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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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STATEMENT OF ADDITIONAL INFORMATION
BlackRock Funds SM
BlackRock Wealth Liquid Environmentally Aware Fund
100 Bellevue Parkway, Wilmington, Delaware 19809 • Phone No. (800) 441-7762
This Statement of Additional Information of BlackRock Wealth Liquid Environmentally Aware Fund (the “Fund”), a series of BlackRock Funds SM (the “Trust”), is not a prospectus and should be read in conjunction with the Prospectuses of the Fund, dated July 29, 2026, as they may be amended or supplemented from time to time (the “Prospectus”), which has 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 Fund at the above address. Part I of this Statement of Additional Information and the portions of Part II of this Statement of Additional Information that relate to the Fund have been incorporated by reference into the Fund’s Prospectus. The portions of Part II of this Statement of Additional Information that do not relate to the Fund do not form a part of the Fund’s Statement of Additional Information, have not been incorporated by reference into the Fund’s Prospectus and should not be relied upon by investors in the Fund. The audited financial statements of the Fund are incorporated into this Statement of Additional Information by reference to the Fund’s Annual Financial Statements and Additional Information (the “Annual Financial Statements”) for the fiscal year ended March 31, 2026, as filed with the SEC on Form N-CSR (the “2026 Annual Financial Statements”). You may request a copy of the 2026 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 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.
Class Ticker Symbol Investor A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PINXX Investor C Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BMCXX Institutional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PNIXX Service Shares ............................................................................ PNPXX Premier Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BMMXX
BlackRock Advisors, LLC — Manager
BlackRock Investments, LLC — Distributor
The date of this Statement of Additional Information is July 29, 2026.
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TABLE OF CONTENTS
Page PART I Investment Objective and Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1 Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3 Information on Trustees and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4 Management, Advisory and Other Service Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16 Information on Sales Charges and Distribution Related Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18 Computation of Offering Price Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-19 Yield Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-19 Por tfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-19 Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-20 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-21
PART II Investment Risks and Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1 Management and Other Service Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-18 Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-32 Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-49 Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-53 Yield Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-54 Por tfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-54 Dividends and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-56 Proxy Voting Policies and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-59 General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-59 Appendix A — Description of Bond Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1 Appendix B — Proxy Voting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
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PART I: INFORMATION ABOUT BLACKROCK WEALTH LIQUID ENVIRONMENTALLY AWARE FUND
Par t I of this Statement of Additional Information (“SAI”) sets for th information about BlackRock Wealth Liquid Environmentally Aware Fund (the “Fund”), a series of BlackRock Funds SM (the “Trust”). It includes information about the Trust’s Board of Trustees (the “Board”), the advisory and management services provided to and the management fees paid by the Fund and information about other fees applicable to and services provided to the Fund. This Par t I of this SAI should be read in conjunction with the Fund’s Prospectus and those por tions of Par t II of this SAI that per tain to the Fund.
The Fund is a retail money market fund under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”), which means it has policies and procedures reasonably designed to limit all beneficial owners of the Fund to natural persons.
I. Investment Objective and Policies
Please see the section “Details About the Fund — How the Fund Invests” in the Fund’s Prospectus for information about the Fund’s investment objective and policies. Additional information regarding the Fund’s investment objective and policies is included below.
The Fund’s manager is BlackRock Advisors, LLC (“BlackRock” or the “Manager”).
Additional Information on Investment Strategies
All securities acquired by the Fund will be determined at the time of purchase by BlackRock, under guidelines established by the Board, to be “Eligible Securities” as defined by the Securities and Exchange Commission (“Commission”). An “Eligible Security” is a security:
1. With a remaining maturity of 397 calendar days or less (with cer tain exceptions) that BlackRock determines presents minimal credit risks to the Fund after considering cer tain factors, which must include an analysis of the capacity of the security’s issuer or guarantor to meet its financial obligations, which analysis must include, to the extent appropriate, consideration of the following factors with respect to the security’s issuer or guarantor:
• Financial condition;
• Sources of liquidity;
• Ability to react to future market-wide and issuer- or guarantor-specific events, including ability to repay debt in a highly adverse situation; and
• Strength of the issuer’s or guarantor’s industry within the economy and relative to economic trends, and issuer’s or guarantor’s competitive position within its industry;
2. That is issued by a registered investment company that is a money market fund; or
3. That issued or guaranteed as to principal or interest by the U.S. Government or any of its agencies or instrumentalities.
***
Set for th below is a listing of some of the types of investments and investment strategies that the Fund may use, and the risks and considerations associated with those investments and investment strategies. Please see Par t II of this SAI for fur ther information on these investments and investment strategies. Information contained in Par t II about the risks and considerations associated with investments and/or investment strategies applies only to the extent the Fund makes each type of investment or uses each investment strategy. Also set for th below is a listing of the proxy voting policy and related guidelines applicable to the Fund. Please see “Proxy Voting Policies and Procedures” in Par t II of this SAI for fur ther 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 par t 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 the Fund is considered to form a par t of the Fund’s SAI.
Wealth Liquid Environmentally Aware Fund Bank Money Instruments X
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Wealth Liquid Environmentally Aware Fund Commercial Paper and Other Shor t Term Obligations X Environmental, Social and Governance (“ESG”) Integration X Foreign Bank Money Instruments X Foreign Shor t Term Debt Instruments X
Forward Commitments X Illiquid Investments X Inflation Risk X Investment in Other Investment Companies X Issuer Insolvency Risk Market Risks/Recent Market Events X
Municipal Investments X Municipal Securities X Municipal Securities — Derivative Products X Municipal Notes X Municipal Commercial Paper X Municipal Lease Obligations X Municipal Securities — Shor t-Term Maturity Standards X
Municipal Securities — Quality Standards X Municipal Securities — Other Factors X Variable Rate Demand Obligations (“VRDOs”) X Negative Interest Rate Scenarios X Operational and Technology Risks X
Proxy Voting Policies X Open-End Active and Fixed Income Index Fund Proxy Voting Policy X BlackRock Active Investment Stewardship Climate and Decarbonization Stewardship Guidelines Index Equity Fund Proxy Voting Policy BlackRock Investment Stewardship Climate and Decarbonization Stewardship Guidelines Purchase of Securities with Fixed Price “Puts” X Repurchase Agreements and Purchase and Sale Contracts X Reverse Repurchase Agreements X Rule 2a-7 Requirements X
Securities Lending X Structured Notes Taxable Money Market Securities X U.S. Government Obligations X Variable and Floating Rate Instruments X When-Issued Securities, Delayed Delivery Securities and Forward Commitments X
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 the Fund uses CFTC Derivatives, it intends to do so below such prescribed levels and will not market
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itself 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 Fund.
II. Investment Restrictions
The Fund has adopted restrictions and policies relating to the investment of the Fund’s assets and its activities. Cer tain of the restrictions are fundamental policies of the Fund and may not be changed without the approval of the holders of a majority of the Fund’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).
Fundamental Investment Restrictions of the Fund:
1. The Fund may not purchase securities of any one issuer (other than securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities or cer tificates of deposit for any such securities) if more than 5% of the value of the Fund’s total assets (taken at current value) would be invested in the securities of such issuer, or more than 10% of the issuer’s outstanding voting securities would be owned by the Fund or the Trust, except that up to 25% of the value of the Fund’s total assets (taken at current value) may be invested without regard to these limitations. For purposes of this limitation, a security is considered to be issued by the entity (or entities) whose assets and revenues back the security. A guarantee of a security is not deemed to be a security issued by the guarantor when the value of all securities issued and guaranteed by the guarantor, and owned by the Fund, does not exceed 10% of the value of the Fund’s total assets.
2. The Fund may not borrow money or issue senior securities, except that the Fund may borrow from banks and enter into reverse repurchase agreements for temporary purposes in amounts up to one-third of the value of its total assets at the time of such borrowing; or mor tgage, pledge or hypothecate any assets, except in connection with any such borrowing and then in amounts not in excess of one-third of the value of the Fund’s total assets at the time of such borrowing. The Fund will not purchase securities while its aggregate borrowings (including reverse repurchase agreements and borrowings from banks) in excess of 5% of its total assets are outstanding. Securities held in escrow or separate accounts in connection with the Fund’s investment practices are not deemed to be pledged for purposes of this limitation.
3. The Fund may not purchase any securities which would cause, at the time of purchase, less than 25% of the value of its total assets to be invested in the obligations of issuers in the financial services industry, or in obligations, such as repurchase agreements, secured by such obligations (unless the Fund is in a temporary defensive position) or which would cause, at the time of purchase, more than 25% of the value of its total assets to be invested in the obligations of issuers in any other industry. In applying the investment limitations stated in this paragraph, (i) there is no limitation with respect to the purchase of (a) instruments issued (as defined in Investment Limitation number 1 above) or guaranteed by the United States, any state, territory or possession of the United States, the District of Columbia or any of their authorities, agencies, instrumentalities or political subdivisions, (b) instruments issued by domestic banks (which may include U.S. branches of non-U.S. banks) and (c) repurchase agreements secured by the instruments described in clauses (a) and (b); (ii) wholly-owned 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; and (iii) utilities will be divided according to their services, for example, gas, gas transmission, electric and gas, electric and telephone will each be considered a separate industry.
4. The Fund may not:
a. purchase or sell real estate, except that the Fund may purchase securities of issuers which deal in real estate and may purchase securities which are secured by interests in real estate;
b. acquire any other investment company or investment company security except in connection with a merger, consolidation, reorganization or acquisition of assets or where otherwise permitted by the Investment Company Act;
c. act as an underwriter of securities within the meaning of the Securities Act of 1933 except to the extent that the purchase of obligations directly from the issuer thereof, or the disposition of securities, in accordance with the Fund’s investment objective, policies and limitations may be deemed to be underwriting;
d. write or sell put options, call options, straddles, spreads, or any combination thereof, except for transactions in options on securities and securities indices, futures contracts and options on futures contracts;
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e. purchase securities of companies for the purpose of exercising control;
f. purchase securities on margin, make shor t sales of securities or maintain a shor t position, except that (i) this investment limitation shall not apply to the Fund’s transactions in futures contracts and related options or the Fund’s sale of securities shor t against the box, and (ii) the Fund may obtain shor t-term credit as may be necessary for the clearance of purchases and sales of por tfolio securities;
g. purchase or sell commodity contracts, or invest in oil, gas or mineral exploration or development programs, except that the Fund may, to the extent appropriate to its investment policies, purchase securities, including publicly traded securities, of companies engaging in whole or in par t in such activities and may enter into futures contracts and related options;
h. make loans, except that the Fund may purchase and hold debt instruments and enter into repurchase agreements in accordance with its investment objective and policies and may lend por tfolio securities. See “Investment Objectives and Policies” above; or
i. purchase or sell commodities except that the Fund may, to the extent appropriate to its investment policies, purchase securities of companies engaging in whole or in par t in such activities, may engage in currency transactions and may enter into futures contracts and related options.
Although the foregoing investment limitations would permit the Fund to invest in options, futures contracts and options on futures contracts, and to sell securities shor t against the box, the Fund does not currently intend to trade in such instruments or engage in such transactions during the next twelve months (except to the extent a por tfolio security may be subject to a “demand feature” or “put” as permitted under Commission regulations for money market funds). Prior to making any such investments, the Fund would notify its shareholders and add appropriate descriptions concerning the instruments and transactions to its Prospectus.
For purposes of investment restriction 3 above, 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.
Non-Fundamental Investment Restrictions of the Fund:
Under its non-fundamental investment restriction, which may be changed by the Board without shareholder approval, the Fund may not:
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).
Unless otherwise indicated or with respect to policies adopted pursuant to Rule 35d-1 of the Investment Company Act, all limitations under the Fund’s fundamental or non-fundamental investment restrictions apply only at the time that a transaction is under taken. Any change in the percentage of the Fund’s assets invested in cer tain 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 the Manager determines that it is practicable to sell or close out the investment without undue market or tax consequences.
III. Information on Trustees and Officers
The Board consists of fifteen individuals (each, a “Trustee”), thir teen of whom are not “interested persons” of the Trust as defined in the Investment Company Act (the “Independent Trustees”). 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 Trust is included in the BlackRock Fund Complex referred to as the BlackRock Multi-Asset Complex. The Trustees also oversee as board members the operations of the other open-end registered investment companies included in the BlackRock Multi-Asset Complex.
The Board has overall responsibility for the oversight of the Trust and the Fund. The Chair of the Board is an Independent Trustee, and the Chair of each Board committee (each, a “Committee”) is an Independent Trustee. The Board has five standing Committees: an Audit Committee, a Governance and Nominating Committee, a Compliance
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Committee, a Per formance Oversight Committee and an Ad Hoc Topics Committee. The role of the Chair of the Board is to preside at all meetings of the Board and to act as a liaison with service providers, officers, attorneys and other Trustees generally between meetings. The Chair of each Committee per forms a similar role with respect to the Committee. The Chair of the Board or the Chair of a Committee may also per form such other functions as may be delegated by the Board or the Committee from time to time. The Independent Trustees meet regularly outside the presence of Fund management, in executive session or with other service providers to the Fund. The Board has regular meetings five times a year, and may hold special meetings if required before its next regular meeting. Each Committee meets regularly to conduct the oversight functions delegated to that Committee by the Board and repor ts 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 full Board to enhance effective oversight.
The Board has engaged the Manager to manage the Fund on a day-to-day basis. The Board is responsible for overseeing the Manager, other service providers, the operations of the Fund and associated risks in accordance with the provisions of the Investment Company Act, state law, other applicable laws, the Trust’s char ter, and the Fund’s investment objective and strategies. The Board reviews, on an ongoing basis, the Fund’s per formance, operations and investment strategies and techniques. The Board also conducts reviews of the Manager and its role in running the operations of the Fund.
Day-to-day risk management with respect to the Fund is the responsibility of the Manager or of sub-advisers or other service providers (depending on the nature of the risk), subject to the supervision of the Manager. The Fund is subject to a number of risks, including investment, compliance, operational and valuation risks, among others. While there are a number of risk management functions per formed by the Manager and the sub-advisers or other service providers, as applicable, it is not possible to eliminate all of the risks applicable to the Fund. Risk oversight forms par t of the Board’s general oversight of the Fund and is addressed as par t of various Board and Committee activities. The Board, directly or through a Committee, also reviews repor ts from, among others, management, the independent registered public accounting firm for the Fund, sub-advisers and internal auditors for the investment adviser or its affiliates, as appropriate, regarding risks faced by the Fund and management’s or the service provider’s risk functions. The Committee system facilitates the timely and efficient consideration of matters by the Trustees, and facilitates effective oversight of compliance with legal and regulatory requirements and of the Fund’s activities and associated risks. The Board has appointed a Chief Compliance Officer, who oversees the implementation and testing of the Trust’s compliance program and repor ts to the Board regarding compliance matters for the Fund and its service providers. The Independent Trustees have engaged independent legal counsel to assist them in per forming their oversight responsibilities.
Audit Committee. The members of the Audit Committee (the “Audit Committee”) are Henry R. Keizer (Chair), Neil A. Cotty, Jeffrey Jarczyk, Lori Richards, Kenneth L. Urish and Claire A. Walton, all of whom are Independent Trustees. The principal responsibilities of the Audit Committee are to approve, and recommend to the full Board for approval, the selection, retention, termination and compensation of the Fund’s independent registered public accounting firm (the “Independent Registered Public Accounting Firm”) and to oversee the Independent Registered Public Accounting Firm’s work. The Audit Committee’s responsibilities include, without limitation, to (1) evaluate the qualifications and independence of the Independent Registered Public Accounting Firm; (2) approve all audit engagement terms and fees for the Fund; (3) review the conduct and results of each independent audit of the Fund’s annual financial statements; (4) review any issues raised by the Independent Registered Public Accounting Firm or Fund management regarding the accounting or financial repor ting policies and practices of the Fund and the internal controls of the Fund and cer tain service providers; (5) oversee the per formance of the Fund’s Independent Registered Public Accounting Firm; (6) review and discuss with management and the Fund’s Independent Registered Public Accounting Firm the per formance and findings of the Fund’s internal auditors; (7) discuss with Fund management its policies regarding risk assessment and risk management as such matters relate to the Fund’s financial repor ting and controls; (8) resolve any disagreements between Fund management and the Independent Registered Public Accounting Firm regarding financial repor ting; and (9) under take such other duties and responsibilities as may from time to time be delegated by the Board to the Audit Committee. The Board has adopted a written char ter for the Audit Committee. During the fiscal year ended March 31, 2026, the Audit Committee met four times.
Governance and Nominating Committee. The members of the Governance and Nominating Committee (the “Governance Committee”) are Cynthia A. Montgomery (Chair), Christopher J. Ailman, Susan J. Car ter, Collette Chilton, Henry R. Keizer and Marc D. Stern, all of whom are Independent Trustees. The principal responsibilities of the Governance Committee are to (1) identify individuals qualified to serve as Independent Trustees of the Trust and recommend Independent Trustee nominees for election by shareholders or appointment by the Board; (2) advise the
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Board with respect to Board composition, procedures and committees (other than the Audit Committee); (3) oversee periodic self-assessments of the Board and committees of the Board (other than the Audit Committee); (4) review and make recommendations regarding Independent Trustee compensation; (5) monitor corporate governance matters and develop appropriate recommendations to the Board; (6) act 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 Independent Trustees; and (7) under take such other duties and responsibilities as may from time to time be delegated by the Board to the Governance Committee. The Governance Committee may consider nominations for Trustees made by the Fund’s shareholders as it deems appropriate. Under the Trust’s Amended and Restated Code of Regulations (“Bylaws”), shareholders must follow cer tain procedures to nominate a person for election as a Trustee at a shareholder meeting at which Trustees are to be elected. Under these advance notice procedures, notice of the proposed nominee to the Secretary of the Trust must be delivered to or mailed and received at the principal executive offices of the Trust not later than the close of business on the fifth 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 Trust’s Bylaws provide that notice of a proposed nomination must include cer tain information about the shareholder and the nominee, as well as cer tain other information, including a written consent of the proposed nominee to serve if elected. Reference is made to the Trust’s Bylaws for more details. The Board has adopted a written char ter for the Governance Committee. During the fiscal year ended March 31, 2026, the Governance Committee met eleven times.
Compliance Committee. The members of the Compliance Committee (the “Compliance Committee”) are Claire A. Walton (Chair), Jeffrey Jarczyk, Cynthia A. Montgomery, Donald C. Opatrny, Lori Richards and Kenneth L. Urish, all of whom are Independent Trustees. The Compliance Committee’s purpose is to assist the Board in fulfilling its responsibility to oversee regulatory and fiduciary compliance matters involving the Trust, the fund-related activities of BlackRock and any sub-adviser and the Trust’s third-par ty service providers. The Compliance Committee’s responsibilities include, without limitation, to (1) oversee the compliance policies and procedures of the Trust and its service providers and recommend changes or additions to such policies and procedures; (2) review information on and, where appropriate, recommend policies concerning the Trust’s compliance with applicable law; (3) review repor ts from, oversee the annual per formance review of, and make cer tain recommendations and determinations regarding the Trust’s Chief Compliance Officer (the “CCO”), including determining the amount and structure of the CCO’s compensation and recommending such amount and structure to the full Board for approval and ratification; and (4) under take such other duties and responsibilities as may from time to time be delegated by the Board to the Compliance Committee. The Board has adopted a written char ter for the Compliance Committee. During the fiscal year ended March 31, 2026, the Compliance Committee met four times.
Per formance Oversight Committee. The members of the Per formance Oversight Committee (the “Per formance Oversight Committee”) are Donald C. Opatrny (Chair), Christopher J. Ailman, Susan J. Car ter, Collette Chilton, Neil A. Cotty and Marc D. Stern, all of whom are Independent Trustees. The Per formance Oversight Committee’s purpose is to assist the Board in fulfilling its responsibility to oversee the Fund’s investment per formance relative to its agreed upon per formance objectives and to assist the Independent Trustees in their consideration of investment advisory agreements. The Per formance Oversight Committee’s responsibilities include, without limitation, to (1) review information on, and make recommendations to the full Board in respect of, the Fund’s investment objective, policies and practices; (2) review information on the Fund’s investment per formance; (3) review information on appropriate benchmarks and competitive universes and unusual or exceptional investment matters; (4) review personnel and other resources devoted to management of the Fund and evaluate the nature and quality of information furnished to the Per formance Oversight Committee; (5) recommend any required action regarding changes in fundamental and non-fundamental investment policies and restrictions, fund mergers or liquidations; (6) request and review information on the nature, extent and quality of services provided to the shareholders; (7) make recommendations to the Board concerning the approval or renewal of investment advisory agreements; and (8) under take such other duties and responsibilities as may from time to time be delegated by the Board to the Per formance Oversight Committee. The Board has adopted a written char ter for the Per formance Oversight Committee. During the fiscal year ended March 31, 2026, the Per formance Oversight Committee met five times.
Ad Hoc Topics Committee. The members of the Ad Hoc Topics Committee (the “Ad Hoc Topics Committee”) are Mark Stalnecker (Chair) and Claire A. Walton, both of whom are Independent Trustees, and John M. Perlowski, who serves as an interested Trustee. The principal responsibilities of the Ad Hoc Topics Committee are to (1) act on routine matters between meetings of the Board; (2) act on such matters as may require urgent action between meetings of the Board; and (3) exercise such other authority as may from time to time be delegated to the Ad Hoc Topics Committee by the Board. The Board has adopted a written char ter for the Ad Hoc Topics Committee. During the fiscal year ended March 31, 2026, the Ad Hoc Topics Committee did not meet.
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The Governance Committee has adopted a statement of policy that describes the experience, qualifications, skills and attributes that are necessary and desirable for potential Independent Trustee candidates (the “Statement of Policy”). The Board believes that each Independent Trustee satisfied, at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. Fur thermore, in determining that a par ticular Independent Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Independent Trustees have balanced and diverse experience, skills, attributes and qualifications, which allow the Board to operate effectively in governing the Trust and protecting the interests of shareholders. Among the attributes common to all Independent Trustees are their ability to review critically, evaluate, question and discuss information provided to them, to interact effectively with the Fund’s investment adviser, sub-advisers, other service providers, counsel and the Independent Registered Public Accounting Firm, and to exercise effective business judgment in the per formance of their duties as Trustees.
Each Trustee’s ability to per form 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 Trust and the other funds in the BlackRock Fund Complexes (and any predecessor funds), other investment funds, public companies, non-profit entities or other organizations; ongoing commitment to and par ticipation in Board and Committee meetings, as well as his or her leadership of standing and ad hoc committees throughout the years; or other relevant life experiences.
The table below discusses some of the experiences, qualifications and skills of each of the Trustees that suppor t the conclusion that each Trustee should serve on the Board.
Trustees Experience, Qualifications and Skills Independent Trustees Christopher J. Ailman Christopher Ailman has more than 30 years of experience in the financial services industry, including most recently serving as Chief Investment Officer of the California State Teachers Retirement System (CalSTRS) from 2000 to June 2024 where he led its investment program. Mr. Ailman currently is a principal at Ailman Advisers. In addition, he has held various roles in the industry, including as member and chair of the asset owner committee of the Kroner Center for Financial Research, chairman of the Nor th American Chapter of the 300 Club of Global CIOs, and co-chair of the Milken Global Capital Markets Advisory Council. These positions have provided Mr. Ailman with considerable investment exper tise across asset classes and strategies, and insight and perspective on the markets and the economy. In addition, Mr. Ailman serves as a member of the Governance Committee and the Per formance Oversight Committee.
Susan J. Car ter Susan J. Car ter has over 35 years of experience in investment management. She has served as President & Chief Executive Officer of Commonfund Capital, Inc. (“CCI”), a registered investment adviser focused on non-profit investors, from 1997 to 2013, Chief Executive Officer of CCI from 2013 to 2014 and Senior Advisor to CCI in 2015. Ms. Car ter also served as director of the Pacific Pension Institute from 2014 to 2018, trustee to the Financial Accounting Foundation from 2017 to 2021, Advisory Board Member for the Center for Private Equity and Entrepreneurship at Tuck School of Business from 1997 to 2021, Advisory Board Member for Bridges Fund Management from 2016 to 2018, Advisory Board Member for Girls Who Invest from 2015 to 2018 and Board Member thereof from 2018 to 2022, and Practitioner Advisory Board Member for Private Capital Research Institute (“PCRI”) from 2017 to 2024. She currently serves as Member of the President’s Counsel for Commonfund. These positions have provided her with insight and perspective on the markets and the economy.
Collette Chilton Collette Chilton has over 20 years of experience in investment management. She held the position of Chief Investment Officer of Williams College from October 2006 to June 2023. Prior to that she was President and Chief Investment Officer of Lucent Asset Management Corporation, where she oversaw approximately $40 billion in pension and retirement savings assets for the company. These positions have provided her with insight and perspective on the markets and the economy.
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Trustees Experience, Qualifications and Skills Neil A. Cotty Neil A. Cotty has more than 30 years of experience in the financial services industry, including 19 years at Bank of America Corporation and its affiliates, where he served, at different times, as the Chief Financial Officer of various businesses including Investment Banking, Global Markets, Wealth Management and Consumer and also served ten years as the Chief Accounting Officer for Bank of America Corporation. Mr. Cotty has been determined by the Audit Committee to be an audit committee financial exper t, as such term is defined in the applicable Commission rules.
Jeffrey Jarczyk Jeffrey Jarczyk is a CPA and has more than 30 years of experience in the financial services industry, including over 19 years at Fidelity Investments, where he served, at different times, as the Chief Auditor and the Chief Accounting Officer of Fidelity Investments’ parent company, FMR LLC. Prior to working at Fidelity, Mr. Jarczyk was a par tner at Deloitte and Ar thur Andersen for approximately 17 years. These positions have allowed him to work extensively with audit and risk committees and company executives helping to identify, manage and mitigate risks for financial services companies. Mr. Jarczyk also served as consultant to the Independent Trustees prior to becoming an Independent Trustee.
Henry R. Keizer Henry R. Keizer brings over 40 years of executive, financial, operational, strategic and global exper tise gained through his 35 year career at KPMG, a global professional services organization and by his service as a director to both publicly and privately held organizations. He has extensive experience with issues facing complex, global companies and exper tise in financial repor ting, accounting, auditing, risk management, and regulatory affairs for such companies. Mr. Keizer’s experience also includes service as an audit committee chair to both publicly and privately held organizations across numerous industries including professional services, proper ty and casualty reinsurance, insurance, diversified financial services, banking, direct to consumer, business to business and technology. Mr. Keizer is a cer tified public accountant and also served on the board of the American Institute of Cer tified Public Accountants. Mr. Keizer has been determined by the Audit Committee to be an audit committee financial exper t, as such term is defined in the applicable Commission rules.
Cynthia A. Montgomery Cynthia A. Montgomery has served for over 20 years on the boards of registered investment companies, most recently as a member of the boards of cer tain BlackRock advised Funds and predecessor funds, including the legacy Merrill Lynch Investment Managers, L.P. (“MLIM”) funds. The Board benefits from Ms. Montgomery’s more than 20 years of academic experience as a professor at Harvard Business School where she taught courses on corporate strategy and corporate governance. Ms. Montgomery also has business management and corporate governance experience through her service on the corporate boards of a variety of public companies. She has also authored numerous ar ticles and books on these topics.
Donald C. Opatrny Donald C. Opatrny has more than 40 years of business, oversight and executive experience, including through his service as president, director and investment committee chair for academic and not-for-profit organizations, and his experience as a par tner, managing director and advisory director at Goldman Sachs for 32 years. He also has investment management experience as a board member of Athena Capital Advisors LLC.
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Trustees Experience, Qualifications and Skills Lori Richards Lori Richards has more than 30 years of experience in the financial services industry, most notably as the first Director of the Office of Compliance Inspections and Examinations (“OCIE”) of the Securities and Exchange Commission (“SEC”) from 1995 to 2009. During 14 years as the Director of OCIE, she led the SEC’s nationwide examination oversight program for advisers, mutual funds, hedge funds, broker-dealers, stock exchanges, and other industry firms. Prior to that, from 1985 to 1995, she held various roles at the SEC, including Associate Director for Enforcement for the SEC’s Pacific Regional Office and executive assistant and senior advisor to then SEC Chairman Ar thur Levitt. More recently, Ms. Richards served as Chief Compliance Officer of the Asset and Wealth Management global lines of business at JPMorgan Chase & Co. from 2013 to 2018 where she led its global compliance program, advised business leaders on compliance issues, oversaw risk assessment, monitoring, testing and training, and maintained relationships with regulators. In addition, Ms. Richards served as a member of the National Adjudicatory Council of the Financial Industry Regulatory Authority (FINRA) from 2019 to 2022 and held the chair and vice chair posts during her tenure. Prior thereto, from 2010 to 2013, she was a Principal at PricewaterhouseCoopers LLP (“PwC”) and co-leader of its Asset Management Regulatory group. At PwC, she assisted a broad range of financial services clients in designing and implementing risk management and compliance programs, and preparing for new regulatory expectations. These positions have provided her with insight and perspective on the markets and the economy, as well as asset management regulation and compliance. In addition, Ms. Richards serves as a member of the Audit Committee and the Compliance Committee.
