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: 811-22606

 

Name of Fund:   BlackRock Utilities, Infrastructure & Power Opportunities Trust (BUI)

 

Fund Address:   100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Utilities,
Infrastructure & Power Opportunities 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 Energy and Resources Trust (BGR)

BlackRock Enhanced Capital and Income Fund, Inc. (CII)

BlackRock Enhanced Equity Dividend Trust (BDJ)

BlackRock Enhanced Global Dividend Trust (BOE)

BlackRock Enhanced International Dividend Trust (BGY)

BlackRock Health Sciences Trust (BME)

BlackRock Health Sciences Trust II (BMEZ)

BlackRock Innovation and Growth Trust (BIGZ)

BlackRock Resources & Commodities Strategy Trust (BCX)

BlackRock Science and Technology Trust (BST)

BlackRock Science and Technology Trust II (BSTZ)

BlackRock Utilities, Infrastructure & Power Opportunities Trust (BUI)

 

 

 

 

 

 

Not FDIC Insured • May Lose Value • No Bank Guarantee

 


Supplemental Information  (unaudited)

 

Section 19(a) Notices

BlackRock Energy and Resources Trust’s (BGR), BlackRock Enhanced Capital and Income Fund, Inc.’s (CII), BlackRock Enhanced Equity Dividend Trust’s (BDJ), BlackRock Enhanced Global Dividend Trust’s (BOE), BlackRock Enhanced International Dividend Trust’s (BGY), BlackRock Health Sciences Trust’s (BME), BlackRock Health Sciences Trust II’s (BMEZ), BlackRock Innovation and Growth Trust’s (BIGZ), BlackRock Resources & Commodities Strategy Trust’s (BCX), BlackRock Science and Technology Trust’s (BST), BlackRock Science and Technology Trust II’s (BSTZ) and BlackRock Utilities, Infrastructure & Power Opportunities Trust’s (BUI) (collectively, the “Trusts”, or individually a “Trust”) amounts and sources of distributions reported are estimates and are being provided to you 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 each Trust’s investment experience during its fiscal year and may be subject to changes based on tax regulations. Each 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

 

 

 

   


  

 

 

 

    

 

BGR

  $  0.281567          $          $      $  0.168433     $  0.450000          63             37     100  
 

CII

    0.050072               1.052428              1.102500          5             95             100    
 

BDJ

    0.285498               0.583322              0.868820          33             67             100    
 

BOE

    0.195369               0.438656        0.121975       0.756000          26             58       16       100    
 

BGY

    0.138751               0.122547        0.144302       0.405600          34             30       36       100    
 

BME

    0.013460               2.425540              2.439000          1             99             100    
 

BMEZ

           1.436427        0.275703              1.712130                84       16             100    
 

BIGZ

                         0.700000       0.700000                            100       100    
 

BCX

    0.290645                      0.189355       0.480000          61                   39       100    
 

BST

                  4.264440              4.264440                      100             100    
 

BSTZ

                  3.082680              3.082680                      100             100    
 

BUI

    0.224593               0.515860        0.711547       1.452000            15             36       49       100    

 

  (a)

Each 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 a Trust is returned to the shareholder. A return of capital does not necessarily reflect a Trust’s investment performance and should not be confused with “yield” or “income.” When distributions exceed total return performance, the difference will reduce a Trust’s net asset value per share.

 

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

Section 19(b) Disclosure

The Trusts, acting pursuant to a U.S. Securities and Exchange Commission (“SEC”) exemptive order and with the approval of each Trust’s Board of Trustees (the “Board”), each have 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 Plans, the Trusts currently distribute the following fixed amounts per share on a monthly basis:

 

   
Exchange Symbol  

Amount Per

Common Share

 

BGR

  $ 0.0375  

CII

    0.0995  

BDJ

    0.0500  

BOE

    0.0630  

BGY

    0.0338  

BME

    0.2130  

BMEZ

    0.1450  

BIGZ

    0.1000  

BCX

    0.0400  

BST

    0.2500  

BSTZ

    0.1920  

BUI

    0.1210  

The fixed amounts distributed per share are subject to change at the discretion of each Trust’s Board. Under its Plan, each Trust will distribute all available net income to its shareholders as required by the Internal Revenue Code of 1986, as amended (the “Code”). If sufficient income (inclusive of net income and short-term capital gains) is not earned on a monthly basis, the Trusts 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, each 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 Investment Company Act of 1940, as amended (the “1940 Act”).

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

 

 

2  

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


Supplemental Information (unaudited) (continued)

 

The Board may amend, suspend or terminate a Trust’s 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 Trusts are subject to risks that could have an adverse impact on their 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 BME, BST and BUI’s prospectuses for a more complete description of each Trust’s risks.

 

 

S U P P L E M E N T A L   I N F O R M A T I O N

  3


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.
 

 

 

4  

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


Table of Contents

 

 

      Page

Supplemental Information

   2

The Markets in Review

   4

Option Over-Writing Strategy

   6

Derivative Financial Instruments

   6

Annual Report:

  

Trust Summary

   7

Financial Statements:

  

Schedules of Investments

   43

Statements of Assets and Liabilities

   134

Statements of Operations

   137

Statements of Changes in Net Assets

   140

Statements of Cash Flows

   146

Financial Highlights

   151

Notes to Financial Statements

   163

Report of Independent Registered Public Accounting Firm

   177

Important Tax Information

   178

Investment Objectives, Policies and Risks

   179

Automatic Dividend Reinvestment Plan

   205

Trustee and Officer Information

   206

Additional Information

   210

Glossary of Terms Used in this Report

   214

 

 

  5


Option Over-Writing Strategy

 

Overview

In general, the goal of each of the Trusts is to provide total return through a combination of current income and realized and unrealized gains (capital appreciation). The Trusts seek to pursue these goals primarily by investing in a portfolio of equity securities and also by employing a strategy of writing (selling) call and put options in an effort to generate current gains from option premiums and to enhance each Trust’s risk-adjusted return. Each Trust’s objectives cannot be achieved in all market conditions.

Each Trust primarily writes single stock covered call options and may also from time to time write single stock put options. When writing (selling) a covered call option, a Trust holds an underlying equity security and enters into an option transaction which allows the counterparty to purchase the equity security at an agreed-upon price (“strike price”) within an agreed-upon time period. The Trust receives cash premiums from the counterparties upon writing (selling) the option, which along with net investment income and net realized gains, if any, are generally available to support current or future distributions paid by the Trust. During the option term, the counterparty may elect to exercise the option if the market value of the equity security rises above the strike price, and the Trust is obligated to sell the equity security to the counterparty at the strike price, realizing a gain or loss. Premiums received increase gains or reduce losses realized on the sale of the equity security. If the option remains unexercised upon its expiration, the Trust realizes gains equal to the premiums received. Alternatively, an option may be closed out by an offsetting purchase or sale of an option prior to expiration. The Trust realizes a capital gain from a closing purchase or sale transaction if the premium paid is less than the premium received from writing the option. The Trust realizes a capital loss from a closing purchase or sale transaction if the premium received is less than the premium paid to purchase the option.

Writing covered call options entails certain risks, which include, but are not limited to, the following: an increase in the value of the underlying equity security above the strike price can result in the exercise of a written option (sale by a Trust to the counterparty) when the Trust might not otherwise have sold the security; exercise of the option by the counterparty may result in a sale below the current market value and a gain or loss being realized by the Trust; and limiting the potential appreciation that could be realized on the underlying equity security to the extent of the strike price of the option. The premium that a Trust receives from writing a covered call option may not be sufficient to offset the potential appreciation on the underlying equity security above the strike price of the option that could have otherwise been realized by the Trust. As such, an option over-writing strategy may outperform the general equity market in flat or falling markets but underperform in rising markets.

Option Over-Writing Strategy Illustration

To illustrate these concepts, assume the following: (1) a common stock purchased at and currently trading at $37.15 per share; (2) a three-month call option is written by a Trust with a strike price of $40 (i.e., 7.7% higher than the current market price); and (3) the Trust receives $2.45, or 6.6% of the common stock’s value, as a premium. If the stock price remains unchanged, the option expires and there would be a 6.6% return for the three-month period. If the stock were to decline in price by 6.6% (i.e., decline to $34.70 per share), the option strategy would “break-even” from an economic perspective resulting in neither a gain nor a loss. If the stock were to climb to a price of $40 or above, the option would be exercised and the stock would return 7.7% coupled with the option premium received of 6.6% for a total return of 14.3%. Under this scenario, the Trust loses the benefit of any appreciation of the stock above $40, and thus is limited to a 14.3% total return. The premium from writing the call option serves to offset some of the unrealized loss on the stock in the event that the price of the stock declines, but if the stock were to decline more than 6.6% under this scenario, the Trust’s downside protection is eliminated and the stock could eventually become worthless.

Each Trust intends to write covered call and other options to varying degrees depending upon market conditions. Please refer to each Trust’s Schedule of Investments and the Notes to Financial Statements for details of written options.

