N-CSR 1 d158670dncsr.htm BLACKROCK TAXABLE MUNICIPAL BOND TRUST BlackRock Taxable Municipal Bond Trust

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number: 811-22426

 

Name of Fund:    BlackRock   Taxable Municipal Bond Trust (BBN)

 

Fund Address:    100   Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Taxable Municipal Bond Trust, 55 East 52nd Street, New York, NY 10055

Registrant’s telephone number, including area code: (800) 882-0052, Option 4

Date of fiscal year end: 12/31/2021

Date of reporting period: 12/31/2021


Item 1 – Report to Stockholders

(a) The Report to Shareholders is attached herewith.


 

LOGO

  DECEMBER 31, 2021

 

  

2021 Annual Report

 

 

BlackRock Taxable Municipal Bond Trust (BBN)

 

 

 

 

     
  Not FDIC Insured • May Lose Value • No Bank Guarantee       
     


Supplemental Information  (unaudited)

 

Section 19(a) Notices

BlackRock Taxable Municipal Bond Trust’s (BBN) (the “Trust”) amounts and sources of distributions reported are estimates and are being provided pursuant to regulatory requirements and are not being provided for tax reporting purposes. The actual amounts and sources for tax reporting purposes will depend upon the Trust’s investment experience during the year and may be subject to changes based on tax regulations. The Trust will provide a Form 1099-DIV each calendar year that will tell you how to report these distributions for U.S. federal income tax purposes.

December 31, 2021

 

     Total Cumulative Distributions
for the Fiscal Period
   

% Breakdown of the Total Cumulative

Distributions for the Fiscal Period

 
Trust Name    
Net
Income
 
 
   

Net Realized
Capital Gains
Short-Term
 
 
 
   

Net Realized
Capital Gains
Long-Term
 
 
 
   
Return of
Capital
 
 (a)  
   

Total Per
Common
Share
 
 
 
   
Net
Income
 
 
   

Net Realized
Capital Gains
Short-Term
 
 
 
   

Net Realized
Capital Gains
Long-Term
 
 
 
   
Return of
Capital
 
 
   

Total Per
Common
Share
 
 
 

BBN

  $ 0.594632     $     $     $ 0.130968     $ 0.725600       82             18     100

 

  (a) 

The Trust estimates that it has distributed more than its net income and net realized capital gains; therefore, a portion of the distribution may be a return of capital. A return of capital may occur, for example, when some or all of the shareholder’s investment in the Trust is returned to the shareholder. A return of capital does not necessarily reflect the Trust’s investment performance and should not be confused with “yield” or “income.” When distributions exceed total return performance, the difference will reduce the Trust’s net asset value per share.

 

Section 19(a) notices for the Trust, as applicable, are available on the BlackRock website at blackrock.com.

Managed Distribution Plan

Effective October 2021, the Trust, with the approval of the Trust’s Board of Trustees (the “Board”), adopted a managed distribution plan, consistent with its investment objectives and policies, to support a level distribution of income, capital gains and/or return of capital (the “Plan”). In accordance with the Plan, the Trust currently distributes a fixed amount of $0.1229 per share on a monthly basis.

The fixed amount distributed per share is subject to change at the discretion of the Board. The Trust is currently not relying on any exemptive relief from Section 19(b) of the Investment Company Act of 1940, as amended (the “1940 Act”). Under its Plan, the Trust will distribute all available investment income to its shareholders as required by the Internal Revenue Code of 1986, as amended (the “Code”). If sufficient income (inclusive of net investment income and short-term capital gains) is not earned on a monthly basis, the Trust will distribute long-term capital gains and/or return of capital to shareholders in order to maintain a level distribution. Each monthly distribution to shareholders is expected to be at the fixed amount established by the Board; however, the Trust may make additional distributions from time to time, including additional capital gain distributions at the end of the taxable year, if required to meet requirements imposed by the Code and/or the 1940 Act.

Shareholders should not draw any conclusions about the Trust’s investment performance from the amount of these distributions or from the terms of the Plan. The Trust’s total return performance is presented in its financial highlights table.

The Board may amend, suspend or terminate the Plan at any time without prior notice to the Trust’s shareholders if it deems such actions to be in the best interests of the Trust or its shareholders. The suspension or termination of the Plan could have the effect of creating a trading discount (if the Trust’s stock is trading at or above net asset value) or widening an existing trading discount. The Trust is subject to risks that could have an adverse impact on its ability to maintain level distributions. Examples of potential risks include, but are not limited to, economic downturns impacting the markets, changes in interest rates, decreased market volatility, companies suspending or decreasing corporate dividend distributions and changes in the Code. Please refer to the Trust’s prospectus for a more complete description of the Trust’s risks.

 

 

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The Markets in Review

Dear Shareholder,

The 12-month reporting period as of December 31, 2021 saw a continuation of the resurgent growth that followed the initial coronavirus (or “COVID-19”) pandemic reopening, albeit at a slower pace. The global economy weathered the emergence of several variant strains and the resulting peaks and troughs in infections amid optimism that increasing vaccinations and economic adaptation could help contain the pandemic’s disruptions. Continued growth meant that the U.S. economy regained and then surpassed its pre-pandemic output. However, a rapid rebound in consumer spending pushed up against supply constraints and led to elevated inflation.

Equity prices rose with the broader economy, as the implementation of mass vaccination campaigns and passage of an additional fiscal stimulus package and infrastructure bill further boosted stocks. In the United States, both large- and small-capitalization stocks posted a strong advance, and many equity indices neared or surpassed all-time highs late in the reporting period. International equities from developed markets also gained, although emerging market stocks declined, pressured by a strengthening U.S. dollar.

The 10-year U.S. Treasury yield (which is inversely related to bond prices) rose during the reporting period as the economy expanded rapidly and inflation reached its highest annualized reading in decades. In the corporate bond market, support from the U.S. Federal Reserve (the “Fed”) assuaged credit concerns and led to solid returns for high-yield corporate bonds, outpacing investment-grade corporate bonds, which declined.

The Fed maintained accommodative monetary policy during the reporting period by maintaining near-zero interest rates and by asserting that inflation could exceed its 2% target for a sustained period without triggering a rate increase. However, the Fed’s tone shifted late in the year, as it reduced its bond-buying program and used its market guidance to raise the prospect of higher rates in 2022.

Looking ahead, we believe that the global expansion will continue to broaden as Europe and other developed market economies gain momentum, although the Delta and Omicron variants of the coronavirus remain a threat, particularly in emerging markets. While we expect inflation to abate somewhat as supply bottlenecks are resolved, we anticipate that inflation will remain higher than the pre-COVID norm. The Fed is poised to raise interest rates next year in response, but the Fed’s policy shift means that tightening is likely to be less aggressive than what we’ve seen in previous cycles.

In this environment, we favor an overweight to equities, as we believe low interest rates and continued economic growth will support further gains, albeit likely more modest than what we saw in 2021. Sectors that are better poised to manage the transition to a lower-carbon world, such as technology and health care, are particularly attractive in the long term. U.S. and other developed-market equities have room for further growth, while we believe Chinese equities stand to gain from a more accommodative monetary and fiscal environment as the Chinese economy slows. We are underweight long-term credit, but inflation-protected U.S. Treasuries, Asian fixed income, and emerging market local-currency bonds offer potential opportunities. We believe that international diversification and a focus on sustainability can help provide portfolio resilience, and the disruption created by the coronavirus appears to be accelerating the shift toward sustainable investments.

In this environment, our view is that investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit blackrock.com for further insight about investing in today’s markets.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

Total Returns as of December 31, 2021
    

 

6-Month 

 

 

 

12-Month 

 

   

U.S. large cap equities
(S&P 500® Index)

  11.67%   28.71%
   

U.S. small cap equities
(Russell 2000® Index)

  (2.31)     14.82   
   

International equities
(MSCI Europe, Australasia, Far East Index)

  2.24      11.26   
   

Emerging market equities
(MSCI Emerging Markets Index)

  (9.30)     (2.54)  
   

3-month Treasury bills
(ICE BofA 3-Month U.S. Treasury Bill Index)

  0.02      0.05   
   

U.S. Treasury securities
(ICE BofA 10-Year U.S. Treasury Index)

  0.44      (3.68)  
   

U.S. investment grade bonds
(Bloomberg U.S. Aggregate Bond Index)

  0.06      (1.54)  
   

Tax-exempt municipal bonds
(S&P Municipal Bond Index)

  0.52      1.77   
   

U.S. high yield bonds
(Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index)

  1.59      5.26   
Past performance is not an indication of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.
 

 

 

H I S  A G E   I S   N O T  A R T   O F  O U R   F U N D  E P O R T

  3


Table of Contents

 

      Page  

Supplemental Information

     2  

The Markets in Review

     3  

Annual Report:

  

The Benefits and Risks of Leveraging

     5  

Derivative Financial Instruments

     5  

Trust Summary

     6  

Financial Statements:

  

Schedule of Investments

     10  

Statement of Assets and Liabilities

     17  

Statements of Operations

     18  

Statements of Changes in Net Assets

     19  

Statements of Cash Flows

     20  

Financial Highlights

     22  

Notes to Financial Statements

     23  

Report of Independent Registered Public Accounting Firm

     30  

Important Tax Information

     31  

Investment Objectives, Policies and Risks

     32  

Expense and Share Price Information

     37  

Automatic Dividend Reinvestment Plan

     39  

Trustee and Officer Information

     40  

Additional Information

     44  

Glossary of Terms Used in this Report

     47  

 

 

4       


The Benefits and Risks of Leveraging

 

The Trust may utilize leverage to seek to enhance the distribution rate on, and net asset value (“NAV”) of, its common shares (“Common Shares”). However, there is no guarantee that these objectives can be achieved in all interest rate environments.

In general, the concept of leveraging is based on the premise that the financing cost of leverage, which is based on short-term interest rates, is normally lower than the income earned by the Trust on its longer-term portfolio investments purchased with the proceeds from leverage. To the extent that the total assets of the Trust (including the assets obtained from leverage) are invested in higher-yielding portfolio investments, the Trust’s shareholders benefit from the incremental net income. The interest earned on securities purchased with the proceeds from leverage (after paying the leverage costs) is paid to shareholders in the form of dividends, and the value of these portfolio holdings (less the leverage liability) is reflected in the per share NAV.

To illustrate these concepts, assume the Trust’s capitalization is $100 million and it utilizes leverage for an additional $30 million, creating a total value of $130 million available for investment in longer-term income securities. If prevailing short-term interest rates are 3% and longer-term interest rates are 6%, the yield curve has a strongly positive slope. In this case, the Trust’s financing costs on the $30 million of proceeds obtained from leverage are based on the lower short-term interest rates. At the same time, the securities purchased by the Trust with the proceeds from leverage earn income based on longer-term interest rates. In this case, the Trust’s financing cost of leverage is significantly lower than the income earned on the Trust’s longer-term investments acquired from such leverage proceeds, and therefore the holders of Common Shares (“Common Shareholders”) are the beneficiaries of the incremental net income.

However, in order to benefit shareholders, the return on assets purchased with leverage proceeds must exceed the ongoing costs associated with the leverage. If interest and other costs of leverage exceed the Trust’s return on assets purchased with leverage proceeds, income to shareholders is lower than if the Trust had not used leverage. Furthermore, the value of the Trust’s portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can influence the value of portfolio investments. In contrast, the amount of the Trust’s obligations under its leverage arrangement generally does not fluctuate in relation to interest rates. As a result, changes in interest rates can influence the Trust’s NAV positively or negatively. Changes in the future direction of interest rates are very difficult to predict accurately, and there is no assurance that the Trust’s intended leveraging strategy will be successful.

The use of leverage also generally causes greater changes in the Trust’s NAV, market price and dividend rates than comparable portfolios without leverage. In a declining market, leverage is likely to cause a greater decline in the NAV and market price of the Trust’s shares than if the Trust were not leveraged. In addition, the Trust may be required to sell portfolio securities at inopportune times or at distressed values in order to comply with regulatory requirements applicable to the use of leverage or as required by the terms of leverage instruments, which may cause the Trust to incur losses. The use of leverage may limit the Trust’s ability to invest in certain types of securities or use certain types of hedging strategies. The Trust incurs expenses in connection with the use of leverage, all of which are borne by shareholders and may reduce income to the shareholders. Moreover, to the extent the calculation of the Trust’s investment advisory fees includes assets purchased with the proceeds of leverage, the investment advisory fees payable to the Trust’s investment adviser will be higher than if the Trust did not use leverage.

The Trust may utilize leverage through reverse repurchase agreements as described in the Notes to Financial Statements, if applicable.

Under the Investment Company Act of 1940, as amended (the “1940 Act”), the Trust is permitted to issue debt up to 33 1/3% of its total managed assets. The Trust may voluntarily elect to limit its leverage to less than the maximum amount permitted under the 1940 Act.

If the Trust segregates or designates on its books and records cash or liquid assets having a value not less than the value of the Trust’s obligations under a reverse repurchase agreement (including accrued interest) then such transaction is not considered a senior security and is not subject to the foregoing limitations and requirements imposed by the 1940 Act.

Derivative Financial Instruments

The Trust may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other assets without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the instrument. The Trust’s successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation the Trust can realize on an investment and/or may result in lower distributions paid to shareholders. The Trust’s investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

    

 

 

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Trust Summary  as of December 31, 2021   

 

BlackRock Taxable Municipal Bond Trust (BBN)

 

Investment Objective

BlackRock Taxable Municipal Bond Trust’s (BBN) (the “Trust”) primary investment objective is to seek high current income, with a secondary objective of capital appreciation. The Trust seeks to achieve its investment objectives by investing primarily in a portfolio of taxable municipal securities, including Build America Bonds (“BABs”), issued by state and local governments to finance capital projects such as public schools, roads, transportation infrastructure, bridges, ports and public buildings.

The Trust originally sought to achieve its investment objectives by investing primarily in a portfolio of BABs, which are taxable municipal securities issued pursuant to the American Recovery and Reinvestment Act of 2009. Given the uncertainty around the BABs program at the time of the Trust’s launch in 2010, the Trust’s initial public offering prospectus included a Contingent Review Provision. For any 24-month period, if there were no new issuances of BABs or other analogous taxable municipal securities, the Board of Trustees (the “Board”) would undertake an evaluation of potential actions with respect to the Trust. Under the Contingent Review Provision, such potential action may include changes to the Trust’s non-fundamental investment policies to broaden its primary investment focus to include taxable municipal securities generally. The BABs program expired on December 31, 2010 and was not renewed. Accordingly, there have been no new issuances of BABs since that date.

Pursuant to the Contingent Review Provision, on June 12, 2015, the Board approved a proposal to amend the Trust’s investment policy from “Under normal market conditions, the Trust invests at least 80% of its managed assets in BABs” to “Under normal market conditions, the Trust invests at least 80% of its managed assets in taxable municipal securities, which include BABs”, and to change the name of the Trust from “BlackRock Build America Bond Trust” to “BlackRock Taxable Municipal Bond Trust.” These changes became effective on August 25, 2015.

The Trust continues to maintain its other investment policies, including its ability to invest up to 20% of its managed assets in securities other than taxable municipal securities. Such other securities may include tax-exempt securities, U.S. Treasury securities, obligations of the U.S. Government, its agencies and instrumentalities and corporate bonds issued by issuers that have, in BlackRock Advisors, LLC’s (the “Manager”) view, typically been associated with or sold in the municipal market. Bonds issued by private universities and hospitals, or bonds sold to finance military housing developments are examples of such securities. The Trust also continues to invest at least 80% of its managed assets in securities that at the time of purchase are investment grade quality.

As used herein, “managed assets” means the total assets of the Trust (including any assets attributable to money borrowed for investment purposes) minus the sum of the Trust’s accrued liabilities (other than money borrowed for investment purposes).

