BlackRock Innovation and Growth Trust (BIGZ)

[Pages:6]BlackRock Innovation and Growth Trust (BIGZ)

Commentary for First Quarter 2022

The views expressed reflect the opinions of BlackRock as of March 31st, 2022 and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

Investing in innovative companies

Private investments3

BlackRock Innovation and Growth (BIGZ) is a closed-end fund ("CEF") that takes a unique approach to investing in innovation. The investment objective is to provide total return and income through a combination of current income, current gains and long-term capital appreciation. The Trust will invest primarily in equity securities issued by mid- and small-capitalization companies that the adviser believes has above-average earnings growth potential. In selecting investments, the adviser focuses on companies that are "innovative." These are companies that have introduced, or are seeking to introduce, a new product or service that potentially changes the marketplace. The Trust utilizes an option writing (selling) strategy in an effort to manage risk, generate current gains from options premiums, and enhance risk-adjusted returns. BIGZ seeks to invest in these themes through a diversified portfolio, reaching across multiple sectors and industries, using both publicly traded and private companies.

For much of the past year, we have actively ramped up our exposure to private businesses, which now account for 24.3% of the Trust's assets as of 31st March 2022. One of our private companies, SiteMinder, went public last year. We continue to hold the shares publicly and believe its hotel commerce platform and software will continue to gain share within a deeply fragmented industry. Apart from SiteMinder, no other private companies have experienced an IPO during our initial investment phase, but we expect this portion of the Trust to be a critical driver of returns over time. We have remained vigilant in both sourcing and investing in attractive deals across the market and now, hovering around our target level of 25%, have turned our attention to building a robust pipeline of potential future investments. As of the end of the quarter, we have invested $858 mm across thirty high potential companies. Importantly ? like the public side of the portfolio ? our private investments span a diversified slate of sectors and industries as shown below.

The Fund declared and paid three monthly distributions of $0.10 during the quarter and has paid a total of $1.10 per share in total distributions since inception, with a distribution rate of 10.5%1, paid monthly. CEFs may pursue investment strategies that focus on a broader opportunity set, including less liquid and private investments that may offer higher return and income potential. Taking advantage of this structure, BIGZ seeks to invest up to 25% of its portfolio in private investments. BIGZ also has a limited term, meaning it will offer full liquidity at net asset value to investors in year 12 of the Trust's life2.

1 Distribution rate is calculated by annualizing the Trust's latest declared regular distribution on March 31st, 2022 and dividing that number by the Trust's market price as of the same day. The distribution rate is calculated net of expenses. BIGZ's estimated source of distributions paid during the current fiscal year to date is 100% return of capital as of 3/31/22. The amounts and sources of distributions reported are only estimates and are not provided for tax reporting purposes. 2 The Trust currently intends to dissolve on or about March 31, 2033 (the "Dissolution Date"); provided that the Board of Trustees of the Trust (the "Board") may vote to extend the Dissolution Date: (i) once for up to one year, and (ii) once for up to an additional six months, to a date up to and including eighteen months after the initial Dissolution Date (which date shall then become the Dissolution Date). Each holder of common shares would be paid a pro rata portion of the Trust's net assets upon dissolution of the Trust. The Board may also vote to cause the Trust to conduct a tender offer, as of a date within twelve months preceding the Dissolution Date (as may be extended as described above), to all common shareholders to purchase 100% of the then outstanding common shares of the Trust at a price equal to the NAV per common share on the expiration date of the tender offer.

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Company

Relativity Space The Production Board Ideal Image LLC PSI Quantum Motif Foodworks Snorkel AI Snyk Limited Siteminder Under Canvas Varo Money Dragos Patreon Dapper Labs Discord SaltPay Grammarly Genesys Loft Orbital Via AnyRoad Super73 Deepgram Validere Anchor Labs Rivos SkySafe Company A* Company B* Company C* Company D*

Industry

Aerospace & Defense Capital Markets Diversified Consumer Services Semiconductors Food Products Software Software Hotels, Restaurants & Leisure Leisure Products Banks Software Software Hotels, Restaurants & Leisure Diversified Telecom Services Software Diversified Consumer Services Software Wireless Telecom Services IT Services Software Specialty Retail Software Software Capital Markets Semiconductors Aerospace & Defense Software IT Services IT Services Hotels, Restaurants & Leisure Total

Investment Amount ($m)

