DEFA14A: BlackRock Defends Innovation and Growth Term Trust Against Saba Capital's Proposal

BlackRock urges shareholders to vote against Saba Capital's proposal to terminate the investment management agreement for the BlackRock Innovation and Growth Term Trust (BIGZ), highlighting BIGZ's outperformance and value-enhancing initiatives.

Summary

• BlackRock is soliciting votes against a proposal by Saba Capital Management L.P. to terminate the investment management agreement between BlackRock Advisors, LLC and the BlackRock Innovation and Growth Term Trust (BIGZ).
• BlackRock highlights BIGZ's strong performance, including outperforming peers in 2023 with a 19.19% total shareholder return and a 12.1% yield on NAV.
• The document emphasizes actions taken by the Board and management to narrow BIGZ's discount to NAV, from 35.6% on 12/31/2022 to 22.9% on 5/24/2024.
• BlackRock cites its open market share repurchase program, which repurchased $177 million in shares and drove $35.5 million in NAV accretion for shareholders.
• The document refutes claims made by Saba, asserting that Saba's actions are driven by quick profits at the expense of shareholders and that BlackRock CEFs have delivered consistent long-term value.
• BlackRock states that it has generated $3.6 billion in gains in 2023 alone while paying shareholders $3.1 billion per year via dividends and repurchased $1.3 billion in shares, generating over $200 million in gains.
• The Trust has adopted a managed distribution plan to support monthly distributions, with the distribution rate subject to change at the discretion of the Board.
• Effective May 20, 2024, the Trust will pay monthly distributions based on an annual rate of 12% (beginning with the June 2024 distribution) of the Fund's 12-month rolling average daily net asset value.
• The Trust estimates that it has distributed more than its income and net-realized capital gains in the current fiscal year; therefore, a portion of your distribution may be a return of capital.

Sentiment

Score: 7

Explanation: The document presents a positive view of BlackRock's management of BIGZ, emphasizing outperformance and value creation. However, the ongoing proxy fight and potential risks associated with the distribution plan temper the overall sentiment.

Positives

• BIGZ outperformed its peers in 2023, demonstrating strong investment performance.
• The discount to NAV has significantly narrowed, increasing shareholder value.
• The share repurchase program has enhanced NAV, benefiting shareholders.
• BlackRock CEFs have a strong track record of delivering long-term value.
• The increase in the distribution rate to an annual rate of 12% is a positive for income-seeking investors.

Negatives

• A portion of the distributions may be a return of capital, which does not necessarily reflect the Trust's investment performance.
• The distribution rate is subject to change at the discretion of the Board, creating uncertainty for investors.
• The Trust's average annual total return (in relation to NAV) for the 5-year period ending on 4/30/2024 is negative (-16.82)%.
• The cumulative total return (in Relation to NAV) for the fiscal year through 4/30/2024 is negative (-2.33)%.

Risks

• The potential termination of the investment management agreement with BlackRock Advisors, LLC could disrupt the fund's strategy.
• Saba Capital's involvement and potential changes to the fund's management could introduce riskier strategies.
• The distribution rate is subject to change, which could impact income for shareholders.
• The amendment or termination of the Plan could have an adverse effect on the market price of the Trust's shares.
• The Trust estimates that it has distributed more than its income and net-realized capital gains in the current fiscal year; therefore, a portion of your distribution may be a return of capital.

Future Outlook

The distribution rate under the Plan is subject to change at the discretion of the Board, and the Plan will be subject to ongoing review to determine whether it should be continued, modified, or terminated.

Management Comments

• BlackRock is fighting for you.
• Defend your fund, save your income.
• BlackRock is delivering real value.
• This is no time for taking chances.
• We need all shareholders to vote on the enclosed WHITE proxy card today to preserve YOUR Fund.

Industry Context

This proxy fight reflects a broader trend of activist investors targeting closed-end funds to unlock value, often through pressuring for fund terminations or changes in management. Saba Capital is a known activist in the CEF space.

Comparison to Industry Standards

• The document compares BIGZ's performance to ASG, another fund, highlighting BIGZ's superior yield on NAV and total shareholder return.
• It also compares BRW's total shareholder return since Saba's takeover to the Morningstar US CEF Bank Loans and BlackRock Bank Loans Funds Median, showing underperformance.
• BlackRock emphasizes its 35+ year track record of delivering long-term value for CEF shareholders, contrasting it with Saba's track record.

Stakeholder Impact

• Shareholders are directly impacted by the outcome of the vote on the investment management agreement.
• Employees of BlackRock Advisors, LLC could be affected if the agreement is terminated.
• The fund's performance and distribution policy impact shareholders' returns and income.

Next Steps

• Shareholders are urged to vote using the WHITE proxy card.
• The Board will continue to review the managed distribution plan.

Key Dates

Keywords

BlackRock, BIGZ, Saba Capital, Proxy Fight, Closed-End Fund, Investment Management Agreement, Shareholder Value, NAV, Distribution Rate, Share Repurchase