As of December 31, 2021, 52% of the Trust’s portfolio are BABs. Like other taxable municipal securities, interest received on BABs is subject to U.S. tax and may be subject to state income tax. Issuers of direct pay BABs, however, are eligible to receive a subsidy from the U.S. Treasury of up to 35% of the interest paid on the BABs. This allowed such issuers to issue bonds that pay interest rates that were expected to be competitive with the rates typically paid by private bond issuers in the taxable fixed income market. While the U.S. Treasury subsidizes the interest paid on BABs, it does not guarantee the principal or interest payments on BABs, and there is no guarantee that the U.S. Treasury will not reduce or eliminate the subsidy for BABs in the future. Any interruption, delay, reduction and/or offset of the reimbursement from the U.S. Treasury may reduce the demand for direct pay BABs and/or potentially trigger extraordinary call features of the BABs. As of the date of this report, the subsidy that issuers of direct pay BABs receive from the U.S. Treasury has been reduced from its original level as the result of budgetary sequestration. The extraordinary call features of some BABs permit early redemption at par value, and the reduction in the subsidy issuers of direct pay BABs receive from the U.S. Treasury has resulted, and may continue to result, in early redemptions of some BABs at par value. Such early redemptions at par value may result in a potential loss in value for investors of such BABs, who may have purchased the securities at prices above par, and may require such investors to reinvest redemption proceeds in lower-yielding securities. As of the date of this report, the Trust did not own any BABs subject to a par value extraordinary call feature. Additionally, many BABs also have more typical call provisions that permit early redemption at a stated spread to an applicable prevailing U.S. Treasury rate. Early redemptions in accordance with these call provisions may likewise result in potential losses for the Trust and give rise to reinvestment risk, which could reduce the Trust’s income and distributions.

On September 24, 2021, the Board approved a change in the fiscal year end of the Trust, effective as of December 31, 2021, from July 31 to December 31.

No assurance can be given that the Trust’s investment objective will be achieved.

Trust Information

 

Symbol on New York Stock Exchange

  BBN

Initial Offering Date

  August 27, 2010

Current Distribution Rate on Closing Market Price as of December 31, 2021 ($26.18)(a)

  5.63%

Current Monthly Distribution per Common Share(b)

  $0.1229

Current Annualized Distribution per Common Share(b)

  $1.4748

Leverage as of December 31, 2021(c)

  34%

 

  (a)

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate may consist of income, net realized gains and/or a return of capital. Past performance is not an indication of future results.

 
  (b)

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 
  (c)

Represents reverse repurchase agreements as a percentage of total managed assets, which is the total assets of the Trust (including any assets attributable to any borrowings) minus the sum of its liabilities (other than borrowings representing financial leverage). Does not reflect derivatives or other instruments that may give rise to economic leverage. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging and Derivative Financial Instruments.

 

 

 

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Trust Summary  as of December 31, 2021 (continued)   

 

BlackRock Taxable Municipal Bond Trust (BBN)

 

Taxable Municipal Bond Overview

Taxable municipal bonds typically trade at a spread (or additional yield) relative to U.S. Treasury bonds with similar maturities. U.S. Treasury yields increased (as prices fell) during the reporting period, creating a challenging backdrop for the broader market. Nevertheless, the Bloomberg Taxable Municipal: U.S. Aggregate Eligible Index returned 1.45% for the 12-month period ended December 31, 2021.

The positive performance in the face of rising rates reflected the meaningful tightening of yield spreads that occurred throughout the year. The asset class benefited from substantial fiscal stimulus, the rollout of COVID-19 vaccines and the recovery in the U.S. economy. These trends contributed to robust municipal revenue collections, which led to ratings upgrades for a number of municipal issuers. Higher-quality municipals initially outperformed, but market participants began to reach for yield in lower-rated debt later in the period. This trend was a tailwind for lower-rated borrowers and issuers that had been most affected by COVID-19.

New-issue supply remained at very high levels in 2021. The dynamic of taxable municipal issuance being used for the purpose of advance refunding previously issued tax-exempt debt remained firmly in place as interest rates stayed at low absolute levels. The new issuance was readily absorbed given that demand strengthened throughout the year.

Market Price and Net Asset Value Per Share Summary

 

     12/31/21      12/31/20      Change      High      Low  

Closing Market Price

  $ 26.18      $ 26.96        (2.89 )%     $ 27.12      $ 23.86  

Net Asset Value

    25.27        25.30        (0.12      26.29        23.74  

TOTAL RETURN BASED ON A $10,000 INVESTMENT

 

LOGO

 

(a)

Represents the Trust’s closing market price on the NYSE and reflects the reinvestment of dividends and/or distributions at actual reinvestment prices.

(b)

An index that is a flagship measure of the USD-denominated taxable municipal bond market over 1-year to maturity. Taxable bonds with an amount outstanding greater than or equal to $300 million are eligible for the U.S. Aggregate Index.

(c)

An index that is a flagship measure of the taxable municipal bond market over 1 year to maturity. To be included in the index, bonds must be rated investment-grade (Baa3/BBB- or higher) by at least two of the following ratings agencies if all three rate the bond: Moody’s, S&P, Fitch.

 

 

R U S T  U M M A R Y

  7


Trust Summary  as of December 31, 2021 (continued)   

 

BlackRock Taxable Municipal Bond Trust (BBN)

 

Performance

Returns for the period ended December 31, 2021 were as follows:

 

          Average Annual Total Returns  
            1 Year      5 Years      10 Years  

Trust at NAV(a)(b)

      5.69      8.78      8.40

Trust at Market Price(a)(b)

      2.75        10.50        9.15  

Bloomberg Taxable Municipal: U.S. Aggregate Eligible Index

      1.45        7.28        6.50  

Bloomberg Taxable Municipal Bond Index(c)

      0.94        6.16        5.62  

Lipper General Bond Funds at NAV(d)

      7.45        7.23        8.26  

Lipper General Bond Funds at Market Price(d)

            8.00        9.04        8.71  

 

  (a)

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices. Performance results reflect the Trust’s use of leverage.

 
  (b)

The Trust’s premium to NAV narrowed during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 
  (c)

The Trust changed its reporting benchmarks from Lipper General Bond Funds and Bloomberg Taxable Municipal: U.S. Aggregate Eligible Index to Bloomberg Taxable Municipal Bond Index. The investment adviser believes the new benchmark more closely tracks to the performance of the Trust.

 
  (d)

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date as calculated by Lipper.

 

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not an indication of future results.

The Trust is presenting the performance of one or more indices for informational purposes only. The Trust is actively managed and does not seek to track or replicate the performance of any index. The index performance shown is not intended to be indicative of the Trust’s investment strategies, portfolio components or past or future performance.

More information about the Trust’s historical performance can be found in the “Closed-End Funds” section of blackrock.com.

The following discussion relates to the Trust’s absolute performance based on NAV:

What factors influenced performance?

Tightening yield spreads offset the impact of increasing yields, helping the Trust deliver a positive return in 2021. The Trust benefited from its positions in lower-quality securities (those rated A and below) as yields spreads for these securities tightened more than the overall market. The Trust’s use of U.S. Treasury futures to manage interest-rate risk also helped performance. At the sector level, the largest contributions came from the state tax-backed, local tax-backed, education, transportation, utility and tobacco sectors.

Reinvestment risk continued to be a headwind since the proceeds from bonds that matured or were called needed to be reinvested at lower yields compared to those issued when yields were higher.

The Trust’s practice of maintaining a specified level of monthly distributions to shareholders did not have a material impact on the Trust’s investment strategy. The distribution policy resulted in return of capital for the period. Refer to the financial highlights and income tax information sections in this report for further information about the distributions.

Describe recent portfolio activity.

The Trust’s duration (interest-rate sensitivity) declined over the period. The Trust’s weightings in the education, tobacco and tax-backed lease sectors increased, while its allocation to utilities decreased. The Trust’s weighting in lower-rated securities (A and below) also rose.

Heavy new issuance presented opportunities for the Trust to participate in transactions that offered both attractive concessions and yields, particularly in the tobacco sector and leases within the tax-backed state space. The Trust also found several opportunities in the education sector, including student loans, charter schools and private universities. Most purchases were in longer-maturity debt (20-years and above) with the exception of government leases, where activity was centered in the 10-year range.

Describe portfolio positioning at period end.

The Trust’s duration was below the benchmark. The Trust was overweight in securities rated A and lower. It was overweight in bonds with maturities of 18 years and longer and underweight in the two- to 15-year range. At the sector level, the Trust was overweight in tobacco and utilities and underweight in school district and state tax-backed issues.

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

 

 

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Trust Summary  as of December 31, 2021 (continued)   

 

BlackRock Taxable Municipal Bond Trust (BBN)

 

Overview of the Trust’s Total Investments

 

SECTOR ALLOCATION

 

Sector(a)(b)   12/31/21     07/31/21  

County/City/Special District/School District

    25     23

Utilities

    18       19  

Transportation

    17       16  

Education

    14       15  

State

    13       15  

Tobacco

    7       6  

Health Care Providers & Services

    3       3  

Health

    1       1  

Corporate

    1       1  

Diversified Financial Services

    1        

Real Estate Management & Development

          1  

Other*

    (c)      (c) 

CALL/MATURITY SCHEDULE

 

Calendar Year Ended December 31,(a)(d)   Percentage  

2022

    %(c) 

2023

    1  

2024

    (c) 

2025

    2  

2026

    (c) 

CREDIT QUALITY ALLOCATION

 

Credit Rating(a)(e)   12/31/21     07/31/21  

AAA/Aaa

    3     3

AA/Aa

    39       39  

A

    34       36  

BBB/Baa

    16       13  

BB/Ba

    3       2  

B

    1       2  

CCC/Caa

    (c)      (c) 

N/R(f)

    4       5  
 

 

  (a)

Excludes short-term securities.

 
  (b)

For Trust compliance purposes, the Trust’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 
  (c)

Rounds to less than 1% of total investments.

 
  (d)

Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.

 
  (e)

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P Global Ratings or Moody’s Investors Service, Inc. if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 
  (f)

The investment adviser evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of December 31, 2021 and July 31, 2021, the market value of unrated securities deemed by the investment adviser to be investment grade each represents less than 1% of the Trust’s total investments.

 
  *

Includes one or more investment categories that individually represents less than 1% of the Trust’s total investments. Please refer to the Schedule of Investments for details.

 

 

 

R U S T  U M M A R Y

  9


Schedule of Investments

December 31, 2021

  

 

BlackRock Taxable Municipal Bond Trust (BBN)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Corporate Bonds

 

Diversified Financial Services — 0.2%

 

Western Group Housing LP, 6.75%, 03/15/57(a)

  $ 2,434     $ 3,559,719  
   

 

 

 

Education — 4.4%

 

George Washington University, Series 2018, 4.13%, 09/15/48(b)

    7,191       8,706,083  

Grand Canyon University, 5.13%, 10/01/28

    9,377       9,637,774  

Massachusetts Higher Education Assistance Corp., Series 2021, 2.67%, 07/01/31

    10,000       10,172,326  

Rensselaer Polytechnic Institute, 5.25%, 09/01/48

    18,190       22,550,019  

Wesleyan University, 4.78%, 07/01/2116(b)

    11,000       15,662,947  
   

 

 

 
      66,729,149  

Health Care Providers & Services — 5.1%

 

Baptist Health Obligated Group, Series 2019, 4.10%, 12/01/49.

    11,300       11,940,433  

CommonSpirit Health, 3.82%, 10/01/49(b)

    7,750       8,760,039  

Kaiser Foundation Hospitals, 2.81%, 06/01/41(b)

    7,366       7,405,778  

Ochsner Clinic Foundation, 5.90%, 05/15/45(b)

    5,000       7,037,875  

PeaceHealth Obligated Group, Series 2018, 4.79%, 11/15/48(b)

    5,065       6,727,428  

Piedmont Healthcare, Inc., 2.72%, 01/01/42

    8,207       8,012,685  

West Virginia United Health System Obligated Group, Series 2018, 4.92%, 06/01/48

    20,000       26,612,807  
   

 

 

 
      76,497,045  

Real Estate Management & Development — 0.7%

 

Bridge Housing Corp., 3.25%, 07/15/30

    9,020       9,617,535  
   

 

 

 

Total Corporate Bonds — 10.4%
(Cost: $132,689,539)

      156,403,448  
   

 

 

 

Municipal Bonds

 

Arizona — 2.1%

 

Salt River Project Agricultural Improvement & Power District, RB, BAB, 4.84%, 01/01/41(b)

    24,545       32,174,298  
   

 

 

 

California — 29.1%

 

Alameda County Joint Powers Authority, RB, BAB, Series A, 7.05%, 12/01/44(b)

    11,000       17,815,116  

Bay Area Toll Authority, RB, BAB(b)

   

Series S-1, 6.92%, 04/01/40

    13,700       20,549,466  

Series S-3, 6.91%, 10/01/50

    14,000       24,743,852  

California Infrastructure & Economic Development Bank, RB, 5.50%, 01/01/38(a)

    5,000       5,175,970  

California State Public Works Board, RB, BAB, Series G-2, 8.36%, 10/01/34(b)

    18,145       28,209,632  

City of Chula Vista California, RB, 2.91%, 06/01/45

    9,185       8,689,221  

City of El Cajon, RB, Series A, 3.28%, 04/01/43

    2,605       2,654,982  

City of Huntington Beach California, Refunding RB, 3.38%, 06/15/44

    5,000       5,291,645  

City of Riverside California, RB, Series A, 3.86%, 06/01/45

    8,265       8,803,969  

City of San Francisco California Public Utilities

   

Commission Water Revenue, RB, BAB, Series DE, 6.00%, 11/01/40(b)

    21,255       28,347,709  

County of Riverside California, RB, 3.82%, 02/15/38

    11,450       12,621,289  

County of Sonoma California, Refunding RB, Series A, 6.00%, 12/01/29(b)

    12,415       14,761,100  

Foothill-Eastern Transportation Corridor Agency, Refunding RB

   

Series A, 4.09%, 01/15/49

    24,340       25,943,008  

Series A, (AGM), 3.92%, 01/15/53

    7,202       7,654,631  
Security   Par
(000)
    Value  

California (continued)

 

Golden State Tobacco Securitization Corp. Refunding RB

   

3.85%, 06/01/50

  $ 7,925     $ 8,081,828  

4.21%, 06/01/50

    23,275       23,306,887  

Golden State Tobacco Securitization Corp., Refunding RB, (SAP), 3.29%, 06/01/42

    11,170       11,386,530  

Inland Empire Tobacco Securitization Corp., Refunding RB, 3.68%, 06/01/38

    8,435       8,702,904  

Los Angeles Community College District, GO, BAB, 6.60%, 08/01/42(b)

    10,000       16,085,240  

Los Angeles Unified School District, GO, BAB, Series RY, 6.76%, 07/01/34

    10,000       13,919,980  

Orange County Local Transportation Authority, Refunding RB, BAB, Series A, 6.91%, 02/15/41(b)

    5,000       7,365,020  

San Diego County Regional Airport Authority, Refunding ARB, Series B, 5.59%, 07/01/43

    4,000       4,379,964  

State of California, GO, BAB

   

7.55%, 04/01/39(b)

    9,035       15,076,849  

7.63%, 03/01/40

    8,950       14,843,092  

7.60%, 11/01/40

    15,000       25,778,655  

University of California, RB, BAB

   

5.95%, 05/15/45(b)

    24,000       33,786,072  

6.30%, 05/15/50

    27,010       34,767,245  

University of California, Refunding RB, Series J, 4.13%, 05/15/45

    8,185       9,696,835  
   

 

 

 
      438,438,691  

Colorado — 3.6%

 

Colorado Health Facilities Authority, Refunding RB, Series B, 4.48%, 12/01/40.

