Statements of Cash Flows
Year Ended April 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MUA
|
|
|
|
MHD
|
|
|
|
MUI
|
|
|
|
MVT
|
|
|
|
|
|
|
|
|
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
$
|
93,592,711
|
|
|
$
|
54,798,821
|
|
|
$
|
81,320,255
|
|
|
$
|
57,342,405
|
|
|
|
|
|
|
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by
operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales of long-term investments
|
|
|
110,666,811
|
|
|
|
68,791,351
|
|
|
|
121,740,472
|
|
|
|
71,331,904
|
|
Purchases of long-term investments
|
|
|
(128,481,381
|
)
|
|
|
(77,197,589
|
)
|
|
|
(131,357,874
|
)
|
|
|
(80,215,045
|
)
|
Net proceeds from sales (purchases) of short-term securities.
|
|
|
2,763,928
|
|
|
|
(2,157,616
|
)
|
|
|
(127,048
|
)
|
|
|
4,980,448
|
|
Amortization of premium and accretion of discount on investments and other fees
|
|
|
(921,615
|
)
|
|
|
1,008,086
|
|
|
|
7,326,199
|
|
|
|
1,713,722
|
|
Net realized (gain) loss on investments
|
|
|
(2,825,504
|
)
|
|
|
(527,251
|
)
|
|
|
1,050,087
|
|
|
|
(527,383
|
)
|
Net unrealized appreciation on investments
|
|
|
(68,133,833
|
)
|
|
|
(38,956,165
|
)
|
|
|
(56,287,354
|
)
|
|
|
(41,546,782
|
)
|
|
|
|
|
|
(Increase) Decrease in Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends affiliated
|
|
|
451
|
|
|
|
2,639
|
|
|
|
657
|
|
|
|
2,463
|
|
Interest unaffiliated
|
|
|
(120,919
|
)
|
|
|
(2,663,381
|
)
|
|
|
274,620
|
|
|
|
333,322
|
|
Prepaid expenses
|
|
|
|
|
|
|
(221,171
|
)
|
|
|
4,434
|
|
|
|
4,958
|
|
Deferred offering costs
|
|
|
(113,838
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and fees
|
|
|
(351,385
|
)
|
|
|
(135,249
|
)
|
|
|
(262,616
|
)
|
|
|
(164,595
|
)
|
Investment advisory fees
|
|
|
(228,012
|
)
|
|
|
(263,333
|
)
|
|
|
(424,400
|
)
|
|
|
(197,461
|
)
|
Directors and Officers fees
|
|
|
(3,125
|
)
|
|
|
(6,702
|
)
|
|
|
91,898
|
|
|
|
(1,696
|
)
|
Other accrued expenses
|
|
|
57,340
|
|
|
|
(63,123
|
)
|
|
|
26,141
|
|
|
|
8,301
|
|
Reorganization costs
|
|
|
|
|
|
|
(112,141
|
)
|
|
|
|
|
|
|
|
|
Variation margin on futures contracts
|
|
|
14,451
|
|
|
|
39,302
|
|
|
|
40,067
|
|
|
|
14,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
5,916,080
|
|
|
|
2,336,478
|
|
|
|
23,415,538
|
|
|
|
13,079,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends paid to Common Shareholders
|
|
|
(22,448,329
|
)
|
|
|
(15,527,112
|
)
|
|
|
(23,858,574
|
)
|
|
|
(14,596,474
|
)
|
Payments for offering costs
|
|
|
66,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayments of TOB Trust Certificates
|
|
|
(3,918,802
|
)
|
|
|
(5,224,239
|
)
|
|
|
(5,609,706
|
)
|
|
|
(2,843,589
|
)
|
Repayments of Loan for TOB Trust Certificates
|
|
|
(2,505,000
|
)
|
|
|
(1,695,000
|
)
|
|
|
|
|
|
|
(2,340,000
|
)
|
Payments on Common Shares redeemed
|
|
|
|
|
|
|
(424
|
)
|
|
|
|
|
|
|
|
|
Proceeds from TOB Trust Certificates
|
|
|
3,468,591
|
|
|
|
3,357,356
|
|
|
|
6,665,001
|
|
|
|
4,643,254
|
|
Proceeds from Loan for TOB Trust Certificates
|
|
|
2,505,000
|
|
|
|
1,695,000
|
|
|
|
|
|
|
|
2,340,000
|
|
Decrease in bank overdraft
|
|
|
|
|
|
|
|
|
|
|
(74,479
|
)
|
|
|
|
|
Proceeds from issuance of Common Shares
|
|
|
17,214,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used for financing activities
|
|
|
(5,617,518
|
)
|
|
|
(17,394,419
|
)
|
|
|
(22,877,758
|
)
|
|
|
(12,796,809
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in restricted and unrestricted cash
|
|
|
298,562
|
|
|
|
(15,057,941
|
)
|
|
|
537,780
|
|
|
|
282,562
|
|
Restricted and unrestricted cash at beginning of year
|
|
|
|
|
|
|
15,787,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted and unrestricted cash at end
of year.
|
|
$
|
298,562
|
|
|
$
|
729,693
|
|
|
$
|
537,780
|
|
|
$
|
282,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the year for interest expense
|
|
$
|
855,663
|
|
|
$
|
1,923,531
|
|
|
$
|
3,855,250
|
|
|
$
|
2,005,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital shares issued in reinvestment of distributions paid to Common Shareholders
|
|
$
|
889,656
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of investments and derivatives acquired through reorganization
|
|
|
|
|
|
|
1,071,266,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares issued in reorganization
|
|
|
|
|
|
|
665,215,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Shares issued in reorganization
|
|
|
|
|
|
|
264,100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F I N A N C I A L
S T A T E M E N T S
|
|
65
|
Statements of Cash Flows (continued)
Year Ended April 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MUA
|
|
|
|
MHD
|
|
|
|
MUI
|
|
|
|
MVT
|
|
|
|
|
|
|
|
|
RECONCILIATION OF RESTRICTED AND UNRESTRICTED CASH AT THE END OF YEAR TO THE STATEMENTS OF ASSETS AND
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
49,562
|
|
|
$
|
52,693
|
|
|
$
|
36,780
|
|
|
$
|
20,562
|
|
Cash pledged
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Futures contracts
|
|
|
249,000
|
|
|
|
677,000
|
|
|
|
501,000
|
|
|
|
262,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
298,562
|
|
|
$
|
729,693
|
|
|
$
|
537,780
|
|
|
$
|
282,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to financial statements.
|
|
|
66
|
|
2 0 2 1
B L A C K R O C K A N N U A L R E P O R T
T O S H A R E H O L D E R S
|
Financial Highlights
(For a share outstanding throughout each period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MUA
|
|
|
|
Year Ended April 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Net asset value, beginning of
year
|
|
$
|
12.83
|
|
|
$
|
14.14
|
|
|
$
|
14.01
|
|
|
$
|
14.07
|
|
|
$
|
14.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income(a)
|
|
|
0.62
|
|
|
|
0.63
|
|
|
|
0.67
|
|
|
|
0.68
|
|
|
|
0.70
|
|
|
|
|
|
|
|
Net realized and unrealized gain (loss)
|
|
|
1.96
|
|
|
|
(1.29
|
)
|
|
|
0.12
|
|
|
|
(0.06
|
)
|
|
|
(0.38
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) from investment operations
|
|
|
2.58
|
|
|
|
(0.66
|
)
|
|
|
0.79
|
|
|
|
0.62
|
|
|
|
0.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to Common Shareholders(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From net investment income
|
|
|
(0.64
|
)
|
|
|
(0.63
|
)
|
|
|
(0.66
|
)
|
|
|
(0.68
|
)
|
|
|
(0.70
|
)
|
|
|
|
|
|
|
From net realized gain
|
|
|
|
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions to Common Shareholders
|
|
|
(0.64
|
)
|
|
|
(0.65
|
)
|
|
|
(0.66
|
)
|
|
|
(0.68
|
)
|
|
|
(0.70
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of year
|
|
$
|
14.77
|
|
|
$
|
12.83
|
|
|
$
|
14.14
|
|
|
$
|
14.01
|
|
|
$
|
14.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market price, end of year
|
|
$
|
15.26
|
|
|
$
|
12.48
|
|
|
$
|
14.98
|
|
|
$
|
13.21
|
|
|
$
|
14.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return Applicable to Common
Shareholders(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on net asset value
|
|
|
20.41
|
%
|
|
|
(5.03
|
)%
|
|
|
5.97
|
%
|
|
|
4.47
|
%
|
|
|
2.23
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on market price
|
|
|
27.89
|
%
|
|
|
(12.80
|
)%
|
|
|
19.07
|
%
|
|
|
(6.48
|
)%
|
|
|
5.56
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets Applicable to Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
0.81
|
%
|
|
|
0.98
|
%
|
|
|
1.01
|
%
|
|
|
0.93
|
%
|
|
|
0.87
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses after fees waived and/or reimbursed
|
|
|
0.80
|
%
|
|
|
0.98
|
%
|
|
|
1.01
|
%
|
|
|
0.93
|
%
|
|
|
0.87
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses after fees waived and/or reimbursed and excluding interest expense, fees, and amortization of
offering costs(d)
|
|
|
0.71
|
%
|
|
|
0.69
|
%
|
|
|
0.70
|
%
|
|
|
0.69
|
%
|
|
|
0.69
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
4.39
|
%
|
|
|
4.43
|
%
|
|
|
4.77
|
%
|
|
|
4.83
|
%
|
|
|
4.93
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets applicable to Common Shareholders, end of year (000)
|
|
$
|
552,373
|
|
|
$
|
463,431
|
|
|
$
|
509,645
|
|
|
$
|
504,470
|
|
|
$
|
505,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings outstanding, end of year (000)
|
|
$
|
68,781
|
|
|
$
|
69,232
|
|
|
$
|
71,659
|
|
|
$
|
71,925
|
|
|
$
|
67,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
19
|
%
|
|
|
21
|
%
|
|
|
19
|
%
|
|
|
15
|
%
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Based on average Common Shares outstanding.
|
(b)
|
Distributions for annual periods determined in accordance with U.S. federal income tax regulations.
|
(c)
|
Total returns based on market price, which can be significantly greater or less than the net asset value, may result in
substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.
|
(d)
|
Interest expense and fees relate to TOB Trusts. See Note 4 of the Notes to Financial Statements for details.
|
See notes to financial statements.
|
|
|
F I N A N C I A L
H I G H L I G H T S
|
|
67
|
Financial Highlights (continued)
(For a share outstanding throughout each period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MHD
|
|
|
|
Year Ended April 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Net asset value, beginning of
year
|
|
$
|
15.18
|
|
|
$
|
16.56
|
|
|
$
|
16.41
|
|
|
$
|
16.85
|
|
|
$
|
17.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income(a)
|
|
|
0.78
|
|
|
|
0.74
|
|
|
|
0.81
|
|
|
|
0.88
|
|
|
|
0.95
|
|
|
|
|
|
|
|
Net realized and unrealized gain (loss)
|
|
|
2.07
|
|
|
|
(1.36
|
)
|
|
|
0.22
|
|
|
|
(0.39
|
)
|
|
|
(1.07
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) from investment operations
|
|
|
2.85
|
|
|
|
(0.62
|
)
|
|
|
1.03
|
|
|
|
0.49
|
|
|
|
(0.12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to Common Shareholders(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From net investment income
|
|
|
(0.73
|
)
|
|
|
(0.76
|
)
|
|
|
(0.83
|
)
|
|
|
(0.92
|
)
|
|
|
(0.98
|
)
|
|
|
|
|
|
|
From net realized gain
|
|
|
|
|
|
|
|
|
|
|
(0.05
|
)
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions to Common Shareholders
|
|
|
(0.73
|
)
|
|
|
(0.76
|
)
|
|
|
(0.88
|
)
|
|
|
(0.93
|
)
|
|
|
(0.98
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of year
|
|
$
|
17.30
|
|
|
$
|
15.18
|
|
|
$
|
16.56
|
|
|
$
|
16.41
|
|
|
$
|
16.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market price, end of year
|
|
$
|
16.33
|
|
|
$
|
13.91
|
|
|
$
|
15.92
|
|
|
$
|
14.98
|
|
|
$
|
16.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return Applicable to Common
Shareholders(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on net asset value
|
|
|
19.31
|
%
|
|
|
(4.02
|
)%
|
|
|
6.84
|
%
|
|
|
3.07
|
%
|
|
|
(0.67
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on market price
|
|
|
22.90
|
%
|
|
|
(8.52
|
)%
|
|
|
12.51
|
%
|
|
|
(4.79
|
)%
|
|
|
(2.87
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets Applicable to Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
1.56
|
%(d)
|
|
|
2.16
|
%(e)
|
|
|
2.47
|
%
|
|
|
2.16
|
%
|
|
|
1.87
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses after fees waived and/or
reimbursed
|
|
|
1.51
|
%(d)
|
|
|
2.15
|
%(e)
|
|
|
2.47
|
%
|
|
|
2.16
|
%
|
|
|
1.87
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses after fees waived and/or
reimbursed and excluding interest expense, fees, and amortization of offering costs(f)
|
|
|
0.98
|
%(d)
|
|
|
0.97
|
%(e)
|
|
|
1.00
|
%
|
|
|
1.01
|
%
|
|
|
0.99
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income to Common Shareholders
|
|
|
4.59
|
%
|
|
|
4.40
|
%(e)
|
|
|
4.98
|
%
|
|
|
5.19
|
%
|
|
|
5.42
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets applicable to Common Shareholders, end of year (000)
|
|
$
|
923,079
|
|
|
$
|
215,764
|
|
|
$
|
235,029
|
|
|
$
|
232,921
|
|
|
$
|
238,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VMTP Shares outstanding at $100,000 liquidation value, end of year (000)
|
|
$
|
347,800
|
|
|
$
|
83,700
|
|
|
$
|
83,700
|
|
|
$
|
83,700
|
|
|
$
|
83,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset coverage per VMTP Shares at $100,000 liquidation value, end of year
|
|
$
|
365,405
|
|
|
$
|
357,782
|
|
|
$
|
380,799
|
|
|
$
|
378,281
|
|
|
$
|
385,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings outstanding, end of year (000)
|
|
$
|
213,104
|
|
|
$
|
53,130
|
|
|
$
|
52,674
|
|
|
$
|
63,166
|
|
|
$
|
62,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
13
|
%
|
|
|
21
|
%
|
|
|
17
|
%
|
|
|
12
|
%
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Based on average Common Shares outstanding.
|
(b)
|
Distributions for annual periods determined in accordance with U.S. federal income tax regulations.
|
(c)
|
Total returns based on market price, which can be significantly greater or less than the net asset value, may result in
substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.
|
(d)
|
Includes reorganization costs associated with the Funds reorganization. Without these costs, total expenses,
total expenses after fees waived and/or reimbursed and total expenses after fees waived and/or reimbursed and excluding interest expense, fees, and amortization of offering costs, would have been 1.49%, 1.47% and 0.95%, respectively, for the year
ended April 30, 2021.
|
(e)
|
Excludes 0.01% of expenses incurred indirectly as a result of investments in underlying funds.
|
(f)
|
Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VMTP Shares. See Note 4 and Note
10 of the Notes to Financial Statements for details.
|
See notes to financial statements.
|
|
|
68
|
|
2 0 2 1
B L A C K R O C K A N N U A L R E P O R T
T O S H A R E H O L D E R S
|
Financial Highlights (continued)
(For a share outstanding throughout each period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MUI
|
|
|
|
Year Ended April 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
Net asset value, beginning of
year
|
|
$
|
14.62
|
|
|
$
|
15.40
|
|
|
$
|
14.93
|
|
|
$
|
15.17
|
|
|
$
|
16.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income(a)
|
|
|
0.64
|
|
|
|
0.56
|
|
|
|
0.56
|
|
|
|
0.59
|
|
|
|
0.65
|
|
Net realized and unrealized gain (loss)
|
|
|
1.48
|
|
|
|
(0.81
|
)
|
|
|
0.47
|
|
|
|
(0.23
|
)
|
|
|
(0.83
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) from investment
operations
|
|
|
2.12
|
|
|
|
(0.25
|
)
|
|
|
1.03
|
|
|
|
0.36
|
|
|
|
(0.18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to Common Shareholders(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From net investment income
|
|
|
(0.63
|
)
|
|
|
(0.53
|
)
|
|
|
(0.53
|
)
|
|
|
(0.60
|
)
|
|
|
(0.67
|
)
|
From net realized gain
|
|
|
|
|
|
|
|
|
|
|
(0.03
|
)
|
|
|
(0.00
|
)(c)
|
|
|
(0.14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions to Common
Shareholders
|
|
|
(0.63
|
)
|
|
|
(0.53
|
)
|
|
|
(0.56
|
)
|
|
|
(0.60
|
)
|
|
|
(0.81
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of
year
|
|
$
|
16.11
|
|
|
$
|
14.62
|
|
|
$
|
15.40
|
|
|
$
|
14.93
|
|
|
$
|
15.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market price, end of
year
|
|
$
|
15.09
|
|
|
$
|
13.13
|
|
|
$
|
13.85
|
|
|
$
|
13.01
|
|
|
$
|
13.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return Applicable to Common
Shareholders(d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on net asset value
|
|
|
15.08
|
%
|
|
|
(1.41
|
)%
|
|
|
7.68
|
%
|
|
|
2.76
|
%
|
|
|
(0.69
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on market price
|
|
|
20.02
|
%
|
|
|
(1.56
|
)%
|
|
|
11.13
|
%
|
|
|
(2.69
|
)%
|
|
|
(2.77
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets Applicable to Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
1.58
|
%
|
|
|
2.31
|
%
|
|
|
2.63
|
%
|
|
|
2.17
|
%
|
|
|
1.90
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses after fees waived and/or
reimbursed
|
|
|
1.58
|
%
|
|
|
2.31
|
%
|
|
|
2.63
|
%
|
|
|
2.17
|
%
|
|
|
1.89
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses after fees waived and/or
reimbursed and excluding interest expense, fees, and amortization of offering costs(e)
|
|
|
0.98
|
%
|
|
|
0.97
|
%
|
|
|
1.01
|
%
|
|
|
0.97
|
%
|
|
|
0.96
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income to Common
Shareholders
|
|
|
4.05
|
%
|
|
|
3.59
|
%
|
|
|
3.73
|
%
|
|
|
3.87
|
%
|
|
|
4.12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets applicable to Common Shareholders, end of year (000)
|
|
$
|
617,032
|
|
|
$
|
559,934
|
|
|
$
|
589,887
|
|
|
$
|
571,769
|
|
|
$
|
580,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VMTP Shares outstanding at $100,000
liquidation value, end of year (000)
|
|
$
|
287,100
|
|
|
$
|
287,100
|
|
|
$
|
287,100
|
|
|
$
|
287,100
|
|
|
$
|
287,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset coverage per VMTP Shares at
$100,000 liquidation value, end of year
|
|
$
|
314,919
|
|
|
$
|
295,031
|
|
|
$
|
305,464
|
|
|
$
|
299,153
|
|
|
$
|
302,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings outstanding, end of year
(000)
|
|
$
|
93,069
|
|
|
$
|
92,014
|
|
|
$
|
93,421
|
|
|
$
|
79,136
|
|
|
$
|
58,337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
13
|
%
|
|
|
20
|
%
|
|
|
24
|
%
|
|
|
34
|
%
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Based on average Common Shares outstanding.
