collateralized by a pool of loans, a substantial portion of which are U.S. loans. Although certain CDOs may benefit from credit enhancement in the form of a senior-subordinate structure, over-collateralization or bond insurance, such enhancement may not always be present, and may fail to protect a Fund against the risk of loss on default of the collateral. Certain CDO issuers may use derivatives contracts to create “synthetic” exposure to assets rather than holding such assets directly, which entails the risks of derivative instruments described elsewhere in this SAI. CDOs may charge management fees and administrative expenses, which are in addition to those of a Fund.
For both CBOs and CLOs, the cash flows from the SPE are split into two or more portions, called tranches, varying in risk and yield. The riskiest portion is the “equity” tranche, which bears the first loss from defaults from the bonds or loans in the SPE and serves to protect the other, more senior tranches from default (though such protection is not complete). Since it is partially protected from defaults, a senior tranche from a CBO or CLO typically has higher ratings and lower yields than its underlying securities, and may be rated investment grade. Despite the protection from the equity tranche, CBO or CLO tranches can experience substantial losses due to actual defaults, downgrades of the underlying collateral by rating agencies, forced liquidation of the collateral pool due to a failure of coverage tests, increased sensitivity to defaults due to collateral default and disappearance of protecting tranches, market anticipation of defaults as well as investor aversion to CBO or CLO securities as a class. Interest on certain tranches of a CDO may be paid in kind or deferred and capitalized (paid in the form of obligations of the same type rather than cash), which involves continued exposure to default risk with respect to such payments.
The risks of an investment in a CDO depend largely on the type of the collateral securities and the class of the CDO in which a Fund invests. Normally, CBOs, CLOs and other CDOs are privately offered and sold, and thus are not registered under the securities laws. However, an active dealer market may exist for CDOs, allowing a CDO to qualify for Rule 144A transactions. In addition to the normal risks associated with fixed-income securities and asset-backed securities generally discussed elsewhere in this SAI, CDOs carry additional risks including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the
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risk that the collateral may default or decline in value or be downgraded, if rated by a nationally recognized statistical rating organization (“NRSRO”); (iii) a Fund may invest in tranches of CDOs that are subordinate to other tranches; (iv) the structure and complexity of the transaction and the legal documents could lead to disputes among investors regarding the characterization of proceeds; (v) the investment return achieved by the Fund could be significantly different than those predicted by financial models; (vi) the lack of a readily available secondary market for CDOs; (vii) the risk of forced “fire sale” liquidation due to technical defaults such as coverage test failures; and (viii) the CDO’s manager may perform poorly.
Commercial Paper. Certain Funds may purchase commercial paper. Commercial paper purchasable by each Fund includes “Section 4(a)(2) paper,” a term that includes debt obligations issued in reliance on the “private placement” exemption from registration afforded by Section 4(a)(2) of the Securities Act. Section 4(a)(2) paper is restricted as to disposition under the Federal securities laws, and is frequently sold (and resold) to institutional investors such as the Fund through or with the assistance of investment dealers who make a market in the Section 4(a)(2) paper, thereby providing liquidity. Certain transactions in Section 4(a)(2) paper may qualify for the registration exemption provided in Rule 144A under the Securities Act. Most Funds can purchase commercial paper rated (at the time of purchase) “A-1” by S&P or “Prime-1” by Moody’s or when deemed advisable by a Fund’s Manager or sub adviser, “high quality” issues rated “A-2”, “Prime-2” or “F-2” by S&P, Moody’s or Fitch, respectively.
Commodity-Linked Derivative Instruments and Hybrid Instruments. Certain Funds seek to gain exposure to the commodities markets primarily through investments in hybrid instruments. Hybrid instruments are either equity or debt derivative securities with one or more commodity-dependent components that have payment features similar to a commodity futures contract, a commodity option contract, or a combination of both. Therefore, these instruments are “commodity-linked.” They are considered “hybrid” instruments because they have both commodity-like and security-like characteristics. Hybrid instruments are derivative instruments because at least part of their value is derived from the value of an underlying commodity, futures contract, index or other readily measurable economic variable.
