Natural Resources 2018: The Resurgence

Natural Resources 2018: The Resurgence 2017 became a second consecutive year of strong positive returns for the natural resources sector, with the S&P Natural Resources TR Index finishing up +22% (Source: Thomson Reuters Datastream, December 31, 2016 to December 31, 2017. Index definition on page 5). 2017: Passed the cyclical trough and still room to run The underlying natural resources sectors (energy, mining and agriculture) diverged somewhat last year, however, with mining rampant throughout, agriculture gaining steadily and energy returning to positive returns in the final quarter (as displayed by the performance of the MSCI World Energy, Euromoney Global Mining and the DAXglobal Agribusiness indices definitions on page 5). After two positive years, we remain optimistic about a continued recovery for natural resources in 2018, with the sector still trading at a valuation discount versus broader equity markets. Positive returns but still undervalued Total return index returns (%) in calendar year 2017 Relative price-to-book of the natural resources sector versus broader equity markets 21.98% 22.40% 0.74x 1.5x S&P Global Natural Resources Index MSCI World Index Source: Thomson Reuters Datastream, December 31, 2016 to December 31, 2017. Past performance is not indicative of future results. You cannot invest directly in an unmanaged index. Current P/B discount Long term P/B discount Source: Bloomberg and Thomson Reuters Datastream. January 1, 1983 to December 31, 2017. The price-to-book ratio (P/B Ratio) is a ratio used to compare a stock's market value to its book value. Past performance is not indicative of future results. You cannot invest directly in an unmanaged index. 2018 Macro Backdrop: another year of synchronized and stable global economic growth The BlackRock Investment Institute s (BII) base case is that 2018 will see another year of synchronised and stable global economic growth with room to run. BII also expects a modest comeback for inflation and this, combined with stable growth, points to a supportive macroeconomic backdrop for commodities and natural resources equities in 2018. However, as BII highlights in its 2018 investment outlook, a faster-than-expected slowdown in China remains a key macro risk. Encouragingly, for now, China data continues to defy the sceptics with PMI statistics, property prices and credit data outperforming market expectations. Our base case over the next 12 to 18 months is a continued gradual slowdown in China and we feel the administration has the tools to successfully avoid a hard-landing type event. We also expect China to remain focused on tackling pollution through continued rationalization of inefficient commodity capacity. 1

Natural Resources 2018: The Resurgence Energy Equities: Refilling the tank in 2018 We believe that ~$60/bbl oil prices are a sustainable level and we expect them to remain relatively range-bound at that level in 2018. A catch-up trade for equities? Returns (%) in calendar year 2017 20.87% That said, we expect the market s confidence in the sustainability of current oil price levels to grow as 2018 progresses and expect a concurrent catch-up trade for the energy equities. We believe that we are in a period where financial returns are moving back towards the long-run average for oil & gas companies and, historically, the sector has performed very well during such periods. 12.48% We have also seen early signs of a shift in company focus from pursuing growth to shareholder returns, a trend that is a positive for the oil macro picture and the rating of energy equities and one we hope continues through this year. We expect to see more meaningful declines emerge in non-opec, ex-us production as a result of dramatic cuts to spending. As such, whilst we expect US shale production to rise, we feel this increase will be necessary to offset the declines in the non-opec, ex-us production. 4.97% MSCI World Energy Index WTI Oil Price Brent Oil Price Source: Thomson Reuters Datastream, December 31, 2016 to December 31, 2017. Past performance is not indicative of future results. You cannot invest directly in an unmanaged index. Index definition on page 5. Metals & Mining: Extracting value in 2018 Despite two positive years for returns, we remain a long way below the peak in 2011 and the sector continues to trade at a relative discount to broader equity markets (as displayed by the performance of the Euromoney Global Mining Index definition on page 5). We believe the mined commodities, in most cases, look fairly priced and our base case is that they remain rangebound at 2017 levels. Crucially, however, mining equities are still pricing in commodity prices below current spot prices and as such, we are constructive on the shares but neutral the commodities themselves. The miners are trading on very attractive cash flow multiples with the 5 largest mining companies trading at forward free cash flow yields of ~14% on average (source: Thomson Reuters Datastream and BlackRock, December 31, 2017). Whilst many investors are sceptical around the deployment of this cash-flow, we believe that the pain of the recent down-cycle is still too fresh in the minds of management teams for a return to the exuberance of years past to become a widespread issue in the near-term. 2