|
(b)
|
Distributions for annual periods determined in accordance with U.S. federal income tax regulations.
|
(c)
|
Amount is greater than $(0.005) per share.
|
(d)
|
Total returns based on market price, which can be significantly greater or less than the net asset value, may result in
substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.
|
(e)
|
Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VMTP Shares. See Note 4 and Note
10 of the Notes to Financial Statements for details.
|
See notes to financial statements.
|
|
|
F I N A N C I A L
H I G H L I G H T S
|
|
69
|
Financial Highlights (continued)
(For a share outstanding throughout each period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MVT
|
|
|
|
Year Ended April 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
Net asset value, beginning of
year
|
|
$
|
13.60
|
|
|
$
|
14.87
|
|
|
$
|
14.75
|
|
|
$
|
15.19
|
|
|
$
|
16.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income(a)
|
|
|
0.72
|
|
|
|
0.68
|
|
|
|
0.74
|
|
|
|
0.83
|
|
|
|
0.91
|
|
Net realized and unrealized gain (loss)
|
|
|
1.97
|
|
|
|
(1.27
|
)
|
|
|
0.20
|
|
|
|
(0.41
|
)
|
|
|
(0.95
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) from investment
operations
|
|
|
2.69
|
|
|
|
(0.59
|
)
|
|
|
0.94
|
|
|
|
0.42
|
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to Common Shareholders(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From net investment income
|
|
|
(0.69
|
)
|
|
|
(0.68
|
)
|
|
|
(0.76
|
)
|
|
|
(0.86
|
)
|
|
|
(0.94
|
)
|
From net realized gain
|
|
|
|
|
|
|
|
|
|
|
(0.06
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions to Common
Shareholders
|
|
|
(0.69
|
)
|
|
|
(0.68
|
)
|
|
|
(0.82
|
)
|
|
|
(0.86
|
)
|
|
|
(0.94
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of
year
|
|
$
|
15.60
|
|
|
$
|
13.60
|
|
|
$
|
14.87
|
|
|
$
|
14.75
|
|
|
$
|
15.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market price, end of
year
|
|
$
|
15.15
|
|
|
$
|
12.55
|
|
|
$
|
14.29
|
|
|
$
|
14.05
|
|
|
$
|
15.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return Applicable to Common
Shareholders(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on net asset value
|
|
|
20.22
|
%
|
|
|
(4.21
|
)%
|
|
|
6.83
|
%
|
|
|
2.79
|
%
|
|
|
(0.34
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on market price
|
|
|
26.52
|
%
|
|
|
(8.02
|
)%
|
|
|
7.78
|
%
|
|
|
(3.74
|
)%
|
|
|
(5.68
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets Applicable to Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
1.47
|
%
|
|
|
2.14
|
%(d)
|
|
|
2.45
|
%
|
|
|
2.11
|
%
|
|
|
1.88
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses after fees waived and/or
reimbursed
|
|
|
1.47
|
%
|
|
|
2.13
|
%(d)
|
|
|
2.45
|
%
|
|
|
2.11
|
%
|
|
|
1.87
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses after fees waived and/or
reimbursed and excluding interest expense, fees, and amortization of offering costs(e)
|
|
|
0.90
|
%
|
|
|
0.89
|
%(d)
|
|
|
0.91
|
%
|
|
|
0.91
|
%
|
|
|
0.92
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income to Common
Shareholders
|
|
|
4.75
|
%
|
|
|
4.51
|
%(d)
|
|
|
5.09
|
%
|
|
|
5.44
|
%
|
|
|
5.78
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets applicable to Common Shareholders, end of year (000)
|
|
$
|
332,905
|
|
|
$
|
290,223
|
|
|
$
|
317,175
|
|
|
$
|
314,261
|
|
|
$
|
321,939
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VMTP Shares outstanding at $100,000
liquidation value, end of year (000)
|
|
$
|
140,000
|
|
|
$
|
140,000
|
|
|
$
|
140,000
|
|
|
$
|
140,000
|
|
|
$
|
140,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset coverage per VMTP Shares at
$100,000 liquidation value, end of year
|
|
$
|
337,789
|
|
|
$
|
307,302
|
|
|
$
|
326,553
|
|
|
$
|
324,472
|
|
|
$
|
329,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings outstanding, end of year
(000)
|
|
$
|
57,997
|
|
|
$
|
56,198
|
|
|
$
|
47,982
|
|
|
$
|
61,343
|
|
|
$
|
60,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
13
|
%
|
|
|
18
|
%
|
|
|
25
|
%
|
|
|
11
|
%
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Based on average Common Shares outstanding.
|
(b)
|
Distributions for annual periods determined in accordance with U.S. federal income tax regulations.
|
(c)
|
Total returns based on market price, which can be significantly greater or less than the net asset value, may result in
substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions at actual reinvestment prices.
|
(d)
|
Excludes 0.01% of expenses incurred indirectly as a result of investments in underlying funds.
|
(e)
|
Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VMTP Shares. See Note 4 and Note
10 of the Notes to Financial Statements for details.
|
See notes to financial statements.
|
|
|
70
|
|
2 0 2 1
B L A C K R O C K A N N U A L R E P O R T
T O S H A R E H O L D E R S
|
Notes to Financial Statements
The following are registered under the Investment Company Act of 1940, as amended (the 1940 Act), as closed-end management investment
companies and are referred to herein collectively as the Funds, or individually as a Fund:
|
|
|
|
|
|
|
Fund Name
|
|
Herein Referred To As
|
|
Organized
|
|
Diversification
Classification
|
BlackRock MuniAssets Fund, Inc.
|
|
MUA
|
|
Maryland
|
|
Diversified
|
BlackRock MuniHoldings Fund, Inc.
|
|
MHD
|
|
Maryland
|
|
Diversified
|
BlackRock Muni Intermediate Duration Fund, Inc.
|
|
MUI
|
|
Maryland
|
|
Diversified
|
BlackRock MuniVest Fund II, Inc.
|
|
MVT
|
|
Maryland
|
|
Diversified
|
The Boards of Directors of the Funds are collectively referred to throughout this report as the Board, and the
directors thereof are collectively referred to throughout this report as Directors. The Funds determine and make available for publication the net asset values (NAVs) of their Common Shares on a daily basis.
The Funds, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the Manager) or its affiliates, are
included in a complex of non-index fixed-income mutual funds and all BlackRock-advised closed-end funds referred to as the BlackRock Fixed-Income Complex.
Reorganizations: The Board and shareholders of MHD (the Acquiring Fund) and the Board and shareholders of each of BlackRock Municipal
Income Investment Quality Trust (BAF), BlackRock Municipal Bond Trust (BBK), BlackRock MuniHoldings Fund II, Inc. (MUH) and BlackRock MuniHoldings Quality Fund, Inc. (MUS) (individually, a Target
Fund and collectively the Target Funds) approved the reorganization of each Target Fund into the Acquiring Fund. As a result, the Acquiring Fund acquired substantially all of the assets and assumed substantially all of the
liabilities of each Target Fund in exchange for an equal aggregate value of newly-issued Common Shares and Preferred Shares of the Acquiring Fund.
Each Common Shareholder of a Target Fund received Common Shares of the Acquiring Fund in an amount equal to the aggregate NAV of such Common
Shareholders Target Fund Common Shares, as determined at the close of business on March 5, 2021. Cash was distributed for any fractional shares.
Each Preferred Shareholder of a Target Fund received Preferred Shares of the Acquiring Fund in an amount equal to the aggregate liquidation preference of
the Target Funds Preferred Shares held by such Preferred Shareholder prior to the Target Funds reorganization.
The reorganizations were
accomplished by a tax-free exchange of Common Shares and Preferred Shares of the Acquiring Fund in the following amounts and at the following conversion ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Funds
|
|
Target
Funds
Share
Class
|
|
|
Shares Prior to
Reorganization
|
|
|
Conversion
Ratio
|
|
|
MHDs
Share
Class
|
|
|
Shares of
MHD
|
|
BAF
|
|
|
Common
|
|
|
|
8,749,418
|
|
|
|
0.89746185
|
|
|
|
Common
|
|
|
|
7,852,259
|
(a)
|
BBK
|
|
|
Common
|
|
|
|
10,522,957
|
|
|
|
0.96696817
|
|
|
|
Common
|
|
|
|
10,175,357
|
(a)
|
MUH
|
|
|
Common
|
|
|
|
11,336,282
|
|
|
|
0.92578578
|
|
|
|
Common
|
|
|
|
10,494,965
|
(a)
|
MUS
|
|
|
Common
|
|
|
|
13,018,276
|
|
|
|
0.81612104
|
|
|
|
Common
|
|
|
|
10,624,485
|
(a)
|
BAF
|
|
|
VMTP
|
|
|
|
422
|
|
|
|
1
|
|
|
|
VMTP
|
|
|
|
422
|
|
BBK
|
|
|
VMTP
|
|
|
|
799
|
|
|
|
1
|
|
|
|
VMTP
|
|
|
|
799
|
|
MUH
|
|
|
VMTP
|
|
|
|
550
|
|
|
|
1
|
|
|
|
VMTP
|
|
|
|
550
|
|
MUS
|
|
|
VMTP
|
|
|
|
870
|
|
|
|
1
|
|
|
|
VMTP
|
|
|
|
870
|
|
|
(a)
|
Net of fractional shares redeemed.
|
|
Each Target Funds net assets and composition of net assets on March 5, 2021, the valuation date of the
reorganization were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BAF
|
|
|
BBK
|
|
|
MUH
|
|
|
MUS
|
|
Net assets applicable to Common Shareholders
|
|
$
|
133,431,549
|
|
|
$
|
172,906,686
|
|
|
$
|
178,338,366
|
|
|
$
|
180,538,553
|
|
Paid-in-capital
|
|
|
123,568,480
|
|
|
|
148,932,221
|
|
|
|
155,728,501
|
|
|
|
167,933,515
|
|
Accumulated earnings
|
|
|
9,863,069
|
|
|
|
23,974,465
|
|
|
|
22,609,865
|
|
|
|
12,605,038
|
|
For financial reporting purposes, assets received and shares issued by the Acquiring Fund were recorded at fair value.
However, the cost basis of the investments received from the Target Funds was carried forward to align ongoing reporting of the Acquiring Funds realized and unrealized gains and losses with amounts distributable to shareholders for tax
purposes.
The net assets applicable to Common Shareholders of the Acquiring Fund before the reorganizations were $241,462,174. The aggregate net
assets applicable to Common Shareholders of the Acquiring Fund immediately after the reorganizations amounted to $906,677,328. Each Target Funds fair value and cost of financial instruments prior to the reorganization were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Funds
|
|
Fair Value of
Investments
|
|
|
Cost of
Investments
|
|
|
TOB Trust
Certificates
|
|
|
Preferred
Shares Value
|
|
BAF
|
|
$
|
223,936,158
|
|
|
$
|
207,836,363
|
|
|
$
|
49,618,622
|
|
|
$
|
42,200,000
|
|
BBK
|
|
|
277,541,340
|
|
|
|
250,542,078
|
|
|
|
33,649,476
|
|
|
|
79,900,000
|
|
|
|
|
N O T E S T O
F I N A N C I A L S T A T E M E N T S
|
|
71
|
Notes to Financial Statements (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Funds
|
|
Fair Value of
Investments
|
|
|
Cost of
Investments
|
|
|
TOB Trust
Certificates
|
|
|
Preferred
Shares Value
|
|
MUH
|
|
|
278,307,330
|
|
|
|
252,425,263
|
|
|
|
49,204,091
|
|
|
|
55,000,000
|
|
MUS
|
|
|
291,481,501
|
|
|
|
268,355,737
|
|
|
|
29,367,864
|
|
|
|
87,000,000
|
|
The purpose of these transactions was to combine five funds managed by the Manager with the same or substantially similar
(but not identical) investment objectives, investment policies, strategies, risks and restrictions. Each reorganization was a tax-free event and was effective on March 8, 2021.
Assuming the reorganization had been completed on May 1, 2020, the beginning of the fiscal reporting period of MHD, the pro forma results of
operations for the year ended April 30, 2021, are as follows:
|
|
Net investment income (loss): $41,679,250
|
|
|
Net realized and change in unrealized gain/loss on investments: $101,416,927
|
|
|
Net increase in net assets resulting from operations: $143,096,177
|
Because the combined investment portfolios have been managed as a single integrated portfolio since the reorganization was completed, it is not
practicable to separate the amounts of revenue and earnings of each Target Fund that have been included in MHDs Statement of Operations since March 8, 2021.
Reorganization costs incurred by MHD in connection with the reorganization were expensed by MHD. The Manager reimbursed the Fund $123,963, which is
included in fees waived and/or reimbursed by the Manager in the Statements of Operations.
2.
|
SIGNIFICANT ACCOUNTING POLICIES
|
The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP),
which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and
reporting guidance applicable to investment companies. Below is a summary of significant accounting policies:
Investment Transactions and Income
Recognition: For financial reporting purposes, investment transactions are recorded on the dates the transactions are executed. Realized gains and losses on investment transactions are determined using the specific identification method.
Dividend income and capital gain distributions, if any, are recorded on the ex-dividend dates. Non-cash dividends, if any, are recorded on the ex-dividend dates at fair value. Interest income, including amortization and accretion of premiums and
discounts on debt securities, is recognized daily on an accrual basis.
Segregation and Collateralization: In cases where a Fund enters into
certain investments (e.g., futures contracts) or certain borrowings (e.g., TOB Trust transactions) that would be treated as senior securities for 1940 Act purposes, a Fund may segregate or designate on its books and records cash or
liquid assets having a market value at least equal to the amount of its future obligations under such investments or borrowings. Doing so allows the investment or borrowings to be excluded from treatment as a senior security.
Furthermore, if required by an exchange or counterparty agreement, the Funds may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.
Distributions: Distributions from net investment income are declared and paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates and made at least annually. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.
Distributions to Preferred Shareholders are accrued and determined as described in Note 10.
Deferred Compensation Plan: Under the Deferred Compensation Plan (the Plan) approved by each Funds Board, the directors who are
not interested persons of the Funds, as defined in the 1940 Act (Independent Directors), may defer a portion of their annual complex-wide compensation. Deferred amounts earn an approximate return as though equivalent dollar
amounts had been invested in common shares of certain funds in the BlackRock Fixed-Income Complex selected by the Independent Directors. This has the same economic effect for the Independent Directors as if the Independent Directors had invested the
deferred amounts directly in certain funds in the BlackRock Fixed-Income Complex.
The Plan is not funded and obligations thereunder represent general
unsecured claims against the general assets of each Fund, as applicable. Deferred compensation liabilities, if any, are included in the Directors and Officers fees payable in the Statements of Assets and Liabilities and will remain as a
liability of the Funds until such amounts are distributed in accordance with the Plan.
Indemnifications: In the normal course of business, a
Fund enters into contracts that contain a variety of representations that provide general indemnification. A Funds maximum exposure under these arrangements is unknown because it involves future potential claims against a Fund, which cannot be
predicted with any certainty.
Other: Expenses directly related to a Fund are charged to that Fund. Other operating expenses shared by several
funds, including other funds managed by the Manager, are prorated among those funds on the basis of relative net assets or other appropriate methods.
|
|
|
72
|
|
2 0 2 1
B L A C K R O C K A N N U A L R E P O R T
T O S H A R E H O L D E R S
|
Notes to Financial Statements (continued)
3.
|
INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS
|
Investment Valuation Policies: Each Funds investments are valued at fair value (also referred to as market value within the
financial statements) each day that the Fund is open for business and, for financial reporting purposes, as of the report date. U.S. GAAP defines fair value as the price a fund would receive to sell an asset or pay to transfer a liability in an
orderly transaction between market participants at the measurement date. Each Fund determines the fair values of its financial instruments using various independent dealers or pricing services under policies approved by the Board. If a
securitys market price is not readily available or does not otherwise accurately represent the fair value of the security, the security will be valued in accordance with a policy approved by the Board as reflecting fair value. The BlackRock
Global Valuation Methodologies Committee (the Global Valuation Committee) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.
Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Funds assets and
liabilities:
|
|
|
Fixed-income investments for which market quotations are readily available are generally valued using the last available
bid price or current market quotations provided by independent dealers or third party pricing services. Pricing services generally value fixed-income securities assuming orderly transactions of an institutional round lot size, but a fund may hold or
transact in such securities in smaller, odd lot sizes. Odd lots may trade at lower prices than institutional round lots. The pricing services may use matrix pricing or valuation models that utilize certain inputs and assumptions to derive values,
including transaction data (e.g., recent representative bids and offers), market data, credit quality information, perceived market movements, news, and other relevant information. Certain fixed-income securities, including asset-backed and mortgage
related securities may be valued based on valuation models that consider the estimated cash flows of each tranche of the entity, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique
attributes of the tranche. The amortized cost method of valuation may be used with respect to debt obligations with sixty days or less remaining to maturity unless the Manager determines such method does not represent fair value.
|
|
|
|
Investments in open-end U.S. mutual funds (including money market funds) are valued at that days published NAV.
|
|
|
|
Futures contracts are valued based on that days last reported settlement or trade price on the exchange where the
contract is traded.
|
If events (e.g., a market closure, market volatility, company announcement or a natural disaster) occur that
are expected to materially affect the value of such investment, or in the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if
a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (Fair Valued Investments). The fair valuation
approaches that may be used by the Global Valuation Committee include market approach, income approach and cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation
approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Fund might reasonably expect to receive or
pay from the current sale or purchase of that asset or liability in an arms-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and
consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.
Fair Value Hierarchy: Various inputs are used in determining the fair value of financial instruments. These inputs to valuation techniques are
categorized into a fair value hierarchy consisting of three broad levels for financial reporting purposes as follows:
|
|
|
Level 1 Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that each Fund
has the ability to access;
|
|
|
|
Level 2 Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in
markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves,
volatilities, prepayment speeds, loss severities, credit risks and default rates) or other marketcorroborated inputs); and
|
|
|
|
Level 3 Unobservable inputs based on the best information available in the circumstances, to the extent observable
inputs are not available (including the Global Valuation Committees assumptions used in determining the fair value of financial instruments).
|
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different
levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments
classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds that
may not have a secondary market and/or may have a limited number of investors. The categorization of a value determined for financial instruments is based on the pricing transparency of the financial instruments and is not necessarily an indication
of the risks associated with investing in those securities.
