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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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STATEMENT OF ADDITIONAL INFORMATION
BlackRock Funds SM
BlackRock Daily Reinvestment Stablecoin Reserve Vehicle
100 Bellevue Parkway, Wilmington, Delaware 19809 • Phone No. (888) 617-2560
This Statement of Additional Information of BlackRock Daily Reinvestment Stablecoin Reserve Vehicle (the “Fund”), a series of BlackRock Funds SM (the “Trust”), is not a prospectus and should be read in conjunction with the Prospectus of the Fund, dated July 31, 2026, as it 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 (888) 617-2560 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 will be incorporated into this Statement of Additional Information by reference to the Fund’s Annual Financial Statements and Additional Information (the “Annual Financial Statements”) when available.
References to the Investment Company Act of 1940, as amended (the “Investment Company Act” or the “1940 Act”), or other applicable law, will include any rules promulgated thereunder and any guidance, interpretations or modifications by the Commission, Commission staff or other authority with appropriate jurisdiction, including court interpretations, and exemptive, no action or other relief or permission from the Commission, Commission staff or other authority.
Class Ticker Symbol OnChain Shares ............................................... RSVXX
BlackRock Advisors, LLC — Manager
BlackRock Investments, LLC — Distributor
The date of this Statement of Additional Information is July 31, 2026.
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TABLE OF CONTENTS
Page
PART I
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Information on Trustees and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6
Management, Advisory and Other Service Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17 Computation of Offering Price Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18
Yield Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18 Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-19
PART II
Investment Risks and Considerations ................................................. II-1
Management and Other Service Arrangements .......................................... II-26 Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-43
Redemption of Shares .............................................................. II-61
Determination of Net Asset Value .................................................... II-66 Yield Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-67
Portfolio Transactions ............................................................. II-67
Dividends and Taxes ............................................................... II-69 Proxy Voting Policies and Procedures ................................................. II-72
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-73
Appendix A — Description of Bond Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Appendix B — Proxy Voting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
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P ART I: I NFORMATION A BOUT BRSRV
Part I of this Statement of Additional Information (“SAI”) sets forth information about BlackRock Daily Reinvestment Stablecoin Reserve Vehicle (the “Fund”), a series of BlackRock Funds SM M (the “Trust”). It includes information about the Trust’s Board of Tr ustees (the “Board”), the advisory and management services provided to and the management fees paid by t the Fund and information about other fees applicable to and services provided to the Fund. This Part I of this SAI should be read in conjunction with the Fund’s Prospectus and those portions of Part II of this SAI that pertain to the Fund.
The Fund is a “government money market fund” under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
I. Investment Objective and Policies
Please see the section “Details About the Fund — How th e Fund Invests” in the Fund’s Prospectus for information about the Fund’s investment objective and p 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 t the time of purchase by BlackRock, under guidelines established by the Board, to be “Eligible Securities” as defined by the Commission. An “Eligible Security” is a security:
1. With a remaining maturity of 397 calendar days or less (with certain exceptions) that BlackRock determines presents minimal credit risks to the Fund after considering certain factors, which must include an analysis of the capacity of the security’s issuer or guar antor 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 is issued or guaranteed as to principal or in terest by the U.S. Government or any of its agencies or instrumentalities.
* * *
Set forth 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 Part II of this SAI for further information on these investments and investment strategies. Information contained in Part II about the risks and considerati ons 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 forth below is a listing of the proxy voting polic y and related guidelines applicable to the Fund. Please see “Proxy Voting Policies and Procedures” in Part II of t this SAI for further information about these policies. A copy of each policy is included in Appendix B.
I-2
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Information that does not apply to the Fund does not fo rm a part of the Fund’s SAI and should not be relied on by investors in the Fund. Only information that is clearly identified as applicable to the Fund is considered to form a part of the Fund’s SAI.
BlackRock Daily Reinvestment Stablecoin Reserve Vehicle Bank Money Instruments Blockchain X Use of Blockchain X Blockchain Technology X Blockchain Networks X Blockchain Network Suitability X Blockchain Regulation X Stablecoin Regulatory Risk X Commercial Paper and Other Short Term Obligations Environmental, Social and Governance (“ESG”) Integration Foreign Bank Money Instruments Foreign Short Term Debt Instruments Forward Commitments X Illiquid Investments X Inflation Risk X Interest Rate Risk X Investment in Other Investment Companies Issuer Insolvency Risk Municipal Investments Municipal Securities Municipal Securities — Derivative Products Municipal Notes Municipal Commercial Paper Municipal Lease Obligations Municipal Securities — Short-Term Maturity Standards Municipal Securities — Quality Standards Municipal Securities — Other Factors Variable Rate Demand Obligations (“VRDOs”) Negative Interest Rate Scenarios X Operational and Technology Risks 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 Recent Market Events X Repurchase Agreements and Purchase and Sale Contracts X
I-3
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BlackRock Daily Reinvestment Stablecoin Reserve Vehicle Reverse Repurchase Agreements Rule 2a-7 Requirements X Securities Lending Short-Term Trading X Structured Notes Taxable Money Market Securities 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 t 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 Derivativ es”), 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 itself as a “commod ity 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 t 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 t the investment of the Fund’s assets and its activities. Certain of the restrictions are fundamental policies of f the Fund and may not be changed without the approval of the holders of a majority of the Fund’s outstandi ng voting securities (which for this purpose and under the Investment Company Act means the lesser of (i) 67% of f 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).
Under these fundamental investment restrictions, the Fund may not:
1. Concentrate its investments in a particular industry, as that term is used in the Investment Company Act.
2. Borrow money, except as permitted under the Investment Company Act.
3. Issue senior securities to the extent such i ssuance would violate the Investment Company Act.
4. Purchase or hold real estate, except the Fund may purch ase and hold securities or other instruments that are secured by, or linked to, real estate or interests therein, securities of real estate investment trusts, mortgage related securities and securities of issuers engaged in th e real estate business, and the Fund may purchase and hold real estate as a result of the ownership of securities or other instruments.
5. Underwrite securities issued by others, except to the extent that the sale of portfolio securities by the Fund may be deemed to be an underwriting or as otherwise permitted by applicable law.
6. Purchase or sell commodities or commodity contract s, except as permitted by the Investment Company Act.
7. Make loans to the extent prohibited by the Investment Company Act.
8. Make any investment inconsistent with the Fund’ s classification as a diversified company under the Investment Company Act.
I-4
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Notations Regarding the Fund’s Fundamental Investment Restrictions
The following notations are not considered to be part of the Fund’s fundamental investment restrictions and are subject to change without shareholder approval.
With respect to the fundamental policy relating to con centration set forth in (1) above, the Investment Company Act does not define what constitutes “concentration” in an industry. The Commission staff has taken the position that investment of 25% or more of a fund’s total assets in one or more issuers conducting their principal activities in the same industry or group of f industries constitutes concentration. It is possible that interpretations of concentration could change in t the future. The policy in (1) above will be interpreted to refer to concentration as that term may be interpreted from time to time. The policy also will be interpreted to permit investment without limit in th e following: securities of the U.S. Government and its agencies or instrumentalities; securities of state, territory, possessi on or municipal governments and their authorities, agencies, instrumentalities or political subdivisions; a nd repurchase agreements collateralized by any such obligations. Accordingly, issuers of the foregoing securities will not be considered to be members of any industry. There also will be no limit on investment in issuers domiciled in a single jurisdiction or country. Finance companies will be considered to be in the indus tries of their parents if their activities are primarily related to financing the activities of the parents. Each h foreign government will be considered to be a member of a separate industry. With respect to the Fund’s i ndustry 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 cla ssify issuers within or among industries.
With respect to the fundamental policy relating to borro wing money set forth in (2) above, the Investment Company Act permits the Fund to borrow money in am ounts of up to one-third of the Fund’s total assets from banks for any purpose, and to borrow up to 5% of f the Fund’s total assets from banks or other lenders for temporary purposes. (The Fund’s total assets in clude the amounts being borrowed.) To limit the risks attendant to borrowing, the Investment Company Act r requires the Fund to maintain at all times an “asset coverage” of at least 300% of the amount of its borrowin gs. Asset coverage means the ratio that the value of the Fund’s total assets (including amounts borrowed), mi nus liabilities other than borrowings, bears to the aggregate amount of all borrowings. The policy in (2) a bove will be interpreted to permit the Fund to engage in trading practices and investments that may be consid ered to be borrowing or to involve leverage to the extent permitted by the Investment Company Act. Shor t-term credits necessary for the settlement of securities transactions and arrangements with respect to secur ities lending will not be considered to be borrowings under the policy. Practices and investments that may invo lve leverage but are not considered to be borrowings are not subject to the policy. The Fund does not c currently intend to borrow for investment purposes.
With respect to the fundamental policy relating to und erwriting set forth in (5) above, the Investment Company Act does not prohibit the Fund from engaging g in the underwriting business or from underwriting the securities of other issuers; in fact, in the case of diversified funds, the Investment Company Act permits a fund to have underwriting commitments of up to 25% of its assets under certain circumstances. Those circumstances currently are that the amount of the fund’s underwriting commitments, when added to the value of the fund’s investments in issuers where the fund owns more than 10% of the outstanding voting securities of those issuers, cannot exceed the 25% cap. A fund engaging in transactions involving the acquisition or disposition of portfolio securities may be considered to be an underwriter under the Securities Act of 1933, as amended (the “Securities Act”). Although it is not believed that the application of the Securities Act provisions described above would cause the Fund to be engaged in the business of underwriting, the policy in (5) above will be interpreted not to preven t the Fund from engaging in transactions involving the acquisition or disposition of portfolio securities, regardl ess of whether the Fund may be considered to be an underwriter under the Securities Act or is otherwi se engaged in the underwriting business to the extent permitted by applicable law.
With respect to the fundamental policy relating to lending g set forth in (7) above, the Investment Company Act does not prohibit the Fund from making loans (includi ng lending its securities); however, Commission staff
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interpretations currently prohibit funds from lending m more than one-third of their total assets (including lending its securities), except through the purchase of debt t obligations or the use of repurchase agreements. In addition, collateral arrangements with respect to options , forward currency and futures transactions and other derivative instruments (as applicable), as well as delays in the settlement of securities transactions, will not be considered loans.
The Fund is currently classified as a diversified fu fund under the Investment Company Act. Pursuant to Rule 2a-7 under the Investment Company Act, a m oney market fund that satisfies the applicable diversification requirements of Rule 2a-7 shall be deem ed to have satisfied the diversification requirements of the Investment Company Act and the rules adopted th ereunder. Pursuant to Rule 2a-7 under the Investment Company Act, the Fund will generally limit its purchases of any one issuer’s securities (other than U.S. Government obligations and repurchase agreements colla teralized by such securities) to 5% of the Fund’s total assets, except that up to 25% of its total assets m ay be invested in securities of one issuer for a period of up to three business days; provided that the Fund may not invest in the securities of more than one issuer in accordance with the foregoing exception at any one tim e. Additionally, pursuant to Rule 2a-7, the Fund will generally not invest more than 10% of its total assets in securities issued by or subject to demand features or guarantees from the institutional that issued the demand feature or guarantee. Under the Investment Company Act, the Fund cannot change its classification from di versified to non-diversified without shareholder approval (including class approval by preferred shareholders, if any).
Non-Fundamental Investment Restrictions of the Fund:
Under its non-fundamental investment restriction, whic h 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 trus t, in reliance on Section 12(d)(1)(F) or (G) (the “fund of funds” provisions) of the Investment Company Act, at t 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 under 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 undertaken. Any change in the percentage of the Fund’s assets invested in certain securities or other instruments resulting from market fluct uations or other changes in the Fund’s total assets will not require the Fund to dispose of an investment un til 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 “Trus tee”), thirteen 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-In come 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 ov ersee 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 Committee, a Perfor mance Oversight Committee and an Ad Hoc Topics Committee. The role of the Chair of the Board is to presi de at all meetings of the Board and to act as a liaison with service providers, officers, attorneys and other Trus tees generally between meetings. The Chair of each Committee performs a similar role with respect to the Co mmittee. The Chair of the Board or the Chair of a
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Committee may also perform such other functions as m ay be delegated by the Board or the Committee from time to time. The Independent Trustees meet regularly y outside the presence of Fund management, in executive session or with other service providers to the Fund. The Boa rd has regular meetings five times a year, and may hold special meetings if required before its next regular r meeting. Each Committee meets regularly to conduct the oversight functions delegated to that Committee by t the Board and reports its findings to the Board. The Board and each standing Committee conduct annual assessments of their oversight function and structure. The Board has determined that the Board’s leadership st ructure 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 operati ons of the Fund and associated risks in accordance with the provisions of the Investment Company Act, stat e law, other applicable laws, the Trust’s charter, and the Fund’s investment objective and strategies. The Board reviews, on an ongoing basis, the Fund’s performance, operations and investment strategies and t 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 th e 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 man agement functions performed 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 part of the Board’s ge neral oversight of the Fund and is addressed as part of various Board and Committee activities. The Board, directly or through a Committee, also reviews reports from, among others, management, the independent r 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 th e implementation and testing of the Trust’s compliance program and reports to the Board regarding compliance matters for the Fund and its service providers. The Independent Trustees have engaged independe nt legal counsel to assist them in performing 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, t ermination and compensation of the Fund’s independent registered public accounting firm (the “Independent Re gistered Public Accounting Firm”) and to oversee the Independent Registered Public Accounting Firm’s wo rk. The Audit Committee’s responsibilities include, without limitation, to (1) evaluate the qualifications and indepe ndence of the Independent Registered Public Accounting Firm; (2) approve all audit engagement terms and fees fo r the Fund; (3) review the conduct and results of each independent audit of the Fund’s annual financial statem ents; (4) review any issues raised by the Independent Registered Public Accounting Firm or Fund management re garding the accounting or financial reporting policies and practices of the Fund and the internal controls of the Fund and certain service providers; (5) oversee the performance 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 performance and findings of the Fund’s internal auditors; (7) discuss with Fund manage ment its policies regarding risk assessment and risk management as such matters relate to the Fund’s financi al reporting and controls; (8) resolve any disagreements between Fund management and the Independent Regi stered Public Accounting Firm regarding financial reporting; and (9) undertake such other duties and responsib ilities as may from time to time be delegated by the Board to the Audit Committee. The Board has adopted a written charter for the Audit Committee. During the fiscal year ended April 30, 2026, the Audit Committee met four times.
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Governance and Nominating Committee. The members of the Governance and Nominating Committee (the “Governance Committee”) are Cynthia A. Montgo mery (Chair), Christopher J. Ailman, Susan J. Carter, Collette Chilton, Henry R. Keizer and Marc D. Stern, all of whom are Independent Trustees. The principal responsibilities of the Governance Committee a re 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) ad vise the Board with respect to Board composition, procedures and committees (other than the Audit Co mmittee); (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 compen sation; (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, committ ee policies and procedures (other than the Audit Committee) and codes of ethics as they relate to Inde pendent Trustees; and (7) undertake such other duties and responsibilities as may from time to time be delegat ed by the Board to the Governance Committee. The Governance Committee may consider nominations for T Trustees made by the Fund’s shareholders as it deems appropriate. Under the Trust’s Amended a nd Restated Code of Regulations (“Bylaws”), shareholders must follow certain 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 bus iness 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 certain information about the shareholder and the nominee, as well as certai n other information, including a written consent of the proposed nominee to serve if elected. Reference is ma de to the Trust’s Bylaws for more details. The Board has adopted a written charter for the Gov ernance Committee. During the fiscal year ended April 30, 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 party 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 reports from, oversee the annual performance review of, and make certain 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) undertake 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 charter for the Compliance Committee. During the fiscal year ended April 30, 2026, the Compliance Committee met four times.
Performance Oversight Committee. The members of the Performance Oversight Committee (the “Performance Oversight Committee”) are Donald C. Opatrny (Chair), Christopher J. Ailman, Susan J. Carter, Collette Chilton, Neil A. Cotty and Marc D. Stern, all of whom are Independent Trustees. The Performance Oversight Committee’s purpose is to assist the Board in fulfilling its responsibility to oversee the Fund’s investment performance relative to its agreed-upon performance objectives and to assist the Independent Trustees in their consideration of investment advisory agreements. The Performance 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 performance;
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(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 Performance 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) undertake such other duties and responsibilities as may from time to time be delegated by the Board to the Performance Oversight Committee. The Board has adopted a written charter for the Performance Oversight Committee. During the fiscal year ended April 30, 2026, the Performance 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. W 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 m 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 Comm ittee by the Board. The Board has adopted a written charter for the Ad Hoc Topics Committee. During the fiscal year ended April 30, 2026, the Ad Hoc Topics Committee did not meet.