    9,485       10,200,387  

Denver City & County School District No.1, Refunding COP, Series B, 7.02%, 12/15/37

    6,000       8,639,808  

Regional Transportation District, COP, BAB, Series B, 7.67%, 06/01/40(b)

    23,000       35,331,979  
   

 

 

 
      54,172,174  

Connecticut — 0.3%

 

Connecticut State Health & Educational Facilities Authority, Refunding RB, Series G-2, 4.25%, 07/01/27(a)

    5,055       5,102,315  
   

 

 

 

District of Columbia — 2.3%

   

Metropolitan Washington Airports Authority Dulles Toll Road Revenue, ARB, BAB, Series D, 8.00%, 10/01/47(b)

    10,750       18,653,486  

Metropolitan Washington Airports Authority Dulles Toll Road Revenue, RB, BAB, 7.46%, 10/01/46

    9,235       16,289,616  
   

 

 

 
      34,943,102  

Florida — 4.4%

 

Capital Trust Agency, Inc., RB(a)

   

5.00%, 01/01/25

    605       604,878  

5.50%, 06/15/26

    445       444,804  

Excelsior Academies, Inc., RB, Series C, 5.25%, 11/01/25

    490       496,733  

Florida Development Finance Corp., RB(a)

   

5.00%, 06/15/25

    285       285,030  

5.75%, 12/15/26

    650       649,289  

7.00%, 12/01/48(c)(d)

    4,500       4,407,953  

Series B, 5.75%, 06/15/25

    735       742,946  

Florida Development Finance Corp., Refunding RB, Series B, 4.11%, 04/01/50

    15,000       15,864,585  

Miami-Dade County Educational Facilities Authority, Refunding RB, Series B, 5.07%, 04/01/50

    12,250       16,239,176  
 

 

 

10  

2 0 2 1   B L A C K O C K  N N U A L  E P O R T   T O  H A R E H O L D E R S


Schedule of Investments   (continued)

December 31, 2021

  

BlackRock Taxable Municipal Bond Trust (BBN)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Florida (continued)

   

Miami-Dade County Industrial Development Authority, RB, 5.25%, 11/01/25

  $ 180     $ 182,456  

Miami-Dade County, Refunding RB, Series 2, Subordinate, 2.54%, 10/01/33

    7,500       7,553,625  

Sumter Landing Community Development District, RB, 4.17%, 10/01/47

    2,575       2,951,143  

Village Center Community Development District, Refunding RB, 5.02%, 11/01/36

    13,500       16,537,378  
   

 

 

 
      66,959,996  

Georgia — 6.2%

 

Municipal Electric Authority of Georgia, Refunding RB, BAB

   

6.64%, 04/01/57

    26,367       40,471,710  

6.66%, 04/01/57

    24,368       37,886,562  

7.06%, 04/01/57

    9,750       14,482,621  
   

 

 

 
      92,840,893  

Idaho — 0.0%

 

Idaho Housing & Finance Association, RB, Series B, 7.15%, 06/15/31

    625       626,464  
   

 

 

 

Illinois — 15.5%

 

Chicago Board of Education, GO, 6.32%, 11/01/29

    9,465       11,254,718  

Chicago Board of Education, GO, BAB

   

6.04%, 12/01/29

    12,935       14,768,148  

6.14%, 12/01/39

    2,085       2,549,421  

6.52%, 12/01/40

    9,745       12,572,999  

Chicago O’Hare International Airport, Refunding ARB, BAB, Series B, 6.40%, 01/01/40

    1,500       2,243,216  

Chicago Transit Authority Sales & Transfer Tax Receipts Revenue, RB, Series A, 6.90%, 12/01/40(b)

    4,075       5,739,311  

Chicago Transit Authority Sales Tax Receipts Fund, RB, Series B, 6.90%, 12/01/40

    4,900       6,911,048  

Chicago Transit Authority Sales Tax Receipts Fund, RB, BAB, Series B, 6.20%, 12/01/40(b)

    16,015       22,158,082  

Chicago Transit Authority Sales Tax Receipts Fund, Refunding RB, Series B, 3.91%, 12/01/40

    3,960       4,538,263  

City of Chicago Illinois Wastewater Transmission Revenue, RB, BAB, Series B, 6.90%, 01/01/40

    36,000       49,264,812  

City of Chicago Illinois Waterworks Revenue, RB, BAB, Series B, 6.74%, 11/01/40

    15,250       21,357,183  

Illinois Municipal Electric Agency, RB, BAB, 7.29%, 02/01/35(b)

    15,000       20,016,060  

Northern Illinois Municipal Power Agency, RB, BAB, 7.82%, 01/01/40

    5,000       7,773,465  

State of Illinois, GO, BAB

   

6.73%, 04/01/35

    6,320       7,763,273  

7.35%, 07/01/35(b)

    35,855       44,896,197  
   

 

 

 
          233,806,196  

Indiana — 2.0%

 

Indiana Finance Authority Refunding RB, 3.31%, 03/01/51

    4,180       4,287,706  
Security   Par
(000)
     Value  

Indiana (continued)

    

Indiana Finance Authority, RB, BAB, Series B, 6.60%, 02/01/39(b)

  $ 7,900      $ 11,798,200  

Indiana Municipal Power Agency, RB, BAB, Series A, 5.59%, 01/01/42

    10,000        13,627,840  
    

 

 

 
       29,713,746  

Kentucky — 1.6%

 

Kentucky Public Transportation Infrastructure Authority Refunding RB, (AGM), 3.22%, 07/01/53

    7,245        7,399,659  

Westvaco Corp., RB, 7.67%, 01/15/27(a)

    13,800        16,584,053  
    

 

 

 
       23,983,712  

Louisiana — 1.0%

 

City of New Orleans LA Sewerage Service Revenue, Refunding RB

    

(AGM), 2.84%, 06/01/41

    3,840        3,874,595  

(AGM), 2.94%, 06/01/45

    4,000        4,041,636  

City of New Orleans LA Water System Revenue, Refunding RB, (AGM), 2.89%, 12/01/41

    3,180        3,035,380  

Louisiana Local Government Environmental Facilities & Community Development Auth, Refunding RB, (AGM), 2.59%, 02/01/43(b)

    4,800        4,579,406  
    

 

 

 
       15,531,017  

Maine — 0.2%

 

Maine Health & Higher Educational Facilities Authority, Refunding RB, Series B, (AGM ST INTRCPT ST RES FD GTY), 3.12%, 07/01/43

    2,590        2,781,510  
    

 

 

 

Maryland — 0.8%

 

Maryland Economic Development Corp., RB, 4.00%, 04/01/34

    10,545        11,122,296  

Maryland Health & Higher Educational Facilities Authority, RB, Series B, 6.25%, 03/01/27(a)

    1,000        993,226  
    

 

 

 
       12,115,522  

Massachusetts — 2.3%

 

Commonwealth of Massachusetts Transportation Fund Revenue, RB, BAB, 5.73%, 06/01/40(b)

    5,000        6,836,805  

Massachusetts Educational Financing Authority, RB

    

Series A, 3.61%, 07/01/36

    14,380        15,265,262  

Series A, 2.64%, 07/01/37

        11,925        12,033,112  
    

 

 

 
       34,135,179  

Michigan — 4.5%

 

Michigan Finance Authority, RB, Series D, 5.02%, 11/01/43

    7,500        10,057,972  

Michigan Finance Authority, Refunding RB, Series A, 3.27%, 06/01/39

    10,000        10,538,470  

Michigan Finance Authority, Refunding RB, CAB, Series B, 0.00%, 06/01/45(e)

    50,000        15,599,050  

Michigan State University, RB, BAB, Series A, 6.17%, 02/15/50

    5,500        7,061,808  

Michigan State University, Refunding RB, Series A, 4.50%, 08/15/48

    14,575        16,651,704  

Michigan Strategic Fund, RB, 3.23%, 09/01/47

    8,340        8,520,353  
    

 

 

 
           68,429,357  
 

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  11


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Taxable Municipal Bond Trust (BBN)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
     Value  

Minnesota — 1.3%

 

Southern Minnesota Municipal Power Agency, Refunding RB, BAB, Series A, 5.93%, 01/01/43

  $ 8,000      $ 11,289,096  

Western Minnesota Municipal Power Agency, RB, BAB, 6.77%, 01/01/46

    5,000        8,059,640  
    

 

 

 
       19,348,736  

Mississippi — 0.5%

 

Mississippi Development Bank, RB, BAB, 6.41%, 01/01/40

    5,000        7,280,635  
    

 

 

 

Missouri — 1.8%

 

Curators of the University of Missouri, RB, BAB, 5.79%, 11/01/41(b)

    7,000        10,396,169  

Missouri Joint Municipal Electric Utility Commission, RB, BAB, 7.73%, 01/01/39

    11,000        17,305,992  
    

 

 

 
       27,702,161  

Nevada — 0.3%

 

City of North Las Vegas Nevada, GO, BAB, 6.57%, 06/01/40

    1,420        1,906,766  

County of Clark Department of Aviation, ARB, BAB, Series C, 6.82%, 07/01/45

    2,000        3,164,234  
    

 

 

 
       5,071,000  

New Hampshire — 2.8%

 

New Hampshire Business Finance Authority Refunding RB

    

3.25%, 04/01/28

    15,000        15,074,925  

3.30%, 04/01/32

    11,895        11,962,873  

New Hampshire Business Finance Authority, RB, 3.78%, 01/01/36

    10,000        10,571,680  

New Hampshire Business Finance Authority, Refunding RB, 2.87%, 07/01/35

    4,995        4,814,770  
    

 

 

 
       42,424,248  

New Jersey — 10.5%

 

New Jersey Economic Development Authority, RB, Series A, (NPFGC), 7.43%, 02/15/29(b)

    20,974        26,420,759  

New Jersey Educational Facilities Authority, Refunding RB, (AGM), 3.51%, 07/01/42

    20,000        21,088,440  

New Jersey Transportation Trust Fund Authority, RB, BAB, Series C, 5.75%, 12/15/28

    4,500        5,227,862  

New Jersey Transportation Trust Fund Authority, Refunding RB, 4.13%, 06/15/42

    29,355        32,770,865  

New Jersey Turnpike Authority, RB, BAB(b)

    

Series A, 7.10%, 01/01/41

    34,000        53,697,798  

Series F, 7.41%, 01/01/40

    6,790        11,049,102  

Rutgers The State University of New Jersey, RB, Series P, 3.92%, 05/01/2119.

    7,275        8,653,147  
    

 

 

 
       158,907,973  

New York — 8.6%

 

Metropolitan Transportation Authority, RB, BAB

    

6.67%, 11/15/39

    2,220        3,150,664  

7.34%, 11/15/39(b)

    13,245        21,419,536  

Series TR, 6.69%, 11/15/40(b)

    13,000        18,705,375  

Metropolitan Transportation Authority, Refunding RB, Series C-2, 5.18%, 11/15/49

    4,370        5,959,330  

New York City Transitional Finance Authority Future Tax Secured Revenue, RB, BAB, 5.57%, 11/01/38(b)

    19,000        24,713,357  

New York State Dormitory Authority, RB, BAB, Series H, 5.39%, 03/15/40(b)

    15,000        19,825,290  
Security   Par
(000)
     Value  

New York (continued)

    

New York State Dormitory Authority, Refunding RB, Series B, 5.75%, 01/01/29

  $ 6,010      $ 6,481,839  

Port Authority of New York & New Jersey, ARB, Consolidated, 192nd Series, 4.81%, 10/15/65

    14,825        20,346,052  

Port Authority of New York & New Jersey, RB

    

Consolidated, 165th Series, 5.65%, 11/01/40

    2,750        3,758,200  

Consolidated, 168th Series, 4.93%, 10/01/51

    3,860        5,393,547  
    

 

 

 
       129,753,190  

Ohio — 6.3%

 

American Municipal Power, Inc., RB, Series B, 7.83%, 02/15/41

    10,000        16,365,490  

American Municipal Power, Inc., Refunding RB, BAB, Series B, 6.45%, 02/15/44

    10,000        14,922,720  

Franklin County Convention Facilities Authority, RB, BAB, 6.64%, 12/01/42(b)

    30,575        47,261,367  

Ohio University, RB, 5.59%, 12/01/2114

    10,100        15,677,311  
    

 

 

 
       94,226,888  

Oklahoma — 0.6%

 

Oklahoma Development Finance Authority, RB, Series B, 11.00%, 09/01/41(a)

    3,000        3,565,518  

Oklahoma Municipal Power Authority, RB, BAB, 6.44%, 01/01/45(b)

    3,500        5,295,010  
    

 

 

 
       8,860,528  

Pennsylvania — 4.0%

 

Commonwealth Financing Authority, RB

    

Series A, 3.86%, 06/01/38

    2,210        2,482,025  

Series A, 4.14%, 06/01/38

    6,200        7,087,573  

Series A, 3.81%, 06/01/41

    4,920        5,695,077  

Series A, 2.99%, 06/01/42

    11,285        11,566,188  

Pennsylvania Economic Development Financing Authority, RB, BAB, Series B, 6.53%, 06/15/39

    23,050        32,797,937  
    

 

 

 
       59,628,800  

Puerto Rico — 2.6%

 

Puerto Rico Sales Tax Financing Corp. Sales Tax Revenue, RB

    

Series A-1, Restructured, 4.75%, 07/01/53

    3,465        3,951,763  

Series A-2, Restructured, 4.33%, 07/01/40

    5,000        5,643,900  

Series A-2, Restructured, 4.55%, 07/01/40

    14,899        15,196,801  

Series A-2, Restructured, 4.78%, 07/01/58

    12,447        14,196,800  
    

 

 

 
       38,989,264  

South Carolina — 3.0%

 

South Carolina Public Service Authority, RB, Series F, (AGM-CR), 5.74%, 01/01/30

    5,000        5,968,555  

South Carolina Public Service Authority, RB, BAB, Series C, (AGM-CR), 6.45%, 01/01/50(b)

    11,290        18,841,621  

South Carolina Public Service Authority, Refunding RB, Series D, 4.77%, 12/01/45

    10,085        13,371,510  

South Carolina Student Loan Corp., RB, Series A, 3.59%, 12/01/39

    6,285        6,328,587  
    

 

 

 
       44,510,273  
 

 

 

12  

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Schedule of Investments   (continued)

December 31, 2021

  

BlackRock Taxable Municipal Bond Trust (BBN)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Tennessee — 3.8%

   

Memphis-Shelby County Industrial Development Board, Refunding TA, Series B, 5.45%, 07/01/45

  $ 5,875     $ 5,553,350  

Metropolitan Government of Nashville & Davidson County Convention Center Authority, RB, BAB, Series A2, 7.43%, 07/01/43(b)

    35,105       51,971,969  
   

 

 

 
      57,525,319  
Texas — 4.6%            

Arlington Higher Education Finance Corp., Refunding RB, Series B, 4.00%, 08/15/28

    1,355       1,367,706  

City of Austin TX Rental Car Special Facility, RB, ARB, 5.75%, 11/15/22(f)

    5,000       5,227,535  

City of San Antonio Texas Customer Facility Charge Revenue, ARB, 5.87%, 07/01/45(b)

    7,500       8,170,800  

Dallas Area Rapid Transit, RB, BAB, 5.02%, 12/01/48(b)

    2,500       3,500,935  

Dallas Fort Worth International Airport, Refunding RB, Series C, 3.09%, 11/01/40.

    10,155       10,554,904  

New Hope Higher Education Finance Corp., RB, 5.00%, 06/15/27(a)

    390       391,583  

North Texas Tollway Authority, Refunding RB, 3.01%, 01/01/43

    6,800       6,927,888  

Port Beaumont Navigation District, Refunding RB, Series B, 6.00%, 01/01/25(a)

    1,085       1,119,202  

Port of Beaumont Industrial Development Authority RB, 4.10%, 01/01/28(a)

    10,500       10,181,965  

Texas Private Activity Bond Surface Transportation Corp., RB, Series B, 3.92%, 12/31/49

    20,000       22,359,000  
   

 

 

 
      69,801,518  
Utah — 2.5%            

Utah Transit Authority, RB, BAB, 5.71%, 06/15/40(b)

    26,405       36,924,224  
   

 

 

 

Virginia — 2.8%

   

Tobacco Settlement Financing Corp., Refunding RB, Series A-1, 6.71%, 06/01/46

    31,220       32,833,793  

Virginia Housing Development Authority, RB, M/F Housing, Series D, 3.64%, 06/01/45(b)

    8,435       8,921,607  
   

 

 

 
      41,755,400  

Washington — 1.8%

   

Washington State Convention Center Public Facilities District, RB, BAB, 6.79%, 07/01/40

    20,895       27,300,425  

West Virginia — 3.6%

   

Tobacco Settlement Finance Authority, RB, Series B, 0.00%, 06/01/47(e)

    1,600       184,504  

Tobacco Settlement Finance Authority, Refunding RB

   

Series A, Class 1, 4.31%, 06/01/49

    40,000       41,489,160  

Series B, Class 2, 4.88%, 06/01/49

    12,175       12,814,979  
   

 

 

 
      54,488,643  
Security   Par
(000)
    Value  

Wisconsin — 0.5%

   

Public Finance Authority, RB

   

6.75%, 11/01/24(a)

  $ 3,580     $ 3,343,090  

4.75%, 06/15/25(a)

    735       735,507  

5.25%, 06/15/26(a)

    200       199,954  

5.38%, 06/15/28(a)

    400       401,813  

5.25%, 01/01/31(a)

    1,385       1,399,617  

Series B, 6.00%, 06/15/24

    435       437,588  

Public Finance Authority, Refunding RB, Series B, 6.13%, 10/01/49(a)

    1,470       1,590,118  
   

 

 

 
      8,107,687  
   

 

 

 

Total Municipal Bonds — 137.8%
(Cost: $1,654,608,406)

      2,078,361,084  
   

 

 

 

Total Long-Term Investments — 148.2%
(Cost: $1,787,297,945)

      2,234,764,532  
   

 

 

 
     Shares         

Short-Term Securities

   
Money Market Funds — 0.6%            

BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.00%(g)(h)

    8,612,214       8,612,214  
   

 

 

 

Total Short-Term Securities — 0.6%
(Cost: $8,612,214)

      8,612,214  
   

 

 

 

Total Investments — 148.8%
(Cost: $1,795,910,159)

      2,243,376,746  

Liabilities in Excess of Other Assets — (48.8)%

 

    (735,238,973
   

 

 

 

Net Assets — 100.0%

    $ 1,508,137,773  
   

 

 

 

 

(a)

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(b) 

All or a portion of the security has been pledged as collateral in connection with outstanding reverse repurchase agreements.