4.
|
SECURITIES AND OTHER INVESTMENTS
|
Zero-Coupon Bonds: Zero-coupon bonds are normally issued at a significant discount from face value and do not provide for periodic interest
payments. These bonds may experience greater volatility in market value than other debt obligations of similar maturity which provide for regular interest payments.
Forward Commitments, When-Issued and Delayed Delivery Securities: The Funds may purchase securities on a when-issued basis and may purchase or sell
securities on a forward commitment basis. Settlement of such transactions normally occurs within a month or more after the purchase or sale commitment is made. A Fund may purchase securities under such conditions with the intention of actually
acquiring them, but may enter into a separate agreement to sell the securities before the settlement date. Since
|
|
|
N O T E S T O
F I N A N C I A L S T A T E M E N T S
|
|
73
|
Notes to Financial Statements (continued)
the value of securities
purchased may fluctuate prior to settlement, a Fund may be required to pay more at settlement than the security is worth. In addition, a Fund is not entitled to any of the interest earned prior to settlement. When purchasing a security on a delayed
delivery basis, a Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations. In the event of default by the counterparty, a Funds maximum amount of loss is the unrealized appreciation of
unsettled when-issued transactions.
Municipal Bonds Transferred to TOB Trusts: Certain Funds leverage their assets through the use of
TOB Trust transactions. The funds transfer municipal bonds into a special purpose trust (a TOB Trust). A TOB Trust issues two classes of beneficial interests: short-term floating rate interests (TOB Trust
Certificates), which are sold to third party investors, and residual inverse floating rate interests (TOB Residuals), which are issued to the participating funds that contributed the municipal bonds to the TOB Trust. The TOB Trust
Certificates have interest rates that reset weekly and their holders have the option to tender such certificates to the TOB Trust for redemption at par and any accrued interest at each reset date. The TOB Residuals held by a fund provide the fund
with the right to cause the holders of a proportional share of the TOB Trust Certificates to tender their certificates to the TOB Trust at par plus accrued interest. The funds may withdraw a corresponding share of the municipal bonds from the TOB
Trust. Other funds managed by the investment adviser may also contribute municipal bonds to a TOB Trust into which a fund has contributed bonds. If multiple BlackRock-advised funds participate in the same TOB Trust, the economic rights and
obligations under the TOB Residuals will be shared among the funds ratably in proportion to their participation in the TOB Trust.
TOB Trusts are
supported by a liquidity facility provided by a third party bank or other financial institution (the Liquidity Provider) that allows the holders of the TOB Trust Certificates to tender their certificates in exchange for payment of par
plus accrued interest on any business day. The tendered TOB Trust Certificates are remarketed by a Remarketing Agent. In the event of a failed remarketing, the TOB Trust may draw upon a loan from the Liquidity Provider to purchase the tendered TOB
Trust Certificates. Any loans made by the Liquidity Provider will be secured by the purchased TOB Trust Certificates held by the TOB Trust and will be subject to an increased interest rate based on number of days the loan is outstanding.
The TOB Trust may be collapsed without the consent of a fund, upon the occurrence of a termination event as defined in the TOB Trust agreement. Upon the
occurrence of a termination event, a TOB Trust would be liquidated with the proceeds applied first to any accrued fees owed to the trustee of the TOB Trust, the Remarketing Agent and the Liquidity Provider. Upon certain termination events, TOB Trust
Certificates holders will be paid before the TOB Residuals holders (i.e., the Funds) whereas in other termination events, TOB Trust Certificates holders and TOB Residuals holders will be paid pro rata.
While a funds investment policies and restrictions expressly permit investments in inverse floating rate securities, such as TOB Residuals, they
restrict the ability of a fund to borrow money for purposes of making investments. MUA and MVT management believes that a Funds restrictions on borrowings do not apply to the Funds TOB Trust transactions. Each funds transfer of the
municipal bonds to a TOB Trust is considered a secured borrowing for financial reporting purposes. The cash received by the TOB Trust from the sale of the TOB Trust Certificates, less certain transaction expenses, is paid to a fund. A fund typically
invests the cash received in additional municipal bonds.
Accounting for TOB Trusts: The municipal bonds deposited into a TOB Trust are
presented in a funds Schedule of Investments and the TOB Trust Certificates are shown in Other Liabilities in the Statements of Assets and Liabilities. Any loans drawn by the TOB Trust pursuant to the liquidity facility to purchase tendered
TOB Trust Certificates are shown as Loan for TOB Trust Certificates. The carrying amount of a funds payable to the holder of the TOB Trust Certificates, as reported in the Statements of Assets and Liabilities as TOB Trust Certificates,
approximates its fair value.
Interest income, including amortization and accretion of premiums and discounts, from the underlying municipal bonds is
recorded by a fund on an accrual basis. Interest expense incurred on the TOB Trust transaction and other expenses related to remarketing, administration, trustee, liquidity and other services to a TOB Trust are shown as interest expense, fees and
amortization of offering costs in the Statements of Operations. Fees paid upon creation of the TOB Trust are recorded as debt issuance costs and are amortized to interest expense, fees and amortization of offering costs in the Statements of
Operations to the expected maturity of the TOB Trust. In connection with the restructurings of the TOB Trusts to non-bank sponsored TOB Trusts, a fund incurred non-recurring, legal and restructuring fees, which are recorded as interest expense, fees
and amortization of offering costs in the Statements of Operations. Amounts recorded within interest expense, fees and amortization of offering costs in the Statements of Operations are:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name
|
|
Interest Expense
|
|
|
Liquidity Fees
|
|
|
Other Expenses
|
|
|
Total
|
|
MUA
|
|
$
|
107,926
|
|
|
$
|
294,278
|
|
|
$
|
102,074
|
|
|
$
|
504,278
|
|
MHD
|
|
|
107,779
|
|
|
|
309,290
|
|
|
|
106,515
|
|
|
|
523,584
|
|
MUI
|
|
|
132,973
|
|
|
|
398,601
|
|
|
|
109,319
|
|
|
|
640,893
|
|
MVT
|
|
|
91,668
|
|
|
|
231,021
|
|
|
|
78,793
|
|
|
|
401,482
|
|
For the year ended April 30, 2021, the following table is a summary of each Funds TOB Trusts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name
|
|
|
Underlying
Municipal Bonds
Transferred to
TOB Trusts
|
(a)
|
|
|
Liability for
TOB Trust
Certificates
|
(b)
|
|
|
Range of
Interest Rates
on TOB Trust
Certificates at
Period End
|
|
|
|
Average
TOB Trust
Certificates
Outstanding
|
|
|
|
Daily Weighted
Average Rate
of Interest and
Other Expenses
on TOB Trusts
|
|
MUA
|
|
$
|
113,106,929
|
|
|
$
|
68,781,335
|
|
|
|
0.07% 0.24
|
%
|
|
$
|
69,680,223
|
|
|
|
0.72
|
%
|
MHD
|
|
|
375,630,927
|
|
|
|
213,103,519
|
|
|
|
0.07 0.36
|
|
|
|
76,462,485
|
|
|
|
0.68
|
|
MUI
|
|
|
160,127,405
|
|
|
|
93,068,875
|
|
|
|
0.06 0.21
|
|
|
|
91,658,976
|
|
|
|
0.70
|
|
|
|
|
74
|
|
2 0 2 1
B L A C K R O C K A N N U A L R E P O R T
T O S H A R E H O L D E R S
|
Notes to Financial Statements (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name
|
|
|
Underlying
Municipal Bonds
Transferred to
TOB Trusts
|
(a)
|
|
|
Liability for
TOB Trust
Certificates
|
(b)
|
|
|
Range of
Interest Rates
on TOB Trust
Certificates at
Period End
|
|
|
|
Average
TOB Trust
Certificates
Outstanding
|
|
|
|
Daily Weighted
Average Rate
of Interest and
Other Expenses
on TOB Trusts
|
|
MVT
|
|
$
|
99,183,830
|
|
|
$
|
57,997,363
|
|
|
|
0.07% 0.32%
|
|
|
$
|
57,587,209
|
|
|
|
0.69
|
%
|
|
(a)
|
The municipal bonds transferred to a TOB Trust are generally high grade municipal bonds. In certain cases, when
municipal bonds transferred are lower grade municipal bonds, the TOB Trust transaction may include a credit enhancement feature that provides for the timely payment of principal and interest on the bonds to the TOB Trust by a credit enhancement
provider in the event of default of the municipal bond. The TOB Trust would be responsible for the payment of the credit enhancement fee and the funds, as TOB Residuals holders, would be responsible for reimbursement of any payments of principal and
interest made by the credit enhancement provider. The maximum potential amounts owed by the funds, for such reimbursements, as applicable, are included in the maximum potential amounts disclosed for recourse TOB Trusts in the Schedules of
Investments.
|
|
|
(b)
|
TOB Trusts may be structured on a non-recourse or recourse basis. When a Fund invests in TOB Trusts on a non-recourse
basis, the Liquidity Provider may be required to make a payment under the liquidity facility to allow the TOB Trust to repurchase TOB Trust Certificates. The Liquidity Provider will be reimbursed from the liquidation of bonds held in the TOB Trust.
If a fund invests in a TOB Trust on a recourse basis, a fund enters into a reimbursement agreement with the Liquidity Provider where a fund is required to reimburse the Liquidity Provider for any shortfall between the amount paid by the Liquidity
Provider and proceeds received from liquidation of municipal bonds held in the TOB Trust (the Liquidation Shortfall). As a result, if a fund invests in a recourse TOB Trust, a fund will bear the risk of loss with respect to any
Liquidation Shortfall. If multiple funds participate in any such TOB Trust, these losses will be shared ratably, including the maximum potential amounts owed by a fund at April 30, 2021, in proportion to their participation in the TOB Trust.
The recourse TOB Trusts are identified in the Schedules of Investments including the maximum potential amounts owed by a fund at April 30, 2021.
|
|
For the year ended April 30, 2021, the following table is a summary of each Funds Loan for TOB Trust
Certificates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name
|
|
Loans
Outstanding
at Period End
|
|
|
Range of
Interest Rates
on Loans at
Period End
|
|
|
Average
Loans
Outstanding
|
|
|
Daily Weighted
Average Rate
of Interest and
Other Expenses
on Loans
|
|
MUA
|
|
$
|
|
|
|
|
|
%
|
|
$
|
125,822
|
|
|
|
0.71
|
%
|
MHD
|
|
|
|
|
|
|
|
|
|
|
85,137
|
|
|
|
0.71
|
|
MVT
|
|
|
|
|
|
|
|
|
|
|
117,534
|
|
|
|
0.71
|
|
5.
|
DERIVATIVE FINANCIAL INSTRUMENTS
|
The Funds engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Funds and/or to manage their
exposure to certain risks such as credit risk, equity risk, interest rate risk, foreign currency exchange rate risk, commodity price risk or other risks (e.g., inflation risk). Derivative financial instruments categorized by risk exposure are
included in the Schedules of Investments. These contracts may be transacted on an exchange or over-the-counter (OTC).
Futures
Contracts: Futures contracts are purchased or sold to gain exposure to, or manage exposure to, changes in interest rates (interest rate risk) and changes in the value of equity securities (equity risk) or foreign currencies (foreign currency
exchange rate risk).
Futures contracts are exchange-traded agreements between the Funds and a counterparty to buy or sell a specific quantity of an
underlying instrument at a specified price and on a specified date. Depending on the terms of a contract, it is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the
settlement date. Upon entering into a futures contract, the Funds are required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contracts size and risk profile. The initial
margin deposit must then be maintained at an established level over the life of the contract. Amounts pledged, which are considered restricted, are included in cash pledged for futures contracts in the Statements of Assets and Liabilities.
Securities deposited as initial margin are designated in the Schedules of Investments and cash deposited, if any, are shown as cash pledged for futures
contracts in the Statements of Assets and Liabilities. Pursuant to the contract, the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (variation margin).
Variation margin is recorded as unrealized appreciation (depreciation) and, if any, shown as variation margin receivable (or payable) on futures contracts in the Statements of Assets and Liabilities. When the contract is closed, a realized gain or
loss is recorded in the Statements of Operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. The use of futures contracts involves the risk of an
imperfect correlation in the movements in the price of futures contracts and interest rates, foreign currency exchange rates or underlying assets.
6.
|
INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
|
Investment Advisory: Each Fund entered into an Investment Advisory Agreement with the Manager, the Funds investment adviser and an indirect,
wholly-owned subsidiary of BlackRock, Inc. (BlackRock), to provide investment advisory and administrative services. The Manager is responsible for the management of each Funds portfolio and provides the personnel, facilities,
equipment and certain other services necessary to the operations of each Fund.
For such services, each Fund, except MUI, pays the Manager a monthly
fee at an annual rate equal to the following percentages of the average daily value of each Funds net assets:
|
|
|
|
|
Fund Name
|
|
Investment
Advisory Fees
|
|
MUA
|
|
|
0.55
|
%
|
MHD
|
|
|
0.55
|
|
|
|
|
N O T E S T O
F I N A N C I A L S T A T E M E N T S
|
|
75
|
Notes to Financial Statements (continued)
|
|
|
|
|
Fund Name
|
|
Investment
Advisory Fees
|
|
MVT
|
|
|
0.50
|
%
|
For such services, MUI pays the Manager a monthly fee of 0.55% of (i) the average daily value of MUIs net
assets and (ii) the proceeds of any outstanding debt securities and borrowings used for leverage.
For purposes of calculating these fees,
net assets mean the total assets of the Fund minus the sum of its accrued liabilities (which does not include liabilities represented by TOB Trusts and the liquidation preference of any outstanding preferred shares). It is understood
that the liquidation preference of any outstanding preferred stock (other than accumulated dividends) and TOB Trusts is not considered a liability in determining a Funds NAV.
Distribution Fees: MUA has entered into a Distribution Agreement with BlackRock Investments, LLC (BRIL), an affiliate of the Manager,
to provide for distribution of MUA common shares on a reasonable best efforts basis through an equity shelf offering (a Shelf Offering) (the Distribution Agreement). Pursuant to the Distribution Agreement, BRIL will receive
commissions with respect to sales of common shares at a commission rate of 1.00% of the gross proceeds of the sale of MUAs common shares and a portion of such commission is re-allowed to broker-dealers engaged by BRIL. The commissions retained
by BRIL during the period ended April 30, 2021 amounted to $36,124.
Waivers: With respect to each Fund, the Manager contractually agreed
to waive its investment advisory fees by the amount of investment advisory fees each Fund pays to the Manager indirectly through its investment in affiliated money market funds (the affiliated money market fund waiver) through
June 30, 2022. The contractual agreement may be terminated upon 90 days notice by a majority of the Independent Directors, or by a vote of a majority of the outstanding voting securities of a Fund. These amounts are included in fees
waived and/or reimbursed by the Manager in the Statements of Operations. For the year ended April 30, 2021, the amounts waived were as follows:
|
|
|
|
|
Fund Name
|
|
Amounts Waived
|
|
MUA
|
|
$
|
2,700
|
|
MHD
|
|
|
4,035
|
|
MUI
|
|
|
2,799
|
|
MVT
|
|
|
3,949
|
|
The Manager contractually agreed to waive its investment advisory fee with respect to any portion of each Funds
assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee through June 30, 2022. The agreement can be renewed for annual periods thereafter, and may be
terminated on 90 days notice, each subject to approval by a majority of the Funds Independent Directors. For the year ended April 30, 2021, there were no fees waived by the Manager pursuant to this arrangement.
With respect to MHD, effective March 8, 2021, the Manager contractually agreed to waive a portion of its investment advisory fees equal to the annual
rate of 0.01% of the average daily value of net assets through June 30, 2022. The contractual agreement may be terminated upon 90 days notice by a majority of the Independent Directors, or by a vote of a majority of the outstanding voting
securities of the Fund. This amount is included in fees waived and/or reimbursed by the Manager in the Statements of Operations. For the year ended April 30, 2021, the amounts waived was $21,865.
Directors and Officers: Certain directors and/or officers of the Funds are directors and/or officers of BlackRock or its affiliates. The Funds
reimburse the Manager for a portion of the compensation paid to the Funds Chief Compliance Officer, which is included in Directors and Officer in the Statements of Operations.
For the year ended April 30, 2021, purchases and sales of investments, excluding short-term investments, were as follows:
|
|
|
|
|
|
|
|
|
Fund Name
|
|
Purchases
|
|
|
Sales
|
|
MUA
|
|
$
|
126,968,877
|
|
|
$
|
108,921,418
|
|
MHD
|
|
|
76,794,609
|
|
|
|
67,973,044
|
|
MUI
|
|
|
124,296,363
|
|
|
|
122,295,472
|
|
MVT
|
|
|
78,834,292
|
|
|
|
66,256,079
|
|
8.
|
INCOME TAX INFORMATION
|
It is each Funds policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment
companies, and to distribute substantially all of its taxable income to its shareholders. Therefore, no U.S. federal income tax provision is required.
Each Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on
each Funds U.S. federal tax returns generally remains open for a period of three fiscal years after they are filed. The statutes of limitations on each Funds state and local tax returns may remain open for an additional year depending
upon the jurisdiction.