Mark Stalnecker Mark Stalnecker has gained a wealth of experience in investing and asset management from his over 13 years of service as the Chief Investment Officer of the University of Delaware as well as from his various positions with First Union Corporation, including Senior Vice President and State Investment Director of First Investment Advisors. The Board benefits from his experience and perspective as the Chief Investment Officer of a university endowment and from the oversight experience he gained from service on various private and non-profit boards.
Marc D. Stern Marc D. Stern has more than 30 years of experience in investing and asset management. Mr. Stern served as the Chief Executive Officer at Bessemer Trust, a wealth management business, for 13 years. During his tenure at Bessemer Trust, Mr. Stern served on the firm’s board of directors, chaired the board’s trust and investment committee, and led the firm’s executive committee. He also served as Bessemer’s Chief Investment Officer for 8 years, where he was Chair of the Investment Policy and Strategy Committee with responsibility for overall asset allocation and investment strategy. Mr. Stern also served as Chair of the Private Clients Investment group at AllianceBernstein. These positions provide Mr. Stern with insight and perspective into investment management, the economy, and fiduciary governance. Mr. Stern also served as consultant to the Independent Trustees prior to becoming an Independent Trustee.
Kenneth L. Urish Kenneth L. Urish has served for over 15 years on the boards of registered investment companies, most recently as a member of the boards of cer tain BlackRock-advised Funds and predecessor funds, including the legacy BlackRock funds. He has over 30 years of experience in public accounting. Mr. Urish has served as a managing member of an accounting and consulting firm. Mr. Urish has been determined by the Audit Committee to be an audit committee financial exper t, as such term is defined in the applicable Commission rules.
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Trustees Experience, Qualifications and Skills Claire A. Walton Claire A. Walton has over 25 years of experience in investment management. She has served as the Chief Operating Officer and Chief Financial Officer of Liber ty Square Asset Management, LP / Steel Par tners Japan Asset Management, LP from 1998 to 2015, an investment manager that specialized in long/shor t non-U.S. equity investments, and was an owner and General Par tner of Neon Liber ty Capital Management, LLC from 2003 to 2023, a firm focusing on long/shor t equities in global emerging and frontier markets. These positions have provided her with insight and perspective on the markets and the economy. Ms. Walton has been determined by the Audit Committee to be an audit committee financial exper t, as such term is defined in the applicable Commission rules.
Interested Trustees Rober t Fairbairn Rober t Fairbairn has more than 25 years of experience with BlackRock, Inc. and over 30 years of experience in finance and asset management. In par ticular, 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 Par tner Program and Strategic Product Management Group. Mr. Fairbairn also serves as a board member for the funds in the BlackRock Fixed-Income Complex.
John M. Perlowski John M. Perlowski’s experience as Senior Managing Director of BlackRock, Inc. since 2026, Managing Director of BlackRock, Inc. from 2009 to 2025, as the Head of BlackRock Global Business Operations Services since 2009, and as President and Chief Executive Officer of the BlackRock-advised Funds provides him with a strong understanding of the BlackRock-advised Funds, their operations, and the business and regulatory issues facing the BlackRock-advised 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 Fixed-Income Complex. Mr. Perlowski is a member of BlackRock’s Global Executive Committee.
Biographical Information
Cer tain biographical and other information relating to the Trustees of the Trust is set for th below, including their address and year of bir th, principal occupations for at least the last five years, length of time served, total number of registered investment companies and investment por tfolios overseen in the BlackRock-advised Funds and any currently held public company and other investment company directorships.
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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 Independent Trustees Mark Stalnecker 1951
Chair of the Board (Since 2019) and Trustee (Since 2015)
Chief Investment Officer, University of Delaware from 1999 to 2013; Trustee and Chair of the Finance and Investment Committees, Winterthur Museum and Country Estate from 2005 to 2016; Member of the Investment Committee, Delaware Public Employees’ Retirement System from 2002 to 2024; Member of the Investment Committee, Christiana Care Health System from 2009 to 2017; Member of the Investment Committee, Delaware Community Foundation from 2013 to 2014; Director and Chair of the Audit Committee, SEI Private Trust Co. from 2001 to 2014.
26 RICs consisting of 171 Portfolios
None
Christopher J. Ailman 1958
Trustee (Since 2024)
Principal, Ailman Advisers, since 2024; Chief Investment Officer, California State Teachers Retirement System (CalSTRS) from 2000 to 2024.
26 RICs consisting of 171 Portfolios
None
Susan J. Carter 1956
Trustee (Since 2016)
Trustee, Financial Accounting Foundation from 2017 to 2021; Advisory Board Member, Center for Private Equity and Entrepreneurship at Tuck School of Business from 1997 to 2021; Director, Pacific Pension Institute from 2014 to 2018; Senior Advisor, CCI (investment adviser) in 2015; Chief Executive Officer, CCI from 2013 to 2014; President & Chief Executive Officer, CCI from 1997 to 2013; Advisory Board Member, Girls Who Invest from 2015 to 2018 and Board Member thereof from 2018 to 2022; Advisory Board Member, Bridges Fund Management from 2016 to 2018; Practitioner Advisory Board Member, PCRI from 2017 to 2024; Lecturer in the Practice of Management, Yale School of Management from 2019 to 2025; Advisor to Finance Committee, Altman Foundation from 2020 to 2024; Investment Committee Member, Tostan since 2021; Member of the President’s Counsel, Commonfund since 2023.
26 RICs consisting of 171 Portfolios
None
Collette Chilton 1958
Trustee (Since 2015)
Trustee, UC Berkeley Foundation Board since 2024; Committee member, Oxford University Endowment Management since 2024; Senior advisor, Insignia since 2024; Chief Investment Officer, Williams College from 2006 to 2023; Chief Investment Officer, Lucent Asset Management Corporation from 1998 to 2006; Director, Boys and Girls Club of Boston since 2017; Director, B1 Capital since 2018.
26 RICs consisting of 171 Portfolios
None
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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 Neil A. Cotty 1954
Trustee (Since 2016)
Bank of America Corporation from 1996 to 2015, serving in various senior finance leadership roles, including Chief Accounting Officer from 2009 to 2015, Chief Financial Officer of Global Banking, Markets and Wealth Management from 2008 to 2009, Chief Accounting Officer from 2004 to 2008, Chief Financial Officer of Consumer Bank from 2003 to 2004, Chief Financial Officer of Global Corporate Investment Bank from 1999 to 2002.
26 RICs consisting of 171 Portfolios
None
Jeffrey Jarczyk4 k4 1964
Trustee (Since 2026)
Director, The Friends of the Public Garden since 2021; Executive Vice President, Chief Auditor, Fidelity Investments from 2016 to 2021; Executive Vice President, Chief Accounting Officer, Fidelity Investments from 2007 to 2016.
26 RICs consisting of 171 Portfolios
None
Henry R. Keizer 1956
Trustee (Since 2019)
Director, Park Indemnity Ltd. (captive insurer) from 2010 to 2022.
26 RICs consisting of 171 Portfolios
GrafTech International Ltd. (materials manufacturing); Sealed Air Corp. (packaging); Hertz Global Holdings (car rental) from 2015 to 2021. Cynthia A. Montgomery 1952
Trustee (Since 2007)
Professor, Harvard Business School since 1989.
26 RICs consisting of 171 Portfolios
None
Donald C. Opatrny 1952
Trustee (Since 2019)
Chair of the Board of Phoenix Art Museum since 2022 and Trustee thereof since 2018; Chair of the Investment Committee of The Arizona Community Foundation since 2022 and Trustee thereof since 2020; Director, Athena Capital Advisors LLC (investment management firm) from 2013 to 2020; Trustee, Vice Chair, Member of the Executive Committee and Chair of the Investment Committee, Cornell University from 2004 to 2019; Member of Affordable Housing Supply Board of Jackson, Wyoming from 2017 to 2022; Member, Investment Funds Committee, State of Wyoming from 2017 to 2023; Member of the Investment Committee, Mellon Foundation from 2009 to 2015; President, Trustee and Member of the Investment Committee, The Aldrich Contemporary Art Museum from 2007 to 2014; Trustee and Chair of the Investment Committee, Community Foundation of Jackson Hole since 2014.
26 RICs consisting of 171 Portfolios
None
Lori Richards 1960
Trustee (Since 2024)
President and Trustee, SEC Historical Society since 2018; Trustee, Garrett College Foundation since 2019; Member, Vice-Chair or Chair of FINRA National Adjudicatory Council from 2019 to 2022; Director, PharmaCann, Inc. from 2021 to 2024; Director, Wahed Invest from 2022 to 2024.
26 RICs consisting of 171 Portfolios
None
Marc D. Stern 4 1962
Trustee (Since 2026)
Chief Executive Officer and Director, Bessemer Trust from 2013 to 2026.
26 RICs consisting of 171 Portfolios
None
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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 Kenneth L. Urish 1951
Trustee (Since 2007)
Managing Partner, Urish Popeck & Co., LLC (certified public accountants and consultants) since 1976; Past-Chairman of the Professional Ethics Committee of the Pennsylvania Institute of Certified Public Accountants and Committee Member thereof since 2007; Member of External Advisory Board, The Pennsylvania State University Accounting Department since 2001, Emeritus since 2022; Principal, UP Strategic Wealth Investment Advisors, LLC since 2013; Trustee, The Holy Family Institute from 2001 to 2010; President and Trustee, Pittsburgh Catholic Publishing Associates from 2003 to 2008; Director, Inter-Tel from 2006 to 2007; Member, Advisory Board, ESG Competent Boards since 2020.
26 RICs consisting of 171 Portfolios
None
Claire A. Walton 1957
Trustee (Since 2016)
Director/Treasurer, Reading Community Trust since 2024; Advisory Board Member, Grossman School of Business at the University of Vermont since 2023; Advisory Board Member, Scientific Financial Systems from 2022 to 2025; General Partner of Neon Liberty Capital Management, LLC from 2003 to 2023; Chief Operating Officer and Chief Financial Officer of Liberty Square Asset Management, LP / Steel Partners Japan Asset Management, LP from 1998 to 2015; Director, Boston Hedge Fund Group from 2009 to 2018; Director, Massachusetts Council on Economic Education from 2013 to 2015.
26 RICs consisting of 171 Portfolios
None
Interested Trustees 5
Robert Fairbairn 1965
Trustee (Since 2018)
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.
76 RICs consisting of 254 Portfolios
None
John M. Perlowski 6 1964
Trustee (Since 2015) President and Chief Executive Officer (Since 2010)
Senior Managing Director of BlackRock, Inc. since 2026; Managing Director of BlackRock, Inc. from 2009 to 2025; Member of BlackRock’s Global Executive Committee since 2025; Head of BlackRock Global Business Operations Services since 2009; Advisory Director of Family Resource Network (charitable foundation) since 2009.
78 RICs consisting of 256 Portfolios
None
1 The address of each Trustee is c/o BlackRock, Inc., 50 Hudson Yards, New York, New York 10001. 2 Independent Trustees serve until their resignation, retirement, removal or death, or until December 31 of the year in which they turn 75. The Board may determine to extend the terms of Independent Trustees 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. Fur thermore, effective January 1, 2019, three BlackRock Fund Complexes were realigned and consolidated into two BlackRock Fund Complexes. As a result, although the char t shows the year that each Independent
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Trustee joined the Board, cer tain Independent Trustees first became members of the boards of other BlackRock-advised Funds, legacy MLIM funds or legacy BlackRock funds as follows: Cynthia A. Montgomery, 1994; Kenneth L. Urish, 1999; Henry R. Keizer, 2016; Donald C. Opatrny, 2015. 4 Mr. Jarczyk and Mr. Stern were each appointed as Trustees of the Trust effective July 1, 2026. Previously, each served as a consultant to the Independent Trustees from April 1, 2026 to July 1, 2026. 5 Mr. Fairbairn and Mr. Perlowski are both “interested persons,” as defined in the Investment Company Act, of the Trust based on their positions with BlackRock, Inc. and its affiliates. Mr. Fairbairn and Mr. Perlowski are also board members of the BlackRock Fixed-Income Complex. 6 Mr. Perlowski is also a trustee of the BlackRock HPS Credit Strategies Fund and BlackRock Private Investments Fund.
Cer tain biographical and other information relating to the officers of the Trust who are not Trustees is set for th below, including their address and year of bir th, 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 Trustees Roland Villacorta 1971
Vice President (Since 2022)
Senior Managing Director of BlackRock, Inc. since 2026; Managing Director of BlackRock, Inc. from 2002 to 2025; Head of Global Cash Management and Head of Securities Lending within BlackRock’s Global Markets Group since 2022; Member of BlackRock’s Global Operating Committee since 2016 and Human Capital Committee since 2023. Jennifer McGovern 1977
Vice President (Since 2014)
Managing Director of BlackRock, Inc. since 2016.
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 Trust serve at the pleasure of the Board.
Share Ownership
Information relating to each Trustee’s share ownership in the Fund and in all BlackRock-advised Funds that are currently overseen by the respective Trustee (“Supervised Funds”) as of December 31, 2025, except as otherwise noted, is set for th in the char t below. Amounts shown may include shares as to which a Trustee has indirect beneficial ownership, such as through par ticipation in cer tain family accounts, 529 college savings plan interests, or similar arrangements where the Trustee has beneficial economic interest but not a direct ownership interest.
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Name
Dollar Range of Equity Securities in the Fund
Aggregate Dollar Range of Equity Securities in Supervised Funds Independent Trustees Christopher J. Ailman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None None Susan J. Car ter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None Over $100,000 Collette Chilton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None Over $100,000 Neil A. Cotty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None Over $100,000 Jeffrey Jarczyk* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None None Henry R. Keizer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Over $100,000 Over $100,000 Cynthia A. Montgomery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None Over $100,000 Donald C. Opatrny. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None Over $100,000 Lori Richards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None None Mark Stalnecker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None Over $100,000 Marc D. Stern* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None None Kenneth L. Urish . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Over $100,000 Over $100,000 Claire A. Walton. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None Over $100,000 Interested Trustees Rober t Fairbairn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None Over $100,000 John M. Perlowski . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None Over $100,000
* Information is provided as of April 1, 2026, the date Mr. Jarczyk and Mr. Stern first served as consultants to the Independent Trustees.
As of July 2, 2026, the Trustees and officers of the Trust as a group directly or indirectly beneficially owned an aggregate of less than 1% of any class of the outstanding shares of the Fund. As of December 31, 2025, none of the Independent Trustees of the Trust or their immediate family members owned beneficially or of record any securities of the Fund’s investment adviser, sub-adviser, principal underwriter, or any person directly or indirectly controlling, controlled by, or under common control with such entities.
Compensation of Trustees
Each Trustee who is an Independent Trustee is paid as compensation an annual retainer of $375,000 per year for his or her services as a board member of the BlackRock-advised Funds in the BlackRock Multi-Asset Complex, including the Trust, and a $20,000 board meeting fee to be paid for each in-person board meeting attended (and may receive a board meeting fee for telephonic attendance at board meetings), for up to five board meetings held in a calendar year (compensation for meetings in excess of this number to be determined on a case-by-case basis), together with out-of-pocket expenses in accordance with a board policy on travel and other business expenses relating to attendance at meetings. The Chairs of the Audit Committee, Compliance Committee, Governance Committee and Per formance Oversight Committee are paid as compensation an additional annual retainer of $45,000, respectively. The Chair of the Board is paid an additional annual retainer of $150,000.
The following table sets for th the compensation the Trust paid to the Trustees, on behalf of the Fund, for the fiscal year ended March 31, 2026 and the aggregate compensation paid to them by all BlackRock-advised Funds for the calendar year ended December 31, 2025.
Name Compensation from the Fund
Estimated Annual Benefits upon Retirement
Aggregate Compensation from the Fund and Other BlackRock-Advised Funds 1 Independent Trustees Christopher J. Ailman . . . . . . . . . . . . . $3,452 None $445,000 Susan J. Car ter . . . . . . . . . . . . . . . . . . $3,452 None $445,000 Collette Chilton . . . . . . . . . . . . . . . . . . $3,452 None $445,000 Neil A. Cotty. . . . . . . . . . . . . . . . . . . . . $3,614 None $467,500 Henry R. Keizer 2 . . . . . . . . . . . . . . . . . $3,907 None $490,000 Cynthia A. Montgomery 3 . . . . . . . . . . $3,812 None $490,000 Donald C. Opatrny 4 . . . . . . . . . . . . . . . $3,812 None $490,000 Lori Richards . . . . . . . . . . . . . . . . . . . . $3,452 None $445,000 Mark Stalnecker 5 . . . . . . . . . . . . . . . . $4,650 None $595,000 Kenneth L. Urish . . . . . . . . . . . . . . . . . $3,452 None $445,000
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Name Compensation from the Fund
Estimated Annual Benefits upon Retirement
Aggregate Compensation from the Fund and Other BlackRock-Advised Funds 1 Claire A. Walton 6 . . . . . . . . . . . . . . . . . $3,812 None $490,000 Interested Trustees Rober t Fairbairn . . ............... None None None John M. Perlowski ................ None None None
1 For the number of BlackRock-advised Funds from which each Trustee receives compensation, see “Biographical Information” beginning on page I-10. 2 Chair of the Audit Committee. 3 Chair of the Governance Committee. 4 Chair of the Per formance Oversight Committee. 5 Chair of the Board and Chair of the Ad Hoc Topics Committee. 6 Chair of the Compliance Committee.
IV. Management, Advisory and Other Service Arrangements
Management Agreement
The Trust, on behalf of the Fund, has entered into a management agreement with BlackRock pursuant to which BlackRock provides the Fund with investment advisory services (the “Management Agreement”).
Pursuant to the Management Agreement, BlackRock 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 per form investment advisory services with respect to the Fund. In addition, the Manager may delegate cer tain of its investment advisory functions under the Management Agreement to one or more of its affiliates to the extent permitted by applicable law. BlackRock 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.
BlackRock has entered into a sub-advisory agreement with BlackRock International Limited (“BIL” or the “Sub Adviser”), pursuant to which BlackRock pays the Sub-Adviser for providing services to BlackRock with respect to that por tion of the Fund for which it acts as sub-adviser a monthly fee at an annual rate equal to a percentage of the management fee paid to BlackRock under the Management Agreement.
The Manager has contractually agreed to waive and/or reimburse fees or expenses of the Fund in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and expenses and cer tain other Fund expenses (as defined in the Fund’s Prospectuses)) as a percentage of average daily net assets to 0.55% for Investor A Shares, 0.20% for Institutional Shares, 1.30% for Investor C Shares, 0.20% for Premier Shares, and 0.50% for Service Shares through June 30, 2028. The contractual agreement may be terminated upon 90 days’ notice by a majority of the Independent Trustees or by a vote of a majority of the outstanding voting securities of the Fund.
The Trust, on behalf of the Fund, paid BlackRock management fees (which includes amounts paid by BlackRock to the Sub-Adviser), and BlackRock waived management fees and reimbursed expenses as follows for the last three fiscal years:
Fees Paid to BlackRock Fees Waived by BlackRock 1 Fees Reimbursed by BlackRock Fiscal Year Ended March 31, 2026. . . . . . . . . . . . . . . . . . . . . . . . . . $20,944,791 $12,717,306 $34,040 Fiscal Year Ended March 31, 2025. . . . . . . . . . . . . . . . . . . . . . . . . . $15,296,534 $ 9,751,428 $18,438 Fiscal Year Ended March 31, 2024. . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,655,255 $ 6,548,794 $59,104
1 In addition to the contractual waiver discussed in the prospectus, BlackRock has also voluntarily agreed to waive a por tion of its fees and/or reimburse operating expenses to enable the Fund to maintain minimum levels of daily net investment income. BlackRock may discontinue these voluntary waivers and/or reimbursements at any time without notice.
BlackRock Retirement of Carbon Credits
BlackRock or its affiliates will use at least 5% of BlackRock’s net revenue from its management fee from the Fund to purchase and then retire carbon credits either directly or through a third-par ty organization. These purchases will be made at least annually, with BlackRock maintaining the option to increase, decrease or terminate these
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purchases in its sole discretion at any time. Based on its revenue from its management fee from the Fund, BlackRock directly or indirectly purchased and retired carbon credits as follows for the last three fiscal years:
Carbon Credits Purchased and Retired Fiscal Year Ended March 31, 2026. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... $415,000 Fiscal Year Ended March 31, 2025. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... $280,000 Fiscal Year Ended March 31, 2024. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... $156,000
Administration Agreement
BlackRock serves as the Fund’s administrator (in such capacity, the “Administrator”) pursuant to an administration agreement (the “Administration Agreement”). The Administrator has agreed to maintain office facilities for the Fund; furnish the Fund with clerical, bookkeeping and administrative services; oversee the determination and publication of the Fund’s net asset value; oversee the preparation and filing of Federal, state and local income tax returns; prepare cer tain repor ts required by regulatory authorities; calculate various contractual expenses; determine the amount of dividends and distributions available for payment by the Fund to its shareholders; prepare and arrange for the printing of dividend notices to shareholders; provide Fund service providers with such information as is required to effect the payment of dividends and distributions; and serve as liaison with the Trust’s officers, independent accountants, legal counsel, custodian, accounting agent and transfer and dividend disbursing agent in establishing the accounting policies of the Fund and monitoring financial and shareholder accounting services. The Administrator may from time to time voluntarily waive administration fees with respect to the Fund and may voluntarily reimburse the Fund for expenses.
Under the Administration Agreement, the Trust, on behalf of the Fund, pays to the Administrator a fee, computed daily and payable monthly, at an aggregate annual rate of (i) 0.0425% of the first $500 million of the Fund’s average daily net assets, 0.040% of the next $500 million of the Fund’s average daily net assets, 0.0375% of the next $1 billion of the Fund’s average daily net assets, 0.035% of the next $2 billion of the Fund’s average daily net assets, 0.0325% of the next $9 billion of the Fund’s average daily net assets and 0.030% of the average daily net assets of the Fund in excess of $13 billion and (ii) 0.020% of average daily net assets allocated to each class of shares of the Fund.
The Trust, on behalf of the Fund, paid the Administrator administration fees, and the Administrator waived administration fees, as follows for the periods set for th below.
Fees Paid to the Administrator Fees Waived by the Administrator Fiscal Year Ended March 31, 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3, 066,719 $142,679 Fiscal Year Ended March 31, 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2, 211,191 $106,908 Fiscal Year Ended March 31, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1, 357,471 $104,106
The Trust and its service providers may engage third par ty plan administrators who provide trustee, administrative and recordkeeping services for cer tain employee benefit, profit-sharing and retirement plans as agents for the Trust with respect to such plans, for the purpose of accepting orders for the purchase and redemption of shares of the Trust.
Pursuant to a Shareholders’ Administrative Services Agreement, BlackRock provides cer tain shareholder liaison services in connection with the Fund’s investor service center. The Fund reimburses BlackRock 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 Fund’s annual repor t.
The following table sets for th the fees paid by the Fund to BlackRock, and the fees waived by BlackRock, pursuant to the Shareholders’ Administrative Services Agreement for the past three fiscal years:
Fees Paid to BlackRock
Fees Waived by BlackRock Fiscal Year Ended March 31, 2026 ............................................. $52,369 $5,778 Fiscal Year Ended March 31, 2025 ............................................. $72,125 $6,700 Fiscal Year Ended March 31, 2024 ............................................. $69,536 $8,214
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Accounting Services
JPMorgan Chase Bank, N.A. (“JPM”) serves as the accounting services provider for the Fund. Among other services, JPM maintains records of purchases and sales of securities, receipts and disbursements of cash and other debits and credits; keeps accounting journals and ledgers; records capital share transactions; calculates expense caps, waivers and recoupments (if any); computes the Fund’s net income and capital gains and dividends payable; calculates and repor ts net asset value; works with independent pricing sources; reconciles securities and cash positions with the Fund’s custodian; prepares cer tain financial statements, notices and repor ts; and prepares cer tain tax repor ts. In connection with its accounting services, JPM also provides cer tain administrative services.
The table below shows the amounts paid by the Fund to JPM for accounting services for the past three fiscal years:
Fees Paid to JPM Fiscal Year Ended March 31, 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................. $85,518 Fiscal Year Ended March 31, 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................. $65,048 Fiscal Year Ended March 31, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................. $67,431
Custodian
JPMorgan Chase Bank, N.A., which has its principal offices at 270 Park Avenue, New York, New York 10017, and The Bank of New York Mellon, which has its principal offices at 240 Greenwich Street, New York, New York 10286, each serve as a custodian for the Fund. Among other responsibilities, JPMorgan Chase Bank, N.A. maintains a custody account or accounts in the name of the Fund, receives and delivers all assets for the 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 the Fund. Additionally, The Bank of New York Mellon maintains a custody account or accounts in the name of the Fund for the limited purpose of holding cer tain cash assets of the Fund.
Transfer Agent
BNY Mellon Investment Servicing (US) Inc., which has its principal place of business at 118 Flanders Road, Westborough, Massachusetts 01581, serves as transfer agent and dividend disbursing agent for the Fund.
V. Information on Sales Charges and Distribution Related Expenses
Set for th below is information on sales charges received by the Fund, including the amounts paid to affiliates of the Manager (“affiliates”) for the periods indicated. The Fund’s shares are not subject to sales charges (including any contingent deferred sales charges (“CDSCs”)) with respect to direct purchases of the Fund’s shares. However, a CDSC may be charged upon redemption of shares received in an exchange transaction for Investor C Shares of a non-money market fund sponsored and advised by BlackRock or its affiliates (a “Non-Money Market BlackRock Fund”). In addition, a CDSC may be charged upon redemption if an investor purchases $1 million or more of Investor A Shares of a fund sponsored and advised by BlackRock or its affiliates where no initial sales charge was paid at the time of purchase of such fund (an “Investor A Load-Waived BlackRock Fund”) (lesser amounts may apply depending on the Investor A Load-Waived BlackRock Fund) and exchanges such shares for Investor A Shares of the Fund and subsequently redeems such shares within 18 months after the investor initially acquired such Investor A Shares (a shor ter holding period may apply depending on the Investor A Load-Waived BlackRock Fund).
BlackRock Investments, LLC (“BRIL” or the “Distributor”) acts as the Fund’s distributor.
Investor A Shares Sales Charge Information
Investor A Shares CDSCs Received on Redemption of Load-Waived Shares Fiscal Year Ended March 31, 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,033 Fiscal Year Ended March 31, 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,066 Fiscal Year Ended March 31, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . ............................. $15,685
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Investor C Sales Charge Information
Investor C Shares CDSCs Received by BRIL CDSCs Paid to Affiliates Fiscal Year Ended March 31, 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 190 $ 190 Fiscal Year Ended March 31, 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,156 $4,156 Fiscal Year Ended March 31, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,666 $9,666
Pursuant to the Trust’s Distribution and Service Plan (the “Plan”), the Trust may pay BRIL and/or the Manager or any other affiliate or significant shareholder of the Manager fees for providing shareholder servicing and distribution related activities.
The table below provides information for the fiscal year ended March 31, 2026 about the 12b-1 fees the Fund paid to BRIL under the Fund’s 12b-1 plan. A por tion of the fees collected by BRIL were paid to affiliates for providing shareholder servicing activities for Investor A Shares and Service Shares and for providing shareholder servicing and distribution related activities and services for Investor C Shares.
Class Name Fees Paid to BRIL Fees Waived by BRIL Investor A Shares .................................................... $11,469,515 $0 Investor C Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 51,219 $0 Service Shares ...................................................... $ 457,567 $0
VI. Computation of Offering Price Per Share
The offering price for the Fund’s share classes is equal to the share class’ net asset value computed by dividing the value of the share class’ net assets by the number of shares of that share class outstanding. For more information on the purchasing and valuation of shares, please see “Purchase of Shares” and “Determination of Net Asset Value” in Par t II of this SAI.