50 50 50 40 40 14 50 40 50 40 40 35 30 18 50 35 30 25 25 15 12 12 10 10 8 5 45 15 10 4 $858

Investment Quarter

Q2 2021 Q2 2021 Q2 2021 Q2 2021 Q2 2021 Q2 2021 Q3 2021 Q3 2021 Q3 2021 Q3 2021 Q3 2021 Q3 2021 Q3 2021 Q3 2021 Q4 2021 Q4 2021 Q4 2021 Q4 2021 Q4 2021 Q4 2021 Q4 2021 Q4 2021 Q4 2021 Q4 2021 Q4 2021 Q4 2021 Q1 2022 Q1 2022 Q1 2022 Q1 2022

*Company names are not disclosed for positions initiated in the first quarter; these will be disclosed in the Q2 2022 commentary.

Current Phase

Private Private Private Private Private Private Private Public Private Private Private Private Private Private Private Private Private Private Private Private Private Private Private Private Private Private Private Private Private Private

Portfolio Ownership

Held Held Held Held Held Held Held Held Held Held Held Held Held Held Held Held Held Held Held Held Held Held Held Held Held Held Held Held Held Held

Performance 4

During the first quarter, selling pressure on the growth and innovation market continued, as investors grappled with a regime change and upward inflections in both the path of inflation and interest rates. The weakness that was mostly confined to the small cap space last year spread into the mid and large cap space, impacting all major growth indices, which posted losses during Q1.

Within the BIGZ portfolio we continued to experience a disconnect between the underlying companies, which have performed well, and the market price of shares, which have declined amid an uncertain economic backdrop. Factors such as the pandemic, supply chain disruptions, high inflation, rising interest rates, and geopolitics have all taken a turn at weighing on the sentiment for growth and innovation stocks. This trend has been most acute in the last six months, and company valuation multiples have compressed despite our Fund's publicly traded holdings largely reporting strong operating results as indicated in the chart below. Despite these pressures, we believe that underlying company fundamentals will ultimately prevail, and our outlook for small caps and innovation equities remains quite positive overall.

3 These investments were selected to illustrate the Trust's private investments made since the inception of the fund. The information above is not a prediction of future performance or any assurance that comparable investment opportunities will be available at the time of investment. It is non-representative of all underlying investments made by the investment team and it should not be assumed that the investment team will invest in comparable investments, or that any future investments made by the investment team will be successful. To the extent that these investments prove to be profitable, it should not be assumed that the investment team's other investments will be profitable or will be as profitable.

Some of our recent investments in this space, like Discord, Varo Money, Under Canvas, and Relativity Space showcase our cross-market approach to uncovering innovative companies that are enforcing change within their industries. These names, and other private holdings, are compelling for us because they are both consumers and producers of technology in ways that can drive scale, market share and ultimately long -term investment performance for our strategy. These companies are not marked to market daily, and so we expect the portfolio to experience a J-curve-like effect over time as their valuation becomes more fully accounted for in the NAV of the portfolio.

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% of BIGZ Public Companies Beating Revenue & Earnings Estimates

100% 80% 60%

91% 79%

96% 73%

79% 75%

82% 61%

40%

20%

0%

Q1 21

Q2 21

Q3 21

Q4 21

Beat Revenue Beat Earnings

Source: BlackRock, Factset

Within this dynamic, BIGZ shares returned -20.23%, and the Trust returned -19.70% on an NAV basis. The Russell 2500 Growth Index returned -12.30% during the period. The largest detractors from relative performance were stock selection in the healthcare and information technology sectors.

In healthcare, shares of Masimo Corp., a maker of noninvasive medical monitoring devices, declined after the firm announced a planned merger with audio company Sound United, LLC. We viewed this non-core acquisition negatively and exited the position upon the news. In the health care technology space, Phreesia Inc. and Health Catalyst Inc performed poorly during the quarter, and in the life sciences space, shares of 10X Genomics Inc. declined after the company lowered guidance for 2022.

In information technology, portfolio holdings in the software space were the most notable detractors from performance, including Gitlab Inc. and Lightspeed Commerce Inc. While we continue to hold Gitlab, we exited Lightspeed Commerce Inc. during the quarter to create room for higher-conviction stocks amid the broader tech sell-off. Other detractors from relative return in the sector included 908 Devices Inc, a producer of instruments for mass spectrometry, DigitalOcean Holdings Inc., a cloud infrastructure provider, and Ambarella Inc., a fabless semiconductor design company.