The Governance Committee has adopted a statement of p 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 I ndependent 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. Furthermore, 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 allo w the Board to operate effectively in governing the Trust and protecting the interests of shareholders. Am ong the attributes common to all Independent Trustees are their ability to review critically, evaluate, question a nd discuss information provided to them, to interact effectively with the Fund’s investment adviser, s ub-advisers, other service providers, counsel and the Independent Registered Public Accounting Firm, a nd to exercise effective business judgment in the performance of their duties as Trustees.
Each Trustee’s ability to perform his or her duties e ffectively 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 comp anies, non-profit entities or other organizations; ongoing commitment to and participation 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, qualific ations and skills of each of the Trustees that support 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 North 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 expertise 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 Performance Oversight Committee.
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Trustees Experience, Qualifications and Skills Susan J. Carter Susan J. Carter 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. Carter 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
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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. 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 expert, 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 partner at Deloitte and Arthur Andersen for approximately seventeen 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 expertise 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 expertise in financial reporting, 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, property and casualty reinsurance, insurance, diversified financial services, banking, direct to consumer, business to business and technology. Mr. Keizer is a certified public accountant and also served on the board of the American Institute of Certified Public Accountants. Mr. Keizer has been determined by the Audit Committee to be an audit committee financial expert, 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 certain 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 articles 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 commi ttee chair for academic and not-for-profit organizations, and his experience as a partner, 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. 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 Arthur 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.
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Trustees Experience, Qualifications and Skills 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 certain 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 expert, as such term is defined in the applicable Commission rules. 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 Liberty Square Asset Management, LP from 1998 to 2015, an investment manager that specialized in long/short non-U.S. equity investments, and was an owner and General Partner of Neon Liberty Capital Management, LLC from 2003 to 2023, a firm focusing on long/short 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 expert, as such term is defined in the applicable Commission rules. Interested Trustees Robert Fairbairn Robert Fairbairn has more than 25 years of experience with BlackRock, Inc. and over 30 years of experience in finance and asset management. In particular, Mr. Fairbairn’s positions as Vice Chairman of BlackRock, Inc., Member of BlackRock’s Global Operating Committee and Co-Chair of BlackRock’s Human Capital Committee provide the Board with a wealth of practical business knowledge and leadership. In addition, Mr. Fairbairn has global investment management and oversight experience through his former positions as Member of BlackRock’s Global Executive Committee, Global Head of
® BlackRock’s Retail and iShares ® businesses, Head of BlackRock’s Global Client Group, Chairman of BlackRock’s international businesses and his previous oversight over BlackRock’s Strategic Partner Program and Strategic Product Management Group. Mr. Fairbairn also serves as a board member for the funds in the BlackRock Fixed-Income Complex. John M. Perlowski John M. Perlowski’s experience as Senior Managing Director of BlackRock, Inc. since 2026, as 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.
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Biographical Information
Certain biographical and other information relating to th e Trustees of the Trust is set forth below, including their address and year of birth, principal occupations for at least the last five years, length of time served, total number of registered investment companies and inv estment portfolios overseen in the BlackRock-advised Funds and any currently held public company a nd other investment company directorships.
Name and Year of Birth 1, 2
Position(s) Held (Length of Service) 3
Principal Occupation(s) During Past Five Years
Number of BlackRock Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen
Public Company and Other Investment Company Directorships Held During Past Five Years
Independent 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 172 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 172 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 172 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; Director, David and Lucile Packard Foundation since 2020.
26 RICs consisting of 172 Portfolios
None
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 172 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 Jeffrey Jarczyk 4 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 172 Portfolios
None
Henry R. Keizer 1956 Trustee (Since 2019) Director, Park Indemnity Ltd. (captive insurer) from 2010 to 2022. 26 RICs consisting of 172 Portfolios
GrafTech International Ltd. (materials manufacturing); WABCO (commercial vehicle safety systems) from 2015 to 2020; Sealed Air Corp. (packaging); Hertz Global Holdings (car rental) from 2015 to 2021. Cynthia A. Montgomery 1952
Trustee (Since 2009)
Professor, Harvard Business School since 1989. 26 RICs consisting of 172 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 172 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 172 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 172 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 2009)
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 172 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; Director, Woodstock Ski Runners from 2013 to 2022
26 RICs consisting of 172 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 255 Portfolios
None
John M. Perlowski 6 1964
Trustee (Since 2015) President (Since 2018) 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 257 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 In connection with the acquisition of Barclays Global Investors by BlackRock, Inc. in December 2009, certain Independent Trustees were elected to the Board. Furthermore, effective January 1, 2019, three BlackRock Fund Complexes were realigned and consolidated into two BlackRock Fund Complexes. As a result, although the chart shows the year that each Independent Trustee joined the Board, certain Independent Trustees first became members of the boards of other BlackRock-advised 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 1940 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 Credit Strategies Fund and BlackRock Private Investments Fund.
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Certain biographical and other information relating to t the officers of the Trust who are not Trustees is set forth below, including their address and year of birth, pr incipal occupations for at least the last five years and length of time served.
Name and Year of Birth 7, 8
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
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BlackRock, Inc. from 2002 to 2025; Head of Global Cash Management and Head
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of Securities Lending within BlackRock’s Global Markets Group since 2022;
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Member of BlackRock’s Global Operating Committee since 2016 and Human
l 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
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PIMCO from 2016 to 2019.
Jay M. Fife 1970 Treasurer (Since 2009) Managing Director of BlackRock, Inc. since 2007.
Aaron Wasserman 1974 Chief Compliance
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Officer (Since 2023)
Managing Director of BlackRock, Inc. since 2018; Chief Compliance Officer of
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the BlackRock-advised funds in the BlackRock Multi-Asset Complex, the
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BlackRock Fixed-Income Complex and the iShares Complex since 2023; Deputy
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Chief Compliance Officer for the BlackRock-advised funds in the BlackRock
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Multi-Asset Complex, the BlackRock Fixed-Income Complex and the iShares
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Complex from 2014 to 2023. Lisa Belle 1968 Anti-Money
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Laundering
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Compliance
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Officer (Since 2019)
Managing Director of BlackRock, Inc. since 2019; Global Financial Crime Head
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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.
7 The address of each Officer is c/o BlackRock, Inc., 50 Hudson Yards, New York, New York 10001. 8 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 (“Superv ised Funds”) as of December 31, 2025, except as otherwise noted, is set forth in the chart below. Amount s shown may include shares as to which a Trustee has indirect beneficial ownership, such as through particip ation in certain family accounts, 529 college savings plan interests, or similar arrangements where the Tr ustee has beneficial economic interest but not a direct ownership interest.
Name
Dollar Range of Equity Securities in the Fund
Aggregate Dollar Range of Equity Securities in Supervised Funds
Independent Trustees Christopher J. Ailman None Over $100,000 Susan J. Carter None Over $100,000 Collette Chilton None Over $100,000 Neil A. Cotty None Over $100,000 Henry R. Keizer None Over $100,000 Jeffrey Jarczyk* None None Cynthia A. Montgomery None Over $100,000 Donald C. Opatrny None Over $100,000 Lori Richards None None
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Name
Dollar Range of Equity Securities in the Fund
Aggregate Dollar Range of Equity Securities in Supervised Funds Mark Stalnecker None Over $100,000 Marc D. Stern* None None Kenneth L. Urish None Over $100,000 Claire A. Walton None Over $100,000 Interested Trustees Robert 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 independen t 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 out standing shares of the Fund. As of December 31, 2025 (and, with respect to Mr. Jarczyk and Mr. Stern, as of April 1, 2026), 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 d as compensation an annual retainer of $375,000 per year for his or her services as a board member of the Bl ackRock-advised Funds in the BlackRock Multi-Asset Complex, including the Trust, and a $20,000 board meetin g fee to be paid for each in-person board meeting attended (and may receive a board meeting fee for tele phonic attendance at board meetings), for up to five board meetings held in a calendar year (compensation fo r meetings in excess of this number to be determined on a case-by-case basis), together with out-of-pocket e xpenses in accordance with a board policy on travel and other business expenses relating to attendance at mee tings. The Chairs of the Audit Committee, Compliance Committee, Governance Committee and Performance Ov ersight 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 forth the estimated compensation the Trust expects to pay the Trustees, on behalf of the Fund, for the fiscal year ended April 30, 2027 and t 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 $628 None $445,000 Susan J. Carter $628 None $445,000 Collette Chilton $628 None $445,000 Neil A. Cotty $628 None $467,500 Jeffrey Jarczyk 2 $628 None None Henry R. Keizer 3 $629 None $490,000 Cynthia A. Montgomery 4 $629 None $490,000 Donald C. Opatrny 5 $629 None $490,000 Lori Richards $628 None $445,000 Mark Stalnecker 6,7 $420 None $595,000 Marc D. Stern 2 $628 None None
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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 Kenneth L. Urish 7 $419 None $445,000 Claire A. Walton 8 $629 None $490,000 Interested Trustees Robert 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-12. 2 gg pg
Compensation includes $0 earned as a consultant to the Independent Trustees for the period April 1, 2026 to July 1, 2026 3 Chair of the Audit Committee. 4 Chair of the Governance Committee. 5 Chair of the Performance Oversight Committee. 6 Chair of the Board and Chair of the Ad Hoc Topic Committee. 7 Mark Stalnecker and Kenneth Urish are retiring on December 31, 2026. 8 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 t time to time, in its sole discretion to the extent permitted by applicable law, appoint one or more sub- advisers, including, without limitation, affiliates of the Manager, to perform investment advisory services with h respect to the Fund. In addition, the Manager may delegate certain of its investment advisory functions under the Management Agreement to one or more of its affiliates to the extent permitted by applicable law. Bl ackRock may terminate any or all sub-advisers or such delegation arrangements in its sole discretion at an y time to the extent permitted by applicable law.
As of the date of this SAI, the Trust, on behalf of t the Fund, has not made any payments to BlackRock for investment advisory services.
The Fund’s allocable portion of the fees and expenses of t the Independent Trustees, counsel to the Independent Trustees, and the independent registered public accounting firm that provides audit services in connection with the Fund (collectively referred to as the “Inde pendent Expenses”) are paid directly by the Fund. BlackRock has contractually undertaken to reimburse or r provide an offsetting credit to the Fund for such Independent Expenses through June 30, 2028.
In addition, BAL has agreed to bear all costs of the Fund’s and the Trust’s operations, but not including brokerage expenses, advisory fees, distribution plan e xpenses, certain fees and expenses related to the Trust’s Independent Trustees and their counsel, auditing fees, litigation expenses, taxes or other extraordinary expenses.
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 provide certain administration services to the Funds. BlackRock and its affiliates provide the Funds with administration services, including management reporting and treasury administration services, financial reporting, legal and tax services, and supervision of the Funds’ administra tive operations, preparation of proxy statements and shareholder reports.
For providing such services, the Administrator is entitled t to a monthly fee at an annual rate of 0.05% of the Fund’s average daily net assets attributable to OnChain Shares.
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The Trust and its service providers may engage third party plan administrators who provide trustee, administrative and recordkeeping services for certain empl oyee benefit, profit-sharing and retirement plans as agents for the Trust with respect to such plans, fo r the purpose of accepting orders for the purchase and redemption of shares of the Trust.
Accounting Services
BNY Mellon Investment Servicing (US) Inc. (“BNY MIS”) serves as the accounting services provider for the Fund. Among other services, BNY MIS maintains record s 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 a nd recoupments (if any); computes the Fund’s net income and capital gains and dividends payable; calculates and reports net asset value; works with independent pricing sources; reconciles securities and cash positions w with the Fund’s custodian; prepares certain financial statements, notices and reports; and prepares certain ta x reports. In connection with its accounting services, BNY MIS also provides certain administrative services.
Custodian
The Bank of New York Mellon, which has its principal offices at 240 Greenwich Street, New York, New York 10286, serves as a custodian for the Fund. Among other responsibilities, The Bank of New York Mellon 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.
Transfer Agent
Securitize Transfer Agent, LLC, which has its principal place of business at 78 SW 7t 7th h St, Suite 500, Miami, FL 33130, serves as transfer agent and dividend disbursing agent for the Fund.
VI. Computation of Offering Price Per Share
The offering price for the Fund’s share class is equal to t the share class’s net asset value computed by dividing the value of the share class’ net assets by the numb er 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 Part 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 f future yields or rates of return on its shares. The yield is affected by such factors as changes in int erest rates on the Fund’s portfolio securities, average portfolio maturity, the types and quality of portfolio securities held and operating expenses. The yield on Fund shares for various reasons may not be comparable to the yi eld on bank deposits, shares of other money market funds or other investments.
VIII. Portfolio Transactions
See “Portfolio Transactions” in Part II of this SAI for more information.
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.
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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 to BlackRock Funds. The Trust is aut horized 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 a nd outstanding Investor B Shares of the Fund were converted into Investor A Shares of the Fund.
Under the Declaration of Trust, the ownership of sha res shall be recorded on the record books of the Trust. In the case of OnChain Shares, the blockchain forms part t of the official record book of the Trust and, together with an off-chain register associating wallet addresses with shareholder personal identifying information, and in the absence of a technical failure of either of these syst ems, shall be conclusive as to the identity of holders of OnChain Shares and as to the number of OnChain Sh ares held by each shareholder. The Second Amended and Restated Bylaws of the Trust (the “Bylaws”) expressly permit the issuance of shares in digital cryptographic form as “tokens” or similar digital embodi ments, in each case existing on a blockchain-based computing platform or blockchain-based operating sy stem. Additionally, the Bylaws explicitly contemplate the maintenance of a share register containing the na mes and addresses of the shareholders of each class of shares, the number of shares of that class held by each of them respectively and a record of all transfers thereof, in the form of any information storage device, method, or one or more electronic networks, databases or ledgers (including one or more distributed electronic networks, databases or ledgers) or such open source or closed source, public or private, permissioned or p permissionless, distributed or centralized, blockchain based computing platforms and operating systems, includi ng those featuring smart contract functionality (or any combination of any of the foregoing).
Under Massachusetts law, shareholders of a business t trust may, under certain circumstances, be held personally liable as partners for the obligations of the Trust. However, the Trust’s Declaration of Trust provides that shareholders shall not be subject to an y 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 undertaking 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 inde mnification out of Trust property 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. T 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 further provides that all pers ons having any claim against the Trustees or Trust shall look solely to the Trust property for payment; that no Tr ustee of the Trust shall be personally liable for or on account of any contract, debt, tort, claim, damage, j udgment or decree arising out of or connected with the administration or preservation of the Trust property or the conduct of any business of the Trust; and that no Trustee shall be personally liable to any person for an y 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 involv ed or with which he may be threatened by reason of his being or having been a Trustee, and that th e Trust will indemnify officers, representatives and employees of the Trust to the same extent that trustees are entitled to indemnification.
X. Financial Statements
Additional copies of the Fund’s annual and semi-annual reports to shareholders and the Fund’s Annual and Semi-Annual Financial Statements and Additional Inform ation may be obtained at no charge by telephoning the Distributor at the telephone number appearing on the front page of this SAI, when available.
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P ART II
Part II of this Statement of Additional Information (“SAI” ) contains information about the following funds: BlackRock Government Money Market Portfolio, a series of BlackRock Series Fund, Inc.; BlackRock Government Money Market V.I. Fund, a series of BlackRock Variable Series Funds, Inc.; BlackRoc k Wealth Liquid Environmentally Aware Fund (“WeLEAF”), Circle Reserve Fund (“Circle Reserve”) and BlackRock Daily Reinvestme nt Stablecoin Reserve Vehicle (“BRSRV”), each a series of BlackRock Funds (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 t the exception of BlackRock Series Fund, Inc. and BlackRock Variable Series Funds, Inc., which are Maryland corporations. Fo r ease and clarity of presentation, common shares of beneficial interest are referred to herein as “shares,” the trustees or direct ors of each Fund are referred to herein as “Trustees” and th e 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 r the “Manager,” and the management agreement applicable to each Fund is referred to as the “Management Agreement.” The In vestment 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, Part II of f this SAI contains general information about all funds in the BlackRock-advised fund complex. Certain information contained herein may not be relevant to the Funds.
I NVESTMENT R ISKS AND C ONSIDERATIONS
Set forth below are descriptions of some of the types of invest ments and investment strategies that one or more of the Funds ma y 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 a nd Policies,” “Investment Objectives and Policies” or “Investmen t Strategies and Risks of the Fund” as applicable, section of Part I of this SAI for further information about each Fund’s invest ment policies and risks. Information contained in this section about the risks and considerations associated with a Fund’s investmen ts and/or investment strategies applies only to those Funds specifica lly identified in Part I of this SAI as making each type of investment or using each investment strategy (each, a “Covered d Fund”). Information that does not apply to a Covered Fund does not form a part of that Covered Fund’s SAI and should not be relied upon by investors in that Covered Fund.