Natural Resources 2018: The Resurgence Agriculture Equities: Stock selection is paramount in 2018 We believe that agricultural markets have stabilized and we have exited the declining crop price environment seen from 2012 through to end 2016 (source: Thomson Reuters Datastream, December 31, 2017). Calendar year 2017 was the first year in five that global grain and oilseed inventories declined (source: FAO, December 31, 2017). We expect a continuation of rangebound agricultural commodity prices in 2018 and see this continuing to help stabilize farmer incomes. We have a positive view on the agricultural equipment producers as we believe 2018 will see replacement demand for high horse power agricultural equipment. We also continue to prefer nitrogen-exposed fertilizer producers. Of the three key fertilizer nutrients, nitrogen supply is closest to a rebalancing and we see demand exceeding supply from 2018 (source: FAO, December 31, 2017). Several crop protection companies have been the beneficiaries of the asset sales experienced in the crop chemicals sector in 2016. Given there are still more asset sales in the pipeline, we continue to believe that this will create opportunities for the small to mid-cap players in the industry. Gold Equities: An important allocation in diversified portfolios Uncorrelated returns Average returns (%) during the last 10 equity market corrections We see both headwinds and tailwinds for gold today and our base case is that it remains rangebound this year. That said, we see strong arguments for owning gold today with political uncertainty elevated and broader equity markets at all-time highs after an extraordinary bull run. Gold price return S&P Equity Index return 20.0% -30.8% Shorter-term, we feel investment demand will continue to be the main driver of the gold price and this will be influenced by the level of financial market uncertainty. For gold to break out of the top of its current range we feel it is likely that broader equity markets would need to pull-back or inflation expectations would need to materially increase. Looking at gold companies business models today, there are challenges such as cost inflation, reserve replenishment and maintaining capital discipline. Source: Thomson Reuters Datastream, December 31, 1973 to December 31, 2017. Past performance is not indicative of future results. You cannot invest directly in an unmanaged index. Index definition on page 5. 1 However, we continue to expect them to deliver a beta of above one to moves in the gold price and as such, believe they are the most efficient way to play a positive gold price view. 3

BlackRock Natural Resources Funds Closed End BlackRock Resources & Commodities Strategy Trust (BCX) Calendar Year Returns 2017 2016 2015 2014 2013 Average Annual Returns 1 year 3 year 5 year Since Inception* NAV 14.75 26.10-22.48-7.25 1.04 14.75 3.90 1.00-8.42 Price 26.73 25.85-19.55-7.72-0.83 26.73 8.66 3.26-10.24 Source: BlackRock. Net of fees, with dividends and capital gains reinvested, as at December 31, 2017. *Fund inception: March 30, 2011. The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor s shares, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. Returns are shown net of advisory fees paid by the fund and net of the fund s operating fees and expenses. Investors who purchase shares of the fund through an investment adviser or other financial professional may separately pay a fee to that service provider. Past performance is not indicative of future results. The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor s shares may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted, and numbers may reflect small variances due to rounding. Standardized performance and performance data current to the most recent month end may be found in the Performance section. BlackRock Energy & Resources Trust (BGR) Calendar Year Returns Average Annual Returns 2017 2016 2015 2014 2013 1 year 3 year 5 year 10 year NAV 2.95 24.49-27.87-12.31 21.44 2.95-2.58-0.31-0.02 Price 5.18 24.29-31.56-7.40 21.50 5.18-3.64 0.13 0.66 Source: Net of fees, with dividends and capital gains reinvested, as at December 31 st 2017. The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor s shares, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. Returns are shown net of advisory fees paid by the fund and net of the fund s operating fees and expenses. Investors who purchase shares of the fund through an investment adviser or other financial professional may separately pay a fee to that service provider. Past performance is not indicative of future results. The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor s shares may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted, and numbers may reflect small variances due to rounding. Standardized performance and performance data current to the most recent month end may be found in the Performance section. 4