The prices of commodity-linked derivative instruments may move in different directions than investments in traditional equity and debt securities when the value of those traditional securities is declining due to adverse economic conditions. As an example, during periods of rising inflation, debt securities have historically tended to decline in value due to the general increase in prevailing interest rates. Conversely, during those same periods of rising inflation, the prices of certain commodities, such as oil and metals, have historically tended to increase. Of course, there cannot be any guarantee that these investments will perform in that manner in the future, and at certain times the price movements of commodity-linked instruments have been parallel to those of debt and equity securities. Commodities have historically tended to increase and decrease in value during different parts of the business cycle than financial assets. Nevertheless, at various times, commodities prices may move in tandem with the prices of financial assets and thus may not provide overall portfolio diversification benefits. Under favorable economic conditions, the Fund’s investments may be expected to under-perform an investment in traditional securities. Over the long term, the returns on the Fund’s investments are expected to exhibit low or negative correlation with stocks and bonds.
Qualifying Hybrid Instruments. Certain Funds may invest in hybrid instruments that qualify for exclusion from regulation under the Commodity Exchange Act and the regulations adopted thereunder. A hybrid instrument that qualifies for this exclusion from regulation must be “predominantly a security.” A hybrid instrument is considered to be predominantly a security if (a) the issuer of the hybrid instrument receives payment in full of the purchase price of the hybrid instrument, substantially contemporaneously with delivery of the hybrid instrument; (b) the purchaser or holder of the hybrid instrument is not required to make any payment to the issuer in addition to the purchase price paid under subparagraph (a), whether as margin, settlement payment, or otherwise, during the life of the hybrid instrument or at maturity; (c) the issuer of the hybrid instrument is not subject by the terms of the instrument to mark-to-market margining requirements; and (d) the hybrid instrument is not marketed as a contract of sale of a commodity for future delivery (or option on such a contract) subject to applicable provisions of the Commodity Exchange Act. Hybrid instruments may be principal protected, partially protected, or offer no principal protection. A principal protected hybrid instrument means that the issuer will pay, at a minimum, the par value of the note at maturity. Therefore, if the commodity value to which the hybrid instrument is linked declines over the life of the note, the Fund will receive at maturity the face or stated value of the note. With a principal protected hybrid instrument, the Fund will receive at maturity the greater of the par value of the note or the increase in its value based on the underlying commodity or index. This protection is, in effect, an option whose value is subject to the volatility and price level of the underlying commodity. The Manager’s decision whether to use principal protection depends in part on the cost of the protection. In addition, the protection feature depends upon the ability of the issuer to meet its obligation to buy back the security, and, therefore, depends on the creditworthiness of the issuer. With full principal protection,
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the Fund will receive at maturity of the hybrid instrument either the stated par value of the hybrid instrument, or potentially, an amount greater than the stated par value if the underlying commodity, index, futures contract or economic variable to which the hybrid instrument is linked has increased in value. Partially protected hybrid instruments may suffer some loss of principal if the underlying commodity, index, futures contract or economic variable to which the hybrid instrument is linked declines in value during the term of the hybrid instrument. However, partially protected hybrid instruments have a specified limit as to the amount of principal that they may lose.
Hybrid Instruments Without Principal Protection. Certain Funds may invest in hybrid instruments that offer no principal protection. At maturity, there is a risk that the underlying commodity price, futures contract, index or other economic variable may have declined sufficiently in value such that some or all of the face value of the hybrid instrument might not be returned. The Manager, at its discretion, may invest in a partially protected principal structured note or a note without principal protection. In deciding to purchase a note without principal protection, the Manager may consider, among other things, the expected performance of the underlying commodity futures contract, index or other economic variable over the term of the note, the cost of the note, and any other economic factors that the Manager believes are relevant.
Limitations on Leverage. Some of the hybrid instruments in which a Fund may invest may involve leverage. To avoid being subject to undue leverage risk, a Fund will seek to limit the amount of economic leverage it has under any one hybrid instrument that it buys and the leverage of the Fund’s overall portfolio. A Fund will not invest in a hybrid instrument if, at the time of purchase: (i) that instrument’s “leverage ratio” exceeds 300% of the price increase in the underlying commodity, futures contract, index or other economic variable or (ii) the Fund’s “portfolio leverage ratio” exceeds 150%, measured at the time of purchase. “Leverage ratio” is the expected increase in the value of a hybrid instrument, assuming a one percent price increase in the underlying commodity, futures contract, index or other economic factor. In other words, for a hybrid instrument with a leverage factor of 150%, a 1% gain in the underlying economic variable would be expected to result in a 1.5% gain in value for the hybrid instrument. Conversely, a hybrid instrument with a leverage factor of 150% would suffer a 1.5% loss if the underlying economic variable lost 1% of its value. “Portfolio leverage ratio” is defined as the average (mean) leverage ratio of all instruments in a Fund’s portfolio, weighted by the market values of such instruments or, in the case of futures contracts, their notional values. A Fund may at times or from time to time decide not to use leverage in its investments or use less leverage than may otherwise be allowable.
