BlackRock Science and Tech Term ord Stock Price, News & Analysis

BlackRock Science and Technology Term Trust (BSTZ) is a non-diversified, closed-end management investment company focused on the science and technology sector. According to its stated investment objectives, the trust seeks to provide total return and income through a combination of current income, current gains, and long-term capital appreciation. BSTZ is associated with BlackRock, which describes its broader purpose as helping people experience financial well-being as a fiduciary to investors and a provider of financial technology.

The trust’s portfolio, as described in available information, can include equity securities, options, preferred securities, convertible securities, depositary receipts, non-U.S. securities, emerging markets investments, restricted and illiquid investments, private company investments, corporate bonds, and other investments. BSTZ seeks to invest at least 80% of its total assets in equity securities issued by U.S. and non-U.S. science and technology companies across a range of market capitalizations that are involved in the development, advancement, and use of science and/or technology.

Investment focus and strategy

BSTZ is described as a closed-end fund that takes an approach to investing in the technology sector that includes exposure to what it refers to as “next generation” technology stocks and private investments. Information released about the trust notes that its portfolio has included private investments as a portion of assets, alongside public technology-related holdings. The trust has also been associated with a single-stock option-writing strategy intended to generate income to support its monthly distribution, as referenced in prior fund commentary.

The trust has adopted a managed distribution plan. Under this type of plan, BSTZ aims to support a level distribution of income, capital gains and/or return of capital. BlackRock disclosures explain that, under such plans, if sufficient investment income is not available for a monthly distribution, the fund may distribute long-term capital gains and/or return capital to shareholders in order to maintain the stated distribution approach. BlackRock also emphasizes that shareholders should not draw conclusions about investment performance solely from the amount or terms of distributions.

Managed distribution plan and updates

BlackRock has announced several updates over time to the managed distribution plans for BSTZ and related term trusts. The Board of Trustees of BlackRock Science and Technology Term Trust has approved changes to the fund’s managed distribution plan, including adjustments to distribution rates and the method used to determine those rates.

In one announcement, BlackRock stated that BSTZ and certain other funds would pay monthly distributions at an annual rate expressed as a percentage of a rolling average daily net asset value, with the rate subject to change at the discretion of the fund’s Board of Trustees. In later communications, BlackRock reported that the Board approved updates under which BSTZ would change from a floating rate distribution to a level rate distribution at a stated monthly rate. These changes were described as intended to enhance distribution stability while maintaining a competitive distribution rate and offering the potential to grow each fund’s net asset value, as well as to help manage the proportion of public and private investments.

BlackRock’s disclosures also explain that under each fund’s plan, the fund will distribute all available investment income to shareholders, consistent with its investment objectives and as required by the Internal Revenue Code. If sufficient income, including net investment income and short-term capital gains, is not available on a monthly basis, the fund will distribute long-term capital gains and/or return of capital to maintain a level distribution. BlackRock has provided estimates of the sources of distributions, indicating the proportions attributable to net income, net realized short-term gains, net realized long-term gains, and return of capital for specific periods.

Capital management and tender offers

BSTZ has been included among BlackRock closed-end funds that conduct periodic tender offers for a portion of their outstanding common shares. In multiple announcements, BlackRock reported that BlackRock Science and Technology Term Trust launched tender offers for up to 2.5% of its outstanding common shares. These tender offers were described as being oversubscribed, with the fund purchasing shares from tendering shareholders on a pro rata basis, after disregarding fractions, based on the number of shares properly tendered.

In these communications, BlackRock stated that the purchase price for properly tendered and accepted shares would be equal to 98% of the fund’s net asset value per share as of the close of regular trading on the New York Stock Exchange on the business day immediately following the expiration date of the tender offer. The announcements also noted that payments for accepted shares were expected to be made within a specified number of business days after the expiration date. BlackRock emphasized that these press releases were for informational purposes and that the tender offers themselves were conducted pursuant to formal offer documents filed with the U.S. Securities and Exchange Commission.

Distributions, tax characterization, and investor communications

BlackRock has provided detailed information about how BSTZ’s distributions may be characterized for regulatory and tax purposes. In certain notices, the firm has reported estimated allocations of distributions among net income, net realized short-term gains, net realized long-term gains, and return of capital for specific fiscal periods. For example, BlackRock has disclosed instances where distributions for BSTZ were estimated to be sourced entirely from net realized long-term gains for a given fiscal period, with no portion attributed to net income, net realized short-term gains, or return of capital for that period.

BlackRock also explains that the amounts and sources of distributions reported in such notices are estimates provided to meet regulatory requirements and are not intended for tax reporting purposes. The final determination of the source and tax characteristics of all distributions for a given year is made after the end of the year and reported on Form 1099-DIV for federal income tax purposes. In some communications regarding other funds, BlackRock has noted that a fund may estimate that it has distributed more than its income and net realized capital gains in a fiscal year, in which case a portion of distributions may be a return of capital. The firm clarifies that a return of capital distribution does not necessarily reflect investment performance and should not be confused with yield or income.

Relationship to BlackRock and information access

BSTZ is one of several BlackRock closed-end term trusts that focus on specific sectors such as science and technology, health sciences, and related areas. BlackRock describes its role as a fiduciary to investors and a provider of financial technology, with an emphasis on making investing easier and more affordable. For its closed-end funds, BlackRock indicates that it updates performance and certain other data on a monthly basis in the closed-end funds section of its website, and that annual and semi-annual reports and other regulatory filings are accessible on the U.S. Securities and Exchange Commission’s website.

BlackRock’s communications regarding BSTZ and related funds often include cautions that press releases and other statements may contain forward-looking information and that actual events could differ materially from those discussed. Investors are directed to review annual and semi-annual reports and other regulatory filings for discussions of factors that may affect the funds.

Sector and classification

Based on the provided classification, BlackRock Science and Technology Term Trust operates in the Securities and Commodity Exchanges industry within the Finance and Insurance sector. As a closed-end management investment company, BSTZ offers investors exposure to science and technology-related securities through a structure that combines public and, at times, private investments, along with an option-writing component described in prior commentary.