(c) 

Issuer filed for bankruptcy and/or is in default.

(d) 

Non-income producing security.

(e)

Zero-coupon bond.

(f)

U.S. Government securities held in escrow, are used to pay interest on this security as well as to retire the bond in full at the date indicated, typically at a premium to par.

(g)

Affiliate of the Trust.

(h)

Annualized 7-day yield as of period end.

 
 

 

For Trust compliance purposes, the Trust’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  13


Schedule of Investments   (continued)

December 31, 2021

  

BlackRock Taxable Municipal Bond Trust (BBN)

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Trust during the period ended December 31, 2021 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer    Value at
07/31/21
     Purchases
at Cost
     Proceeds
from Sales
     Net
Realized
Gain (Loss)
     Change in
Unrealized
Appreciation
(Depreciation)
     Value at
12/31/21
     Shares
Held at
12/31/21
     Income      Capital Gain
Distributions
from
Underlying
Funds
 

BlackRock Liquidity Funds, T-Fund, Institutional Class

   $ 6,413,514      $ 2,198,700 (a)     $      $      $      $ 8,612,214        8,612,214      $ 368      $  
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 

 

  (a)

Represents net amount purchased (sold).

 

Reverse Repurchase Agreements

 

               
Counterparty     
Interest
Rate
 
 
   
Trade
Date
 
 
    
Maturity
Date
 
(a)  
     Face Value       

Face Value
Including
Accrued Interest
 
 
 
   Type of Non-Cash Underlying
Collateral
    

Remaining
Contractual Maturity
of the Agreements
 
 
(a) 

Barclays Bank PLC

     0.35 %(b)      06/09/21        Open      $ 1,082,244      $ 1,084,401      Municipal Bonds      Open/Demand  

Credit Suisse Securities (USA) LLC

     0.30 (b)      06/09/21        Open        6,267,938        6,278,645      Corporate Bonds      Open/Demand  

Credit Suisse Securities (USA) LLC

     0.30 (b)      06/09/21        Open        8,458,414        8,472,863      Corporate Bonds      Open/Demand  

Credit Suisse Securities (USA) LLC

     0.30 (b)      06/09/21        Open        13,612,500        13,635,755      Corporate Bonds      Open/Demand  

Credit Suisse Securities (USA) LLC

     0.30 (b)      06/09/21        Open        6,731,250        6,742,749      Corporate Bonds      Open/Demand  

RBC Capital Markets LLC

     0.28 (b)      06/09/21        Open        8,069,688        8,082,554      Corporate Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      06/09/21        Open          34,620,000        34,708,714      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      06/09/21        Open        7,212,500        7,230,982      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      06/09/21        Open        49,342,500        49,468,940      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      06/09/21        Open        28,216,012        28,288,316      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      06/09/21        Open        32,070,000        32,152,179      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      06/09/21        Open        31,080,106        31,159,749      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.35 (b)      06/11/21        Open        22,087,500        22,130,663      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.35 (b)      06/11/21        Open        6,087,500        6,099,396      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.35 (b)      06/11/21        Open        4,850,000        4,859,478      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.35 (b)      06/11/21        Open        21,735,000        21,777,474      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.35 (b)      06/11/21        Open        2,984,375        2,990,207      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.35 (b)      06/11/21        Open        9,030,000        9,047,646      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.35 (b)      06/11/21        Open        17,681,250        17,715,802      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.35 (b)      06/11/21        Open        3,948,000        3,955,715      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.35 (b)      06/11/21        Open        10,181,125        10,201,020      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.40 (b)      06/11/21        Open        8,677,500        8,696,880      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      06/11/21        Open        14,557,644        14,594,220      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      06/11/21        Open        7,200,000        7,218,090      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      06/11/21        Open        15,562,500        15,601,601      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      06/11/21        Open        3,666,156        3,675,367      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      06/11/21        Open        16,692,500        16,734,440      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      06/11/21        Open        39,865,000        39,965,161      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      06/11/21        Open        27,580,400        27,649,696      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.30 (b)      06/23/21        Open        7,461,825        7,473,764      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.40 (b)      06/29/21        Open        15,574,325        15,606,339      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.40 (b)      06/29/21        Open        15,712,500        15,744,798      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      06/30/21        Open        18,956,250        19,000,086      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      07/27/21        Open        8,582,613        8,599,456      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      07/27/21        Open        26,900,000        26,952,791      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.35 (b)      08/02/21        Open        21,327,500        21,358,602      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.35 (b)      08/02/21        Open        12,125,000        12,142,800      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.35 (b)      08/02/21        Open        17,972,500        17,998,710      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.35 (b)      08/02/21        Open        13,287,500        13,307,007      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.35 (b)      08/02/21        Open        4,760,000        4,766,942      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.35 (b)      08/02/21        Open        13,837,500        13,857,680      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.35 (b)      08/02/21        Open        12,612,500        12,631,016      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      08/02/21        Open        5,494,500        5,504,871      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      08/02/21        Open        6,781,250        6,794,050      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      08/02/21        Open        4,230,000        4,237,984      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      08/02/21        Open        7,875,000        7,889,864      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      08/02/21        Open        3,195,000        3,201,030      Municipal Bonds      Open/Demand  

 

 

14  

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Schedule of Investments   (continued)

December 31, 2021

  

BlackRock Taxable Municipal Bond Trust (BBN)

 

Reverse Repurchase Agreements (continued)

 

Counterparty   

Interest

Rate

   

Trade

Date

     Maturity
Date(a)
     Face Value     

Face Value

Including

Accrued Interest

     Type of Non-Cash Underlying
Collateral
  

Remaining

Contractual Maturity

of the Agreements(a)

 

Barclays Bank PLC

     0.40 %(b)      08/03/21        Open      $ 23,925,000      $ 23,964,875      Municipal Bonds      Open/Demand  

Barclays Bank PLC

     0.25 (b)      12/01/21        Open        6,887,210        6,888,645      Corporate Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      12/01/21        Open        14,184,137        14,189,634      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      12/14/21        Open        10,813,075        10,815,373      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      12/14/21        Open        17,979,325        17,983,145      Municipal Bonds      Open/Demand  

RBC Capital Markets LLC

     0.45 (b)      12/14/21        Open        18,476,562        18,480,489      Municipal Bonds      Open/Demand  
          

 

 

    

 

 

       
           $ 768,100,674      $ 769,608,654        
          

 

 

    

 

 

       

 

  (a) 

Certain agreements have no stated maturity and can be terminated by either party at any time.

 
  (b) 

Variable rate security. Rate as of period end and maturity is the date the principal owed can be recovered through demand.

 

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

Description   

Number of

Contracts

      

Expiration

Date

      

Notional

Amount (000)

      

Value/

Unrealized

Appreciation

(Depreciation)

 

Short Contracts

                 

10-Year U.S. Treasury Note.

     1,345          03/22/22        $  175,291        $  (1,650,539

U.S. Long Bond

     1,473          03/22/22          235,588          (2,377,375

5-Year U.S. Treasury Note

     640          03/31/22          77,365          (296,403
                 

 

 

 
                  $  (4,324,317
                 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statement of Assets and Liabilities were as follows:

 

    

Commodity

Contracts

    

Credit

Contracts

    

Equity

Contracts

    

Foreign

Currency

Exchange

Contracts

    

Interest

Rate

Contracts

      

Other

Contracts

     Total  

Liabilities — Derivative Financial Instruments

                     

Futures contracts

                                                                  

Unrealized depreciation on futures contracts

  $      $      $      $      $ 4,324,317        $      $ 4,324,317  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

    

 

 

 

For the period ended December 31, 2021, the effect of derivative financial instruments in the Statement of Operations was as follows:

 

    

Commodity

Contracts

    

Credit

Contracts

    

Equity

Contracts

    

Foreign

Currency

Exchange

Contracts

    

Interest

Rate

Contracts

      

Other

Contracts

     Total  

Net Realized Gain (Loss) from:

                     

Futures contracts

  $      $      $      $      $ (2,756,790      $      $ (2,756,790
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                     

Futures contracts

  $      $      $      $      $ 12,221,731        $      $ 12,221,731  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

                                                               

Average notional value of contracts — short

                                                          $ 491,548,488  

For more information about the Trust’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

 

 

C H E D U L E   O F   I N V E S  T M E N T S

  15


Schedule of Investments   (continued)

December 31, 2021

  

BlackRock Taxable Municipal Bond Trust (BBN)

 

Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of financial instruments. For a description of the input levels and information about the Trust’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the Trust’s financial instruments categorized in the fair value hierarchy. The breakdown of the Trust’s financial instruments into major categories is disclosed in the Schedule of Investments above.

 

      Level 1        Level 2        Level 3        Total  

Assets

                 

Investments

                 

Long-Term Investments

                 

Corporate Bonds

   $        $ 156,403,448        $        $ 156,403,448  

Municipal Bonds

              2,078,361,084                   2,078,361,084  

Short-Term Securities

                 

Money Market Funds

     8,612,214                            8,612,214  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 8,612,214        $  2,234,764,532        $        $  2,243,376,746  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(a)

                 

Liabilities

                 

Interest Rate Contracts

   $ (4,324,317      $        $        $ (4,324,317
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Derivative financial instruments are futures contracts. Futures contracts are valued at the unrealized appreciation (depreciation) on the instrument.

 

The Trust may hold assets and/or liabilities in which the fair value approximates the carrying amount or face value, including accrued interest, for financial statement purposes. As of period end, reverse repurchase agreements of $769,608,654 are categorized as Level 2 within the fair value hierarchy.

See notes to financial statements.

 

 

16  

2 0 2 1   B L A C K O C K  N N U A L  E P O R T   T O  H A R E H O L D E R S


Statement of Assets and Liabilities

December 31, 2021

 

     BBN  

ASSETS

 

Investments, at value — unaffiliated(a)

  $ 2,234,764,532  

Investments, at value — affiliated(b)

    8,612,214  

Cash

    694,140  

Cash pledged:

 

Collateral — reverse repurchase agreements

    4,895,726  

Futures contracts

    7,779,000  

Receivables:

 

Investments sold

    5,950,000  

Dividends — affiliated

    45  

Interest — unaffiliated

    25,559,020  

Variation margin on futures contracts

    985,641  

Deferred offering costs

    201,350  

Prepaid expenses

    11,701  
 

 

 

 

Total assets

    2,289,453,369  
 

 

 

 

LIABILITIES

 

Cash received as collateral for reverse repurchase agreements

    1,241,000  

Reverse repurchase agreements, at value

    769,608,654  

Payables:

 

Accounting services fees

    75,582  

Custodian fees

    10,495  

Income dividend distributions

    7,334,817  

Investment advisory fees

    1,060,627  

Trustees’ and Officer’s fees

    665,176  

Other accrued expenses

    8,894  

Professional fees

    259,192  

Transfer agent fees

    93,564  

Variation margin on futures contracts

    957,595  
 

 

 

 

Total liabilities

    781,315,596  
 

 

 

 

NET ASSETS

  $  1,508,137,773  
 

 

 

 

NET ASSETS CONSIST OF

 

Paid-in capital(c)(d)(e)

  $ 1,148,801,678  

Accumulated earnings

    359,336,095  
 

 

 

 

NET ASSETS

  $ 1,508,137,773  
 

 

 

 

Net asset value

  $ 25.27  
 

 

 

 

(a) Investments, at cost — unaffiliated

  $ 1,787,297,945  

(b) Investments, at cost — affiliated

  $ 8,612,214  

(c)  Shares outstanding

    59,681,177  

(d) Shares authorized

    Unlimited  

(e) Par value

  $ 0.001  

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T S

  17


Statements of Operations

 

    BBN  
     Period from
08/01/21
to 12/31/21
           Year Ended
07/31/21
 

INVESTMENT INCOME

     

Dividends — affiliated

  $ 368       $ 6,368  

Interest — unaffiliated

    38,737,813         93,563,922  
 

 

 

     

 

 

 

Total investment income

    38,738,181         93,570,290  
 

 

 

     

 

 

 

EXPENSES

     

Investment advisory

    5,174,858         11,620,974  

Professional

    115,866         156,709  

Accounting services

    93,821         209,882  

Transfer agent

    85,011         111,234  

Trustees and Officer

    49,897         209,662  

Registration

    8,424         19,482  

Custodian

    4,782         42,566  

Miscellaneous

    16,681         36,030  
 

 

 

     

 

 

 

Total expenses excluding interest expense

    5,549,340         12,406,539  

Interest expense

    1,252,940         4,891,046  
 

 

 

     

 

 

 

Total expenses

    6,802,280         17,297,585  

Less:

     

Fees waived and/or reimbursed by the Manager

    (1,669       (15,143
 

 

 

     

 

 

 

Total expenses after fees waived and/or reimbursed

    6,800,611         17,282,442  
 

 

 

     

 

 

 

Net investment income

    31,937,570         76,287,848  
 

 

 

     

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

     

Net realized gain (loss) from:

     

Investments — unaffiliated

    1,797,622         12,644,083  

Futures contracts

    (2,756,790       17,984,760  
 

 

 

     

 

 

 
    (959,168       30,628,843  
 

 

 

     

 

 

 

Net change in unrealized appreciation (depreciation) on:

     

Investments — unaffiliated

    (44,747,713       21,613,659  

Futures contracts

    12,221,731         (15,679,597
 

 

 

     

 

 

 
    (32,525,982       5,934,062  
 

 

 

     

 

 

 

Net realized and unrealized gain (loss)

    (33,485,150       36,562,905  
 

 

 

     

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

  $ (1,547,580     $ 112,850,753  
 

 

 

     

 

 

 

See notes to financial statements.

 

 

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Statement of Changes in Net Assets

 

    BBN  
    Period from
08/01/21
to 12/31/21
          Year Ended July 31,  
           

2021

    2020  

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

  $ 31,937,570       $ 76,287,848     $ 82,543,682  

Net realized gain (loss)

    (959,168       30,628,843       (54,447,339

Net change in unrealized appreciation (depreciation)

    (32,525,982       5,934,062       115,295,437  
 

 

 

     

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    (1,547,580       112,850,753       143,391,780  
 

 

 

     

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

From net investment income

    (39,353,609       (79,862,619     (76,644,636

Return of capital

    (3,701,878       (393,632      
 

 

 

     

 

 

   

 

 

 

Decrease in net assets resulting from distributions to shareholders

    (43,055,487       (80,256,251     (76,644,636
 

 

 

     

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

Net proceeds from the issuance of shares.

    17,881,084         41,762,503        

Reinvestment of distributions

    1,041,469         2,657,099       1,053,928  
 

 

 

     

 

 

   

 

 

 

Net increase in net assets derived from capital share transactions.