VII. Yield Information
The yield on the Fund’s shares normally will fluctuate on a daily basis. Therefore, the yield for any given past period is not an indication or representation by the Fund of future yields or rates of return on its shares. The yield is affected by such factors as changes in interest rates on the Fund’s por tfolio securities, average por tfolio maturity, the types and quality of por tfolio securities held and operating expenses. The yield on Fund Shares for various reasons may not be comparable to the yield on bank deposits, shares of other money market funds or other investments. The yield on the Fund’s Institutional Shares for the seven-day period ended March 31, 2026 was 3.62%.
VIII. Portfolio Transactions
See “Por tfolio Transactions” in Par t II of this SAI for more information.
The value of the Fund’s aggregate holdings of the securities of its regular brokers or dealers (as defined in Rule 10b-1 under the Investment Company Act) or their parents if any por tion of such holdings were purchased during the fiscal year ended March 31, 2026 is as follows:
Regular Broker/Dealer
Debt (D)/Equity (E)
Aggregate Holdings (000’s) RBC Capital Markets, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................... D $274,896 Handelsbanken Markets Securities, Inc. . . . . . . . . . . . . . . . . . . . . ........................ D $260,008 Skandinaviska Enskilda Banken AB. . . . . . . . . . . . . . . . . . . . . . . .......................... D $164,480 BofA Securities, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D $133,000 Swedbank Securities US, LLC ..................................................... D $126,642 Barclays Capital, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D $ 93,000 Goldman Sachs & Co. LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D $ 52,000 Citigroup Global Markets Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D $ 35,000
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IX. Additional Information
Independent Registered Public Accounting Firm. Deloitte & Touche LLP, with offices located at 115 Federal Street, Boston, Massachusetts 02110, serves as the Fund’s independent registered public accounting firm.
Counsel. Ropes & Gray LLP, with offices at 1211 Avenue of the Americas, New York, New York 10036, serves as the Fund’s counsel.
The Trust
The Trust was organized as a Massachusetts business trust on December 22, 1988, and is registered under the Investment Company Act as an open-end, management investment company. The Fund is diversified pursuant to the Investment Company Act. Effective January 31, 1998, the Trust changed its name from Compass Capital Funds SM to BlackRock Funds SM . The Trust is authorized to issue an unlimited number of shares of beneficial interest with a par value of $0.001 per share, which may be divided into different series and classes. Effective on December 27, 2017, all of the issued and outstanding Investor B Shares of the Fund were conver ted into Investor A Shares of the Fund.
Under Massachusetts law, shareholders of a business trust may, under cer tain circumstances, be held personally liable as par tners for the obligations of the Trust. However, the Trust’s Declaration of Trust provides that shareholders shall not be subject to any personal liability in connection with the assets of the Trust for the acts or obligations of the Trust, and that every note, bond, contract, order or other under taking made by the Trust shall contain a provision to the effect that the shareholders are not personally liable thereunder. The Declaration of Trust provides for indemnification out of proper ty of any shareholder held personally liable solely by reason of his being or having been a shareholder and not because of such shareholder’s acts or omissions or some other reason. The Declaration of Trust also provides that the Trust shall, upon request, assume the defense of any claim made against any shareholder for any act or obligation of the Trust, and shall satisfy any judgment thereon.
The Declaration of Trust fur ther provides that all persons having any claim against the Trustees or Trust shall look solely to the Trust proper ty for payment; that no Trustee of the Trust shall be personally liable for or on account of any contract, debt, tor t, claim, damage, judgment or decree arising out of or connected with the administration or preservation of the Trust proper ty or the conduct of any business of the Trust; and that no Trustee shall be personally liable to any person for any action or failure to act except by reason of such Trustee’s own bad faith, willful misfeasance, gross negligence or reckless disregard of his duties as a Trustee.
With the exception stated, the Declaration of Trust provides that a Trustee is entitled to be indemnified against all liabilities and expenses reasonably incurred by such Trustee in connection with the defense or disposition of any proceeding in which he may be involved or with which he may be threatened by reason of his being or having been a Trustee, and that the Trust will indemnify officers, representatives and employees of the Trust to the same extent that trustees are entitled to indemnification.
Principal Shareholders
To the knowledge of the Trust, the following entities owned of record or beneficially 5% or more of any class of the Fund’s shares as of July 1, 2026:
Name Address Percentage Class Pershing LLC 1 Pershing Plaza Jersey City, NJ 07399-0001
69.98% Investor A Shares
Edward D Jones and Co. 12555 Manchester Road St. Louis, MO 63131-3710
15.31% Investor A Shares
Wells Fargo Clearing Services 2801 Market Street St. Louis, MO 63103
17.90% Investor C Shares
Morgan Stanley Smith Barney LLC 1 New York Plaza 12 th Floor New York, NY 10004-1901
12.02% Investor C Shares
BNY I S Trust Co. Cust Simple IRA 301 Bellevue Parkway Wilmington, DE 19809
8.71% Investor C Shares
Charles Schwab & Co, Inc. 211 Main Street San Francisco, CA 94105
6.21% Investor C Shares
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Name Address Percentage Class National Financial Services LLC 499 Washington Boulevard 5 th Floor Jersey City, NJ 07310-2010
5.55% Investor C Shares
Charles Schwab & Co., Inc. 211 Main Street San Francisco, CA 94105
45.34% Institutional Class
Broadway National Bank 1177 N.E. Loop 410 San Antonio, TX 78209
16.68% Institutional Class
Morgan Stanley 1300 Thames Street 6 th Floor Baltimore, MD 21231-3495
10.97% Institutional Class
National Financial Services LLC 499 Washington Boulevard 5 th Floor Jersey City, NJ 07310-2010
10.68% Institutional Class
Morgan Stanley Smith Barney LLC 1 New York Plaza 12 th Floor New York, NY 10004-1901
86.77% Premier Class
Pershing LLC 1 Pershing Plaza Jersey City, NJ 07399-0001
7.68% Premier Class
LPL Financial 4707 Executive Drive San Diego, CA 92121-3091
5.39% Premier Class
Charles Schwab & Co., Inc. 211 Main Street San Francisco, CA 94105
91.30% Service Class
X. Financial Statements
The audited financial statements, financial highlights and notes thereto in the Fund’s Annual Financial Statements and Additional Information for the fiscal year ended March 31, 2026, as filed with the SEC on Form N CSR (the “2026 Annual Financial Statements”), are incorporated in this SAI by reference. No other par ts of the 2026 Annual Financial Statements are incorporated by reference herein. The 2026 Annual Financial Statements have been audited by Deloitte & Touche LLP. The repor t of Deloitte & Touche LLP is incorporated herein by reference. Such 2026 Annual Financial Statements have been incorporated herein in reliance upon the repor t of such firm given their authority as exper ts in accounting and auditing. Additional copies of the Fund’s annual and semi-annual repor ts to shareholders and the 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
Par t II of this Statement of Additional Information (“SAI”) contains information about the following funds: BlackRock Government Money Market Por tfolio, a series of BlackRock Series Fund, Inc.; BlackRock Government Money Market V.I. Fund, a series of BlackRock Variable Series Funds, Inc.; BlackRock Wealth Liquid Environmentally Aware Fund (“WeLEAF”) and Circle Reserve Fund (“Circle Reserve”), each a series of BlackRock Funds SM (the “Trust”); and BlackRock Summit Cash Reserves Fund (“Summit Cash Reserves”), a series of BlackRock Financial Institutions Series Trust (“FIST”).
Throughout this SAI, each of the above listed funds may be referred to as a “Fund” or collectively as the “Funds.”
Each Fund is organized as a Massachusetts business trust, with the exception of BlackRock Series Fund, Inc. and BlackRock Variable Series Funds, Inc., which are Maryland corporations. For ease and clarity of presentation, common shares of beneficial interest are referred to herein as “shares,” the trustees or directors of each Fund are referred to herein as “Trustees” and the boards of trustees/directors of each Fund are referred to as the “Board of Trustees” or the “Board.” BlackRock Advisors, LLC is the manager of each Fund and is referred to as “BlackRock” or the “Manager,” and the management agreement applicable to each Fund is referred to as the “Management Agreement.” 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 Exchange Act of 1934, as amended, is referred to herein as the “Exchange Act.” The Securities and Exchange Commission is referred to herein as the “Commission” or the “SEC.”
In addition to containing information about the Funds, Par t II of this SAI contains general information about all funds in the BlackRock-advised fund complex. Cer tain information contained herein may not be relevant to the Funds.
INVESTMENT RISKS AND CONSIDERATIONS
Set for th 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” as applicable, section of Par t I of this SAI for fur ther information about 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 Par t 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 par t of that Covered Fund’s SAI and should not be relied upon by investors in that Covered Fund.
Only information that is clearly identified as applicable to a Covered Fund is considered to form a par t of that Covered Fund’s SAI.
Bank Money Instruments. Cer tain Funds may invest in U.S. dollar-denominated obligations of U.S. and foreign depository institutions, including commercial and savings banks, savings and loan associations, and other institutions. Such obligations include but are not limited to cer tificates of deposit, bankers’ acceptances, time deposits, bank notes and deposit notes. For example, the obligations may be issued by (i) U.S. or foreign depository institutions, (ii) foreign branches or subsidiaries of U.S. depository institutions (“Eurodollar” obligations), (iii) U.S. branches or subsidiaries of foreign depository institutions (“Yankeedollar” obligations) or (iv) foreign branches or subsidiaries of foreign depository institutions. Eurodollar and Yankeedollar obligations and obligations of branches or subsidiaries of foreign depository institutions may be general obligations of the parent bank or may be limited to the issuing branch or subsidiary by the terms of the specific obligations or by government regulation. Investments in obligations of foreign depository institutions and their foreign branches and subsidiaries will only be made if determined to be of comparable quality to other investments permissible for each Fund. No Fund will invest more than 25% of its total assets (taken at market value at the time of each investment) in obligations of foreign depository institutions and their foreign branches and subsidiaries or in obligations of foreign branches or subsidiaries of U.S. depository institutions that are not backed by the U.S. parent. The Funds treat bank money instruments issued by U.S. branches or subsidiaries of foreign banks as obligations issued by domestic banks (not subject to the 25% limitation) if the branch or subsidiary is subject to the same bank regulation as U.S. banks.
Eurodollar and Yankeedollar obligations, as well as other obligations of foreign depository institutions and shor t term obligations issued by other foreign entities, may involve additional investment risks, including adverse political and economic developments, the possible imposition of withholding taxes on interest income payable on such obligations, the possible seizure or nationalization of foreign deposits and the possible establishment of exchange
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controls or other foreign governmental laws or restrictions that might adversely affect the repayment of principal and the payment of interest. The issuers of such obligations may not be subject to U.S. regulatory requirements. Foreign branches or subsidiaries of U.S. banks may be subject to less stringent reserve requirements than U.S. banks. U.S. branches or subsidiaries of foreign banks are subject to the reserve requirements of the states in which they are located. There may be less publicly available information about a U.S. branch or subsidiary of a foreign bank or other issuer than about a U.S. bank or other issuer, and such entities may not be subject to the same accounting, auditing and financial record keeping standards and requirements as U.S. issuers. Evidence of ownership of Eurodollar and foreign obligations may be held outside the United States, and the Funds may be subject to the risks associated with the holding of such proper ty overseas. Eurodollar and foreign obligations of the Funds held overseas will be held by foreign branches of each Fund’s custodian or by other U.S. or foreign banks under subcustodian arrangements complying with the requirements of the Investment Company Act.
The Manager will carefully consider the above factors in making investments in Eurodollar obligations, Yankeedollar obligations of foreign depository institutions and other foreign shor t term obligations, and will not knowingly purchase obligations that, at the time of purchase, are subject to exchange controls or withholding taxes. Generally, a Fund will limit its Yankeedollar investments to obligations of banks organized in Canada, France, Germany, Japan, the Netherlands, Switzerland, the United Kingdom or other industrialized nations.
Bank money instruments in which cer tain Funds invest must be issued by depository institutions with total assets of at least $1 billion, except that such Funds may invest in cer tificates of deposit of smaller institutions if such cer tificates of deposit are Federally insured and if, as a result of such purchase, no more than 10% of total assets (taken at market value), are invested in such cer tificates of deposit.
Commercial Paper and Other Short Term Obligations. Commercial paper (including variable amount master demand notes and other variable rate securities, with or without forward features) refers to shor t term unsecured promissory notes issued by corporations, par tnerships, trusts or other entities to finance shor t term credit needs and non-conver tible debt securities ( e.g. , bonds and debentures) with no more than 397 days remaining to maturity at the date of purchase. Shor t term obligations issued by trusts, corporations, par tnerships or other entities include mor tgage-related or asset-backed instruments, including pass-through cer tificates such as par ticipations in, or bonds and notes backed by, pools of mor tgage, automobile, manufactured housing or other types of consumer loans; credit card or trade receivables or pools of mor tgage-backed or asset-backed securities. These structured financings will be suppor ted by sufficient collateral and other credit enhancements, including letters of credit, insurance, reserve funds and guarantees by third par ties, to enable such instruments to obtain a quality rating by a Nationally Recognized Statistical Rating Organization (“NRSRO”), if applicable. Some structured financings also use various types of swaps, among other things, to issue instruments that have interest rate, quality or maturity characteristics necessary or desirable for a Fund. These swaps may include so-called credit default swaps that might depend for payment not only on the credit of a counterpar ty, but also on the obligations of another entity, the “reference entity.” Commercial paper is generally considered to be shor t-term unsecured debt of corporations. Like all fixed income securities, commercial paper prices are susceptible to fluctuations in interest rates. If interest rates rise, commercial paper prices will decline and vice versa. However, the shor t-term nature of a commercial paper investment generally makes it less susceptible to volatility than many other fixed income securities because interest rate risk typically increases as maturity lengths increase. Commercial paper tends to yield smaller returns than longer-term corporate debt because securities with shor ter maturities typically have lower effective yields than those with longer maturities.
Environmental, Social and Governance (“ESG”) Integration. Although a Fund does not seek to implement a specific sustainability objective, strategy or process unless disclosed in the Fund’s Prospectus, BlackRock will consider ESG factors as par t of the credit research and investment process for a Fund. BlackRock views ESG integration as the practice of incorporating financially material ESG data or information into investment processes with the objective of enhancing risk-adjusted returns. All securities purchases by a Fund are selected from approved lists maintained by BlackRock. All instruments on an approved list used by a Fund have met the minimal credit risk requirement of Rule 2a-7, if required. In reviewing instruments, BlackRock will consider the capacity of the issuer or guarantor to meet its obligations. BlackRock considers ESG data within the total data available during its review. This may include third par ty research as well as considerations of proprietary BlackRock research across the ESG risks and oppor tunities regarding an issuer.
The ESG characteristics utilized in a Fund’s investment processes are anticipated to evolve over time and one or more characteristics may not be relevant with respect to all issuers that are eligible for investment. Cer tain of these considerations may affect the Fund’s exposure to cer tain companies or industries. While BlackRock views ESG considerations as having the potential to contribute to a Fund’s long-term per formance, there is no guarantee that such results will be achieved.
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Foreign Bank Money Instruments. Foreign bank money instruments refer to U.S. dollar-denominated obligations of foreign depository institutions and their foreign branches and subsidiaries, such as, but not limited to, cer tificates of deposit, bankers’ acceptances, time deposits, bank notes and deposit notes. The obligations of such foreign depository institutions and their foreign branches and subsidiaries may be the general obligations of the parent bank or may be limited to the issuing branch or subsidiary by the terms of the specific obligation or by government regulation. Such investments will only be made if determined to be of comparable quality to other investments permissible for a Fund. A Fund will not invest more than 25% of its total assets (taken at market value at the time of each investment) in these obligations. Investments in foreign entities generally involve the same risks as those described above in connection with investments in Eurodollar and Yankeedollar obligations and obligations of foreign depository institutions and their foreign branches and subsidiaries. See “Bank Money Instruments.”
Foreign Short Term Debt Instruments. Foreign shor t term debt instruments refer to U.S. dollar-denominated commercial paper and other shor t term obligations issued by foreign entities. Such investments are subject to quality standards similar to those applicable to investments in comparable obligations of domestic issuers. These investments generally involve the same risks as those described above in connection with investments in Eurodollar and Yankeedollar obligations and obligations of foreign depository institutions and their foreign branches and subsidiaries. See “Bank Money Instruments.”
Forward Commitments. Cer tain Funds may purchase or sell money market securities on a forward commitment basis at fixed purchase terms. The purchase or sale will be recorded on the date a Fund enters into the commitment, and the value of the security will thereafter be reflected in the calculation of the Fund’s NAV. The value of the security on the delivery date may be more or less than its purchase price. Although a Fund generally will enter into forward commitments with the intention of acquiring securities for its por tfolio, a Fund may dispose of a commitment prior to settlement if the Manager deems it appropriate to do so.
There can be no assurance that a security purchased or sold through a forward commitment will be delivered. The value of securities in these transactions on the delivery date may be more or less than a Fund’s purchase price. The Fund may bear the risk of a decline in the value of the security in these transactions and may not benefit from appreciation in the value of the security during the commitment period.
Illiquid Investments . No Fund will acquire any illiquid security (i.e., securities that cannot be sold or disposed of in the ordinary course of business within seven days at approximately the value ascribed to them by the Fund) if, immediately following such purchase, more than 5% of the Fund’s total assets are invested in illiquid securities. The Manager will monitor the liquidity of illiquid investments under the supervision of the Board.
Inflation Risk. The Funds are subject to inflation risk. Inflation risk is the risk that the present value of assets or income from investments will be less in the future as inflation decreases the value of money. As inflation increases, the present value of a Fund’s assets can decline as can the value of a Fund’s distributions. Inflation rates may change frequently and significantly due to a number of potential factors, including, among others, unexpected economic shifts or changes in fiscal or monetary policies.
Investment in Other Investment Companies. Each Fund may, subject to applicable law, invest in other investment companies (including investment companies managed by BlackRock and its affiliates), including money market funds and exchange-traded funds (“ETFs”), which are typically open-end funds or unit investment trusts listed on a stock exchange. Under Section 12(d)(1)(A) of the Investment Company Act, however, a Fund may invest up to 10% of its total assets in securities of other investment companies (measured at the time of such investment). In addition, under Section 12(d)(1)(A) of the Investment Company Act a Fund may not acquire securities of an investment company if such acquisition would cause the Fund to own more than 3% of the total outstanding voting stock of such investment company and a Fund may not invest in another investment company if such investment would cause more than 5% of the value of the Fund’s total assets to be invested in securities of such investment company. (These limits do not restrict a feeder fund from investing all of its assets in shares of its master por tfolio.) In addition to the restrictions on investing in other investment companies discussed above, under Section 12(d)(1)(C) of the Investment Company Act a Fund may not invest in a registered closed-end investment company if such investment would cause the Fund and other BlackRock-advised investment companies to own more than 10% of the total outstanding voting stock of such closed-end investment company. Pursuant to Section 12(d)(1)(G) of the Investment Company Act, these percentage limitations do not apply to investments in affiliated investment companies, including ETFs, subject to cer tain conditions. In addition, a Fund may be able to rely on cer tain rules under the Investment Company Act to invest in shares of money market funds or other investment companies beyond the statutory limits noted above, but subject to cer tain conditions.
As with other investments, investments in other investment companies are subject to market and selection risk.
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Shares of investment companies, such as closed-end fund investment companies, that trade on an exchange may at times be acquired at market prices representing premiums to their NAVs. In addition, investment companies held by a Fund that trade on an exchange could trade at a discount from NAV, and such discount could increase while the Fund holds the shares. If the market price of shares of an exchange-traded investment company decreases below the price that the Fund paid for the shares and the Fund were to sell its shares of such investment company at a time when the market price is lower than the price at which it purchased the shares, the Fund would experience a loss.
In addition, if a Fund acquires shares in investment companies, including affiliated investment companies, shareholders would bear both their propor tionate share of expenses in the Fund and, indirectly, the expenses of such investment companies. Such expenses, both at the Fund level and acquired investment company level, would include management and advisory fees, unless such fees have been waived by BlackRock. Please see the relevant Fund’s Prospectus to determine whether any such management and advisory fees have been waived by BlackRock. Investments by a Fund in wholly owned investment entities created under the laws of cer tain countries will not be deemed an investment in other investment companies. Pursuant to guidance issued by the staff of the Commission, fees and expenses of money market funds used for the investment of cash collateral received in connection with loans of Fund securities are not treated as “acquired fund fees and expenses,” which are fees and expenses charged by other investment companies and pooled investment vehicles in which a Fund invests a por tion of its assets.
To the extent shares of a Fund are held by another fund, the ability of the Fund itself to purchase other funds may be limited. In addition, a fund-of-funds ( e.g. , an investment company that seeks to meet its investment objective by investing significantly in other investment companies) may be limited in its ability to purchase underlying funds if such underlying funds themselves own shares of underlying funds.
A number of publicly traded closed-end investment companies have been organized to facilitate indirect foreign investment in developing countries, and cer tain of such countries, such as Thailand, South Korea, Chile and Brazil, have specifically authorized such funds. There also are investment oppor tunities in cer tain of such countries in pooled vehicles that resemble open-end investment companies. The restrictions on investments in securities of investment companies set for th above may limit oppor tunities for a Fund to invest indirectly in cer tain developing countries.
Issuer Insolvency Risk. Cer tain Funds’ potential exposure to financially or operationally troubled issuers involves a high degree of credit and market risk, which may be heightened during an economic downturn or recession. Should an issuer of securities held by a Fund become involved in a bankruptcy proceeding, reorganization or financial restructuring, a wide variety of considerations make an evaluation of the outcome of the Fund’s exposure to the issuer uncer tain.
During the period of a bankruptcy proceeding, reorganization or financial restructuring, it is unlikely that a Fund will receive any interest payments on the securities of the issuer. A Fund will be subject to significant uncer tainty as to whether the reorganization or restructuring will be completed, and the Fund may bear cer tain extraordinary expenses to protect and recover its investment. A Fund will also be subject to significant uncer tainty as to when and in what manner and for what value the obligations evidenced by the securities of the issuer held by the Fund will eventually be satisfied.
Even if a plan of reorganization or restructuring is adopted with respect to the securities of the issuer held by the Fund, there can be no assurance that the securities or other assets received by a Fund in connection with such plan of reorganization or restructuring will not have a lower value or income potential than may have been anticipated or no value. A Fund may be unable to enforce its claims or rights in any collateral or may have its claims or security interest in any collateral challenged, disallowed or subordinated to the claims or security interests of other creditors. In addition, amendments to the U.S. Bankruptcy Code or other relevant laws could alter the expected outcome or introduce greater uncer tainty regarding the outcome of the Fund’s securities holdings in the issuer. In a bankruptcy proceeding, a reorganization or restructuring, the securities of the issuer held by a Fund could be re-characterized or a Fund may receive different securities or other assets, including equity securities. These types of equity securities include, but are not limited to: common stock; preferred stock (including conver tible preferred stock); bonds, notes and debentures conver tible into common or preferred stock; stock purchase warrants and rights; equity interests in trusts; and depositary receipts. Equity securities are subject to changes in value, and their value may be more volatile than those of other asset classes. Holders of equity securities are subject to more risk than holders of debt securities because the status of equity holders is subordinate to debtholders in an issuer’s capital structure. The value of equity securities received by a Fund could decline if the financial condition of the issuer deteriorates or if overall market and economic conditions, or conditions within the issuer’s region or industry, deteriorate.
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To the extent that a Fund receives other assets in connection with a bankruptcy proceeding, reorganization or financial restructuring, the Fund may also be subject to additional risks associated with the assets received. One example of assets that a Fund could receive is an interest in one or more loans made to the issuer as par t of a workout agreed to by a consor tium of lienholders and creditors of the issuer. A Fund may receive such interests in loans to the extent permitted by the Investment Company Act.
Securities or other assets received in a reorganization or restructuring typically entail a higher degree of risk than investments in securities of issuers that have not undergone a reorganization or restructuring and may be subject to heavy selling or downward pricing pressure after completion of the reorganization or restructuring. The post reorganization/restructuring assets and securities may also be illiquid and difficult to sell or value. If a Fund par ticipates in negotiations with respect to a plan of reorganization or restructuring with respect to securities of the issuer held by a Fund, the Fund also may be restricted from disposing such securities for a period of time. If a Fund becomes involved in such proceedings, the Fund may have more active par ticipation in the affairs of the issuer than that assumed generally by an investor.
Market Risks/Recent Market Events. Securities may decline in value due to factors affecting securities markets generally or par ticular industries represented in the markets. The value of a security may decline due to general market conditions, economic trends or events that are not specifically related to a company or to factors that affect a par ticular industry or industries, or factors that affect a par ticular issuer or issuers, exchange, country, group of countries, region, market, industry, group of industries, sector or asset class. The success of a Fund’s activities could be affected by interest rates, availability of credit, inflation rates, economic uncer tainty, changes in laws, trade barriers, economic sanctions, currency exchange controls, and local, regional or global events such as war, acts of terrorism, natural and environmental disasters, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on a Fund and its investments. During a general economic downturn in the securities markets, multiple asset classes may be negatively affected. These factors may affect the level and volatility of securities prices and the liquidity of a Fund’s investments, which could impair a Fund’s profitability or result in losses. A Fund may maintain substantial trading positions that can be adversely affected by the level of volatility in the financial markets; the larger the positions, the greater the potential for loss. Unpredictable or unstable market conditions may result in reduced oppor tunities to find suitable investments to deploy capital or make it more difficult to exit and realize value from a Fund’s existing investments. It is impor tant to understand that a Fund can incur material losses even if it reacts quickly to difficult market conditions and there can be no assurance that a Fund will not suffer material adverse effects from broad and rapid changes in market conditions.
Periods of unusually high volatility in the financial markets and restrictive credit conditions, sometimes limited to a par ticular sector or a geography, can occur. Some countries, including the United States, have adopted and/or are considering the adoption of more protectionist trade policies, a move away from the tighter financial industry regulations that followed the financial crisis of 2008, and/or substantially reducing corporate taxes. The exact shape of these policies is still being considered, but the equity and debt markets may react strongly to expectations of change, which could increase volatility, especially if the market’s expectations are not borne out. A rise in protectionist trade policies, and the possibility of changes to some international trade agreements, could affect the economies of many nations in ways that cannot necessarily be foreseen at the present time. In addition, geopolitical and other risks, including environmental and public health, may add to instability in world economies and markets generally. Economies and financial markets throughout the world are increasingly interconnected. As a result, whether or not a Fund invests in securities of issuers located in or with significant exposure to countries experiencing economic, political and/or financial difficulties, the value and liquidity of the Fund’s investments may be negatively affected by such events.
Governments and regulators may take actions that affect the regulation of a Fund or the instruments in which a Fund invests, or the issuers of such instruments, in ways that are unforeseeable. Future legislation or regulation or other governmental actions could limit or preclude a Fund’s abilities to achieve its investment objectives or otherwise adversely impact an investment in a Fund. Recent policy initiatives under taken by the U.S. government have the potential to impact international relations, trade agreements and the overall regulatory environment in ways that could create uncer tainty and instability in domestic and global markets and could adversely affect the investment per formance of a Fund. In par ticular, actions taken by the U.S. government in respect of international trade relations could lead to trade wars, increased costs for impor ted goods, disruptions in supply chains, reduced foreign investment, and instability in regions where a Fund invests. Political and diplomatic events within the United States, including a contentious domestic political environment, changes in political par ty control of one or more branches of the U.S. Government, the U.S. Government’s inability at times to agree on a long-term budget and deficit reduction plan, the threat of a U.S. Government shutdown, and disagreements over, or threats not to increase, the U.S.
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Government’s borrowing limit (or “debt ceiling”), as well as political and diplomatic events abroad, may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree. A downgrade of the ratings of U.S. Government debt obligations, or concerns about the U.S. Government’s credit quality in general, could have a substantial negative effect on the U.S. and global economies. For example, concerns about the U.S. Government’s credit quality may cause increased volatility in the stock and bond markets, higher interest rates, reduced prices and liquidity of U.S. Treasury securities, and/or increased costs of various kinds of debt. Moreover, although the U.S. Government has honored its credit obligations, there remains a possibility that the United States could default on its obligations. The consequences of such an unprecedented event are impossible to predict, but it is likely that a default by the United States would be highly disruptive to the U.S. and global securities markets and could significantly impair the value of a Fund’s investments.