Counterpar ty Risk. A significant risk of hybrid instruments is counterparty risk. Unlike exchange-traded futures and options, which are standard contracts, hybrid instruments are customized securities, tailor-made by a specific issuer. With a listed futures or options contract, an investor’s counterparty is the exchange clearinghouse. Exchange clearinghouses are capitalized by the exchange members and typically have high investment grade ratings ( e.g. , ratings of AAA or AA by S&P). Therefore, the risk is small that an exchange clearinghouse might be unable to meet its obligations at maturity. However, with a hybrid instrument, a Fund will take on the counterparty credit risk of the issuer. That is, at maturity of the hybrid instrument, there is a risk that the issuer may be unable to perform its obligations under the structured note.
Convertible Securities. A convertible security is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed amount of common stock or other equity security of the same or a different issuer within a particular period of time at a specified price or formula. A convertible security entitles the holder to receive interest paid or accrued on debt or the dividend paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities have characteristics similar to nonconvertible income securities in that they ordinarily provide a stable stream of income with generally higher yields than those of common stocks of the same or similar issuers, but lower yields than comparable nonconvertible securities. The value of a convertible security is influenced by changes in interest rates, with investment value declining as interest rates increase and increasing as interest rates decline. The credit standing of the issuer and other factors also may have an effect on the convertible security’s investment value. Convertible securities rank senior to common stock in a corporation’s capital structure but are usually subordinated to comparable nonconvertible securities. Convertible securities may be subject to redemption at the option of the issuer at a price established in the convertible security’s governing instrument.
The characteristics of convertible securities make them potentially attractive investments for an investment company seeking a high total return from capital appreciation and investment income. These characteristics include the potential for capital appreciation as the value of the underlying common stock increases, the relatively high yield received from dividend or interest payments as compared to common stock dividends and decreased risks of decline in value relative to the underlying common stock due to their fixed-income nature. As a result of the conversion
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feature, however, the interest rate or dividend preference on a convertible security is generally less than would be the case if the securities were issued in nonconvertible form.
In analyzing convertible securities, the Manager will consider both the yield on the convertible security relative to its credit quality and the potential capital appreciation that is offered by the underlying common stock, among other things.
Convertible securities are issued and traded in a number of securities markets. Even in cases where a substantial portion of the convertible securities held by a Fund are denominated in U.S. dollars, the underlying equity securities may be quoted in the currency of the country where the issuer is domiciled. As a result, fluctuations in the exchange rate between the currency in which the debt security is denominated and the currency in which the share price is quoted will affect the value of the convertible security. With respect to convertible securities denominated in a currency different from that of the underlying equity securities, the conversion price may be based on a fixed exchange rate established at the time the security is issued, which may increase the effects of currency risk. As described below, a Fund is authorized to enter into foreign currency hedging transactions in which it may seek to reduce the effect of exchange rate fluctuations.
Apart from currency considerations, the value of convertible securities is influenced by both the yield on nonconvertible securities of comparable issuers and by the value of the underlying common stock. The value of a convertible security viewed without regard to its conversion feature ( i.e. , strictly on the basis of its yield) is sometimes referred to as its “investment value.” To the extent interest rates change, the investment value of the convertible security typically will fluctuate. At the same time, however, the value of the convertible security will be influenced by its “conversion value,” which is the market value of the underlying common stock that would be obtained if the convertible security were converted. Conversion value fluctuates directly with the price of the underlying common stock. If the conversion value of a convertible security is substantially below its investment value, the price of the convertible security is governed principally by its investment value. To the extent the conversion value of a convertible security increases to a point that approximates or exceeds its investment value, the price of the convertible security will be influenced principally by its conversion value. A convertible security will sell at a premium over the conversion value to the extent investors place value on the right to acquire the underlying common stock while holding a fixed-income security. The yield and conversion premium of convertible securities issued in Japan and the Euromarket are frequently determined at levels that cause the conversion value to affect their market value more than the securities’ investment value.