    18,922,553         44,419,602       1,053,928  
 

 

 

     

 

 

   

 

 

 

NET ASSETS

       

Total increase (decrease) in net assets

    (25,680,514       77,014,104       67,801,072  

Beginning of period

    1,533,818,287         1,456,804,183       1,389,003,111  
 

 

 

     

 

 

   

 

 

 

End of period

  $  1,508,137,773       $  1,533,818,287     $  1,456,804,183  
 

 

 

     

 

 

   

 

 

 

 

(a) 

Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T S

  19


 

Statements of Cash Flows

 

    BBN  
     Period from
08/01/21
to 12/31/21
    Year Ended
07/31/21
 

CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES

   

Net increase (decrease) in net assets resulting from operations

  $ (1,547,580   $ 112,850,753  

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used for) operating activities

   

Proceeds from sales of long-term investments

    54,074,103       336,596,130  

Purchases of long-term investments

    (126,414,625     (373,215,914

Net proceeds from purchases of short-term securities

    (2,198,700     (91,769

Amortization of premium and accretion of discount on investments and other fees

    356,682       37,251  

Net realized gain on investments

    (1,797,622     (12,644,083

Net unrealized (appreciation) depreciation on investments

    44,747,713       (21,613,659

(Increase) Decrease in Assets

   

Receivables

   

Dividends — affiliated

    37       1,898  

Interest — unaffiliated

    (6,351,593     2,213,389  

Variation margin on futures contracts

    (985,641     10,156  

Prepaid expenses

    (11,701     10,509  

Deferred offering costs

    74,017       (275,367

Increase (Decrease) in Liabilities

   

Cash received

   

Collateral — reverse repurchase agreements

    (508,000     1,749,000  

Payables

   

Accounting services fees

    (124,760     83,240  

Custodian fees

    (28,767     21,076  

Interest expense

    962,986       (3,596,665

Investment advisory fees

    23,267       44,539  

Trustees’ and Officer’s fees

    27,620       134,844  

Other accrued expenses

    (16,194     5,015  

Professional fees

    64,201       54,121  

Transfer agent fees

    23,565        

Variation margin on futures contracts

    (750,188     1,684,060  
 

 

 

   

 

 

 

Net cash provided by (used for) operating activities

    (40,381,180     44,058,524  
 

 

 

   

 

 

 

CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES

   

Cash dividends paid to Common Shareholders

    (34,679,201     (77,599,152

Payments for offering costs

    (210,186     210,186  

Proceeds from issuance of capital shares

    19,073,032       40,570,555  

Net borrowing of reverse repurchase agreements

    61,845,401       (1,657,113
 

 

 

   

 

 

 

Net cash provided by (used for) for financing activities

    46,029,046       (38,475,524
 

 

 

   

 

 

 

CASH IMPACT FROM FOREIGN EXCHANGE FLUCTUATIONS CASH

   

Net increase in restricted and unrestricted cash

    5,647,866       5,583,000  

Restricted and unrestricted cash at beginning of period

    7,721,000       2,138,000  
 

 

 

   

 

 

 

Restricted and unrestricted cash at end of period

  $ 13,368,866     $ 7,721,000  
 

 

 

   

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

   

Cash paid during the period for interest expense

  $ 289,954     $ 8,487,711  
 

 

 

   

 

 

 

NON-CASH FINANCING ACTIVITIES

   

Value of capital shares issued in reinvestment of distributions paid to Common Shareholders

  $ 1,041,469     $ 2,657,099  
 

 

 

   

 

 

 

 

 

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Statements of Cash Flows   (continued)

 

    BBN  
     Period from
08/01/21
to 12/31/21
     Year Ended
07/31/21
 

RECONCILIATION OF RESTRICTED AND UNRESTRICTED CASH AT THE END OF PERIOD TO THE STATEMENT OF ASSETS AND LIABILITIES

    

Cash

  $ 694,140      $  

Cash pledged

    

Collateral — reverse repurchase agreements

    4,895,726         

Futures contracts

    7,779,000             7,721,000  
 

 

 

    

 

 

 
  $    13,368,866      $ 7,721,000  
 

 

 

    

 

 

 

See notes to financial statements.

 

 

I N A N C I A L  T A T E M E N T S

  21


Financial Highlights

(For a share outstanding throughout each period)

 

     BBN  
    

Period from

08/01/21

to 12/31/21

         

Year Ended July 31,

 
          2021     2020     2019     2018     2017  
               

Net asset value, beginning of period

   $ 26.02       $  25.48     $ 24.32     $ 23.03     $ 23.45     $ 25.02  
  

 

 

     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

     0.55         1.32       1.44       1.38       1.47       1.58  

Net realized and unrealized gain (loss)

     (0.57       0.61       1.06       1.33       (0.32     (1.57
  

 

 

     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations.

     (0.02       1.93       2.50       2.71       1.15       0.01  
  

 

 

     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(b)

              

From net investment income

     (0.67       (1.38     (1.34     (1.41     (1.57     (1.58

Return of capital

     (0.06       (0.01           (0.01            
  

 

 

     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

     (0.73       (1.39     (1.34     (1.42     (1.57     (1.58
  

 

 

     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of period

   $ 25.27       $ 26.02     $ 25.48     $ 24.32     $ 23.03     $ 23.45  
  

 

 

     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Market price, end of period

   $ 26.18       $ 26.31     $ 26.60     $ 23.89     $ 21.99     $ 23.29  
  

 

 

     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return(c)

              

Based on net asset value

     (0.08 )%(d)         7.96     10.73     12.60     5.23     0.45 %(e)  
  

 

 

     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Based on market price

     2.37 %(d)         4.56     17.68     15.84     1.17     2.18
  

 

 

     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets(f)

              

Total expenses

     1.07 %(g)         1.20     1.97     2.53     2.03     1.52
  

 

 

     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed

     1.07 %(g)         1.20     1.97     2.53     2.03     1.52
  

 

 

     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed and excluding interest expense

     0.87 %(g)         0.86     0.91     0.93     0.91     0.92
  

 

 

     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

     5.01 %(g)         5.31     5.88     6.02     6.27     6.79
  

 

 

     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

              

Net assets, end of period (000)

   $ 1,508,138       $ 1,533,818     $ 1,456,804     $ 1,389,003     $ 1,315,521     $ 1,339,058  
  

 

 

     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Borrowings outstanding, end of period (000)

   $ 769,609       $ 706,800     $ 712,054     $ 799,955     $ 742,657     $ 729,035  
  

 

 

     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate

     3       16     15     7     8     7
  

 

 

     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 

Based on average 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)

Aggregate total return.

(e)

The Trust’s total return includes a reimbursement by an affiliate for a realized investment loss. Excluding this payment, the Trust’s total return would have been 0.32%. (f) Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

(g)

Annualized.

See notes to financial statements.

 

 

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Notes to Financial Statements

 

1.

ORGANIZATION

BlackRock Taxable Municipal Bond Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Trust is registered as a diversified, closed-end management investment company. The Trust is organized as a Delaware statutory trust. The Trust determines and makes available for publication the net asset value (“NAV”) of its Common Shares on a daily basis.

The Trust, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of open-end non-index fixed-income funds and all BlackRock-advised closed-end funds referred to as the BlackRock Fixed-Income Complex.

On September 24, 2021, the Board of Trustees of the Trust (the “Board”) approved a change in the fiscal year end of the Trust, effective as of December 31, 2021, from July 31 to December 31.

 

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. The Trust 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 the Trust enters into certain investments (e.g., futures contracts) or certain borrowings (e.g., reverse repurchase transactions) that would be treated as “senior securities” for 1940 Act purposes, the Trust 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 investments or borrowings to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, the Trust 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 portion of distributions, if any, that exceeds a fund’s current and accumulated earnings and profits, as measured on a tax basis, constitute a non-taxable return of capital. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

Deferred Compensation Plan: Under the Deferred Compensation Plan (the “Plan”) approved by the Board, the trustees who are not “interested persons” of the Trust, as defined in the 1940 Act (“Independent Trustees”), 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 Trustees. This has the same economic effect for the Independent Trustees as if the Independent Trustees 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 the Trust, as applicable. Deferred compensation liabilities, if any, are included in the Trustees’ and Officer’s fees payable in the Statement of Assets and Liabilities and will remain as a liability of the Trust until such amounts are distributed in accordance with the Plan.

Indemnifications: In the normal course of business, the Trust enters into contracts that contain a variety of representations that provide general indemnification. The Trust’s maximum exposure under these arrangements is unknown because it involves future potential claims against the Trust, which cannot be predicted with any certainty.

Other: Expenses directly related to the Trust are charged to the Trust. 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.

 

3.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: The Trust’s investments are valued at fair value (also referred to as “market value” within the financial statements) each day that the Trust 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. The Trust determines the fair values of its financial instruments using various independent dealers or pricing services under policies approved by the Board. If a security’s 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.

 

 

O T E S   T O  I N A N C I A L  T A T E M E N T S

  23


Notes to Financial Statements  (continued)

 

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of the Trust’s 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. Floating rate loan interests are valued at the mean of the bid prices from one or more independent brokers or dealers as obtained from a third-party pricing service. 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 day’s published NAV.

 

   

Futures contracts are valued based on that day’s last reported settlement or trade price on the exchange where the contract is traded.

If events (e.g., 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 the Trust might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-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 the Trust 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 market-corroborated 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 Committee’s 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.

Reverse Repurchase Agreements: Reverse repurchase agreements are agreements with qualified third-party broker dealers in which a fund sells securities to a bank or broker-dealer and agrees to repurchase the same securities at a mutually agreed upon date and price. A fund receives cash from the sale to use for other investment purposes. During the term of the reverse repurchase agreement, a fund continues to receive the principal and interest payments on the securities sold. Certain agreements have no stated maturity and can be terminated by either party at any time. Interest on the value of the reverse repurchase agreements issued and outstanding is based upon competitive market rates determined at the time of issuance. A fund may utilize reverse repurchase agreements when it is anticipated that the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction. Reverse repurchase agreements involve leverage risk. If a fund suffers a loss on its investment of the transaction proceeds from a reverse repurchase agreement, a fund would still be required to pay the full repurchase price. Further, a fund remains subject to the risk that the market value of the securities repurchased declines below the repurchase price. In such cases, a fund would be required to return a portion of the cash received from the transaction or provide additional securities to the counterparty.

Cash received in exchange for securities delivered plus accrued interest due to the counterparty is recorded as a liability in the Statement of Assets and Liabilities at face value including accrued interest. Due to the short-term nature of the reverse repurchase agreements, face value approximates fair value. Interest payments made by a fund to the

 

 

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Notes to Financial Statements  (continued)

 

counterparties are recorded as a component of interest expense in the Statement of Operations. In periods of increased demand for the security, a fund may receive a fee for the use of the security by the counterparty, which may result in interest income to a fund.

For the period ended December 31, 2021, the average daily amount of reverse repurchase agreements outstanding and the weighted average interest rate for the Trust were $723,310,089 and 0.41%, respectively.

Reverse repurchase transactions are entered into by a fund under Master Repurchase Agreements (each, an “MRA”), which permit a fund, under certain circumstances, including an event of default (such as bankruptcy or insolvency), to offset payables and/or receivables under the MRA with collateral held and/or posted to the counterparty and create one single net payment due to or from a fund. With reverse repurchase transactions, typically a fund and counterparty under an MRA are permitted to sell, re-pledge, or use the collateral associated with the transaction. Bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of the MRA counterparty’s bankruptcy or insolvency. Pursuant to the terms of the MRA, a fund receives or posts securities and cash as collateral with a market value in excess of the repurchase price to be paid or received by a fund upon the maturity of the transaction. Upon a bankruptcy or insolvency of the MRA counterparty, a fund is considered an unsecured creditor with respect to excess collateral and, as such, the return of excess collateral may be delayed.

As of period end, the following table is a summary of the Trust’s open reverse repurchase agreements by counterparty which are subject to offset under an MRA on a net basis:

 

         
    Reverse Repurchase      Fair Value of
Non-Cash Collateral
Pledged Including
    Cash Collateral        
Counterparty     Agreements        Accrued Interest (a)      Pledged/Received (a)      Net Amount  

Barclays Bank PLC

  $ (265,602,980    $ 265,602,980     $     $  

Credit Suisse Securities (USA) LLC

    (35,130,012      35,130,012              

RBC Capital Markets LLC

    (468,875,662      468,875,662              
 

 

 

    

 

 

   

 

 

   

 

 

 
  $ (769,608,654    $ 769,608,654     $     $  
 

 

 

    

 

 

   

 

 

   

 

 

 

 

  (a)

Net collateral, including accrued interest, with a value of $844,348,762 has been pledged/received in connection with open reverse repurchase agreements. Excess of net collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 

In the event the counterparty of securities under an MRA files for bankruptcy or becomes insolvent, a fund’s use of the proceeds from the agreement may be restricted while the counterparty, or its trustee or receiver, determines whether or not to enforce a fund’s obligation to repurchase the securities.

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

The Trust engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Trust and/or to manage its 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 Schedule 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 Trust 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 Trust is required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s 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 Statement of Assets and Liabilities.

Securities deposited as initial margin are designated in the Schedule of Investments and cash deposited, if any, are shown as cash pledged for futures contracts in the Statement of Assets and Liabilities. Pursuant to the contract, the Trust agrees 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 Statement of Assets and Liabilities. When the contract is closed, a realized gain or loss is recorded in the Statement 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: The Trust entered into an Investment Advisory Agreement with the Manager, the Trust’s 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 the Trust’s portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of the Trust.

For such services, the Trust pays the Manager a monthly fee at an annual rate equal to 0.55% of the average daily value of the Trust’s managed assets.

 

 

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  25


Notes to Financial Statements  (continued)

 

For purposes of calculating this fee, “managed assets” are determined as total assets of the Trust (including any assets attributable to money borrowed for investment purposes) less the sum of its accrued liabilities (other than money borrowed for investment purposes).

Distribution Fees: BBN has entered into a Distribution Agreement with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager, to provide for distribution of BBN 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 BBN’s common shares and a portion of such commission is re-allowed to broker-dealers engaged by BRIL. The commissions retained by BRIL were as follows:

 

     Amounts Retained  
Trust Name   Period from
08/01/21
to 12/31/21
     Year Ended
07/31/21
 

 

 

BBN

  $ 36,142      $ 84,419  

Expense Waivers: The Manager contractually agreed to waive its investment advisory fees by the amount of investment advisory fees the Trust pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”) through June 30, 2023. The contractual agreement may be terminated upon 90 days’ notice by a majority of the Independent Trustees, or by a vote of a majority of the outstanding voting securities of the Trust. This amount is included in fees waived and/or reimbursed by the Manager in the Statement of Operations. The amounts waived were as follows:

 

     Amounts Waived  
Trust Name   Period from
08/01/21
to 12/31/21
     Year Ended
07/31/21
 

 

 

BBN

  $ 1,669      $ 15,143  

The Manager contractually agreed to waive its investment advisory fee with respect to any portion of the Trust’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee through June 30, 2023. 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 Trust’s Independent Trustees. For the period ended December 31, 2021 and year ended July 31, 2021, there were no fees waived by the Manager pursuant to this arrangement.

Trustees and Officers: Certain trustees and/or officers of the Trust are directors and/or officers of BlackRock or its affiliates. The Trust reimburses the Manager for a portion of the compensation paid to the Trust’s Chief Compliance Officer, which is included in Trustees and Officer in the Statement of Operations.

 

7.

PURCHASES AND SALES

For the period ended December 31, 2021, purchases and sales of investments, excluding short-term investments, were $126,414,625 and $60,024,103, respectively.

 

8.

INCOME TAX INFORMATION

It is the Trust’s 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.

The Trust files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Trust’s U.S. federal tax returns generally remains open for a period of three fiscal years after they are filed. The statutes of limitations on the Trust’s 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 Trust as of December 31, 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 Trust’s financial statements.

The tax character of distributions paid was as follows:

 

 

 
Trust Name   Period from
08/01/21
to 12/31/21
    Year Ended
07/31/21
     Year Ended
07/31/20
 

 

 

BBN

      

Ordinary income

  $   39,353,609     $   79,862,619      $   76,644,636  

Return of Capital

    3,701,878       393,632         
 

 

 

   

 

 

    

 

 

 
  $ 43,055,487     $ 80,256,251      $ 76,644,636  
 

 

 

   

 

 

    

 

 

 

 

 

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Notes to Financial Statements  (continued)

 

As of December 31, 2021, the tax components of accumulated earnings (loss) were as follows:

 

 

 
Trust Name   Non-Expiring
Capital Loss
Carryforwards(a)
    Net Unrealized
Gains (Losses)(b)
     Total  

 

 

BBN

  $ (79,822,886   $ 439,158,981      $ 359,336,095  

 

 

 

  (a) 

Amounts available to offset future realized capital gains.

 
  (b) 

The difference between book-basis and tax-basis net unrealized gains was attributable primarily to the realization for tax purposes of unrealized gains/(losses) on certain futures contracts, amortization methods for premiums on fixed income securities, the accrual of income on securities in default, the deferral of compensation to trustees and the timing of distributions.

 

During the period ended December 31, 2021, the Trust utilized the following amounts of its capital loss carryforward:

 

 

 
Trust Name   Amounts  

 

 

BBN

  $ 11,262,563  

 

 

As of December 31, 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:

 

 

 
Trust Name   Tax Cost      Gross Unrealized
Appreciation
     Gross Unrealized
Depreciation
    Net Unrealized
Appreciation
(Depreciation)
 

 

 

BBN

  $ 1,796,223,144      $ 449,399,721      $ (2,246,119   $ 447,153,602  

 

 

 

9.

PRINCIPAL RISKS

In the normal course of business, the Trust invests in securities or other instruments and may enter into certain transactions, and such activities subject the Trust 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 Trust and its investments.

The Trust 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 Trust 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 the Trust.

The Build America Bonds (“BABs”) market is smaller, less diverse and less liquid than other types of municipal securities. Since the BABs program expired on December 31, 2010 and was not extended, BABs may be less actively traded, which may negatively affect the value of BABs held by the Trust.