The largest contributor to relative performance was investment decisions in the consumer staples sector. Notably, portfolio holding Freshpet, a maker of premium refrigerated petfood, outperformed after reporting a 37% increase in net sales for the fourth quarter compared to the prior year period. The 2021 calendar year also marked the fifth consecutive year of net sales growth for the company. Elsewhere, the Fund achieved positive relative results in financials, primarily through avoiding underperforming benchmark positions in the capital markets space like Morningstar Inc. and Hamilton Lane Inc.

The net asset value (NAV) of a closed-end fund is based on the cumulative market value of the portfolio holdings, while fluctuations in supply and demand can cause a fund's market price to dislocate from its NAV. In recent months the Fund has faced both stock-specific pressures (i.e. declining prices due to valuation multiple compression) and waning investor sentiment (i.e. a widening of the fund's discount to NAV). Both influences have heavily weighed on the Fund's near-term performance, but we are confident they will not impact the multi-year prospects for our portfolio companies and recently initiated private investments, which are handpicked to deliver upon long-term growth objectives.

BIGZ Performance summary

Q1 2022

Total return (NAV) Total return (market price) Russell 2500 Growth TR

-20.23% -19.70% -12.30%

Since Inception

-30.83% -39.29% -9.37%

Source: BlackRock as of 3/31/22. The Trust's date of full implementation was 3/29/21. Returns are shown net of advisory fees paid by the Trust and net of the Trust's operating fees and expenses. As of the Trust's prospectus dated 3/31/2022, the Trust's gross expense ratio is 1.30%. Investors who purchase shares of the Trust through an investment adviser or other financial professional may separately pay a fee to that service provider. Past performance is not indicative of future results. The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor's shares may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted, and numbers may reflect small variances due to rounding

To a lesser extent, stock selection in the industrials and energy sectors also detracted from relative performance. In industrials, building products company Azek Company Inc., a maker of sustainable outdoor and decking products, weighed on returns. In energy, our decision to not invest in the sector, which represented 2.9% of the benchmark index at period-end, proved detrimental amid sharply rising oil & gas prices. We continue to believe the sector's long-term growth prospects are limited, with relatively little innovation, and that company performance is ultimately too closely tied to supply and demand factors outside of their control.

4 Returns are shown net of advisory fees paid by the Trust and net of the Trust's operating fees and expenses. Investors who purchase shares of the Trust through an investment adviser or other financial professional may separately pay a fee to that service provider. Past performance is not indicative of future results. The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor's shares may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted, and numbers may reflect small variances due to rounding.

References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. BlackRock may or may not own the securities referenced and, if such securities are owned, no representation is being made that such securities will continue to be held. The holdings mentioned in the commentary represent the largest contributors and detractors to performance relative to the benchmark. They are not representative of all underlying investments made by the manager on behalf of the strategy, and it should not be assumed that the manager will invest in these investments or in comparable investments, or that any future investments made by the manager will be successful. To the extent that these investments prove to be profitable, it should not be assumed that the strategy will be profitable or will be as profitable.

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Portfolio Positioning (March 31, 2022):

Cross-market diversification remains a key tenet of the BIGZ portfolio, and we believe it is paramount in positioning for long-term success in the small and midcap market. At the end of the quarter, the Trust was invested across nine sectors and twenty-eight different industries. The Trust held fifty-one public equities and had investments in twenty-nine private companies. The holdings are US centric, with 87% of assets residing among US companies, but the Trust also had exposure to six other countries including Argentina, Australia, Israel, Norway, Sweden and the United Kingdom. The Trust's weighted average market cap was $6.5 bn, below the index's $7.5 bn level. The long-term earnings growth of the portfolio's holdings was 45.9%, using consensus expectations, substantially above the 25.6% growth rate for the Russell 2500 Growth Index.

At the end of the quarter, the portfolio's largest overweight allocations relative to the Russell 2500 Growth Index were the information technology, communication services and consumer discretionary sectors. The largest underweight allocations were in the industrials, healthcare and financials sectors, though together these sectors still accounted for over 33% of the Trust.

Option Activity

The options program is a dynamic call-writing process, focused on single stocks to allow for the greatest combination of current yield and capital appreciation. Given the team's positive outlook on portfolio companies and the extreme weakness in the small and mid-cap innovation market, the percentage of the portfolio overwritten remained low at the end of the quarter, which we believe positions the strategy for greater upside in coming quarters. As of March 31st, 10.5% of the portfolio was overwritten with covered calls. The Trust continues to seek opportunities to generate option premiums during periods of heightened volatility.

