Closed-End Funds vs Mutual Funds

[Pages:9]Closed-End Funds vs Mutual Funds

Structure and Performance

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Closed-End vs. Mutual Funds

Share Treatment

Exchange Listed

Closed-End Funds

Yes

Liquidity

Intraday (shares trade on an exchange)

Mutual Funds

No Market Close

Return Focus

Primarily Current Income / Total Return

Current Income/Total Return

Shares Offered Shares Redeemed

Shares Priced Use of Leverage

Share Classes

Total shares are determined by initial demand during the initial public offering("IPO").

Shares can be bought and sold in secondary market post IPO.

No. Shares are bought and sold in the secondary market.1

Based on market supply and demand. Priced at either a premium or discount to net asset

value ("NAV").

Prevalent among CEFs

Not typical in CEF structure

Continuously offered.

Yes. Once a day, at the close of business.

Price is set daily by NAV.

Can use leverage, but employed much less than in CEFs

Multiple share classes with different expense structures

Illiquid Security Exposure

Yes

Limited

1. Certain closed-end funds may make periodic tender offers for shares.

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Performance of Closed-End Funds vs. Mutual Funds

3-Year Annualized Total Return of CEFs & Mutual Funds Lipper Classifications (as of 12/31/2021)

+240

-30

+310

+50

+430

+380

+330

bps

bps

bps

bps

bps

bps

bps

16.0 14.0 12.0

11.4

15.1 14.6

10.0 8.3

8.0

6.1 6.0

4.0

3.7 2.8 3.1

2.0

8.2 3.9

9.3 5.5

7.0 3.7

0.0

Bank Loan

Emerging Market Emerging Market

Equity Income

General Bond

Debt

Equity

High Yield

Municipal

CEF (NAV) Mutual Fund

Source: Lipper LANA. Data as of 12/31/21. Returns show the median NAV return for CEFs and the median NAV return for Mutual Funds. Past performance is no indication of future results. Performance shown is the average for the funds in the category; individual fund performance could have been positive or negative. CEFs represented by the following Lipper categories, Municipal Debt represented by General & Insured Municipal Funds (Levered), High Yield represented by High Yield Funds (Levered), Bank Loans represented by Loan Participation Funds, General Bond represented by General Bond Funds, Equity Income represented by Options Arbitrage/Opt Strategies Funds, Emerging Market Equity represented by Emerging Market Funds, Emerging Market Debt (Hard) represented by Emerging Market Debt (Hard) Category. Mutual Funds represented by the following categories, Municipal Debt represented by General & Insured Municipal Funds , High Yield represented by High Yield Funds, Bank Loans represented by Loan Participation Funds, General Bond represented by General Bond Funds, Equity Income represented by Equity Income Funds, Emerging Market Equity represented by Emerging Market Funds, Emerging Market Debt (Hard) represented by Emerging Market Debt (Hard) Category. Any funds not incepted in this time period will not be included in return numbers.

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Performance of Closed-End Funds vs. Mutual Funds

5-Year Annualized Total Return of CEFs & Mutual Funds Lipper Classifications (as of 12/31/2021)

+110 bps

12.0

10.0

8.0

6.0

4.4

4.0

3.3

-180 bps

3.3

+5bps

8.7 8.2

-110 bps

11.4 10.3

+330 bps

7.0

3.7

+180 bps

6.4 4.6

+230 bps

5.8 3.5

2.0

1.5

0.0

Bank Loan

Emerging Market Emerging Market

Equity Income

General Bond

Debt

Equity

High Yield

Municipal

CEF (NAV) Mutual Fund

Source: Lipper LANA. Data as of 12/31/21. Returns show the median NAV return for CEFs and the median NAV return for Mutual Funds. Past performance is no indication of future results. Performance shown is the average for the funds in the category; individual fund performance could have been positive or negative. CEFs represented by the following Lipper categories, Municipal Debt represented by General & Insured Municipal Funds (Levered), High Yield represented by High Yield Funds (Levered), Bank Loans represented by Loan Participation Funds, General Bond represented by General Bond Funds, Equity Income represented by Options Arbitrage/Opt Strategies Funds, Emerging Market Equity represented by Emerging Market Funds, Emerging Market Debt (Hard) represented by Emerging Market Debt (Hard) Category. Mutual Funds represented by the following categories, Municipal Debt represented by General & Insured Municipal Funds , High Yield represented by High Yield Funds, Bank Loans represented by Loan Participation Funds, General Bond represented by General Bond Funds, Equity Income represented by Equity Income Funds, Emerging Market Equity represented by Emerging Market Funds, Emerging Market Debt (Hard) represented by Emerging Market Debt (Hard) Category. Any funds not incepted in this time period will not be included in return numbers.