Management has analyzed tax laws and regulations and their application to the Funds as of April 30, 2021, inclusive of
the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds financial statements.
|
|
|
76
|
|
2 0 2 1
B L A C K R O C K A N N U A L R E P O R T
T O S H A R E H O L D E R S
|
Notes to Financial Statements (continued)
U.S. GAAP requires that
certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or NAVs per share. As of period end, the following permanent differences
attributable to non-deductible expenses were reclassified to the following accounts:
|
|
|
|
|
|
|
|
|
Fund Name
|
|
Paid-in Capital
|
|
|
Accumulated
Earnings (Loss)
|
|
MUA
|
|
$
|
(46,500
|
)
|
|
$
|
46,500
|
|
MHD
|
|
|
(129,458
|
)
|
|
|
129,458
|
|
The tax character of distributions paid was as follows:
|
|
|
|
|
|
|
|
|
Fund Name
|
|
Year Ended
04/30/21
|
|
|
Year Ended
04/30/20
|
|
|
|
|
MUA
|
|
|
|
|
|
|
|
|
Tax-exempt income(a)
|
|
$
|
23,078,942
|
|
|
$
|
22,874,474
|
|
Ordinary income(b)
|
|
|
320,432
|
|
|
|
11,097
|
|
Long-term capital gains(c)
|
|
|
|
|
|
|
767,947
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
23,399,374
|
|
|
$
|
23,653,518
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MHD
|
|
|
|
|
|
|
|
|
Tax-exempt income(a)
|
|
$
|
13,947,656
|
|
|
$
|
12,535,210
|
|
Ordinary income(b)
|
|
|
15,907
|
|
|
|
8,171
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,963,563
|
|
|
$
|
12,543,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MUI
|
|
|
|
|
|
|
|
|
Tax-exempt income(a)
|
|
$
|
27,173,482
|
|
|
$
|
26,692,456
|
|
Ordinary income(b)
|
|
|
647
|
|
|
|
7,088
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
27,174,129
|
|
|
$
|
26,699,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MVT
|
|
|
|
|
|
|
|
|
Tax-exempt income(a)
|
|
$
|
16,096,972
|
|
|
$
|
17,424,641
|
|
Ordinary income(b)
|
|
|
2,894
|
|
|
|
33,500
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
16,099,866
|
|
|
$
|
17,458,141
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
The Funds designate these amounts paid during the fiscal year ended April 30, 2021, as exempt-interest dividends.
|
|
|
(b)
|
Ordinary income consists primarily of taxable income recognized from market discount. Additionally, all ordinary income
distributions are comprised of interest related dividends for non-U.S. residents and are eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations.
|
|
|
(c)
|
The Fund designate this amount paid during the fiscal year ended April 30, 2021 as 20% rate long-term capital gain
dividends.
|
|
As of period end, the tax components of accumulated earnings (loss) were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name
|
|
|
Undistributed
Tax-Exempt Income
|
|
|
|
Undistributed
Ordinary Income
|
|
|
|
Undistributed
Long-Term
Capital Gains
|
|
|
|
Non-Expiring
Capital Loss
Carryforwards
|
(a)
|
|
|
Net Unrealized
Gains (Losses)
|
(b)
|
|
|
Total
|
|
MUA
|
|
$
|
|
|
|
$
|
27,052
|
|
|
$
|
2,427,831
|
|
|
$
|
|
|
|
$
|
51,087,234
|
|
|
$
|
53,542,117
|
|
MHD
|
|
|
2,510,679
|
|
|
|
|
|
|
|
47,830
|
|
|
|
(27,296,188
|
)
|
|
|
139,808,622
|
|
|
|
115,070,943
|
|
MUI
|
|
|
3,267,289
|
|
|
|
|
|
|
|
|
|
|
|
(5,533,868
|
)
|
|
|
75,845,323
|
|
|
|
73,578,744
|
|
MVT
|
|
|
786,989
|
|
|
|
2,870
|
|
|
|
|
|
|
|
(5,269,494
|
)
|
|
|
47,422,464
|
|
|
|
42,942,829
|
|
|
(a)
|
Subject to limitation, amounts available to offset future realized capital gains.
|
|
|
(b)
|
The differences between book-basis and tax-basis net unrealized gains were attributable primarily to the tax deferral
of losses on wash sales and straddles, amortization and accretion methods of premiums and discounts on fixed income securities, the accrual of income on securities in default, the treatment of residual interests in tender option bond trusts and the
deferral of compensation to Directors.
|
|
During the year ended April 30, 2021, the Funds listed below utilized the following amounts of their
respective capital loss carryforward:
|
|
|
|
|
Fund Name
|
|
Amounts
|
|
MHD
|
|
$
|
285,008
|
|
MUI
|
|
|
521,855
|
|
MVT
|
|
|
409,798
|
|
As of April 30, 2021, gross unrealized appreciation and depreciation based on cost of investments (including short
positions and derivatives, if any) for U.S. federal income tax purposes were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name
|
|
Tax Cost
|
|
|
Gross Unrealized
Appreciation
|
|
|
Gross Unrealized
Depreciation
|
|
|
Net Unrealized
Appreciation
(Depreciation)
|
|
MUA
|
|
$
|
493,436,736
|
|
|
$
|
58,421,369
|
|
|
$
|
(6,921,250
|
)
|
|
$
|
51,500,119
|
|
MHD
|
|
|
1,117,033,931
|
|
|
|
140,518,271
|
|
|
|
(647,376
|
)
|
|
|
139,870,895
|
|
|
|
|
N O T E S T O
F I N A N C I A L S T A T E M E N T S
|
|
77
|
Notes to Financial Statements (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name
|
|
Tax Cost
|
|
|
Gross Unrealized
Appreciation
|
|
|
Gross Unrealized
Depreciation
|
|
|
Net Unrealized
Appreciation
(Depreciation)
|
|
MUI
|
|
$
|
815,963,407
|
|
|
$
|
76,969,089
|
|
|
$
|
(736,102
|
)
|
|
$
|
76,232,987
|
|
MVT
|
|
|
420,126,773
|
|
|
|
47,731,157
|
|
|
|
(282,582
|
)
|
|
|
47,448,575
|
|
In the normal course of business, the Funds invest in securities or other instruments and may enter into certain transactions, and such activities subject
each Fund to various risks, including among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including,
without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or
(iv) currency, interest rate and price fluctuations. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on
the Funds and their investments. MUAs prospectus provides details of the risks to which the Fund is subject.
The Funds may hold a significant
amount of bonds subject to calls by the issuers at defined dates and prices. When bonds are called by issuers and the Funds reinvest the proceeds received, such investments may be in securities with lower yields than the bonds originally held, and
correspondingly, could adversely impact the yield and total return performance of a Fund.
A Fund structures and sponsors the TOB Trusts
in which it holds TOB Residuals and has certain duties and responsibilities, which may give rise to certain additional risks including, but not limited to, compliance, securities law and operational risks.
Should short-term interest rates rise, the Funds investments in the TOB Trusts may adversely affect the Funds net investment income and
dividends to Common Shareholders. Also, fluctuations in the market value of municipal bonds deposited into the TOB Trust may adversely affect the Funds NAVs per share.
The U.S. Securities and Exchange Commission (SEC) and various federal banking and housing agencies have adopted credit risk retention rules
for securitizations (the Risk Retention Rules). The Risk Retention Rules would require the sponsor of a TOB Trust to retain at least 5% of the credit risk of the underlying assets supporting the TOB Trusts municipal bonds. The Risk
Retention Rules may adversely affect the Funds ability to engage in TOB Trust transactions or increase the costs of such transactions in certain circumstances.
TOB Trusts constitute an important component of the municipal bond market. Any modifications or changes to rules governing TOB Trusts may adversely impact
the municipal market and the Funds, including through reduced demand for and liquidity of municipal bonds and increased financing costs for municipal issuers. The ultimate impact of any potential modifications on the TOB Trust market and the overall
municipal market is not yet certain.
Each Fund 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. A Fund may not be able to readily dispose of such investments at prices that approximate those at which a Fund could sell such investments
if they were more widely traded and, as a result of such illiquidity, a Fund may have to sell other investments or engage in borrowing transactions if necessary to raise funds to meet its obligations. Limited liquidity can also affect the market
price of investments, thereby adversely affecting a Funds net asset value and ability to make dividend distributions. 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.
Market Risk: Each Fund may be exposed to prepayment risk, which is
the risk that borrowers may exercise their option to prepay principal earlier than scheduled during periods of declining interest rates, which would force each Fund to reinvest in lower yielding securities. Each Fund may also be exposed to
reinvestment risk, which is the risk that income from each Funds portfolio will decline if each Fund invests the proceeds from matured, traded or called fixed-income securities at market interest rates that are below each Fund portfolios
current earnings rate.
Municipal securities are subject to the risk that litigation, legislation or other political events, local business or
economic conditions, credit rating downgrades, or the bankruptcy of the issuer could have a significant effect on an issuers ability to make payments of principal and/or interest or otherwise affect the value of such securities. Municipal
securities can be significantly affected by political or economic changes, including changes made in the law after issuance of the securities, as well as uncertainties in the municipal market related to, taxation, legislative changes or the rights
of municipal security holders, including in connection with an issuer insolvency. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the discontinuance of the tax
benefits supporting the project or assets or the inability to collect revenues for the project or from the assets. Municipal securities may be less liquid than taxable bonds, and there may be less publicly available information on the financial
condition of municipal security issuers than for issuers of other securities.
An outbreak of respiratory disease caused by a novel coronavirus has
developed into a global pandemic and has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this pandemic, and other global health crises 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. This pandemic may result in substantial market volatility and may
adversely impact the prices and liquidity of a funds investments. The duration of this pandemic and its effects cannot be determined with certainty.
Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on
its commitments related to unsettled or open transactions, including making timely interest and/or principal payments or otherwise honoring its obligations. The Funds manage counterparty credit risk by entering into transactions only with
counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and
counterparty credit risks, consist principally of financial instruments and
|
|
|
78
|
|
2 0 2 1
B L A C K R O C K A N N U A L R E P O R T
T O S H A R E H O L D E R S
|
Notes to Financial Statements (continued)
receivables due from
counterparties. The extent of the Funds exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statements of Assets and Liabilities, less any collateral held
by the Funds.
A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the
market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.
With
exchange-traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller
of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a
default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing brokers customer accounts. While clearing brokers are
required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all
its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing brokers customers, potentially resulting in losses to the Funds.
Concentration Risk: A diversified portfolio, where this is appropriate and consistent with a funds objectives, minimizes the risk that a
price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Funds portfolio are disclosed in its Schedule of Investments.
Certain Funds invest a significant portion of their assets in securities within a single or limited number of market sectors. When a Fund concentrates its
investments in this manner, it assumes the risk that economic, regulatory, political and social conditions affecting such sectors may have a significant impact on the Fund and could affect the income from, or the value or liquidity of, the
Funds portfolio. Investment percentages in specific sectors are presented in the Schedules of Investments.
Certain Funds invest a significant
portion of their assets in high yield securities. High yield securities that are rated below investment-grade (commonly referred to as junk bonds) or are unrated may be deemed speculative, involve greater levels of risk than higher-rated
securities of similar maturity and are more likely to default. High yield securities may be issued by less creditworthy issuers, and issuers of high yield securities may be unable to meet their interest or principal payment obligations. High yield
securities are subject to extreme price fluctuations, may be less liquid than higher rated fixed-income securities, even under normal economic conditions, and frequently have redemption features.
Certain Funds invest a significant portion of their assets in fixed-income securities and/or use derivatives tied to the fixed-income markets. Changes in
market interest rates or economic conditions may affect the value and/or liquidity of such investments. Interest rate risk is the risk that prices of bonds and other fixed-income securities will increase as interest rates fall and decrease as
interest rates rise. The Funds may be subject to a greater risk of rising interest rates due to the current period of historically low rates.
LIBOR Transition Risk: The United Kingdoms Financial Conduct Authority announced a phase out of the London Interbank Offered Rate
(LIBOR). Although many LIBOR rates will be phased out by the end of 2021, a selection of widely used USD LIBOR rates will continue to be published through June 2023 in order to assist with the transition. The Funds may be exposed to
financial instruments tied to LIBOR to determine payment obligations, financing terms, hedging strategies or investment value. The transition process away from LIBOR might lead to increased volatility and illiquidity in markets for, and reduce the
effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. The ultimate effect of the LIBOR transition process on the Funds is uncertain.
10.
|
CAPITAL SHARE TRANSACTIONS
|
Each Fund is authorized to issue 200 million shares, all of which were initially classified as Common Shares. The par value for each Funds
Common Shares is $0.10. The par value for each of MHDs, MUIs and MVTs Preferred Shares outstanding is $0.10. The Board is authorized, however, to reclassify any unissued Common Shares to Preferred Shares without the approval of
Common Shareholders.
Common Shares
For
the periods shown, shares issued and outstanding increased by the following amounts as a result of dividend reinvestment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Fund Name
|
|
04/30/21
|
|
|
04/30/20
|
|
|
|
|
MUA
|
|
|
62,648
|
|
|
|
78,450
|
|
MHD
|
|
|
|
|
|
|
18,512
|
|
MVT
|
|
|
|
|
|
|
15,552
|
|
For the year ended April 30, 2021 and the year ended April 30, 2020, shares issued and outstanding remained
constant for MUI.
For the year ended April 30, 2021, Common Shares issued and outstanding increased by 39,147,091 as a result of the
reorganization of MHD.
For the year ended April 30, 2021, Common Shares issued and outstanding decreased by 25 as a result of a redemption of
fractional shares from the reorganization of MHD.
The Funds participate in an open market share repurchase program (the Repurchase
Program). From December 1, 2019 through November 30, 2020, each Fund may repurchase up to 5% of its outstanding common shares under the Repurchase Program, based on common shares outstanding as of the close of business on
November 30, 2019, subject to certain conditions. From December 1, 2020 through November 30, 2021, each Fund may repurchase up to 5% of its outstanding common shares under the Repurchase Program, based on common shares outstanding as
of the close of business on November 30, 2020, subject to certain conditions. There is no assurance that the Funds will purchase shares in any particular amounts. For the year ended April 30, 2021, the Funds did not repurchase any shares.
|
|
|
N O T E S T O
F I N A N C I A L S T A T E M E N T S
|
|
79
|
Notes to Financial Statements (continued)
MUA has filed a prospectus
with the SEC allowing it to issue an additional 5,500,000 Common Shares through an equity shelf program (a Shelf Offering). Under the Shelf Offering, MUA, subject to market conditions, may raise additional equity capital from time to
time in varying amounts and utilizing various offering methods at a net price at or above the Funds NAV per Common Share (calculated within 48 hours of pricing). As of period end, 4,273,464 Common Shares remain available for issuance under the
Shelf Offering. During the period ended, MUA issued 1,226,536 shares under the Shelf Offering. See Additional Information - Shelf Offering Program for additional information about the Shelf Offering.
Initial costs incurred by MUA in connection with its shelf offering are recorded as Deferred offering cost in the Statement of Assets and
Liabilities. As shares are sold, a portion of the costs attributable to the shares sold will be charged against paid-in-capital. Any remaining deferred charges at the end of the shelf offering period will be charged to expense. Any subsequent costs
incurred to keep the filing active will be charged to expense as incurred.
Preferred Shares
A Funds Preferred Shares rank prior to its Common Shares as to the payment of dividends by the Fund and distribution of assets upon dissolution or
liquidation of the Fund. The 1940 Act prohibits the declaration of any dividend on Common Shares or the repurchase of Common Shares if the Fund fails to maintain asset coverage of at least 200% of the liquidation preference of the Funds
outstanding Preferred Shares. In addition, pursuant to the Preferred Shares governing instruments, a Fund is restricted from declaring and paying dividends on classes of shares ranking junior to or on parity with its Preferred Shares or
repurchasing such shares if the Fund fails to declare and pay dividends on the Preferred Shares, redeem any Preferred Shares required to be redeemed under the Preferred Shares governing instruments or comply with the basic maintenance amount
requirement of the ratings agencies rating the Preferred Shares.
Holders of Preferred Shares have voting rights equal to the voting rights of holders
of Common Shares (one vote per share) and vote together with holders of Common Shares (one vote per share) as a single class on certain matters. Holders of Preferred Shares, voting as a separate class, are also entitled to (i) elect two members
of the Board, (ii) elect the full Board if dividends on the Preferred Shares are not paid for a period of two years and (iii) a separate class vote to amend the Preferred Share governing documents. In addition, the 1940 Act requires the
approval of the holders of a majority of any outstanding Preferred Shares, voting as a separate class, to (a) adopt any plan of reorganization that would adversely affect the Preferred Shares, (b) change a Funds sub-classification as
a closed-end investment company or change its fundamental investment restrictions or (c) change its business so as to cease to be an investment company.
VMTP Shares
MHD, MUI and MVT (for purposes of
this section, each a VMTP Fund), have issued Series W-7 VMTP Shares, $100,000 liquidation preference per share, in one or more privately negotiated offerings to qualified institutional buyers as defined pursuant to Rule 144A under the
Securities Act. The VMTP Shares are subject to certain restrictions on transfer, and a VMTP Fund may also be required to register its VMTP Shares for sale under the Securities Act under certain circumstances. As of period end, the VMTP Shares
outstanding and assigned long-term ratings were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name
|
|
Issue
Date
|
|
|
Shares
Issued
|
|
|
Aggregate
Principal
|
|
|
Term
Redemption
Date
|
|
|
Moodys
Rating
|
|
|
Fitch
Rating
|
|
MHD
|
|
|
12/16/11
|
|
|
|
837
|
|
|
$
|
83,700,000
|
|
|
|
07/02/23
|
|
|
|
Aa1
|
|
|
|
AA
|
|
|
|
|
03/08/21
|
|
|
|
2,641
|
|
|
|
264,100,000
|
|
|
|
07/02/23
|
|
|
|
Aa1
|
|
|
|
AA
|
|
MUI
|
|
|
12/07/12
|
|
|
|
2,871
|
|
|
|
287,100,000
|
|
|
|
07/02/23
|
|
|
|
Aa2
|
|
|
|
AA
|
|
MVT
|
|
|
12/16/11
|
|
|
|
1,400
|
|
|
|
140,000,000
|
|
|
|
07/02/23
|
|
|
|
Aa1
|
|
|
|
AA
|
|
Redemption Terms: Each VMTP Fund is required to redeem its VMTP Shares on the term redemption date, unless earlier
redeemed or repurchased or unless extended. There is no assurance that a term will be extended further or that any VMTP Shares will be replaced with any other preferred shares or other form of leverage upon the redemption or repurchase of the VMTP
Shares. Six months prior to the term redemption date, a VMTP Fund is required to begin to segregate liquid assets with its custodian to fund the redemption. In addition, a VMTP Fund is required to redeem certain of its outstanding VMTP Shares if it
fails to comply with certain asset coverage, basic maintenance amount or leverage requirements.
Subject to certain conditions, VMTP Shares may be
redeemed, in whole or in part, at any time at the option of the VMTP Fund. With respect to MHD, MUI and MVT, the redemption price per VMTP Share is equal to the liquidation preference per share plus any outstanding unpaid dividends and applicable
redemption premium. If MHD, MUI and MVT redeems the VMTP Shares prior to the term redemption date and the VMTP Shares have long-term ratings above A1/A+ or its equivalent by the ratings agencies then rating the VMTP Shares, then such redemption
may be subject to a prescribed redemption premium (up to 2% of the liquidation preference) payable to the holder of the VMTP Shares based on the time remaining until the term redemption date, subject to certain exceptions for redemptions that are
required to comply with minimum asset coverage requirements.
Dividends: Dividends on the VMTP Shares are declared daily and payable monthly at
a variable rate set weekly at a fixed rate spread to the Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Index or to a percentage of the one-month LIBOR rate, as set forth in the VMTP Shares governing
instrument. The fixed spread is determined based on the long-term preferred share rating assigned to the VMTP Shares by the ratings agencies then rating the VMTP Shares.
The dividend rate on VMTP Shares is subject to a step-up spread if the VMTP Fund fails to comply with certain provisions, including, among other things,
the timely payment of dividends, redemptions or gross-up payments, and complying with certain asset coverage and leverage requirements.