Investment Outlook

As we assess the US and global economy three months into the year, there is no shortage of events for investors to digest.

Looking forward, we have not meaningfully changed our outlook or aggressively repositioned the portfolio into recent weakness. We remain constructive on markets and ultimately believe that a more normal environment will ensue, which should be accommodative for US equities broadly. Thinking beyond the past few months of instability and the associated cyclical upswing, we believe that innovation as an investment theme will play a vital role in portfolios over the next several years. The path of rates and inflation are today's key question for investors, and changes in these variables can certainly create near term headwinds for equity multiples; but we also know that finding growth and income is important in this market, and we believe that the ultimate potential of our holdings can more than offset any fluctuations associated with increasing short-term rates. As actions are undertaken to slow the US economy, we maintain a steady belief that small and medium-sized business will have a transformative impact on the US economy in the years ahead.

BIGZ Portfolio/Trust Statistics

Distribution rate (market price) % of NAV overwritten with options Number of public holdings Private Investments (% of total assets)

10.5% 10.5%

51 24.3%

Source: BlackRock as of 3/31/2022. Distribution rate is calculated by annualizing the Trust's latest declared regular distribution and dividing that number by the Trust's market price as of 3/31/2022.

Top 10 holdings

(as % of portfolio assets)

Company Name

Industry

Holdings

Inc

Software

Position Size

3.30%

Entegris Inc

Monolithic Power Systems Inc

Semiconductors Semiconductors

Five9 Inc

Software

Bio-Techne Corp

Life Sciences Tools & Services

Axon Enterprise Inc Aerospace & Defense

3.19% 2.94% 2.79%

2.76% 2.73%

We know that inflation is too high, and the Fed appears to be behind the curve. While this dynamic has been challenging for long-duration equities, we also saw that investors had begun to realize they may have been too optimistic about US growth and perhaps too afraid of US inflation; and cracks began to show in parts of the value market late in the quarter as investors stepped back in to offer support for quality growth names trading at markedly better valuations. With the EU likely moving toward a recession and China still in lockdowns, the US may provide a reprieve of sorts, especially if earnings growth remains robust amid a broader post-pandemic economic moderation. In the goldilocks scenario for growth stocks, demand would decline enough to tame inflation, global supply-chain constraints would moderate, and the Fed would ease pressure on short rates as growth cools. We're not there yet, though, and will have to contend with volatility in the interim along the path to normalcy.

Avalara Inc Globant SA

Paylocity Holding Corp

DigitalOcean Holdings Inc

Software IT Services

Software

IT Services

Source: BlackRock as of 3/31/2022.

2.63% 2.58%

2.23%

2.23%

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Sector and industry breakdown

(as % of portfolio assets)

Sector

Information technology Software Semiconductors & Semiconductor Equipment IT Services Electronic Equipment, Instruments & Components

Healthcare Life Sciences Tools & Services Healthcare Technology Healthcare Equipment & Supplies Biotechnology

Consumer Discretionary Hotels, Restaurants & Leisure Diversified Consumer Services Internet & Direct Marketing Retail Auto Components Leisure Products Specialty Retail

Industrials Aerospace & Defense Machinery Building Products Electrical Equipment Road & Rail

Communication Services Entertainment Wireless Telecommunication Services Diversified Telecommunication Services Interactive Media & Services

Consumer Staples Food products

Financials Capital Markets Banks

Real estate Equity Real Estate Investment Trusts (REITs)

Materials Chemicals

Allocation

42.80% 24.19% 10.35% 6.40%

1.85%

18.28% 8.55% 4.37% 3.70% 1.67% 15.48% 5.12% 4.68% 1.99% 1.57% 1.56% 0.56% 12.06% 6.06% 1.82% 1.50% 1.35% 1.34% 3.31% 1.69% 0.86% 0.44% 0.32% 2.77% 2.77% 2.75% 1.97% 0.78% 1.57% 1.57% 1.34% 1.34%

Source: BlackRock as of 3/31/2022.

Geography breakdown

(as % of portfolio assets)

Country United States United Kingdom Argentina Israel Norway Sweden Australia

Portfolio Weight (%)

87.0% 3.7% 2.6% 2.4% 1.7% 1.4% 1.3%

Source: BlackRock as of 3/31/2022.