Derivative Financial Instruments

The Trusts 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 Trusts’ 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 a Trust can realize on an investment and/or may result in lower distributions paid to shareholders. The Trusts’ investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

 

 

6  

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


Trust Summary  as of December 31, 2021     BlackRock Energy and Resources Trust (BGR)

 

Investment Objective

BlackRock Energy and Resources Trust’s (BGR) (the “Trust”) investment objective is to provide total return through a combination of current income and long-term capital appreciation. The Trust seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its total assets in equity securities of energy and natural resources companies and equity derivatives with exposure to the energy and natural resources industry. The Trust may invest directly in such securities or synthetically through the use of derivatives. The Trust seeks to pursue this goal primarily by investing in a portfolio of equity securities and also by employing a strategy of writing (selling) call and put options.

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

Trust Information

 

   

Symbol on New York Stock Exchange

  BGR    

Initial Offering Date

  December 29, 2004        

Current Distribution Rate on Closing Market Price as of December 31, 2021 ($9.48)(a)

  4.75%    

Current Monthly Distribution per Common Share(b)

  $0.0375    

Current Annualized Distribution per Common Share(b)

  $0.4500    

 

  (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.

 

Market Price and Net Asset Value Per Share Summary

 

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

Closing Market Price

  $ 9.48      $ 7.10        33.52    $  10.33      $  7.08  

Net Asset Value

    10.77        8.17        31.82        11.25        8.17  

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 designed to capture the large- and mid-cap segments across developed markets countries. All securities in the index are classified in the energy sector as per the Global Industry Classification Standard.

 

 

 

T R U S T   S U M M A R Y

    7  


Trust Summary  as of December 31, 2021 (continued)    BlackRock Energy and Resources Trust (BGR)

 

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)

    38.36     (1.27 )%       (0.47 )% 

Trust at Market Price(a)(b)

    40.14       (1.36      (0.87

MSCI World Energy Call Overwrite Index(c)

    37.39       N/A        N/A  

MSCI World Energy Index

    40.09       (1.12      (0.18

 

  (a)

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b)

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

 
  (c)

An index that incorporates an option overlay component on the MSCI World Energy Index with a 33% overwrite level. The benchmark commenced on December 31, 2018 and therefore the benchmark does not have 5- and 10-year returns.

 

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?

Energy stocks performed very well in 2021, as the revival in economic growth boosted demand for crude oil and led to rising earnings for companies across the sector. Although the largest energy companies logged remarkable gains, small- to mid-sized exploration & production (“E&P”) companies generally performed even better due to their higher sensitivity to oil and natural gas prices.

The Trust’s holding in the refining & marketing sub-sector made the largest contribution to absolute returns, followed by the E&P sub-sector.

ConocoPhillips, Chevron Corp. and Royal Dutch Shell PLC were the leading individual contributors to performance, as rising oil prices were a tailwind for large, integrated energy companies.

An out-of-benchmark position in the Brazilian state-owned integrated oil producer Petroleo Brasileiro SA (Petrobras) was the largest detractor. The stock declined following an unexpected change in the company’s chief executive officer, which the market saw as the first step in deeper government influence in its longer-term strategy. Positions in Santos Ltd. and Schlumberger Ltd. detracted, as well.

The Trust utilized an options overlay strategy in which calls are written on a portion of the portfolio’s holdings. The Trust’s options overlay strategy contributed positively to relative performance for the 12-month period.

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 investment adviser increased the Trust’s weighting in companies positioned for the current environment of supply-and-demand tightness, particularly those with above-average exposure to natural gas. The investment adviser further increased the Trust’s weighting in Canada, and it rotated its holdings in Europe.

Describe portfolio positioning at period end.

The integrated energy sub-sector represented the Trust’s largest allocation, followed by the E&P, distribution, refining & marketing and oil services industries, respectively.

The investment adviser maintained a bias toward higher-quality oil producers it believes should gain the largest benefit from continued strength in oil and natural gas prices. The Trust tilted away from the oil services sub-sector, where many companies could continue to face headwinds from industry overcapacity.

As of December 31, 2021, the Trust had in place an option overwriting program whereby 35% of the underlying equities were overwritten with call options. These call options were typically written at levels above the prevailing market prices (estimated to be 3.9% out of the money) with an average time until expiration of 55 days.

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.

 

 

8  

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


Trust Summary  as of December 31, 2021 (continued)    BlackRock Energy and Resources Trust (BGR)

 

Overview of the Trust’s Total Investments

 

TEN LARGEST HOLDINGS

   
Security(a)  

Percent of

Total Investments

 

Chevron Corp.

    14

Royal Dutch Shell PLC, Class B, ADR

    11  

TotalEnergies SE

    8  

ConocoPhillips

    7  

Exxon Mobil Corp.

    6  

Canadian Natural Resources Ltd.

    4  

Suncor Energy Inc.

    4  

Marathon Petroleum Corp.

    4  

TC Energy Corp.

    4  

Pioneer Natural Resources Co.

    3  

INDUSTRY ALLOCATION

     
Industry(a)(b)   12/31/21     12/31/20  

Oil, Gas & Consumable Fuels

    97     96

Metals & Mining

    1        

Food Products

    1        

Energy Equipment & Services

    1       4  

 

 

 

(a)

Excludes short-term securities and options written.

(b)

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

 

 

T R U S T    S U M M A R Y

    9  


Trust Summary  as of December 31, 2021    BlackRock Enhanced Capital and Income Fund, Inc. (CII)

 

Investment Objective

BlackRock Enhanced Capital and Income Fund, Inc.’s (CII) (the “Trust”) investment objective is to provide current income and capital appreciation. The Trust seeks to achieve its investment objective by investing in a portfolio of equity securities of U.S. and foreign issuers. The Trust may invest directly in such securities or synthetically through the use of derivatives. The Trust also seeks to achieve its investment objective by employing a strategy of writing (selling) call and put options.

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

Trust Information

 

   

Symbol on New York Stock Exchange

   CII    

Initial Offering Date

   April 30, 2004        

Current Distribution Rate on Closing Market Price as of December 31, 2021 ($22.12)(a)

   5.40%    

Current Monthly Distribution per Common Share(b)

   $0.0995    

Current Annualized Distribution per Common Share(b)

   $1.1940    

 

  (a)

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance is not an indication of future results.

 
  (b)

The distribution rate is not constant and is subject to change.

 

Market Price and Net Asset Value Per Share Summary

 

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

Closing Market Price

   $ 22.12      $ 17.40        27.13    $  22.18      $  17.20  

Net Asset Value

     22.10        19.12        15.59        22.18        18.93  

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 measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000® Index and includes approximately 1,000 of the largest securities based on a combination of their market capitalization and current index membership. The index represents approximately 93% of the U.S. market.

 

 

 

10  

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


Trust Summary  as of December 31, 2021 (continued)    BlackRock Enhanced Capital and Income Fund, Inc. (CII)

 

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)

    21.97     14.87      12.88

Trust at Market Price(a)(b)

    34.15       17.10        14.30  

MSCI USA Call Overwrite Index(c)

    23.51       N/A        N/A  

Russell 1000® Index

    26.45       18.43        16.54  

 

  (a)

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b)

The Trust moved from a discount to NAV to a premium during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 
  (c)

An index that incorporates an option overlay component on the MSCI USA Index with a 55% overwrite level. The benchmark commenced on December 31, 2018 and therefore the benchmark does not have 5- and 10-year returns.

 

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?

The largest contribution to the Trust’s relative performance came from investment decisions in the communication services sector. Most notably, stock selection and an overweight allocation to the interactive media & services industry boosted relative returns, as did an underweight allocation to diversified telecommunication services and entertainment companies. Elsewhere, stock selection in the industrials sector proved beneficial, specifically within the professional services industry. In energy, overweight exposure to the oil, gas & consumable fuels industry added to performance. Lastly, investment decisions within financials were solid contributors.

Conversely, investment decisions in the consumer discretionary sector detracted the most from the Trust’s relative returns. Notably, stock selection and an overweight allocation to the internet & direct marketing retail industry proved detrimental, as did stock selection among specialty retail and hotels, restaurants & leisure companies. Within information technology (“IT”), stock selection detracted from performance, particularly in the IT services and semiconductors & semiconductor equipment industries. Other detractors included stock selection in the consumer staples and materials sectors.

The Trust utilized an options overlay strategy in which calls are written on a portion of the portfolio’s holdings. The Trust’s options overlay strategy contributed positively to relative performance for the 12-month period.

The Trust’s practice of maintaining a specified level of monthly distributions did not have a material impact on the Trust’s investment strategy. The distribution policy did not result 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.

During the period, a combination of portfolio trading activity and market price changes resulted in the Trust adding exposure to the consumer discretionary, materials, and health care sectors. The Trust reduced exposure to consumer staples, financials and energy.

Describe portfolio positioning at period end.

At period end, the Trust’s largest absolute allocations were in the IT, consumer discretionary, and communication services sectors. Relative to the benchmark, the Trust’s most significant overweight exposures were in the communication services, consumer discretionary, and financials sectors. The Trust maintained its most significant relative underweight sector exposures to consumer staples, utilities and health care.

As of December 31, 2021, the Trust had an options overwriting program in place whereby 46% of the underlying equities were overwritten with call options. These call options were typically written at levels above prevailing market prices (estimated to be 3.6% out of the money) with an average time until expiration of 53 days.