The Trust may invest in BABs. Issuers of direct pay BABs held in the Trust’s portfolio receive a subsidy from the U.S. Treasury with respect to interest payment on bonds. There is no assurance that an issuer will comply with the requirements to receive such subsidy or that such subsidy will not be reduced or terminated altogether in the future. As of period end, the subsidy that issuers of direct payment BABs receive from the U.S. Treasury has been reduced as the result of budgetary sequestration, which has resulted, and which may continue to result, in early redemptions of BABs at par value. The early redemption of BABs at par value may result in a potential loss in value for investors of such BABs, including the Trust, who may have purchased the securities at prices above par, and may require the Trust to reinvest redemption proceeds in lower-yielding securities which could reduce the Trust’s income and distributions. Moreover, the elimination or reduction in subsidy from the federal government may adversely affect an issuer’s ability to repay or refinance BABs and the BABs’ credit ratings, which, in turn, may adversely affect the value of the BABs held by the Trust and the Trust’s NAV.

The Trust may invest without limitation in illiquid or less liquid investments or investments in which no secondary market is readily available or which are otherwise illiquid, including private placement securities. The Trust may not be able to readily dispose of such investments at prices that approximate those at which the Trust could sell such investments if they were more widely traded and, as a result of such illiquidity, the Trust may have to sell other investments or engage in borrowing transactions if necessary to raise funds to meet its obligations. Limited liquidity can also affect the market price of investments, thereby adversely affecting the Trust’s NAV and ability to make dividend distributions. 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: The Trust 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 the Trust to reinvest in lower yielding securities. The Trust may also be exposed to reinvestment risk, which is the risk that income from the Trust’s portfolio will decline if the Trust invests the proceeds from matured, traded or called fixed-income securities at market interest rates that are below the Trust portfolio’s 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 issuer’s 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

 

 

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  27


Notes to Financial Statements  (continued)

 

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 fund’s investments. The duration of this pandemic and its effects cannot be determined with certainty.

Counterparty Credit Risk: The Trust 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 Trust manages 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 Trust to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Trust’s exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statement of Assets and Liabilities, less any collateral held by the Trust.

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 Trust 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, the Trust 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 broker’s 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 broker’s customers, potentially resulting in losses to the Trust.

Concentration Risk: A diversified portfolio, where this is appropriate and consistent with a fund’s 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 the Trust’s portfolio are disclosed in its Schedule of Investments.

The Trust invests a substantial amount of its assets in issuers located in a single state or limited number of states. When a Trust concentrates its investments in this manner, it assumes the risk that economic, regulatory, political or social conditions affecting that state or group of states could have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio. Investment percentages in specific states or U.S. territories are presented in the Schedule of Investments.

The Trust invests a significant portion of its assets in fixed-income securities and/or uses 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 Trust 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 Kingdom’s Financial Conduct Authority announced a phase out of the London Interbank Offered Rate (“LIBOR”). Although many LIBOR rates will cease to be published or no longer will be representative of the underlying market they seek to measure after December 31, 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 Trust 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 Trust is uncertain.

 

10.

CAPITAL SHARE TRANSACTIONS

The Trust is authorized to issue an unlimited number of shares, all of which were initially classified as Common Shares. The par value for the Trust’s Common Shares is $0.001. The Board is authorized, however, to reclassify any unissued Common Shares to Preferred Shares without the approval of Common Shareholders.

For the periods shown, shares issued and outstanding increased by the following amounts as a result of dividend reinvestment:

 

     Period from
08/01/21
to 12/31/21
     Year Ended  
Trust Name    07/31/21      07/31/20  

BBN

    40,624        105,984        42,857  

 

 

The Trust participates in an open market share repurchase program (the “Repurchase Program”). From December 1, 2020 through November 30, 2021, the Trust 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. From December 1, 2021 through November 30, 2022, the Trust 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, 2021, subject to certain conditions. There is no assurance that the Trust will purchase shares in any particular amounts. For the period ended December 31, 2021 and year ended July 31, 2021, the Trust did not repurchase any shares.

BBN has filed a prospectus with the SEC allowing it to issue an additional 20,000,000 Common Shares through an equity Shelf Offering. Under the Shelf Offering, BBN, 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 Trust’s NAV

 

 

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Notes to Financial Statements   (continued)

 

per Common Share (calculated within 48 hours of pricing). As of period end, 17,630,675 Common Shares remain available for issuance under the Shelf Offering. During the period ended December 31, 2021 and year ended July 31, 2021, BBN issued 694,022 and 1,675,303 shares, respectively under the Shelf Offering. See Additional Information - Shelf Offering Program for additional information.

Initial costs incurred by BBN in connection with its shelf offering are recorded as “Deferred offering costs” 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.

 

11.

SUBSEQUENT EVENTS

Management’s evaluation of the impact of all subsequent events on the Trust’s financial statements was completed through the date the financial statements were issued and the following items were noted:

The Trust declared and paid or will pay distributions to Common Shareholders as follows:

 

 

 
Trust Name   Declaration
Date
     Record
Date
     Payable/
Paid Date
     Dividend Per
Common Share
 

 

 

BBN

    12/20/21        12/31/21        01/11/22      $ 0.122900  
    02/01/22        02/15/22        02/28/22        0.122900  

 

 

 

 

O T E S   T O  I N A N C I A L  T A T E M E N T S

  29


Report of Independent Registered Public Accounting Firm

 

To the Shareholders and Board of Trustees of BlackRock Taxable Municipal Bond Trust:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of BlackRock Taxable Municipal Bond Trust (the “Fund”), including the schedule of investments, as of December 31, 2021, the related statements of operations and cash flows for the period from August 1, 2021 through December 31, 2021 and for the year ended July 31, 2021, the statements of changes in net assets for the period from August 1, 2021 through December 31, 2021 and for each of the two years in the period ended July 31, 2021, the financial highlights for the period from August 1, 2021 through December 31, 2021 and for each of the five years in the period ended July 31, 2021, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2021, and the results of its operations and its cash flows for the period from August 1, 2021 through December 31, 2021 and for the year ended July 31, 2021, the changes in its net assets for the period from August 1, 2021 through December 31, 2021 and for each of the two years in the period ended July 31, 2021, and the financial highlights for the period from August 1, 2021 through December 31, 2021 and for each of the five years in the period ended July 31, 2021, 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 Fund’s management. Our responsibility is to express an opinion on the Fund’s 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 Fund 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 Fund is not required to have, nor were we engaged to perform, an audit of its 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 Fund’s 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 December 31, 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

February 24, 2022

We have served as the auditor of one or more BlackRock investment companies since 1992.

 

 

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Important Tax Information  (unaudited)   

 

The Trust hereby designates the following amount, or maximum amount allowable by law, as interest income eligible to be treated as a section 163(j) interest dividend for the fiscal period ended December 31, 2021:

 

 

 
Trust Name   Interest
Dividend
 

 

 

BBN

  $   39,353,609  

 

 

The Trust hereby designates the following amount, or maximum amount allowable by law, as interest-related dividends eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations for the fiscal period ended December 31, 2021:

 

 

 
Trust Name   Interest
Related
Dividends
 

 

 

BBN

  $   39,353,609  

 

 

 

 

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  31


Investment Objectives, Policies and Risks

 

Recent Changes

The following information is a summary of certain changes since July 31, 2021. This information may not reflect all of the changes that have occurred since you purchased the Trust.

During the Trust’s most recent fiscal year, there were no material changes in the Trust’s investment objectives or policies that have not been approved by shareholders or in the principal risk factors associated with investment in the Trust.

Investment Objectives and Policies

BlackRock Taxable Municipal Bond Trust (BBN)

The Trust’s primary investment objective is to seek high current income, with a secondary objective of capital appreciation. There can be no assurance that the Trust will achieve its investment objectives. The Trust’s investment objectives are not fundamental and may be changed by its Board of Trustees (the “Board”).

The Trust seeks to achieve its investment objectives by investing primarily in a portfolio of taxable municipal securities, including Build America Bonds (“BABs”), issued by state and local governments to finance capital projects such as public schools, roads, transportation infrastructure, bridges, ports and public buildings. The Trust believes there could be an opportunity to capitalize on the market for BABs by investing in taxable municipal issues at attractive market yields relative to the yields on equivalently rated corporate bonds. BlackRock Advisors, LLC (the “Manager”) will use its in-depth expertise in the municipal securities market to assemble the Trust’s portfolio. As market conditions permit and based upon the Manager’s assessment of the interest rate environment, the Trust may opportunistically hedge its duration in an attempt to protect against the risk of rising interest rates, although no assurance can be given that this strategy will be successful. The Manager will not manage duration to a benchmark. Duration, in comparison to maturity (which is the date on which the issuer of a debt instrument is obligated to repay the principal amount), is a measure of the price volatility of a debt instrument as a result in changes in market rates of interest, based on the weighted average timing of the instrument’s expected principal and interest payments. Duration differs from maturity in that it takes into account a security’s yield, coupon payments and its principal payments in addition to the amount of time until the security finally matures. As the value of a security changes over time, so will its duration.

The Trust may invest in taxable municipal securities and tax-exempt municipal securities, including municipal bonds and notes, certificates of participation, other securities issued to finance and refinance public projects, and other related securities and derivative instruments creating exposure to municipal bonds, notes and securities. Under normal market conditions, the Trust will invest at least 80% of its Managed Assets in taxable municipal securities, which include BABs. This investment policy may be changed by the Board upon 60 days’ prior notice to shareholders. The Trust may invest up to 20% of its Managed Assets in securities other than taxable municipal securities. Such other securities include tax-exempt securities, U.S. Treasury securities, obligations of the U.S. Government, its agencies and instrumentalities and corporate bonds issued by issuers that have, in the Manager’s view, typically been associated with or sold in the municipal market. “Managed Assets” means the total assets of the Trust (including any assets attributable to money borrowed for investment purposes) minus the sum of the Trust’s accrued liabilities (other than money borrowed for investment purposes). For the avoidance of doubt, assets attributable to money borrowed for investment purposes includes the portion of the Trust’s assets in an issuer of tender option bonds of which the Trust owns the TOB Residual (as defined below).

Under normal market conditions, the Trust will invest at least 80% of its Managed Assets in securities that at the time of investment are investment grade quality. Investment grade quality securities are securities rated within the four highest grades (“Baa” or “BBB” or better) by Moody’s Investor Service Inc. (“Moody’s”), S&P Global Ratings (“S&P”), Fitch Ratings, Inc. (“Fitch”) or securities that are unrated but judged to be of comparable quality by the Manager. The Trust may invest up to 20% of its Managed Assets in securities that at the time of investment are rated below investment grade quality by Moody’s, S&P or Fitch or that are unrated but judged to be of comparable quality by the Manager. Certain of the Trust’s investments may be illiquid.

BABs are taxable municipal securities issued by state and local governments. Municipal securities include, among other things, bonds, notes, leases and certificates of participation. Municipal securities may be structured as callable or non-callable, may have payment forms that include fixed-coupon, variable rate and zero coupon, and may include capital appreciation bonds, floating rate securities, inverse floating rate securities (including TOB Residuals), inflation-linked securities and other derivative instruments that replicate investment exposure to such securities. BABs, as municipal securities, may be structured in any of the foregoing ways and new versions of BABs may be offered in the future. The Trust may invest in any of these BABs or municipal securities, and may acquire them through investments in pooled vehicles, partnerships or other investment companies. The Trust may also purchase BABs and other municipal securities representing a wide range of sectors and purposes.

The Trust may purchase municipal securities 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 Trust’s income. Insurance generally will be obtained from insurers with a claims-paying ability rated Baa or BBB or better by Moody’s, S&P or Fitch. The insurance feature does not guarantee the market value of the insured obligations or the net asset value of the common shares. The Trust may purchase insured securities and may purchase insurance for bonds in its portfolio.

The credit quality policies noted above apply only at the time a security is purchased, and the Trust is not required to dispose of a security in the event that a rating agency downgrades its assessment of the credit characteristics of a particular issue. In determining whether to retain or sell such a security, the Manager may consider such factors as its assessment of the credit quality of the issuer of such security, the price at which such security could be sold and the rating, if any, assigned to such security by other rating agencies.

The Trust may implement various temporary “defensive” strategies at times when the Manager determines that conditions in the markets or the termination of the Trust makes pursuing the Trust’s basic investment strategy inconsistent with the best interests of its shareholders. These strategies may include investing all or a portion of the Trust’s assets in U.S. Government obligations and high-quality, short-term debt securities that may be either tax-exempt or taxable.

 

 

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Investment Objectives, Policies and Risks  (continued)

 

The Trust originally sought to achieve its investment objectives by investing primarily in a portfolio of BABs, which are taxable municipal securities issued pursuant to the American Recovery and Reinvestment Act of 2009. Given the uncertainty around the BABs program at the time of the Trust’s launch in 2010, the Trust’s initial public offering prospectus included a Contingent Review Provision. For any 24-month period, if there were no new issuances of BABs or other analogous taxable municipal securities, the Board would undertake an evaluation of potential actions with respect to the Trust (the “Contingent Review Provision”). Under the Contingent Review Provision, such potential action included changes to the Trust’s non-fundamental investment policies to broaden its primary investment focus to include taxable municipal securities generally. The BABs program expired on December 31, 2010 and was not renewed. Accordingly, there have been no new issuances of BABs since that date. Pursuant to the Contingent Review Provision, on June 12, 2015, the Board approved a proposal to amend the Trust’s 80% investment policy to include all taxable municipal securities, including BABs, and to change the name of the Trust, which changes became effective on August 25, 2015.

Leverage: The Trust 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 Trust currently leverages its assets through the use of residual interest municipal tender option bonds (“TOB Residuals”), which are derivative interests in municipal bonds. The TOB Residuals in which the Trust 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 Trust may use combined economic leverage of up to 100% of its net assets (50% of its Managed Assets), all or a portion of which may be effected through the use of TOB Residuals.

The Trust may utilize reverse repurchase agreements when it is anticipated that the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction.

The Trust may borrow through a credit facility.

The Trust 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 Trust securities.

Risk Factors

This section contains a discussion of the general risks of investing in the Trust. 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 the Trust will meet its investment objective or that the Trust’s performance will be positive for any period of time.

Investment and Market Discount Risk: An investment in the Trust’s 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 Trust’s 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 Trust 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 Trust’s net asset value could decrease as a result of its investment activities. At any point in time an investment in the Trust’s common shares may be worth less than the original amount invested, even after taking into account distributions paid by the Trust. During periods in which the Trust may use leverage, the Trust’s 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 Trust 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 Trust’s 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 Trust’s investments will not affect interest income derived from instruments already owned by the Trust, but will be reflected in the Trust’s net asset value. The Trust may lose money if short-term or long-term interest rates rise sharply in a manner not anticipated by Trust management.

To the extent the Trust invests in debt securities that may be prepaid at the option of the obligor (such as mortgage-backed securities), the sensitivity of such securities to changes in interest rates may increase (to the detriment of the Trust) when interest rates rise. Moreover, because 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 Trust 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 Trust to sell assets at inopportune times or at a loss or depressed value and could hurt the Trust’s performance.

 

   

Credit Risk — 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 issuer’s credit rating or the market’s perception of an issuer’s creditworthiness may also affect the value of the Trust’s investment in that issuer. The degree of credit risk depends on both the financial condition of the issuer and the terms of the obligation.

 

 

N V E S T M E N T  B J E C T I V E S  , P O L I C I E S   A N DI S K S

  33


Investment Objectives, Policies and Risks   (continued)

 

   

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 Trust may have to invest the proceeds in securities with lower yields.

Build America Bonds Risk: Build America Bonds involve similar risks as municipal bonds, including credit and market risk. In particular, should a Build America Bond’s issuer fail to continue to meet the applicable requirements imposed on the bonds as provided by the ARRA , it is possible that such issuer may not receive federal cash subsidy payments, impairing the issuer’s ability to make scheduled interest payments. The Build America Bond program expired on December 31, 2010 and no further issuance is permitted unless Congress renews the program. As a result, the number of available Build America Bonds is limited, which may negatively affect the value of the Build America Bonds. In addition, there can be no assurance that Build America Bonds will be actively traded. It is difficult to predict the extent to which a market for such bonds will continue, meaning that Build America Bonds may experience greater illiquidity than other municipal obligations. The Build America Bonds outstanding as of December 31, 2010 will continue to be eligible for the federal interest rate subsidy, which continues for the life of the Build America Bonds; however, no bonds issued following expiration of the Build America Bond program will be eligible for the U.S. federal tax subsidy.

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 issuer’s 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 full faith, credit and taxing power for repayment. The Trust’s investments may consist of private activity bonds that may subject certain shareholders to an alternative minimum tax.