For the year ended
April 30, 2021, the average annualized dividend rates for the VMTP Shares were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MHD
|
|
|
MUI
|
|
|
MVT
|
|
Dividend rates
|
|
|
1.03
|
%
|
|
|
1.03
|
%
|
|
|
1.03
|
%
|
|
|
|
80
|
|
2 0 2 1
B L A C K R O C K A N N U A L R E P O R T
T O S H A R E H O L D E R S
|
Notes to Financial Statements (continued)
For the year ended April 30, 2021,
VMTP Shares issued and outstanding remained constant for MUI and MVT.
For the year ended April 30, 2021, VMTP Shares issued and outstanding for
MHD increased by 2,641 due to the reorganizations of BAF, BBK, MUH and MUS with and into MHD.
Offering Costs: The Funds incurred costs in
connection with the issuance of VMTP Shares, which were recorded as a direct deduction from the carrying value of the related debt liability and will be amortized over the life of the VMTP Shares. Amortization of these costs is included in interest
expense, fees and amortization of offering costs in the Statements of Operations.
Financial Reporting: The VMTP Shares are considered debt of
the issuer; therefore, the liquidation preference, which approximates fair value of the VMTP Shares, is recorded as a liability in the Statements of Assets and Liabilities net of deferred offering costs. Unpaid dividends are included in interest
expense and fees payable in the Statements of Assets and Liabilities, and the dividends accrued and paid on the VMTP Shares are included as a component of interest expense, fees and amortization of offering costs in the Statements of Operations. The
VMTP Shares are treated as equity for tax purposes. Dividends paid to holders of the VMTP Shares are generally classified as tax-exempt income for tax-reporting purposes. Dividends and amortization of deferred offering costs on VMTP Shares are
included in interest expense, fees and amortization of offering costs in the Statements of Operations:
|
|
|
|
|
|
|
|
|
Fund Name
|
|
Dividends Accrued
|
|
|
Deferred Offering
Costs Amortization
|
|
MHD
|
|
$
|
1,264,698
|
|
|
$
|
|
|
MUI
|
|
|
2,951,741
|
|
|
|
|
|
MVT
|
|
|
1,439,372
|
|
|
|
|
|
Managements evaluation of the impact of all subsequent events on the Funds financial statements was completed through the date the financial
statements were issued and the following items were noted:
The Funds declared and paid or will pay distributions to Common Shareholders as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name
|
|
Declaration
Date
|
|
|
Record
Date
|
|
|
Payable/
Paid Date
|
|
|
Dividend Per
Common Share
|
|
MUA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/03/21
|
|
|
|
05/14/21
|
|
|
|
06/01/21
|
|
|
$
|
0.052500
|
|
|
|
|
06/01/21
|
|
|
|
06/15/21
|
|
|
|
07/01/21
|
|
|
|
0.052500
|
|
MHD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/03/21
|
|
|
|
05/14/21
|
|
|
|
06/01/21
|
|
|
|
0.060500
|
|
|
|
|
06/01/21
|
|
|
|
06/15/21
|
|
|
|
07/01/21
|
|
|
|
0.060500
|
|
MUI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/03/21
|
|
|
|
05/14/21
|
|
|
|
06/01/21
|
|
|
|
0.054000
|
|
|
|
|
06/01/21
|
|
|
|
06/15/21
|
|
|
|
07/01/21
|
|
|
|
0.054000
|
|
MVT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/03/21
|
|
|
|
05/14/21
|
|
|
|
06/01/21
|
|
|
|
0.058500
|
|
|
|
|
06/01/21
|
|
|
|
06/15/21
|
|
|
|
07/01/21
|
|
|
|
0.058500
|
|
The Funds declared and paid or will pay distributions to Preferred Shareholders as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Shares(a)
|
|
Fund Name
|
|
Shares
|
|
|
Series
|
|
|
Declared
|
|
MHD
|
|
|
VMTP
|
|
|
|
W-7
|
|
|
$
|
302,855
|
|
MUI
|
|
|
VMTP
|
|
|
|
W-7
|
|
|
|
249,999
|
|
MVT
|
|
|
VMTP
|
|
|
|
W-7
|
|
|
|
121,908
|
|
|
(a)
|
Dividends declared for period May 1, 2021 to May 31, 2021.
|
|
|
|
|
N O T E S T O
F I N A N C I A L S T A T E M E N T S
|
|
81
|
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of BlackRock MuniAssets Fund, Inc.,
BlackRock MuniHoldings Fund, Inc., BlackRock Muni Intermediate Duration Fund, Inc., and BlackRock MuniVest Fund II, Inc.:
Opinion on the Financial
Statements and Financial Highlights
We have audited the accompanying statements of assets and liabilities of BlackRock MuniAssets Fund, Inc.,
BlackRock MuniHoldings Fund, Inc., BlackRock Muni Intermediate Duration Fund, Inc., and BlackRock MuniVest Fund II, Inc. (the Funds), including the schedules of investments, as of April 30, 2021, the related statements of operations
and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion,
the financial statements and financial highlights present fairly, in all material respects, the financial position of the Funds as of April 30, 2021, and the results of their operations and their cash flows for the year then ended, the changes
in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial
statements and financial highlights are the responsibility of the Funds management. Our responsibility is to express an opinion on the Funds financial statements and financial highlights based on our audits. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we
engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Funds internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of April 30, 2021, by correspondence with the custodian and brokers; when replies were not received from brokers, we
performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
Deloitte & Touche LLP
Boston, Massachusetts
June 22, 2021
We have served as the auditor of one or more BlackRock investment companies since 1992.
|
|
|
82
|
|
2 0 2 1
B L A C K R O C K A N N U A L R E P O R T
T O S H A R E H O L D E R S
|
Important Tax Information (unaudited)
For the fiscal period ended March 8,
2021, the Funds designate the following amounts paid as exempt-interest dividends:
|
|
|
|
|
Fund Name
|
|
Exempt-Interest
Dividends
|
|
BAF
|
|
$
|
4,049,535
|
|
BBK
|
|
|
5,906,341
|
|
MUH
|
|
|
8,514,740
|
|
MUS
|
|
|
8,799,988
|
|
|
|
|
I M P O R T A N T T A X I N F
O R M A T I O N
|
|
83
|
Investment Objectives, Policies and Risks
Recent Changes
The following information is a summary of certain changes since April 30, 2020. This information may not reflect all of the changes that have
occurred since you purchased the relevant Fund.
During each Funds most recent fiscal year, there were no material changes in the
Funds investment objectives or policies that have not been approved by shareholders or in the principal risk factors associated with investment in the Fund.
Investment Objectives and Policies
BlackRock MuniAssets
Fund, Inc. (MUA)
The Funds investment objective is to provide high current income exempt from Federal income taxes by investing primarily
in a portfolio of medium to lower grade or unrated municipal obligations the interest on which, in the opinion of bond counsel to the issuer, is exempt from Federal income taxes. The Fund seeks to achieve its investment objective by investing at
least 80% of its assets, except during temporary defensive periods, in a portfolio of obligations issued by or on behalf of states, territories and possessions of the United States and their political subdivisions, agencies or instrumentalities
paying interest which, in the opinion of bond counsel to the issuer, is exempt from Federal income taxes (Municipal Bonds). The Fund at all times, except during temporary defensive periods, will maintain at least 65% of its assets in
Municipal Bonds which are rated in any one of the medium and lower rating categories of a nationally recognized statistical rating organization or are unrated. These ratings are currently Baa (Moodys Investor Service Inc.
(Moodys)) or BBB (S&P Global Ratings (S&P) and Fitch Ratings, Inc. (Fitch)) or lower. These are fundamental policies of the Fund and, therefore, may not be changed without the approval of a majority
of the Funds outstanding voting shares as defined in the Investment Company Act of 1940, as amended (the 1940 Act). The Fund may invest directly in such securities or synthetically through the use of derivatives. The Fund is not
intended as, and you should not construe it to be, a complete investment program. There can be no assurance that the Funds investment objective will be achieved or that the Funds investment program will be successful.
The Fund has the authority to invest as much as 35% of its total assets in Municipal Bonds in the higher rating categories of nationally recognized
statistical rating organizations (ratings of A or higher by Moodys, S&P or Fitch or comparable unrated securities). In addition, the Fund reserves the right to temporarily invest more than 20% of its total assets in short-term municipal
securities, or short-term taxable money market securities (including commercial paper, certificates of deposit and repurchase agreements) for defensive purposes when, in the opinion of BlackRock Advisors, LLC (the Manager), prevailing
market or financial conditions warrant. The Fund does not invest more than 25% of its total assets (taken at market value) in Municipal Bonds whose issuers are located in the same state. Total assets of the Fund means the Funds net
assets plus the amount of any borrowings for investment purposes.
Ordinarily, the Fund does not intend to realize significant interest income that is
subject to Federal income taxes. However, the Fund may invest all or a portion of its assets in certain tax-exempt securities classified as private activity bonds (PABs) (in general, bonds that benefit non-governmental
entities) that may subject certain investors in the Fund to a Federal alternative minimum tax.
The Fund may invest in securities not issued by or on
behalf of a state or territory or by an agency or instrumentality thereof, if the Fund receives an opinion of counsel to the issuer that such securities pay interest that is excludable from gross income for federal income tax purposes
(Non-Municipal Tax-Exempt Securities), which could include trust certificates, partnership interests or other instruments evidencing interest in one or more long-term Municipal Bonds. Non-Municipal Tax-Exempt Securities also may include
securities issued by other investment companies that invest in Municipal Bonds, to the extent such investments are permitted by the Funds investment restrictions and applicable law.
The Fund ordinarily does not intend to realize significant investment income not exempt from federal income taxes. From time to time, the Fund may realize
taxable capital gains.
Investments in lower rated Municipal Bonds generally provide a higher yield and are less affected by interest rate
fluctuations than higher rated tax-exempt securities of similar maturity but are subject to greater overall market risk and are also subject to a greater degree of risk with respect to the ability of the issuer to meet its principal and interest
obligations.
The Fund seeks to reduce risk through investing in multiple issuers, credit analysis and monitoring of current developments regarding
the obligor and trends in both the economy and financial markets. The Manager will use various means to research the stability and/or potential for improvement of various municipal issuers in connection with the proposed purchase of their securities
by the Fund. Evaluation of each Municipal Bond may include the analysis of financial performance, debt structure, economic factors and the administrative structure of the issuer. Additionally, the priority of liens and the overall structure of the
particular issue may be factors that will determine suitability for purchase. Further investigation may be performed and may include, among other things, discussions with project management, corporate officers and industry experts as well as site
inspections, area analysis, and project and financial projection analysis. All purchases and sales also may be subject to the review of market data, economic projections and the performance of the financial markets. Certain economic indicators also
may be monitored. Additionally, the Advisor will vary the average maturity of the Funds portfolio securities based upon its assessment of economic and market conditions
Leverage: The Fund currently does not intend to borrow money or issue debt securities or preferred shares. The Fund is, however, permitted to
borrow money or issue debt securities in an amount up to 33 1/3% of its Managed Assets (50% of its net assets), and issue preferred shares in an amount up to 50% of its Managed Assets (100% of its net assets). Managed Assets means the
total assets of the Fund (including any assets attributable to money borrowed for investment purposes) minus the sum of the Funds accrued liabilities (other than money borrowed for investment purposes). The Fund reserves the right to borrow
money from banks or other financial institutions, or issue debt securities or preferred shares, in the future if it believes that market conditions would be conducive to the successful implementation of a leveraging strategy through borrowing money
or issuing debt securities or preferred shares. Any such leveraging will not be fully achieved until the proceeds resulting from the use of leverage have been invested in accordance with the Funds investment objective and policies.
|
|
|
84
|
|
2 0 2 1
B L A C K R O C K A N N U A L R E P O R T
T O S H A R E H O L D E R S
|
Investment Objectives, Policies and Risks (continued)
The Funds Board of
Directors (the Board) has authorized the Fund to use economic leverage up to 25% of its total assets. The Fund currently intends to use economic leverage approximately equal to 15% of its total assets at the time the leverage is
implemented, but may use economic leverage up to 25% of its total assets under the leverage policy set by the Board without further Board or shareholder approval. The Board could in the future authorize the Fund to use additional leverage up to the
maximum amount permitted under the 1940 Act or change the 25% threshold at which Board approval is required to increase leverage, in each case without further shareholder approval.
The Fund currently leverages its assets through the use of TOB Residuals, which are derivative interests in municipal bonds.
The Fund may enter into derivative transactions that have economic leverage embedded in them.
The Fund may also borrow money as a temporary measure for extraordinary or emergency purposes, including the payment of dividends and the settlement of
securities transactions which otherwise might require untimely dispositions of Fund securities.
BlackRock MuniHoldings Fund, Inc. (MHD)
The Funds investment objective is to provide stockholders with current income exempt from federal income taxes. There can be no assurance that the
Funds investment objective will be realized. The Funds investment policies provide that it seeks to achieve its investment objective by investing, as a fundamental policy at least 80% of an aggregate of the Funds net assets
(including proceeds from the issuance of any preferred stock) and the proceeds of any borrowings for investment purposes, in a portfolio of municipal obligations issued by or on behalf of states, territories and possessions of the United States and
their political subdivisions, agencies or instrumentalities, each of which pays interest that, in the opinion of bond counsel to the issuer, is excludable from gross income for federal income tax purposes (except that the interest may be includable
in taxable income for purposes of the federal alternative minimum tax).
The Funds investment objective and its policy of investing at least 80%
of an aggregate of the Funds net assets (including proceeds from the issuance of any preferred stock) and the proceeds of any borrowings for investment purposes, in municipal bonds are fundamental policies that may not be changed without the
approval of the holders of a majority of the outstanding common stock and the outstanding preferred stock, including the Funds outstanding Series W-7 Variable Rate Muni Term Preferred Shares (VMTP Shares), voting together as a
single class, and of the holders of a majority of the outstanding preferred stock, including the VMTP Shares, voting as a separate class. A majority of the outstanding means (1) 67% or more of the shares present at a meeting, if the holders of
more than 50% of the outstanding shares are present or represented by proxy, or (2) more than 50% of the outstanding shares, whichever is less.
The Funds investment policies provide that it will invest at least 75% of its total assets in a portfolio of municipal bonds that are commonly
referred to as investment grade securities, which are obligations rated at the time of purchase within the four highest quality ratings as determined by either Moodys Investor Service Inc. (Moodys) (currently Aaa,
Aa, A and Baa), S&P Global Ratings (S&P) (currently AAA, AA, A and BBB) or Fitch Ratings (Fitch) (currently AAA, AA, A and BBB). In the case of short-term notes, the investment grade rating categories are SP-1+
through SP-2 for S&P, MIG-1 through MIG-3 for Moodys and F-1+ through F-3 for Fitch. In the case of tax exempt commercial paper, the investment grade rating categories are A-1+ through A-3 for S&P, Prime-1 through Prime-3 for
Moodys and F-1+ through F-3 for Fitch. Obligations ranked in the lowest investment grade rating category (BBB, SP-2 and A-3 for S&P; Baa, MIG-3 and Prime-3 for Moodys and BBB and F-3 for Fitch), while considered investment
grade, may have certain speculative characteristics. There may be sub-categories or gradations indicating relative standing within the rating categories set forth above. In assessing the quality of municipal bonds with respect to the foregoing
requirements, BlackRock Advisors, LLC (the Manager) takes into account the nature of any letters of credit or similar credit enhancement to which particular municipal bonds are entitled and the creditworthiness of the financial
institution that provided such credit enhancement. If unrated, such securities will possess creditworthiness comparable, in the opinion of the Manager, to other obligations in which the Fund may invest.
The Fund may invest up to 25% of its total assets in municipal bonds that are rated below Baa by Moodys or below BBB by S&P or Fitch or, if
unrated, are considered by the Manager to possess similar credit characteristics. Bonds of below investment grade quality are regarded as having predominantly speculative characteristics with respect to the issuers capacity to pay interest and
repay principal. Such securities, sometimes referred to as high yield or junk bonds, are predominantly speculative with respect to the capacity to pay interest and repay principal in accordance with the terms of the security
and generally involve a greater volatility of price than securities in higher rating categories. Below investment grade securities and comparable unrated securities involve substantial risk of loss, are considered speculative with respect to the
issuers ability to pay interest and any required redemption or principal payments and are susceptible to default or decline in market value due to adverse economic and business developments.
The foregoing credit quality policies apply only at the time a security is purchased, and the Fund is not required to dispose of a security if a rating
agency downgrades its assessment of the credit characteristics of a particular issue. In determining whether to retain or sell a security that a rating agency has downgraded, the Manager may consider such factors as the Managers assessment of
the credit quality of the issuer of the security, the price at which the security could be sold and the rating, if any, assigned to the security by other rating agencies. In the event that the Fund disposes of a portfolio security subsequent to its
being downgraded, the Fund may experience a greater risk of loss than if such security had been sold prior to such downgrade.
The Fund may also
purchase municipal bonds that are additionally secured by insurance, bank credit agreements or escrow accounts. The credit quality of companies which provide these credit enhancements will affect the value of those securities. Although the insurance
feature reduces certain financial risks, the premiums for insurance and the higher market price paid for insured obligations may reduce the Funds income. The insurance feature does not guarantee the market value of the insured obligations or
the net asset value of the common stock. The Fund may purchase insured bonds and may purchase insurance for bonds in its portfolio.
The Fund may
invest in certain tax exempt securities classified as private activity bonds (or industrial development bonds, under pre-1986 law) (in general, bonds that benefit non-governmental entities) that may subject certain investors in the Fund
to an alternative minimum tax. The percentage of the Funds total assets invested in private activity bonds will vary from time to time. The Fund has not established any limit on the percentage of its portfolio that may be invested in municipal
bonds subject to the federal alternative minimum tax provisions of federal tax law, and the Fund expects that a portion of the income it produces will be includable in alternative minimum taxable income.
The Fund also may not invest more than 25% of its total assets (taken at market value at the time of each investment) in municipal bonds whose issuers are
located in the same state.
|
|
|
I N V E S T M E N T
O B J E C T I V E S , P O L I C I E S A N D
R I S K S
|
|
85
|
Investment Objectives, Policies and Risks (continued)
The average maturity of the
Funds portfolio securities varies from time to time based upon an assessment of economic and market conditions by the Manager. The Funds portfolio at any given time may include both long-term, intermediate-term and short-term municipal
bonds.