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.

 

 

T R U S T   S U M M A R Y

    11  


Trust Summary  as of December 31, 2021 (continued)    BlackRock Enhanced Capital and Income Fund, Inc. (CII)

 

Overview of the Trust’s Total Investments

 

TEN LARGEST HOLDINGS

   
Security(a)  

Percent of

Total Investments

 

Microsoft Corp.

    7

Alphabet, Inc.

    6  

Amazon.com, Inc.

    5  

Apple, Inc.

    5  

UnitedHealth Group, Inc.

    3  

Meta Platforms, Inc.

    3  

Corteva, Inc.

    3  

Visa, Inc.

    3  

Berkshire Hathaway, Inc.

    3  

Comcast Corp.

    2  

SECTOR ALLOCATION

     
Sector(a)(b)   12/31/21     12/31/20  

Information Technology

    28     29

Consumer Discretionary

    14       14  

Communication Services

    14       14  

Financials

    12       12  

Health Care

    12       11  

Industrials

    7       8  

Materials

    5       3  

Energy

    4       3  

Consumer Staples

    2       5  

Real Estate

    2       1  
 

 

(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.

 

 

12  

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


Trust Summary  as of December 31, 2021     BlackRock Enhanced Equity Dividend Trust (BDJ)

 

Investment Objective

BlackRock Enhanced Equity Dividend Trust’s (BDJ) (the “Trust”) primary investment objective is to provide current income and current gains, with a secondary investment objective of long-term capital appreciation. The Trust seeks to achieve its investment objectives by investing in common stocks that pay dividends and have the potential for capital appreciation and by employing a strategy of writing (selling) call and put options. The Trust invests, under normal market conditions, at least 80% of its total assets in dividend paying equities. The Trust may invest directly in such securities or synthetically through the use of derivatives.

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

Trust Information

 

   

Symbol on New York Stock Exchange

   BDJ    

Initial Offering Date

   August 31, 2005        

Current Distribution Rate on Closing Market Price as of December 31, 2021 ($10.08)(a)

   5.95%    

Current Monthly Distribution per Common Share(b)

   $0.0500    

Current Annualized Distribution per Common Share(b)

   $0.6000    

 

  (a)

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance is not an indication of future results.

 
  (b)

The distribution rate is not constant and is subject to change.

 

Market Price and Net Asset Value Per Share Summary

 

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

Closing Market Price

  $ 10.08      $ 8.47        19.01    $  10.67      $  8.29    

Net Asset Value

    10.23        9.35        9.41        10.75        9.17    

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 measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values.

 

 

 

T R U S T   S U M M A R Y

    13  


Trust Summary  as of December 31, 2021 (continued)    BlackRock Enhanced Equity Dividend Trust (BDJ)

 

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)

    19.33     9.99      10.26

Trust at Market Price(a)(b)

    29.80       12.40        11.58  

MSCI USA Value Call Overwrite Index(c)

    27.03       N/A        N/A  

Russell 1000® Value Index

    25.16       11.16        12.97  

 

  (a)

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b)

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

 
  (c)

An index that incorporates an option overlay component on the MSCI USA Value Index with a 55% overwrite level. The benchmark commenced on December 31, 2018 and therefore the benchmark does not have 5- and 10-year returns.

 

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?

Stock selection and allocation decisions in the financial sector made the largest contribution to the Trust’s relative performance. Notably, investment decisions in the capital markets and insurance industries proved beneficial, and allocation decisions in the consumer finance and diversified financial services industries also boosted relative results. In energy, overweight exposure to the oil, gas & consumable fuels industry added to performance. Other modest contributors included an underweight allocation to utilities and stock selection in the materials sector.

Conversely, the largest detractor from relative returns was stock selection in the health care sector. Selection decisions in the health care equipment & supplies and pharmaceuticals industries detracted the most, while the Trust’s lack of exposure to the life sciences tools & services industry also weighed on relative return. Elsewhere, in the consumer discretionary sector, stock selection detracted from performance, specifically in the specialty retail industry. Other detractors during the period included stock selection in the information technology (“IT”) sector and the Trust’s lack of exposure to the real estate sector.

The Trust utilized an options overlay strategy in which calls are written on a portion of the portfolio’s holdings. The Trust’s options overlay strategy detracted from relative performance for the 12-month period.

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 did not result 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.

During the period, a combination of portfolio trading activity and market price changes resulted in the Trust adding exposure to the health care, consumer discretionary, and communication services sectors. The Trust reduced exposure to financials, consumer staples and energy.

Describe portfolio positioning at period end.

At period end, the Trust’s largest absolute allocations were to the financials, health care and IT sectors. Relative to the benchmark, the Trust’s most significant overweight exposures were to the financials, energy, and health care sectors. The Trust maintained its most significant relative underweight sector exposures to real estate, industrials and consumer staples.

As of December 31, 2021, the Trust had an options overwriting program in place whereby 51% of the underlying equities were overwritten with call options. These call options were typically written at levels above prevailing market prices (estimated to be 3.5% out of the money) with an average time until expiration of 55 days.

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.

 

 

14  

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


Trust Summary  as of December 31, 2021 (continued)    BlackRock Enhanced Equity Dividend Trust (BDJ)

 

Overview of the Trust’s Total Investments

 

TEN LARGEST HOLDINGS

 

   
Security(a)  

Percent of

Total Investments

 

Wells Fargo & Co.

    4

Anthem, Inc.

    3  

American International Group, Inc.

    3  

Cisco Systems, Inc.

    3  

Citigroup, Inc.

    3  

Bank of America Corp.

    3  

Sanofi

    2  

AstraZeneca PLC

    2  

Unilever PLC

    2  

Medtronic PLC

    2  

SECTOR ALLOCATION

 

     
Sector(a)(b)   12/31/21     12/31/20  

Financials

    26     28

Health Care

    21       18  

Information Technology

    12       13  

Industrials

    8       7  

Consumer Discretionary

    7       5  

Energy

    7       7  

Communication Services

    6       7  

Consumer Staples

    6       9  

Utilities

    4       4  

Materials

    3       2  
 
(a)

Excludes short-term securities and options written.

(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.

 

 

T R U S T   S U M M A R Y

    15  


Trust Summary  as of December 31, 2021    BlackRock Enhanced Global Dividend Trust (BOE)

 

Investment Objective

BlackRock Enhanced Global Dividend Trust’s (BOE) (the “Trust”) primary investment objective is to provide current income and current gains, with a secondary investment objective of long-term capital appreciation. The Trust seeks to achieve its investment objectives by investing primarily in equity securities issued by companies located in countries throughout the world and by employing a strategy of writing (selling) call and put options. Under normal circumstances, the Trust invests at least 80% of its net assets in dividend-paying equity securities and at least 40% of its assets outside of the U.S. (unless market conditions are not deemed favorable by Trust management, in which case the Trust would invest at least 30% of its assets outside of the U.S.). The Trust may invest in securities of companies of any market capitalization, but intends to invest primarily in securities of large capitalization companies. The Trust may invest directly in such securities or synthetically through the use of derivatives.

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

Trust Information

 

   

Symbol on New York Stock Exchange

  BOE

Initial Offering Date

  May 31, 2005    

Current Distribution Rate on Closing Market Price as of December 31, 2021 ($12.18)(a)

  6.21%

Current Monthly Distribution per Common Share(b)

  $0.0630

Current Annualized Distribution per Common Share(b)

  $0.7560

 

  (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.

 

Market Price and Net Asset Value Per Share Summary

 

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

Closing Market Price

  $ 12.18      $ 10.91        11.64    $  12.79     $  10.75    

Net Asset Value

    13.40        12.28        9.12        13.49       12.02    

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 captures large- and mid-cap representation across certain developed and emerging markets.

 

 

 

16  

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


Trust Summary  as of December 31, 2021 (continued)    BlackRock Enhanced Global Dividend Trust (BOE)

 

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)

    16.21     9.64     8.38

Trust at Market Price(a)(b)

    18.89       10.74       8.87  
 

MSCI ACWI Call Overwrite Index(c)

    18.18       N/A       N/A  

MSCI ACWI

    18.54       14.40       11.85  

 

  (a)

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b)

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

 
  (c)

An index that incorporates an option overlay component on the MSCI ACWI Index with a 45% overwrite level. The benchmark commenced on December 31, 2018 and therefore the benchmark does not have 5- and 10-year returns.

 

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?

Stock selection within the consumer discretionary sector was the largest contributor to the Trust’s relative performance, particularly within the internet & direct marketing retail industry. Stock selection within the industrials and financials sectors also contributed. At the individual stock level, financial software company Intuit, Inc. was a top contributor, as the company reported strong financial results for the year. Danish pharmaceutical company Novo Nordisk A/S also contributed to performance. The company demonstrated significant growth in the GLP-1 drug market as well as in the more novel obesity drug market. In particular, Novo Nordisk’s new obesity drug Wegovy came to market in June 2021, with strong potential to help the company tap into this new market opportunity and to bring upgraded expectations for Novo Nordisk’s long-term growth. Plumbing and heating company Ferguson PLC also contributed, delivering strong performance over the year and demonstrating its ability to more than pass on price increases to its customers, protecting its margins in the prevailing inflationary environment.