The COVID-19 pandemic resulted in significant market volatility, exchange suspensions and closures, declines in global financial markets, higher default rates, supply chain disruptions, and a substantial economic downturn in economies throughout the world. The impact of this coronavirus, and other epidemics and pandemics that may arise in the future, could affect the economies of many nations, individual companies and the market in general in ways that cannot necessarily be foreseen at the present time. These health crises may be shor t term or long term, and may exacerbate other pre-existing political, social and economic risks, disrupt normal market conditions and operations, and negatively impact per formance. In addition, the impact of infectious diseases in emerging developing or emerging market countries may be greater due to less established health care systems.
Legal and Regulatory Risks. The Manager is par t of a larger firm with multiple business lines active in multiple jurisdictions that are governed by a multitude of legal systems and regulatory regimes, some of which are new and evolving. As a result, the Funds and the Manager and its affiliates are subject to extensive and sophisticated legal, tax and regulatory risks, including changing laws and regulations, developing interpretations of such laws and regulations, as well as existing laws, and increased scrutiny by regulators and law enforcement authorities. Unexpected economic, political, regulatory and diplomatic events within the United States and abroad can trigger new and complex regulations that the Manager and/or the Funds may need to comply with. The implementation of changes to comply with current and/or new regulations applicable to the Funds and/or the Manager could have a material adverse effect on the Funds (including by imposing material costs on the Funds, reducing profit margins, reducing investment oppor tunities or by otherwise restricting the Funds and/or the Manager).
Tariff and Trade Policy Risks . Some countries, including the U.S., have adopted more protectionist trade policies. The U.S. government recently altered its approach to international trade policy, resulting in significant impacts on international trade relations, cer tain tax and immigration policies, and other aspects of the national and international political and financial landscape. The rise in protectionist trade policies, slowing economic growth, changes to some major international trade agreements, risks associated with trade agreements between the U.S. and the European Union, and the risks associated with trade negotiations between the U.S. and China, could affect the economies of many nations in ways that cannot necessarily be foreseen at the present time. Global trade disruption, significant introductions of trade barriers, and bilateral trade frictions, together with any future downturns in the global economy resulting therefrom, could adversely affect the financial per formance of a Fund and its investments. Trade policy may be an ongoing source of instability, potentially resulting in significant currency fluctuations and/or having other adverse effects on international markets, international trade agreements, and/or other existing cross-border cooperation arrangements (whether economic, tax, fiscal, legal, regulatory, or otherwise). To the extent trade disputes escalate globally, there could be additional significant impacts on the sectors or industries in which a Fund invests and other adverse impacts on a Fund’s overall per formance.
Municipal Investments
Municipal Securities. Cer tain Funds invest in shor t term municipal obligations issued by or on behalf of the states, their political subdivisions, agencies and instrumentalities and obligations of other qualifying issuers, such as issuers located in Puer to Rico, the U.S. Virgin Islands and Guam, the interest on which (and/or, in the case of proper ty taxes, the value of which) is excludable, in the opinion of bond counsel to the issuer, from gross income for purposes of Federal income taxes and the applicable state’s income taxes (“State Taxes”). Obligations that pay interest that is excludable from gross income for Federal income tax purposes are referred to herein as “Municipal Securities,” and obligations that pay interest that is excludable from gross income for Federal income tax purposes and are exempt from the applicable State Taxes are referred to as “State Municipal Securities.” Unless otherwise indicated, references to Municipal Securities shall be deemed to include State Municipal Securities.
Municipal Securities include debt obligations issued to obtain funds for various public purposes, including construction of a wide range of public facilities, refunding of outstanding obligations and obtaining funds for general operating expenses and loans to other public institutions and facilities. In addition, cer tain types of bonds are issued
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by or on behalf of public authorities to finance various facilities operated for private profit. Such obligations are included within the term Municipal Securities if the interest paid thereon is excludable from gross income for Federal income tax purposes.
The two principal classifications of Municipal Securities are “general obligation” bonds and “revenue” or “special obligation” bonds. General obligation bonds are secured by the issuer’s pledge of its faith, credit and taxing power for the repayment of principal and the payment of interest. Revenue or special obligation bonds are payable only from the revenues derived from a par ticular facility or class of facilities or, in some cases, from the proceeds of a special excise tax or other specific revenue source such as from the user of the facility being financed. Private activity bonds (or “industrial development bonds” under pre-1986 law) are in most cases revenue bonds and do not generally constitute the pledge of the credit or taxing power of the issuer of such bonds. The repayment of the principal and the payment of interest on such private activity bonds depends solely on the ability of the user of the facilities financed by the bonds to meet its financial obligation and the pledge, if any, of real and personal proper ty so financed as security for such payment. In addition, private activity bonds may pay interest that is subject to the Federal alternative minimum tax. A Fund’s por tfolio may include “moral obligation” bonds, which are normally issued by special purpose public authorities. If an issuer of moral obligation bonds is unable to meet its debt service obligations from current revenues, it may draw on a reserve fund, the restoration of which is a moral commitment but not a legal obligation of a state or municipality.
Yields on Municipal Securities are dependent on a variety of factors, including the general condition of the money market and of the municipal bond market, the size of a par ticular offering, the maturity of the obligation, and the rating of the issuer. The ability of a Fund to achieve its investment objective is also dependent on the continuing ability of the issuers of the Municipal Securities in which the Fund invests to meet their obligations for the payment of interest and the repayment of principal when due. There are variations in the risks involved in holding Municipal Securities, both within a par ticular classification and between classifications, depending on numerous factors. Fur thermore, the rights of holders of Municipal Securities and the obligations of the issuers of such Municipal Securities may be subject to applicable bankruptcy, insolvency and similar laws and cour t decisions affecting the rights of creditors generally, and such laws, if any, which may be enacted by Congress or state legislatures affecting specifically the rights of holders of Municipal Securities.
A Fund’s ability to distribute dividends exempt from Federal income tax will depend on the exclusion from gross income of the interest income that it receives on the Municipal Securities in which it invests. A Fund will only purchase a Municipal Security if it is accompanied by an opinion of counsel to the issuer, which is delivered on the date of issuance of that security, that interest on such securities is excludable from gross income for Federal income tax purposes (the “tax exemption opinion”).
Events occurring after the date of issuance of the Municipal Securities, however, may cause the interest on such securities to be includable in gross income for Federal income tax purposes. For example, the Internal Revenue Code of 1986, as amended (the “Code”) establishes cer tain requirements, such as restrictions as to the investment of the proceeds of the issue, limitations as to the use of proceeds of such issue and the proper ty financed by such proceeds, and the payment of cer tain excess earnings to the Federal government, that must be met after the issuance of the Municipal Securities for interest on such securities to remain excludable from gross income for Federal income tax purposes. The issuers and the conduit borrowers of the Municipal Securities generally covenant to comply with such requirements and the tax exemption opinion generally assumes continuing compliance with such requirements. Failure to comply with these continuing requirements, however, may cause the interest on such Municipal Securities to be includable in gross income for Federal income tax purposes retroactive to their date of issue.
In addition, the Internal Revenue Service (“IRS”) has an ongoing enforcement program that involves the audit of tax exempt bonds to determine whether an issue of bonds satisfies all of the requirements that must be met for interest on such bonds to be excludable from gross income for Federal income tax purposes. From time to time, some of the Municipal Securities held by a Fund may be the subject of such an audit by the IRS, and the IRS may determine that the interest on such securities is includable in gross income for Federal income tax purposes either because the IRS has taken a legal position adverse to the conclusion reached by the counsel to the issuer in the tax exemption opinion or as a result of an action taken or not taken after the date of issue of such obligation.
If interest paid on a Municipal Security in which a Fund invests is determined to be taxable subsequent to the Fund’s acquisition of such security, the IRS may demand that such Fund pay taxes on the affected interest income and, if the Fund agrees to do so, its yield could be adversely affected. If the interest paid on any Municipal Security held by a Fund is determined to be taxable, such Fund will dispose of the security as soon as practicable. A determination that interest on a security held by a Fund is includable in gross income for Federal or state income tax
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purposes retroactively to its date of issue may, likewise, cause a por tion of prior distributions received by shareholders to be taxable to those shareholders in the year of receipt.
From time to time, proposals have been introduced before Congress for the purpose of restricting or eliminating the Federal income tax exclusion for interest on Municipal Securities. Similar proposals may be introduced in the future. If such a proposal were enacted, the ability of each Fund to pay “exempt-interest dividends” would be affected adversely and the Fund would re-evaluate its investment objectives and policies and consider changes in structure. See “Dividends and Taxes — Taxes.”
Municipal Securities — Derivative Products. Derivative Products are typically structured by a bank, broker dealer or other financial institution. A Derivative Product generally consists of a trust or par tnership through which a Fund holds an interest in one or more underlying bonds coupled with a right to sell (“put”) the Fund’s interest in the underlying bonds at par plus accrued interest to a financial institution (a “Liquidity Provider”). Typically, a Derivative Product is structured as a trust or par tnership that provides for pass-through tax-exempt income. There are currently three principal types of derivative structures: (1) “Tender Option Bonds,” which are instruments that grant the holder thereof the right to put an underlying bond at par plus accrued interest at specified intervals to a Liquidity Provider; (2) “Swap Products,” in which the trust or par tnership swaps the payments due on an underlying bond with a swap counterpar ty who agrees to pay a floating municipal money market interest rate; and (3) “Par tnerships,” which allocate to the par tners por tions of income, expenses, capital gains and losses associated with holding an underlying bond in accordance with a governing agreement. A Fund may also invest in other forms of shor t term Derivative Products eligible for investment by money market funds.
Investments in Derivative Products raise cer tain tax, legal, regulatory and accounting issues that may not be presented by investments in municipal bonds. There is some risk that cer tain issues could be resolved in a manner that could adversely impact the per formance of a Fund. For example, the tax-exempt treatment of the interest paid to holders of Derivative Products is premised on the legal conclusion that the holders of such Derivative Products have an ownership interest in the underlying bonds. Were the IRS or any state taxing authority to issue an adverse ruling or take an adverse position with respect to the taxation of Derivative Products, there is a risk that the interest paid on such Derivative Products or, in the case of proper ty taxes, the value of such Fund to the extent represented by such Derivative Products, would be deemed taxable at the Federal and/or state level. Before purchasing a Derivative Product, the Manager is required by the Funds’ procedures to conclude that the tax-exempt security and the suppor ting shor t-term obligation involve minimal credit risks and are Eligible Securities under the Funds’ Rule 2a-7 procedures. In evaluating the creditwor thiness of the entity obligated to purchase the tax-exempt security, the Manager will review periodically the entity’s relevant financial information.
Municipal Notes. Municipal notes are shor ter term municipal debt obligations. They may provide interim financing in anticipation of tax collection, bond sales or revenue receipts. If there is a shor tfall in the anticipated proceeds, the note may not be fully repaid and a Fund may lose money.
Municipal Commercial Paper. Municipal commercial paper is generally unsecured and issued to meet shor t term financing needs. The lack of security presents some risk of loss to a Fund since, in the event of an issuer’s bankruptcy, unsecured creditors are repaid only after the secured creditors are paid out of the assets, if any, that remain.
Municipal Lease Obligations. Also included within the general category of State Municipal Securities are Cer tificates of Par ticipation (“COPs”) issued by governmental authorities or entities to finance the acquisition or construction of equipment, land and/or facilities. The COPs represent par ticipations in a lease, an installment purchase contract or a conditional sales contract (hereinafter collectively called “lease obligations”) relating to such equipment, land or facilities. Although lease obligations do not constitute general obligations of the issuer for which the issuer’s unlimited taxing power is pledged, a lease obligation is frequently backed by the issuer’s covenant to budget for, appropriate and make the payments due under the lease obligation. However, cer tain lease obligations contain “non-appropriation” clauses that provide that the issuer has no obligation to make lease or installment purchase payments in future years unless money is appropriated for such purpose on a yearly basis. Although “non appropriation” lease obligations are secured by the leased proper ty, disposition of the proper ty in the event of foreclosure might prove difficult. The securities represent a type of financing that has not yet developed the depth of marketability associated with more conventional securities. Cer tain investments in lease obligations may be illiquid.
Municipal Securities — Short-Term Maturity Standards. All of the investments of a Fund in Municipal Securities will be in securities with remaining maturities of 397 days or less. The dollar-weighted average maturity of each Fund’s por tfolio will be 60 days or less. For purposes of this investment policy, an obligation will be treated as having
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a maturity earlier than its stated maturity date if such obligation has technical features that, in the judgment of the Manager, will result in the obligation being valued in the market as though it has such earlier maturity.
The maturities of Variable Rate Demand Obligations (“VRDOs”) are deemed to be the longer of (i) the notice period required before a Fund is entitled to receive payment of the principal amount of the VRDOs on demand or (ii) the period remaining until the VRDO’s next interest rate adjustment. If not redeemed by a Fund through the demand feature, VRDOs mature on a specified date, which may range up to 30 years from the date of issuance. See “VRDOs” below.
Municipal Securities — Quality Standards. A Fund’s por tfolio investments in municipal notes and shor t term tax-exempt commercial paper will be limited to those obligations that are (i) secured by a pledge of the full faith and credit of the United States or (ii) otherwise are determined by the Manager to present minimal credit risks to the Fund. A Fund’s investments in municipal bonds will be in securities that have been determined by the Manager to present minimal credit risks to the Fund. In addition, cer tain Funds may require that por tfolio investments (or their issuers) receive minimum credit ratings from one or more NRSROs, or if not rated, are determined by the Manager to be of comparable quality to securities that have received such rating(s). Cer tain tax-exempt obligations (primarily VRDOs) may be entitled to the benefit of letters of credit or similar credit enhancements issued by financial institutions. In such instances, in assessing the quality of such instruments, the Trustees and the Manager will take into account not only the creditwor thiness of the issuers, but also the creditwor thiness and type of obligation of the financial institution. The type of obligation of the financial institution concerns, for example, whether the letter of credit or similar credit enhancement being issued is conditional or unconditional. For a description of debt ratings, see Appendix A — “Description of Bond Ratings.”
Cer tain Funds may not invest in any security issued by a depository institution unless such institution is organized and operating in the United States, has total assets of at least $1 billion and is federally insured. While the types of money market securities in which the Funds invest generally are considered to have low principal risk, such securities are not completely risk free. There is a risk of the failure of issuers or credit enhancers to meet their principal and interest obligations. With respect to repurchase agreements and purchase and sale contracts, there is also the risk of the failure of the par ties involved to repurchase at the agreed-upon price, in which event each Fund may suffer time delays and incur costs or possible losses in connection with such transactions.
Municipal Securities — Other Factors. Management of the Funds will endeavor to be as fully invested as reasonably practicable in order to maximize the yield on each Fund’s por tfolio. Not all shor t term municipal securities trade on the basis of same day settlements and, accordingly, a por tfolio of such securities cannot be managed on a daily basis with the same flexibility as a por tfolio of money market securities, which can be bought and sold on a same day basis. There may be times when a Fund has uninvested cash resulting from an influx of cash due to large purchases of shares or the maturing of por tfolio securities. A Fund also may be required to maintain cash reserves or incur temporary bank borrowings to make redemption payments, which are made on the same day the redemption request is received. Such inability to be invested fully would lower the yield on such Fund’s por tfolio.
Because cer tain Funds may at times invest a substantial por tion of their assets in Municipal Securities secured by bank letters of credit or guarantees, an investment in a Fund should be made with an understanding of the characteristics of the banking industry and the risks that such an investment in such credit enhanced securities may entail. Banks are subject to extensive governmental regulations that may limit both the amounts and types of loans and other financial commitments that may be made and interest rates and fees that may be charged. The profitability of the banking industry is largely dependent on the availability and cost of capital funds for the purpose of financing lending operations under prevailing money market conditions. Fur thermore, general economic conditions play an impor tant par t in the operations of this industry and exposure to credit losses arising from possible financial difficulties of borrowers might affect a bank’s ability to meet its obligations under a letter of credit.
Changes to the Code may limit the types and volume of securities qualifying for the Federal income tax exemption of interest; this may affect the availability of Municipal Securities for investment by the Funds, which could, in turn, have a negative impact on the yield of the por tfolios. A Fund reserves the right to suspend or otherwise limit sales of its shares if, as a result of difficulties in acquiring por tfolio securities or otherwise, it is determined that it is not in the interests of the Fund’s shareholders to issue additional shares.
VRDOs. VRDOs are tax-exempt obligations that contain a floating or variable interest rate adjustment formula and right of demand on the par t of the holder thereof to receive payment of the unpaid balance plus accrued interest upon a shor t notice period not to exceed seven days. There is, however, the possibility that because of default or insolvency the demand feature of VRDOs may not be honored. The interest rates are adjustable at periodic intervals to some prevailing market rate of the VRDOs at approximately the par value of the VRDOs on the adjustment date.
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The adjustment may be based upon the Securities Industry and Financial Markets Association (“SIFMA”) Municipal Swap Index or some other appropriate interest rate adjustment index. Each Fund may invest in all types of tax-exempt instruments currently outstanding or to be issued in the future that satisfy its shor t term maturity and quality standards.
Because of the interest rate adjustment formula on VRDOs, the VRDOs are not comparable to fixed rate securities. A Fund’s yield on VRDOs will decline and its shareholders will forego the oppor tunity for capital appreciation during periods when prevailing interest rates have declined. On the other hand, during periods where prevailing interest rates have increased, a Fund’s yield on VRDOs will increase and its shareholders will have a reduced risk of capital depreciation.
Negative Interest Rate Scenarios. Should a negative interest rate scenario ever occur that causes a government or retail money market fund to have a negative gross yield, the fund may account for the negative gross yield by either using a floating NAV or a reverse distribution mechanism that seeks to maintain a stable net asset value of the fund by cancelling shareholders’ shares in the amount of the negative gross yield. If a fund conver ts to a floating NAV, any losses the fund experiences due to negative interest rates will be reflected in a declining NAV per share. Under a reverse distribution mechanism, shareholders in a fund would observe a stable share price but a declining number of shares for their investment. This means that such an investor would lose money when the fund cancels shares. In either situation, the Board will need to determine that the approach is in the best interests of the fund and will need to ensure shareholders are provided adequate disclosures around the consequences of the approach chosen by the Board for the fund.
Operational and Technology Risks — Each Fund and the entities with which it interacts directly or indirectly are susceptible to operational and technology risks, including those related to human errors, processing errors, communication errors, systems failures, cybersecurity incidents, and the use of ar tificial intelligence and machine learning (“AI”), which may result in losses for a Fund and its shareholders or impair a Fund’s operations. These entities include, but are not limited to, a Fund’s adviser, administrator, distributor, other service providers (e.g., index and benchmark providers, accountants, custodians, and transfer agents), financial intermediaries, counterpar ties, market makers, Authorized Par ticipants, listing exchanges, other financial market operators, and governmental authorities, as applicable. Operational and technology risks for the issuers in which a Fund invests could also result in material adverse consequences for such issuers and may cause a Fund’s investments in such issuers to lose value. A Fund may incur substantial costs in order to mitigate operational and technology risks.
Cybersecurity incidents can result from deliberate attacks or unintentional events against an issuer in which a Fund invests, a Fund or any of its service providers. They include, but are not limited to, gaining unauthorized access to systems, misappropriating assets or sensitive information, corrupting or destroying data, and causing operational disruption. Geopolitical tension may increase the scale and sophistication of deliberate attacks, par ticularly those from nation states or from entities with nation state backing. Cybersecurity incidents may result in any of the following: financial losses; inter ference with a Fund’s ability to calculate its NAV; disclosure of confidential information; impediments to trading; submission of erroneous trades by a Fund or erroneous subscription or redemption orders; the inability of a Fund or its service providers to transact business; violations of applicable privacy and other laws; regulatory fines; penalties; reputational damage; reimbursement or other compensation costs; and other legal and compliance expenses. Fur thermore, cybersecurity incidents may render records of a Fund, including records relating to its assets and transactions, shareholder ownership of Fund shares, and other data integral to a Fund’s functioning, inaccessible, inaccurate or incomplete. Power outages, natural disasters, equipment malfunctions and processing errors that threaten information and technology systems relied upon by a Fund or its service providers, as well as market events that occur at a pace that overloads these systems, may also disrupt business operations or impact critical data. Recent advances in AI technology pose risks to a Fund and its por tfolio investments. These advancements could harm a Fund and its por tfolio investments by reducing the demand for both the technology and software offerings of the Fund’s por tfolio investments. Additionally, these advancements could significantly disrupt a Fund’s por tfolio investments and subject them to increased competition, which could have a material adverse effect on business, financial condition, and results of operations. AI technology advancements, including efficiency improvements, without related increases in the adoption and development of such technologies, could also negatively impact demand for, and the valuation of, digital infrastructure assets.
Each Fund and its por tfolio investments could be exposed to the risks of AI technology if third-par ty service providers or any counterpar ties, whether or not known to a Fund, also use AI technology in their business activities. Each Fund and its service providers may not be in a position to control the use of AI technology in third-par ty products or services.
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Use of AI technology could include the input of confidential information in contravention of applicable policies, contractual or other obligations or restrictions, resulting in such confidential information becoming accessible by other third-par ty AI technology applications and users.
Independent of its context of use, AI technology is generally highly reliant on the collection and analysis of large amounts of data, may incorporate biased or inaccurate data, and it is not possible or practicable to incorporate all relevant data into the models that AI technology utilizes to operate. Cer tain data in such models will inevitably contain a degree of inaccuracy and error, or could otherwise be inadequate or flawed, which would be likely to degrade the effectiveness of AI technology. The output or results of any such AI technologies may therefore be incomplete, erroneous, distor ted or misleading. Fur ther, AI tools may lack transparency as to how data is utilized and how outputs are generated. AI technologies may also allow the unintended introduction of vulnerabilities into infrastructures and applications. To the extent that a Fund or its por tfolio investments are exposed to the risks of AI technology use, any such inaccuracies or errors could have adverse impacts on a Fund or its investments.
Regulations related to AI technology could also impose cer tain obligations and costs related to monitoring and compliance. For example, in April 2023, the Federal Trade Commission, U.S. Depar tment of Justice, Consumer Financial Protection Bureau, and U.S. Equal Employment Oppor tunity Commission released a joint statement on ar tificial intelligence demonstrating interest in monitoring the development and use of automated systems and enforcement of their respective laws and regulations. In October 2023, an executive order established new standards for AI safety and security. In addition to the U.S. regulatory framework, in 2024, the EU adopted the Ar tificial Intelligence Act, which applies to cer tain AI technology and the data used to train, test, and deploy them, which may create additional compliance burdens, higher administrative costs, and significant penalties should a Fund, the adviser, or a Fund’s por tfolio investments fail to comply.
AI technology and its applications, including in the investment and financial sectors, continue to develop rapidly, and it is impossible to predict the future risks that may arise from such developments. The full extent of current or future risks related thereto is not possible to predict, and a Fund may not be able to anticipate, prevent, mitigate, or remediate all of the potential risks, challenges, or impacts of such changes.
While each Fund’s service providers are required to have appropriate operational, information security and cybersecurity risk management policies and procedures, their methods of risk management may differ from those of a Fund in the setting of priorities, the personnel and resources available or the effectiveness of relevant controls. Each Fund and its adviser seek to reduce these risks through controls, procedures and oversight, including establishing business continuity plans and risk management systems. However, there are inherent limitations in such plans and systems, including the possibility that cer tain risks that may affect a Fund have not been identified or may emerge in the future; that such plans and systems may not completely eliminate the occurrence or mitigate the effects of operational or information security disruptions or failures or of cybersecurity incidents; or that prevention and remediation effor ts will not be successful or that incidents will go undetected. A Fund cannot control the systems, information security or other cybersecurity of the issuers in which it invests or its service providers, counterpar ties, and other third par ties whose activities affect a Fund.
Lastly, the regulatory climate governing cybersecurity and data protection is developing quickly and may vary considerably across jurisdictions. Regulators continue to develop new rules and standards related to cybersecurity and data protection. Compliance with evolving regulations can be demanding and costly, requiring substantial resources to monitor and implement required changes.
Purchase of Securities with Fixed Price “Puts.” Cer tain Funds have authority to purchase fixed rate Municipal Securities and, for a price, simultaneously acquire the right to sell such securities back to the seller at an agreed upon rate at any time during a stated period or on a cer tain date. Such a right is generally denoted as a fixed price put. Puts with respect to fixed rate instruments are to be distinguished from the demand or repurchase features of VRDOs that enable cer tain Funds to dispose of such a security at a time when the market value of the security approximates its par value.
Repurchase Agreements and Purchase and Sale Contracts. Funds may invest in Taxable Securities (as defined below, see “Taxable Money Market Securities”) pursuant to repurchase agreements. Repurchase agreements may be entered into only with a member bank of the Federal Reserve System or primary dealer in U.S. Government securities or an affiliate thereof that meets the creditwor thiness standards adopted by the Manager. Under such agreements, the bank or primary dealer or an affiliate thereof agrees, upon entering into the contract, to repurchase the security at a mutually agreed upon time and price, thereby determining the yield during the term of the agreement. This results in a fixed rate of return insulated from market fluctuations during such period. Repurchase agreements may be construed to be collateralized loans by the purchaser to the seller secured by the securities transferred to the
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purchaser. In the case of a repurchase agreement, a Fund will require the seller to provide additional collateral if the market value of the securities falls below the repurchase price at any time during the term of the repurchase agreement. One common type of repurchase agreement a Fund may enter into is a “tri-par ty” repurchase agreement. In “tri-par ty” repurchase agreements, an unaffiliated third par ty custodian maintains accounts to hold collateral for the Fund and its counterpar ties and, therefore, the Fund may be subject to the credit risk of those custodians. In any repurchase transaction to which a Fund is a par ty, collateral for a repurchase agreement may include cash items and obligations issued by the U.S. Government or its agencies or instrumentalities. Collateral, however, is not limited to the foregoing and may include, for example, obligations rated below the highest category by NRSROs, including collateral that may be below investment grade. Collateral for a repurchase agreement may also include securities that a Fund could not hold directly without the repurchase obligation. Irrespective of the type of collateral underlying the repurchase agreement, the Fund must determine that a repurchase obligation with a par ticular counterpar ty involves minimal credit risk to the Fund and otherwise satisfies any additional credit quality standards applicable to the Fund.
In the event of default by the seller under a repurchase agreement construed to be a collateralized loan, the underlying securities are not owned by the Fund but only constitute collateral for the seller’s obligation to pay the repurchase price. Therefore, a Fund may suffer time delays and incur costs or possible losses in connection with the disposition of the collateral. In the event of a default under a repurchase agreement that is construed to be a collateralized loan, instead of the contractual fixed rate of return, the rate of return to a Fund will depend upon intervening fluctuations of the market value of such security and the accrued interest on the security. In such event, a Fund would have rights against the seller for breach of contract with respect to any losses arising from market fluctuations following the failure of the seller to per form. In general, for Federal income tax purposes, repurchase agreements are treated as collateralized loans secured by the securities “sold.” Therefore, amounts earned under such agreements, even if the underlying securities are tax-exempt securities, will not be considered tax-exempt interest. From time to time, a Fund also may invest in money market securities pursuant to purchase and sale contracts. While purchase and sale contracts are similar to repurchase agreements, purchase and sale contracts are structured so as to be in substance more like a purchase and sale of the underlying security than is the case with repurchase agreements and, with purchase and sale contracts, the purchaser receives any interest on the security paid during the period of the contract.
Repurchase agreements pose cer tain risks for a Fund that utilizes them. Such risks are not unique to the Fund but are inherent in repurchase agreements. The Funds seek to minimize such risks but because of the inherent legal uncer tainties involved in repurchase agreements, such risks cannot be eliminated. Lower quality collateral and collateral with longer maturities may be subject to greater price fluctuations than higher quality collateral and collateral with shor ter maturities. If the repurchase agreement counterpar ty were to default, lower quality collateral may be more difficult to liquidate than higher quality collateral. Should the counterpar ty default and the amount of collateral not be sufficient to cover the counterpar ty’s repurchase obligation, a Fund would retain the status of an unsecured creditor of the counterpar ty ( i.e. , the position the Fund would normally be in if it were to hold, pursuant to its investment policies, other unsecured debt securities of the defaulting counterpar ty) with respect to the amount of the shor tfall. As an unsecured creditor, a Fund would be at risk of losing some or all of the principal and income involved in the transaction.