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Performance of Closed-End Funds vs. Mutual Funds

10-Year Annualized Total Return of CEFs & Mutual Funds Lipper Classifications (as of 12/31/2021)

+210 bps

14.0

12.0

10.0

8.0

6.0

5.7

4.0

3.6

2.0

-110 bps

3.6 2.4

+180 bps

6.2 4.4

-180 bps

11.4 9.6

+300 bps

7.5 4.6

+220 bps

+270 bps

7.5 5.3

6.0 3.3

0.0

Bank Loan

Emerging Market Emerging Market

Equity Income

General Bond

Debt

Equity

High Yield

Municipal

CEF (NAV) Mutual Fund

Source: Lipper LANA. Data as of 12/31/21. Returns show the median NAV return for CEFs and the median NAV return for Mutual Funds. Past performance is no indication of future results. Performance shown is the average for the funds in the category; individual fund performance could have been positive or negative. CEFs represented by the following Lipper categories, Municipal Debt represented by General & Insured Municipal Funds (Levered), High Yield represented by High Yield Funds (Levered), Bank Loans represented by Loan Participation Funds, General Bond represented by General Bond Funds, Equity Income represented by Options Arbitrage/Opt Strategies Funds, Emerging Market Equity represented by Emerging Market Funds, Emerging Market Debt (Hard) represented by Emerging Market Debt (Hard) Category. Mutual Funds represented by the following categories, Municipal Debt represented by General & Insured Municipal Funds , High Yield represented by High Yield Funds, Bank Loans represented by Loan Participation Funds, General Bond represented by General Bond Funds, Equity Income represented by Equity Income Funds, Emerging Market Equity represented by Emerging Market Funds, Emerging Market Debt (Hard) represented by Emerging Market Debt (Hard) Category. Any funds not incepted in this time period will not be included in return numbers.

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Distribution Rates Closed-End Funds vs. Mutual Funds

Distribution Rate of CEFs & Mutual Funds Lipper Classifications (as of 11/30/2021)

+290 bps

9.0

8.0

7.0 6.1

6.0

+370 bps

8.0

+120 bps

+530 bps

6.9

+490 bps

6.6

+330 bps

7.8

+400 bps

7.4

5.0 4.3

4.5

4.0 3.2

3.4

3.0

2.1

2.0

1.6

1.8

0.9 1.0

0.0

Bank Loan

Emerging Market Emerging Market

Equity Income

General Bond

Debt

Equity

High Yield

Municipal (Tax Equivalent)

CEF (NAV) Mutual Fund

Source: Lipper LANA. Data is the median. Data as of 11/30/21. Past performance is no indication of future results. Performance shown is the average for the funds in the category; individual fund performance could have been positive or negative. CEFs represented by the following Lipper categories, Municipal Debt represented by General & Insured Municipal Funds (Levered), High Yield represented by High Yield Funds (Levered), Bank Loans represented by Loan Participation Funds, General Bond represented by General Bond Funds, Equity Income represented by Options Arbitrage/Opt Strategies Funds, Emerging Market Equity represented by Emerging Market Funds, Emerging Market Debt (Hard) represented by Emerging Market Debt (Hard) Category. Mutual Funds represented by the following categories, Municipal Debt represented by General & Insured Municipal Funds , High Yield represented by High Yield Funds, Bank Loans represented by Loan Participation Funds, General Bond represented by General Bond Funds, Equity Income represented by Equity Income Funds, Emerging Market Equity represented by Emerging Market Funds, Emerging Market Debt (Hard) represented by Emerging Market Debt (Hard) Category. Any funds not incepted in this time period will not be included in return numbers. Tax Equivalent is calculated using 40.8% tax rate.

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Important Information

Lipper CEF Classification Definitions

GENERAL BOND FUNDS? Funds that do not have any quality or maturity restrictions. These funds intends to keep the bulk of their assets in corporate and government debt issues. GENERAL & INSURED MUNICIPAL DEBT FUNDS (Levered)? Funds that either invest primarily in municipal debt issues rated in the top four credit ratings or invest primarily in municipal debt issues insured as to timely payment. These funds can be leveraged via use of debt, preferred equity, and/or reverse repurchase agreements. HIGH YIELD FUNDS (Levered)? Funds that aim at high (relative) current yield from fixed income securities, have no quality or maturity restrictions, and tend to invest in lower-grade debt issues. These funds can be levered via use of debt, preferred equity, and/or reverse repurchase agreements. LOAN PARTICIPATION FUNDS? Funds that invest primarily in participation interests in collateralized senior corporate loans that have floating or variable rates. OPTIONS ARBITRAGE/OPTIONS STRATEGIES FUNDS - Funds that employ various strategies to capture "the spread" between options through inefficiencies in the market or funds that use portfolio strategies where the manager focuses on options to generate the bulk of the portfolios returns