 

   

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 Trust 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 Trust and its investment manager will rely on the opinion of issuers’ bond counsel and, in the case of derivative securities, sponsors’ counsel, on the tax-exempt status of interest on municipal bonds and payments under derivative securities. Neither the Trust nor its investment manager will independently review the bases for those tax opinions, which may ultimately be determined to be incorrect and subject the Trust and its shareholders to substantial tax liabilities.

Reinvestment Risk: Proceeds from a current investment of the Trust, both interest payments and principal payments, may be reinvested in instruments that offer lower yields than the current investment due in part to market conditions and the interest rate environment at the time of reinvestment. Reinvestment risk is greater on short- to intermediate-term loans.

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 security’s value. The Trust cannot be certain that any insurance company will make the payments it guarantees. If a municipal security’s 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 Trust.

Zero Coupon Securities Risk: While interest payments are not made on such securities, holders of such securities are deemed to have received income (“phantom income”) annually, notwithstanding that cash may not be received currently. The effect of owning instruments that do not make current interest payments is that a fixed yield is earned not only on the original investment but also, in effect, on all discount accretion during the life of the obligations. This implicit reinvestment of earnings at a fixed rate eliminates the risk of being unable to invest distributions at a rate as high as the implicit yield on the zero coupon bond, but at the same time eliminates the holder’s ability to reinvest at higher rates in the future. For this reason, some of these securities may be subject to substantially greater price fluctuations during periods of changing market interest rates than are comparable securities that pay interest currently. Longer term zero coupon bonds are more exposed to interest rate risk than shorter term zero coupon bonds. These investments benefit the issuer by mitigating its need for cash to meet debt service, but also require a higher rate of return to attract investors who are willing to defer receipt of cash.

Variable and Floating Rate Instrument Risk: Variable and floating rate securities provide for periodic adjustment in the interest rate paid on the securities. These securities may be subject to greater illiquidity risk than other fixed income securities, meaning the absence of an active market for these securities could make it difficult for the Fund to dispose of them at any given time.

 

 

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Investment Objectives, Policies and Risks  (continued)

 

Indexed and Inverse Securities Risk: Indexed and inverse securities provide a potential return based on a particular index of value or interest rates. The Trust’s return on these securities will be subject to risk with respect to the value of the particular index. These securities are subject to leverage risk and correlation risk. Certain indexed and inverse securities have greater sensitivity to changes in interest rates or index levels than other securities, and the Trust’s investment in such instruments may decline significantly in value if interest rates or index levels move in a way Trust management does not anticipate.

U.S. Government Obligations Risk: Certain securities in which the Trust may invest, including securities issued by certain U.S. Government agencies and U.S. Government sponsored enterprises, are not guaranteed by the U.S. Government or supported by the full faith and credit of the United States.

Economic Sector and Geographic Risk: The Trust, as a fundamental policy, may not invest 25% or more of the value of its Managed Assets in any one industry. However, this limitation does not apply to securities of the U.S. Government, any state government or their respective agencies, or instrumentalities and securities backed by the credit of any federal or state governmental entity. As such, the Trust may invest 25% of more of its Managed Assets in municipal securities of issuers in the same state (or U.S. Territory) or in the same economic sector. If the Trust does so, this may make it more susceptible to adverse economic, political or regulatory occurrences affecting a particular state or economic sector.

Leverage Risk: The Trust utilizes leverage for investment purposes by entering into reverse repurchase agreements and derivative instruments with leverage embedded in then, such as TOB Residuals. The Trust’s use of leverage may increase or decrease from time to time in its discretion and the Trust 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 Trust cannot assure you that the use of leverage will result in a higher yield on the common shares. Any leveraging strategy the Trust 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;

 

   

the risk that fluctuations in interest rates or dividend rates on any leverage that the Trust 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 Trust 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 Trust’s investments will be borne entirely by the holders of common shares. Therefore, if the market value of the Trust’s portfolio declines, leverage will result in a greater decrease in net asset value to the holders of common shares than if the Trust 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.

Tender Option Bonds Risk: The Trust’s participation in tender option bond transactions may reduce the Trust’s returns and/or increase volatility. Investments in tender option bond transactions expose the Trust 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 Trust 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 Trust may invest special purpose trusts formed for the purpose of holding municipal bonds contributed by one or more funds (“TOB Trusts”) on either a non-recourse or recourse basis. If the Trust invests in a TOB Trust on a recourse basis, it could suffer losses in excess of the value of its TOB Residuals.

Reverse Repurchase Agreements Risk: Reverse repurchase agreements involve the sale of securities held by the Trust with an agreement to repurchase the securities at an agreed-upon price, date and interest payment. Reverse repurchase agreements involve the risk that the other party may fail to return the securities in a timely manner or at all. The Trust could lose money if it is unable to recover the securities and the value of the collateral held by the Trust, including the value of the investments made with cash collateral, is less than the value of the securities. These events could also trigger adverse tax consequences for the Trust. In addition, reverse repurchase agreements involve the risk that the interest income earned in the investment of the proceeds will be less than the interest expense.

Illiquid Investments Risk: The Trust may invest without limitation in illiquid or less liquid investments or investments in which no secondary market is readily available or which are otherwise illiquid, including private placement securities. The Trust may not be able to readily dispose of such investments at prices that approximate those at which the Trust could sell such investments if they were more widely traded and, as a result of such illiquidity, the Trust may have to sell other investments or engage in borrowing transactions if necessary to raise cash to meet its obligations. Limited liquidity can also affect the market price of investments, thereby adversely affecting the Trust’s 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 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.

Investment Companies and ETFs Risk: Subject to the limitations set forth in the Investment Company Act of 1940, as amended (the “1940 Act”) and the rules thereunder, the Trust may acquire shares in other investment companies and in exchange-traded Trusts (“ETFs”), some of which may be affiliated investment companies. The market value of the shares of other investment companies and ETFs may differ from their net asset value. As an investor in investment companies and ETFs, the Trust would bear its ratable share of that entity’s expenses, including its investment advisory and administration fees, while continuing to pay its own advisory and administration fees and other expenses

 

 

N V E S T M E N T  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

  35


Investment Objectives, Policies and Risks  (continued)

 

(to the extent not offset by the Manager through waivers). As a result, shareholders will be absorbing duplicate levels of fees with respect to investments in other investment companies and ETFs (to the extent not offset by the Manager through waivers).

The securities of other investment companies and ETFs in which the Trust may invest may be leveraged. As a result, the Trust may be indirectly exposed to leverage through an investment in such securities. An investment in securities of other investment companies and ETFs that use leverage may expose the Trust to higher volatility in the market value of such securities and the possibility that the Trust’s long-term returns on such securities (and, indirectly, the long-term returns of shares of the Trust) will be diminished.

As with other investments, investments in other investment companies, including ETFs, are subject to market and selection risk. To the extent the Trust is held by an affiliated Trust, the ability of the Trust itself to hold other investment companies may be limited.

Derivatives Risk: The Trust’s use of derivatives may increase its costs, reduce the Trust’s 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 Trust’s 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 Trust to sell or otherwise close a derivatives position could expose the Trust to losses and could make derivatives more difficult for the Trust 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 Trust’s 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 Trust 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 Trust 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 OTC swaps with the Trust. 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 Trust, 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 Trust of trading in these instruments and, as a result, may affect returns to investors in the Trust.

On October 28, 2020, the SEC 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 1940 Act, 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.

Market Risk and Selection Risk: Market risk is the risk that one or more markets in which the Trust 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 Trust and its investments. Selection risk is the risk that the securities selected by Trust 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.

 

 

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Expense and Share Price Information

 

Summary of Trust Expenses

The following table and example are intended to assist shareholders in understanding the various costs and expenses directly or indirectly associated with investing in the Trust’s common shares.

 

   
     BBN     

Shareholder Transaction Expenses

 

Maximum Sales Load (as a percentage of offering price)(a)

    1.00%     

Offering expenses borne by the Trust (as a percentage of offering price)(a)

    0.02      
  $ 0.02 per share for         
    open market purchases  

Dividend Reinvestment Plan Fees

    of common shares(b)        

Estimated Annual Expenses (as a percentage of net assets attributable to common shares)

 

Investment advisory fees

    0.81%     

Other expenses

    0.26        

Miscellaneous

    0.06        

Interest expense(c)

    0.20        

Total annual expenses

    1.07        

Fee waiver(d)

    —        

Total annual Trust operating expenses after fee waiver(d)

    1.07        

 

  (a)

If the common shares are sold to or through underwriters, the Prospectus Supplement will set forth any applicable sales load and the estimated offering expenses. Trust shareholders will pay all offering expenses involved with an offering.

 
  (b) 

Computershare Trust Company, N.A. (the “Reinvestment Plan Agent”) fees for the handling of the reinvestment of dividends will be paid by the Trust. However, shareholders will pay a $0.02 per share fee incurred in connection with open-market purchases, which will be deducted from the value of the dividend. Shareholders will also be charged a $2.50 sales fee and pay a $0.15 per share fee if a shareholder directs the Reinvestment Plan Agent to sell the common shares held in a dividend reinvestment account. Per share fees include any applicable brokerage commissions the Reinvestment Plan Agent is required to pay.

 
  (c) 

The Trust uses leverage in the form of reverse repurchase agreements representing 33.8% of Managed Assets at an annual interest expense to the Trust of 0.41%, which is based on current market conditions. The actual amount of interest expense borne by the Trust will vary over time in accordance with the level of the Trust’s use of reverse repurchase agreements and variations in market interest rates. Interest expense is required to be treated as an expense of the Trust for accounting purposes.

 
  (d) 

The Trust and the Manager have entered into a fee waiver agreement (the “Fee Waiver Agreement”), pursuant to which the Manager has contractually agreed to waive the investment advisory fees with respect to any portion of the Trust’s assets attributable to investments in any equity and fixed-income mutual funds and ETFs managed by the Manager or its affiliates that have a contractual fee, through June 30, 2023. In addition, pursuant to the Fee Waiver Agreement, the Manager has contractually agreed to waive its investment advisory fees by the amount of investment advisory fees the Trust pays to the Manager indirectly through its investment in money market funds managed by the Manager or its affiliates, through June 30, 2023. The Fee Waiver Agreement may be terminated at any time, without the payment of any penalty, only by the Trust (upon the vote of a majority of the Trustees who are not “interested persons” (as defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”), of the Trust (the “Independent Trustees”)) or a majority of the outstanding voting securities of the Trust), upon 90 days’ written notice by the Trust to the Manager.

 

Expense Example

The following example illustrates the expenses (including the sales load of $10.00 and offering costs of $0.20) that shareholders would pay on a $1,000 investment in common shares, assuming (i) total net annual expenses of 1.07% of net assets attributable to common shares and (ii) a 5% annual return:

 

     1 Year      3 Years      5 Years      10 Years      

Total expenses incurred

  $ 21      $ 44      $ 69      $ 139      

The example should not be considered a representation of future expenses. The example assumes that the estimated “Other expenses” set forth in the Estimated Annual Expenses table are accurate and that all dividends and distributions are reinvested at NAV. Actual expenses may be greater or less than those assumed. The Trust’s actual rate of return may be greater or less than the hypothetical 5% return shown in the example.

 

 

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Expense and Share Price Information  (continued)

 

Share Price Data

The following table summarizes the highest and lowest daily closing market prices on the NYSE per common share, the NAV per common share, and the premium to or discount from NAV, on the date of each of the high and low market prices. The trading volume indicates the number of common shares traded on the NYSE during the respective quarters. Effective December 31, 2021, the Fund changed its fiscal year end from July 31 to December 31.

 

    NYSE Market Price
  Per Common Share  
     NAV per Common
Share on Date of
Market Price
     Premium/
(Discount)
on Date of
Market Price
       
During Quarter Ended   High      Low      High      Low      High     Low     Trading Volume    

December 31, 2021

  $  26.30      $  25.31      $  26.00      $  25.92        1.15     (2.35 )%      4,885,288    

October 31, 2021

    27.12        25.24        25.98        25.43        4.39       (0.75     6,940,805    

July 31, 2021

    26.46        24.39        25.98        24.30        1.85       0.37       8,366,213    

April 30, 2021

    26.95        23.86        25.48        23.75        5.77       0.46       11,948,443    

January 31, 2021

    27.41        25.04        25.33        24.26        8.21       3.22       9,986,734    

October 31, 2020

    26.69        25.15        25.60        24.59        4.26       2.28       9,847,155    

July 31, 2020

    26.60        22.78        25.49        23.19        4.35       (1.77     9,824,952    

April 30, 2020

    26.52        20.39        27.50        23.64        (3.56     (13.75     24,622,384    

January 31, 2020

    25.56        23.37        25.61        24.23        (0.20     (3.55     10,838,865    

October 31, 2019

    25.49        23.32        25.65        24.46        (0.62     (4.66     12,453,113    

As of December 31, 2021, the market price, NAV per Common Share, and premium (discount) to NAV per Common Share are $26.18, $25.27, and 3.60% respectively.

Common shares of the Trust have historically traded at both a premium and discount to NAV.

Shares of closed-end funds frequently trade at a discount to their NAV. Because of this possibility and the recognition that any such discount may not be in the interest of shareholders, the Board might consider from time to time engaging in open-market repurchases, managed distribution plans, or other programs intended to reduce the discount. We cannot guarantee or assure, however, that the Board will decide to engage in any of these actions. Nor is there any guarantee or assurance that such actions, if undertaken, would result in the shares trading at a price equal or close to the NAV.

 

 

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Automatic Dividend Reinvestment Plan

 

 

Pursuant to BBN’s 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 Trust’s 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 BBN declares a dividend or determines 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 Trust (“newly issued shares”) or (ii) by purchase of outstanding shares on the open market or on the Trust’s primary exchange (“open-market purchases”). If, on the dividend payment date, the net asset value (“NAV”) per share 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 participant’s 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 Agent’s fees for the handling of the reinvestment of distributions will be paid by the Trust. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Reinvestment Plan Agent’s 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.

The Trust reserves the right to amend or terminate the Reinvestment Plan. There is no direct service charge to participants in the Reinvestment Plan; however, the Trust reserves the right to amend the Reinvestment Plan to include a service charge payable by the participants. Participants in BBN that request a sale of shares are subject to a $2.50 sales fee and a $0.15 per share sold brokerage commission fee. 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.

 

 

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  39


Trustee and Officer Information

 

Independent Trustees(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 Trustee

(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 102 Portfolios    None

Karen P. Robards

1950

  

Co-Chair of the Board and Trustee

(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 102 Portfolios    Greenhill & Co., Inc.; AtriCure, Inc. (medical devices) from 2000 until 2017.

Michael J. Castellano

1946

  

Trustee

(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 102 Portfolios    None

Cynthia L. Egan

1955

  

Trustee

(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 102 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

  

Trustee

(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 Yale’s 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 104 Portfolios    None

 

 

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Trustee and Officer Information  (continued)

 

Independent Trustees(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

Lorenzo A. Flores

1964

  

Trustee

(Since 2021)

   Vice Chairman, Kioxia, Inc. since 2019; Chief Financial Officer, Xilinx, Inc. from 2016 to 2019; Corporate Controller, Xilinx, Inc. from 2008 to 2016.    73 RICs consisting of 102 Portfolios    None

Stayce D. Harris

1959

  

Trustee

(Since 2021)

   Lieutenant General, Inspector General, Office of the Secretary of the United States Air Force from 2017 to 2019; Lieutenant General, Assistant Vice Chief of Staff and Director, Air Staff, United States Air Force from 2016 to 2017; Major General, Commander, 22nd Air Force, AFRC, Dobbins Air Reserve Base, Georgia from 2014 to 2016; Pilot, United Airlines from 1990 to 2020.    73 RICs consisting of 102 Portfolios    The Boeing Company since 2021.

J. Phillip Holloman

1955

  

Trustee

(Since 2021)

   President and Chief Operating Officer, Cintas Corporation from 2008 to 2018.    73 RICs consisting of 102 Portfolios    PulteGroup, Inc. (home construction); Rockwell Automation Inc. (industrial automation).