Regulations adopted by global prudential regulators require cer tain bank-regulated counterpar ties and cer tain of their affiliates to include in cer tain financial contracts, including many repurchase agreements and purchase and sale contracts, terms that delay or restrict the rights of counterpar ties, such as a Fund, to terminate such agreements, take foreclosure action, exercise other default rights or restrict transfers of credit suppor t in the event that the counterpar ty and/or its affiliates are subject to cer tain types of resolution or insolvency proceedings. It is possible that these requirements, as well as potential additional government regulation and other developments in the market, could adversely affect a Fund’s ability to terminate existing repurchase agreements and purchase and sale contracts or to realize amounts to be received under such agreements. The SEC has also finalized rules that will require cer tain transactions involving U.S. Treasuries, including repurchase agreements, to be centrally cleared. Compliance with these rules is expected to be required by the middle of 2027. Although the impact of these rules on the Funds is difficult to predict, they may reduce the availability or increase the costs of such transactions and may adversely affect a Fund’s per formance.
Reverse Repurchase Agreements. A Fund may enter into reverse repurchase agreements with the same par ties with whom it may enter into repurchase agreements. Under a reverse repurchase agreement, a Fund sells securities to another par ty and agrees to repurchase them at a mutually agreed-upon date and price. Reverse repurchase agreements involve the risk that (i) the market value of the securities retained in lieu of sale by a Fund may decline below the price of the securities the Fund has sold but is obligated to repurchase and (ii) the price of the securities sold may decline below the price at which the Fund is required to repurchase them. In addition, if the buyer of
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securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, such buyer or its trustee or receiver may receive an extension of time to determine whether to enforce a Fund’s obligations to repurchase the securities and the Fund’s use of the proceeds of the reverse repurchase agreement may effectively be restricted pending such decision.
Additionally, regulations adopted by global prudential regulators that require cer tain bank-regulated counterpar ties and cer tain of their affiliates to include in cer tain financial contracts, including many reverse repurchase agreements, terms that delay or restrict the rights of counterpar ties, such as a Fund, to terminate such agreements, take foreclosure action, exercise other default rights or restrict transfers of credit suppor t in the event that the counterpar ty and/or its affiliates are subject to cer tain types of resolution or insolvency proceedings. It is possible that these requirements, as well as potential additional government regulation and other developments in the market, could adversely affect a Fund’s ability to terminate existing reverse repurchase agreements or to realize amounts to be received under such agreements. The SEC has also finalized rules that will require cer tain transactions involving U.S. Treasuries, including reverse repurchase agreements, to be centrally cleared. Compliance with these rules is expected to be required by the middle of 2027. Although the impact of these rules on the Funds is difficult to predict, they may reduce the availability or increase the costs of such transactions and may adversely affect a Fund’s per formance.
Rule 2a-7 Requirements. Rule 2a-7 under the Investment Company Act sets for th por tfolio maturity, liquidity, diversification and quality requirements applicable to all money market funds.
Maturity. Each Fund is managed so that the dollar-weighted average maturity of all of its investments will be 60 days or less, and the dollar-weighted average life of all of its investments will be 120 days or less. In addition, the Funds will not acquire any instrument with a remaining maturity of greater than 397 days. The “dollar-weighted average maturity” of a Fund is the average amount of time until the issuers of the debt securities in the Fund’s por tfolio must pay off the principal amount of the debt. “Dollar-weighted” means the larger the dollar value of a debt security based on its market value in a Fund, the more weight it gets in calculating this average. To calculate the dollar-weighted average maturity, the Fund may treat a variable or floating rate security under cer tain circumstances as having a maturity equal to the time remaining to the security’s next interest rate reset date or the period remaining until the principal amount can be recovered through demand rather than the security’s actual maturity. “Dollar-weighted average life” of a Fund’s por tfolio is calculated without reference to the exceptions used in calculating the dollar-weighted average maturity for variable or floating rate securities regarding the use of interest rate reset dates.
Liquidity. Rule 2a-7 contains a “general liquidity requirement” that requires that each Fund hold securities that are sufficiently liquid to meet reasonably foreseeable shareholder redemptions in light of its obligations under section 22(e) of the Investment Company Act, and any commitments the Fund has made to shareholders. To comply with this general liquidity requirement, each Fund’s adviser or sub-adviser must consider factors that could affect the Fund’s liquidity needs, including characteristics of the Fund’s investors and their likely redemptions. Depending upon the volatility of its cash flows (par ticularly shareholder redemptions), this provision may require a Fund to maintain greater liquidity than would be required by the daily and weekly minimum liquidity requirements discussed below. The Funds will not acquire any security other than daily liquid assets unless, immediately following such purchase, at least 25% of its total assets would be invested in daily liquid assets. The Funds will not acquire any security other than weekly liquid assets unless, immediately following such purchase, at least 50% of its total assets would be invested in weekly liquid assets. “Daily Liquid Assets” include (i) cash; (ii) direct obligations of the U.S. Government; (iii) securities that will mature, as determined without reference to the maturity shor tening provisions of Rule 2a-7 regarding interest rate readjustments, or are subject to a demand feature that is exercisable and payable within one business day; and (iv) amounts receivable and due unconditionally within one business day on pending sales of por tfolio securities. “Weekly Liquid Assets” include (i) cash; (ii) direct obligations of the U.S. Government; (iii) U.S. Government securities issued by a person controlled or supervised by and acting as an instrumentality of the U.S. Government pursuant to authority granted by the U.S. Congress, that are issued at a discount to the principal amount to be repaid at maturity without provision for the payment of interest and have a remaining maturity of 60 days or less; (iv) securities that will mature, as determined without reference to the maturity shor tening provisions of Rule 2a-7 regarding interest rate readjustments, or are subject to a demand feature that is exercisable and payable within five business days; and (v) amounts receivable and due unconditionally within five business days on pending sales of por tfolio securities. No Fund will invest more than 5% of the value of its total assets in securities that are illiquid ( i.e. , securities that cannot be sold or disposed of in the ordinary course of business within seven days at approximately the value ascribed to them by the Fund).
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Portfolio Diversification and Quality. Immediately after the acquisition of any security, taxable money market funds must not have invested more than: Five percent of its total assets in securities issued by the issuer of the security, provided, however, such a fund may invest up to twenty-five percent of its total assets in the securities of a single issuer for a period of up to three business days after the acquisition thereof; provided, fur ther, that the fund may not invest in the securities of more than one issuer in accordance with the foregoing proviso at any time; and ten percent of its total assets in securities issued by or subject to demand features or guarantees from the institution that issued the demand feature or guarantee.
Government Money Market Funds. A government money market fund invests at least 99.5% of its total assets in obligations of the U.S. Government, including obligations of the U.S. Treasury and federal agencies and instrumentalities, as well as repurchase agreements collateralized by government securities. Under Rule 2a-7, a government money market fund may, but is not required to, impose discretionary liquidity fees. The Board of Trustees has determined that each Fund that is a government money market fund will not be subject to discretionary liquidity fees under Rule 2a-7.
Retail Money Market Funds. A retail money market fund is a money market fund that has policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. Under Rule 2a-7, a retail money market fund is subject to the discretionary liquidity fees provisions; however, a retail money market fund is permitted to use the amor tized cost method of accounting or the penny rounding method, allowing a retail money market fund to maintain a stable NAV.
Securities Lending. Each Fund may lend por tfolio securities to cer tain borrowers that BlackRock determines to be creditwor thy, including borrowers affiliated with BlackRock. The borrowers provide collateral that is maintained in an amount at least equal to the current market value of the securities loaned. No securities loan shall be made on behalf of a Fund if, as a result, the aggregate value of all securities loans of the par ticular Fund exceeds one-third of the value of such Fund’s total assets (including the value of the collateral received). A Fund may terminate a loan at any time and obtain the return of the securities loaned. Each Fund receives, by way of substitute payment, the value of any interest or cash or non-cash distributions paid on the loaned securities that it would have otherwise received if the securities were not on loan.
With respect to loans that are collateralized by cash, the borrower may be entitled to receive a fee based on the amount of cash collateral. The Funds are compensated by any positive difference between the amount earned on the reinvestment of cash collateral and the fee paid to the borrower. In the case of collateral other than cash, a Fund is compensated by a fee paid by the borrower equal to a percentage of the market value of the loaned securities. Any cash collateral received by the Fund for such loans, and uninvested cash, may be reinvested in cer tain shor t-term instruments either directly on behalf of the Fund or through one or more joint accounts or money market funds, including those affiliated with BlackRock; such investments are subject to investment risk.
Securities lending involves exposure to cer tain risks, including operational risk (i.e., the risk of losses resulting from problems in the settlement and accounting process), “gap” risk (i.e., the risk of a mismatch between the return on cash collateral reinvestments and the fees each Fund has agreed to pay a borrower), foreign exchange risk ( i.e ., the risk of a shor tfall at default when a cash collateral investment is denominated in a currency other than the currency of the assets being loaned due to movements in foreign exchange rates), and credit, legal, counterpar ty and market risks (including the risk that market events, including but not limited to corporate actions, could lead a Fund to lend securities that are trading at a premium due to increased demand, or to recall loaned securities or to lend less or none at all, which could lead to reduced securities lending revenue). If a Fund were to lend out securities that are subject to a corporate action and commit to the borrower a par ticular election as determined by the Fund’s investment adviser, the benefit the Fund would receive in respect of committing to such election may or may not be less than the benefit the Fund would have received from making a different election in such corporate action. If a securities lending counterpar ty were to default, a Fund would be subject to the risk of a possible delay in receiving collateral or in recovering the loaned securities, or to a possible loss of rights in the collateral. In the event a borrower does not return a Fund’s securities as agreed, the Fund’s ability to par ticipate in a corporate action event may be impacted, or the Fund may experience losses if the proceeds received from liquidating the collateral do not at least equal the value of the loaned security at the time the collateral is liquidated, plus the transaction costs incurred in purchasing replacement securities. This latter event could trigger adverse tax consequences for a Fund. A Fund could lose money if its shor t-term investment of the collateral declines in value over the period of the loan. Substitute payments received by a Fund representing dividends paid on securities loaned out by the Fund will not be considered qualified dividend income, and distributions by the Fund of such substitute payments will not constitute qualified dividend income. Additionally, substitute payments received by a Fund representing qualified REIT dividends paid on REIT securities loaned out by the Fund will not be considered qualified REIT dividends, and distributions by the Fund
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of such substitute payments will not be eligible for a 20% deduction currently available for ordinary REIT dividends paid to non-corporate shareholders provided cer tain other requirements are satisfied. The securities lending agent will take into account the tax effects on shareholders caused by these differences in connection with a Fund’s securities lending program. Substitute payments received on tax-exempt securities loaned out will not be tax-exempt income. There could also be changes in the status of issuers under applicable laws and regulations, including tax regulations, that may impact the regulatory or tax treatment of loaned securities and could, for example, result in a delay in the payment of dividend equivalent payments owed to a Fund (as permitted by applicable law).
Regulations adopted by global prudential regulators require cer tain bank-regulated counterpar ties and cer tain of their affiliates to include in cer tain financial contracts, including many securities lending agreements, terms that delay or restrict the rights of counterpar ties, such as the Fund, to terminate such agreements, foreclose upon collateral, exercise other default rights or restrict transfers of credit suppor t in the event that the counterpar ty and/or its affiliates are subject to cer tain types of resolution or insolvency proceedings. It is possible that these requirements, as well as potential additional government regulation and other developments in the market, could adversely affect the Fund’s ability to terminate existing securities lending agreements or to realize amounts to be received under such agreements. Prudential regulation may also favor lenders that can provide additional protections, such as liens that are exercisable in connection with a lender default, to borrowers. Cer tain Funds expect to provide additional protections to borrowers, where permitted pursuant to a Fund’s investment policies and if BlackRock believes doing so is in the best interest of the Fund.
The SEC has adopted a rule that will require repor ting and public disclosure of securities loan transaction information (not including par ty names); this may include, but is not limited to, information about securities loans entered into in connection with shor t sales. Compliance with this rule is expected to be required in late 2028, although in response to the outcome of a legal challenge against the rule, the SEC may amend the rule and/or delay the current expected compliance date.
Structured Notes. Structured notes and other related instruments purchased by a Fund are generally privately negotiated debt obligations where the principal and/or interest is determined by reference to the per formance of a specific asset, benchmark asset, market or interest rate (“reference measure”). Issuers of structured notes generally include corporations and banks. The interest rate or the principal amount payable upon maturity or redemption may increase or decrease, depending upon changes in the value of the reference measure. The terms of a structured note may provide that, in cer tain circumstances, no principal is due at maturity and, therefore, may result in a loss of invested capital by a Fund. The interest and/or principal payments that may be made on a structured product may vary widely, depending on a variety of factors, including the volatility of the reference measure.
Structured notes may be positively or negatively indexed, so the appreciation of the reference measure may produce an increase or a decrease in the interest rate or the value of the principal at maturity. The rate of return on structured notes may be determined by applying a multiplier to the per formance or differential per formance of reference measures. Application of a multiplier involves leverage that will serve to magnify the potential for gain and the risk of loss.
The purchase of structured notes exposes a Fund to the credit risk of the issuer of the structured product. Structured notes may also be more volatile, less liquid, and more difficult to price accurately than less complex securities and instruments or more traditional debt securities. The secondary market for structured notes could be illiquid making them difficult to sell when the Fund determines to sell them. The possible lack of a liquid secondary market for structured notes and the resulting inability of the Fund to sell a structured note could expose the Fund to losses and could make structured notes more difficult for the Fund to value accurately.
Taxable Money Market Securities. Cer tain Funds may invest in a variety of taxable money market securities (“Taxable Securities”). The Taxable Securities in which cer tain Funds may invest consist of U.S. Government securities, U.S. Government agency securities, domestic bank cer tificates of deposit and bankers’ acceptances, shor t term corporate debt securities such as commercial paper and repurchase agreements. These investments must have a maturity not in excess of 397 days from the date of purchase.
The standards applicable to Taxable Securities in which cer tain Funds invest are essentially the same as those described above with respect to Municipal Securities. Cer tain Funds may not invest in any security issued by a depository institution unless such institution is organized and operating in the United States, has total assets of at least $1 billion and is federally insured. Taxable Securities in which the Funds invest will be determined by the Manager to present minimal credit risks to the Fund, if required, and cer tain Funds may require that por tfolio investments (or their issuers) receive minimum credit ratings from one or more NRSROs, or if not rated, are determined by the Manager to be of comparable quality to securities that have received such rating(s).
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U.S. Government Obligations. A Fund may purchase obligations issued or guaranteed by the U.S. Government and U.S. Government agencies and instrumentalities. Obligations of cer tain agencies and instrumentalities of the U.S. Government are suppor ted by the full faith and credit of the U.S. Treasury. Others are suppor ted by the right of the issuer to borrow from the U.S. Treasury; and still others are suppor ted only by the credit of the agency or instrumentality issuing the obligation. No assurance can be given that the U.S. Government will provide financial suppor t to U.S. Government-sponsored instrumentalities if it is not obligated to do so by law. Cer tain U.S. Treasury and agency securities may be held by trusts that issue par ticipation cer tificates (such as Treasury income growth receipts and cer tificates of accrual on Treasury cer tificates). These cer tificates, as well as Treasury receipts and other stripped securities, represent beneficial ownership interests in either future interest payments or the future principal payments on U.S. Government obligations. These instruments are issued at a discount to their “face value” and may (par ticularly in the case of stripped mor tgage-backed securities) exhibit greater price volatility than ordinary debt securities because of the manner in which their principal and interest are returned to investors.
Examples of the types of U.S. Government obligations that may be held by cer tain Funds include U.S. Treasury Bills, Treasury Notes and Treasury Bonds and the obligations of the Federal Housing Administration, Farmers Home Administration, Expor t-Impor t Bank of the United States, Small Business Administration, the Government National Mor tgage Association (“Ginnie Mae”), the Federal National Mor tgage Association (“Fannie Mae”), Federal Financing Bank, General Services Administration, The Co-operative Central Bank, Federal Home Loan Banks, the Federal Home Loan Mor tgage Corporation (“Freddie Mac”), Farm Credit System and Tennessee Valley Authority. Cer tain Funds may also invest in mor tgage-related securities issued or guaranteed by U.S. Government agencies and instrumentalities, including such obligations of Ginnie Mae, Fannie Mae and Freddie Mac.
To the extent consistent with their respective investment objectives, the Funds may invest in a variety of U.S. Treasury obligations and obligations issued by or guaranteed by the U.S. Government or its agencies, instrumentalities or U.S. Government sponsored enterprises. Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Obligations of U.S. Government agencies and authorities are suppor ted by varying degrees of credit but generally are not backed by the full faith and credit of the U.S. Government. No assurance can be given that the U.S. Government would provide financial suppor t to its agencies, instrumentalities or U.S. Government sponsored enterprises if it were not obligated to do so by law. There is no assurance that these commitments will be under taken or complied with in the future.
In addition, cer tain Funds may invest in U.S. Treasury Floating Rate Notes (FRNs), which are two-year notes issued by the U.S. Treasury. The interest rate of an FRN changes over the life of the FRN and is the sum of an index rate and a spread. The index rate of an FRN is tied to the highest accepted discount rate of the most recent 13-week Treasury bill and is re-set every week. The spread is a rate applied to the index rate. The spread stays the same for the life of an FRN. The spread is determined at the auction where the FRN is first offered. The spread is the highest accepted discount margin in that auction. See also “Variable and Floating Rate Instruments” below.
Variable and Floating Rate Instruments. Cer tain Funds may purchase variable and floating rate instruments. Variable and floating rate instruments are subject to the credit quality standards described in the Prospectus. In some cases, the Funds may require that the obligation to pay the principal of the instrument be backed by a letter of credit or guarantee. Such instruments may carry stated maturities in excess of 397 days provided that the maturity shor tening provisions stated in Rule 2a-7 are satisfied. Although a par ticular variable or floating rate demand instrument may not be actively traded in a secondary market, in some cases, a Fund may be entitled to principal on demand and may be able to resell such notes in the dealer market.
Variable and floating rate instruments held by a Fund generally may have maturities of more than 397 days provided: (i) they are subject to a demand feature entitling the Fund to the payment of principal and interest within 397 days of exercise, unless the instrument is issued or guaranteed by the U.S. Government or its agencies and/or instrumentalities, and (ii) the rate of interest on such instruments is adjusted at periodic intervals which may extend up to 397 days.
In determining a Fund’s weighted average por tfolio maturity and whether a long-term variable rate demand instrument has a remaining maturity of 397 days or less, the instrument will be deemed by a Fund to have a maturity equal to the longer of the period remaining until its next interest rate adjustment or the period remaining until the principal amount can be recovered through demand. In determining a Fund’s weighted average por tfolio maturity and whether a long-term floating rate demand instrument has a remaining maturity of 397 days or less, the instrument will be deemed by a Fund to have a maturity equal to the period remaining until the principal amount can be recovered through demand. In addition, a variable or floating rate instrument issued or guaranteed by the U.S. Government or its agencies and/or instrumentalities will be deemed by a Fund to have a maturity equal to the period remaining until its next interest rate adjustment (in the case of a variable rate instrument) or one day (in the case of
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a floating rate instrument). Variable and floating rate notes are frequently rated by credit rating agencies, and their issuers must satisfy the Fund’s quality and maturity requirements. If an issuer of such a note were to default on its payment obligation, the Fund might be unable to dispose of the note because of the absence of an active secondary market and might, for this or other reasons, suffer a loss.
When-Issued Securities, Delayed Delivery Securities and Forward Commitments. A Fund may purchase or sell securities that it is entitled to receive on a when-issued basis. A Fund may also purchase or sell securities on a delayed delivery basis or through a forward commitment (including on a “TBA” (to be announced) basis). These transactions involve the purchase or sale of securities by a Fund at an established price with payment and delivery taking place in the future. The Fund enters into these transactions to obtain what is considered an advantageous price to the Fund at the time of entering into the transaction.
Pursuant to recommendations of the Treasury Market Practices Group, which is sponsored by the Federal Reserve Bank of New York, a Fund or its counterpar ty generally will be required to post collateral when entering into cer tain forward-settling transactions, including without limitation TBA transactions.
There can be no assurance that a security purchased on a when-issued basis will be issued or that a security purchased or sold on a delayed delivery basis or through a forward commitment will be delivered. Also, the value of securities in these transactions on the delivery date may be more or less than the price paid by the Fund to purchase the securities. The Fund will lose money if the value of the security in such a transaction declines below the purchase price and will not benefit if the value of the security appreciates above the sale price during the commitment period.
If deemed advisable as a matter of investment strategy, a Fund may dispose of or renegotiate a commitment after it has been entered into, and may sell securities it has committed to purchase before those securities are delivered to the Fund on the settlement date. In these cases the Fund may realize a taxable capital gain or loss.
When a Fund engages in when-issued, TBA or forward commitment transactions, it relies on the other par ty to consummate the trade. Failure of such par ty to do so may result in the Fund’s incurring a loss or missing an oppor tunity to obtain a price considered to be advantageous.
The market value of the securities underlying a commitment to purchase securities, and any subsequent fluctuations in their market value, is taken into account when determining the market value of a Fund star ting on the day the Fund agrees to purchase the securities. The Fund does not earn interest on the securities it has committed to purchase until they are paid for and delivered on the settlement date.
Regulations adopted by global prudential regulators that are now in effect require cer tain bank-regulated counterpar ties and cer tain of their affiliates to include in cer tain financial contracts, including many agreements with respect to when-issued, TBA and forward commitment transactions, terms that delay or restrict the rights of counterpar ties, such as a Fund, to terminate such agreements, foreclose upon collateral, exercise other default rights or restrict transfers of credit suppor t in the event that the counterpar ty and/or its affiliates are subject to cer tain types of resolution or insolvency proceedings. It is possible that these new requirements, as well as potential additional government regulation and other developments in the market, could adversely affect a Fund’s ability to terminate existing agreements with respect to these transactions or to realize amounts to be received under such agreements.
Diversification Status
Each Fund’s investments will be limited in order to allow the Fund to continue to qualify as a regulated investment company under the Code. To qualify, among other requirements, each Fund will limit its investments so that at the close of each quar ter of the taxable year (i) at least 50% of the market value of each Fund’s total assets is represented by cash, securities of other regulated investment companies, U.S. Government securities and other securities, with such other securities limited, in respect of any one issuer, to an amount not greater than 5% of the Fund’s assets and not greater than 10% of the outstanding voting securities of such issuer and (ii) not more than 25% of the value of its assets is invested in the securities (other than U.S. Government securities or securities of other regulated investment companies) of any one issuer, any two or more issuers that the Fund controls and that are determined to be engaged in the same or similar trades or businesses or related trades or businesses or in the securities of one or more qualified publicly traded par tnerships ( i.e. , par tnerships that are traded on an established securities market or tradable on a secondary market, other than par tnerships that derive 90% of their income from interest, dividends, capital gains, and other traditional permitted mutual fund income). See “Dividends and Taxes — Taxes.”
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Each Fund has elected to be classified as “diversified” under the Investment Company Act. Each Fund must also satisfy the diversification requirements set for th in Rule 2a-7.
MANAGEMENT AND OTHER SERVICE ARRANGEMENTS
Trustees and Officers
See “Information on Directors and Officers, ‘— Biographical Information,’ ‘— Share Ownership’ and ‘— Compensation of Directors’ ” or “Information on Trustees and Officers, ‘— Biographical Information,’ ‘— Share Ownership’ and ‘— Compensation of Trustees’,” as applicable, in Par t I of each Fund’s SAI for biographical and cer tain other information relating to the Trustees and officers of your Fund, including Trustees’ compensation.
Management Arrangements
Management Services. The Manager provides each Fund with investment advisory and management services. Subject to the supervision of the Board of Trustees, the Manager is responsible for the actual management of a Fund’s por tfolio and reviews the Fund’s holdings in light of its own research analysis and that from other relevant sources. The responsibility for making decisions to buy, sell or hold a par ticular security rests with the Manager. The Manager per forms cer tain of the other administrative services and provides all the office space, facilities, equipment and necessary personnel for management of each Fund.
Management Fee. Each Fund has entered into a management agreement with the Manager pursuant to which the Manager receives for its services to the Fund monthly compensation at an annual rate based on the average daily net assets of the Fund. For information regarding the fees paid by your Fund to the Manager for the Fund’s last three fiscal years or other applicable periods, see “Management, Advisory and Other Service Arrangements — Management Agreement” or “Management and Advisory Arrangements,” as applicable, in Par t I of each Fund’s SAI. Each Management Agreement obligates the Manager to provide investment advisory services and to pay, or cause an affiliate to pay, for maintaining its staff and personnel and to provide office space, facilities and necessary personnel for the Fund. Each Manager is also obligated to pay, or cause an affiliate to pay, the fees of all officers and Trustees of the Fund who are affiliated persons of the Manager or any affiliate.
For Funds that do not have an administration agreement with the Manager, each Management Agreement obligates the Manager to provide management services and to pay all compensation of and furnish office space for officers and employees of a Fund connected with investment and economic research, trading and investment management of the Fund, as well as the fees of all Trustees of the Fund who are interested persons of the Fund. Each Fund pays all other expenses incurred in the operation of that Fund, including among other things: taxes; expenses for legal and auditing services; costs of preparing, printing and mailing proxies, shareholder repor ts, prospectuses and statements of additional information, except to the extent paid by BlackRock Investments, LLC (the “Distributor” or “BRIL”), charges of the custodian and sub-custodian, and the transfer agent; expenses of redemption of shares; Commission fees; expenses of registering the shares under Federal, state or foreign laws; fees and expenses of Trustees who are not interested persons of a Fund as defined in the Investment Company Act; accounting and pricing costs (including the daily calculations of NAV); insurance; interest; brokerage costs; litigation and other extraordinary or non-recurring expenses; and other expenses properly payable by the Fund. Cer tain accounting services are provided to each Fund by The Bank of New York Mellon (“BNYM”), State Street Bank and Trust Company (“State Street”) or JPMorgan Chase Bank, N.A. (“JPM”) pursuant to an agreement between BNYM, State Street or JPM, as applicable, and each Fund. Each Fund pays a fee for these services. In addition, the Manager provides cer tain accounting services to each Fund and the Fund pays the Manager a fee for such services. The Distributor pays cer tain promotional expenses of the Funds incurred in connection with the offering of shares of the Funds. Cer tain expenses are financed by each Fund pursuant to distribution plans in compliance with Rule 12b-1 under the Investment Company Act. See “Purchase of Shares — Distribution and/or Shareholder Servicing Plans.”
Organization of the Manager. The Manager, BlackRock Advisors, LLC, is a Delaware limited liability company and an indirect, majority-owned subsidiary of BlackRock, Inc.
Duration and Termination. Unless earlier terminated as described below, each Management Agreement will remain in effect from year to year if approved annually (a) by the Trustees or by a vote of a majority of the outstanding voting securities of the Fund and (b) by a majority of the Trustees who are not par ties to such agreement or interested persons (as defined in the Investment Company Act) of any such par ty. The Management Agreements are not assignable and may be terminated without penalty on 60 days’ written notice at the option of either par ty thereto or by the vote of the shareholders of the Fund.
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Other Service Arrangements
Administrative Services and Administrative Fee. Cer tain Funds have entered into an administration agreement (the “Administration Agreement”) with an administrator identified in the Fund’s Prospectus and Par t I of the Fund’s SAI (each, an “Administrator”). For its services to a Fund, the Administrator receives monthly compensation at the annual rate set for th in each applicable Fund’s Prospectus. For information regarding any administrative fees paid by your Fund to the Administrator for the periods indicated, see “Management, Advisory and Other Service Arrangements — Administration Agreement” or “Management and Advisory Arrangements,” as applicable, in Par t I of that Fund’s SAI.
For Funds that have an Administrator, the Administration Agreement obligates the Administrator to provide cer tain administrative services to the Fund and to pay, or cause its affiliates to pay, for maintaining its staff and personnel and to provide office space, facilities and necessary personnel for the Fund. Each Administrator is also obligated to pay, or cause its affiliates to pay, the fees of those officers and Trustees of the Fund who are affiliated persons of the Administrator or any of its affiliates.