Only information that is clearly identified as applicable to a Co vered Fund is considered to form a part of that Covered Fund’s SAI.
Bank Money Instruments. Certain Funds may invest in U.S. dollar-denomin ated 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 certificates of deposit, bankers’ acceptances, time deposits, bank notes and deposit notes. For example, the obligations may be issued by (i) U.S. or forei gn depository institutions, (ii) foreign branches or subsidiaries of U.S. depository institutions (“Eurodollar” obligations), (iii) U.S. br anches or subsidiaries of foreign depository institutions (“Yankeedollar” obligations) or (iv) foreign branches or s ubsidiaries of foreign depository institutions. Eurodollar and Yankeedollar obligations and obligations of branches or subsidia ries of foreign depository institutions may be general obligati ons of the parent bank or may be limited to the issuing branch or subs idiary by the terms of the specific obligations or by governm ent 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 inv estments permissible for each F und. No Fund will invest more than 25% of its total assets (taken at market value at the time of ea ch investment) in obligations of foreign depository institution s and their foreign branches and subsidiaries or in obligations of fo reign branches or subsidiaries of U.S. depository institutions t hat are not backed by the U.S. parent. The Funds treat bank money instrume nts 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 obligati ons of foreign depository institutions and short term obligat ions issued by other foreign entities, may invo lve additional investment risks, including adverse political and economic development s,
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the possible imposition of withholding taxes on interest income p payable on such obligations, the possible seizure or nationaliz ation of foreign deposits and the possible establishment of exchange cont rols or other foreign governmental laws or restrictions that might adversely affect the repayment of prin cipal and the payment of interest. The issuers of such obligations may not be subje ct to U.S. regulatory requirements. Foreign branches or subsidia ries of U.S. banks may be subject to less stringent reserve requirements than U.S. banks. U.S. branches or subsidiaries of f foreign banks are subject to the reserve requirements of the sta tes in which they are located. There may be less publicly available inform ation 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. i ssuers. Evidence of ownership of Eurodollar and foreign obligation s may be held outside the United States, and the Funds may be subj ect to the risks associated with the holding of such property overseas. Eurodollar and foreign obligations of the Funds held overseas will be held by foreign branches of each Fund’s custodi an or by other U.S. or foreign banks under subcustodian arrangem ents 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 short t erm obligations, and will not knowingly purchase obligations that, at the time of purchase, are subject to exchange controls or r withholding taxes. Generally, a Fund will limit its Yankeedollar investments to obligations of banks organized in Canada, F France, Germany, Japan, the Netherlands, Switzerland, the United Kingdom or other industrialized nations.
Bank money instruments in which certain Funds invest must be i ssued by depository institutions with total assets of at least $1 billion, except that such Funds may invest in certificates of f deposit of smaller institutions if such certificates of deposi t are Federally insured and if, as a result of such purchase, no more th an 10% of total assets (taken at market value), are invested in such certificates of deposit.
Blockchain
This Blockchain section, including all subsections hereunder, app lies solely to BlackRock Daily Reinvestment Stablecoin Reserve Vehicle and does not apply to any other Fund as of the date of t this SAI. This discussion of blockchain-related features and ris ks is intended to provide a high-level overview tailored to the F und’s current operations and supported networks and does not purport to be a complete or exhaustive description of all risks, deve lopments or considerations associated with distributed ledger technology, blockchain networks, smart contracts, or digital w wallets. New or unanticipated regulatory, operational, technologic al, or market risks may emerge over time, and the applicability or ma teriality of any risk may vary based on the blockchain network used, wallet or custody configuration, and future changes to t the Fund’s operations. Investors should review the Fund’s Prospect us and this SAI in their entirety and consult their own legal, ta x and technology advisers regarding the risks of transacting in OnChain Shares.
Use of Blockchain . The Fund’s transfer agent maintains the official reco rd of ownership of OnChain Shares on the public blockchains that are used by the Fund’s investors. In partic ular, the Fund’s transfer agent utilizes a permissioned system that operates in connection with multiple public, permissionless blockchain s. As of the date of this SAI, these public blockchains include Ethereum, Tempo, and Solana and in the future may in clude other supported networks, subject to eligibility and other requirements that the Fund or the Fund’s tr ansfer agent may impose. The Board has dele gated to BlackRock the authority to selec t the blockchain networks on which the Fund’s OnChain Shares will be offered and sold. OnChain Shares will be digitally represented on such blockchains using token standards that vary by blockchain. Such blockchain records, together with an off chain register associating wallet addresses with shareholder p ersonal identifying information, will constitute the official shareholder register of the Fund and, in the absence of a techni cal failure of either of these systems, conclusively govern the record ownership of OnChain Shares.
A blockchain is a distributed ledger that digitally records tr ansactions in a verifiable way using cryptography, with records designed to be immutable (i.e., extremely difficult to alter once confirmed). A distri buted ledger is a database in which data is stored in a decentralized manner. Cryptography is a method of storing and transmitting data in a particular form so that only those for whom it is intended can read and process it. Transactions on the blockchain are verified and authenticated by compute rs on the network (referred to as “nodes” or “validators”) that r receive, propagate, verify, and execute transactions. The process of authenticating a transaction before it is recorded ensures that only valid and author ized transactions are recorded on the blockchain in collections of transactions called “blocks.” Blockchain networks are based upon software source code that establishes and governs their respective cryptographic systems for v verifying transactions. The Fund’s transfer agent maintains
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controls to correct errors in the share registry or remediate unauthorized transactions. In the event such a correction were warranted, the Fund’s transfer agent would make the correction by a dding an appropriate instruction to another subsequent block on the applicable blockchain ( i.e ., the prior activity on the blockchain would not be deleted, although the blockchain would be updated with the correct transactional history).
In order to facilitate the use of blockchain technology, ea ch investor will use a “blockchain wallet,” which is a software application (but can also be a hardware device or managed by an institutional custody solution) that stores a user’s “private k ey” for related digital assets and is used to facilitate the transfe fer of assets on a particular blockchain. A “private key” is one of two numbers in a cryptographic “key pair.” A key pair consists of a “public key” and its corresponding private key, both of which a re lengthy alphanumeric codes, where the public key is mathematically d erived from the private key. The private key is used by the owner of a blockchain wallet to send (i.e., digitally sign and auth enticate) instructions to the blockchain to update the owner ship records of the digital assets and is private to the wallet owner. T The public key is, as the name implies, public and allows oth er wallets on the applicable blockchain to transfer digital asset s to a wallet’s public key address when permitted. The blockchain n will record transaction data, including wallet addresses and digital si gnatures, but does not record the private key information. Ea ch investor is responsible for their own blockchain wallet, including g the security and maintenance of the investor’s private key. Neither the Fund nor the Fund’s transfer agent is responsible for an y investor’s blockchain wallet or the maintenance, security , or safekeeping of any investor’s private key.
The Fund’s transfer agent utilizes a permissioned system that op erates in connection with public, permissionless blockchains. T he permissioned system is established through a combination of polic ies, procedures, and technological controls which collectively seek to ensure that the blockchain operates as an integrated d recordkeeping mechanism under the oversight of the Fund’s transfer agent. To create and maintain this permissioned structure on pub lic blockchains, the Fund’s transfer agent registers and associ ates each blockchain wallet with relevant persona l identifying information which is mainta ined in an off-chain registry (i.e., a sep arate database that is not available to the public and is used, am ong other purposes, to satisfy anti-money laundering regulations). Permission to hold OnChain Shares is granted only to regis tered wallets, sometimes referred t to as “whitelisting”, thereby restricting the ability to transact in tokenized OnCh ain Shares to pre-approved potential shareholders.
Protocols referred to as “smart contracts” are used as part of the operational framework that the Fund’s transfer agent uses to enforce compliance with the Fund’s policies and procedures, as a pplicable. Smart contracts are self-executing computer code tha t effectuate actions based upon predetermined conditions. Specifically , smart contracts have been developed to support functions such as “minting” (creating a new token balance) and “burning ” (removing a token balance from circulation), as well as restrictions to prevent unauthorized interaction with the token balances (e.g., transfers of token balances to unapproved addre sses) and the ability to claw back tokens under certain circumstances. In this manner, this permissioned system is intended to preven t transactions in token balances by or with unknown persons or unknown blockchain addresses, even if the underlying blockchain network is permissionless.
Different blockchain networks rely on distinct methods to validate and finalize transactions. Some networks, such as Ethereum and Solana, utilize a broad, permissionless set of independent va lidators that participate in an open validation process design ed to confirm transactions without reliance on a central authority. On su ch networks, transactions may be included in a proposed bloc k and recorded on the blockchain relatively quickly, but they are not necessarily immediately final. Instead, finality is reached d after sufficient validator participation and consensus under the network ’s specific rules, which may occur within seconds or may requ ire additional time depending on network conditions, validator particip ation, and the applicable fin ality or commitment standard. These systems typically rely on economic incentiv e mechanisms, such as staking and penalties for dishonest behavior, to encoura ge honest participation and maintain security among a decentralized and trust-minimized set of participants. Both Ethereum and Solana utilize proof-of-stake-based systems, although their specific implementations and supporting mechanisms differ.
Other networks, such as Tempo (as of the date of this SA I), may rely on a more limited, permissioned group of institutional validators operating pursuant to defined governance and validation rules. These ne tworks currently utilize Byzantine Fault Tolerant consensus mechanisms, under which approved validators vo te to validate and finalize blocks of transactions once a required validator threshold has confirmed their validity. These designs may provide deterministic finality once the required validator threshold is met, rather than relying on broader validat or participation and additional protocol-specific finality or commitment processes used by permissionless networks such as Ethereum and Solana. Because validator identities are known and subject to governance frameworks, these systems may place less reliance on open economic incentive mechanisms, at the protocol level, although such incentives may be introduced as validator sets expand or as networks seek to further align participant behavior with system integrity. These designs are intended to provide transaction finality and operational resilience while
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emphasizing predictability, oversight, and institutional particip ation. The specific validation method used by any supported network may evolve over time, and the Fund does not control or operate the underlying blockchain networks, nor is it responsibl e in any way for them. Before investing in OnChain Shares on a par ticular blockchain, an investor should review all aspects of th e applicable blockchain, including the validation method, consensu s mechanisms, governance structu re, and security model of such blockchain.
The maintenance of the records of OnChain Shares on the blockch chain will not affect the Fund’s investments in securities; the Fu nd will continue to invest in accordance with t the requirements in Rule 2a-7 under the 1940 Act and the terms of this SAI. The Fund will not invest in any digital assets, including any virtual currencies.
Information Available via the Blockchain
Information recorded on a public blockchain will be available to t the public and will store the complete transaction history of token balances beginning with their issuance on the blockchain. A As a result, robust and transparent data, other than shareholde r identifying information, will be publicly available through one or more “blockchain explorer” tools capable of displaying activ ity on the applicable blockchain. Accordingly, OnChain Shares’ i ssuance, redemption and transfer data (but not a shareholder’s identifying information) will be exposed to the public. The identifying information n ecessary to associate a given token balanc e with the record owner of an OnChain Share w will be maintained in one or more off-chain n databases that are not available to the public. However, if there are data security breaches resulting in theft of the inform ation necessary to link identity with the t token balances, the stolen information could be used to determine a shareholder’s identity and complete investing history in OnChain Shares.
In the event of a conflict between the transaction history on th e blockchain and the records maintained by the Fund’s transfer agent, the Fund’s transfer agent shall update its records as necessary y to align with the blockchain records, to the extent prac ticable, except where the transaction is determined by the Fund’s transfer agent to be erroneous or to violate applicable law, regulatio n, or the Fund’s policies and procedures (including transfer restric tions), in which case the Fund’s transfer agent will use commerci ally reasonable efforts to remediate its records accordingly. Conflicts may arise due to , among other things, a chain outage (i.e., t the blockchain becomes unavailable or unreliable), a bug resulting in erroneous minting or burning of Tokens, a reversal of a previously finalized transaction (which would represent a fundame ntal compromise of the network’s security guarantees), or a blockchain fork resulting in two competing chains. Typically , the Fund’s transfer agent will reconcile its records with blockch ain transactions on at least a daily basis.
Blockchain Fees, Functionality, and Transaction Processing
Public blockchain networks require the payment of certain transac tion fees to execute a transaction on the applicable network. These fees are typically paid in the native digital asset for th e operation of the blockchain network (such as, on the Ethereum blockchain, for example, in the form of “ether,” the native dig ital asset for the operation of Ethereum) but may also include o ther eligible digital assets depending on network design. These transa ction fees (sometimes called “gas fees”) are paid to execute a transaction. Gas measures the amount of computational effort th at it will take to execute a given transaction. The amount of ga s required to execute a transaction will vary from transaction to tr ansaction depending on, among other things, the complexity or size of a particular transaction and the congestion on the rele vant blockchain. Congestion on the blockchain may be due to increased transactions involving smart contracts that are un related to OnChain Shares, and the Fund cannot control such congestion.
Delays in transaction processing have occurred on the blockcha in networks. Such a delay may occur because of, among other things, the inability of nodes to reach consensus on transactions or upgrades or changes to the applicable blockchain protocol. During a network delay, recording transactions in OnChain Sha res on the blockchain will not be possible and as such may cause discrepancies between the blockchain record and the backup off- chain record maintained by the Fund’s transfer agent. Should such a delay occur for an extended period of time, the Fund c ould choose to effect transactions with shareholders manually (i.e ., in book-entry form) or to provide shareholders with a means to subm it transaction requests on a different network approved for use by the Fund, in each case until such time as the network has resumed normal operation. In such circumstances, depending on the action taken by the Fund in response to these events, dividends d eclared during such period may not be reinvested in additional OnChain Shares and may instead be paid to affected sharehold ers in cash until shareholders are otherwise notified by the Fund o r the Fund’s transfer agent that dividend reinvestment has resume d. Notwithstanding any pause, delay, or freeze affecting a
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blockchain network, the Fund’s transfer agent will continue to r receive, validate, and process redemption requests off-chain in good order. Shareholders’ ability to redeem OnChain Shares is not c conditioned upon the availability or operability of any blockchain network, and the Fund’s transfer agent will process all redemption r requests that are received in good order regardless of the s tatus of any supported blockchain.
The Fund or Blackrock may choose to re-evaluate the suitability of f a particular blockchain network for use by the Fund in the event of future or recurring delays, technical malfunctions or for other reasons. In the event the Fund discontinues use of a blockchain network, the Fund will suspend new OnChain Share subscriptions through such network and may take such additional actions as it deems appropriate with respect to an y OnChain Shares deployed on the network, including, without limitation and where applicable law and blockchain architect ure permit, processing redemptions of such OnChain Shares manually or initiating the redemption of OnChai n Shares deployed on affected blockchain.
Peer-to-Peer Transfers
OnChain Shares may be transferred in peer-to-peer transactions fr om one shareholder wallet to another current shareholder walle t within any approved blockchain network. A record of completed p peer-to-peer transactions is recorded by the Transfer Agent’s blockchain-integrated recordkeeping system due to it being view able on the blockchain. Before transferring OnChain Shares, you (as the transferor) and the potential transferee must each have an active, permissioned (i.e., “whitelisted”) wallet registered with the Fund’s transfer agent.
The Fund imposes no minimum number of OnChain Shares required to effect a transfer. The relevant blockchain will, however, generally impose a minimum fractional token size, which, in p practice will place limits on the minimum number of OnChain Shares that can be transferred in a peer-to-peer transaction. OnChain Shares will be coded such that they can only be transferred to wallets that previously have been whitelisted by the Fund’s t transfer agent. Peer-to-peer transfers of OnChain Shares can occur at any time on any given day, including outside of the Fund’s normal business hours. Such transfers are deemed complete upon confirmation of the transaction on the applicable blockchain. A transferee will become a registered owner of OnChain Shares at the time such OnChain Shares are transferred t to their wallet, which may occur intra-day or on days or at times when the Fund is closed for business. Dividend eligibility with respect to transferred OnChain Shares will be determined in accordance with the Fund’s prospectus. For more information on dividend eligibility rel ated to peer-to-peer transfers of OnChain Shares, shareholde rs should consult the “Dividends, Distributions, and Taxes” section of the Fund’s prospectus.