The Funds stated expectation is that it will invest in municipal bonds that, in the Managers opinion, are underrated or
undervalued. Underrated municipal bonds are those whose ratings do not, in the opinion of the Manager, reflect their true higher creditworthiness. Undervalued municipal bonds are bonds that, in the opinion of the Manager, are worth more than the
value assigned to them in the marketplace. The Manager may at times believe that bonds associated with a particular municipal market sector (for example, but not limited to electric utilities), or issued by a particular municipal issuer, are
undervalued. The Manager may purchase those bonds for the Funds portfolio because they represent a market sector or issuer that the Manager considers undervalued, even if the value of those particular bonds appears to be consistent with the
value of similar bonds. Municipal bonds of particular types (for example, but not limited to hospital bonds, industrial revenue bonds or bonds issued by a particular municipal issuer) may be undervalued because there is a temporary excess of supply
in that market sector, or because of a general decline in the market price of municipal bonds of the market sector for reasons that do not apply to the particular municipal bonds that are considered undervalued. The Funds investment in
underrated or undervalued municipal bonds will be based on the Managers belief that their yield is higher than that available on bonds bearing equivalent levels of interest rate risk, credit risk and other forms of risk, and that their prices
will ultimately rise, relative to the market, to reflect their true value. Any capital appreciation realized by the Fund will generally result in capital gain distributions subject to federal capital gains taxation.
The Fund ordinarily does not intend to realize significant investment income not exempt from federal income tax. From time to time, the Fund may realize
taxable capital gains.
Federal tax legislation has limited the types and volume of bonds the interest on which qualifies for a federal income tax
exemption. As a result, this legislation and legislation that may be enacted in the future may affect the availability of municipal bonds for investment by the Fund.
Leverage: The Fund may utilize leverage to seek to enhance the yield and net asset value of its common shares. However, this objective cannot be
achieved in all interest rate environments. The Fund currently leverages its assets through the use of VMTP Shares and residual interest municipal tender option bonds (TOB Residuals), which are derivative interests in municipal bonds.
The TOB Residuals in which the Fund will invest pay interest or income that, in the opinion of counsel to the issuer of such TOB Residuals, is exempt from regular U.S. federal income tax.
The Fund currently does not intend to borrow money or issue debt securities. Although it has no present intention to do so, the Fund reserves the right to
borrow money from banks or other financial institutions, or issue debt securities, in the future if it believes that market conditions would be conducive to the successful implementation of a leveraging strategy through borrowing money or issuing
debt securities or preferred stock.
The Fund may enter into derivative transactions that have economic leverage embedded in them.
The Fund may also borrow money as a temporary measure for extraordinary or emergency purposes, including the payment of dividends and the settlement of
securities transactions which otherwise might require untimely dispositions of Fund securities.
BlackRock Muni Intermediate Duration Fund, Inc.
(MUI)
The Funds investment objective is to provide common stockholders with high current income exempt from federal income taxes. The Fund
seeks to achieve its investment objective by investing at least 80% of its net assets (including assets acquired from the sale of preferred stock) plus the amount of any borrowings for investment purposes, in a portfolio of municipal obligations
issued by or on behalf of states, territories and possessions of the United States and their political subdivisions, agencies or instrumentalities, each of which pays interest that, in the opinion of bond counsel to the issuer, is excludable from
gross income for federal income tax purposes (except that the interest may be includable in taxable income for purposes of the federal alternative minimum tax) (Municipal Bonds). The Funds investment objective and its policy of
investing at least 80% of its net assets (including assets acquired from the sale of preferred stock) plus the amount of any borrowings for investment purposes, in Municipal Bonds are fundamental policies that may not be changed without the approval
of a majority of the outstanding common stock and the outstanding preferred stock, including the Funds outstanding Series W-7 Variable Rate Muni Term Preferred Shares (VMTP Shares), voting together as a single class, and of the
holders of a majority of the outstanding preferred stock, including the VMTP Shares, voting as a separate class. A majority of the outstanding means (1) 67% or more of the stock present at a meeting, if the holders of more than 50% of the
outstanding stock are present or represented by proxy, or (2) more than 50% of the outstanding stock, whichever is less.
There can be no assurance that the
Funds investment objective will be realized.
The Fund may invest in certain tax exempt securities classified as private activity
bonds (or industrial development bonds, under pre-1986 law) (PABs) (in general, bonds that benefit non-governmental entities) that may subject certain investors in the Fund to an alternative minimum tax. The percentage of the
Funds total assets invested in PABs will vary from time to time. The Fund has not established any limit on the percentage of its portfolio that may be invested in PABs. The Fund expects that a portion of the interest or income it produces will
be includable in alternative minimum taxable income.
Under normal market conditions, the Fund invests at least 75% of its total assets in a portfolio
of Municipal Bonds that are commonly referred to as investment grade securities, which are obligations rated at the time of purchase within the four highest quality ratings as determined by either Moodys Investor Service Inc.
(Moodys) (currently Aaa, Aa, A and Baa), S&P Global Ratings (S&P) (currently AAA, AA, A and BBB) or Fitch Ratings (Fitch) (currently AAA, AA, A and BBB). In the case of short-term notes, the
investment grade rating categories are SP-1+ through SP-2 for S&P, MIG-1 through MIG-3 for Moodys and F- 1+ through F-3 for Fitch. In the case of tax exempt commercial paper, the investment grade rating categories are A- 1+
through A-3 for S&P, Prime-1 through Prime-3 for Moodys and F-1+ through F-3 for Fitch. Obligations ranked in the lowest investment grade rating category (BBB, SP-2 and A-3 for S&P; Baa, MIG-3 and Prime-3 for Moodys and BBB
and F-3 for Fitch), while considered investment grade, may have certain speculative characteristics. There may be sub-categories or gradations indicating relative standing within the rating categories set forth above. In assessing the
quality of Municipal Bonds with respect to the foregoing requirements, the Manager takes into account the nature of any letters of credit or similar credit enhancement to which particular Municipal Bonds are entitled and the creditworthiness of the
financial institution that provided such credit enhancement. If unrated, such securities will possess creditworthiness comparable, in the opinion of the Manager, to other obligations in which the Fund may invest.
|
|
|
86
|
|
2 0 2 1
B L A C K R O C K A N N U A L R E P O R T
T O S H A R E H O L D E R S
|
Investment Objectives, Policies and Risks (continued)
The Fund may invest up to
25% of its total assets in Municipal Bonds that are rated below Baa by Moodys or below BBB by S&P or Fitch or, if unrated, are considered by the Manager to possess similar credit characteristics. Such securities, sometimes referred to as
high yield or junk bonds, are predominantly speculative with respect to the capacity to pay interest and repay principal in accordance with the terms of the security and generally involve a greater volatility of price than
securities in higher rating categories. The Fund does not intend to purchase Municipal Bonds that are in default or which the Manager believes will soon be in default. Below investment grade securities and comparable unrated securities involve
substantial risk of loss, are considered speculative with respect to the issuers ability to pay interest and any required redemption or principal payments and are susceptible to default or decline in market value due to adverse economic and
business developments.
The Fund may invest 25% or more of its total assets in tax exempt securities of issuers in the industries comprising the same
economic sector, such as hospitals or life care facilities and transportation-related issuers. However, the Fund will not invest 25% or more of its total assets in any one of the industries comprising an economic sector. In addition, a substantial
part of the Funds portfolio may be comprised of securities credit enhanced by banks, insurance companies or companies with similar characteristics. Emphasis on these sectors may subject the Fund to certain risks.
If a percentage restriction on investment policies is adhered to at the time a transaction is effected, later changes in percentage resulting from
changing values will not be considered a violation.
The value of bonds and other fixed income obligations may fall when interest rates rise and rise
when interest rates fall. In general, bonds and other fixed income obligations with longer maturities will be subject to greater volatility resulting from interest rate fluctuations than will similar obligations with shorter maturities. [Under
normal market conditions, the Fund maintains a dollar-weighted average portfolio duration of three to ten years.] Duration measures the sensitivity of a securitys price to changes in interest rates. Unlike final maturity, duration
takes account of all payments made over the life of the security. Typically, with a 1% change in interest rates, an investments value may be expected to move in the opposite direction approximately 1% for each year of its duration. The greater
a portfolios duration, the greater the change in the portfolios value in response to changes in interest rates. The Manager increases or reduces the Funds portfolio duration based on its interest rate outlook. When the Manager
expects interest rates to fall, it attempts to maintain a longer portfolio duration. When the Manager expects interest rates to increase, it attempts to shorten the portfolios duration. Generally, as is the case with any investment grade fixed
income obligations, Municipal Bonds with longer maturities tend to produce higher yields. Under normal market conditions, however, such yield-to-maturity increases tend to decline in the longer maturities (i.e., the slope of the yield curve
flattens). At the same time, due to their longer exposure to interest rate risk, prices of longer term obligations are subject to greater market fluctuations as a result of changes in interest rates. Based on the foregoing premises, the Manager
believes that the yield and price volatility characteristics of an intermediate duration portfolio generally offer an attractive trade-off between return and risk. There may be market conditions, however, where an intermediate duration portfolio may
be less attractive due to the fact that the Municipal Bond yield curve changes from time to time depending on supply and demand forces, monetary and tax policies and investor expectations. As a result, there may be situations where investments in
individual Municipal Bonds with longer durations may be more attractive than individual intermediate duration Municipal Bonds.
For temporary periods
or to provide liquidity, the Fund has the authority to invest as much as 20% of its total assets in tax exempt and taxable money market obligations with a maturity of one year or less (such short-term obligations being referred to herein as
Temporary Investments). In addition, the Fund reserves the right as a defensive measure to invest temporarily a greater portion of its assets in Temporary Investments, when, in the opinion of the Manager, prevailing market or financial
conditions warrant. Taxable money market obligations will yield taxable income.
The Fund also may invest in variable rate demand obligations
(VRDOs) and VRDOs in the form of participation interests (Participating VRDOs) in variable rate tax exempt obligations held by a financial institution. The Funds hedging strategies are not fundamental policies and may
be modified by the Funds Board of Directors (the Board) without the approval of the Funds stockholders. The Fund is also authorized to invest in indexed and inverse floating obligations for hedging purposes and to seek to
enhance return.
Certain Municipal Bonds may be entitled to the benefits of letters of credit or similar credit enhancements issued by financial
institutions. In such instances, the Board of Directors of the Fund and the Manager will take into account, in assessing the quality of such bonds, both the creditworthiness of the issuer of such bonds and the creditworthiness of the financial
institution that provides the credit enhancement.
The Fund may invest in securities not issued by or on behalf of a state or territory or by an
agency or instrumentality thereof, if the Fund receives an opinion of counsel to the issuer that such securities pay interest that is excludable from gross income for federal income tax purposes (Non-Municipal Tax Exempt Securities).
Non- Municipal Tax Exempt Securities could include trust certificates, partnership interests or other instruments evidencing interest in one or more long-term Municipal Bonds. Non-Municipal Tax Exempt Securities also may include securities issued by
other investment companies that invest in Municipal Bonds, to the extent such investments are permitted by the Funds investment restrictions and applicable law. Non-Municipal Tax Exempt Securities are subject to the same risks associated with
an investment in Municipal Bonds as well as many of the risks associated with investments in derivatives. While the Fund receives opinions of legal counsel to the effect that the income from the Non-Municipal Tax Exempt Securities in which the Fund
invests is excludable from gross income for federal income tax purposes to the same extent as the underlying Municipal Bonds, the Internal Revenue Service (IRS) has not issued a ruling on this subject. Were the IRS to issue an adverse
ruling or take an adverse position with respect to the taxation of these types of securities, there is a risk that the interest paid on such securities would be deemed taxable at the federal level.
The Fund ordinarily does not intend to realize significant investment income not exempt from federal income tax. From time to time, the Fund may realize
taxable capital gains. Interest received on certain otherwise tax exempt securities that are classified as private activity bonds (in general, bonds that benefit non-governmental entities) may be subject to a federal alternative minimum
tax. The percentage of the Funds total assets invested in private activity bonds will vary from time to time. Federal tax legislation has limited the types and volume of bonds the interest on which qualifies for a federal income
tax exemption. As a result, this legislation and legislation that may be enacted in the future may affect the availability of Municipal Bonds for investment by the Fund.
Leverage: The Fund may utilize leverage to seek to enhance the yield and net asset value of its common shares. However, this objective cannot be
achieved in all interest rate environments. The Fund currently leverages its assets through the use of VMTP Shares and residual interest municipal tender option bonds (TOB Residuals), which are derivative interests in municipal bonds.
The TOB Residuals in which the Fund will invest pay interest or income that, in the opinion of counsel to the issuer of such TOB Residuals, is exempt from regular U.S. federal income tax.
|
|
|
I N V E S T M E N T
O B J E C T I V E S , P O L I C I E S A N D
R I S K S
|
|
87
|
Investment Objectives, Policies and Risks (continued)
BlackRock MuniVest Fund
II, Inc. (MVT)
The Funds investment objective is to provide stockholders with as high a level of current income exempt from federal income
taxes as is consistent with its investment policies and prudent investment management. There can be no assurance that the Funds investment objective will be realized. The Funds investment policies provide that it seeks to achieve its
investment objective by investing, as a fundamental policy at least 80% of an aggregate of the Funds net assets (including proceeds from the issuance of any preferred stock) and the proceeds of any borrowings for investment purposes, in a
portfolio of municipal obligations issued by or on behalf of states, territories and possessions of the United States and their political subdivisions, agencies or instrumentalities, each of which pays interest that, in the opinion of bond counsel
to the issuer, is excludable from gross income for federal income tax purposes (except that the interest may be includable in taxable income for purposes of the federal alternative minimum tax) (Municipal Bonds).
The Funds investment objective and its policy of investing at least 80% of an aggregate of the Funds net assets (including proceeds from the
issuance of any preferred stock) and the proceeds of any borrowings for investment purposes, in Municipal Bonds are fundamental policies that may not be changed without the approval of the holders of a majority of the outstanding common shares and
the outstanding preferred shares, including the Funds outstanding Series W-7 Variable Rate Muni Term Preferred Shares (the VMTP Shares), voting together as a single class, and of the holders of a majority of the outstanding
preferred shares, including the VMTP Shares, voting as a separate class. A majority of the outstanding means (1) 67% or more of the shares present at a meeting, if the holders of more than 50% of the outstanding shares are present or
represented by proxy, or (2) more than 50% of the outstanding shares, whichever is less.
The Funds investment policies provide that under
normal market conditions, the Fund expects to invest at least 75% of its total assets in a portfolio of Municipal Bonds that are commonly referred to as investment grade securities, which are obligations rated at the time of purchase
within the four highest quality ratings as determined by either Moodys Investors Service, Inc. (Moodys) (currently Aaa, Aa, A and Baa), Standard & Poors (S&P) (currently AAA, AA, A and BBB) or
Fitch Ratings (Fitch) (currently AAA, AA, A and BBB). In the case of short term notes, the investment grade rating categories are SP-1+ through SP-2 for S&P, MIG-1 through MIG-3 for Moodys and F-1+ through F-3 for
Fitch. In the case of tax exempt commercial paper, the investment grade rating categories are A-1+ through A-3 for S&P, Prime-1 through Prime-3 for Moodys and F-1+ through F-3 for Fitch.
Obligations ranked in the lowest investment grade rating category (BBB, SP-2 and A-3 for S&P; Baa, MIG-3 and Prime-3 for Moodys and BBB and F-3
for Fitch), while considered investment grade, may have certain speculative characteristics. There may be sub-categories or gradations indicating relative standing within the rating categories set forth above. In assessing the quality of
Municipal Bonds with respect to the foregoing requirements, BlackRock Advisors, LLC (the Manager) takes into account the nature of any letters of credit or similar credit enhancement to which particular Municipal Bonds are entitled and
the creditworthiness of the financial institution that provided such credit enhancement. If unrated, such securities will possess creditworthiness comparable, in the opinion of the Manager, to other obligations in which the Fund may invest.
The Fund may invest up to 25% of its total assets in Municipal Bonds that are rated below Baa by Moodys or below BBB by S&P or Fitch or, if
unrated, are considered by the Manager to possess similar credit characteristics. Bonds of below investment grade quality are regarded as having predominantly speculative characteristics with respect to the issuers capacity to pay interest and
repay principal. Such securities, sometimes referred to as high yield or junk bonds, are predominantly speculative with respect to the capacity to pay interest and repay principal in accordance with the terms of the security
and generally involve a greater volatility of price than securities in higher rating categories. Below investment grade securities and comparable unrated securities involve substantial risk of loss, are considered speculative with respect to the
issuers ability to pay interest and any required redemption or principal payments and are susceptible to default or decline in market value due to adverse economic and business developments.
The foregoing credit quality policies apply only at the time a security is purchased, and the Fund is not required to dispose of a security if a rating
agency downgrades its assessment of the credit characteristics of a particular issue. In determining whether to retain or sell a security that a rating agency has downgraded, the Advisor may consider such factors as the Advisors assessment of
the credit quality of the issuer of the security, the price at which the security could be sold and the rating, if any, assigned to the security by other rating agencies. In the event that the Fund disposes of a portfolio security subsequent to its
being downgraded, the Fund may experience a greater risk of loss than if such security had been sold prior to such downgrade.
The Fund may also
purchase Municipal Bonds that are additionally secured by insurance, bank credit agreements or escrow accounts. The credit quality of companies which provide these credit enhancements will affect the value of those securities. Although the insurance
feature reduces certain financial risks, the premiums for insurance and the higher market price paid for insured obligations may reduce the Funds income. The insurance feature does not guarantee the market value of the insured obligations or
the net asset value of the common shares. The Fund may purchase insured bonds and may purchase insurance for bonds in its portfolio.
The Fund may
invest in certain tax exempt securities classified as private activity bonds (or industrial development bonds, under pre-1986 law) (PABs) (in general, bonds that benefit non-governmental entities) that may subject certain
investors in the Fund to an alternative minimum tax. The percentage of the Funds total assets invested in PABs will vary from time to time. The Fund has not established any limit on the percentage of its portfolio that may be invested in
Municipal Bonds subject to the federal alternative minimum tax provisions of federal tax law, and the Fund expects that a portion of the income it produces will be includable in alternative minimum taxable income.
The Fund also may not invest more than 25% of its total assets (taken at market value at the time of each investment) in Municipal Bonds whose issuers are
located in the same state.
The average maturity of the Funds portfolio securities varies from time to time based upon an assessment of economic
and market conditions by the Manager. The Funds portfolio at any given time may include both long-term, intermediate-term and short-term Municipal Bonds.
The Funds stated expectation is that it will invest in Municipal Bonds that, in the Advisors opinion, are underrated or undervalued.