Duration and Termination of Administration Agreement. Unless earlier terminated as described below, each Administration Agreement with BlackRock will continue from year to year if approved annually (a) by the Board of Trustees of each applicable Fund or by a vote of a majority of the outstanding voting securities of such Fund and (b) by a majority of the Trustees of the Fund who are not par ties to such contract or interested persons (as defined in the Investment Company Act) of any such par ty. Such contract is not assignable and may be terminated without penalty on written notice at the option of either par ty thereto or by the vote of the shareholders of the Fund.
Transfer Agency Services. Each Fund has entered into an agreement with a transfer agent identified in the Fund’s Prospectus and Par t I of the Fund’s SAI, pursuant to which the transfer agent is responsible for the issuance, transfer, and redemption of shares and the opening and maintenance of shareholder accounts. Each Fund pays a fee for these services.
See “Management, Advisory and Other Service Arrangements, ‘— Transfer Agent’ or ‘— Transfer Agency Agreement’ ” or “Management and Advisory Arrangements — Transfer Agency and Shareholders’ Administrative Services,” as applicable, in Par t I of each Fund’s SAI.
Independent Registered Public Accounting Firm. The Audit Committee of each Fund, the members of which are non-interested Trustees of the Fund, has selected an independent registered public accounting firm for that Fund that audits the Fund’s financial statements. Please see the inside back cover page of your Fund’s Prospectus and Par t I, Section IX “Additional Information” of each Fund’s SAI for information on your Fund’s independent registered public accounting firm.
Custodian Services. The name and address of the custodian (the “Custodian”) of each Fund are provided on the inside back cover page of the Fund’s Prospectus. The Custodian is responsible for safeguarding and controlling the Fund’s cash and securities, handling the receipt and delivery of securities and collecting interest and dividends on the Fund’s investments. The Custodian is authorized to establish separate accounts in foreign currencies and to cause foreign securities owned by the Fund to be held in its offices outside the United States and with cer tain foreign banks and securities depositories. A Fund also may use special purpose custodian banks from time to time for cer tain assets.
Accounting Services. Each Fund has entered into an agreement with BNYM, State Street or JPM, pursuant to which BNYM, State Street or JPM provides cer tain accounting and administrative services to the Fund. Each Fund pays a fee for these services.
See “Management, Advisory and Other Service Arrangements — Accounting Services” or “Management and Advisory Arrangements — Accounting Services,” as applicable, in Par t I of each Fund’s SAI for information on the amounts paid by your Fund to BNYM, State Street or JPM, the Manager and/or the Administrator for the periods indicated.
Distribution Expenses. Each Fund has entered into a distribution agreement with the Distributor in connection with the continuous offering of each class of shares of the Fund (the “Distribution Agreements”). The Distribution Agreements obligate the Distributor to pay cer tain expenses in connection with the offering of each class of shares of the Funds. After the prospectuses, statements of additional information and periodic repor ts have been prepared, set in type and mailed to shareholders, the Distributor pays for the printing and distribution of these documents used in connection with the offering to dealers and investors. The Distributor also pays for other supplementary sales literature and adver tising costs. Each Distribution Agreement is subject to the same renewal requirements and termination provisions as the Management Agreement described above. See “Information on Sales Charges and
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Distribution Related Expenses” or “Information on Distribution Related Expenses,” as applicable, in Par t I of each Fund’s SAI for information on the fees paid by your Fund for the periods indicated.
Disclosure of Portfolio Holdings
The Board of Trustees of each Fund and the Board of Directors of the Manager have each approved Por tfolio Holdings and Related Information Distribution Guidelines (the “Policy”) regarding the disclosure of each Fund’s por tfolio securities, as applicable, and other por tfolio information. The purpose of the Policy is to ensure that (i) shareholders and prospective shareholders of the Funds have equal access to por tfolio holdings and characteristics and (ii) third par ties (such as consultants, intermediaries and third-par ty data providers) have access to such information no earlier or more frequently than shareholders and prospective shareholders.
Pursuant to the Policy, each Fund and the Manager may, under cer tain circumstances as set for th below, make selective disclosure with respect to a Fund’s Por tfolio Characteristics (as defined below) and Por tfolio Holdings (as defined below). The Board of Trustees of each Fund and the Board of Directors of the Manager have each approved the adoption by the Fund of the Policy, and employees of the Manager are responsible for adherence to the Policy. The Board of Trustees provides ongoing oversight of the Fund’s and Manager’s compliance with the Policy. Notwithstanding the above, there is no assurance that the Policy will protect the Funds from the potential misuse of holdings information by an individual or firms in possession of that information.
Disclosure of material non-public information (“Confidential Information”) about a Fund’s Por tfolio Holdings and/ or Por tfolio Characteristics is prohibited, except as provided in the Policy.
Confidential Information relating to a Fund may not be distributed to persons not employed by BlackRock unless the Fund has a legitimate business purpose for doing so and confidentiality obligations are in effect, as appropriate.
• Por tfolio Holdings : “Por tfolio Holdings” are a Fund’s por tfolio securities and other instruments, and include, but are not limited to:
• for equity securities, information such as issuer name, CUSIP, ticker symbol, total shares and market value;
• for fixed income securities, information such as issuer name, CUSIP, ticker symbol, coupon, maturity, current face value, market value, yield, WAL, WAM, duration and convexity;
• for all securities, information such as quantity, SEDOL and market price as of a specific date;
• for derivatives, indicative data including, but not limited to, pay leg, receive leg, notional amount, reset frequency and trade counterpar ty; and
• for trading strategies, specific por tfolio holdings, including the number of shares held, weightings of par ticular holdings, trading details, pending or recent transactions and por tfolio management plans to purchase or sell par ticular securities or allocation within par ticular sectors.
• Por tfolio Characteristics (excluding Liquidity Metrics) : “Por tfolio Characteristics” include, but are not limited to, sector allocation, credit quality breakdown, maturity distribution, duration and convexity measures, average credit quality, average maturity, average coupon, top 10 holdings with percent of the fund held, average market capitalization, capitalization range, risk related information ( e.g., value at risk, standard deviation), ROE, P/E, P/B, P/CF, P/S and EPS.
• Additional characteristics specific to money market funds include, but are not limited to, historical daily and weekly liquid assets (as defined under Rule 2a-7) and historical fund net inflows and outflows.
• Por tfolio Characteristics — Liquidity Metrics:
• “Liquidity Metrics” which seek to ascer tain a Fund’s liquidity profile under BlackRock’s global liquidity risk methodology which include, but are not limited to: (a) disclosure regarding the number of days needed to liquidate a por tfolio or the por tfolio’s underlying investments; and (b) the percentage of a Fund’s NAV invested in a par ticular liquidity tier under BlackRock’s global liquidity risk methodology.
• The dissemination of position-level liquidity metrics data and any non-public regulatory data pursuant to SEC Rule 22e-4 (including SEC liquidity tiering) is not permitted unless pre-approved.
• Disclosure of Liquidity Metrics pursuant to Section 3 of the Policy should be reviewed by BlackRock’s Risk and Quantitative Analysis Group and the relevant por tfolio management team prior to dissemination.
Information that is non-material or that may be obtained from public sources ( i.e. , information that has been publicly disclosed via a filing with the SEC ( e.g. , a fund’s annual repor t and annual financial statements), through a
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press release or placement on a publicly-available internet website), or information derived or calculated from such public sources shall not be deemed Confidential Information.
Por tfolio Holdings and Por tfolio Characteristics may be disclosed in accordance with the below schedule. Prior to the time periods designated below, non-public portfolio holdings and portfolio characteristics may only be disclosed with both a non-disclosure or confidentiality agreement and Fund CCO approval. Thereafter, BlackRock may disclose such information to shareholders, prospective shareholders, intermediaries, consultants and third-par ty data providers . BlackRock generally discloses por tfolio holdings and other por tfolio characteristics information on the lag times established herein on its public website.
Time Periods for Portfolio Holdings Funds in Scope Days After Month-End—After Which Portfolio Holdings May Be Disclosed
All Open-End Mutual Funds (non-money market) except those noted below. 20 Calendar Days After Month End
Global Allocation funds, 1 BlackRock Core Bond Por tfolio of BlackRock Funds V, BlackRock Strategic Income Oppor tunities Por tfolio of BlackRock Funds V, BlackRock Strategic Global Bond Fund, Inc., BlackRock Total Return Fund of BlackRock Bond Fund, Inc., BlackRock Total Return V.I. Fund of BlackRock Variable Series Funds II, Inc., BlackRock Unconstrained Equity Fund, BlackRock Systematic Multi-Strategy Fund of BlackRock Funds IV and BlackRock Global Equity Market Neutral Fund of BlackRock Funds SM .
60 Calendar Days After Month End 1
BlackRock Capital Appreciation Fund, Inc., BlackRock Equity Dividend Fund, BlackRock High Equity Income Fund of BlackRock Funds SM , BlackRock Large Cap Focus Growth Fund, Inc., BlackRock Large Cap Focus Value Fund, Inc., BlackRock Mid-Cap Growth Equity Por tfolio of BlackRock Funds SM , BlackRock Mid-Cap Value Fund of BlackRock Mid-Cap Value Series, Inc.
15 Calendar Days After Month End
Time Periods for Portfolio Characteristics (Excluding Liquidity Metrics (Addressed Below))
Funds in Scope Days After Month-End—After Which Portfolio Characteristics May Be Disclosed
All Open-End Mutual Funds (non-money market) 5 Calendar Days After Month-End
1 Global Allocation Exception: The “Global Allocation funds” include BlackRock Global Allocation Fund, Inc., BlackRock Global Allocation Por tfolio of BlackRock Series Fund, Inc. and BlackRock Global Allocation V.I. Fund of BlackRock Variable Series Funds, Inc. Information on cer tain Por tfolio Characteristics of BlackRock Global Allocation Por tfolio of BlackRock Series Fund, Inc. and BlackRock Global Allocation V.I. Fund of BlackRock Variable Series Funds, Inc. is available, upon request, to insurance companies that use these funds as underlying investments (and to advisers and sub-advisers of funds invested in BlackRock Global Allocation Por tfolio of BlackRock Series Fund, Inc. and BlackRock Global Allocation V.I. Fund of BlackRock Variable Series Funds, Inc.) in their variable annuity contracts and variable life insurance policies on a weekly basis (or such other period as may be determined to be appropriate). Open-End Mutual Funds and ETFs (Excluding Money Market Mutual Funds and MM ETFs) Time Periods for Portfolio Characteristics: Liquidity Metrics
Funds in Scope Days After Quarter-End—After Which Liquidity Metrics May Be Disclosed
All Open-End Mutual Funds and ETFs (non-money market). 60 Calendar Days After Quar ter-End
If Liquidity Metrics are disclosed to one party, they must also be disclosed to all other parties requesting the same information.
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Money Market Mutual Funds and ETFs 2,3 Money Market ETFs will comply with the disclosure requirements under both the Money Market (Rule 2a-7) Policy and the ETF Rule (Rule 6c-11) Policy. Time Periods
Prior to 5 Business Days After Month-End
5 Business Days After Month-End to Date of Public Filing
Portfolio Holdings
Cannot disclose without non-disclosure or confidentiality agreement and CCO approval except the following Por tfolio Holdings information is required to be released on the website pursuant to Rule 2a-7 on a monthly basis: name of issuer, category of investment, CUSIP, principal amount, maturity dates, yields and value. BlackRock will release this information on the following timelines or on a more frequent timeline than required under Rule 2a-7: • Government MMFs: Daily por tfolio holdings are released on the website on a one business day lag. • Money Market ETFs (prime and government): Daily por tfolio holdings information released pursuant to ETF rule requirements. • Cer tain Money Market Mutual Funds and Money Market ETFs: Weekly schedule of investments (PDF) is posted to the website at least one business day after week-end. (The Cash business identifies those Funds.)
May disclose to shareholders, prospective shareholders, intermediaries, consultants and third par ty data providers. If Por tfolio Holdings are disclosed to one par ty, they must also be disclosed to all other par ties requesting the same information.
Portfolio Characteristics
Cannot disclose without non-disclosure or confidentiality agreement and CCO approval except the following information is: (i) required to be released on the Fund’s website daily (i.e., each Business Day as of the end of the preceding Business Day): • Historical NAVs calculated based on market factors (e.g., marked to market). • Percentage of fund assets invested in daily and weekly liquid assets (as defined under Rule 2a-7). • Daily net flow information (inflows less outflows). • Other information as may be required by Rule 2a-7. (ii) voluntarily released on the Fund’s website daily (i.e., each Business Day as of the end of the preceding Business Day): • Fund SEC yields, WAM (required monthly), WAL (required monthly), fund size and share class size.
May disclose to shareholders, prospective shareholders, intermediaries, consultants and third par ty data providers. If Por tfolio Characteristics are disclosed to one par ty, they must also be disclosed to all other par ties requesting the same information.
2 BlackRock Short Obligations Fund. Fund’s holdings may be disclosed in accordance with the frequency for money market funds. 3 Circle Reserve Fund Exception:
SM Information on por tfolio holdings and cer tain por tfolio characteristics of the Circle Reserve Fund of BlackRock Funds R
SM may be made available to the shareholders of the Fund, upon request, on a more frequent basis as may be deemed appropriate by BlackRock from time-to-time.
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Guidelines for Confidential and Non-Material Information. Confidential Information may be disclosed to the Fund’s Board of Trustees and its counsel, outside counsel for the Fund, the Fund’s auditors and to cer tain third-par ty service providers (e.g., Fund administrator, Fund custodian, proxy voting service), securities lending borrowers, broker-dealers that are fund counterpar ties and shareholders and their representatives that par ticipate in applicable redemptions in kind. Non-disclosure or confidentiality agreements will be in place with such service providers, borrowers, and broker-dealers. With respect to Confidential Information, the Fund’s CCO or his or her designee may authorize the following, subject in the case of (ii) and (iii) to a confidentiality or non-disclosure arrangement: (i) the preparation and posting of the Fund’s Por tfolio Holdings and/or Por tfolio Characteristics to its website on a more frequent basis than authorized above; (ii) the disclosure of the Fund’s Por tfolio Holdings to third-par ty service providers not noted above; and (iii) the disclosure of the Fund’s Por tfolio Holdings and/or Por tfolio Characteristics to other par ties for legitimate business purposes.
Fact Sheets and Repor ts
• Fund Fact Sheets are available to shareholders, prospective shareholders, intermediaries and consultants on a monthly or quar terly basis no earlier than the fifth calendar day after the end of a month or quar ter.
Other Information. The Policy shall also apply to other Confidential Information of a Fund such as per formance attribution analyses or security-specific information (e.g., information about Fund holdings where an issuer has been downgraded, been acquired or declared bankruptcy).
Data on NAVs, asset levels (by total Fund and share class), accruals, yields, capital gains, dividends and fund returns (net of fees by share class) are generally available to shareholders, prospective shareholders, consultants, and third-par ty data providers upon request, as soon as such data is available.
Contact Information. For information about por tfolio holdings and characteristics, BlackRock fund shareholders and prospective investors should call the number set out on the back cover of the Prospectus.
Compensation. Neither a Fund, a service provider nor any of their affiliated persons (as that term is defined in the Investment Company Act) shall receive compensation in any form in connection with the disclosure of information about such Fund’s Por tfolio Holdings or Por tfolio Characteristics.
Ongoing Arrangements. The Manager has entered into ongoing agreements to provide selective disclosure of Fund Por tfolio Holdings to the following persons or entities: 1. Fund’s Board of Trustees and, if necessary, independent Trustees’ counsel and Fund counsel.
2. Fund’s transfer agent. 3. Fund’s Custodian. 4. Fund’s Administrator, if applicable. 5. Fund’s independent registered public accounting firm. 6. Fund’s accounting services provider.
7. Independent rating agencies —Lipper Inc., Moody’s, Fitch. 8. Information aggregators — S&P Global, Bloomberg, eVestments Alliance and Informa/PSN Investment Solutions. 9. Pricing Vendors — Refinitiv Limited, Refinitiv US LLC, ICE Data Services, Bloomberg, IHS Markit, JP Morgan Pricing-Direct, Valuation Research Corporation, Murray, Devine & Co., Inc. and WM Company PLC. 10. Valuation Providers — Houlihan Lokey, Lincoln Financial, Chatham and Kroll. 11. Third-par ty feeder funds — Stock Index Fund, a series of Homestead Funds, Inc. and Transamerica Stock Index, a series of Transamerica Funds and their respective boards, sponsors, administrators and other service providers. 12. Affiliated feeder funds — iShares S&P 500 Index Fund, iShares U.S. Aggregate Bond Index Fund, Treasury Money Market Fund (Cayman) and their respective boards, sponsors, administrators and other service providers. 13. Other — Investment Company Institute, Goldman Sachs Asset Management, L.P., JPMorgan Chase Bank, N.A., Mizuho Asset Management Co., Ltd., Nationwide Fund Advisors, State Street Bank and Trust Company, Donnelley Financial Solutions, Inc. and Silicon Valley Bank.
In connection with effecting redemptions in kind, the Fund or the Manager may provide information about a Fund’s por tfolio holdings, such as the securities to be delivered in connection with the redemption in kind, to a
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redeeming shareholder. Typically, such shareholder will be subject to a non-disclosure agreement or other duty to keep the information confidential.
With respect to each such arrangement, a Fund has a legitimate business purpose for the release of information. The release of the information is subject to confidential treatment to prohibit the entity from sharing with an unauthorized source. The Funds, BlackRock and their affiliates do not receive any compensation or other consideration in connection with such arrangements.
The Funds and the Manager may monitor, to the extent possible, the use of Confidential Information by the individuals or firms to which it has been disclosed. To do so, in addition to the requirements of any applicable confidentiality agreement and/or the terms and conditions of the Fund’s and Manager’s Codes of Ethics, the Manager’s compliance personnel under the supervision of the Fund’s CCO, monitor the Manager’s securities trading desks to determine whether individuals or firms who have received Confidential Information have made any trades on the basis of that information. In addition, the Manager maintains an internal restricted list to prevent trading by the personnel of the Manager or its affiliates in securities — including securities held by a Fund — about which the Manager has Confidential Information. There can be no assurance, however, that the Fund’s policies and procedures with respect to the selective disclosure of Por tfolio Holdings will prevent the misuse of such information by individuals or firms that receive such information.
Potential Conflicts of Interest
Cer tain activities of BlackRock, Inc., BlackRock Advisors, LLC, BlackRock Fund Advisors and the other subsidiaries of BlackRock, Inc. (collectively referred to in this section as “BlackRock”) and their respective directors, officers or employees, with respect to the Funds and/or other accounts managed by BlackRock, may give rise to actual or perceived conflicts of interest such as those described below.
BlackRock is one of the world’s largest asset management firms. BlackRock, its subsidiaries and their respective directors, officers and employees, including the business units or entities and personnel who may be involved in the investment activities and business operations of a Fund, are engaged worldwide in businesses, including managing equities, fixed income securities, cash and alternative investments, and other financial services, and have interests other than that of managing the Funds. These are considerations of which investors in a Fund should be aware, and which may cause conflicts of interest that could disadvantage a Fund and its shareholders. These businesses and interests include potential multiple advisory, transactional, financial and other relationships with, or interests in companies and interests in securities or other instruments that may be purchased or sold by a Fund.
BlackRock may have proprietary interests in, and may manage or advise with respect to, accounts or funds (including separate accounts and other funds and collective investment vehicles) that have investment objectives identical or similar to those of a Fund and/or that engage in transactions in the same types of securities, currencies and instruments as the Fund. Such other funds or accounts may offer exposure to strategies that are identical or substantially similar to those of a Fund but with different fees and expenses, governance and structures, and/or services provided by BlackRock. BlackRock is also a major par ticipant in the global currency, equities, swap and fixed income markets, in each case, for the accounts of clients and, in some cases, on a proprietary basis. As such, BlackRock is or may be actively engaged in transactions in the same securities, currencies, and instruments in which a Fund invests.
Such activities could affect the prices and availability of the securities, currencies, and instruments in which a Fund invests, which could have an adverse impact on a Fund’s per formance. Such transactions, par ticularly in respect of most proprietary accounts or client accounts, will be executed independently of a Fund’s transactions and thus at prices or rates that may be more or less favorable than those obtained by the Fund.
In addition, the por tfolio holdings of cer tain BlackRock-advised investment vehicles managed in an identical or substantially similar manner as cer tain Funds are made publicly available on a more timely basis than the applicable Fund. In some cases, such por tfolio holdings are made publicly available on a daily basis. While not expected, it is possible that a recipient of por tfolio holdings information for such an investment vehicle could cause harm to a Fund that is managed in an identical or substantially similar manner, including by trading ahead of or against such Fund based on the information received.
When BlackRock seeks to purchase or sell the same assets for client accounts, including a Fund, the assets actually purchased or sold may be allocated among the accounts on a basis determined in its good faith discretion to be equitable. In some cases, this system may adversely affect the size or price of the assets purchased or sold for a Fund. In addition, transactions in investments by one or more other accounts managed by BlackRock may have the
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effect of diluting or otherwise disadvantaging the values, prices or investment strategies of a Fund, par ticularly, but not limited to, with respect to small capitalization, emerging market or less liquid strategies. This may occur with respect to BlackRock-advised accounts when investment decisions regarding a Fund are based on research or other information that is also used to suppor t decisions for other accounts. When BlackRock implements a por tfolio decision or strategy on behalf of another account ahead of, or contemporaneously with, similar decisions or strategies for a Fund, market impact, liquidity constraints, or other factors could result in the Fund receiving less favorable trading results and the costs of implementing such decisions or strategies could be increased or the Fund could otherwise be disadvantaged. BlackRock may, in cer tain cases, elect to implement internal policies and procedures designed to limit such consequences, which may cause a Fund to be unable to engage in cer tain activities, including purchasing or disposing of securities, when it might otherwise be desirable for it to do so. Conflicts may also arise because por tfolio decisions regarding a Fund may benefit other accounts managed by BlackRock. For example, the sale of a long position or establishment of a shor t position by a Fund may impair the price of the same security sold shor t by (and therefore benefit) BlackRock or its other accounts or funds, and the purchase of a security or covering of a shor t position in a security by a Fund may increase the price of the same security held by (and therefore benefit) BlackRock or its other accounts or funds.
BlackRock, on behalf of other client accounts, on the one hand, and a Fund, on the other hand, may invest in or extend credit to different par ts of the capital structure of a single issuer. BlackRock may pursue rights, provide advice or engage in other activities, or refrain from pursuing rights, providing advice or engaging in other activities, on behalf of other clients with respect to an issuer in which a Fund has invested, and such actions (or refraining from action) may have a material adverse effect on the Fund. In situations in which clients of BlackRock (including the Funds) hold positions in multiple par ts of the capital structure of an issuer, BlackRock may not pursue cer tain actions or remedies that may be available to a Fund, as a result of legal and regulatory requirements or otherwise. BlackRock addresses these and other potential conflicts of interest based on the facts and circumstances of par ticular situations. For example, BlackRock may determine to rely on information barriers between different business units or por tfolio management teams. BlackRock may also determine to rely on the actions of similarly situated holders of loans or securities rather than, or in connection with, taking such actions itself on behalf of the Funds.
In addition, to the extent permitted by applicable law, cer tain Funds may invest their assets in other funds advised by BlackRock, including funds that are managed by one or more of the same por tfolio managers, which could result in conflicts of interest relating to asset allocation, timing of Fund purchases and redemptions, and increased remuneration and profitability for BlackRock and/or its personnel, including por tfolio managers.
Third par ties, including service providers to BlackRock or the Fund, may sponsor events (including, but not limited to, marketing and promotional activities and presentations, educational training programs and conferences) for registered representatives, other professionals and individual investors. There is a potential conflict of interest as such sponsorships may defray the costs of such activities to BlackRock, and may provide an incentive to BlackRock to retain such third par ties to provide services to the Fund.
In cer tain circumstances, BlackRock, on behalf of the Funds, may seek to buy from or sell securities to another fund or account advised by BlackRock. BlackRock may (but is not required to) effect purchases and sales between BlackRock clients (“cross trades”), including the Funds, if BlackRock believes such transactions are appropriate based on each par ty’s investment objectives and guidelines, subject to applicable law and regulation. There may be potential conflicts of interest or regulatory issues relating to these transactions which could limit BlackRock’s decision to engage in these transactions for the Funds. BlackRock may have a potentially conflicting division of loyalties and responsibilities to the par ties in such transactions.
BlackRock and its clients may pursue or enforce rights with respect to an issuer in which a Fund has invested, and those activities may have an adverse effect on the Fund. As a result, prices, availability, liquidity and terms of the Fund’s investments may be negatively impacted by the activities of BlackRock or its clients, and transactions for the Fund may be impaired or effected at prices or terms that may be less favorable than would otherwise have been the case.
The results of a Fund’s investment activities may differ significantly from the results achieved by BlackRock for its proprietary accounts or other accounts (including investment companies or collective investment vehicles) that it manages or advises. It is possible that one or more accounts managed or advised by BlackRock and such other accounts will achieve investment results that are substantially more or less favorable than the results achieved by a Fund. Moreover, it is possible that a Fund will sustain losses during periods in which one or more proprietary or other accounts managed or advised by BlackRock achieve significant profits. The opposite result is also possible.
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From time to time, a Fund may be restricted from purchasing or selling securities, or from engaging in other investment activities because of regulatory, legal or contractual requirements applicable to BlackRock or other accounts managed or advised by BlackRock, and/or the internal policies of BlackRock designed to comply with such requirements. As a result, there may be periods, for example, when BlackRock will not initiate or recommend cer tain types of transactions in cer tain securities or instruments with respect to which BlackRock is per forming services or when position limits have been reached. For example, the investment activities of BlackRock for its proprietary accounts and accounts under its management may limit the investment oppor tunities for a Fund in cer tain emerging and other markets in which limitations are imposed upon the amount of investment, in the aggregate or in individual issuers, by affiliated foreign investors.
In connection with its management of a Fund, BlackRock may have access to cer tain fundamental analysis and proprietary technical models developed by BlackRock. BlackRock will not be under any obligation, however, to effect transactions on behalf of a Fund in accordance with such analysis and models. In addition, BlackRock will not have any obligation to make available any information regarding its proprietary activities or strategies, or the activities or strategies used for other accounts managed by them, for the benefit of the management of a Fund and it is not anticipated that BlackRock will have access to such information for the purpose of managing the Fund. The proprietary activities or por tfolio strategies of BlackRock, or the activities or strategies used for accounts managed by BlackRock or other client accounts could conflict with the transactions and strategies employed by BlackRock in managing a Fund.
The Funds may be included in investment models developed by BlackRock for use by clients and financial advisors. To the extent clients invest in these investment models and increase the assets under management of the Funds, the investment management fee amounts paid by the Funds to BlackRock may also increase. The net asset value and liquidity of a Fund may be impacted by purchases and sales of the Fund by model-driven investment por tfolios, as well as by BlackRock itself and by its advisory clients.
In addition, cer tain principals and cer tain employees of a Fund’s investment adviser are also principals or employees of other business units or entities within BlackRock. As a result, these principals and employees may have obligations to such other business units or entities or their clients and such obligations to other business units or entities or their clients may be a consideration of which investors in a Fund should be aware.
BlackRock may enter into transactions and invest in securities, instruments and currencies on behalf of a Fund in which clients of BlackRock, or, to the extent permitted by the Commission and applicable law, BlackRock, serves as the counterpar ty, principal or issuer. In such cases, such par ty’s interests in the transaction will be adverse to the interests of the Fund, and such par ty may have no incentive to assure that the Fund obtains the best possible prices or terms in connection with the transactions. In addition, the purchase, holding and sale of such investments by a Fund may enhance the profitability of BlackRock.
BlackRock may also create, write or issue derivatives for clients, the underlying securities, currencies or instruments of which may be those in which a Fund invests or which may be based on the per formance of the Fund. Additionally, an affiliate of BlackRock will create, write or issue options, which may be based on the per formance of cer tain Funds. BlackRock has entered into an arrangement with Markit Indices Limited, the index provider for underlying fixed-income indexes used by cer tain iShares ETFs, related to derivative fixed-income products that are based on such iShares ETFs. Trading activity in these derivative products could also potentially lead to greater liquidity for such products, increased purchase activity with respect to these iShares ETFs and increased assets under management for BlackRock.
A Fund may, subject to applicable law, purchase investments that are the subject of an underwriting or other distribution by BlackRock and may also enter into transactions with other clients of BlackRock where such other clients have interests adverse to those of the Fund. At times, these activities may cause business units or entities within BlackRock to give advice to clients that may cause these clients to take actions adverse to the interests of the Fund. To the extent such transactions are permitted, a Fund will deal with BlackRock on an arms-length basis.