The Fund has no ability to control or monitor the price at wh ich peer-to-peer transfers of OnChain Shares occur, and such transfers may be executed at prices that differ from the Fund’ s then-current NAV. You should consult your own tax advisor regarding your particular circumstances, and about any federal, state, local and foreign tax consequences in connection with th e transfer of OnChain Shares. The Fund’s transfer agent cannot en sure the reliability of peer-to-peer transfers of OnChain Shares . To the extent investors or potential invest ors engage in transfers between each other at t a price other than NAV, such transfers may, in certain circumstances, have legal implications for tho se persons under the federal securities laws or otherwise. Neithe r the Prospectus nor this SAI designates any person as authorized to c onsummate transactions in OnChain Shares. In addition, as of th e date of this SAI, no person other than the Distributor is aut horized by the Fund to act as a dealer in OnChain Shares and no person is permitted to so act without the express written authorization of the Fund.
Neither the Fund nor the transfer agent can ensure the reliability of any transfer of other assets negotiated in connection wit h peer to-peer transfers.
Digital Wallet Security
An investor in OnChain Shares or its third-party wallet custodian is responsible for securing the investor’s own private key ag ainst loss or theft. Although the Fund’s transfer agent maintains cont rols to correct errors or unauthorized transactions when an investor loses its own private key (or it is stolen), such in tervention may require information collection and operational task s to accomplish and may render the investor’s token balances unavaila ble while these activities take place. The immediacy with which an investor notifies the Fund’s transfer agent of the loss or th eft of a private key has a direct bearing on the time required by the Fund to perform corrections. The Fund, however, has sole di scretion in determining if, and under what circumstances, it will perform any such corrections. The Fund is not obligated to make any such corrections, and its decision in this regard, includin g any action or inaction taken by the Fund, is dispositive. For a dditional information on procedures in the event of a lost or st olen
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private key and potential corrective measures taken by the Fund or the Fund’s transfer agent, investors should consult the Fund ’s prospectus.
Investors in OnChain Shares can mitigate the risk associated with a lost or stolen p private key for their investor-managed walle t by:
• Using a “multi-sig configuration” where multiple private keys are required to sign an instruction from the wallet;
• Using a backup recovery phrase, secured in a safe place, or other two-factor authentication method;
• Physically securing storage for investor-managed wallet devices that are implemented in hardware;
• Using PINs or other equivalent per-transaction authentication methods if supported by the investor-managed wallet solution; and/or
• Being aware of phishing and social manipulation techniques commonly used to extract sensitive information from you via written or verbal communication.
Blockchain Technology . Blockchain technology is a relatively new and evolvi ng technology which operates as a distributed ledger. Blockchain systems could be vulnerable to fraud, particularly y if a significant portion of network validators colluded to defrau d the rest. Access to a given blockchain requires an individualized pri vate key, which, if compromised, could result in loss due to t heft, destruction or inaccessibility. Regulation of blockchain technol ogy is evolving and may vary significantly across jurisdictions . Any future regulatory developments could affect the viability and expansion of the use of blockchain technology.
Because blockchain technology systems may operate across many y national boundaries and regulatory jurisdictions, it is possible that blockchain technology may be subject to widespread and inc onsistent regulation. Blockchain technology is not a product or service that provides identifiable revenue for companies that im plement, or otherwise use it. Currently, blockchain technology is commonly used for the recording of transactions in digital cu rrency, which may be extremely speculative and volatile. Problems in digital currency markets could have a wider effect on companies associated with blockchain technology. Blockchain technology also may never be implemented to a scale that provides id entifiable economic benefit. There are currently a number of competing blockchain platforms with competing intellectual property clai ms. The uncertainty inherent in these competing technologies coul d cause companies to use alternatives to blockchain. Finally, b ecause digital assets registered on a blockchain do not have a standardized exchange, like a stock market, there is less liquid ity for such assets and greater possibility of fraud or manipul ation.
There are risks associated with the issuance, redemption, transfer, custody and record k keeping of OnChain Shares maintained and recorded primarily on a blockchain. For example, shares that are issued using blockchain technology would be subject to the following risks, among others:
1. Delays in processing of shareholder transactions on the blockchain, which may be due to network-wide outages;
2. A rapidly-evolving regulatory landscape in the United States and in other countries, which might result in security, privacy or other regulatory concerns that could require changes to the way transactions in the shares are recorded;
3. The possibility of undiscovered technical flaws in an underlying technology, including in the process by which transactions are recorded to a blockchain, or by which the validity of a copy of such blockchain can be proven;
4. The possibility that cryptographic or other security measures that authenticate prior transactions for a blockchain could be compromised, or “hacked,” which could allow an attacker to interfere with the integrity of the blockchain and thereby disrupt the ability to corroborate definitive transactions recorded on the blockchain;
5. The possibility that new technologies, software changes, or service disruptions that inhibit access to a blockchain;
6. The volatility of transaction fees, particularly during periods of network congestion, could make the cost of operating the Fund’s blockchain-integrated system less predictable; and
7. The possibility that a breach to one blockchain could cause investors, and the public generally, to lose trust in blockchain technology and increase reluctance to issue and invest in assets recorded on blockchains.
In addition, blockchain technology risk can carry with it additiona l sub-risks, including: Fork Risk and Network Attack Risk. T he following discussion describes these risks in the context of the bloc kchain architectures expected to be utilized by the Fund. For illustrative purposes only, the below discussion refers in places to features specific to Ethereum, which operates as a proof-o f-stake network as of the date of this SAI. These features, and the r related risks, will vary among different proof-of-stake blockchains and
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will differ with respect to blockchains that operate by other consen sus mechanisms, such as those that employ a permissioned se t of validators. The Fund expects OnChain Shares to be deployed on multiple blockchains with d ifferent consensus architectures.
Fork Risk
Blockchain software is generally open-source. Any user can downl oad the software, modify it and then propose that the network adopt the modification. In practice, modifications to blockc hain networks are typically introduced through a structured governance process, including formal improvement proposals, co mmunity review, developer consensus-building, and extensive testing on development and test networks before deployment on the main network.
When a modification is introduced and a substantial majority of f users and validators consent to t the modification, the change typically is implemented and the blockchain network remains uninterrupted. Most protocol upgrades on Ethereum, for example, are implemented as planned network-wide upgrades (commonly refe ferred to as “hard forks”) in n which the entire community upgrades together and the prior version of the network is effectively abandoned.
However, if less than a substantial majority of users and validat ors consent to a proposed modification, and the modification i s not compatible with the software prior to its modification, the consequence could be what is known as a contentious “fork” (i.e ., “split”) of the blockchain network (and the blockchain), with one version running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two (or more) versions of the blockchain network running in parallel, but with each version’s native asset t lacking interchangeability. For example, while such contentio us forks have historically been rare on Ethereum, a notable example occurred in 2016 when th e Ethereum network split into Ethereum and Ethereum Classic. Additionally, a fork could be in troduced by an unintentional, una nticipated software flaw in the multiple versions of otherwise compatible software users run.
Certain blockchains operate under proof-of-stake-based consensu s mechanisms. Under proof-of-stake, validators are required to stake or receive delegations of a specified minimum amount of the blockchain’s native digital asset as collateral to participat e in block proposal and attestation. The proof-of-stake mechanis m typically includes a finality process under which blocks are considered final once they receive the required supermajority s upport from validators. Once finalized, a block generally cannot t be reverted without significant disruption to the network and, depe nding on the applicable protocol, without the attacking validat ors forfeiting a substantial portion of staked native tokens throug h a penalty mechanism known as “slashing.” Slashing or other validator penalty mechanisms may also penalize validators who en gage in other protocol violations, such as proposing conflictin g blocks. These economic penalties serve as a significant deterrent against validators supporting a competing chain in a fork scenario, although the availability, operation and scope of such penalties or mechanisms may differ among proof-of-stake blockchains.
Notwithstanding these deterrents, the proof-of-s take consensus mechanism introduces certain risks that are distinct from those present under a proof-of-work system. These incl ude, but are not limited to, the theoretical “nothing at stake” problem (in whi ch validators could attempt to validate on multiple competing chai ns simultaneously because proof-of-stake does not require the expenditure of computational resources), as well as certain attack vectors specific to proof-of-stake, such as block withholdin g. Although slashing or other validator penalty mechanisms are desi gned to mitigate these risks, no assurance can be given that su ch mitigation will be effective under all circumstances.
A protocol modification may also be implemented as a “soft fork ,” which is a backward-compatib le change that does not result in a split of the blockchain network. Unlike a ha rd fork, a soft fork tightens or adds ru les to the protocol such that non-upgrade d nodes continue to recognize new blocks as valid. While soft forks generally do not carry the same risk of a chain split, they m ay still introduce changes that affect the func tionality or features available on the network.
If a contentious fork occurs, the original blockchain and the forked blockchain could potentially compete with each other for users, validators, and other participants, leading to a loss of these for the original blockchain. Such competition could reduc e the security, functionality, and value of the network on which the F und’s shares are issued. In an instance where a fork occurs on a blockchain on which OnChain Shares are deployed, the Fund and the Fund’s transfer agent will determine OnChain Share ownership based on immediately prior available informati on and will announce on the Fund’s transfer agent’s fund-specific website which version of the blockchain on which OnChain Shares are deployed. During this time, the Fund may choose to freeze blockchain activity in OnChain Shares and effect transacti ons with shareholders manually (i.e., in book-entry form) until such time as the fork is resolved or the netwo rk otherwise has resumed normal operations. Dividends declared during such period will not be reinvested in additional OnChain Shares and will instead be p paid to affected shareholders in cash until shareholders are
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otherwise notified by the Fund or the Fund’s transfer agent th at dividend reinvestment has resumed. Tokens existing on any non designated fork will not constitute valid OnChain Shares and will have no claim on the Fund’s assets.
Network Attack Risk
Proof-of-stake-based blockchain networks rely on validators that st ake a network’s native digital asset in order to participate in transaction validation and block production. If a malicious actor, whether individually or as part of a coordinated group, were to obtain control over a significant portion of the total staked a ssets on a blockchain, that actor could disrupt the operation of f the network. Depending on the extent of such control, this could in clude delaying or preventing transaction confirmation, censoring transactions, influencing the ordering of transactions, or, in n more extreme circumstances, causing inconsistent views of the blockchain or other failures of the network’s consensus process. T The specific mechanics and thresholds at which such disruption s may occur vary across blockchain networks.
For example, on blockchain networks such as Ethereum and So lana, which utilize proof-of-stake -based consensus mechanisms (with Solana also incorporating Proof of History), consensus is g generally achieved through the participation of a supermajority y of validators. These mechanisms are designed to mitigate the risk of coordinated attacks; however, there can be no assurance that such protections will be effective in all circumstances. On bloc kchains that instead rely on a relatively small set of validato rs, such as Tempo as of the date hereof, the risk of coordinated attacks m may also exist. This risk may be mitigated to some extent if th e validators are vetted institutional actors or ensuring that v validators operate under defined governance frameworks with compliance obligations.
Proof-of-stake-based consensus mechanisms typically incorporat e economic incentive structures intended to discourage malicious behavior by validators. For example, certain blockchain pr otocols include penalty mechanisms (“slashing”) under which validators that engage in provably malicious behavior may forfe it a portion of their staked assets or be removed from the valid ator set. Other blockchain networks may rely on a combination of prot ocol rules, validator performance requirements, governance processes, and market-based delegation to impose consequences on underperforming or malicious validators. These mechanisms are intended to make certain attacks economically unattractive, as v validators risk loss of stake, reputation, or future partici pation in the network.
Notwithstanding these design features, there can be no assurance t that such mechanisms will prevent coordinated or malicious activity. In certain circumstances, if a sufficiently large portion of f validator stake were to act in concert, a blockchain’s c onsensus process could be disrupted, including through transaction censorship , delays in confirmation, or inconsistent views of the ledg er. In addition, in response to a significant network disruption or a ttack, participants in a blockchain network may seek to coordi nate responses outside of formal protocol rules, including through c changes to network software, although such actions are uncertain and may not be effective or uniformly adopted.
Additionally, for relatively nascent stage blockchain networks, th e full range of potential failure modes, including fork-relat ed risks, may not be as well understood or as extensively tested as in more mature networks such as Ethereum. As a result, there m ay be uncertainty regarding how these systems would behave under adverse or unexpected conditions, including validator disagreement or network partition events. Furthermore, the con sensus mechanisms for these network s may evolve over time as the networks mature, which could introduce new or different risk considerations.
Before investing in OnChain Shares on a particular blockchain, an investor should carefully consider the risks of using such blockchain network and should conduct their own assessment of the su itability of such network for ma king their investment in th e Fund.
Blockchain Networks . The suitability of the blockchain networks (and underl ying blockchain ledgers) approved for use by the Fund could decline due to a variety of causes, adversely affectin g the functionality of the OnChain Shares and an investment in the Fund. Blockchain networks are based on software protocols th at govern the peer-to-peer interactions between computers connected to these networks. The suitability of a network for the blockchain-based functionality provided in connection with OnChain Shares depends upon a variety of factors, including, but not limited to:
1. The effectiveness of the informal groups of (often uncompensated) developers contributing to the protocols that underlie the network;
2. Effectiveness of the validators and the network’s consensus mechanisms to secure the network against confirmation of invalid transactions;
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3. The continued participation of a number of sufficient validators;
4. The lack of collusion among validators;
5. Disputes among the developers or validators of the network;
6. Changes in the consensus or validation scheme that underlies the network;
7. The failure of cybersecurity controls or security breaches of the network;
8. The inability of validators to reach consensus and the consequential halting of transaction verification on the network;
9. The existence of undiscovered technical flaws in the network;
10. The development of new or existing hardware or software tools or mechanisms that could negatively impact the functionality of the network or related infrastructure;
11. The price or volatility of the blockchain asset associated with the respective network;
12. The cost of “gas” fees to use the network;
13. Intellectual property rights-based or other claims against the network’s participants;
14. The continued adoption of the network; and
15. The maturity of the software development kit used in connection with the network.
Unfavorable developments or characteristics of any of the above or other circumstances could adversely affect the Fund’s operations or the functionality of OnChain Shares. Furthermore, a blockchain record stores the complete transaction history fro m issuance of OnChain Shares. As a result, robust and transparent da ta, other than shareholder p ersonal identifying information, will be publicly available via the published blockchain and tools su ch as block explorers. Such transaction data is secured by cryptography and only a public-key-derived wallet address (and not a shareholder’s personal identifying information) will be exposed to the public on the blockchain. The personal identify ing information necessary to associate a public key representing a given block of OnChain Shares with the record owner of those OnChain Shares will be maintained by the Fund’s transfer agent and will not be available to the public. However, if there are da ta security breaches with respect t to such database(s) resultin g in theft of the information necessary to link p personal identity with the public key and rel ated OnChain Share transactions, the st olen information could be used to determine a shareholder’s id entity and complete transaction history in OnChain Shares.
Concerns over these privacy issues may limit adoption of public-le dger blockchain technology, reducing the potential market acceptance for OnChain Shares and the size of the Fund.
Blockchain Network Suitability . The Board has delegated to BlackRock the authority to evaluate and select the blockchain networks on which the Fund’s OnChain Shares will be offered and sold. The Board does not review or approve individual blockchain networks. In exercising this delegated authority, BlackRock conducts multi-layered technical and operational due diligence prior to supporting the Fund’s OnChain Shares on any blockchain network. BlackRock’s review process is supported by the Fund’s transfer agent, which assists in blockchain diligence as detailed below.
Although neither the Fund, BlackRock, nor the Fund’s transfer age nt endorses or recommends any particular blockchain, and an investor should independently assess any blockchain for th eir own purposes and use cases, the Fund’s transfer agent will nonetheless review information related to a blockchain in relation to allowing a blockchain to be used to support OnChain Share s, including the following:
• Operational Integrity and Scalability: Each supported blockchain should generally demonstrate consistent performance and adequate scalability.
• Transaction Costs: Each supported blockchain should have reasonably understandable transaction fees.
• Permissioning Compatibility: Each supported blockchain should be able to support the Fund’s transfer agent’s permissioned framework on public, permissionless blockchains in seeking to ensure that only pre-approved wallets can participate in transactions involving OnChain Shares.
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• Burning and Minting Process: If an investor wishes to move between two supported blockchains, the investor will need to contact the transfer agent to communicate their intent. The process is manual and is only supported during business days and operating hours. Each of the supported blockchains should be able to support the Fund’s transfer agent’s management of a burning and minting process. This pro cess involves reducing the balance of OnChain Shares on the originating blockchain to zero by recording a “burning” tran saction and then minting an equivalent number of OnChain Shares on the destination blockchain. This controlled burning and minting process seeks to ensure that the movement of OnChain Shares between blockchains does not result in n any dilution or duplication of OnChain Shares.