Index definitions The S&P Global Natural Resources Index includes 90 of the largest publicly-traded companies in natural resources and commodities businesses that meet specific investability requirements, offering investors diversified and investable equity exposure across 3 primary commodity-related sectors: agribusiness, energy, and metals & mining. The MSCI World Energy Index is designed to capture the large and mid cap segments across 23 Developed Markets (DM) countries. All securities in the index are classified in the Energy sector as per the Global Industry Classification Standard (GICS ). The Euromoney Global Mining Index measures the returns of companies in the metal and mineral extraction industries. The Euromoney Global Mining index is market capitalization weighted, free float adjusted and cover both Emerging and Developed Markets. Indices are calculated both at regional and sector level. The DAXglobal Agribusiness Index provides exposure to publicly traded companies worldwide that derive at least 50% of their revenues from the business of agriculture. The MSCI World Index, is a broad global equity benchmark that represents large and mid-cap equity performance across 23 developed markets countries. It covers approximately 85% of the free float-adjusted market capitalization in each country and MSCI World benchmark does not offer exposure to emerging markets. Developed Markets countries include: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the UK and the US. The Standard & Poor's 500 Index (S&P 500) is an index of 505 stocks issued by 500 large companies with market capitalizations of at least $6.1 billion. The Energy and Resources Trust (BGR) is similar to the MSCI World Energy Index, however key differences include: the inclusion of an option over-write strategy, the restriction of individuals holdings to <10% in the trust and an active approach to sub-sector allocation. The Commodities & Resources Trust (BCX) is similar to the S&P Global Natural Resources Index, however key differences include: the inclusion of an option over-write strategy in the trust, the restriction of individual holdings to <10% in the trust and an active approach to sub-sector allocation across the energy, mining and agriculture universe. 5

Disclosures and Important Risks Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses which may be obtained by visiting the SEC Edgar database. Read the prospectus carefully before investing. Common shares for most of the closed-end funds identified above are only available for purchase and sale at current market price on a stock exchange. A closed-end fund s dividend yield, market price and NAV will fluctuate with market conditions. The information for these funds is provided for informational purposes only and does not constitute a solicitation of an offer to buy or sell Fund shares. Performance results reflect past performance and are no guarantee of future results. Current performance may be lower or higher than the performance data quoted. All returns assume reinvestment of all dividends. The market value and net asset value (NAV) of a fund's shares will fluctuate with market conditions. Closed-end funds may trade at a premium to NAV but often trade at a discount. Important Risks of the Resources & Commodities Strategy Trust and the Energy & Resources Trust All information and data, including performance characteristics, is as of the date shown, and is subject to change. Note that closed-end funds often trade at a discount to NAV but may trade at a premium. Investments in the natural resources industries can be significantly affected by events relating to those industries such as variations in the commodities markets, weather, disease, embargoes, international, political and economic developments, the success of exploration projects, tax and other government regulations, as well as other factors. International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. Investing in derivatives entails specific risks that may reduce returns and/or increase volatility. The options strategy of the Fund entails certain risks. Negative weightings may result from specific circumstances (including timing differences between trade and settle dates of securities purchased by the funds) and/or the use of certain financial instruments, including derivatives, which may be used to gain or reduce market exposure and/or risk management. Certain transactions the funds may utilize may give rise to a form of leverage through either (a) additional market exposure or (b) borrowing capital in an attempt to increase investment return. The use of such transactions includes certain leverage-related risks, including potential for higher volatility, greater decline of the fund's net asset value and fluctuations of dividends and distributions paid by the fund. General market and credit risks. Debt instruments are subject to credit and interest rate risks. Credit risk refers to the likelihood that an obligor will default in the payment of principal or interest on an instrument. Financial strength and solvency of an obligor are the primary factors influencing credit risk. In addition, lack or inadequacy of collateral or credit enhancement for a debt instrument may affect its credit risk. Credit risk may change over the life of an instrument and debt instrument that are rated by rating agencies are often reviewed and may be subject to downgrade. Interest rate risk refers to the risks associated with market changes in interest rates. Interest rate changes may affect the value of a debt instrument indirectly (especially in the case of fixed rate obligations or directly (especially in the case of instrument whose rates are adjustable). In general, rising interest rates will negatively impact the process of a fixed rate debt instrument and falling interest rates will have a positive effect on price. Adjustable rate instruments also react to interest rate changes in a similar manner although generally to a lesser degree (depending, however, on the characteristics of the reset terms, including the index chosen, frequency of reset and reset caps or floors, among other factors). For more complete information on risks of investing in the fund, please see the fund prospectus. BLACKROCK and ishares are registered trademarks of BlackRock, Inc. or its subsidiaries. All other trademarks are the property of their respective owners. Prepared by BlackRock Investments, LLC, member FINRA. 2018 BlackRock, Inc. All rights reserved. Not FDIC Insured No Bank Guarantee May Lose Value 6