To the extent authorized by applicable law, BlackRock may act as broker, dealer, agent, lender or adviser or in other commercial capacities for a Fund. It is anticipated that the commissions, mark-ups, mark-downs, financial advisory fees, underwriting and placement fees, sales fees, financing and commitment fees, brokerage fees, other fees, compensation or profits, rates, terms and conditions charged by BlackRock will be in its view commercially reasonable, although BlackRock, including its sales personnel, will have an interest in obtaining fees and other amounts that are favorable to BlackRock and such sales personnel, which may have an adverse effect on the Funds. Index based funds may use an index provider that is affiliated with another service provider of the Fund or BlackRock that acts as a broker, dealer, agent, lender or in other commercial capacities for a Fund or BlackRock.
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Subject to applicable law, BlackRock (and its personnel and other distributors) will be entitled to retain fees and other amounts that they receive in connection with their service to the Funds as broker, dealer, agent, lender, adviser or in other commercial capacities. No accounting to the Funds or their shareholders will be required, and no fees or other compensation payable by the Funds or their shareholders will be reduced by reason of receipt by BlackRock of any such fees or other amounts.
When BlackRock acts as broker, dealer, agent, adviser or in other commercial capacities in relation to the Funds, BlackRock may take commercial steps in its own interests, which may have an adverse effect on the Funds.
A Fund will be required to establish business relationships with its counterpar ties based on the Fund’s own credit standing. BlackRock will not have any obligation to allow its credit to be used in connection with a Fund’s establishment of its business relationships, nor is it expected that the Fund’s counterpar ties will rely on the credit of BlackRock in evaluating the Fund’s creditwor thiness.
BlackRock Investment Management, LLC (“BIM”) or BlackRock Institutional Trust Company, N.A. (“BTC”), as applicable, each an affiliate of BlackRock, pursuant to SEC exemptive relief, acts as securities lending agent to, and receives a share of securities lending revenues from, the Funds. BlackRock will also receive compensation for managing the reinvestment of the cash collateral from securities lending. There are potential conflicts of interests in managing a securities lending program, including but not limited to: (i) BlackRock as securities lending agent may have an incentive to, among other things, increase or decrease the amount of securities on loan or to lend par ticular securities in order to generate additional risk-adjusted revenue for BlackRock and its affiliates; and (ii) BlackRock as securities lending agent may have an incentive to allocate loans to clients that would provide more revenue to BlackRock. As described fur ther below, BlackRock seeks to mitigate this conflict by providing its securities lending clients with equal lending oppor tunities over time in order to approximate pro rata allocation.
As par t of its securities lending program, BlackRock indemnifies the Funds and cer tain other clients and/or funds against a shor tfall in collateral in the event of borrower default. On a regular basis, BlackRock calculates the potential dollar exposure of collateral shor tfall resulting from a borrower default (“shor tfall risk”) in the securities lending program. BlackRock establishes program-wide borrower limits (“credit limits”) to actively manage borrower specific credit exposure. BlackRock oversees the risk model that calculates projected collateral shor tfall values using loan-level factors such as loan and collateral type and market value as well as specific borrower credit characteristics. When necessary, BlackRock may adjust securities lending program attributes by restricting eligible collateral or reducing borrower credit limits. As a result, the management of program-wide exposure as well as BlackRock-specific indemnification exposure may affect the amount of securities lending activity BlackRock may conduct at any given point in time by reducing the volume of lending oppor tunities for cer tain loans (including by asset type, collateral type and/or revenue profile).
BlackRock may decline to make a securities loan on behalf of a Fund, discontinue lending on behalf of a Fund or terminate a securities loan on behalf of a Fund for any reason, including but not limited to regulatory requirements and/or market rules, liquidity considerations, or credit considerations, which may impact Funds by reducing or eliminating the volume of lending oppor tunities for cer tain types of loans, loans in par ticular markets, loans of par ticular securities or types of securities, or for loans overall. In addition, some borrowers may prefer cer tain BlackRock lenders that provide additional protections against lender default that are favored by their prudential regulation.
BlackRock uses a predetermined systematic process in order to approximate pro rata allocation over time. In order to allocate a loan to a por tfolio: (i) BlackRock as a whole must have sufficient lending capacity pursuant to the various program limits (i.e. indemnification exposure limit and borrower credit limits); (ii) the lending por tfolio must hold the asset at the time a loan oppor tunity arrives; and (iii) the lending por tfolio must also have enough inventory, either on its own or when aggregated with other por tfolios into one single market delivery, to satisfy the loan request. In doing so, BlackRock seeks to provide equal lending oppor tunities for all por tfolios, independent of whether BlackRock indemnifies the por tfolio. Equal oppor tunities for lending por tfolios does not guarantee equal outcomes. Specifically, shor t and long-term outcomes for individual clients may vary due to asset mix, asset/liability spreads on different securities, and the overall limits imposed by the firm.
Purchases and sales of securities and other assets for a Fund may be aggregated with orders for other BlackRock client accounts, including with accounts that pay different transaction costs solely due to the fact that they have different research payment arrangements. BlackRock, however, is not required to aggregate orders if por tfolio management decisions for different accounts are made separately, or if they determine that aggregating is not practicable or required, or in cases involving client direction.
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Prevailing trading activity frequently may make impossible the receipt of the same price or execution on the entire volume of securities purchased or sold. When this occurs, the various prices may be averaged, and the Funds will be charged or credited with the average price. Thus, the effect of the aggregation may operate on some occasions to the disadvantage of the Funds. In addition, under cer tain circumstances, the Funds will not be charged the same commission or commission equivalent rates in connection with an aggregated order.
BlackRock, unless prohibited by applicable law, may cause a Fund or account to pay a broker or dealer a commission for effecting a transaction that exceeds the amount another broker or dealer would have charged for effecting the same transaction in recognition of the value of brokerage and research services provided by that broker or dealer. Under the European Union Markets in Financial Instruments Directive (Directive 2014/65/EU) and Markets in Financial Instruments Regulation (Regulation (EU) No 600/2014) (together “MiFID II”), European Union’s (the “EU”) investment managers, including BlackRock International Limited (“BIL”) which acts as a sub-adviser to cer tain Funds, pay for research from brokers and dealers directly out of their own resources, rather than through client commissions.
Subject to applicable law, BlackRock may select brokers that furnish BlackRock, the Funds, other BlackRock client accounts or personnel, directly or through correspondent relationships, with research or other appropriate services which provide, in BlackRock’s view, appropriate assistance to BlackRock in the investment decision-making process (including with respect to futures, fixed-price offerings and over-the-counter (“OTC”) transactions). Such research or other services may include, to the extent permitted by law, research repor ts on companies, industries and securities; economic and financial data; financial publications; proxy analysis; trade industry seminars; computer data bases; research-oriented software and other services and products.
Research or other services obtained in this manner may be used in servicing any or all of the Funds and other BlackRock client accounts, including in connection with BlackRock client accounts other than those that pay commissions to the broker relating to the research or other service arrangements. Such products and services may dispropor tionately benefit other BlackRock client accounts relative to the Funds based on the amount of brokerage commissions paid by the Funds and such other BlackRock client accounts. For example, research or other services that are paid for through one client’s commissions may not be used in managing that client’s account. In addition, other BlackRock client accounts may receive the benefit, including dispropor tionate benefits, of economies of scale or price discounts in connection with products and services that may be provided to the Funds and to such other BlackRock client accounts. To the extent that BlackRock uses soft dollars, it will not have to pay for those products and services itself.
BlackRock, unless prohibited by applicable law, may endeavor to execute trades through brokers who, pursuant to such arrangements, provide research or other services in order to ensure the continued receipt of research or other services BlackRock believes are useful in its investment decision-making process. BlackRock may from time to time choose not to engage in the above described arrangements to varying degrees. BlackRock, unless prohibited by applicable law, may also enter into commission sharing arrangements under which BlackRock may execute transactions through a broker-dealer and request that the broker-dealer allocate a por tion of the commissions or commission credits to another firm that provides research to BlackRock. To the extent that BlackRock engages in commission sharing arrangements, many of the same conflicts related to traditional soft dollars may exist.
BlackRock may utilize cer tain electronic crossing networks (“ECNs”) (including, without limitation, ECNs in which BlackRock has an investment or other interest, to the extent permitted by applicable law) in executing client securities transactions for cer tain types of securities. These ECNs may charge fees for their services, including access fees and transaction fees. The transaction fees, which are similar to commissions or markups/ markdowns, will generally be charged to clients and, like commissions and markups/markdowns, would generally be included in the cost of the securities purchased. Access fees may be paid by BlackRock even though incurred in connection with executing transactions on behalf of clients, including the Funds. In cer tain circumstances, ECNs may offer volume discounts that will reduce the access fees typically paid by BlackRock. BlackRock will only utilize ECNs consistent with its obligation to seek to obtain best execution in client transactions.
BlackRock owns a minority interest in, and is a member of, Members Exchange (“MEMX”), a newly created U.S. stock exchange. Transactions for a Fund may be executed on MEMX if third par ty brokers select MEMX as the appropriate venue for execution of orders placed by BlackRock traders on behalf of client por tfolios.
BlackRock has adopted policies and procedures designed to prevent conflicts of interest from influencing proxy voting decisions that it makes on behalf of advisory clients, including the Funds, and to help ensure that such decisions are made in accordance with BlackRock’s fiduciary obligations to its clients. Never theless,
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notwithstanding such proxy voting policies and procedures, actual proxy voting decisions of BlackRock may have the effect of favoring the interests of other clients or businesses of other divisions or units of BlackRock, provided that BlackRock believes such voting decisions to be in accordance with its fiduciary obligations. For a more detailed discussion of these policies and procedures, see “Proxy Voting Policies and Procedures.”
It is also possible that, from time to time, BlackRock and/or its advisory clients (including other funds and separately managed accounts) may, subject to compliance with applicable law, purchase and hold shares of a Fund. Increasing a Fund’s assets may enhance investment flexibility and diversification and may contribute to economies of scale that tend to reduce the Fund’s expense ratio. BlackRock reserves the right, subject to compliance with applicable law, to redeem at any time some or all of the shares of a Fund acquired for its own accounts. A large redemption of shares of a Fund by BlackRock could significantly reduce the asset size of the Fund, which might have an adverse effect on the Fund’s investment flexibility, por tfolio diversification and expense ratio. BlackRock seeks to consider the effect of redemptions on a Fund and other shareholders in deciding whether to redeem its shares but is not obligated to do so and may elect not to do so.
It is possible that a Fund may invest in securities of, or engage in transactions with, companies in which BlackRock has significant debt or equity investments or other interests. A Fund may also invest in issuances (such as structured notes) by entities for which BlackRock provides and is compensated for cash management services relating to the proceeds from the sale of such issuances. In making investment decisions for a Fund, BlackRock is not permitted to obtain or use material non-public information acquired by any unit of BlackRock, in the course of these activities. In addition, from time to time, the activities of BlackRock may limit a Fund’s flexibility in purchases and sales of securities. As indicated below, BlackRock may engage in transactions with companies in which BlackRock-advised funds or other clients of BlackRock have an investment.
BlackRock and its personnel and other financial service providers may have interests in promoting sales of the Funds. With respect to BlackRock and its personnel, the remuneration and profitability relating to services to and sales of the Funds or other products may be greater than remuneration and profitability relating to services to and sales of cer tain funds or other products that might be provided or offered. BlackRock and its sales personnel may directly or indirectly receive a por tion of the fees and commissions charged to the Funds or their shareholders. BlackRock and its advisory or other personnel may also benefit from increased amounts of assets under management. Fees and commissions may also be higher than for other products or services, and the remuneration and profitability to BlackRock and such personnel resulting from transactions on behalf of or management of the Funds may be greater than the remuneration and profitability resulting from other funds or products.
BlackRock may provide valuation assistance to cer tain clients with respect to cer tain securities or other investments and the valuation recommendations made for such clients’ accounts may differ from the valuations for the same securities or investments assigned by a Fund’s pricing vendors, especially if such valuations are based on broker-dealer quotes or other data sources unavailable to the Fund’s pricing vendors. While BlackRock will generally communicate its valuation information or determinations to a Fund’s pricing vendors and/or fund accountants, there may be instances where the Fund’s pricing vendors or fund accountants assign a different valuation to a security or other investment than the valuation for such security or investment determined or recommended by BlackRock.
BlackRock and its directors, officers and employees, may buy and sell securities or other investments for their own accounts and may have conflicts of interest with respect to investments made on behalf of a Fund. As a result of differing trading and investment strategies or constraints, positions may be taken by directors, officers and employees of BlackRock that are the same, different from or made at different times than positions taken for the Fund. To lessen the possibility that a Fund will be adversely affected by this personal trading, the Fund, BRIL and BlackRock each have adopted a Code of Ethics in compliance with Section 17(j) of the Investment Company Act that restricts securities trading in the personal accounts of investment professionals and others who normally come into possession of information regarding the Fund’s por tfolio transactions. Each Code of Ethics is also available on the EDGAR Database on the Commission’s Internet site at http://www.sec.gov, and copies may be obtained, after paying a duplicating fee, by e-mail at publicinfo@sec.gov.
BlackRock will not purchase securities or other proper ty from, or sell securities or other proper ty to, a Fund, except that the Fund may in accordance with rules or guidance adopted under the Investment Company Act engage in transactions with another Fund or accounts that are affiliated with the Fund as a result of common officers, directors, or investment advisers or pursuant to exemptive orders granted to the Funds and/or BlackRock by the Commission. These transactions would be effected in circumstances in which BlackRock determined that it would be appropriate for the Fund to purchase and another client of BlackRock to sell, or the Fund to sell and another client of BlackRock to purchase, the same security or instrument on the same day. From time to time, the activities of a Fund may be restricted because of regulatory requirements applicable to BlackRock and/or BlackRock’s internal policies designed
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to comply with, limit the applicability of, or that otherwise relate to such requirements. A client not advised by BlackRock would not be subject to some of those considerations. There may be periods when BlackRock may not initiate or recommend cer tain types of transactions, or may otherwise restrict or limit its advice regarding cer tain securities or instruments issued by or related to companies for which BlackRock is per forming advisory or other services or has proprietary positions. For example, when BlackRock is engaged to provide advisory or risk management services for a company, BlackRock may be prohibited from or limited in purchasing or selling securities of that company on behalf of a Fund, par ticularly where such services result in BlackRock obtaining material non public information about the company (e.g., in connection with par ticipation in a creditors’ committee). Moreover, applicable provisions of the Investment Company Act or other regulatory considerations may restrict a Fund or BlackRock from effecting cer tain por tfolio transactions or taking other actions in respect of an investment on behalf of a Fund, including where BlackRock and/or clients advised by BlackRock already have an interest in such issuer or the investment. Similar situations could arise if personnel of BlackRock serve as directors of companies the securities of which the Funds wish to purchase or sell. However, if permitted by applicable law, and where consistent with BlackRock’s policies and procedures (including the necessary implementation of appropriate information barriers), the Funds may purchase securities or instruments that are issued by such companies, are the subject of an advisory or risk management assignment by BlackRock, or where personnel of BlackRock are directors or officers of the issuer.
BlackRock has adopted and implemented policies and procedures that are designed to address potential conflicts that arise in connection with the advisory services BlackRock provides to Funds and other clients. Cer tain BlackRock advisory personnel may take views, and make decisions or recommendations, that are different than or opposite those of other BlackRock advisory personnel. Cer tain por tfolio management teams within BlackRock may make decisions or take (or refrain from taking) actions with respect to clients they advise in a manner different than or adverse to the decisions made or the actions taken (or not taken) by the Funds’ por tfolio management teams. The various por tfolio management teams may not share information with each other, including as a result of cer tain information barriers and other policies, and will not have any obligation or other duty to do so.
BlackRock has established cer tain information barriers and other policies to address the sharing of information between different businesses within BlackRock, including with respect to personnel responsible with managing por tfolios and voting proxies with respect to cer tain index equity por tfolios versus those responsible for managing por tfolios and voting proxies with respect to all other por tfolios. As a result of information barriers, cer tain units of BlackRock generally will not have access, or will have limited access, to cer tain information and personnel, including senior personnel, in other units of BlackRock, and generally will not manage the Funds with the benefit of information possessed by such other units. Therefore, BlackRock may not be able to review potential investments for the Funds with the benefit of information held by cer tain areas of BlackRock.
BlackRock may determine to move cer tain personnel, businesses, or business units from one side of an information barrier to the other side of the information barrier. In connection therewith, BlackRock personnel, businesses, and business units that were moved will no longer have access to the information and personnel from the side of the information barrier from which they were moved. Information obtained in connection with such changes to information barriers may limit or restrict the ability of BlackRock to engage in or otherwise effect transactions on behalf of the Funds (including purchasing or selling securities that BlackRock may otherwise have purchased or sold for a client in the absence of a change to an information barrier). Information barriers may not have their intended impact due to, for example, changes in applicable law or inadver tent crossings of the barriers, and actions by personnel on one side of a barrier may impact the potential actions of personnel on the other side of a barrier.
Although the information barriers are intended to allow for independent por tfolio management decision-making and proxy voting among cer tain BlackRock businesses, the investment activities of BlackRock for BlackRock clients, as well as BlackRock’s proprietary accounts, may nonetheless limit the investment strategies and rights of other clients (including the Fund). As BlackRock’s assets under management increases, BlackRock clients may face greater negative impacts due to ownership restrictions and limitations imposed by laws, regulations, rules, regulators, or issuers. For example, in cer tain circumstances where a BlackRock client invests in securities issued by companies that operate in cer tain industries (e.g., banking, insurance, and utilities) or in cer tain emerging or international markets, or are subject to regulatory or corporate ownership restrictions (e.g., with mechanisms such as poison pills in place to prevent takeovers), or where a BlackRock client invests in cer tain futures and derivatives, there may be limits on the aggregate amount invested by BlackRock for its clients and BlackRock’s proprietary accounts that may not be exceeded without the grant of a license or other regulatory or corporate approval, order, consent, relief, waiver or non-disapproval or, if exceeded, may cause BlackRock or its clients to be subject to enforcement actions, disgorgement of share ownership or profits, regulatory restrictions, complex compliance repor ting, increased
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compliance costs or suffer disadvantages or business restrictions. In light of cer tain restrictions, BlackRock may also seek to make indirect investments (e.g., using derivatives) on behalf of its clients to receive exposure to cer tain securities in excess of the applicable ownership restrictions and limitations when legally permitted that will expose such clients to additional costs and additional risks, including any risks associated with investing in derivatives. There may be limited availability of derivatives that provide indirect exposure to an impacted security. BlackRock clients can be subject to more than one ownership limitation depending on each client’s holdings, and each ownership limitation can impact multiple securities held by the client. Cer tain clients or shareholders may have their own overlapping obligations to monitor their compliance with ownership limitations across their investments.
If cer tain aggregate ownership thresholds are reached either through the actions of BlackRock or a BlackRock client or as a result of corporate actions by the issuer, the ability of BlackRock on behalf of clients to purchase or dispose of investments, or exercise rights (including voting) or under take business transactions, may be restricted by law, regulation, rule, or organizational documents or otherwise impaired. For example, to meet the requirements of an ownership limitation or restriction, a client may be unable to purchase or directly hold a security the client would otherwise purchase or hold. The limitation or restriction may be based on the holdings of other BlackRock clients instead of the specific client being restricted. For index funds, this means a fund may not be able to track its index as closely as it would if it was not subject to an ownership limitation or restriction because the fund cannot acquire the amount of the impacted security included in its index. BlackRock on behalf of its clients may limit purchases, sell existing investments, utilize indirect investments, utilize information barriers, or otherwise restrict, forgo, or limit the exercise of rights (including transferring, outsourcing, or limiting voting rights or forgoing the right to receive dividends) when BlackRock, in its sole discretion, deems it appropriate in light of potential regulatory or other restrictions on ownership or other consequences resulting from reaching investment thresholds. These types of restrictions could negatively impact a client’s per formance or ability to meet its investment objective.
When BlackRock or a BlackRock client is subject to an ownership limitation, BlackRock may in its discretion seek permission from the applicable issuers or regulators to exceed the limitation. However, there is no guarantee that permission will be granted, or that, once granted, it will not be modified or revoked at a later date with minimal or no notice. The issuer and/or regulator may also require that BlackRock on behalf of itself and its clients take or refrain from taking cer tain actions in connection with the approval, order, consent, relief or non-disapproval, which BlackRock may accept if it believes the benefits outweigh the costs and may limit BlackRock from taking actions that it otherwise would take. In those circumstances where ownership thresholds or limitations must be observed, BlackRock seeks to allocate limited investment oppor tunities equitably among clients, taking into consideration benchmark weight and investment strategy. BlackRock may adopt cer tain controls designed to prevent the occurrence of a breach of any applicable ownership threshold or limits, including, for example, when ownership in cer tain securities nears an applicable threshold, BlackRock may limit additional purchases in such securities. If client holdings of an issuer exceed an applicable threshold and BlackRock is unable to obtain relief to enable the continued holding of such investments, it may be necessary to reduce these positions to meet the applicable limitations and BlackRock or such client may be subject to regulatory actions. In these cases, the investments will be sold in a manner that BlackRock deems fair and equitable over time.
Ownership limitations are highly complex. It is possible that, despite BlackRock’s intent to either comply with or be granted permission to exceed ownership limitations, it may inadver tently breach a limit or violate the corporate or regulatory approval, order, consent, relief or non-disapproval that was obtained.
In addition to the foregoing, other ownership thresholds may trigger repor ting requirements to governmental and regulatory authorities, and such repor ts may entail the disclosure of the identity of a client or BlackRock’s intended strategy with respect to such security or asset.
BlackRock may maintain securities indices. To the extent permitted by applicable laws, the Funds may seek to license and use such indices as par t of their investment strategy. Index based funds that seek to track the per formance of securities indices also may use the name of the index or index provider in the fund name. Index providers, including BlackRock (to the extent permitted by applicable law), may be paid licensing fees for use of their index or index name. In instances where BlackRock charges a unitary management fee, BlackRock may have a financial incentive to use a BlackRock index that is less costly to BlackRock than a third par ty index. BlackRock may benefit from the Funds using BlackRock indices by creating increasing acceptance in the marketplace for such indices. BlackRock is not obligated to license its indices to a Fund and the Funds are under no obligation to use BlackRock indices. Any Fund that enters into a license for a BlackRock index cannot be assured that the terms of any index licensing agreement with BlackRock will be as favorable as those terms offered to other licensees.
BlackRock may enter into contractual arrangements with third-par ty service providers to a Fund (e.g., custodians, administrators and index providers) pursuant to which BlackRock receives fee discounts or concessions in
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recognition of BlackRock’s overall relationship with such service providers. BlackRock may also enter into contractual arrangements with such service providers pursuant to which BlackRock incurs additional costs if the service provider’s services are terminated with respect to a Fund. To the extent that BlackRock is responsible for paying service providers out of its fees that it receives from the Funds, the benefits of lower fees, including any fee discounts or concessions, or any additional savings, may accrue, in whole or in par t, to BlackRock, which could result in conflicts of interest relating to the use or termination of service providers to a Fund. In addition, conflicts of interest may arise with respect to contractual arrangements with third-par ty service providers to a Fund, or the selection of such providers, par ticularly in circumstances where BlackRock is negotiating on behalf of both funds that have a unitary management fee and those that do not or different service providers have different fee structures.
Conflicts of interest may arise as a result of simultaneous investment management of multiple client accounts by BlackRock’s investment professionals. For example, differences in the advisory fee structure may create the appearance of actual or potential conflicts of interest because such differences could create pecuniary incentives for BlackRock to favor one client account over another.
BlackRock owns or has an ownership interest in cer tain trading, por tfolio management, operations and/or information systems used by Fund service providers. These systems are, or will be, used by a Fund service provider in connection with the provision of services to accounts managed by BlackRock and funds managed and sponsored by BlackRock, including the Funds, that engage the service provider (typically the custodian). A Fund’s service provider remunerates BlackRock for the use of the systems. A Fund service provider’s payments to BlackRock for the use of these systems may enhance the profitability of BlackRock.
BlackRock’s receipt of fees from a service provider in connection with the use of systems provided by BlackRock may create an incentive for BlackRock to recommend that a Fund enter into or renew an arrangement with the service provider.
In recognition of a BlackRock client’s overall relationship with BlackRock, BlackRock may offer special pricing arrangements for cer tain services provided by BlackRock. Any such special pricing arrangements will not affect Fund fees and expenses applicable to such client’s investment in a Fund.
Present and future activities of BlackRock and its directors, officers and employees, in addition to those described in this section, may give rise to additional conflicts of interest.
PURCHASE OF SHARES
Each Fund offers its shares without a sales charge at a price equal to the NAV next determined after a purchase order becomes effective. Each Fund attempts to maintain a NAV per share of $1.00. Share purchase orders are effective on the date Federal Funds become available to a Fund. Generally, if Federal Funds are available to a Fund prior to the determination of NAV on any business day, the order will be effective on that day. Except as otherwise specified in a Fund’s Prospectus, shares purchased will begin accruing dividends on the day following the date of purchase. Federal Funds are a commercial bank’s deposits in a Federal Reserve Bank and can be transferred from one member bank’s account to that of another member bank on the same day and thus are considered to be immediately available funds. Any order may be rejected by a Fund or the Distributor.
Shareholder Services
Each Fund offers a number of shareholder services described below that are designed to facilitate investment in shares of the Fund. Full details as to each of such services and copies of the various plans and instructions as to how to par ticipate in the various services or plans, or how to change options with respect thereto, can be obtained from each Fund, by calling the telephone number on the cover page to Par t I of your Fund’s SAI, or from the Distributor. The types of shareholder service programs offered to shareholders include: Fee-Based Programs; Automatic Investment Plan; and Systematic Withdrawal Plan.
Purchase of Shares of Summit Cash Reserves
Summit Cash Reserves has authorized one or more brokers and/or financial institutions (“Authorized Persons”) to receive on its behalf purchase and redemption orders that are in “good form” in accordance with the policies of those Authorized Persons. Such Authorized Persons are authorized to designate other intermediaries to receive purchase and redemption orders on the Fund’s behalf, and the Fund will be deemed to have received a purchase or redemption order when an Authorized Person or, if applicable, such Authorized Person’s authorized designee, receives the order. Such customer orders will be priced at the Fund’s NAV next computed after they are received by an Authorized Person or such Authorized Person’s authorized designee. Financial institutions may include retirement
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plan service providers who aggregate purchase and redemption instructions received from numerous retirement plans or plan par ticipants.
Investor A and Investor C Shares
Purchase of Investor A Shares. The minimum investment for the initial purchase of shares is $1,000. There is no investment minimum for employer-sponsored retirement plans (not including SEP IRAs, SIMPLE IRAs or SARSEPs). There is no investment minimum for cer tain fee-based programs. There is a $50 minimum for subsequent investments (with the exception of cer tain employer-sponsored retirement plans which may have a lower minimum). Purchases through the Automatic Investment Plan are subject to a lower initial purchase minimum. In addition, the minimum initial investment for employees of the Fund, the Fund’s Manager, sub-adviser, BRIL or transfer agent or employees of their affiliates is $100, unless payment is made through a payroll deduction program in which case the minimum investment is $25.
Purchases of Investor A Shares Through Brokers. It is the responsibility of brokers to transmit purchase orders and payment on a timely basis. Generally, if payment is not received within the period described in the Prospectus, the order will be canceled, notice thereof will be given, and the broker and its customers will be responsible for any loss to the Fund or its shareholders. Orders of less than $500 may be mailed by a broker to the transfer agent.
Other Purchase Information. Shares of the Fund are sold on a continuous basis by BRIL as distributor. BRIL maintains its principal offices at 50 Hudson Yards, New York, New York 10001. Purchases may be effected on weekdays on which the NYSE is open for business (a “Business Day”). Payment for orders of Investor A Shares which are not received or accepted will be returned after prompt inquiry. The issuance of shares is recorded on the books of the Fund. No cer tificates will be issued for shares. Payments for Investor A Shares of the Fund may, in the discretion of the Fund’s Manager, be made in the form of securities that are permissible investments for the Fund. The Fund reserves the right to reject any purchase order, to modify or waive the minimum initial or subsequent investment requirement and to suspend and resume the sale of any share class of the Fund at any time.