Investors should note that they may experience materially d ifferent service levels on different blockchains and are encouraged t to select the blockchain that best suits their investment t objectives, risk tolerance, and operational requirements.
Blockchain Regulation . Regulation of digital assets (such as OnChain Shares), blockchain technologies and digital asset platforms is currently developing and likely to rapidly evolve, varies si gnificantly among international, federal, state and local jurisd ictions and is subject to significant uncertainty. Various legislativ e and executive bodies in the United States and in other countries are currently considering, or may in the future consider, laws, regul ations, guidance, or other actions, which may severely impact t the Fund, and thus the Fund’s shareholders. Failure by the Fund or r any Fund service provider to comply with any laws, rules or regulations, some of which may not exist yet or are subject to interpretation and may be subject to change, could result in a v ariety of adverse consequences to the Fund (and thus to the Fund’s sha reholders), including civil penalties and fines. New or changing laws and regulations or interpretations of existing laws and r regulations may adversely impact the Fund’s ability to issue and redeem OnChain Shares or otherwise make distributions on OnChai n Shares, the secondary market liquidity and market price of OnChain Shares, shareholders’ ability to access or otherwise utili ze an exchange or platform for trading of OnChain Shares (should such a platform or exchange exist in the future and such activity be permitted by the Fund) and the structure, rights a nd transferability of OnChain Shares (should shareholders be permitte d to transfer or exchange OnChain Shares in the future). Therefore, there can be no assurance that any new or continui ng regulatory scrutiny or initiatives will not have an adverse imp act on OnChain Shares or impede the Fund’s current or future activiti es. In addition, because of the differences between the way OnChain Shares are issued and recorded as co mpared to shares in a traditional mutual fu fund, there is a risk that issues that mig ht easily be resolved by existing law if traditional methods were in volved may not be easily resolved for OnChain Shares. The treatment of OnChain Shares (and certain other forms of tokeni zed shares) under applicable state law, including the Uniform Commercial Code (“UCC”), is uncertain. The occurrence of any related d issue or dispute could have a material adverse effect on the Fund’s current or future business or OnChain Shares. Blockcha in networks currently face an uncertain regulatory landscape i n not only the United States but also in many foreign jurisdicti ons such as the European Union and China. Various foreign jurisdictions may, in the near future, adopt laws, regulations or directives that affect a blockchain network and its users, developers and service providers that fall within such jurisdicti ons’ regulatory scope. Such laws, regulations or directives ma y conflict with those of the United States or may directly and nega tively impact the Fund and its service providers. The effect o f any future regulatory change is impossible to p redict, but such change could be substan tial and adverse to the shareholders, the Fu nd and the Fund’s service providers.
Stablecoin Regulatory Risk. The Fund intends to operate such that its OnChain Shares will be “eligible reserve assets” for payment stablecoin issuers under The Fund’s status as an eligib le reserve asset under the GENIUS Act is a product of its struct ure as a government money market fund operating in accordance with Rule 2a-7 under the 1940 Act and investing exclusively in Treasury Instruments with a maturity of 93 days or less and overn ight repurchase agreements secured by such instruments. If the GENIUS Act or regulations adopted thereunder were to impose re quirements with which the Fund cannot comply — for example, by limiting the types of permitted reserve assets in a manner that excludes shares of money market funds or by imposing operational or structural conditions that the Fund is unable to satisfy — payment stablecoin issuers that hold OnChain Shares a s reserve assets could be required to redeem their holdings in the F und in order to maintain comp liance with applicable law. Such large-scale redemptions could adversely affect the Fund’s liquid ity and net assets. In addition, under rules adopted or propose d by the Office of the Comptroller of the Curren cy (OCC), there may be limits on the percent age of a stablecoin issuer’s total reser ve assets that may be held in any single investment product, whic h could limit the growth of the Fund. Additionally, various other aspects of the GENIUS Act remain unclear and subject to interpret ation, and federal regulators, including the OCC and the U.S. Department of the Treasury, are developing implementing standards th at have not been finalized as of the date of this Prospectu s. Changes in, or new interpretations of, the GENIUS Act or related d rules could affect the types of instruments the Fund is permit ted to hold under that framework or the methods by which the F und implements its investment strategy, including operational processes tied to its permissioned use of public blockchains for OnChain Shares. These developments could require the Fund to adjust portfolio holdings or modify operational practices a nd could adversely affect the Fund or its shareholders.
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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 short term unsecured promissory notes issued by corporations, partnerships, trusts or other entities to finan ce short term credit needs and non-convertible debt securities ( e.g. , bonds and debentures) with no more than 397 days remaining to matur ity at the date of purchase. Short term obligations issued by trusts, corporations, partnerships or other entities include m mortgage-related or asset-backed instruments, including pass-th rough certificates such as participations in, or bonds and notes back ed by, pools of mortgage, automobile, manufactured housing or other types of consumer loans; credit card or trade receivabl es or pools of mortgage-backed or asset-backed securities. These structured financings will be supported by sufficient collatera l and other credit enhancements, including letters of credit, in surance, reserve funds and guarantees by third parties, to enable such instruments to obtain a quality rating by a Nationally Recognized Statistical Rating Organization (“NRSRO”), if applicable. Some structured financings al so use various types of swaps, among other things, to issue instruments that have interest rate, qua lity or maturity characteristics necessary or desirable for a Fu nd. These swaps may include so-called credit default swaps that mi ght depend for payment not only on the credit of a counterparty, but also on the obligations of another entity, the “reference entity .” Commercial paper is generally considered to be short-ter m unsecured debt of corporations. Like all fixed income securiti es, commercial paper prices are susceptible to fluctuations in in terest rates. If interest rates rise, commercial paper prices will dec line and vice versa. However, the short-term nature of a commerc ial paper investment generally makes it less su sceptible to volatility than many other fix ed income securities because interest rat e risk typically increases as maturity lengths increase. Commercial paper t tends to yield smaller returns than longer-term corporate de bt because securities with shorter maturities typically have lo wer 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 Pros pectus, BlackRock will consider ESG factors as part of the cr edit research and investment process for a Fund. BlackRock views ESG in tegration as the practice of incorporating financially materi al ESG data or information into investment processes with the obj ective of enhancing risk-adjusted returns. All securities purchas es by a Fund are selected from approved lists maintained by BlackRoc k. All instruments on an approved list used by a Fund have met the minimal credit risk requirement of Rule 2a-7, if required. In n reviewing instruments, BlackRock will consider the capacity o f the issuer or guarantor to meet its obligations. BlackRock consid ers ESG data within the total data available during its review. Th is may include third party research as well as considerations of proprietary BlackRock research across the ESG risks and opportunities regarding an issuer.
The ESG characteristics utilized in a Fund’s investment pr ocesses are anticipated to evolve over time and one or more characteristics may not be relevant with respect to all issuers th at are eligible for investment. Certain of these consideratio ns may affect the Fund’s exposure to certain companies or industries. Wh ile BlackRock views ESG considerations as having the potential to contribute to a Fund’s long-term performance, th ere is no guarantee that such results will be achieved.
Foreign Bank Money Instruments. Foreign bank money instruments refer to U.S. dollar-denominated obligations of foreign depository institutions and their foreign branches and subsid iaries, such as, but not limited to, certificates of deposit, bank ers’ acceptances, time deposits, bank notes and deposit notes. The obligati ons of such foreign depository institutions and their for eign branches and subsidiaries may be the general obligations of the p parent bank or may be limited to the issuing branch or subsidia ry by the terms of the specific obligation or by government regula tion. 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 investme nt) in these obligations. Investments in fo reign entities generally involve the same r isks as those described above in connection with investments in Eurodolla r 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 short term debt instruments refer to U.S. dollar-denominated commercial paper and other short 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 Eurodolla r and Yankeedollar obligations and obligations of foreign depository institutions and their foreign branches and subsidiaries. See “Bank Money Instruments.”
Forward Commitments. Certain 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 commitm ent, and the value of the secur ity will thereafter be reflected in the calculation of the Fund’s NAV. T The value of the security on the delivery date may be more o r less than its purchase price. Although a Fund generally will enter into forward commitments with the intention of acquiring securiti es for its portfolio, a Fund may dispose of a commitment prior t to settlement if the Manager deems it appropriate to do so.
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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 r isk of a decline in the value of the security in these transactions and may not benefit from appreciation in the value of the secur ity 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 invest ed in illiquid securities. The Manager will monitor the liquidity o f 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. In flation 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 la w, 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 un it investment trusts listed on a stock exchange. Under Section 12(d)(1)(A) of the Investment Company Act, however, a F und may invest up to 10% of its total assets in securities of other investment companies (measured at th e 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 c company if such acquisition would cause the Fund to own more than 3% of the total outstanding voting stock of such invest ment 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 suc h investment company. (These limits do not restrict a feeder fund fr om investing all of its assets in shares of its master portfo lio.) 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 ow n 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, in cluding ETFs, subject to certain conditions. In addition, a Fund d may be able to rely on certain 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 certain conditions.
As with other investments, investments in other investme nt companies are subject to market and selection risk.
Shares of investment companies, such as closed-end fund invest ment companies, that trade on an exchange may at times be acquired at market prices representing premiums to their NAVs. In addition, investment t companies held by a Fund that trade on an exchange could trade at a discount from NAV, and such disc ount could increase while the Fund holds the shares. If the market price of shares of an exchange-traded investment company d ecreases below the price that the Fund paid for the shares and the Fund were to sell its shares of such investment company at a tim e 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 proportionate share of expenses in the Fund and, indirectly, the expenses of such investment companies. Such expenses, both at the Fund level and acquired investment comp any level, would include management and advisory fees, unless such fees have been waived by BlackRock. Please see the relevan t Fund’s Prospectus to determine whether any such management and advisory fees have been waived by BlackRock. Investment s by a Fund in wholly owned investment entities created under the laws of certain countries will not be deemed an investment in oth er investment companies. Pursuan t to guidance issued by the st aff 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 othe r investment companies and pooled investment vehicl es in which a Fund invests a portion 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 limite d in its ability to purchase underlying funds if such underlying funds themselves own shares of underlying funds.
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A number of publicly traded closed-end investment companies have been organized to facilitate indirect foreign investment in developing countries, and certain of such countries, such as T Thailand, South Korea, Chile and Brazil, have specifically authori zed such funds. There also are investment opportunities in certain of such countries in pooled vehicles that resemble open-end investment companies. The restrictions on investments in securities of investment companies set forth above may limit opportunities for a Fund to invest indirectly in certain developing countries.
Issuer Insolvency Risk. Certain Funds’ potential exposure to financially or operationally troubled issuers involves a high degree of credit and market risk, which may be heightened during an ec onomic downturn or recession. Should an issuer of securities held b y a Fund become involved in a bankruptcy proceeding, reorganizati on or financial restructuring, a wide variety of considerations make an evaluation of the outcome of the Fund’s exposure to the issuer uncertain.
During the period of a bankruptcy proceeding, reorganization or financial restructuring, it is unlikely that a Fund will receiv e any interest payments on the securities of the issuer. A Fund will be subject to significant uncertainty as to whether the reorgani zation or restructuring will be completed, and the Fund may bear certain extraordinary expenses to protect and recover its investment. A Fund will also be subject to significant uncertainty as to when a nd in what manner and for what value the obligations evidenced by the securities of the issuer held by y the Fund will eventually be satisfied.
Even if a plan of reorganization or restructuring is adopted with h respect to the securities of the issuer held by the Fund, the re 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 n 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, dis allowed or subordinated to the claims or security interests of other creditors. In addition, amendments to the U.S. Bankruptcy Code or oth er relevant laws could alter the expected outcome or introduce g reater uncertainty regarding the outcome of the Fund’s securities holdings in the issuer. In a bankruptcy proceeding, a reorganiza tion or restructuring, the securities of the issuer held by a F und could be re-characterized or a Fund may receive different securiti es or other assets, including equity securities. These types of equity securities include, but are not limited to: common stock; preferred stock (including convertible preferred stock); bonds , notes and debentures convertible 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 ri sk than holders of debt securities because the status of equi ty holders is subordinate to debtholders in an issuer’s capital st ructure. The value of equity securities received by a Fund could decline if the financial condition of the issuer deteriorates or if overa ll market and economic conditions, or conditions within the is suer’s region or industry, deteriorate.
To the extent that a Fund receives other assets in connection w with a bankruptcy proceeding, reorganization or financial restructuring, the Fund may also be subject to additional risk s associated with the assets received. One example of assets that t a Fund could receive is an interest in one or more loans made to t the issuer as part of a workout agreed to by a consortium of lienholders and creditors of the issuer. A Fund may receive such int erests in loans to the extent permitted by the Investment Company Act.
Securities or other assets received in a reorganization or restruct uring typically entail a higher degree of risk than investme nts 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 rest ructuring. The post- reorganization/restructuring assets and sec urities may also be illiquid and difficult to sell or value. If a Fund pa rticipates in negotiations with respect to a plan of reorganiz ation or restructuring with respect to securities of the issuer held by a F und, the Fund also may be restricted from disposing such secu rities for a period of time. If a Fund becomes invo lved in such proceedings, the Fund may h ave more active participation in the affair s of the issuer than that assumed generally by an investor.
Market Risks/Recent Market Events. Securities may decline in value due to fact ors affecting securities markets generally or particular industries represented in the markets. The value of a security may decline due to general market conditions, economi c trends or events that are not specifically related to a company or to factors that affect a particular industry or industries, or factors that affect a particular issuer or issuers, exchange, country , group of countries, region, market, industry, group of industrie s, sector or asset class. The success of a Fund’s activities could be affe fected by interest rates, availability of credit, inflation rates , economic uncertainty, changes in laws, trade barriers, economic sanctions, currency exchange controls, and local, regional or global eve nts such as war, acts of terrorism, natural and environmental di sasters, the spread of infectious illness or other public health is sues, recessions, or other events could have a significant impact on a F und and its investments. During a general economic downturn i n the securities markets, multiple asset classes may be negatively affected. These factors may affect the level and volatility of
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securities prices and the liquidity of a Fund’s investments, wh ich could impair a Fund’s profitability or result in losses. A F und may maintain substantial trading positions that can be adversely affe fected by the level of volatility in the financial markets; the larger the positions, the greater the potential for loss. Unpredictable or r unstable market conditions may result in reduced opportunities t to find suitable investments to deploy capital or make it more d ifficult to exit and realize value from a Fund’s existing investme nts. It is important to understand that a Fund can incur material losses even if it reacts quickly to difficult market conditions and t here 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 market s and restrictive credit conditions, sometimes limited to a particu lar sector or a geography, can occur. Some countries, including the U United States, have adopted and/or are considering the adoption of more protectionist trade policies, a move away from the tight er financial industry regulations that followed the financial c risis of 2008, and/or substantially reducing corporate taxes. The ex act shape of these policies is still being considered, but the eq uity 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 po licies, and the possibility of changes to some international tr ade agreements, could affect the economies of many nations in w ays 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 an d markets generally. Economies and financial markets throughout th e world are increasingly interconnected. As a result, whether o r not a Fund invests in securities of issuers located in or with significant exposure to countries experiencing economic, politic al 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 regul ation 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 t objectives or otherwise adversely impact an investment in a Fund. Recent policy initiatives undertaken by th e U.S. government have the potential to impact international relations, trade agreements and the overall regulatory environment in ways that t could create uncertainty and instability in domestic and global markets and could adversely affect the investment performance of a Fund. In particular, actions taken by the U.S. government in respect of international trade relations could lead to trade w wars, increased costs for imported goods, disruptions in supply ch ains, reduced foreign investment, and instability in regions where a F und invests. Political and diplomatic events within the United States, including a contentious domestic political environment, ch anges in political party control of one or more branches of t he U.S. Government, the U.S. Government’s inability at times to agree on a long-term budget and deficit reduction plan, the threat t of a U.S. Government shutdown, and disagreements over, or threats not to increase, the U.S.
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 v various kinds of debt. Moreover, although the U.S. Government h has honored its credit obligations, there remains a possibility that th e United States could default on its obligations. The conseq uences of such an unprecedented event are impossibl e 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 coul d significantly impair the value of a Fund’s investments.
The COVID-19 pandemic resulted in significant market volatility, exch ange suspensions and closures, declines in global financia l 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 pandemi cs 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 short term or long term, and may ex acerbate other pre-existing political, social and economic risks, disrupt normal market conditions and operations, and negatively im pact performance. In addition, the impact of infectious diseases in emerging developing or emerging market countries m ay be greater due to less established health care systems.