The largest detractor from relative returns came from the Trust’s overweight positioning and stock selection in the consumer staples sector, most notably within the food products industry. Other detractors included stock selection in information technology (“IT”) and underweight positioning in energy. At the individual security level, China Feihe Ltd. was the top detractor from returns. The infant milk formula producer has been directly impacted by the pandemic through its having caused a material decline in the birth rate in China. Concerns that “greater prosperity” initiatives may focus on reducing the cost of having children have led to worries that the high cost of premium infant milk formula in comparison to developed markets might lead to regulation. More recently, the Chinese authorities announced a number of measures to promote breastfeeding, including further restrictions on advertising early-stage infant milk formula products. The Trust exited its position in China Feihe, seeing the possibility of regulatory intervention as a persistent headwind to the shares, with no obvious catalyst to bring a rebound. Elsewhere, Fidelity National Information Services, Inc. detracted from performance due to pressure in the payments space. Reckitt Benckiser Group PLC was also a significant detractor, as consumer staples stocks lagged generally. Investors also remained cautious of future sales of Reckitt’s health and nutrition divisions, which have repeatedly delivered falling results.

The Trust utilized an options overlay strategy in which calls are written on a portion of the portfolio’s holdings. The Trust’s options overlay strategy detracted from relative performance for the 12-month period.

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 did not result 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.

During the period, the Trust added exposure to the financial sector, most notably within the insurance industry. Exposure to the consumer discretionary and IT sectors also increased. Conversely, the Trust reduced exposure to industrials, consumer staples, and health care.

Describe portfolio positioning at period end.

At period end, the Trust’s largest sector exposures were in IT and health care, driven by holdings in the IT services and pharmaceuticals industries respectively. The Trust had no exposure to the materials sector. Regionally, the majority of the portfolio was listed in the United States or Europe, with significant exposure in the United Kingdom.

As of December 31, 2021, the Trust had an options overwriting program in place whereby approximately 42% of the underlying equities were overwritten with call options. These call options were typically written at levels above prevailing market prices (estimated to be 2.9% out of the money) with an average time until expiration of 54 days.

 

 

T R U S T   S U M M A R Y

    17  


Trust Summary  as of December 31, 2021 (continued)    BlackRock Enhanced Global Dividend Trust (BOE)

 

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.

Overview of the Trust’s Total Investments

 

TEN LARGEST HOLDINGS

 

   
Security(a)  

Percent of   

Total Investments   

Microsoft Corp.

  4%

AbbVie, Inc.

  3   

UnitedHealth Group, Inc.

  3   

Sanofi

  3   

Relx PLC

  3   

Novo Nordisk A/S

  3   

Intercontinental Exchange, Inc.

  3   

Diageo PLC

  3   

Medtronic PLC

  3   

Taiwan Semiconductor Manufacturing Co. Ltd.

  3   

GEOGRAPHIC ALLOCATION

 

     
Country/Geographic Region   12/31/21     12/31/20   

United States

    49   56%

United Kingdom

    20     18   

France

    10     4   

Taiwan

    4     2   

Denmark

    3     1   

Ireland

    3     1   

Canada

    2     3   

Portugal

    2     —   

Singapore

    1     3   

China

    1     —   

Mexico

    1     —   

Japan

    1     —   

Indonesia

    1     —   

Switzerland

    1     4   

Spain

    1     2   

India

        (b)

Germany

        1   

Australia

        2   

Netherlands

        2   

Finland

        1   
 
(a)

Excludes short-term securities and options written.

(b)

Rounds to less than 1% of total investments.

 

 

18  

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


Trust Summary  as of December 31, 2021    BlackRock Enhanced International Dividend Trust (BGY)

 

Investment Objective

BlackRock Enhanced International Dividend Trusts (BGY) (the Trust) primary investment objective is to provide current income and current gains, with a secondary objective of long-term capital appreciation. The Trust seeks to achieve its investment objectives by investing primarily in equity securities issued by companies of any market capitalization located in countries throughout the world and by employing a strategy of writing (selling) call and put options. The Trust invests, under normal circumstances, at least 80% of its net assets in dividend-paying equity securities issued by non-U.S. companies of any market capitalization, but intends to invest primarily in securities of large capitalization companies. The Trust may invest directly in such securities or synthetically through the use of derivatives.

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

Trust Information

 

   

Symbol on New York Stock Exchange

  BGY

Initial Offering Date

  May 30, 2007    

Current Distribution Rate on Closing Market Price as of December 31, 2021 ($6.28)(a)

  6.46%

Current Monthly Distribution per Common Share(b)

  $0.0338

Current Annualized Distribution per Common Share(b)

  $0.4056

 

  (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.

 

Market Price and Net Asset Value Per Share Summary

 

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

Closing Market Price

  $ 6.28      $ 5.87        6.98    $  6.68     $  5.80    

Net Asset Value

    6.81        6.49        4.93        7.02       6.36    

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 captures large- and mid-cap representation across certain developed markets countries (excluding the U.S.) and certain emerging markets countries.

 

 

 

T R U S T   S U M M A R Y

    19  


Trust Summary  as of December 31, 2021 (continued)    BlackRock Enhanced International Dividend Trust (BGY)

 

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)

    11.92     9.27     6.59

Trust at Market Price(a)(b)

    14.11       10.36       7.04  
 

MSCI ACWI ex USA Call Overwrite Index(c)

    9.23       N/A       N/A  

MSCI ACWI ex USA Index

    7.82       9.61       7.28  

 

  (a)

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b)

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

 
  (c)

An index that incorporates an option overlay component on the MSCI ACWI ex USA Index with a 45% overwrite level. The benchmark commenced on December 31, 2018 and therefore the benchmark does not have 5- and 10-year returns.

 

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?

From a sector perspective, the Trust’s underweight positioning and stock selection in consumer discretionary stocks contributed the most to returns. Stock selection in industrials and health care also contributed to performance. At the individual security level, Danish pharmaceutical company Novo Nordisk A/S was the top contributor. The company demonstrated significant growth in the GLP-1 drug market as well as in the more novel obesity drug market. In particular, Novo Nordisk’s new obesity drug Wegovy came to market in June 2021, with strong potential to help the company tap into this new market opportunity and to bring upgraded expectations for Novo Nordisk’s long-term growth. Plumbing and heating company Ferguson PLC also contributed, delivering strong performance over the year and demonstrating its ability to more than pass on price increases to its customers, protecting its margins in the prevailing inflationary environment. Research consultant RELX PLC also contributed to returns, as shares performed well after it announced strong revenue over the course of the year.

By contrast, stock selection in financials was the largest detractor from relative performance at the sector level, particularly within the diversified financial services and capital markets subsectors. Stock selection and overweight positioning in consumer staples also detracted from returns, as did stock selection and underweight positioning in information technology. At the individual security level, China Feihe Ltd. was the top detractor from returns. The infant milk formula producer has been directly impacted by the pandemic through its having caused a material decline in the birth rate in China. Concerns that “greater prosperity” initiatives may focus on reducing the cost of having children have led to worries that the high cost of premium infant milk formula in comparison to developed markets might lead to regulation. More recently, the Chinese authorities announced a number of measures to promote breastfeeding, including further restrictions on advertising early-stage infant milk formula products. The Trust exited its position in China Feihe, seeing the possibility of regulatory intervention as a persistent headwind to the shares, with no obvious catalyst to bring a rebound. Consumer products giant Unilever plc also detracted as it has failed to execute its portfolio restructuring in a timely manner, which has resulted in low organic growth. Concerns remain about its margins given its need to invest in advertising and promotion, as well as a lack of innovation within the company. Koninklijke Philips NV also detracted following its Sleep product recall. The Trust exited its position during the year due to the potential legal liability from the recall, lacking insight and visibility on this material element of the investment case for the stock.

The Trust utilized an options overlay strategy in which calls are written on a portion of the portfolio’s holdings. The Trust’s options overlay strategy detracted from relative performance for the 12-month period.

Describe recent portfolio activity.

During the period, the Trust increased its exposure to the consumer discretionary sector, particularly within the luxury space. It also added exposure to the utilities and energy sectors. Conversely, the Trust reduced exposure to consumer staples, industrials and health care.

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 portfolio positioning at period end.

At period end, the Trust’s largest sector exposures were in consumer staples and industrials. Notable exposures at the subsector and industry level included pharmaceuticals, textiles, apparel and luxury goods, as well as personal products. The Trust had no exposure to real estate. Regionally, the majority of the portfolio’s securities were listed either in Europe ex U.K. or in the United Kingdom.

As of December 31, 2021, the Trust had an options overwriting program in place whereby 41% of the underlying equities were overwritten with call options. These call options were typically written at levels above prevailing market prices (estimated to be 2.4% out of the money) with an average time until expiration of 54 days.

 

 

20  

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


Trust Summary  as of December 31, 2021 (continued)    BlackRock Enhanced International Dividend Trust (BGY)

 

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.

