DEFA14A: BlackRock Science and Technology Term Trust Faces Activist Challenge: Shareholders to Vote on Board Nominees

BlackRock Science and Technology Term Trust urges shareholders to vote for its board nominees and against a proposal by Saba Capital Management to terminate BlackRock as the investment advisor.

Summary

• BlackRock Science and Technology Term Trust (BSTZ) is facing a challenge from activist hedge fund Saba Capital Management, which is seeking to replace BlackRock as the investment advisor and install its own board members.
• BSTZ is urging shareholders to vote 'FOR' BlackRock's board nominees and 'AGAINST' Saba's proposal at the upcoming Annual Meeting on June 18.
• BlackRock highlights BSTZ's strong performance, including a 19% return on market price in 2023 (outperforming 80% of closed-end funds) and an 18% return year-to-date in 2024 (outperforming 98% of closed-end funds).
• BSTZ offers a monthly distribution with a 6.4% yield on market price, which is claimed to be 8 times higher than technology companies.
• BlackRock emphasizes its expertise in technology investing, access to private markets, and simplified tax reporting.
• The fund has voluntarily repurchased over $41 million of shares, adding over $8.5 million to BSTZ's net asset value since inception.
• The fund has adopted a managed distribution plan to support a distribution of income, capital gains and/or return of capital based on an annual rate of 6% of the Funds 12-month rolling average daily net asset value calculated 5 business days prior to declaration date of each distribution.
• As of March 28, 2024, the estimated allocation for the fund distribution was $0.103540, with 100% being a return of capital.
• For the fiscal year through March 28, 2024, the estimated allocation for the fund distribution was $0.309510, with 100% being a return of capital.
• The average annual total return (in relation to NAV) for the 5-year period ending on 2/29/2024 was 11.07%.
• The annualized current distribution rate expressed as a percentage of NAV as of 2/29/2024 was 5.55%.

Sentiment

Score: 7

Explanation: The document presents a generally positive view of BSTZ's performance and management, while acknowledging the challenge from an activist investor. The emphasis on strong returns and high distribution yield contributes to a favorable sentiment, although the potential disruption from Saba Capital introduces some uncertainty.

Positives

• BSTZ has demonstrated strong market price returns in 2023 and 2024, outperforming a significant portion of closed-end funds.
• The fund offers a high monthly distribution yield of 6.4%.
• BlackRock emphasizes its expertise in technology investing and access to private markets.
• Share repurchases have added value to BSTZ's net asset value.
• The average annual total return (in relation to NAV) for the 5-year period ending on 2/29/2024 was 11.07%.

Negatives

• The fund is facing a challenge from an activist hedge fund, which could lead to changes in the fund's strategy.
• The fund 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.
• As of March 28, 2024, the estimated allocation for the fund distribution was $0.103540, with 100% being a return of capital.
• For the fiscal year through March 28, 2024, the estimated allocation for the fund distribution was $0.309510, with 100% being a return of capital.

Risks

• The activist hedge fund's attempt to replace BlackRock as the investment advisor could disrupt the fund's strategy and performance.
• Market conditions can impact the fund's market price and NAV.
• Distributions may include a return of capital, which does not necessarily reflect the fund's investment performance.
• The amounts and sources of distributions reported are only estimates and are being provided to you pursuant to regulatory requirements and are not being provided for tax reporting purposes.

Future Outlook

The future of the fund depends on the outcome of the proxy vote and whether BlackRock remains as the investment advisor.

Management Comments

• BlackRock is asking all BSTZ shareholders to make their voices heard and protect their investment.
• BlackRock brings best-in-class expertise and deep experience as investment advisor.
• BSTZ's management team is led by Tony Kim, a renowned technology-investing expert with a strong track record in technology equity investing.

Industry Context

The document highlights the increasing trend of activist investors targeting closed-end funds to influence management and strategy.

Comparison to Industry Standards

• The document claims BSTZ's distributions are 8 times higher than those of typical technology companies, as represented by the dividend yield of the MSCI ACWI Information Technology Index.
• The document compares BSTZ's performance against all closed-end funds, indicating a strong relative performance.

Stakeholder Impact

• Shareholders are directly impacted by the outcome of the proxy vote, which will determine the fund's management and strategy.
• The fund's performance and distributions affect shareholder returns.
• Changes in management could impact the fund's investment approach and risk profile.

Next Steps

• Shareholders need to vote on the enclosed white proxy card 'FOR' BlackRock's board nominees and 'AGAINST' Saba's proposal by June 18.
• Shareholders can vote online, by phone, or by mail.

Key Dates

Keywords

BlackRock, BSTZ, Saba Capital, Activist Hedge Fund, Proxy Vote, Board Nominees, Investment Advisor, Technology, Closed-End Fund, Distributions, Return of Capital