Exchange Privilege. Unless an exemption applies, a front-end sales charge will be charged in connection with exchanges of Investor A Shares of the Fund for Investor A Shares of another fund advised by BlackRock or its affiliates that imposes such a sales charge. Exchanges of Investor C Shares of the Fund for Investor C Shares of one of the non-money market por tfolios advised by BlackRock or its affiliates (each a “Non-Money Market Por tfolio”) will be exercised at NAV. However, a contingent deferred sales charge (“CDSC”) will be charged in connection with the redemption of the Investor C Shares of the Non-Money Market Por tfolio received in the exchange.
A CDSC of 1.00% may apply to cer tain redemptions of Investor C Shares of Summit Cash Reserves. The Investor C Shares CDSC is only charged upon redemptions of Investor C Shares within one year after you originally acquired the Investor C Shares of the Non-Money Market Por tfolio, unless you qualify for a waiver. There is no CDSC charged on redemptions if you have owned your Investor C Shares for more than one year (as measured from your original purchase of Investor C Shares that you exchanged into Investor C Shares of Summit Cash Reserves). In determining whether an Investor C Shares CDSC is applicable to a redemption, the calculation will be determined in the manner that results in the lowest possible rate being charged. The charge will be assessed on an amount equal to the lesser of the proceeds of redemption or the cost of the shares being redeemed. Accordingly, no CDSC will be imposed on increases in NAV above the initial purchase price of Investor C Shares. In addition, no CDSC will be assessed on Investor C Shares acquired through reinvestment of dividends. It will be assumed that the redemption is first of shares held for over one year or shares acquired pursuant to reinvestment of dividends and then of shares held longest during the one-year period. A transfer of shares from a shareholder’s account to another account will be assumed to be made in the same order as a redemption.
See “Information on Sales Charges and Distribution Related Expenses” in Par t I of the Fund’s SAI for information about amounts paid to the Distributor in connection with CDSC shares for the periods indicated.
The CDSC on Investor C Shares is not charged in connection with: (1) redemptions of Investor C Shares purchased through cer tain employer-sponsored retirement plans and fee-based programs previously approved by cer tain Funds and rollovers of current investments in the Fund through such plans; (2) exchanges pursuant to the exchange privilege described in the Fund’s Prospectus; (3) redemptions made in connection with minimum required distributions from IRA and 403(b)(7) accounts due to the shareholder reaching the applicable age triggering such distributions; (4) redemptions made with respect to cer tain retirement plans sponsored by BlackRock or its affiliates; (5) redemptions in connection with a shareholder’s death as long as the waiver request is made within one year of death or, if later, reasonably promptly following completion of probate (including in connection with the distribution of account assets to a beneficiary of the decedent) or disability (as defined in the Code) subsequent to the purchase of Investor C Shares; (6) withdrawals resulting from shareholder disability (as defined in the Code) as long as the
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disability arose subsequent to the purchase of the shares; (7) involuntary redemptions of Investor C Shares in accounts with low balances as described in “Redemption of Shares” below; (8) redemptions made pursuant to a systematic withdrawal plan, subject to the limitations set for th under “Systematic Withdrawal Plan” below; (9) redemptions related to the payment of BNY Mellon Investment Servicing Trust Company custodial IRA fees; and (10) redemptions when a shareholder can demonstrate hardship, in the absolute discretion of the Fund. In addition, no CDSC is charged on Investor C Shares acquired through the reinvestment of dividends or distributions.
Cer tain CDSC waivers and reductions on Investor C Shares may be available to customers of cer tain financial intermediaries, as described under “Intermediary-Defined Sales Charge Waiver Policies” in the Fund’s Prospectus. Please speak to your financial intermediary for more information.
A shareholder wishing to make an exchange may do so by sending a written request to the Fund at the following address: BlackRock, P.O. Box 534429, Pittsburgh, Pennsylvania 15253-4429. Shareholders are automatically provided with telephone exchange privileges when opening an account, unless they indicate on the Application that they do not wish to use this privilege. To add this feature to an existing account that previously did not provide this option, a request must be made in writing or by telephone. Once this election has been made, the shareholder may simply contact the Fund by telephone at (800) 441-7762 to request the exchange. During periods of substantial economic or market change, telephone exchanges may be difficult to complete and shareholders may have to submit exchange requests in writing.
If the exchanging shareholder does not currently own shares of the investment por tfolio whose shares are being acquired, a new account will be established with the same registration, dividend and capital gain options and broker of record as the account from which shares are exchanged, unless otherwise specified in writing by the shareholder with all signatures guaranteed by an “eligible guarantor institution” as defined in Rule 17 Ad-15 under the Exchange Act. In order to par ticipate in the Automatic Investment Program or establish a Systematic Withdrawal Plan for the new account, however, an exchanging shareholder must file a specific written request.
Any share exchange must satisfy the requirements relating to the minimum initial investment requirement, and must be legally available for sale in the state of the investor’s residence. For Federal income tax purposes, a share exchange is a taxable event and, accordingly, a capital gain or loss may be realized. Before making an exchange request, shareholders should consult a tax or other financial adviser and should consider the investment objective, policies and restrictions of the investment por tfolio into which the shareholder is making an exchange. Brokers may charge a fee for handling exchanges.
The Fund reserves the right to suspend, modify or terminate the exchange privilege at any time. Notice will be given to shareholders of any material modification or termination except where notice is not required. The Fund reserves the right to reject any telephone exchange request. Telephone exchanges may be subject to limitations as to amount or frequency, and to other restrictions that may be established from time to time to ensure that exchanges do not operate to the disadvantage of any por tfolio or its shareholders. The Fund, the Administrator and BRIL will employ reasonable procedures to confirm that instructions communicated by telephone are genuine. The Fund, the Trust, the Administrator(s) and BRIL will not be liable for any loss, liability, cost or expense for acting upon telephone instructions reasonably believed to be genuine in accordance with such procedures.
By use of the exchange privilege, the investor authorizes the Fund’s transfer agent to act on telephonic or written exchange instructions from any person representing him- or herself to be the investor and believed by the Fund’s transfer agent to be genuine. The records of the Fund’s transfer agent per taining to such instructions are binding. The exchange privilege may be modified or terminated at any time upon 60 days’ notice to affected shareholders. The exchange privilege is only available in states where the exchange may legally be made.
The redemption of shares of one fund and the subsequent investment in another fund generally will be treated as two separate transactions. Therefore, a front-end sales charge will be imposed (unless an exemption applies) on the purchase of Investor A or Investor A1 Shares of a Non-Money Market Por tfolio with the proceeds of a redemption of Investor A Shares of the Fund. In addition, when Investor C Shares of the Fund are redeemed and the proceeds are used to purchase Investor C Shares of a Non-Money Market Por tfolio, a CDSC will be imposed (unless an exemption applies) when the Investor C Shares of the Non-Money Market Por tfolio are redeemed.
The Fund has adopted an automatic conversion feature for Investor C Shares. Effective November 23, 2020, Investor C Shares held for approximately eight years will be conver ted into Investor A Shares, as set for th in the Fund’s Prospectus. In addition, accounts that do not have a financial intermediary associated with them are not eligible to hold Investor C Shares, and any Investor C Shares held in such accounts will be automatically conver ted to Investor A Shares.
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A CDSC of up to 1.00% may apply to cer tain redemptions of Investor A Shares of Summit Cash Reserves purchased in an exchange transaction for Investor A Shares of another mutual fund sponsored and advised by BlackRock or its affiliates (“BlackRock Fund”) where no initial sales charge was paid at the time of purchase of such fund (each, an “Investor A Load-Waived BlackRock Por tfolio”) as par t of an investment of $1,000,000 (lesser amounts may apply depending on the Investor A Load-Waived BlackRock Por tfolio) or more. The Investor A Shares CDSC is only charged upon redemptions of Investor A Shares within 18 months after you originally acquired such Investor A Shares of the Investor A Load-Waived BlackRock Por tfolio (a shor ter holding period may apply depending on the Investor A Load-Waived BlackRock Por tfolio), unless you qualify for a waiver. There is no CDSC charged on redemptions if you have owned your Investor A Shares for more than 18 months (or for a shor ter holding period, as applicable) as measured from your original purchase of Investor A Shares that you exchanged into Investor A Shares of Summit Cash Reserves or if you purchase Investor A Shares of Summit Cash Reserves not through an exchange. The deferred sales charge on Investor A Shares is not charged in connection with: (a) redemptions of Investor A Shares purchased through cer tain employer-sponsored retirement plans and rollovers of current investments in a Fund through such plans; (b) exchanges pursuant to the exchange privilege described in the Fund’s Prospectus; (c) redemptions made in connection with minimum required distributions due to the shareholder reaching age 72 from IRA and 403(b)(7) accounts; (d) redemptions made with respect to cer tain retirement plans sponsored by BlackRock or its affiliates; (e) redemptions (i) within one year of a shareholder’s death or, if later, the receipt of a cer tified probate settlement (including in connection with the distribution of account assets to a beneficiary of the decedent) or (ii) in connection with a shareholder’s disability (as defined in the Code) subsequent to the purchase of Investor A Shares; (f) involuntary redemptions of Investor A Shares in accounts with low balances; (g) cer tain redemptions made pursuant to the Systematic Withdrawal Plan (described below); (h) redemptions related to the payment of BNY Mellon Investment Servicing Trust Company custodial IRA fees; and (i) redemptions when a shareholder can demonstrate hardship, in the absolute discretion of a Fund.
If a holder of Investor A Shares of the Fund subsequently exchanges back into the same class of shares of the original affiliated fund it will do so without paying any sales charge. If a holder of Investor A Shares of the Fund exchanges into Investor A Shares of another affiliated fund, the holder will be required to pay a sales charge equal to the difference, if any, between the sales charge previously paid on the shares of the original affiliated fund and the sales charge payable at the time of the exchange on the shares of the new affiliated fund.
It is contemplated that the exchange privilege may be applicable to other new mutual funds whose shares are distributed by the Distributor.
Under the exchange privilege, exchanges are made on the basis of the relative NAVs of the shares being exchanged. Shares issued pursuant to dividend reinvestment are sold on a no-load basis in each of the affiliated funds. For purposes of the exchange privilege, dividend reinvestment shares shall be deemed to have been sold with a sales charge equal to the sales charge previously paid on the shares on which the dividend was paid. Based on this formula an exchange of Investor A Shares of the Fund for Investor A Shares of an affiliated fund generally will require the payment of a sales charge equal to the difference, if any, between the sales charge previously paid on the Investor A Shares originally exchanged for Investor A Shares of the Fund and the sales charge that may be payable at the time of the exchange on the Investor A Shares of the affiliated fund to be acquired.
Before effecting an exchange, shareholders of the Fund should obtain a currently effective prospectus of the affiliated fund into which the exchange is to be made for information regarding the fund and for fur ther details regarding such exchange.
To effect an exchange, shareholders should contact their financial adviser, selected securities dealer or other financial intermediary, who will advise the Fund of the exchange, or write to the Fund’s transfer agent requesting that the exchange be effected. Shareholders of cer tain affiliated funds with shares for which cer tificates have not been issued may effect an exchange by wire through their securities dealers. The exchange privilege may be modified or terminated at any time in accordance with the rules of the Commission. There is currently no limitation on the number of times a shareholder may effect an exchange into the Fund through the exchange privilege; however, the Fund reserves the right to limit the number of times an investor may effect an exchange. Cer tain affiliated funds may suspend the continuous offering of their shares at any time and thereafter may resume such offering from time to time. The exchange privilege is available only to U.S. shareholders in states where the exchange legally may be made.
An exchange pursuant to the exchange privilege is treated as a sale of the exchanged shares and a purchase of the new shares for Federal income tax purposes. In addition, an exchanging shareholder of any of the funds may be subject to backup withholding unless such shareholder cer tifies under penalty of perjury that the taxpayer
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identification number on file with any such fund is correct, and that he or she is not otherwise subject to backup withholding. See “Dividends and Taxes — Taxes.”
Additional Shareholder Features (Investor A and Investor C Shares Only)
Automatic Investment Plan (“AIP”). Cer tain shareholders may arrange for periodic investments in the Fund through automatic deductions from a checking or savings account by completing the AIP Application which may be obtained from the Fund at (800) 441-7762, or online at www.blackrock.com. The minimum pre-authorized investment amount is $50 per Fund.
Systematic Withdrawal Plan (“SWP”). The Fund offers a Systematic Withdrawal Plan to shareholders who wish to receive regular distributions from their accounts. Upon commencement of the SWP, the account must have a current value of $10,000 or more in the Fund. Shareholders may elect to receive automatic cash payments of $50 or more at any interval. You may choose any day for the withdrawal. If no day is specified, the withdrawals will be processed on the 25th day of the month or, if such day is not a Business Day, on the prior Business Day and are paid promptly thereafter. An investor may utilize the SWP by completing the Systematic Withdrawal Plan Application Form which may be obtained by calling the Fund or by visiting our website at www.blackrock.com.
Shareholders should realize that if withdrawals exceed income dividends their invested principal in the account will be depleted. To par ticipate in the SWP, shareholders must have their dividends automatically reinvested. Shareholders may change or cancel the SWP at any time, upon written notice to the Fund, or by calling the Fund at (800) 441-7762.
For this reason, a shareholder may not par ticipate in the Automatic Investment Plan (see “Account Services and Privileges — Automatic Investment Plan” in the Fund’s Prospectus) and the Systematic Withdrawal Plan at the same time.
Dividend Allocation Plan. The Dividend Allocation Plan allows shareholders to elect to have all their dividends and any other distributions from the Fund or any Eligible Fund (which includes the Fund and other funds as designated by BRIL from time to time) automatically invested at NAV in one other such Eligible Fund designated by the shareholder, provided the account into which the dividends and distributions are directed is initially funded with the requisite minimum amount.
Conversion of Investor C Shares to Investor A Shares
Effective November 23, 2020 (the “Effective Date”), approximately eight years after purchase, Investor C Shares of the Fund will conver t automatically into Investor A Shares of the Fund (the “Investor C 8-Year Conversion”). It is the financial intermediary’s responsibility to ensure that the shareholder is credited with the proper holding period. As of the Effective Date, cer tain financial intermediaries, including group retirement recordkeeping platforms, may not have been tracking such holding periods and therefore may not be able to process such conversions. In such instances, Investor C Shares held as of the Effective Date will automatically conver t to Investor A Shares approximately eight years after the Effective Date. If, as of November 23, 2028 (eight years after the Effective Date), a financial intermediary has not implemented systems or procedures to track holding periods commencing from the Effective Date, shareholders holding Investor C Shares through such financial intermediary will no longer be eligible to hold Investor C Shares and any such shares will conver t to Investor A Shares as soon as reasonably practicable after such date.
In addition, accounts that do not have a financial intermediary associated with them are not eligible to hold Investor C Shares, and any Investor C Shares held in such accounts will be automatically conver ted into Investor A Shares (the “Investor C Direct Accounts Conversion” and together with the Investor C 8-Year Conversion, the “Investor C Conversions”).
The Investor C Conversions will occur at least once each month (on the “Investor C Conversion Date”) on the basis of the relative NAV of the shares of the two applicable classes on the Investor C Conversion Date, without the imposition of any sales load, fee or other charge. The Investor C Conversions will not be deemed a purchase or sale of the shares for Federal income tax purposes. Shares acquired through reinvestment of dividends on Investor C Shares will also conver t automatically to Investor A Shares, as set for th in the Fund’s Prospectus. The Investor C Conversion Date for dividend reinvestment shares will be calculated taking into account the length of time the shares underlying the dividend reinvestment shares were outstanding.
Institutional Shares
Purchase of Shares . Summit Cash Reserves offers Institutional Shares as described in the Fund’s Prospectus.
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In addition, the following investors may purchase Institutional Shares: employees, officers and directors/ trustees of BlackRock, Inc., BlackRock Funds, Bank of America Corporation (“BofA Corp.”), Barclays PLC or their respective affiliates and immediate family members of such persons, if they open an account directly with BlackRock; individuals and “Institutional Investors” with a minimum initial investment of $2 million who may purchase shares of the Fund through a financial intermediary that has entered into an agreement with the Distributor to purchase such shares (“Institutional Investors” include, but are not limited to, endowments, foundations, family offices, local, city, and state governmental institutions, corporations, and insurance company separate accounts); employer-sponsored retirement plans (which, for this purpose, do not include SEP IRAs, SIMPLE IRAs or SARSEPs), state sponsored 529 college savings plans, collective trust funds, investment companies or other pooled investment vehicles, unaffiliated thrifts and unaffiliated banks and trust companies, each of which may purchase shares of the Fund through a financial intermediary that has entered into an agreement with the Distributor to purchase such shares; clients investing through a self-directed IRA brokerage account program sponsored by a retirement plan record-keeper, provided that such program offers only mutual fund options and that the program maintains an account with the Fund on an omnibus basis; clients of financial intermediaries that: (i) charge such clients a fee for advisory, investment consulting, or similar services or (ii) have entered into an agreement with the Distributor to offer Institutional Shares through a no-load program or investment platform, in each case, with no minimum initial investment; clients investing through financial intermediaries that have entered into an agreement with the Distributor to offer such shares on a platform that charges a transaction based sales commission outside of the Fund, with a minimum initial investment of $1,000; tax-qualified accounts for insurance agents that are registered representatives of an insurance company’s broker-dealer that has entered into an agreement with the Distributor to offer Institutional Shares, and the family members of such persons, with a minimum initial investment of $1,000; trust depar tment clients of Bank of America, N.A. and its affiliates for whom they (i) act in a fiduciary capacity (excluding par ticipant directed employee benefit plans), (ii) otherwise have investment discretion, or (iii) act as custodian for at least $2 million in assets; and holders of cer tain BofA Corp. sponsored unit investment trusts (UITs) who reinvest dividends received from such UITs in shares of the Fund.
The Fund may in its discretion waive or modify any minimum investment amount, may reject any order for any class of shares and may suspend and resume the sale of shares of the Fund at any time.
Institutional Shares of the Fund may be purchased by customers of broker-dealers and agents that have established a servicing relationship with the Fund on behalf of their customers. These broker-dealers and agents may impose additional or different conditions on the purchase or redemption of Fund shares by their customers and may charge their customers transaction, account or other fees on the purchase and redemption of Fund shares. Each broker-dealer or agent is responsible for transmitting to its customers a schedule of any such fees and information regarding any additional or different conditions regarding purchases and redemptions. Shareholders who are customers of such broker-dealers or agents should consult them for information regarding these fees and conditions.
Except as otherwise specified in the Fund’s Prospectus, payment for Institutional Shares must normally be made in Federal funds or other immediately available funds by the time specified by the shareholder’s financial intermediary, but in no event later than the close of the federal funds wire (normally 6:45 p.m. (Eastern time)). Payment may also, in the discretion of the Fund, be made in the form of securities that are permissible investments for the Fund. If payment for a purchase order is not received by the prescribed time, an investor may be liable for any resulting losses or expenses incurred by the Fund.
Financial intermediaries may, in connection with a change in account type or otherwise in accordance with a financial intermediary’s policies and procedures, exchange shares of the Fund from one class of shares to another class of shares of the Fund, provided that the exchanged shares are not subject to a CDSC and that shareholders meet eligibility requirements of the new share class.
DCC&S. Qualified Plans may be able to invest in shares of the Fund through the Defined Contribution Clearance and Settlement System (“DCC&S”) of the National Securities Clearing Corporation. Institutions qualifying to trade on DCC&S include broker/dealers, trust companies and third par ty administrators. Please contact the Fund for information on agreements, procedures, sales charges and fees related to DCC&S transactions.
Purchase of Shares of WeLEAF
WeLEAF has authorized one or more brokers and/or financial institutions (“Authorized Persons”) to receive on its behalf purchase and redemption orders that are in “good form” in accordance with the policies of those Authorized Persons. Such Authorized Persons are authorized to designate other intermediaries to receive purchase and redemption orders on the Fund’s behalf, and the Fund will be deemed to have received a purchase or redemption order when an Authorized Person or, if applicable, such Authorized Person’s authorized designee, receives the order.
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Such customer orders will be priced at the Fund’s NAV next computed after they are received by an Authorized Person or such Authorized Person’s authorized designee. Financial institutions may include retirement plan service providers who aggregate purchase and redemption instructions received from numerous retirement plans or plan par ticipants.
Investor Shares
Purchase of Shares. The minimum investment for the initial purchase of shares is $1,000. There is no investment minimum for employer-sponsored retirement plans (not including SEP IRAs, SIMPLE IRAs or SARSEPs). There is no investment minimum for cer tain fee-based programs. There is a $50 minimum for subsequent investments (with the exception of cer tain employer-sponsored retirement plans which may have a lower minimum). Purchases through the Automatic Investment Plan are subject to a lower initial purchase minimum. In addition, the minimum initial investment for employees of the Fund, the Fund’s Manager, sub-adviser, BRIL or transfer agent or employees of their affiliates is $100, unless payment is made through a payroll deduction program in which case the minimum investment is $25.
Purchases Through Brokers. It is the responsibility of brokers to transmit purchase orders and payment on a timely basis. Generally, if payment is not received within the period described in the Prospectus, the order will be canceled, notice thereof will be given, and the broker and its customers will be responsible for any loss to the Fund or its shareholders. Orders of less than $500 may be mailed by a broker to the transfer agent.
Other Purchase Information. Shares of the Fund are sold on a continuous basis by BRIL as distributor. BRIL maintains its principal offices at 50 Hudson Yards, New York, New York 10001. Purchases may be effected on weekdays on which both the NYSE and the Federal Reserve Bank of Philadelphia are open for business (a “Business Day”). Payment for orders which are not received or accepted will be returned after prompt inquiry. The issuance of shares is recorded on the books of the Fund. No cer tificates will be issued for shares. Payments for shares of the Fund may, in the discretion of the Fund’s Manager, be made in the form of securities that are permissible investments for the Fund. The Fund reserves the right to reject any purchase order, to modify or waive the minimum initial or subsequent investment requirement and to suspend and resume the sale of any share class of the Fund at any time.
Shareholder Features
Exchange Privilege. Unless an exemption applies, a front-end sales charge will be charged in connection with exchanges of Investor A Shares of WeLEAF for Investor A Shares of one of the funds advised by BlackRock or its affiliates where an initial sales charge is assessed at the time of purchase of such fund (each, an “Investor A Load BlackRock Fund”). Exchanges of Investor C Shares of WeLEAF for Investor C Shares of a Non-Money Market Por tfolio will be exercised at NAV. However, a CDSC will be charged in connection with the redemption of the Investor C Shares of the Non-Money Market Por tfolio received in the exchange.
A CDSC of up to 1.00% may apply to cer tain redemptions of Investor A Shares of WeLEAF purchased in an exchange transaction for Investor A Shares of a por tfolio advised by BlackRock or its affiliates where no initial sales charge was paid at the time of purchase of such Fund (an “Investor A Load-Waived BlackRock Fund”) as par t of an investment of $1,000,000 (lesser amounts may apply depending on the Investor A Load-Waived BlackRock Fund) or more. The Investor A Shares CDSC is only charged upon redemptions of Investor A Shares within 18 months after you originally acquired such Investor A Shares of the Investor A Load-Waived BlackRock Fund (a shor ter holding period may apply depending on the Investor A Load-Waived BlackRock Fund), unless you qualify for a waiver. There is no CDSC charged on redemptions if you have owned your Investor A Shares for more than 18 months (or for a shor ter holding period, as applicable) as measured from your original purchase of Investor A Shares that you exchanged into Investor A Shares of WeLEAF. The deferred sales charge on Investor A Shares is not charged in connection with: (a) redemptions of Investor A Shares purchased through cer tain employer-sponsored retirement plans and rollovers of current investments in a Fund through such plans; (b) exchanges pursuant to the exchange privilege described in the Fund’s Prospectus; (c) redemptions made in connection with minimum required distributions due to the shareholder reaching age 72 from IRA and 403(b)(7) accounts; (d) redemptions made with respect to cer tain retirement plans sponsored by BlackRock or its affiliates; (e) redemptions (i) within one year of a shareholder’s death or, if later, the receipt of a cer tified probate settlement (including in connection with the distribution of account assets to a beneficiary of the decedent) or (ii) in connection with a shareholder’s disability (as defined in the Code) subsequent to the purchase of Investor A Shares; (f) involuntary redemptions of Investor A Shares in accounts with low balances; (g) cer tain redemptions made pursuant to the Systematic Withdrawal Plan (described below); (h) redemptions related to the payment of BNY Mellon Investment Servicing Trust Company custodial IRA fees; and (i) redemptions when a shareholder can demonstrate hardship, in the absolute discretion of a Fund.
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A CDSC of 1.00% may apply to cer tain redemptions of Investor C Shares of WeLEAF. The Investor C Shares CDSC is only charged upon redemptions of Investor C Shares within one year after you originally acquired the Investor C Shares of the Non-Money Market Por tfolio, unless you qualify for a waiver. There is no CDSC charged on redemptions if you have owned your Investor C Shares for more than one year (as measured from your original purchase of Investor C Shares that you exchanged into Investor C Shares of WeLEAF). In determining whether an Investor C Shares CDSC is applicable to a redemption, the calculation will be determined in the manner that results in the lowest possible rate being charged. The charge will be assessed on an amount equal to the lesser of the proceeds of redemption or the cost of the shares being redeemed. Accordingly, no CDSC will be imposed on increases in NAV above the initial purchase price of Investor C Shares. In addition, no CDSC will be assessed on Investor C Shares acquired through reinvestment of dividends. It will be assumed that the redemption is first of shares held for over one year or shares acquired pursuant to reinvestment of dividends and then of shares held longest during the one-year period. A transfer of shares from a shareholder’s account to another account will be assumed to be made in the same order as a redemption.
See “Information on Sales Charges and Distribution Related Expenses” in Par t I of the Fund’s SAI for information about amounts paid to the Distributor in connection with CDSC shares for the periods indicated.
The CDSC on Investor C Shares is not charged in connection with: (1) redemptions of Investor C Shares purchased through cer tain employer-sponsored retirement plans and fee-based programs previously approved by cer tain Funds and rollovers of current investments in the Fund through such plans; (2) exchanges pursuant to the exchange privilege described in the Fund’s Prospectus; (3) redemptions made in connection with minimum required distributions due to the shareholder reaching age 72 from IRA and 403(b)(7) accounts; (4) redemptions made with respect to cer tain retirement plans sponsored by BlackRock or its affiliates; (5) redemptions in connection with a shareholder’s death as long as the waiver request is made within one year of death or, if later, reasonably promptly following completion of probate (including in connection with the distribution of account assets to a beneficiary of the decedent) or disability (as defined in the Code) subsequent to the purchase of Investor C Shares; (6) withdrawals resulting from shareholder disability (as defined in the Code) as long as the disability arose subsequent to the purchase of the shares; (7) involuntary redemptions of Investor C Shares in accounts with low balances as described in “Redemption of Shares” below; (8) redemptions made pursuant to a systematic withdrawal plan, subject to the limitations set for th under “Systematic Withdrawal Plan” below; (9) redemptions related to the payment of BNY Mellon Investment Servicing Trust Company custodial IRA fees; and (10) redemptions when a shareholder can demonstrate hardship, in the absolute discretion of the Fund. In addition, no CDSC is charged on Investor C Shares acquired through the reinvestment of dividends or distributions.
WeLEAF has adopted an automatic conversion feature for Investor C Shares. Effective November 23, 2020, Investor C Shares held for approximately eight years will be conver ted into Investor A Shares, as set for th in the Fund’s Prospectus. In addition, accounts that do not have a financial intermediary associated with them are not
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"text": "BlackRock Variable Series Funds, Inc."
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"text": "to the Statement of Additional Information (\u201cSAI\u201d) of each of the funds listed"
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"text": "in Appendix A (each, a \u201cFund\u201d), as amended from time to time."
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"text": "Each Fund\u2019s SAI is amended as follows:"
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"id": "b838a66e-a1eb-44e9-902d-3c1f836e75e1",
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"text": "The list in the section entitled \u201cPurchase of Shares - Additional Payments by BlackRock - D. Service"
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"text": "Organizations Receiving Additional Payments\u201d in Part II, or in the section entitled \u201cMiscellaneous -"
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"text": "Additional Payments by BlackRock - D. Service Organizations Receiving Additional Payments,\u201d"
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"text": "Receiving Additional Payments\u201d or \u201cInvestment Adviser and Other Service Providers - Additional"
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"text": "Fund\u2019s current SAI, is deleted in its entirety and replaced with the following:"
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