Legal and Regulatory Risks. The Manager is part of a larger firm with multiple business lines active in multiple jurisdictions that are governed by a multitude of legal systems and regulatory reg imes, some of which are new and evolving. As a result, the Funds and the Manager and its affiliates are subject to extensive and s ophisticated legal, tax and regulatory risks, including changi ng laws and regulations, developing interpretations of such laws and regulations, as well as existing laws, and increased scrutiny y by regulators and law enforcement authorities. Unexpected economic, p 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
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implementation of changes to comply with cu rrent and/or new regulations applicable to the Funds and/or the Manager could have a material adverse effect on the Funds (including by imposing m material costs on the Funds, reducing profit margins, reducing investment opportunities or by otherwise restricting the Funds and/or the Manager).
Tariff and Trade Policy Risks . Some countries, including the U.S., have adopt ed more protectionist trade policies. The U.S. government recently altered its approach to international trad e policy, resulting in significant impacts on international trade relations, certain tax and immigration policies, and other asp ects 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 agreem ents between the U.S. and the European Union, and the risks associated with trade negotiations between the U.S. and China, could affect the econom ies of many nations in ways that cannot necessarily be foreseen at the present time. Global trade disruption, significant introduc tions of trade barriers, and bilateral trade frictions, toget her with any future downturns in the global economy resulting therefrom, coul d adversely affect the financial performance of a Fund and its investments. Trade policy may be an ongoing source of f instability, potentially resulting in significant currency fluctuatio ns and/ or having other adverse effects on international markets, in ternational trade agreements, and/or other existing cross-border cooperation arrangements (whether economic, tax, fiscal, legal, reg ulatory, or otherwise). To the extent trade disputes escalat e globally, there could be additional significant impacts on the sect ors or industries in which a Fund invests and other adverse impacts on a Fund’s overall performance.
Municipal Investments
Municipal Securities. Certain Funds invest in short term municipal obligati ons 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 Puerto Ric o, the U.S. Virgin Islands and Guam, the interest on which (and/or, in th e case of property taxes, the value of which) is excludable, in the opinion of bond counsel to the issuer, from gross income for purpo ses of Federal income taxes and the applicable state’s income taxes (“State Taxes”). Obligations that pay interest that is ex cludable from gross income for Federal income tax purposes are referred to herein as “Municipal Securities,” and obligations that p pay interest that is excludable from gross income for Federa l income tax purposes and are exempt from the applicable State T Taxes are referred to as “State Municipal Securities.” Unless otherwise indicated, references to Municipal Securities sha ll be deemed to include State Municipal Securities.
Municipal Securities include debt obligations issued to obtain funds for various public purposes, including construction of a w ide range of public facilities, refunding of outstanding obligations and obtaining funds for general operating expenses and loans t o other public institutions and facilities. In addition, certain ty pes of bonds are issued by or on behalf of public authorities t to finance various facilities operated for private profit. Such obligations are included within the term Municipal Securities if the inter est 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 obli gation bonds are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, fr om the proceeds of a special excise tax or other specific reven ue source such as from the user of the facility being financed. Pri vate activity bonds (or “industrial development bonds” under pre-1986 law) are in most cases revenue bonds and do not generally constitute th e 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 property 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 portfolio may include “moral obligation” bonds, which are normally issued by special purpose public authorities. If an issuer of moral obligation bonds is una ble to meet its debt service obligations from current revenues , it may draw on a reserve fund, the restoration of which is a moral co mmitment but not a legal obligation of a state or municipalit y.
Yields on Municipal Securities are dependent on a variety of fact ors, including the general condition of the money market and o f the municipal bond market, the size of a particular 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 t on the continuing ability of the issuers of the Municipal Secur ities in which the Fund invests to meet their obli gations for the payment of interest and th e repayment of principal when due. There are variations in the risks involved in holding Municipal Securiti es, both within a particular classification and between classific ations, depending on numerous factors. Furthermore, the rights of hold ers of Municipal Securities and the obligations of the issuers of
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such Municipal Securities may be subject to applicable bankruptcy , insolvency and similar laws and court decisions affecting th e rights of creditors generally, and such laws, if any, which may be enacted by Congress or state legislatures affecting specific ally the rights of holders of Municipal Securities.
A Fund’s ability to distribute dividends exempt from Federal in come tax will depend on the exclusion from gross income of the interest income that it receives on the Municipal Securities in w which it invests. A Fund will only purchase a Municipal Securit y if it is accompanied by an opinion of counsel to the issuer, which is delivered on the date of issuance of that security, that intere st on such securities is excludable from gross income for Fe deral 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 certain requirements, such as restrictions as to the investment of the proceeds of the issue, limitations a s to the use of proceeds of such issue and the property financed by su ch proceeds, and the payment of certain excess earnings to the Federal government, that must be met after the issuance of t the Municipal Securities for interest on such securities to remain excludable from gross income for Federal income tax purposes. T The issuers and the conduit borrowers of the Municipal Securities generally covenant to comply with such requirements and the t tax exemption opinion generally assumes continuing compliance with such requirements. Failure to comply w 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 ongoi ng enforcement program that involves the audit of tax exempt bonds to determine whether an issue of bonds satisfies all of the r requirements that must be met for interest on such bonds to b e excludable from gross income for Federal income tax purposes. Fr om 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 I IRS may determine that the interest on such securities is includab le in gross income for Federal income tax purposes either because th e IRS has taken a legal position adverse to the conclusion reache d 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 issu e 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 acquisiti on of such security, the IRS may demand that such Fund pay taxes on th e affected interest income and, if the Fund agrees to do so, it s yield could be adversely affected. If the interest paid on any Munici pal Security held by a Fund is determined to be taxable, s uch Fund will dispose of the security as soon as practicable. A determ ination that interest on a security held by a Fund is includa ble in gross income for Federal or state income tax purposes retroactivel y to its date of issue may, likewise, cause a portion of prio r distributions received by shareholders to be taxabl e to those shareholders in the year of receipt.
From time to time, proposals have been introduced before Cong ress for the purpose of restricting or eliminating the Federal income tax exclusion for interest on Municipal Securities. Simila r proposals may be introduced in the future. If such a proposa l 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 ch anges 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 f a trust or partnership through which a Fund holds an interest t in one or more underlying bonds coupled with a right to sell (“put”) the Fund’s interest in the underlying bonds at par plus accru ed interest to a financial institution (a “Liquidity Provider”). Typi cally, a Derivative Product is structured as a trust or partn ership that provides for pass-through tax-exempt income. There are cu rrently three principal types of derivative structures: (1) “Tend er Option Bonds,” which are instruments that grant the holder thereo f the right to put an underlying bond at par plus accrued interest at specified intervals to a Liquidity Provider; (2) “Swa p Products,” in which the trust or partnership swaps the payme nts due on an underlying bond with a swap counterparty who agrees to pay a floating municipal money market interest rate; and (3) “Partnerships,” which allocate to the partners portions of income, expenses, capital gains and losses associated with holdi ng an underlying bond in accordance with a governing agreement. A Fund m ay also invest in other forms of short term Derivative Products eligible for investment by money market funds.
Investments in Derivative Products raise certain tax, legal, reg ulatory and accounting issues that may not be presented by investments in municipal bonds. There is some risk that certain issues could be resolved in a manner that could adversely impac t the performance of a Fund. For example, the tax-exempt treatm ent of the interest paid to holders of Derivative Products is premised on the legal conclusion that the holders of such Deri vative Products have an ownership interest in the underlying bond s. Were the IRS or any state taxing authority to issue an adv erse ruling or take an adverse position with respect to the taxation of
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Derivative Products, there is a risk that the interest paid on su ch Derivative Products or, in the case of property taxes, the v value of such Fund to the extent represented by such Derivative Products, w ould be deemed taxable at the Federal and/or state level. Befo fore purchasing a Derivative Product, the Manager is required by the Funds ’ procedures to conclude that the tax-exempt security and the supporting short-term obligation involve minimal credit risk s and are Eligible Securities under the Funds’ Rule 2a-7 procedures. In evaluating the creditworthiness of the entity ob ligated to purchase the tax-ex empt security, the Manager will re view periodically the entity’s rele vant financial information.
Municipal Notes. Municipal notes are shorter term municipal debt obligations. They may provide interim financing in anticipation of tax collection, bond sales or revenue receipts. If f there is a shortfall in the anticipated proceeds, the note m ay not be fully repaid and a Fund may lose money.
Municipal Commercial Paper. Municipal commercial paper is generally unsecured a nd issued to meet short term financing needs. The lack of security presents some risk of loss to a Fund si nce, in the event of an issuer’s bankruptcy, unsecured creditors ar e 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 f State Municipal Securities are Certificates of Participation (“COPs”) issued by governmental authorities or r entities to finance the acquisition or construction of equipment, land and/or facilities. The COPs represent participations in a lease, an installment purchase contract or a conditional sales contra ct (hereinafter collectively called “lease obligations”) relating to such equipment, land or facilities. Although lease obligation s do not constitute general obligations of the issuer for which the issu er’s unlimited taxing power is pledged, a lease obligation is fr equently backed by the issuer’s covenant to budget for, appropriate a nd make the payments due under the lease obligation. However, certain lease obligations contain “non-appropriation” clauses that pr ovide that the issuer has no obligation to make lease or installment purchase payments in future y years unless money is appropriated for such purpose on a yearly basis. Although “non appropriation” lease obligations are secured by the leased propert y, disposition of the property in the event of foreclosure mi ght prove difficult. The securities represent a type of financing that has not yet developed the depth of marketability associated w with more conventional securities. Certain 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 do llar-weighted average maturity of each Fund’s portfolio will be 60 days or less. For purposes of this investment policy, an obli gation will be treated as having a maturity earlier than its st ated maturity date if such obligation has technical features that, in the judgment of the Manager, will result in the obligation bei ng 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 y 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 portfolio investments in municipal notes and short 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 Unit ed States or (ii) otherwise are determined by the Manager to present minima l credit risks to the Fund. A Fund’s investments in municipal bonds will be in securities that have been determined by the Man ager to present minimal credit risks to the Fund. In addition, certain Funds may require that portfolio investments (or their i ssuers) receive minimum credit ratings from one or more NRSROs, or if not rated, are determined by the Manager to be of comp arable quality to securities that have received such rating(s). Cer tain tax-exempt obligations (primarily VRDOs) may be entitled to th e benefit of letters of credit or similar credit enhancements iss ued by financial institutions. In such instan ces, in assessing the quality of such instruments, the Trustees and the Manager will t ake into account not only the creditworthiness of the issuers, but also the creditworthiness 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.”
Certain Funds may not invest in any security issued by a de pository institution unless such institution is organized and operat ing in the United States, has total assets of at least $1 billion and is federally insured. While the ty pes of money market securities in which the Funds invest generally are considered to have low pr incipal risk, such securities are not completely risk free. There is a risk of the failure of issuers or credit enhancers to meet their p principal and interest obligations. With respect to repurchase
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agreements and purchase and sale contracts, there is also the risk of the failure of the parties involved to repurchase at the agreed-upon price, in which event each Fund may suffer time del ays 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 portfolio. Not all short term municipal securities trade on the basis of same day settlements and, accordingly, a portfolio of such securities cannot t be managed on a daily basis with the same flexibility as a portfolio 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 p purchases of shares or the maturing of portfolio securities. A Fu nd also may be required to maintain cash reserves or incur tem porary bank borrowings to make redemption payments, which are made on the same day the redemption request is received. Such in ability to be invested fully would lower the yield on such Fund ’s portfolio.
Because certain Funds may at times invest a substantial portion of their assets in Municipal Securities secured by bank letters of credit or guarantees, an investment in a Fund should be made with h an understanding of the characteristics of the banking indust ry and the risks that such an investment in such credit enhanced securities may entail. Ba nks are subject to extensive governmenta l regulations that may limit both the amounts and types of loans a nd 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 t of capital funds for the purpose of financing lending operations under prevailing money market conditions. Furthermore, general economic conditions play an important part in the operations of f this industry and exposure to credit losses arising from possib le 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 a nd volume of securities qualifying for the Fed eral income tax exemption of interest; t his may affect the availability of Municipal Securities for investment by the Funds, which could, in turn, have a negative impact o n the yield of the portfolios. A Fund reserves the right to suspend or otherwise limit sales of its shares if, as a result of difficu lties in acquiring portfolio securities or otherwise, it is determined that t it is not in the interests of the Fund’s shareholders to iss ue additional shares.
VRDOs. VRDOs are tax-exempt obligations that contain a floating or variable interest rate adjustment formula and right of demand on the part of the holder thereof to receive payment of f the unpaid balance plus accrued interest upon a short notice period not to exceed seven days. There is, however, the possibility t that because of default or insolvency the demand feature of VRDOs may not be honored. The interest rates are adjustable at p eriodic intervals to some prevailing market rate of the VRDOs at approximately the par value of the VRDOs on the adjustment date.
The adjustment may be based upon the Securities Industry and Fi nancial Markets Association (“SIFMA”) Municipal Swap Index or some other appropriate interest rate adjustment index. Each h Fund may invest in all types of f tax-exempt instruments currently outstanding or to be issued in the future that sa tisfy its short term maturity and quality standards.
Because of the interest rate adjustment fo rmula 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 opportunity y for capital appreciation during periods when prevailing interest rates have declined. On the other hand, during peri ods 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 o ccur 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 ne t asset value of the fund by cancelling shareholders’ shares i n the amount of the negative gross yield. If a fund converts to a floating NAV, any losses the fund experiences due to negative inter est rates will be reflected in a declining NAV per share. Under a reverse distribution mechanism, shareholders in a fund would obse rve 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 n eed to determine that the appr oach 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 s — Each Fund and the entities with which it intera cts 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 artificial inte lligence and machine learning (“AI”), which may result in loss es for a Fund and its shareholders or impair a Fund’s operations. Th ese entities include, but are not limited to, a Fund’s adviser,
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administrator, distributor, other service providers (e.g., index and benchmark providers, accountants, custodians, and transfer agents), financial intermediaries, counterparties, market makers, Authorized Participants, listing exchanges, other financial m arket operators, and governmental authorities, as applicable. Operati onal and technology risks for the issuers in which a Fund invest s could also result in material adverse consequences for such issu ers and may cause a Fund’s investments in such issuers to lose value. A Fund may incur substantial costs in ord er to mitigate operational and technology risks.
Cybersecurity incidents can result from deliberate attacks or unint entional events against an issuer in which a Fund invests, a Fund or any of its service providers. They include, but are not limite d to, gaining unauthorized access to systems, misappropriating assets or sensitive information, corrupting or destroying da ta, 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 n state backing. Cybersecurity incidents may result in any of the fo llowing: financial losses; interfe ference with a Fund’s ability to ca lculate 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 applica ble privacy and other laws; regulatory fines; penalties; reputational damage; reimbursement or other compensation costs; and other legal and compliance expenses. Furthermore, cybersecurity inci dents 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 servi ce providers, as well as market events that occur at a pac e that overloads these systems, may also disrupt business operations or impact critical data. Recent advances in AI technology po se risks to a Fund and its portfolio investments. These advancements could harm a Fund and its portfolio investments by reducing the demand for both the technology and software offerings of t the Fund’s portfolio investments. Additionally, these advancements could significantly disrupt a Fund’s portfolio investments and subj ect them to increased competition, which could have a materi al adverse effect on business, financial condition, and results of operations. AI technology advancements, including efficiency improvements, without related increases in the adoption and devel opment of such technologies, could also negatively impact demand for, and the valuation of, digital infrastructure assets.
Each Fund and its portfolio investments could be exposed to th e risks of AI technology if third-party service providers or any counterparties, whether or not known to a Fund, also use AI t 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-party products or services.
Use of AI technology could include the input of confidential info rmation in contravention of applicable policies, contractual o r other obligations or restrictions, resulting in such confidential information becoming accessible by other third-party AI techn ology applications and users.