Overview of the Trust’s Total Investments

 

TEN LARGEST HOLDINGS
   
Security(a)  

Percent of   

Total Investments   

Relx PLC

  4%

Sanofi

  4   

Novo Nordisk A/S

  4   

TELUS Corp.

  4   

Unilever PLC

  4   

EDP - Energias de Portugal SA

  4   

Prudential PLC

  4   

Taiwan Semiconductor Manufacturing Co. Ltd.

  4   

Reckitt Benckiser Group PLC

  4   

Diageo PLC

  4   
GEOGRAPHIC ALLOCATION
     
Country/Geographic Region   12/31/21     12/31/20   

United Kingdom

    32   35%

France

    18     9   

United States

    11     4   

Taiwan

    6     4   

Singapore

    5     5   

Denmark

    4     3   

Canada

    4     5   

Portugal

    4     —   

Spain

    4     6   

India

    3     2   

Mexico

    2     —   

China

    2     1   

Indonesia

    2     —   

Japan

    2     —   

Switzerland

    1     9   

Germany

        3   

Australia

        5   

Netherlands

        6   

Finland

        3   
 

 

(a)

Excludes short-term securities and options written.

 

 

T R U S T   S U M M A R Y

    21  


Trust Summary  as of December 31, 2021     BlackRock Health Sciences Trust (BME)

 

Investment Objective

BlackRock Health Sciences Trust’s (BME) (the “Trust”) investment objective is to provide total return through a combination of current income, current gains and long-term capital appreciation. The Trust seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its total assets in equity securities of companies engaged in the health sciences and related industries and equity derivatives with exposure to the health sciences industry. The Trust seeks to pursue this goal primarily by investing in a portfolio of equity securities and by employing a strategy of writing (selling) call and put options.

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

Trust Information

 

   

Symbol on New York Stock Exchange

   BME

Initial Offering Date

   March 31, 2005    

Current Distribution Rate on Closing Market Price as of December 31, 2021 ($48.50)(a)

   5.27%

Current Monthly Distribution per Common Share(b)

   $0.2130

Current Annualized Distribution per Common Share(b)

   $2.5560

 

  (a)

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance is not an indication of future results.

 
  (b)

The distribution rate is not constant and is subject to change.

 

Market Price and Net Asset Value Per Share Summary

 

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

Closing Market Price

  $ 48.50        $ 47.59          1.91    $  50.31        $  44.61  

Net Asset Value

    47.96          45.66          5.04        49.07          43.57  

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 unmanaged index that features companies involved in medical services or health care in the Russell 3000® Index, which includes the largest 3,000 U.S. companies as determined by total market capitalization.

 

 

 

22  

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


Trust Summary  as of December 31, 2021 (continued)   

BlackRock Health Sciences Trust (BME)

 

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)

    10.66     15.81     15.89

Trust at Market Price(a)(b)

    7.37       15.74       16.32  

MSCI USA Investable Market Index Health Care Call Overwrite Index(c)

    18.52       N/A       N/A  

Russell 3000® Health Care Index

    18.60       17.59       17.42  

 

  (a)

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (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)

An index that incorporates an option overlay component on the MSCI USA Investable Market Index Health Care Index with a 33% overwrite level. The benchmark commenced on December 31, 2018 and therefore the benchmark does not have 5- and 10-year returns.

 

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?

Security selection and sector allocation both detracted from the Trust’s relative performance in 2021. At a sector level, security selection in the health care providers & services and biotechnology sub-sectors were the largest detractors.

An underweight position in Moderna, Inc. was the most significant detractor at the individual stock level. The COVID-19 vaccine producer benefited from strong demand as the highly transmissible disease spread globally. The Trust did not initiate a position in Moderna earlier in the pandemic due to concerns around the company’s ability to generate profits from the development and distribution of an effective vaccine. However, the investment adviser increased the Trust’s weighting in the stock in the second half of the year.

An underweight in Danaher Corp. also dampened the Trust’s performance. The U.S.-based medical device company beat earnings expectations, experienced profit margin expansion, and announced an acquisition that was well received by investors. The Trust’s investment adviser chose not to invest in the company earlier in the year on the belief that there were better ways to capitalize on the growth of the COVID-19 testing and diagnostics business. However, the company benefited from strong demand for its testing products throughout the pandemic, and the durability of demand for testing has been stronger than the investment adviser expected due to the emergence of new variants of the virus.

An out-of-benchmark position in the health care provider Amedisys, Inc. detracted due to weaker-than-expected earnings and reduced guidance. The company suffered a negative impact from COVID-19, particularly in its senior living facilities, where occupancy rates and average length of stay remained below pre-pandemic levels. The company, which is a leading player in the growing home health space, also announced a strategic acquisition.

Stock selection in the pharmaceuticals sub-sector contributed to relative performance in 2021.

An overweight in Thermo Fisher Scientific, Inc., which raised its long-term growth expectations due to strong demand in its COVID-19 testing business, was the top contributor. The Trust’s investment adviser favored the medical supplies company relative to its peers, as its more diversified product line afforded exposure to revenue streams that are independent of COVID-19.

A private investment in the biotechnology company Acumen Pharmaceuticals, Inc., which underwent a successful initial public offering, was also a top contributor.

An underweight position in the pharmaceutical giant Johnson & Johnson was an additional contributor of note. The company’s shares came under pressure due to concerns about product safety and the efficacy of its single-dose, viral protein-based COVID-19 vaccine.

The Trust made use of options, principally writing call options on individual stocks, to seek enhanced income returns while continuing to participate in the performance of the underlying equities. The option overlay strategy contributed to results.

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 did not result 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 increased its weightings in the pharmaceuticals and medical devices & supplies sub-sectors, while its allocations to biotechnology and healthcare providers & services remained the same.

 

 

T R U S T   S U M M A R Y

    23  


Trust Summary  as of December 31, 2021 (continued)   

BlackRock Health Sciences Trust (BME)

 

Describe portfolio positioning at period end.

The emergence of the COVID-19 Omicron variant extended uncertainty about the duration of the pandemic and led to increased market volatility. The investment adviser remains very alert to shifts in COVID-19 outlook, and it continues to monitor developments on this front. The Trust closed the year with an above-average sensitivity to the performance of COVID-19 beneficiaries, primarily through investments in vaccine producers and diagnostic suppliers. The investment adviser will be watching for signs of herd immunity to assess the possible vulnerability of revenues related to the virus.

The investment adviser believes the key long-term drivers for the health care sector—an aging global population and innovation in medical technology—remain in place. In its view, the combination of these secular trends and favorable valuations creates a compelling long-term investment opportunity.

At year end, the Trust held overweight positions in the medical devices & supplies and biotechnology sub-sectors due to their attractive valuations and robust fundamentals.

As of December 31, 2021, the Trust had in place an option overwriting program whereby 33.5% of the underlying equities were overwritten with call options. These call options were typically written at levels above the prevailing market prices (estimated to be 6.7% out of the money) and with an average time until expiration of 56 days.

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.

Overview of the Trust’s Total Investments

 

TEN LARGEST HOLDINGS
   
Security(a)   Percent of   
Total Investments   

UnitedHealth Group, Inc.

  8%

Thermo Fisher Scientific, Inc.

  6   

Abbott Laboratories

  6   

Pfizer, Inc.

  4   

Johnson & Johnson

  4   

Eli Lilly & Co.

  3   

Cigna Corp.

  3   

Stryker Corp.

  2   

Intuitive Surgical, Inc.

  2   

Amgen, Inc.

  2   
INDUSTRY ALLOCATION
     
Industry(a)(b)   12/31/21     12/31/20   

Health Care Equipment & Supplies

    27   30%

Health Care Providers & Services

    21     21   

Pharmaceuticals

    21     19   

Biotechnology

    18     19   

Life Sciences Tools & Services

    13     9   

Health Care Technology

        1   

Diversified Financial Services

        1   

Other(c)

        —   
 

 

(a)

Excludes short-term securities and options written.

(b)

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

(c)

Represents less than 1% of the Trust’s long-term investments.

 

 

24  

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


Trust Summary  as of December 31, 2021    

BlackRock Health Sciences Trust II (BMEZ)

 

Investment Objective

BlackRock Health Sciences Trust II’s (BMEZ) (the “Trust”) investment objective is to provide total return and income through a combination of current income, current gains and long-term capital appreciation. Under normal market conditions, the Trust will invest at least 80% of its total assets in equity securities of companies principally engaged in the health sciences group of industries and equity derivatives with exposure to the health sciences group of industries. Equity derivatives in which the Trust invests include purchased and sold (written) call and put options on equity securities of companies in the health sciences group of industries.

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

Trust Information

 

   

Symbol on New York Stock Exchange

   BMEZ

Initial Offering Date

   January 30, 2020    

Current Distribution Rate on Closing Market Price as of December 31, 2021 ($25.36)(a)

   6.86%

Current Monthly Distribution per Common Share(b)

   $0.1450

Current Annualized Distribution per Common Share(b)

   $1.7400

 

  (a)

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance is not an indication of future results.

 
  (b)

The distribution rate is not constant and is subject to change.