Market cap breakdown

(as a % of portfolio assets)

$0 to $2bn $2bn to $5bn $5bn to $10bn $10bn to $15bn $15bn to $20bn $20bn and over

Other

9.3

7.4 7.6 6.8

19.7 24.7

24.3

% of portfolio assets

Source: BlackRock as of 3/31/2022. *Other includes locked-up capital in previous private positions.

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About BlackRock

BlackRock's purpose is to help more and more people experience financial well-being. As a fiduciary to investors and a leading provider of financial technology, we help millions of people build savings that serve them throughout their lives by making investing easier and more affordable. For additional information on BlackRock, please visit corporate | Twitter: @blackrock | LinkedIn: pany/blackrock.

Important information about the Trust This document and the information contained herein relates solely to BlackRock Innovation and Growth Trust (BIGZ). The information contained herein does not relate to, and is not relevant to, any other fund or product sponsored or distributed by BlackRock or any of its affiliates. This document is not an offer to sell any securities and is not a solicitation of an offer to buy any securities. Carefully consider the Trust's investment objective, risk factors and charges and expenses before investing. This and other information can be found in the Trust's prospectus which may be obtained by visiting the SEC Edgar database. Read the prospectus carefully before investing. Common shares for the closed-end fund identified above are only available for purchase and sale at current market price on a stock exchange. A closed-end fund's dividend yield, market price and NAV will fluctuate with market conditions. The information for this fund is provided for informational purposes only and does not constitute a solicitation of an offer to buy or sell fund shares. Performance results reflect past performance and are no guarantee of future results. Current performance may be lower or higher than the performance data quoted. All returns assume reinvestment of all dividends. The market value and net asset value (NAV) of a fund's shares will fluctuate with market conditions. Closed-end funds may trade at a premium to NAV but often trade at a discount. Risks Associated with the Trust's Options Strategy. The ability of the Trust to generate current gains from options premiums and to enhance the Trust's risk-adjusted returns is partially dependent on the successful implementation of its options strategy. There are several risks associated with transactions in options on securities. For example, there are significant differences between the securities and options markets that could result in an imperfect correlation between these markets, causing a given transaction not to achieve its objectives. A decision as to whether, when and how to use options involves the exercise of skill and judgment, and even a well-conceived transaction may be unsuccessful to some degree because of market behavioror unexpected events. Restricted and Illiquid Investments Risk. The Trust may invest without limitation in illiquid or less liquid investments or investments in which no secondary market is readily available or which are otherwise illiquid, including private placement securities. The Trust may not be able to readily dispose of such investments at prices that approximate those at which the Trust could sell such investments if they were more widely traded and, as a result of such illiquidity, the Trust may have to sell other investments or engage in borrowing transactions if necessary to raise cash to meet its obligations. Limited liquidity can also affect the market price of investments, thereby adversely affecting the Trust's NAV and ability to make dividend distributions. The financial markets in general, and certain segments of the mortgage-related securities markets in particular, have in recent years experienced periods of extreme secondary market supply and demand imbalance, resulting in a loss of liquidity during which market prices were suddenly and substantially below traditional measures of intrinsic value. During such periods, some investments could be sold only at arbitrary prices and with substantial losses. Periods of such market dislocation may occur again at any time. Privately issued debt securities are often of below investment grade quality, frequently are unrated and present many of the same risks as investing in below investment grade public debt securities. There is no assurance that the Trust will achieve its investment objective. The Trust is subject to numerous risks, including investment risks discussed above. The Trust is not a complete investment program and you may lose money investing in the Trust. An investment in the Trust may not be appropriate for all investors. The amounts and sources of distributions reported in any notices are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to change based on tax regulations. The Fund will send a Form 1099-DIV for the calendar year that will tell how to report these distributionsfor federal income tax purposes. Some BlackRock funds make distributions of ordinary income and capital gains at calendar year end. Those distributions temporarily cause extraordinarily high yields. There is no assurance that a fund will repeat that yield in the future. Subsequent monthly distributions that do not include ordinary income or capital gains in the form of dividends will likely be lower. Index definitions: Russell 2500 Growth TR: The Russell 2500TM Growth Index measures the performance of the small to mid-cap growth segment of the U.S. equity universe. ? 2022 BlackRock, Inc. All Rights Reserved. BLACKROCK, BLACKROCK SOLUTIONS and iSHARES are trademarks of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners. Prepared by BlackRock Investments, LLC, member FINRA. Not FDIC Insured ? May Lose Value ? No Bank Guarantee

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