Independent of its context of use, AI technology is generally h highly reliant on the collection and analysis of large amounts of f data, may incorporate biased or inaccurate data, and it is not possibl e or practicable to incorporate all relevant data into the mode ls that AI technology utilizes to operate. Certain data in such models w will inevitably contain a degree of inaccuracy and error, or cou ld otherwise be inadequate or flawed, which would be likely to de grade the effectiveness of AI technology. The output or results o f any such AI technologies may therefore be incomplete, erroneous, di storted or misleading. Further, AI tools may lack transparen cy as to how data is utilized and how outputs are generated. A AI technologies may also allow the unintended introduction of vulnerabilities into infrastructures and applications. To the extent that a Fund or its portfolio investments are exposed to th e risks of AI technology use, any such inaccuracies or errors could have adverse impacts on a Fund or its investments. Regulations rela ted to AI technology could also impose certain obligations and costs related to monitoring and comp liance. For example, in April 2023, the Federal Trade Commission, U.S. Department of Jus tice, Consumer Financial Protection Bureau, and U.S. Equal Employment Opportunity Commission released a joint statement on artificial intelligence demonstratin g interest in monitoring th e 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 secur ity. In addition to the U.S. regulatory framework, in 2024, th e EU adopted the Artificial Intelligence Act, which applies to certain AI technology and the data used to train, test, and deploy them, which may create additional compliance burdens, higher administra tive costs, and significant penalties should a Fund, the advis er, or a Fund’s portfolio 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 fu ll extent of current or future risks relate d thereto is not possible to predict, and a Fund may not be able to anticipate, prevent, mitigate, or remediate all of the potent ial risks, challenges, or impacts of such changes.
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While each Fund’s service providers are required to have appropr iate operational, information security and cybersecurity risk management policies and procedures, their methods of risk ma nagement may differ from those of a Fund in the setting of priorities, the personnel and resources available or the effectiv eness 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 limitati ons in such plans and systems, including g the possibility that certain risks that m ay affect a Fund have not been identified or m ay emerge in the future; that such plans a nd systems may not completely eliminate th e occurrence or mitigate the effects of operational or information security disruptions or failures or of cybersecurity incidents ; or that prevention and remediation efforts 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 in vests or its service providers, counterpartie s, and other third parties whose activities affect a Fund.
Lastly, the regulatory climate governing cybersecurity and data protection is developing quickly and may vary considerably acro ss jurisdictions . Regulators continue to develop new rules and st andards related to cybersecurity and data protection. Compliance with evolving regulations can be demanding and costly, requi ring substantial resources to monitor and implement required changes.
Purchase of Securities with Fixed Price “Puts.” Certain Funds have authority to purchase fixed rate Municipal Securities and, for a price, simultaneously acquire the right to sell such securities ba ck to the seller at an agreed-upon rate at any time during a stated period or on a certain date. Such a right is generally denoted as a fixed price put. Puts with respect to fixed rate instrument s are to be distinguished from the demand or repurchase features of VRDOs t that enable certain 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. Re purchase 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 a ffiliate thereof that meets the creditworthiness 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 secur ity at a mutually agreed upon time and price, thereby determini ng the yield during the term of the agreement. This results in a fixed d rate of return insulated from market fluctuations during su ch period. Repurchase agreements may be construed to be collatera lized loans by the purchaser to t the seller secured by the securit ies transferred to the purchaser. In the case of a repurchase ag reement, a Fund will require the seller to provide additional colla teral if the market value of the securities falls below the repurchase pr ice at any time during the term m of the repurchase agreement. On e common type of repurchase agreement a Fund may enter into is a “tri-party” repurchase agreement. In “tri-party” repurchase agreements, an unaffiliated third party custodian maintains acc ounts to hold collateral for the Fund and its counterparties and , therefore, the Fund may be subject to the credit risk of those cu stodians. In any repurchase transaction to which a Fund is a p arty, collateral for a repurchase agreement may include cash items and ob ligations issued by the U.S. Government or its agencies or instrumentalities. Collateral, however, is not limited to the foreg oing and may include, for example, obligations rated below t he highest category by NRSROs, including colla teral that may be below investment grad e. Collateral for a repurchase agreement may also include securities that a Fund could not hold directly without t the repurchase obligation. Irrespective of the type of coll ateral underlying the repurchase agreement, the Fund must determine th at a repurchase obligation with a particular counterparty 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 agreemen t construed to be a collateralized loan, the underlying securi ties 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 c onnection with the disposition of the collateral. In the event of a default under a repurchase agreement that is construed to be a co llateralized loan, instead of the contractual fixed rate of re turn, the rate of return to a Fund will depend upon intervening fluctuations of the market value of such security and the accrued int erest on the security. In such event, a Fund would have rights against the seller for breach of contract with respect to any losses a rising from market fluctuations following the failu re of the seller to perform. In general, for Federal income tax purposes, repurchas e agreements are treated as collateralized loans secured by the securities “sold.” Therefo fore, amounts earned under such agreement s, even if the underlying securities are tax-exempt securities, will not be considered tax-exempt interest. From time to time, a F und also may invest in money market securities pursuant to purchase and sale contracts. While purchase and sale contracts are simil ar to repurchase agreements, purchase and sale contracts are structured d so as to be in substance more like a purchase and sale of t the underlying security than is the case with repurchase agreements and, with purchase a nd sale contracts, the purchaser receives a ny interest on the security paid during the period of the contract.
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Repurchase agreements pose certain risks for a Fund that utilizes th em. Such risks are not unique to the Fund but are inherent i in repurchase agreements. The Funds seek to minimize such risks but t because of the inherent legal uncertainties 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 collat eral and collateral with shorter maturities. If the repurchase agreement counterparty were to default, lower quality collateral may be more difficult to liquidate than higher quality collate ral. Should the counterparty default and the amount of collateral not be sufficient to cover the counterparty’s repurchase obligatio n, a Fund would retain the status of an unsecured creditor of the counterparty ( i.e. , the position the Fund would normally be in if it were to hold, pursuant to its investment policies, other un secured debt securities of the defaulting counterparty) with respect t to the amount of the shortfall. As an unsecured creditor, a Fund would be at t risk of losing some or all of the principal and income involved in the transaction.
Regulations adopted by global prudential regulators require cert ain bank-regulated counterparties and certain of their affiliat es to include in certain financial contracts, including many repurcha se agreements and purchase and sale contracts, terms that delay or restrict the rights of counterparties, such as a Fund, to t erminate such agreements, take foreclosure action, exercise other de fault rights or restrict transfers of credit support in the event that t the counterparty and/or its affiliates are subject to certain t types of resolution or insolvency proceedings. It is possible that these requirements, as well as potential additional government regula tion and other developments in the market, could adversely affect a Fund’s ability to terminate ex isting repurchase agreements and purchase and sale contracts or to realize amounts to be received under such agreements. The SEC has also finalized rules that w ill require certain transactions involving U.S. Treasuries, including repurchase agreements, to be centrally cleared. Compliance wi th these rules is expected to be required by the middle of 2027. A lthough the impact of these rules on the Funds is difficult to p redict, they may reduce the availability or increase t the costs of such transactions and may adversely affect a Fund’s performance.
Reverse Repurchase Agreements. A Fund may enter into reverse repurchase agreemen ts with the same parties with whom it may enter into repurchase agreements. Under a reverse repurchase agreement, a Fund sells securities to another party and agrees to repurchase them at a mutually agreed-upon date and price. Rev erse repurchase agreements involve t 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 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 t the proceeds of the reverse repurchase agreement may effectively be restricted pending such decision.
Additionally, regulations adopted by global prudential regulat ors that require certain bank-regulated counterparties and certai n of their affiliates to include in certain financial contracts, incl uding many reverse repurchase agreements, terms that delay or r estrict the rights of counterparties, such as a Fund, to terminate su ch agreements, take foreclosure action, exercise other default rig hts or restrict transfers of credit support in the event that the counterp arty and/or its affiliates are subject to certain types of r esolution or insolvency proceedings. It is possible th at 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 rev erse repurchase agreements or to realize amounts to be received under such agreements. The SEC has also finalized rules that will require certain transactions involving U.S. Treasuries, including rev erse repurchase agreements, to be centrally cleared. Compliance with these rules is exp ected to be required by the middle of 2027. Although the impact of these rules on the Funds is difficu lt to predict, they may reduce the availability or increase the costs of such transacti ons and may adversely affect a Fund’s performance.
Rule 2a-7 Requirements. Rule 2a-7 under the Investment Company Act sets fo rth portfolio maturity, liquidity, diversification and quality requirements applicable to all money market funds.
Maturity. Each Fund is managed so that the dollar-weighted average ma turity 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 an y 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 F und’s portfolio must pay off the principal amount of the debt. “Dollar-weighted” means the larger the dollar value of a debt secu rity based on its market value in a Fund, the more weight it gets in calculating this average. To calculate the dollar-weighted av erage maturity, the Fund may treat a variable or floating rate security under certain circumstances as having a maturity equal to the time remaining to the security’s next interest rate rese t date or the period remaining until the principal amount can be recovered d through demand rather than the security’s actual maturity.
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“Dollar-weighted average life” of a Fund’s portfolio is calculat ed without reference to the excepti ons used in calculating the dollar-weighted average maturity for variable or floating ra te securities regarding the use of interest rate reset dates.
Liquidity. Rule 2a-7 contains a “general liquidity requirement” that t 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 sharehol ders. To comply with this gen eral liquidity requirement, each Fund’s adviser or sub-adviser must consider factors that could affe fect the Fund’s liquidity needs, including characteristics of the Fund’s investors and their likely redemptions. Depending upon th e volatility of its cash flows (particularly shareholder redemptions), this provision may require a Fund to maintain great er liquidity than would be required by the daily and weekly minimum liquidity requirements discussed below. The Funds will not t 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 n not acquire any security other than weekly liquid assets unless, immedi ately following such purchase, at least 50% of its total ass ets would be invested in weekly liquid assets. “Daily Liquid Asset s” include (i) cash; (ii) direct obligations of the U.S. Governme nt; (iii) securities that will mature, as determined without reference to th e maturity shortening provisions of Rule 2a-7 regarding interest rate readjustments, or are subject to a demand featu re that is exercisable and payable within one business day; and (iv) amounts receivable and due unconditionally within one business day on pending sales of portfolio securities. “Weekly Liqui d Assets” include (i) cash; (ii) direct obligations of the U.S. Go vernment; (iii) U.S. Government securities issued by a person controlled or supervised by and acting as an instrumentality of t the U.S. Government pursuant to authority granted by the U.S. Congress, that are issued at a discount to the principal amount t 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 shortening provisions of Rule 2a-7 regarding interest r rate readjustments, or are subject to a demand feature that is exercisable and payable within five business days; and (v) am ounts receivable and due unconditionally within five business days on pending sales of portfolio securities. No Fund will invest more than n 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 ordina ry course of business within seven days at approximately the value ascribed to them by the Fund).
Portfolio Diversification and Quality. Immediately after the acquisition of any secur ity, taxable money market funds must not have invested more than: Five percent of its total assets in securities issued by th e 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, further, that the fund may not invest in the securities of more than one issuer i n accordance with the foregoing proviso at any time; and ten percent of its total assets in securities issued by or subject to de mand features or guarantees from the institution that t 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 y and federal agencies and instrumentalities, as well as repurcha se agreements collateralized by government secu rities. Under Rule 2a-7, a government money market fund may, but is not required to, impose discretionary liquidity fees. The Board of Trustees has de termined 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 p ersons. Under Rule 2a-7, a retail money market fund is subject to the discretionary liquidity fees provisions; however, a retail money ma rket fund is permitted to use the amortized cost method of accounting or the penny rounding method, allowing a ret ail money market fund to maintain a stable NAV.
Securities Lending. Each Fund may lend portfolio securities to certain borro wers that BlackRock determines to be creditworthy, 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 ag gregate value of all securities loans of the particular Fund exceeds one-th ird 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 securiti es that it would have otherwise received if the securities were not on loan.
With respect to loans that are collaterali zed by cash, the borrower may be entitled to receive a fee based on the amount of cas h collateral. The Funds are compensated by any positive differen ce 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 t the
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borrower equal to a percentage of the market value of the loan ed securities. Any cash collateral received by the Fund for such loans, and uninvested cash, may be reinvested in certain short-t erm instruments either directly on behalf of the Fund or throug h one or more joint accounts or money market funds, including t hose affiliated with BlackRock; such investments are subject to investment risk.
Securities lending involves exposure to certain risks, includi ng operational risk (i.e., the risk of losses resulting from prob lems in the settlement and accounting process), “gap” risk (i.e., the risk of a mismatch between the return on cash collateral reinvest ments and the fees each Fund has agreed to pay a borrower), foreign exchange risk ( i.e ., the risk of a shortfall at default when a cash collateral investment is denominated in a c currency other than the currency of the asset s being loaned due to movements in forei gn exchange rates), and credit, legal, counterparty and market risks (including the risk that market events, including but not lim ited to corporate actions, could lead a Fund to lend securities that are t trading at a premium due to increased demand, or to recall loa ned 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 th e borrower a particular election as determined by the Fund’s investment adviser, the benefit the Fund would receive in respect of f committing to such election may or may not be less than th e benefit the Fund would have received from making a different el ection in such corporate action. If a securities lending counterparty were to default, a Fund would be subject to the risk k of a possible delay in receiving collateral or in recovering t the loaned securities, or to a possible loss of rights in the co llateral. In the event a borrower does not return a Fund’s securiti es as agreed, the Fund’s ability to participate in a corporate action event may be impacted, or th e Fund may experience losses if the proceeds received from liquidating the collateral do not at least e qual the value of the loaned security at the time the collat eral is liquidated, plus the transaction costs incurred in purchasin g replacement securities. This latter event could trigger adverse t ax consequences for a Fund. A Fund could lose money if its short-term investment of the collateral declines in value over the peri od of the loan. Substitute payments received by a Fund representing divi dends 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 y a Fund representing qualified REIT dividends paid on REIT securities loaned out by the Fund will not be considered qualified RE IT dividends, and distributions by the Fund of such substi tute payments will not be eligible for a 20% deduction currently ava ilable for ordinary REIT dividends paid to non-corporate shareholders provided certain other requirements are satisfied. T The securities lending agent will take into account the tax effe fects on shareholders caused by these differences in connection with a F und’s securities lending program. Substitute payments received o n 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 t may impact the regulatory or tax treatment of loaned securitie s 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 cert ain bank-regulated counterparties and certain of their affiliat es to include in certain financial contracts, including many securities lending agreements, terms that delay or restrict the rights o f counterparties, such as the Fund, to t erminate such agreements, foreclose upon collat eral, exercise other default rights or res trict transfers of credit support in the event that the counterparty a nd/or its affiliates are subject to certain types of resolution or insolvency proceedings. It is possible th at 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 secu rities lending agreements or to realize amounts to be received under such agreements. Prudential reg ulation may also favor lenders that can provide additional protections, such as liens that are exercisable in connection with a lender default, to borrowers. Certain Funds expect to prov ide additional protections to borrowers, where permitted pursuant to a Fund’s investment policies and if BlackRock believes doing s o is in the best interest of the Fund.
The SEC has adopted a rule that will require reporting and public disclosure of securities loan transaction information (not including party names); this may include, but is not limited to , information about securities loans entered into in connection with short sales. Compliance with this rule is expected to be requi red 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 purcha sed by a Fund are generally privately negotiated debt obligations where the principal and/or interest is determined by reference to the performance of a specific asset, benchmark as set, market or interest rate (“reference measure”). Issuers of structu red notes generally include corporations and banks. The intere st rate or the principal amount payable upon maturity or redemp tion may increase or decrease, depending upon changes in the value of the reference measure. The terms of a structured note may prov ide that, in certain circumstances, no principal is due at mat urity
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and, therefore, may result in a loss of invest ed 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 f factors, including the volatility of the reference measure.
Structured notes may be positively or negatively indexed, so t the appreciation of the reference measure may produce an increase or a decrease in the interest rate or the value of the principal at t maturity. The rate of return on structured notes may be determ ined by applying a multiplier to the performance or differential p erformance of reference measures. Application of a multiplier invo lves leverage that will serve to magnify the pot ential for gain and the risk of loss.
The purchase of structured notes exposes a Fund to the credit risk k of the issuer of the structured product. Structured notes ma y also be more volatile, less liquid, and more difficult to price a ccurately 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 y market for structured notes and the resulting inability of the Fund to sell a structured note could expose the Fund to losses and c ould make structured notes more difficult for the Fund to value accurately.
Taxable Money Market Securities. Certain Funds may invest in a variety of taxable money market securities (“Taxable Securities”). The Taxable Securities in which certain Funds may inv est consist of U.S. Government securities, U.S. Government agency securities, domestic bank certificates of deposit and bankers’ acceptances, short 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 certai n Funds invest are essentially the same as those described above w with respect to Municipal Securities. Certain Funds may not invest i in any security issued by a depository institution unless such in stitution is organized and operating in the United States, has total asset s of at least $1 billion and is federally insured. Taxable Secu rities in which the Funds invest will be determined by the Manager to p present minimal credit risks to the Fund, if required, and certain F Funds may require that portfolio investments (or their issuers) receive m minimum credit ratings from one or more NRSROs, or if not rat ed, are determined by the Manager to be of comparable quality to securities that have received such rating(s).