 

Market Price and Net Asset Value Per Share Summary

 

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

Closing Market Price

  $ 25.36      $ 28.65        (11.48 )%    $  30.68      $  22.88    

Net Asset Value

    26.47        30.73        (13.86     32.95        25.17    

TOTAL RETURN BASED ON A $10,000 INVESTMENT

 

LOGO

 

  BMEZ

commenced operations on January 30, 2020.

 

 

  (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 captures large- and mid-cap representation across certain developed and emerging markets.

 

 

 

T R U S T   S U M M A R Y

    25  


Trust Summary  as of December 31, 2021 (continued)    BlackRock Health Sciences Trust II (BMEZ)

 

Performance

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

 

    Average Annual Total Returns  
 

 

 

 
      1 Year      

Since

Inception

 

(a) 

Trust at NAV(b)(c)

    (8.31 )%      21.94

Trust at Market Price(b)(c)

    (5.76     19.25  
 

MSCI ACWI Call Overwrite Index(d)

    18.56       15.52  

MSCI ACWI

    18.54       18.15  

 

  (a)

BMEZ commenced operations on January 30, 2020.

 
  (b)

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (c)

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

 
  (d)

An index that incorporates an option overlay component on the MSCI ACWI Index with a 25% overwrite level.

 

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?

The Trust focuses on innovative, small- and mid-sized healthcare companies. The listed benchmark, which incorporates all sectors of the market and emphasizes large-cap stocks, is therefore used for reference purposes only. Small-cap health care stocks lagged considerably in 2021, largely due to their weak showing in the fourth quarter of 2021.

Stock selection across the four sub-sectors of health care detracted from relative performance in 2021, led by weakness in the biotechnology industry. Rising interest rates had negative impact on many of the Trust’s holdings in high-growth companies during the period, particularly in smaller-cap biotechnology companies that had experienced a strong price appreciation in 2020. For instance, Mersana Therapeutics, Inc. was a key detractor in the past year.

Nevro Corp., a U.S.-based medical device company, was another notable detractor. The stock was hurt by litigation regarding patent infringement, as well as cancellations of neuro-stimulation surgeries due to COVID-19.

The healthcare provider Oak Street Health, Inc. which reported weaker-than-expected results, was also a key detractor. The company cited increased costs stemming from the effects of COVID-19 on its operations.

A position in the health care provider Amedisys, Inc., which reported disappointing earnings and reduced its guidance, also detracted. The company experienced a negative impact from COVID-19, particularly in its senior living facilities, where occupancy rates and average length of stay remained below pre-pandemic levels. The company, which is a leading player in the growing home health space, also announced a strategic acquisition.

On the positive side, overweight allocations to the medical devices & supplies and health care providers & services industries helped relative performance.

An overweight position in Straumann Holding AG, a global leader in tooth replacement solutions, was the leading contributor. The company benefited from the recovery in elective procedures.

Private investments also strongly contributed to the Trust’s relative performance, with four of the five largest relative contributors being private positions that went public. Design Therapeutics, Inc. was the most notable contributor in this area. The U.S.-based firm, which develops novel, small-molecule therapeutic candidates called gene targeted chimeras, went public in 2021. A private investment in a biotechnology company, Acumen Pharmaceuticals, Inc., also made a strong contribution to performance following a successful initial public offering.

Merger and acquisition activity in the small-cap health care universe continued to be a source of positive returns. Private positions in Amunix Pharmaceuticals, Inc., an immune-oncology company acquired by Sanofi for $1 billion, and Vividion Therapeutics, Inc., a biotech company acquired by Bayer, were among the top contributors.

The Trust utilizes an options overlay strategy in which calls are written on a portion of the portfolio’s holdings. This strategy contributed to relative performance.

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 did not result 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.

 

 

26  

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


Trust Summary  as of December 31, 2021 (continued)    BlackRock Health Sciences Trust II (BMEZ)

 

Describe recent portfolio activity.

The Trust’s allocations to the pharmaceuticals, biotechnology, and health care providers & services industries decreased, while its allocation to the medical devices & supplies sub-sector increased.

Describe portfolio positioning at period end.

The emergence of the Omicron variant of COVID-19 extended uncertainty about the duration of the pandemic and led to increased market volatility. The investment adviser remains very alert to shifts in the COVID-19 outlook, and it continues to monitor developments on this front. The Trust closed the year with an above-average sensitivity to the performance of COVID-19 beneficiaries, primarily through investments in vaccine producers and diagnostic suppliers. The investment adviser will be watching for signs of herd immunity to assess the possible vulnerability of revenues related to the virus.

The investment adviser believes the key long-term drivers for the health care sector—an aging global population and innovation in medical technology—remain in place. In its view, the combination of these secular trends and favorable valuations creates a compelling long-term investment opportunity.

At year end, the Trust held overweight positions in the medical devices & supplies and biotechnology sub-sectors due to their attractive valuations and robust fundamentals.

As of December 31, 2021, the Trust had in place an option overwriting program in place whereby 21.6% of the underlying equities were overwritten with call options. These call options were typically written at levels above the prevailing market prices (estimated to be 9.4% out of the money) with an average time until expiration of 59 days.

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.

Overview of the Trust’s Total Investments

 

TEN LARGEST HOLDINGS

 

   
Security(a)  

 Percent of  

Total Investments   

Seagen, Inc.

  2%

Alcon, Inc.

  2   

Masimo Corp.

  2   

Edwards Lifesciences Corp.

  2   

Vertex Pharmaceuticals, Inc.

  2   

ResMed, Inc.

  2   

Daiichi Sankyo Co. Ltd.

  2   

Intuitive Surgical, Inc.

  2   

Tandem Diabetes Care, Inc.

  2   

Kymera Therapeutics, Inc.

  2   

INDUSTRY ALLOCATION

 

     
Industry(a)(b)   12/31/21     12/31/20   

Biotechnology

    34   42%

Health Care Equipment & Supplies

    30     24   

Health Care Providers & Services

    15     13   

Life Sciences Tools & Services

    12     10   

Pharmaceuticals

    5     6   

Diversified Financial Services

    2     2   

Health Care Technology

    1     2   

Software

    1     —   

Internet & Direct Marketing Retail

        1   

Other

    (c)    —   
 

 

(a)

Excludes short-term securities and options written.

(b)

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

(c)

Represents less than 1% of the Trust’s long-term investments.

 

 

T R U S T   S U M M A R Y

    27  


Trust Summary  as of December 31, 2021    BlackRock Innovation and Growth Trust (BIGZ)

 

Investment Objective

BlackRock Innovation and Growth Trust’s (BIGZ) (the “Trust”) investment objective is to provide total return and income through a combination of current income, current gains and long-term capital appreciation. The Trust will invest primarily in equity securities issued by mid- and small-capitalization companies that the Trust’s adviser believes have above-average earnings growth potential. In selecting investments for the Trust, the Trust’s adviser focuses on mid- and small-capitalization growth companies that are “innovative.” These are companies that have introduced, or are seeking to introduce, a new product or service that potentially changes the marketplace. The Trust utilizes an option writing (selling) strategy in an effort to generate current gains from options premiums and to enhance the Trust’s risk-adjusted returns.

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

Trust Information

 

   

Symbol on New York Stock Exchange

  BIGZ

Initial Offering Date

  March 29, 2021    

Current Distribution Rate on Closing Market Price as of December 31, 2021 ($14.54)(a)

  8.25%

Current Monthly Distribution per Common Share(b)

  $0.1000

Current Annualized Distribution per Common Share(b)

  $1.2000

 

  (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.

 

Market Price and Net Asset Value Per Share Summary

 

      12/31/21        03/29/21 (a)       Change        High          Low    

Closing Market Price

  $ 14.54      $ 20.00        (27.30 )%     $  22.95        $  13.74    

Net Asset Value

    16.72        20.00        (16.40      21.01          15.77    

 

  (a)

Commencement of operations.

 

TOTAL RETURN BASED ON A $10,000 INVESTMENT

 

LOGO

BIGZ commenced operations on March 29, 2021.

 

  (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 measures the performance of the small to mid-cap growth segment of the US equity universe. It includes those Russell 2500 companies with higher growth earning potential as defined by FTSE Russell’s leading style methodology.

 

 

 

28  

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


Trust Summary  as of December 31, 2021 (continued)    BlackRock Innovation and Growth Trust (BIGZ)

 

Performance

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

 

     

Since

Inception

 

(a) 

Trust at NAV(b)(c)

    (13.03 )% 

Trust at Market Price(b)(c)

    (24.37

MSCI USA SMID Growth Call Overwrite Index (d)

    11.02  

Russell 2500 Growth Index

    6.05  

 

  (a)

BIGZ commenced operations on March 29, 2021.

 
  (b)

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (c)

The Trust moved from neither a premium nor discount to a discount to NAV during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 
  (d)

An index that incorporates an option overlay component on the MSCI USA SMID Growth Index with a 25% overwrite level.

 

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?