Holders of convertible securities generally have a claim on the assets of the issuer prior to the common stockholders but may be subordinated to other debt securities of the same issuer. A convertible security may be subject to redemption at the option of the issuer at a price established in a charter provision, indenture or other governing instrument pursuant to which the convertible security was issued. If a convertible security held by a Fund is called for redemption, the Fund will be required to redeem the security, convert it into the underlying common stock or sell it to a third party. Certain convertible debt securities may provide a put option to the holder, which entitles the holder to cause the security to be redeemed by the issuer at a premium over the stated principal amount of the debt security under certain circumstances.
A Fund may also invest in synthetic convertible securities. Synthetic convertible securities may include either Cash-Settled Convertibles or Manufactured Convertibles. “Cash-Settled Convertibles” are instruments that are created by the issuer and have the economic characteristics of traditional convertible securities but may not actually permit conversion into the underlying equity securities in all circumstances. As an example, a private company may issue a Cash-Settled Convertible that is convertible into common stock only if the company successfully completes a public offering of its common stock prior to maturity and otherwise pays a cash amount to reflect any equity appreciation. “Manufactured Convertibles” are created by the Manager or another party by combining separate securities that possess one of the two principal characteristics of a convertible security, i.e. , fixed-income (“fixed income component”) or a right to acquire equity securities (“convertibility component”). The fixed-income component is achieved by investing in nonconvertible fixed-income securities, such as nonconvertible bonds, preferred stocks and money market instruments. The convertibility component is achieved by investing in call options, warrants, or other securities with equity conversion features (“equity features”) granting the holder the right to purchase a specified quantity of the underlying stocks within a specified period of time at a specified price or, in the case of a stock index option, the right to receive a cash payment based on the value of the underlying stock index.
A Manufactured Convertible differs from traditional convertible securities in several respects. Unlike a traditional convertible security, which is a single security that has a unitary market value, a Manufactured Convertible is
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comprised of two or more separate securities, each with its own market value. Therefore, the total “market value” of such a Manufactured Convertible is the sum of the values of its fixed-income component and its convertibility component.
More flexibility is possible in the creation of a Manufactured Convertible than in the purchase of a traditional convertible security. Because many corporations have not issued convertible securities, the Manager may combine a fixed-income instrument and an equity feature with respect to the stock of the issuer of the fixed-income instrument to create a synthetic convertible security otherwise unavailable in the market. The Manager may also combine a fixed-income instrument of an issuer with an equity feature with respect to the stock of a different issuer when the Manager believes such a Manufactured Convertible would better promote a Fund’s objective than alternative investments. For example, the Manager may combine an equity feature with respect to an issuer’s stock with a fixed income security of a different issuer in the same industry to diversify the Fund’s credit exposure, or with a U.S. Treasury instrument to create a Manufactured Convertible with a higher credit profile than a traditional convertible security issued by that issuer. A Manufactured Convertible also is a more flexible investment in that its two components may be purchased separately and, upon purchasing the separate securities, “combined” to create a Manufactured Convertible. For example, the Fund may purchase a warrant for eventual inclusion in a Manufactured Convertible while postponing the purchase of a suitable bond to pair with the warrant pending development of more favorable market conditions.
The value of a Manufactured Convertible may respond to certain market fluctuations differently from a traditional convertible security with similar characteristics. For example, in the event a Fund created a Manufactured Convertible by combining a short-term U.S. Treasury instrument and a call option on a stock, the Manufactured Convertible would be expected to outperform a traditional convertible of similar maturity that is convertible into that stock during periods when Treasury instruments outperform corporate fixed-income securities and underperform during periods when corporate fixed-income securities outperform Treasury instruments.
Corporate Loans. Certain Funds may invest in corporate loans. Corporate loans are generally non-investment grade floating rate instruments. Usually, they are freely callable at the issuer’s option. Certain Funds may invest in fixed and floating rate loans (“Loans”) arranged through private negotiations between a corporate borrower or a foreign sovereign entity and one or more financial institutions or institutional investors (“Lenders”). A Fund may invest in such Loans in the form of participations in Loans (“Participations”) and assignments of all or a portion of Loans from third parties (“Assignments”). A Fund considers these investments to be investments in debt securities for purposes of its investment policies. Participations typically will result in the Fund having a contractual relationship only with the Lender, not with the borrower. The Fund will have the right to receive payments of principal, interest and any fees to which it is entitled only from the Lender selling the Participation and only upon receipt by the Lender of the payments from the borrower. In connection with purchasing Participations, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the Loans, nor any rights of set off against the borrower, and the Fund may not benefit directly from any collateral supporting the Loan in which it has purchased the Participation. As a result, the Fund will assume the credit risk of both the borrower and the Lender that is selling the Participation. In the event of the insolvency of the Lender selling the Participation, the Fund may be treated as a general creditor of the Lender and may not benefit from any set-off between the Lender and the borrower. The Fund will acquire Participations only if the Lender interpositioned between the Fund and the borrower is determined by the Fund’s manager to be creditworthy. When the Fund purchases Assignments from Lenders, the Fund will acquire direct rights against the borrower on the Loan, and will not have exposure to a counterparty’s credit risk. The Funds may enter into Participations and Assignments on a forward commitment or “when-issued” basis, whereby a Fund would agree to purchase a Participation or Assignment at set terms in the future. For more information on forward commitments and when-issued securities, see “When-Issued Securities, Delayed Delivery Securities and Forward Commitments” below.