U.S. Government Obligations. A Fund may purchase obligations issued or gu aranteed by the U.S. Government and U.S. Government agencies and instrumentalities. Obligations of certai n agencies and instrumentalities of the U.S. Government are supported by the full faith and credit of the U.S. Treasury. Others are supported by the right of the issuer to borrow from the U.S. Treasury; and still others are supported only by the credit of the age ncy or instrumentality issuing the obligation. No assuran ce can be given that the U.S. Government will provide financial support to U.S. Government-sponsored instrumentalities if it is no t obligated to do so by law. Certain U.S. Treasury and agency secu rities may be held by trusts that issue participation certifica tes (such as Treasury income growth receipts and certificates of accrual on Treasury certificates). These certificates, as well as Treasury receipts and other stripped securities, represent beneficia l ownership interests in eith er future interest payments or the future principal payments on U.S. Government obligations. These in struments are issued at a discount to their “face value” and may (particularly in the case of stripped mortgage-backed securiti es) exhibit greater price volatility than ordinary debt secur ities because of the manner in which their princi pal and interest are returned to investors.
Examples of the types of U.S. Government obligations that may be held by certain Funds include U.S. Treasury Bills, Treasury Notes and Treasury Bonds and the obligations of the Federa l Housing Administration, Farmers Home Administration, Export Import Bank of the United States, Small Business Administrati on, the Government National Mortgage Association (“Ginnie Mae”), the Federal National Mortgage Association (“Fannie Mae” ), Federal Financing Bank, General Services Administration, The Co-operative Central Bank, Federal Home Loan Banks, the Federal Home
Loan Mortgage Corporation (“Freddie Mac”), Farm Credit Sys tem and Tennessee Valley Authority. Certain Funds may also invest in mortgage-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 obliga tions and obligations issued by or guaranteed by the U.S. Government or its agencies, instrumentalities or U.S. Government sponsored enterprises. Treasury obligations may diffe fer in their interest rates, maturities, tim es of issuance and other characteristics. Obligations of U.S. Government agencies and authorities are s upported by varying degrees of credit but generally are not backed by the full faith and credit of the U.S. Gov ernment. No assurance can be given that the U.S. Government would provide financial support to its agencies, instrumentalities or U.S. Government sponsored enterprises if it were not obligated to do so by law. T here is no assurance that these commitments will be undertaken or complied with in the future.
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In addition, certain 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 th e 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 f the most recent 13-week Treasury y 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 a uction where the FRN is first offered. The spread is the highest accepted discount margin in that auction. See also “Variable and Floa ting Rate Instruments” below.
Variable and Floating Rate Instruments. Certain Funds may purchase variable and floatin g rate instruments. Variable and floating rate instruments are subject to the credit quality standards descri bed in the Prospectus. In some cases, the Funds may require t 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 -shortening provisions stated in Rule 2a-7 are satisfied. Alt hough a particular variable or floating rate demand instrument may not be actively traded in a secondary market, in some cases, a Fun d 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 y may have maturities of more than 397 days provided: (i) they ar e subject to a demand feature entitling the Fund to the payment of f principal and interest within 397 days of exercise, unless the instrument is issued or guaranteed by the U.S. Government or r its agencies and/or instrumentalities, and (ii) the rate of intere st on such instruments is adjusted at periodi c intervals which may extend up to 397 days.
In determining a Fund’s weighted average portfolio maturity a nd whether a long-term variable rate demand instrument has a remaining maturity of 397 days or less, the instrument will be d eemed by a Fund to have a maturity equal to the longer of the period remaining until its next interest rate adjustment or t 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 inst rument will be deemed by a Fund to have a maturity equal to th e period remaining until the principal amount can be recovered throug h demand. In addition, a variable or floating rate instrumen t issued or guaranteed by the U.S. Government or its agencies a nd/or instrumentalities will be deemed by a Fund to have a maturit y equal to the period remaining until its next interest rate adjust ment (in the case of a variable rate instrument) or one day (i n the case of a floating rate instrument). Variable and floating rate notes are frequently rated by credit rating agencies, and their r issuers must satisfy the Fund’s quality and maturity requirements. If an issuer of such a note were to default on its payment obligatio n, the Fund might be unable to dispose of the note because of the absence of an active secondary market and might, for this or oth er 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 purch ase or sell securities on a delayed delivery basis or through a forward commitment (including on a “TBA” (to be announced) basis). T These transactions involve the purchase or sale of securitie s by a Fund at an established price with payment and delivery taki ng 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 counterparty generally will be required t to post collateral when entering into certain 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 o n the delivery date may be more or less than the price paid by th e Fund to purchase the securities. The Fund will lose money if the v alue of the security in such a transaction d eclines below the purchase price and will not benefit if the value of the security appre ciates above the sale price during the commitment period.
If deemed advisable as a matter of investment strategy, a F und may dispose of or renegotiate a commitment after it has been entered into, and may sell securities it has committed to purch ase 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 party to consummate the trade. Failure of such party to do so may result in the Fund’s incurring a loss or missing an opportunity to obtain a price considered to be advantageous.
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The market value of the securities underlying a commitment to p purchase securities, and any subsequent fluctuations in their market value, is taken into account when determining the mark et value of a Fund starting 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 deli vered on the settlement date.
Regulations adopted by global prudential regulators that are now in effect require certain bank-regulated counterparties and certain of their affiliates to include in certain financial contra cts, including many agreements with respect to when-issued, T BA and forward commitment transactions, terms that delay or restrict the rights of counterparties, such as a Fund, to terminate such agreements, foreclose upon collateral, exercise other default rights or restrict transfers of credit support in the event that t the counterparty and/or its affiliates are subject to certain types of f resolution or insolvency proceedings. It is possible that th ese new requirements, as well as potential additional government regulati on and other developments in the market, could adversely affec t a Fund’s ability to terminate existing agreemen ts with respect to these transactions or to realize amounts to be received under s uch agreements.
Diversification Status
Each Fund’s investments will be limited in order to allow the F und to continue to qualify as a regulated investment company under the Code. To qualify, among other requirements, each Fund will lim it its investments so that at the close of each quarter r of the taxable year (i) at least 50% of the market value of each h Fund’s total assets is represented by cash, securities of other r egulated investment companies, U.S. Government securities and other secu rities, with such other securities limited, in respect of any on e 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 (o ther than U.S. Government sec urities or securities of other regulated investment companies) of any one issuer, any two or more issuers that the Fund controls and th at are determined to be engaged in the same or similar trades or businesses or related trades or businesses or in the securities o f one or more qualified publicly traded partnerships ( i.e. , partnerships that are traded on an est ablished securities market or tradable on a secondary market, other than partnerships that derive 90% of t their income from interest, dividends, capital gains, and other traditional permitted mutual fund income). See “Dividends and Taxes — Taxes.”
Each Fund has elected to be classified as “diversified” under th e Investment Company Act. Each Fund must also satisfy the diversification requirements set forth in Rule 2a-7.
M ANAGEMENT AND O THER S ERVICE A RRANGEMENTS
Trustees and Officers
See “Information on Directors and Officers, ‘— Biographical In formation,’ ‘— Share Ownership’ and ‘— Compensation of Directors’ “ or “Information on Trustees and Officers, ‘— Biographical Information,’ ‘— Share Ownership’ and ‘— Compensation of Trustees’,” as applicable, in Part I of each Fund’s SAI for biographical and certain other information relating g to the Trustees and officers of your Fund, including Trustees’ compensation.
Management Arrangements
Management Services. The Manager provides each Fund with investment ad visory and management services. Subject to the supervision of the Board of Trustees, the Manager is responsible for the actual management of a Fund’s portfolio and reviews th e Fund’s holdings in light of its own research analysis and that from other relevant sources. The responsibility for making decis ions to buy, sell or hold a particular security rests with the Manager. The Manager performs certain of the other administrative ser vices and provides all the office space, facilities, equipment and necessary personnel for management of each Fund.
The Manager has been granted relief from the SEC that permits th e Manager, subject to Board approval, to hire, terminate and replace subadvisers for BlackRock Daily Reinvestment Stableco in Reserve Vehicle, and to amend sub-advisory agreements between the Manager and sub-advisers with respect to the Fund without t obtaining shareholder approval. If a new sub-adviser is retained for the Fund or a sub-advisory agreement is materially y amended, shareholders will receive notice of such action. The r elief does not extend to any increase in the advisory fee paid by the Fund to the Manager; any such increase would be subject to the approval of Fund shareholders.
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Management Fee. Each Fund has entered into a management agreem ent 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 peri ods, see “Management, Advisory and Other Service Arrangements — — Management Agreement” or “Management and Advisory Arrangements,” as applicable, in Part 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 o ffice space, facilities and necessary personnel for the Fund. Each Manager is also obligated to pay, or cause an affiliate to pay, th e 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 h the Manager, each Management Agreement obligates the Manager to provide management services and to pay all compensation of f and furnish office space for officers and employees of a Fund connected with investment and economic research, trading and invest ment management of the Fund, as well as the fees of all Trustees of the Fund who are interested persons of the Fund. Each h Fund pays all other expenses incurred in the operation of tha t Fund, including among other things: taxes; expenses for legal and auditing services; costs of preparing, printing and mailing proxies, shareholder reports, prospectuses and statements of add itional information, except to the extent paid by BlackRock Investments, LLC (the “Distributor” or “BRIL”), charges of th e custodian and sub-custodian, and the transfer agent; expenses of redemption of shares; Commission fees; expenses of registering t the shares under Federal, state or foreign laws; fees and expens es of Trustees who are not interested persons of a Fund as defined d in the Investment Company Act; accounting and pricing costs (including the daily calculations of NAV); insurance; interes t; brokerage costs; litigation and other extraordinary or non-recu rring expenses; and other expenses properly payable by the Fund. Cert ain accounting services are provided to each Fund by The Bank of New York Mellon (“BNYM”), State Street Bank and Trust Compan y (“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. The Distributor pays certain promotional expenses of cert ain Funds incurred in connection with the offering of shares of such Funds. Certain expenses are financed by each Fund pursuan t to distribution plans in compliance with Rule 12b-1 under the Investment Company Act. See “Purchase of Shares — Dis tribution and/or Shareholder Servicing Plans.”
Organization of the Manager. The Manager, BlackRock Advisors, LLC, is a De laware limited liability company and an indirect, majority-owned subsidiary of BlackRock, Inc.
Duration and Termination. Unless earlier terminated as described below, ea ch Management Agreement will remain in effect from year to year if approved annually (a) by the Trustees or by a v vote of a majority of the outstanding voting securities of the Fu nd and (b) by a majority of the Trustees who are not parties to such h agreement or interested persons (as defined in the Investment Company Act) of any such party. The Management Agreements a re not assignable and may be terminated without penalty on 60 days’ written notice at the option of either party theret o or by the vote of the shareholders of the Fund.
Other Service Arrangements
Administrative Services and Administrative Fee. Certain Funds have entered into an administration agreement (the “Administration Agreement”) with an administra tor identified in the Fund’s Prospectus and Part I of the Fund’s SAI (each, an “Administrator”). For its services to a Fund, the Administrator recei ves monthly compensation at the annual rate set forth in e ach applicable Fund’s Prospectus. For information regarding any admi nistrative 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 Part I of that Fund’s SAI.
For Funds that have an Administrator, the Administrati on Agreement obligates the Administrator to provide certain administrative services to the Fund and to pay, or cause its a ffiliates 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 affili ates to pay, the fees of those officers and Trustees of the Fund who are affiliated persons of the Administrator or any of its affiliat es. Duration and Termination of Administration Agreement. Unless earlier terminated as described below, each Administration Agreement with BlackRock will continue from year to year if approv ed annually (a) by the Board of Trustees of each applicable Fund or by a vote of a majority of the outstanding voting secur ities of such Fund and (b) by a majority of the Trustees of the Fund who are not parties to such contract or interested persons (as de fined in the Investment Company Act) of any such party. Such contract is not assignable and may be terminated without pena lty on written notice at the option of either party thereto or by the vote of the shareholders of the Fund.
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Transfer Agency Services . Each Fund has entered into an agreement with a tr ansfer agent identified in the Fund’s Prospectus and Part I of the Fund’s SAI, pursuant to which the transfer agent is responsible for the issuance, transfer, and redemption of sha res 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 Sha reholders’ Administrative Services,” as applicable, in Part 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 pub lic accounting firm for that Fund that audits the Fund’s financ ial statements. Please see the inside back cover page of your Fund’ s Prospectus and Part 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 fo r safeguarding and controlling the Fund’s cash and securities, handling the receipt and delivery of securities and collecting int erest and dividends on the Fund’s investments. The Custodian is authorized to establish separate accounts in foreign currencies a nd to cause foreign securities owned by the Fund to be held in n its offices outside the United States and with certain foreign banks and securities depositories. A Fund also may use special purpo se custodian banks from time to time for certain 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 certain accounting and administrative serv ices 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 Part 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 agreem ent with the Distributor in connection with the continuous offering of each class of shares of the Fund (the “Distribution Agreements”). The Distribution Agreements obligate t he Distributor to pay certain expenses in connection with the offering of each class of shares of the Funds. After the prospectuse s, statements of additional information and periodic reports have been prepared, set in type and mailed to shareholders, the Distributor pays for the printing and distribution of these documen ts used in connection with the offering to dealers and inves tors. The Distributor also pays for other supplementary sales literatu re and advertising costs. Each Distribution Agreement is subjec t to the same renewal requirements and termination provisions as the Management Agreement described above. See “Information on Sales Charges and Distribution Related Expenses” or “Information on Distribution Related Expenses,” as applicable, in Part 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 Directo rs of the Manager have each approved Portfolio Holdings and Related Information Distribution Guidelines (the “Policy”) regar ding the disclosure of each Fund’s portfolio securities, as applicable, and other portfolio information. The purpose of th e Policy is to ensure that (i) shareholders and prospective shareholders of the Funds have equal access to portfolio holdings and characteristics and (ii) third parties (such as consultan ts, intermediaries and third-party 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 cert ain circumstances as set forth below, make selective disclosur e with respect to a Fund’s Portfolio Characteristics (as defined be low) and Portfolio Holdings (as defined below). The Board of Trustees of each Fund and the Board of Directors of the Manager h ave each approved the adoption by the Fund of the Policy, and employees of the Manager are responsible for adherence to the Polic y. 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 In formation”) about a Fund’s Portfolio Holdings and/or Portfolio Characteristics is prohibited, except as provided in the Policy.
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Confidential Information relating to a Fund may not be distribut ed to persons not employed by BlackRock unless the Fund has a legitimate business purpose for doing so and confidentia lity obligations are in effect, as appropriate.
• Portfolio Holdings : “Portfolio Holdings” are a Fund’s portfolio 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 counterparty; and
• for trading strategies, specific portfolio holdings, including the number of shares held, weightings of particular holdings, trading details, pending or recent transactions and portfolio management plans to purchase or sell particular securities or allocation within particular sectors.
• Portfolio Characteristics (excluding Liquidity Metrics) : “Portfolio 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.
• Portfolio Characteristics — Liquidity Metrics:
• “Liquidity Metrics” which seek to ascertain 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 portfolio or the portfolio’s underlying investments; and (b) the percentage of a Fund’s NAV invested in a particular 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 portfolio 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 report and annual financial statements), through a 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.
Portfolio Holdings and Portfolio Characteristics may be disclosed in accordance with the below schedule. Prior to the time periods designated below, non-public portfolio holdings and portfolio char acteristics may only be disclosed with both a non-disclosure or confidentiality agreement and Fund CCO approval. Thereafter, BlackRock may disclose su ch information to shareholders,
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prospective shareholders, intermediaries, consultants and third-party data providers . BlackRock generally discloses portfolio holdings and other portfolio characteristics informati on 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 Portfolio of BlackRock Funds V, BlackRock Strategic Income Opportunities Portfolio 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 Portfolio 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 BlackR ock Global Allocation Fund, Inc., BlackRock Global Allocation Portfolio of BlackRock Series Fund, Inc. and BlackRock Global Allocation V.I. Fund of BlackRock Variable Series Funds, Inc. Information on certain Portfolio Ch aracteristics of BlackRock Global Allocation Portfolio 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 Portfolio of BlackRock Series Fund, Inc. and BlackRock Global Allocation V.I. Fund of BlackRock Variable Series Funds, Inc.) in their var iable 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 Quarter-End
If Liquidity Metrics are disclosed to one pa
Truncated: This annotation is too large to fit.
View the raw JSON.
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