The largest detractor from relative performance from a sector perspective was the Trust’s allocation to the consumer discretionary sector, most notably within the specialty retail industry. Within this space, auto e-commerce retailer Vroom Inc. and pool and spa care specialist Leslie’s Inc. detracted the most at the individual stock level with marked declines throughout the period. Vroom in particular weighed on performance due to nagging supply chain issues that have hampered profitability in recent quarter despite strong long-term growth prospects. Elsewhere among consumer discretionary stocks, an overweight position in casino operator Penn National Gaming, Inc. also detracted from performance. Stock selection in the information technology (“IT”) sector was the second-biggest weight on relative performance, particularly within the software industry, where positions in Lightspeed POS, Inc. and Five9, Inc. declined later in the period. The third-largest detractor was stock selection in the health care sector, specifically within the life sciences tools & services industry, where a position in Seer Inc. detracted during the year.

By contrast, stock selection in real estate was the largest contributor to relative performance at the sector level, most notably within the real estate investment trust (“REIT”) industry. Among individual REIT names, warehousing specialist Rexford Industrial Realty, Inc. led performance, as a competitor in the $30 billion regional industrial market that has enjoyed strong e-commerce tailwinds. Rexford has acquired properties to grow its internal database quickly, helping it capitalize on high demand and rent growth in the southern California property market and grow its market share. Additionally, a position in Innovative Industrial Properties, Inc. helped to drive performance, as the provider of real estate capital for the medical-use cannabis industry delivered on high expectations for revenue growth and continued to expand its portfolio during the year. Elsewhere, stock selection was notably strong within the aerospace & defense sub-sector within industrials, where Axon Enterprise, Inc. helped to bolster returns with its mission to create a public safety ecosystem. Lastly, the Trust’s relative performance benefited from a position in Celsius Holdings, Inc. within the beverages industry in the consumer staples sector.

The Trust utilized an options overlay strategy in which calls are written on a portion of the portfolio’s holdings. The Trust’s options overlay strategy did not have a material impact on relative performance for the since inception period.

Describe recent portfolio activity.

The public equity portion of the Trust became fully invested at the end of April. Due to a combination of market changes and portfolio activity since then, the Trust increased its exposure to the IT and financials sectors. Conversely, the Trust reduced exposure to health care and consumer discretionary stocks. The Trust also significantly increased its stake in privately held companies during the period to 19.9% as the investment adviser worked to increase exposure to this investment segment. The private investments did not have a material impact on Trust performance for the since inception period.

The Trust briefly held an elevated cash position early in the period between the Trust’s inception and its becoming fully invested. The cash position did not have a material impact on Trust performance.

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 portfolio positioning at period end.

At period end, the Trust’s largest sector overweight positions in the public equity portion of the portfolio were in IT and health care, while the largest underweight positions were in financials and materials.

 

 

T R U S T   S U M M A R Y

    29  


Trust Summary  as of December 31, 2021 (continued)    BlackRock Innovation and Growth Trust (BIGZ)

 

As of December 31, 2021, the Trust had an options overwriting program in place whereby 10.5% of the underlying equities were overwritten with call options. These call options were typically written at levels above prevailing market prices (estimated to be 11.8% out of the money) with an average time until expiration of 55 days.

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.

Overview of the Trust’s Total Investments

 

TEN LARGEST HOLDINGS

 

   
Security(a)  

Percent of    

Total Investments   

Five9, Inc.

  3%

Entegris, Inc.

  3   

10X Genomics, Inc.

  3   

Bio-Techne Corp.

  3   

Masimo Corp.

  3   

Axon Enterprise, Inc.

  3   

Monolithic Power Systems, Inc.

  3   

Globant SA

  3   

Kahoot! AS

  2   

Bill.Com Holdings, Inc.

  2   

INDUSTRY ALLOCATION

 

   
Industry(a)(b)   12/31/21   

Software

  23%

Semiconductors & Semiconductor Equipment

  10   

Life Sciences Tools & Services

  8   

IT Services

  8   

Health Care Equipment & Supplies

  7   

Aerospace & Defense

  5   

Health Care Technology

  5   

Hotels, Restaurants & Leisure

  4   

Entertainment

  3   

Building Products

  2   

Auto Components

  2   

Diversified Consumer Services

  2   

Electronic Equipment, Instruments & Components

  2   

Food Products

  2   

Biotechnology

  2   

Specialty Retail

  2   

Internet & Direct Marketing Retail

  2   

Machinery

  2   

Electrical Equipment

  2   

Equity Real Estate Investment Trusts (REITs)

  1   

Road & Rail

  1   

Capital Markets

  1   

Chemicals

  1   

Leisure Products

  1   

Banks

  1   

Wireless Telecommunication Services

  1   
 
(a)

Excludes short-term securities and options written.

(b)

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

 

 

30  

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


Trust Summary  as of December 31, 2021    BlackRock Resources & Commodities Strategy Trust (BCX)

 

Investment Objective

BlackRock Resources & Commodities Strategy Trust’s (BCX) (the “Trust”) primary investment objective is to seek high current income and current gains, with a secondary objective of capital appreciation. The Trust will seek to achieve its investment objectives, under normal market conditions, by investing at least 80% of its total assets in equity securities issued by commodity or natural resources companies, derivatives with exposure to commodity or natural resources companies or investments in securities and derivatives linked to the underlying price movement of commodities or natural resources. While permitted, the Trust does not currently expect to invest in securities and derivatives linked to the underlying price movement of commodities or natural resources. The Trust seeks to pursue this goal primarily by investing in a portfolio of equity securities and also by employing a strategy of writing (selling) call and put options.

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

Trust Information

 

   

Symbol on New York Stock Exchange

   BCX

Initial Offering Date

   March 30, 2011  

Current Distribution Rate on Closing Market Price as of December 31, 2021 ($9.35)(a)

   5.13%

Current Monthly Distribution per Common Share(b)

   $0.0400

Current Annualized Distribution per Common Share(b)

   $0.4800

 

  (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.

 

Market Price and Net Asset Value Per Share Summary

 

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

Closing Market Price

   $ 9.35      $ 7.41        26.18    $ 10.16      $ 7.41  

Net Asset Value

     10.21        8.45        20.83        10.39        8.38  

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 includes approximately 90 of the largest publicly-traded companies in the natural resources and commodities businesses that meet specific investability requirements across three primary commodity-related sectors: agribusiness, energy, and metals and mining.

 

 

 

T R U S T   S U M M A R Y

    31  


Trust Summary  as of December 31, 2021 (continued)    BlackRock Resources & Commodities Strategy Trust (BCX)

 

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)

    27.20     8.05     3.70

Trust at Market Price(a)(b)

    32.83       9.97       4.49  

MSCI ACWI Select Liquidity Natural Resources Call Overwrite Index(c)

    25.86       N/A       N/A  

S&P Global Natural Resources Net Index

    24.40       8.94       3.95  

 

  (a)

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (b)

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

 
  (c)

An index that incorporates an option overlay component on the MSCI ACWI Select Liquidity Natural Resources Index with a 33% overwrite level. The benchmark commenced on December 31, 2018 and therefore the benchmark does not have 5- and 10-year returns.

 

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?

Natural resource equities delivered strong returns in 2021. The gradual re-opening of the world economy led to accelerating growth, fueling robust end-market demand across the commodities complex and boosting shares of the related companies.

The Trust’s holding in the energy sector made the largest contribution to absolute returns, followed by agriculture and mining.

The fertilizer producer CF Industries Holdings, Inc. was the largest contributor to performance. The company benefited from the rising prices for nitrogen fertilizers brought about by lower supplies. An out-of-benchmark position in Neo Lithium Corp. was also among the top performers, reflecting the improvement in lithium prices.

An out-of-benchmark position in the Brazilian state-owned integrated oil producer Petroleo Brasileiro SA (Petrobras) was the largest detractor. The stock declined following an unexpected change in the company’s chief executive officer, which the market saw as the first step in deeper government influence in its longer-term strategy. The crop chemicals producer FMC Corp., which downgraded its guidance due to rising costs, was another large detractor.

The Trust utilized an options overlay strategy in which calls are written on a portion of the portfolio’s holdings. The Trust’s option overwriting strategy contributed positively to relative performance for the 12-month period.

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 did not result 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 investment adviser increased the Trust’s weighting in the energy sector in 2021, based on its positive view on oil prices. The investment adviser maintained a bias toward higher-quality oil producers it believed would gain the largest benefit from continued strength in oil and natural gas prices. The Trust tilted away from the oil services sub-sector, where many companies could continue to face headwinds from industry overcapacity.

In the mining sector, the investment adviser focused on companies with stronger balance sheets and lower costs. In agriculture, the Trust was underweight in the paper and packaging industry in favor of health and wellness companies that are positioned to take advantage of consumers’ shifting preferences with respect to food and nutrition.

Describe portfolio positioning at period end.

At the end of the period, 41.0% of the portfolio was invested in the energy sector, 29.7% in the mining sector and 26.8% in the agriculture sector, together with a cash position of 1.2%.

As of December 31, 2021, the Trust had in place an option overwriting program whereby 33% of the underlying equities were overwritten with call options. These call options were typically written at prices above the prevailing market prices (estimated to be 4.9% out of the money) with an average time until expiration of 52 days.

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.

 

 

32  

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


Trust Summary  as of December 31, 2021 (continued)    BlackRock Resources & Commodities Strategy Trust (BCX)

 

Overview of the Trust’s Total Investments

 

TEN LARGEST HOLDINGS

   
Security(a)  

Percent of

Total Investments

 

TotalEnergies SE

    6

Chevron Corp.