Lipper Mutual Fund Classification Definitions

EQUITY INCOME FUNDS? Funds that, by prospectus language and portfolio practice, seek relatively high current income and growth of income by investing at least 65% of their portfolio in dividend-paying equity securities. GENERAL BOND FUNDS? Funds that do not have any quality or maturity restrictions. These funds intends to keep the bulk of their assets in corporate and government debt issues. GENERAL & INSURED MUNICIPAL DEBT FUNDS ? Funds that either invest primarily in municipal debt issues rated in the top four credit ratings or invest primarily in municipal debt issues insured as to timely payment. HIGH YIELD FUNDS? Funds that aim at high (relative) current yield from fixed income securities, have no quality or maturity restrictions, and tend to invest in lower-grade debt issues. LOAN PARTICIPATION FUNDS? Funds that invest primarily in participation interests in collateralized senior corporate loans that have floating or variable rates.

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Important Information

Carefully consider the funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the funds' prospectuses and shareholder reports which may be obtained by visiting the SEC Edgar database. Read the prospectus carefully before investing.

Common shares of the closed-end funds identified above are only available to the public for purchase and sale at current market price on a stock exchange. A closed-end fund's investment return, dividend yield, market price and net asset value (NAV) will fluctuate with market conditions. The information for these funds 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 NAV of a fund's shares will fluctuate with market conditions. At the time of sale, your shares may have a market price that is above or below net asset value, and may be worth more or less than your original investment. Closed-end funds may trade at a premium to NAV but often trade at a discount. Closed-end funds are able to use leverage to a greater degree than open-end funds, which can enhance returns on both the downside and the upside. Also, closed-end funds are able to invest in more illiquid securities given the fixed capital nature of the structure, which leads to different investment opportunities compared to open-end funds.

The funds are actively managed and their characteristics will vary. The values of the securities owned by the funds fluctuate in price so the value of your investment can go down depending on market conditions. International investing involves special risks including, but not limited to political risks, currency fluctuations, illiquidity and volatility. These risks may be heightened for investments in emerging markets. Investments in emerging markets may be considered speculative and are more likely to experience hyperinflation and currency devaluations, which adversely affect returns. In addition, many emerging securities markets have lower trading volumes and less liquidity. The funds may use derivatives to hedge their investments or to seek to enhance returns. Derivatives entail risks relating to liquidity, leverage and credit that may reduce returns and increase volatility.

There is no assurance that any fund will achieve its investment objective. Each Fund is subject to numerous risks, including investment risks. None of the funds is a complete investment program and you may lose money investing in a fund. An investment in a fund may not be appropriate for all investors.

Closed-end fund shares are not deposits or obligations of, or guaranteed by, any bank and are not insured by the FDIC or any other agency. Investing involves risk, including possible loss of principal amount invested. This is not a prospectus intended for use in the purchase or sale of any fund's shares. Shares may only be purchased or sold through registered broker/dealers. For more information regarding any of BlackRock's closed-end funds, please call BlackRock at 800-882-0052.

BlackRock does not provide tax advice, and investors should consult their professional advisors before making any tax or investment decision. Some BlackRock closed-end funds may utilize leverage to seek to enhance the yield and net asset value of their common stock, through bank borrowings, issuance of short-term debt securities or shares of preferred stock, or a combination thereof. However, these objectives cannot be achieved in all interest rate environments. While leverage may result in a higher yield for the fund, the use of leverage involves risk, including the potential for higher volatility of the NAV, fluctuations of dividends and other distributions paid by the fund and the market price of the fund's common stock, among others. There is no assurance that a fund's leveraging strategy will be successful. While a common investment practice by many closed-end fund managers, leverage cannot assure a higher yield or return to the holders of the common shares. As mentioned above, the ability of a closed-end fund to use leverage differs from that of an open-end fund.

Some BlackRock closed-end funds make distributions of ordinary income and capital gains only at calendar year end, or make additional distributions of ordinary income and capital gains at calendar year end in order to maintain their qualification for pass through tax treatment as a "regulated investment company" under the Internal Revenue Code. Those distributions temporarily cause extraordinarily high yields. There is no assurance that a fund will repeat that yield in the future. To the extent a BlackRock closed-end fund makes subsequent regular monthly distributions of ordinary income and/or capital gains, such distributions will likely be lower than such calendar year end distributions. Fund details, holdings and characteristics are as of the date noted and subject to change.

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