R. Glenn Hubbard

1958

  

Trustee

(Since 2007)

   Dean, Columbia Business School from 2004 to 2019; Faculty member, Columbia Business School since 1988.    73 RICs consisting of 102 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

  

Trustee

(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 104 Portfolios    None

Catherine A. Lynch(d)

1961

  

Trustee

(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 104 Portfolios    None

 

 

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  41


Trustee and Officer Information  (continued)

 

Interested Trustees(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

  

Trustee

(Since 2018)

   Vice Chairman of BlackRock, Inc. since 2019; Member of BlackRock’s Global Executive and Global Operating Committees; Co-Chair of BlackRock’s Human Capital Committee; Senior Managing Director of BlackRock, Inc. from 2010 to 2019; oversaw BlackRock’s Strategic Partner Program and Strategic Product Management Group from 2012 to 2019; Member of the Board of Managers of BlackRock Investments, LLC from 2011 to 2018; Global Head of BlackRock’s Retail and iShares® businesses from 2012 to 2016.    103 RICs consisting of 261 Portfolios    None

John M. Perlowski(d)

1964

   Trustee (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 263 Portfolios    None
(a) 

The address of each Trustee is c/o BlackRock, Inc., 55 East 52nd Street, New York, New York 10055.

(b) 

Each Independent Trustee 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 Trust’s by-laws or charter or statute, or until December 31 of the year in which he or she turns 75. Trustees 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 Trust’s 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 Trustees on a case-by-case basis, as appropriate.

(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 Trustees 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 Trust 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.

 

 

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Trustee and Officer Information  (continued)

 

Officers Who Are Not Trustees(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 Trust serve at the pleasure of the Board.

Further information about the Trust’s Trustees and Officers is available in the Trust’s Statement of Additional Information, which can be obtained without charge by calling (800) 441-7762.

 

Effective December 31, 2021, Richard E. Cavanagh and Michael J. Castellano retired as Trustees of the Trust.

 

 

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  43


Additional Information

 

Trust Certification

The Trust is listed for trading on the NYSE and has filed with the NYSE its annual chief executive officer certification regarding compliance with the NYSE’s listing standards. The Trust filed with the SEC the certification of its chief executive officer and chief financial officer required by Section 302 of the Sarbanes-Oxley Act.

Regulation Regarding Derivatives

On October 28, 2020, the Securities and Exchange Commission (the “SEC”) adopted regulations governing the use of derivatives by registered investment companies (“Rule 18f-4”). The Trust 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 1940 Act, 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.

Environmental, Social and Governance (“ESG”) Integration

Although a Trust does not seek to implement a specific ESG, impact or sustainability strategy unless otherwise disclosed, Trust management will consider ESG characteristics as part of the investment process for actively managed Trusts. These considerations will vary depending on a Trust’s particular investment strategies and may include consideration of third-party research as well as consideration of proprietary BlackRock research across the ESG risks and opportunities regarding an issuer. Trust management will consider those ESG characteristics it deems relevant or additive when making investment decisions for a Trust. The ESG characteristics utilized in a Trust’s investment process are anticipated to evolve over time and one or more characteristics may not be relevant with respect to all issuers that are eligible for investment. ESG characteristics are not the sole considerations when making investment decisions for a Trust. Further, investors can differ in their views of what constitutes positive or negative ESG characteristics. As a result, a Trust may invest in issuers that do not reflect the beliefs and values with respect to ESG of any particular investor. ESG considerations may affect a Trust’s exposure to certain companies or industries and a Trust may forego certain investment opportunities. While Trust management views ESG considerations as having the potential to contribute to a Trust’s long-term performance, there is no guarantee that such results will be achieved.

Dividend Policy

The Trust’s policy is to make monthly distributions to shareholders. In order to provide shareholders with a more stable level of dividend distributions, the Trust employs a managed distribution plan (the “Plan”), the goal of which is to provide shareholders with consistent and predictable cash flows by setting distribution rates based on expected long-term returns of the Trust.

The distributions paid by the Trust for any particular month may be more or less than the amount of net investment income earned by the Trust during such month. Furthermore, the final tax characterization of distributions is determined after the year-end of the Trust and is reported in the Trust’s annual report to shareholders. Distributions can be characterized as ordinary income, capital gains and/or return of capital. The Trust’s taxable net investment income and net realized capital gains (“taxable income”) may not be sufficient to support the level of distributions paid. To the extent that distributions exceed the Trust’s current and accumulated earnings and profits, the excess may be treated as a non-taxable return of capital.

A return of capital is a return of a portion of an investor’s original investment. A return of capital is not expected to be taxable, but it reduces a shareholder’s tax basis in his or her shares, thus reducing any loss or increasing any gain on a subsequent disposition by the shareholder of his or her shares. It is possible that a substantial portion of the distributions paid during a calendar year may ultimately be classified as return of capital for U.S. federal income tax purposes when the final determination of the source and character of the distributions is made.

Such distributions, under certain circumstances, may exceed the Trust’s total return performance. When total distributions exceed total return performance for the period, the difference reduces the Trust’s total assets and net asset value (“NAV”) per share and, therefore, could have the effect of increasing the Trust’s expense ratio and reducing the amount of assets the Trust has available for long term investment.

General Information

BBN’s Statement of Additional Information includes additional information about its Board and is available, without charge upon request by calling (800)-882-0052.

The following information is a summary of certain changes since July 31, 2021. This information may not reflect all of the changes that have occurred since you purchased the Trust.

Except if noted otherwise herein, there were no changes to the Trust’s charter or by-laws that would delay or prevent a change of control of the Trust that were not approved by the shareholders. Except if noted otherwise herein, there have been no changes in the persons who are primarily responsible for the day-to-day management of the Trust’s portfolios.

In accordance with Section 23(c) of the Investment Company Act of 1940, the Trust may from time to time purchase shares of its common stock in the open market or in private transactions.

Quarterly performance, semi-annual and annual reports, current net asset value and other information regarding the Trust may be found on BlackRock’s website, which can be accessed at blackrock.com. Any reference to BlackRock’s website in this report is intended to allow investors public access to information regarding the Trust and does not, and is not intended to, incorporate BlackRock’s website in this report.

 

 

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Additional Information  (continued)

 

Electronic Delivery

Shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual shareholder reports and prospectuses, by enrolling in the electronic delivery program. Electronic copies of shareholder reports and prospectuses, are available on BlackRock’s website.

To enroll in electronic delivery:

Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:

Please contact your financial adviser. Please note that not all investment advisers, banks or brokerages may offer this service.

Householding

The Trust will mail only one copy of shareholder documents, including prospectuses, annual and semi-annual reports, Rule 30e-3 notices and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call the Trust at (800) 882-0052.

Availability of Quarterly Schedule of Investments

The Trust files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Trust’s Form N-PORT is available on the SEC’s website at sec.gov. Additionally, the Trust makes its portfolio holdings for the first and third quarters of each fiscal year available at blackrock.com/fundreports.

Availability of Proxy Voting Policies, Procedures and Voting Records

A description of the policies and procedures that the Trust uses to determine how to vote proxies relating to portfolio securities and information about how the Trust voted proxies relating to securities held in the Trust’s portfolio during the most recent 12-month period ended June 30 is available without charge, upon request (1) by calling (800) 882-0052; (2) on the BlackRock website at blackrock.com; and (3) on the SEC’s website at sec.gov.

Availability of Trust Updates

BlackRock will update performance and certain other data for the Trust on a monthly basis on its website in the “Closed-end Funds” section of blackrock.com as well as certain other material information as necessary from time to time. Investors and others are advised to check the website for updated performance information and the release of other material information about the Trust. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Trust and does not, and is not intended to, incorporate BlackRock’s website in this report.

Shelf Offering Program

From time-to-time, BBN may seek to raise additional equity capital through an equity shelf program (a “Shelf Offering”). In a Shelf Offering, BBN may, subject to market conditions, raise additional equity capital by issuing new Common Shares from time to time in varying amounts at a net price at or above BBN’s net asset value (“NAV”) per Common Share (calculated within 48 hours of pricing). While any such Shelf Offering may allow BBN to pursue additional investment opportunities without the need to sell existing portfolio investments, it could also entail risks – including that the issuance of additional Common Shares may limit the extent to which the Common Shares are able to trade at a premium to NAV in the secondary market.

On February 17, 2021, BBN filed a final prospectus with the SEC in connection with its Shelf Offering. This report and the prospectus of BBN are not offers to sell BBN Common Shares or solicitations of an offer to buy BBN Common Shares in any jurisdiction where such offers or sales are not permitted. The prospectus of BBN contain important information about the Trust, including its investment objective, risks, charges and expenses. Investors are urged to read the prospectus of BBN carefully and in its entirety before investing. Copies of the final prospectus for BBN can be obtained from BlackRock at blackrock.com.

BlackRock Privacy Principles

BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.

If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.

BlackRock obtains or verifies personal non-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.

 

 

D D I T I O N A L  N F O R M A T I O N

  45


Additional Information  (continued)

 

BlackRock Privacy Principles (continued)

BlackRock does not sell or disclose to non-affiliated third parties any non-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. These non-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.

We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.

Trust and Service Providers

 

Investment Adviser

 

Independent Registered Public Accounting Firm

BlackRock Advisors, LLC

 

Deloitte & Touche LLP

Wilmington, DE 19809

 

Boston, MA 02116

Accounting Agent and Custodian

 

Legal Counsel

State Street Bank and Trust Company

 

Willkie Farr & Gallagher LLP

Boston, MA 02111

 

New York, NY 10019

Transfer Agent

 

Address of the Trust

Computershare Trust Company, N.A.

 

100 Bellevue Parkway

Canton, MA 02021

 

Wilmington, DE 19809

 

 

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2 0 2 1   B L A C K O C K  N N U A L  E P O R T   T O  H A R E H O L D E R S


Glossary of Terms Used in this Report

 

Portfolio Abbreviation

 

AGM    Assured Guaranty Municipal Corp.
AGM-CR    AGM Insured Custodial Receipt
ARB    Airport Revenue Bonds
BAB    Build America Bond
CAB    Capital Appreciation Bonds
COP    Certificates of Participation
CR    Custodian Receipt
GO    General Obligation Bonds
M/F    Multi-Family
NPFGC    National Public Finance Guarantee Corp.
RB    Revenue Bond
SAP    Subject to Appropriations
ST    Special Tax
TA    Tax Allocation

 

 

L O S S A R Y   O F  E R M S  S E D   I N   T H I S  E P O R T

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Want to know more?

blackrock.com     |     800-882-0052

This report is intended for current holders. It is not a prospectus. Past performance results shown in this report should not be considered a representation of future performance. Statements and other information herein are as dated and are subject to change.

TAXMB-12/21-AR

 

 

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(b) Not Applicable

 

Item 2 –

Code of Ethics – The registrant (or the “Fund”) has adopted a code of ethics, as of the end of the period covered by this report, applicable to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. During the period covered by this report, the code of ethics was amended to update certain information and to make other non-material changes. During the period covered by this report, there have been no waivers granted under the code of ethics. The registrant undertakes to provide a copy of the code of ethics to any person upon request, without charge, who calls 1-800-882-0052, option 4.

 

Item 3 –

Audit Committee Financial Expert – The registrant’s board of directors (the “board of directors”), has determined that (i) the registrant has the following audit committee financial experts serving on its audit committee and (ii) each audit committee financial expert is independent:

Frank J. Fabozzi

Lorenzo A. Flores

Catherine A. Lynch

Karen P. Robards

The registrant’s board of directors has determined that Karen P. Robards qualifies as an audit committee financial expert pursuant to Item 3(c)(4) of Form N-CSR.

Ms. Robards has a thorough understanding of generally accepted accounting principles, financial statements and internal control over financial reporting as well as audit committee functions. Ms. Robards has been President of Robards & Company, a financial advisory firm, since 1987. Ms. Robards was formerly an investment banker for more than 10 years where she was responsible for evaluating and assessing the performance of companies based on their financial results. Ms. Robards has over 30 years of experience analyzing financial statements. She also is a member of the audit committee of one publicly held company and a non-profit organization.

Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification. The designation or identification of a person as an audit committee financial expert does not affect the duties, obligations, or liability of any other member of the audit committee or board of directors.

 

Item 4 –

Principal Accountant Fees and Services

The following table presents fees billed by Deloitte & Touche LLP (“D&T”) in each of the last two fiscal years for the services rendered to the Fund:

 

2


     (a) Audit Fees   (b) Audit-Related Fees1   (c) Tax Fees2   (d) All Other Fees
Entity Name   Current
 Fiscal Year 
End3
  Previous
 Fiscal Year 
End
  Current
 Fiscal Year 
End3
  Previous
 Fiscal Year 
End
  Current
 Fiscal Year 
End3
  Previous
 Fiscal Year 
End
  Current
 Fiscal Year 
End3
  Previous
 Fiscal Year 
End

BlackRock Taxable Municipal Bond Trust

  $30,870   $34,643   $4,000   $3,057   $7,450   $14,900   $0   $0

The following table presents fees billed by D&T that were required to be approved by the registrant’s audit committee (the “Committee”) for services that relate directly to the operations or financial reporting of the Fund and that are rendered on behalf of BlackRock Advisors, LLC (“Investment Adviser” or “BlackRock”) and entities controlling, controlled by, or under common control with BlackRock (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Fund (“Affiliated Service Providers”):

 

     Current Fiscal Year End3   Previous Fiscal Year End

(b) Audit-Related Fees1

  $0   $0

(c) Tax Fees2

  $0   $0

(d) All Other Fees4

  $2,032,000   $1,984,000

1 The nature of the services includes assurance and related services reasonably related to the performance of the audit or review of financial statements not included in Audit Fees, including accounting consultations, agreed-upon procedure reports, attestation reports, comfort letters, out-of-pocket expenses and internal control reviews not required by regulators.

2 The nature of the services includes tax compliance and/or tax preparation, including services relating to the filing or amendment of federal, state or local income tax returns, regulated investment company qualification reviews, taxable income and tax distribution calculations.

3The registrant changed its fiscal year end from July 31 to December 31 effective December 31, 2021 whereby this fiscal year consists of the five months ended December 31, 2021.

4 Non-audit fees of $2,032,000 and $1,984,000 for the current fiscal year and previous fiscal year, respectively, were paid to the Fund’s principal accountant in their entirety by BlackRock, in connection with services provided to the Affiliated Service Providers of the Fund and of certain other funds sponsored and advised by BlackRock or its affiliates for a service organization review and an accounting research tool subscription. These amounts represent aggregate fees paid by BlackRock and were not allocated on a per fund basis.

(e)(1) Audit Committee Pre-Approval Policies and Procedures:

The Committee has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the Investment Adviser and Affiliated Service Providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are (a) consistent with the SEC’s auditor independence rules and (b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis (“general pre-approval”). The term of any general pre-approval is 12 months from the date of the pre-approval, unless the Committee provides for a different period. Tax or other non-audit services provided to the registrant which have a direct impact on the operations or financial reporting of the registrant will only be deemed pre-approved provided that any individual project does not exceed $10,000 attributable to the registrant or $50,000 per project. For this purpose, multiple projects will be aggregated to determine if they exceed the previously mentioned cost levels.

Any proposed services exceeding the pre-approved cost levels will require specific pre-approval by the Committee, as will any other services not subject to general pre-approval (e.g.,

 

3


unanticipated but permissible services). The Committee is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting. At this meeting, an analysis of such services is presented to the Committee for ratification. The Committee may delegate to the Committee Chairman the authority to approve the provision of and fees for any specific engagement of permitted non-audit services, including services exceeding pre-approved cost levels.

(e)(2) None of the services described in each of Items 4(b) through (d) were approved by the Committee pursuant to the de minimis exception in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not Applicable

(g) ) The aggregate non-audit fees, defined as the sum of the fees shown under “Audit-Related Fees,” “Tax Fees” and “All Other Fees,” paid to the accountant for services rendered by the accountant to the registrant, the Investment Adviser and the Affiliated Service Providers were:

 

Entity Name  

Current Fiscal

Year End1

 

Previous Fiscal

Year End

BlackRock Taxable Municipal Bond Trust

  $11,450   $17,957

1The registrant changed its fiscal year end from July 31 to December 31 effective December 31, 2021 whereby this fiscal year consists of the five months ended December 31, 2021.

Additionally, the amounts billed by D&T in connection with services provided to the Affiliated Service Providers of the Fund and of other funds sponsored or advised by BlackRock or its affiliates during the current and previous fiscal years for a service organization review and an accounting research tool subscription were:

 

Current Fiscal

Year End1

 

Previous Fiscal

Year End

$2,032,000   $1,984,000

1The registrant changed its fiscal year end from July 31 to December 31 effective December 31, 2021 whereby this fiscal year consists of the five months ended December 31, 2021.

These amounts represent aggregate fees paid by BlackRock and were not allocated on a per fund basis.

(h) The Committee has considered and determined that the provision of non-audit services that were rendered to the Investment Adviser, and the Affiliated Service Providers that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

 

Item 5 –

Audit Committee of Listed Registrant

 

4


  (a)

The following individuals are members of the registrant’s separately designated standing audit committee establi