A Fund may have difficulty disposing of Assignments and Participations. In certain cases, the market for such instruments may lack sufficient liquidity, and therefore the Fund anticipates that in such cases such instruments could be sold only to a limited number of institutional investors. The lack of a sufficiently liquid secondary market may have an adverse impact on the value of such instruments and on the Fund’s ability to dispose of particular Assignments or Participations in response to a specific economic event, such as deterioration in the creditworthiness of the borrower.
Leading financial institutions often act as agent for a broader group of Lenders, generally referred to as a syndicate. The syndicate’s agent arranges the loans, holds collateral and accepts payments of principal and interest. If the agent develops financial problems, a Fund may not recover its investment or recovery may be delayed.
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The Loans in which the Fund may invest are subject to the risk of loss of principal and income. Although borrowers frequently provide collateral to secure repayment of these obligations they do not always do so. If they do provide collateral, the value of the collateral may not completely cover the borrower’s obligations at the time of a default. If a borrower files for protection from its creditors under the U.S. bankruptcy laws, these laws may limit a Fund’s rights to its collateral. In addition, the value of collateral may erode during a bankruptcy case. In the event of a bankruptcy, the holder of a Loan may not recover its principal, may experience a long delay in recovering its investment and may not receive interest during the delay.
Transactions in corporate loans may settle on a delayed basis. As a result, the proceeds from the sale of corporate loans may not be readily available to make additional investments or to meet a Fund’s redemption obligations. To the extent the extended settlement process gives rise to short-term liquidity needs, a Fund may hold additional cash, sell investments or temporarily borrow from banks and other lenders.
In certain circumstances, Loans may not be deemed to be securities under certain federal securities laws. Therefore, in the event of fraud or misrepresentation by a borrower or an arranger, Lenders and purchasers of interests in Loans, such as the Funds, may not have the protection of the anti-fraud provisions of the federal securities laws as would otherwise be available for bonds or stocks. Instead, in such cases, parties generally would rely on the contractual provisions in the Loan agreement itself and common-law fraud protections under applicable state law.
Direct Lending. The Fund may act as the originator for direct loans and engage in direct lending. Direct loans between the Fund and a borrower may not be administered by an underwriter or agent bank. The Fund may provide financing to commercial borrowers directly or through companies acquired (or created) and owned by or otherwise affiliated with the Fund. The terms of the direct loans are negotiated with borrowers in private transactions. Furthermore, a direct loan may be secured or unsecured.
In determining whether to make a direct loan, the Fund will rely primarily upon the creditworthiness of the borrower and/or any collateral for payment of interest and repayment of principal. The risks associated with direct loans are substantially similar to those associated with investing in corporate loans. In making a direct loan, the Fund is exposed to the risk that the borrower may default or become insolvent and, consequently, that the Fund will lose money on the loan. Furthermore, direct loans may subject the Fund to liquidity and interest rate risk and certain direct loans may be deemed illiquid. Direct loans are not publicly traded and may not have a secondary market. The lack of a secondary market for direct loans may have an adverse impact on the ability of the Fund to dispose of a direct loan and/or to value the direct loan.
When engaging in direct lending, the Fund’s performance may depend, in part, on the ability of the Fund to originate loans on advantageous terms. In originating loans, the Fund will compete with a broad spectrum of lenders. Increased competition for, or a diminishment in the available supply of, qualifying loans could result in lower yields on such loans, which could reduce Fund performance.
As part of its lending activities, the Fund may originate loans to companies that are experiencing significant financial or business difficulties, including companies involved in bankruptcy or other reorganization and liquidation proceedings. Although the terms of such financing may result in significant financial returns to the Fund, they involve a substantial degree of risk. The level of analytical sophistication, both financial and legal, necessary for successful
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