Underrated Municipal Bonds are those whose ratings do not, in the opinion of the Advisors, reflect their true higher creditworthiness. Undervalued Municipal Bonds are bonds that, in the opinion of the Advisors, are worth more than the value assigned
to them in the marketplace. The Advisors may at times believe that bonds associated with a particular municipal market sector (for example, but not limited to electric utilities), or issued by a particular municipal issuer, are undervalued. The
Advisors may purchase those bonds for the Funds portfolio
|
|
|
88
|
|
2 0 2 1
B L A C K R O C K A N N U A L R E P O R T
T O S H A R E H O L D E R S
|
Investment Objectives, Policies and Risks (continued)
because they represent a
market sector or issuer that the Advisors considers undervalued, even if the value of those particular bonds appears to be consistent with the value of similar bonds. Municipal Bonds of particular types (for example, but not limited to hospital
bonds, industrial revenue bonds or bonds issued by a particular municipal issuer) may be undervalued because there is a temporary excess of supply in that market sector, or because of a general decline in the market price of Municipal Bonds of the
market sector for reasons that do not apply to the particular Municipal Bonds that are considered undervalued. The Funds investment in underrated or undervalued Municipal Bonds will be based on the Advisors belief that their yield is
higher than that available on bonds bearing equivalent levels of interest rate risk, credit risk and other forms of risk, and that their prices will ultimately rise, relative to the market, to reflect their true value. Any capital appreciation
realized by the Fund will generally result in capital gain distributions subject to federal capital gains taxation.
The Fund ordinarily does not
intend to realize significant investment income not exempt from federal income tax. From time to time, the Fund may realize taxable capital gains.
Federal tax legislation has limited the types and volume of bonds the interest on which qualifies for a federal income tax exemption. As a result, this
legislation and legislation that may be enacted in the future may affect the availability of Municipal Bonds for investment by the Fund.
Leverage:
The Fund may utilize leverage to seek to enhance the yield and net asset value of its common shares. However, this objective cannot be achieved in all interest rate environments. The Fund currently leverages its assets through the use of VMTP
Shares and residual interest municipal tender option bonds (TOB Residuals), which are derivative interests in municipal bonds. The TOB Residuals in which the Fund will invest pay interest or income that, in the opinion of counsel to the
issuer of such TOB Residuals, is exempt from regular U.S. federal income tax.
Risk Factors
This section contains a discussion of the general risks of investing in each Fund. The net asset value and market price of, and dividends paid on, the
common shares will fluctuate with and be affected by, among other things, the risks more fully described below. As with any fund, there can be no guarantee that a Fund will meet its investment objective or that the Funds performance will be
positive for any period of time. Each risk noted below is applicable to each Fund unless the specific Fund or Funds are noted in a parenthetical.
Investment and Market Discount Risk: An investment in the Funds common shares is subject to investment risk, including the possible loss of
the entire amount that you invest. As with any stock, the price of the Funds common shares will fluctuate with market conditions and other factors. If shares are sold, the price received may be more or less than the original investment. Common
shares are designed for long-term investors and the Fund should not be treated as a trading vehicle. Shares of closed-end management investment companies frequently trade at a discount from their net asset value. This risk is separate and distinct
from the risk that the Funds net asset value could decrease as a result of its investment activities. At any point in time an investment in the Funds common shares may be worth less than the original amount invested, even after taking
into account distributions paid by the Fund. During periods in which the Fund may use leverage, the Funds investment, market discount and certain other risks will be magnified.
Debt Securities Risk: Debt securities, such as bonds, involve interest rate risk, credit risk, extension risk, and prepayment risk, among other
things.
|
|
|
Interest Rate Risk The market value of bonds and other fixed-income securities changes in response to interest
rate changes and other factors. Interest rate risk is the risk that prices of bonds and other fixed-income securities will increase as interest rates fall and decrease as interest rates rise.
|
|
The Fund may be subject to a greater risk of rising interest rates due to the current period of historically low rates.
For example, if interest rates increase by 1%, assuming a current portfolio duration of ten years, and all other factors being equal, the value of the Funds investments would be expected to decrease by 10%. The magnitude of these fluctuations
in the market price of bonds and other fixed-income securities is generally greater for those securities with longer maturities. Fluctuations in the market price of the Funds investments will not affect interest income derived from instruments
already owned by the Fund, but will be reflected in the Funds net asset value. The Fund may lose money if short-term or long-term interest rates rise sharply in a manner not anticipated by Fund management.
|
|
Rates on certain floating rate debt securities typically reset only periodically, changes in prevailing interest rates
(and particularly sudden and significant changes) can be expected to cause some fluctuations in the net asset value of the Fund to the extent that it invests in floating rate debt securities.
|
|
These basic principles of bond prices also apply to U.S. Government securities. A security backed by the full
faith and credit of the U.S. Government is guaranteed only as to its stated interest rate and face value at maturity, not its current market price. Just like other fixed-income securities, government-guaranteed securities will fluctuate in
value when interest rates change.
|
|
A general rise in interest rates has the potential to cause investors to move out of fixed-income securities on a large
scale, which may increase redemptions from funds that hold large amounts of fixed-income securities. Heavy redemptions could cause the Fund to sell assets at inopportune times or at a loss or depressed value and could hurt the Funds
performance.
|
|
|
|
Credit Risk Credit risk refers to the possibility that the issuer of a debt security (i.e., the borrower) will not
be able to make payments of interest and principal when due. Changes in an issuers credit rating or the markets perception of an issuers creditworthiness may also affect the value of the Funds investment in that issuer. The
degree of credit risk depends on both the financial condition of the issuer and the terms of the obligation.
|
|
|
|
Extension Risk When interest rates rise, certain obligations will be paid off by the obligor more slowly than
anticipated, causing the value of these obligations to fall.
|
|
|
|
Prepayment Risk When interest rates fall, certain obligations will be paid off by the obligor more quickly than
originally anticipated, and the Fund may have to invest the proceeds in securities with lower yields.
|
|
|
|
I N V E S T M E N T
O B J E C T I V E S , P O L I C I E S A N D
R I S K S
|
|
89
|
Investment Objectives, Policies and Risks (continued)
Municipal Securities
Risks: Municipal securities risks include the ability of the issuer to repay the obligation, the relative lack of information about certain issuers of municipal securities, and the possibility of future legislative changes which could affect the
market for and value of municipal securities. These risks include:
|
|
|
General Obligation Bonds Risks Timely payments depend on the issuers credit quality, ability to raise tax
revenues and ability to maintain an adequate tax base.
|
|
|
|
Revenue Bonds Risks These payments depend on the money earned by the particular facility or class of facilities,
or the amount of revenues derived from another source.
|
|
|
|
Private Activity Bonds Risks Municipalities and other public authorities issue private activity bonds to finance
development of industrial facilities for use by a private enterprise. The private enterprise pays the principal and interest on the bond, and the issuer does not pledge its faith, credit and taxing power for repayment.
|
|
|
|
Moral Obligation Bonds Risks Moral obligation bonds are generally issued by special purpose public authorities of
a state or municipality. If the issuer is unable to meet its obligations, repayment of these bonds becomes a moral commitment, but not a legal obligation, of the state or municipality.
|
|
|
|
Municipal Notes Risks Municipal notes are shorter term municipal debt obligations. If there is a shortfall in the
anticipated proceeds, the notes may not be fully repaid and the Fund may lose money.
|
|
|
|
Municipal Lease Obligations Risks In a municipal lease obligation, the issuer agrees to make payments when due on
the lease obligation. Although the issuer does not pledge its unlimited taxing power for payment of the lease obligation, the lease obligation is secured by the leased property.
|
|
|
|
Tax-exempt Status Risk The Fund and its investment manager will rely on the opinion of issuers bond counsel
and, in the case of certain derivative securities, sponsors counsel, on the tax-exempt status of interest on municipal bonds and payments under derivative securities. Neither the Fund nor its investment manager will independently review the
bases for those tax opinions, which may ultimately be determined to be incorrect and subject the Fund and its shareholders to substantial tax liabilities.
|
Taxability Risk: The Fund intends to minimize the payment of taxable income to shareholders by investing in tax-exempt or municipal securities in
reliance at the time of purchase on an opinion of bond counsel to the issuer that the interest paid on those securities will be excludable from gross income for U.S. federal income tax purposes. Such securities, however, may be determined to pay, or
have paid, taxable income subsequent to the Funds acquisition of the securities. In that event, the Internal Revenue Service may demand that the Fund pay U.S. federal income taxes on the affected interest income, and, if the Fund agrees to do
so, the Funds yield could be adversely affected. In addition, the treatment of dividends previously paid or to be paid by the Fund as exempt interest dividends could be adversely affected, subjecting the Funds shareholders to
increased U.S. federal income tax liabilities. Federal tax legislation may limit the types and volume of bonds the interest on which qualifies for a federal income tax-exemption. As a result, current legislation and legislation that may be enacted
in the future may affect the availability of municipal bonds for investment by the Fund. In addition, future laws, regulations, rulings or court decisions may cause interest on municipal securities to be subject, directly or indirectly, to U.S.
federal income taxation or interest on state municipal securities to be subject to state or local income taxation, or the value of state municipal securities to be subject to state or local intangible personal property tax, or may otherwise prevent
the Fund from realizing the full current benefit of the tax-exempt status of such securities. Any such change could also affect the market price of such securities, and thus the value of an investment in the Fund.
Insurance Risk: Insurance guarantees that interest payments on a municipal security will be made on time and that the principal will be repaid when
the security matures. However, insurance does not protect against losses caused by declines in a municipal securitys value. The Fund cannot be certain that any insurance company will make the payments it guarantees. If a municipal
securitys insurer fails to fulfill its obligations or loses its credit rating, the value of the security could drop.
Junk Bonds Risk:
Although junk bonds generally pay higher rates of interest than investment grade bonds, junk bonds are high risk investments that are considered speculative and may cause income and principal losses for the Fund.
Variable Rate Demand Obligations Risk (MUI): Variable rate demand obligations are floating rate securities that combine an interest in a long term
municipal bond with a right to demand payment before maturity from a bank or other financial institution. If the bank or financial institution is unable to pay, the Fund may lose money.
Repurchase Agreements and Purchase and Sale Contracts Risk (MUA): If the other party to a repurchase agreement or purchase and sale contract
defaults on its obligation under the agreement, the Fund may suffer delays and incur costs or lose money in exercising its rights under the agreement. If the seller fails to repurchase the security in either situation and the market value of the
security declines, the Fund may lose money.
Sector Risk (MUI): Sector risk is the risk that the Funds concentration in the securities of
companies in a specific market sector or industry will cause the Fund to be more exposed to the price movements of companies in and developments affecting that sector than a more broadly diversified fund. To the extent that the Fund concentrates its
investments in a particular sector, there is the risk that the Fund will perform poorly during a downturn in that sector.
Leverage Risk: The
Fund also utilizes leverage for investment purposes by entering into derivative instruments with leverage embedded in them, such as TOB Residuals. With respect to MHD, MUI and MVT, the Fund uses leverage for investment purposes through the issuance
of VMTP Shares. The Funds use of leverage may increase or decrease from time to time in its discretion and the Fund may, in the future, determine not to use leverage.
The use of leverage creates an opportunity for increased common share net investment income dividends, but also creates risks for the holders of common
shares. The Fund cannot assure you that the use of leverage will result in a higher yield on the common shares. Any leveraging strategy the Fund employs may not be successful.
Leverage involves risks and special considerations for common shareholders, including:
|
|
|
the likelihood of greater volatility of net asset value, market price and dividend rate of the common shares than a
comparable portfolio without leverage;
|
|
|
|
90
|
|
2 0 2 1
B L A C K R O C K A N N U A L R E P O R T
T O S H A R E H O L D E R S
|
Investment Objectives, Policies and Risks (continued)
|
|
|
the risk that fluctuations in interest rates or dividend rates on any leverage that the Fund must pay will reduce the
return to the common shareholders;
|
|
|
|
the effect of leverage in a declining market, which is likely to cause a greater decline in the net asset value of the
common shares than if the Fund were not leveraged, which may result in a greater decline in the market price of the common shares;
|
|
|
|
leverage may increase operating costs, which may reduce total return.
|
Any decline in the net asset value of the Funds investments will be borne entirely by the holders of common shares. Therefore, if the market value
of the Funds portfolio declines, leverage will result in a greater decrease in net asset value to the holders of common shares than if the Fund were not leveraged. This greater net asset value decrease will also tend to cause a greater decline
in the market price for the common shares.
Derivatives Risk: The Funds use of derivatives may increase its costs, reduce the Funds
returns and/or increase volatility. Derivatives involve significant risks, including:
|
|
|
Volatility Risk Volatility is defined as the characteristic of a security, an index or a market to fluctuate
significantly in price within a short time period. A risk of the Funds use of derivatives is that the fluctuations in their values may not correlate with the overall securities markets.
|
|
|
|
Counterparty Risk Derivatives are also subject to counterparty risk, which is the risk that the other party in the
transaction will not fulfill its contractual obligation.
|
|
|
|
Market and Illiquidity Risk The possible lack of a liquid secondary market for derivatives and the resulting
inability of the Fund to sell or otherwise close a derivatives position could expose the Fund to losses and could make derivatives more difficult for the Fund to value accurately.
|
|
|
|
Valuation Risk Valuation may be more difficult in times of market turmoil since many investors and market makers
may be reluctant to purchase complex instruments or quote prices for them.
|
|
|
|
Hedging Risk Hedges are sometimes subject to imperfect matching between the derivative and the underlying
security, and there can be no assurance that the Funds hedging transactions will be effective. The use of hedging may result in certain adverse tax consequences.
|
|
|
|
Tax Risk Certain aspects of the tax treatment of derivative instruments, including swap agreements and
commodity-linked derivative instruments, are currently unclear and may be affected by changes in legislation, regulations or other legally binding authority. Such treatment may be less favorable than that given to a direct investment in an
underlying asset and may adversely affect the timing, character and amount of income the Fund realizes from its investments.
|
|
|
|
Regulatory Risk Derivative contracts, including, without limitation, swaps, currency forwards and non-deliverable
forwards, are subject to regulation under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) in the United States and under comparable regimes in Europe, Asia and other non-U.S. jurisdictions. Under the
Dodd-Frank Act, certain derivatives are subject to margin requirements and swap dealers are required to collect margin from the Fund with respect to such derivatives. Specifically, regulations are now in effect that require swap dealers to post and
collect variation margin (comprised of specified liquid instruments and subject to a required haircut) in connection with trading of over-the-counter (OTC) swaps with the Fund. Shares of investment companies (other than certain money
market funds) may not be posted as collateral under these regulations. Requirements for posting of initial margin in connection with OTC swaps will be phased-in through at least 2021. In addition, 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 contracts, including many derivatives contracts, terms that delay or restrict the rights of counterparties, such as
the Fund, to terminate such contracts, foreclose upon collateral, exercise other default rights or restrict transfers of credit support in the event that the counterparty and/or its affiliates are subject to certain types of resolution or insolvency
proceedings. The implementation of these requirements with respect to derivatives, as well as regulations under the Dodd-Frank Act regarding clearing, mandatory trading and margining of other derivatives, may increase the costs and risks to the Fund
of trading in these instruments and, as a result, may affect returns to investors in the Fund.
|
|
|
|
On October 28, 2020, the Securities and Exchange Commission adopted new regulations governing the use of derivatives
by registered investment companies (Rule 18f-4). The Fund will be required to implement and comply with Rule 18f-4 by August 19, 2022. Once implemented, Rule 18f-4 will impose limits on the amount of derivatives a fund can enter
into, eliminate the asset segregation framework currently used by funds to comply with Section 18 of the Investment Company Act of 1940, as amended, treat derivatives as senior securities and require funds whose use of derivatives is more than
a limited specified exposure amount to establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager.
|
|
|
|
Tender Option Bonds Risk: The Funds participation in tender option bond transactions may reduce the
Funds returns and/or increase volatility. Investments in tender option bond transactions expose the Fund to counterparty risk and leverage risk. An investment in a tender option bond transaction typically will involve greater risk than an
investment in a municipal fixed rate security, including the risk of loss of principal. Distributions on TOB Residuals will bear an inverse relationship to short-term municipal security interest rates. Distributions on TOB Residuals paid to the Fund
will be reduced or, in the extreme, eliminated as short-term municipal interest rates rise and will increase when short-term municipal interest rates fall. TOB Residuals generally will underperform the market for fixed rate municipal securities in a
rising interest rate environment. The Fund may invest in TOB Trusts on either a non-recourse or recourse basis. If the Fund invests in a TOB Trust on a recourse basis, it could suffer losses in excess of the value of its TOB Residuals.
|
|
|
|
Illiquid Investments Risk: The Fund 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 Fund may not be able to readily dispose of such investments at prices that approximate those at which the Fund
could sell such investments if they were more widely traded and, as a result of such illiquidity, the Fund 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 Funds net asset value 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
|
|
|
|
I N V E S T M E N T
O B J E C T I V E S , P O L I C I E S A N D
R I S K S
|
|
91
|
Investment Objectives, Policies and Risks (continued)
|
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.
|
Market Risk and Selection Risk: Market risk is the
risk that one or more markets in which the Fund invests will go down in value, including the possibility that the markets will go down sharply and unpredictably. The value of a security or other asset may decline due to changes in general market
conditions, economic trends or events that are not specifically related to the issuer of the security or other asset, or factors that affect a particular issuer or issuers, exchange, country, group of countries, region, market, industry, group of
industries, sector or asset class. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues like pandemics or epidemics, recessions, or other events could have a significant
impact on the Fund and its investments. Selection risk is the risk that the securities selected by Fund management will underperform the markets, the relevant indices or the securities selected by other funds with similar investment objectives and
investment strategies. This means you may lose money.
A recent outbreak of an infectious coronavirus has developed into a global pandemic
that has resulted in numerous disruptions in the market and has had significant economic impact leaving general concern and uncertainty. The impact of this coronavirus, and other epidemics and pandemics that may arise in the future, could affect the
economies of many nations, individual companies and the market in general ways that cannot necessarily be foreseen at the present time.
|
|
|
92
|
|
2 0 2 1
B L A C K R O C K A N N U A L R E P O R T
T O S H A R E H O L D E R S
|
Automatic Dividend Reinvestment Plan
Pursuant to MUA, MHD, MUI and MVTs Dividend Reinvestment Plan (the
Reinvestment Plan), Common Shareholders are automatically enrolled to have all distributions of dividends and capital gains and other distributions reinvested by Computershare Trust Company, N.A. (the Reinvestment Plan Agent)
in the respective Funds Common Shares pursuant to the Reinvestment Plan. Shareholders who do not participate in the Reinvestment Plan will receive all distributions in cash paid by check and mailed directly to the shareholders of record (or if
the shares are held in street name or other nominee name, then to the nominee) by the Reinvestment Plan Agent, which serves as agent for the shareholders in administering the Reinvestment Plan.
After MUA, MHD, MUI and MVT declare a dividend or determine to make a capital gain or other distribution, the Reinvestment Plan Agent will acquire shares
for the participants accounts, depending upon the following circumstances, either (i) through receipt of unissued but authorized shares from the Funds (newly issued shares) or (ii) by purchase of outstanding shares on the
open market or on the Funds primary exchange (open-market purchases). If, on the dividend payment date, the net asset value per share (NAV) is equal to or less than the market price per share plus estimated brokerage
commissions (such condition often referred to as a market premium), the Reinvestment Plan Agent will invest the dividend amount in newly issued shares acquired on behalf of the participants. The number of newly issued shares to be
credited to each participants account will be determined by dividing the dollar amount of the dividend by the NAV on the date the shares are issued. However, if the NAV is less than 95% of the market price on the dividend payment date, the
dollar amount of the dividend will be divided by 95% of the market price on the dividend payment date. If, on the dividend payment date, the NAV is greater than the market price per share plus estimated brokerage commissions (such condition often
referred to as a market discount), the Reinvestment Plan Agent will invest the dividend amount in shares acquired on behalf of the participants in open-market purchases. If the Reinvestment Plan Agent is unable to invest the full
dividend amount in open-market purchases, or if the market discount shifts to a market premium during the purchase period, the Reinvestment Plan Agent will invest any un-invested portion in newly issued shares. Investments in newly issued shares
made in this manner would be made pursuant to the same process described above and the date of issue for such newly issued shares will substitute for the dividend payment date.
You may elect not to participate in the Reinvestment Plan and to receive all dividends in cash by contacting the Reinvestment Plan Agent, at the address
set forth below.
Participation in the Reinvestment Plan is completely voluntary and may be terminated or resumed at any time without penalty by
notice if received and processed by the Reinvestment Plan Agent prior to the dividend record date. Additionally, the Reinvestment Plan Agent seeks to process notices received after the record date but prior to the payable date and such notices often
will become effective by the payable date. Where late notices are not processed by the applicable payable date, such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution.
The Reinvestment Plan Agents fees for the handling of the reinvestment of distributions will be paid by each Fund. However, each participant will
pay a pro rata share of brokerage commissions incurred with respect to the Reinvestment Plan Agents open-market purchases in connection with the reinvestment of all distributions. The automatic reinvestment of all distributions will not
relieve participants of any U.S. federal, state or local income tax that may be payable on such dividends or distributions.
Each Fund reserves the
right to amend or terminate the Reinvestment Plan. There is no direct service charge to participants in the Reinvestment Plan; however, each Fund reserves the right to amend the Reinvestment Plan to include a service charge payable by the
participants. Participants in MUI that request a sale of shares are subject to a $2.50 sales fee and a $0.15 per share sold brokerage commission fee. Participants in MUA, MHD and MVT that request a sale of shares are subject to a $0.02 per share
sold brokerage commission. All correspondence concerning the Reinvestment Plan should be directed to Computershare Trust Company, N.A. through the internet at computershare.com/blackrock, or in writing to Computershare, P.O. Box 505000, Louisville,
KY 40233, Telephone: (800) 699-1236. Overnight correspondence should be directed to the Reinvestment Plan Agent at Computershare, 462 South 4th Street, Suite 1600, Louisville, KY 40202.
|
|
|
A U T O M A T I C
D I V I D E N D R E I N V E S T M E N T P L A N
|
|
93
|
Director and Officer Information
|
|
|
|
|
|
|
|
|
Independent Directors(a)
|
|
|
|
|
|
Name
Year of Birth(b)
|
|
Position(s) Held
(Length of Service)(c)
|
|
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
|
|
|
|
|
|
Richard E. Cavanagh
1946
|
|
Co-Chair of the Board and Director
(Since 2007)
|
|
Director, The Guardian Life Insurance Company of America since 1998; Board Chair, Volunteers of America (a not-for-profit organization) from 2015 to 2018 (board member since 2009); Director,
Arch Chemicals (chemical and allied products) from 1999 to 2011; Trustee, Educational Testing Service from 1997 to 2009 and Chairman thereof from 2005 to 2009; Senior Advisor, The Fremont Group since 2008 and Director thereof since 1996; Faculty
Member/Adjunct Lecturer, Harvard University since 2007 and Executive Dean from 1987 to 1995; President and Chief Executive Officer, The Conference Board, Inc. (global business research organization) from 1995 to 2007.
|
|
73 RICs consisting of 98 Portfolios
|
|
None
|
|
|
|
|
|
Karen P. Robards
1950
|
|
Co-Chair of the Board and Director
(Since 2007)
|
|
Principal of Robards & Company, LLC (consulting and private investing) since 1987; Co-founder and Director of the Cooke Center for Learning and Development (a not-for-profit organization)
since 1987; Director of Enable Injections, LLC (medical devices) since 2019; Investment Banker at Morgan Stanley from 1976 to 1987.
|
|
73 RICs consisting of 98 Portfolios
|
|
Greenhill & Co., Inc.; AtriCure, Inc. (medical devices) from 2000 until 2017
|
|
|
|
|
|
Michael J. Castellano
1946
|
|
Director
(Since 2011)
|
|
Chief Financial Officer of Lazard Group LLC from 2001 to 2011; Chief Financial Officer of Lazard Ltd from 2004 to 2011; Director, Support Our Aging Religious (non-profit) from 2009 to June
2015 and from 2017 to September 2020; Director, National Advisory Board of Church Management at Villanova University since 2010; Trustee, Domestic Church Media Foundation since 2012; Director, CircleBlack Inc. (financial technology company) from
2015 to July 2020.
|
|
73 RICs consisting of 98 Portfolios
|
|
None
|
|
|
|
|
|
Cynthia L. Egan
1955
|
|
Director
(Since 2016)
|
|
Advisor, U.S. Department of the Treasury from 2014 to 2015; President, Retirement Plan Services, for T. Rowe Price Group, Inc. from 2007 to 2012; executive positions within Fidelity
Investments from 1989 to 2007.
|
|
73 RICs consisting of 98 Portfolios
|
|
Unum (insurance); The Hanover Insurance Group (Board Chair) (insurance); Huntsman Corporation (chemical products); Envestnet (investment platform) from 2013 until 2016
|
|
|
|
|
|
Frank J. Fabozzi(d)
1948
|
|
Director
(Since 2007)
|
|
Editor of The Journal of Portfolio Management since 1986; Professor of Finance, EDHEC Business School (France) since 2011; Visiting Professor, Princeton University for the 2013 to 2014
academic year and Spring 2017 semester; Professor in the Practice of Finance, Yale University School of Management from 1994 to 2011 and currently a Teaching Fellow in Yales Executive Programs; Board Member, BlackRock Equity-Liquidity Funds
from 2014 to 2016; affiliated professor Karlsruhe Institute of Technology from 2008 to 2011; Visiting Professor, Rutgers University for the Spring 2019 semester; Visiting Professor, New York University for the 2019 academic year. Adjunct Professor
of Finance, Carnegie Mellon University in fall 2020 semester.
|
|
75 RICs consisting of 100 Portfolios
|
|
None
|
|
|
|
94
|
|
2 0 2 1
B L A C K R O C K A N N U A L R E P O R T
T O S H A R E H O L D E R S
|
Director and Officer Information (continued)
|
|
|
|
|
|
|
|
|
Independent Directors(a) (continued)
|
|
|
|
|
|
Name
Year of Birth(b)
|
|
Position(s) Held
(Length of Service)(c)
|
|
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
|
|
|
|
|
|
R. Glenn Hubbard
1958
|
|
Director
(Since 2007)
|
|
Dean, Columbia Business School from 2004 to 2019; Faculty member, Columbia Business School since 1988.
|
|
73 RICs consisting of 98 Portfolios
|
|
ADP (data and information services) 2004-2020; Metropolitan Life Insurance Company (insurance); KKR Financial Corporation (finance) from 2004 until 2014
|
|
|
|
|
|
W. Carl Kester(d)
1951
|
|
Director
(Since 2007)
|
|
George Fisher Baker Jr. Professor of Business Administration, Harvard Business School since 2008; Deputy Dean for Academic Affairs from 2006 to 2010; Chairman of the Finance Unit, from 2005 to
2006; Senior Associate Dean and Chairman of the MBA Program from 1999 to 2005; Member of the faculty of Harvard Business School since 1981.
|
|
75 RICs consisting of 100 Portfolios
|
|
None
|
|
|
|
|
|
Catherine A. Lynch(d)
1961
|
|
Director
(Since 2016)
|
|
Chief Executive Officer, Chief Investment Officer and various other positions, National Railroad Retirement Investment Trust from 2003 to 2016; Associate Vice President for Treasury
Management, The George Washington University from 1999 to 2003; Assistant Treasurer, Episcopal Church of America from 1995 to 1999.
|
|
75 RICs consisting of 100 Portfolios
|
|
None
|
|
Interested Directors(a)(e)
|
|
|
|
|
|
Name
Year of Birth(b)
|
|
Position(s) Held
(Length of Service)(c)
|
|
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
|
|
|
|
|
|
Robert Fairbairn
1965
|
|
Director
(Since 2018)
|
|
Vice Chairman of BlackRock, Inc. since 2019; Member of BlackRocks Global Executive and Global Operating Committees; Co-Chair of BlackRocks Human Capital Committee; Senior Managing
Director of BlackRock, Inc. from 2010 to 2019; oversaw BlackRocks 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 BlackRocks Retail and iShares® businesses from 2012 to 2016.
|
|
103 RICs consisting of 250 Portfolios
|
|
None
|
|
|
|
|
|
John M. Perlowski(d)
1964
|
|
Director
(Since 2015)
President and Chief Executive Officer (Since 2010)
|
|
Managing Director of BlackRock, Inc. since 2009; Head of BlackRock Global Accounting and Product Services since 2009; Advisory Director of Family Resource Network (charitable foundation) since
2009.
|
|
105 RICs consisting of 252 Portfolios
|
|
None
|
|
(a) The address of
each Director is c/o BlackRock, Inc., 55 East 52nd Street, New York, New York 10055.
|
(b) Each Independent
Director holds office until his or her successor is duly elected and qualifies or until his or her earlier death, resignation, retirement or removal as provided by the Funds by-laws or charter or statute, or until December 31 of the year
in which he or she turns 75. Directors who are interested persons, as defined in the Investment Company Act serve until their successor is duly elected and qualifies or until their earlier death, resignation, retirement or removal as
provided by the Funds by-laws or statute, or until December 31 of the year in which they turn 72. The Board may determine to extend the terms of Independent Directors on a case-by-case basis, as appropriate.
|
|
|
|
D I R E C T O R A N D
O F F I C E R I N F O R M A T I O N
|
|
95
|
Director and Officer Information (continued)
|
|
|
|
|
|
|
|
|
(c) Following the
combination of Merrill Lynch Investment Managers, L.P. (MLIM) and BlackRock, Inc. in September 2006, the various legacy MLIM and legacy BlackRock fund boards were realigned and consolidated into three new fund boards in 2007. Certain
Independent Directors first became members of the boards of other legacy MLIM or legacy BlackRock funds as follows: Richard E. Cavanagh, 1994; Frank J. Fabozzi, 1988; R. Glenn Hubbard, 2004; W. Carl Kester, 1995; and Karen P. Robards,
1998.
|
(d) Dr. Fabozzi,
Dr. Kester, Ms. Lynch and Mr. Perlowski are also trustees of the BlackRock Credit Strategies Fund and BlackRock Private Investments Fund.
|
(e) Mr. Fairbairn
and Mr. Perlowski are both interested persons, as defined in the 1940 Act, of the Fund based on their positions with BlackRock, Inc. and its affiliates. Mr. Fairbairn and Mr. Perlowski are also board members of the
BlackRock Multi-Asset Complex.
|
|
|
|
|
|
Officers Who Are Not Directors(a)
|
|
|
|
Name
Year of Birth(b)
|
|
Position(s) Held
(Length of Service)
|
|
Principal Occupation(s) During Past Five Years
|
Jonathan Diorio
1980
|
|
Vice President
(Since 2015)
|
|
Managing Director of
BlackRock, Inc. since 2015; Director of BlackRock, Inc. from 2011 to 2015.
|
Trent Walker
1974
|
|
Chief Financial Officer
(Since
2021)
|
|
Managing Director of BlackRock, Inc.
since September 2019; Executive Vice President of PIMCO from 2016 to 2019; Senior Vice President of PIMCO from 2008 to 2015; Treasurer from 2013 to 2019 and Assistant Treasurer from 2007 to 2017 of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO
ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT, PIMCO Managed Accounts Trust, 2 PIMCO-sponsored interval funds and 21 PIMCO-sponsored closed-end funds.
|
Jay M. Fife
1970
|
|
Treasurer
(Since 2007)
|
|
Managing Director of
BlackRock, Inc. since 2007.
|
Charles Park
1967
|
|
Chief Compliance Officer
(Since
2014)
|
|
Anti-Money Laundering Compliance Officer
for certain BlackRock-advised Funds from 2014 to 2015; Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the BlackRock Multi-Asset Complex and the BlackRock Fixed-Income Complex since 2014; Principal of and Chief
Compliance Officer for iShares® Delaware Trust Sponsor LLC since 2012 and BlackRock Fund Advisors (BFA) since 2006; Chief Compliance Officer for the BFA-advised iShares® exchange traded funds since 2006; Chief Compliance Officer for BlackRock Asset Management International Inc. since 2012.
|
Janey Ahn
1975
|
|
Secretary
(Since 2012)
|
|
Managing Director of
BlackRock, Inc. since 2018; Director of BlackRock, Inc. from 2009 to 2017.
|
(a) The address of each
Officer is c/o BlackRock, Inc., 55 East 52nd Street, New York, New York 10055.
(b) Officers of the Fund serve at the pleasure of the Board.
|
Neal J. Andrews retired as the Chief Financial Officer effective December 31, 2020, and Trent Walker was elected as
the Chief Financial Officer effective January 1, 2021.
Effective June 10, 2021, Stayce D. Harris and
J. Phillip Holloman were each appointed to serve as a Director of the Funds.
|
|
|
96
|
|
2 0 2 1
B L A C K R O C K A N N U A L R E P O R T
T O S H A R E H O L D E R S
|
Additional Information
Proxy Results
At a Joint Special Meeting of Shareholders of BlackRock MuniHoldings Fund, Inc. held on Tuesday, December 15, 2020, Fund shareholders were asked to
vote on the following proposals:
Preferred Shareholders
Proposal 1(I). The holders of Variable Rate Muni Term Preferred Shares (VMTP Shares and the holders thereof, VMTP Holders) of
BlackRock MuniHoldings Fund, Inc. (the Acquiring Fund) were asked to vote as a separate class on a proposal to approve an Agreement and Plan of Reorganization between BlackRock Municipal Income Investment Quality Trust and the Acquiring
Fund (the BAF Reorganization Agreement) and the transactions contemplated therein, including amendments to the Articles Supplementary Establishing and Fixing the Rights and Preferences of Variable Rate Muni Term Preferred Shares of the
Acquiring Fund (the MHD Articles Supplementary) in connection with the issuance of additional Acquiring Fund VMTP Shares.
With respect to
the Proposal 1(I), the shares of the Fund were voted as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name
|
|
For
|
|
|
Against
|
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
MHD
|
|
|
837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposal 1(J). The VMTP Holders of the Acquiring Fund were asked to vote as a separate class on a proposal to approve an
Agreement and Plan of Reorganization between BlackRock Municipal Bond Trust and the Acquiring Fund (the BBK Reorganization Agreement) and the transactions contemplated therein, including amendments to the MHD Articles Supplementary in
connection with the issuance of additional Acquiring Fund VMTP Shares.
With respect to Proposal 1(J), the shares of the Fund were voted as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name
|
|
For
|
|
|
Against
|
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
MHD
|
|
|
837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposal 1(K). The VMTP Holders of the Acquiring Fund were asked to vote as a separate class on a proposal to approve an
Agreement and Plan of Reorganization between BlackRock MuniHoldings Fund II, Inc. and the Acquiring Fund (the MUH Reorganization Agreement) and the transactions contemplated therein, including amendments to the MHD Articles Supplementary
in connection with the issuance of additional Acquiring Fund VMTP Shares.
With respect to Proposal 1(K), the shares of the Fund were voted as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name
|
|
For
|
|
|
Against
|
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
MHD
|
|
|
837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposal 1(L). The VMTP Holders of the Acquiring Fund were asked to vote as a separate class on a proposal to approve an
Agreement and Plan of Reorganization between BlackRock MuniHoldings Quality Fund, Inc. and the Acquiring Fund (the MUS Reorganization Agreement) and the transactions contemplated therein, including amendments to the MHD Articles
Supplementary in connection with the issuance of additional Acquiring Fund VMTP Shares.
With respect to Proposal 1(L), the shares of the Fund were
voted as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name
|
|
For
|
|
|
Against
|
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
MHD
|
|
|
837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common and Preferred Shareholders
Proposal 2(A). The common shareholders and holders of Variable Rate Muni Term Preferred Shares (VMTP Shares and the holders thereof,
VMTP Holders) of BlackRock MuniHoldings Fund, Inc. (the Acquiring Fund) were asked to vote as a single class on a proposal to approve the issuance of additional common shares of the Acquiring Fund in connection with an
Agreement and Plan of Reorganization between BlackRock Municipal Income Investment Quality Trust and the Acquiring Fund.
With respect to Proposal
2(A), the shares of the Fund were voted as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name
|
|
For
|
|
|
Against
|
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
MHD
|
|
|
6,072,410
|
|
|
|
361,998
|
|
|
|
205,800
|
|
|
|
|
|
Proposal 2(B). The common shareholders and VMTP Holders of the Acquiring Fund were asked to vote as a single class on a
proposal to approve the issuance of additional common shares of the Acquiring Fund in connection with an Agreement and Plan of Reorganization between BlackRock Municipal Bond Trust and the Acquiring Fund.
With respect to Proposal 2(B), the shares of the Fund were voted as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name
|
|
For
|
|
|
Against
|
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
MHD
|
|
|
6,058,613
|
|
|
|
359,115
|
|
|
|
222,479
|
|
|
|
|
|
|
|
|
A D D I T I O N A L
I N F O R M A T I O N
|
|
97
|
Additional Information (continued)
Proposal 2(C). The common
shareholders and VMTP Holders of the Acquiring Fund were asked to vote as a single class on a proposal to approve the issuance of additional common shares of the Acquiring Fund in connection with an Agreement and Plan of Reorganization between
BlackRock MuniHoldings Fund II, Inc. and the Acquiring Fund.
With respect to Proposal 2(C), the shares of the Fund were voted as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name
|
|
For
|
|
|
Against
|
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
MHD
|
|
|
6,057,489
|
|
|
|
360,241
|
|
|
|
222,479
|
|
|
|
|
|
Proposal 2(D). The common shareholders and VMTP Holders of the Acquiring Fund were being asked to vote as a single class
on a proposal to approve the issuance of additional common shares of the Acquiring Fund in connection with an Agreement and Plan of Reorganization between BlackRock MuniHoldings Quality Fund, Inc. and the Acquiring Fund.
With respect to Proposal 2(D), the shares of the Fund were voted as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Name
|
|
For
|
|
|
Against
|
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
MHD
|
|
|
6,054,307
|
|
|
|
360,585
|
|
|
|
225,317
|
|
|
|
|
|