    6  

Royal Dutch Shell PLC, Class B, ADR

    5  

Glencore PLC

    5  

Nutrien Ltd.

    5  

CF Industries Holdings, Inc.

    4  

BHP Group PLC

    4  

Anglo American PLC

    4  

Vale SA

    4  

Bunge Ltd.

    4  

INDUSTRY ALLOCATION

     
Industry(a)(b)   12/31/21     12/31/20  

Oil, Gas & Consumable Fuels

    40     34

Metals & Mining

    30       35  

Chemicals

    15       14  

Food Products

    9       5  

Machinery

    4       1  

Electronic Equipment, Instruments & Components

    1       2  

Containers & Packaging

    1       7  

Paper & Forest Products(c)

           

Energy Equipment & Services

          1  

Specialty Retail

          1  
 

 

(a)

Excludes short-term securities and options written.

(b)

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

(c)

Represents less than 1% of the Trust’s long-term investments.

 

 

T R U S T   S U M M A R Y

    33  


Trust Summary  as of December 31, 2021    BlackRock Science and Technology Trust (BST)

 

Investment Objective

BlackRock Science and Technology Trust’s (BST) (the “Trust”) investment objective is to provide income and total return through a combination of current income, current gains and long-term capital appreciation. The Trust seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its total assets in equity securities of U.S. and non-U.S. science and technology companies in any market capitalization range, selected for their rapid and sustainable growth potential from the development, advancement and use of science and/or technology (high growth science and technology stocks), and/or potential to generate current income from advantageous dividend yields (cyclical science and technology stocks). The Trust seeks to pursue this goal primarily by investing in a portfolio of equity securities and also by employing a strategy of writing (selling) call and put options.

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

Trust Information

 

   

Symbol on New York Stock Exchange

  BST

Initial Offering Date

  October 30, 2014  

Current Distribution Rate on Closing Market Price as of December 31, 2021 ($49.97)(a)

  6.00%

Current Monthly Distribution per Common Share(b)

  $0.2500

Current Annualized Distribution per Common Share(b)

  $3.0000

 

  (a)

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance is not an indication of future results.

 
  (b)

The distribution rate is not constant and is subject to change.

 

Market Price and Net Asset Value Per Share Summary

 

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

Closing Market Price

  $ 49.97      $ 53.30        (6.25 )%     $  61.14      $  47.30  

Net Asset Value

    52.40        51.94        0.89        58.68        49.07  

TOTAL RETURN BASED ON A $10,000 INVESTMENT

 

LOGO

BST commenced operations on October 30, 2014.

 

  (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 includes large- and mid-cap securities across certain Developed Markets countries and certain Emerging Markets countries. All securities in the index are classified in the Information Technology sector as per the Global Industry Classification Standard.

 

 

 

34  

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


Trust Summary  as of December 31, 2021 (continued)    BlackRock Science and Technology Trust (BST)

 

Performance

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

 

    Average Annual Total Returns  
                   
      1 Year         5 Years      

Since

  Inception

 

(a) 

Trust at NAV(b)(c)

    9.44     30.04     23.40

Trust at Market Price(b)(c)

    1.70       31.77       21.80  

MSCI ACWI Information Technology Call Overwrite Index(d)

    21.85       N/A       N/A  

MSCI ACWI Information Technology Index

    27.36       29.47       22.96  

 

  (a)

BST commenced operations on October 30, 2014.

 
  (b)

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (c)

The Trust moved from a premium to NAV to a discount during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 
  (d)

An index that incorporates an option overlay component on the MSCI ACWI Information Technology Index with a 33% overwrite level. The benchmark commenced on December 31, 2018 and therefore the benchmark does not have 5- and 10-year returns.

 

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?

The largest contributor to the Trust’s relative performance among individual stocks was its out-of-benchmark position in privately held fintech company Klarna, Inc. The Sweden-based digital payments provider allows shoppers to pay in installments without interest, and its acquisition of e-commerce technology platform specialist Hero Towers bolstered growth. An additional funding round in June 2021 valued Klarna at $45 billion, making it Europe’s most valuable “unicorn” technology startup. Also, an overweight position in U.S. semiconductor company Marvell Technology, Inc. was among top contributors, as the company’s data center, storage, and 5G business segments saw strong and improving demand. The stock performed well after Marvell raised its 2022 guidance in light of increased enterprise demand. Lastly, an out-of-benchmark position in privately held data software company Databricks, Inc. contributed. An additional funding round during the period valued the company at $38 billion, and Databricks is one of the leading developers of tools for large-scale data analysis as well as being a large player in the cloud software space.

By contrast, the largest detractor from relative returns was the Trust’s underweight position in Microsoft Corp. The stock performed well during the period and has a large weighting in the benchmark, and the software giant has continued to see strong growth in its Azure cloud computing business due to rising enterprise spending on digital transformation projects. Elsewhere, an underweight position in semiconductor company Nvidia Corp. was among top detractors as it benefited from strong demand for its gaming and data center graphics processing units as well as exposure to the emerging metaverse theme. Lastly, an out-of-benchmark position in artificial intelligence software company C3.AI, Inc. was among the largest detractors, as the stock got caught up in broader pressure on high-growth technology names during the period.

The Trust successfully completed a rights offering in July 2021, raising $359 million and providing capital for private equity investments and rebalancing the portfolio while mitigating portfolio turnover and the potential realization of capital gains which is a taxable event for shareholders. BlackRock, not the Trust, covered all expenses of the offering and structured the offering to limit NAV dilution to $0.68 per share or approximately 1.2% of NAV.

The Trust utilized an options overlay strategy in which calls are written on a portion of the portfolio’s holdings. The Trust’s options overlay strategy contributed positively to relative performance for the 12-month period.

Describe recent portfolio activity.

During the period, the Trust increased its exposure to the semiconductors sub-sector. It decreased exposure to the internet, services, and software sub-sectors. From a regional perspective, the Trust’s allocation to emerging markets decreased, while its allocation to the United States and Europe increased.

The Trust’s practice of maintaining a specified level of monthly distributions did not have a material impact on the Trust’s investment strategy. The distribution policy did not result 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 portfolio positioning at period end.

At period end, the Trust’s largest sub-sector exposure was in software (31%), internet (19%), and semiconductors (19%). The Trust’s smallest exposure was in content & infrastructure (1%).

As of December 31, 2021, the Trust had an options overwriting program in place whereby 25% of the underlying equities were overwritten with call options. These call options were typically written at levels above prevailing market prices (estimated to be 7.8% out of the money) with an average time until expiration of 53 days.

 

 

T R U S T   S U M M A R Y

    35  


Trust Summary  as of December 31, 2021 (continued)   

BlackRock Science and Technology Trust (BST)

 

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.

Overview of the Trust’s Total Investments

 

TEN LARGEST HOLDINGS

 

   
Security(a)  

Percent of

Total Investments

 

Apple, Inc.

    5

Microsoft Corp.

    4  

Marvell Technology, Inc.

    3  

Alphabet, Inc.

    3  

Klarna Holdings AB

    2  

Tesla, Inc.

    2  

Amazon.com, Inc.

    2  

ASML Holding NV

    2  

Lam Research Corp.

    2  

Mastercard, Inc.

    2  
SECTOR ALLOCATION

 

     
Sector(a)(b)   12/31/21     12/31/20  

Software

    29     27

Semiconductors & Semiconductor Equipment

    19       15  

IT Services

    19       19  

Interactive Media & Services

    9       10  

Technology Hardware, Storage & Peripherals

    5       4  

Internet & Direct Marketing Retail

    4       10  

Automobiles

    3       3  

Banks

    2       1  

Electrical Equipment

    2        

Road & Rail

    1       2  

Professional Services

    1       (c) 

Entertainment

    1       3  

Hotels, Restaurants & Leisure

    1       (c) 

Food Products

    1       (c) 

Electronic Equipment, Instruments & Components

    1       1  

Diversified Financial Services

    1       1  

Chemicals

    1        

Diversified Consumer Services

          2  

Health Care Technology

          1  

Diversified Telecommunication Services

          1  

Other(c)

           
 
(a)

Excludes short-term securities and options written.

(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)

Represents less than 1% of the Trust’s long-term investments.

 

 

36  

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


Trust Summary  as of December 31, 2021    BlackRock Science and Technology Trust II (BSTZ)

 

Investment Objective

BlackRock Science and Technology Trust II’s (BSTZ) (the “Trust”) investment objective is to provide total return and income through a combination of current income, current gains and long-term capital appreciation. The Trust seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its total assets in equity securities issued by U.S. and non-U.S. science and technology companies in any market capitalization range, selected for their rapid and sustainable growth potential from the development, advancement and use of science and/or technology. The Trust seeks to pursue this goal primarily by investing in a portfolio of equity securities and also by employing a strategy of writing (selling) call and put options.

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

Trust Information

 

   

Symbol on New York Stock Exchange

  BSTZ

Initial Offering Date

  June 27, 2019

Current Distribution Rate on Closing Market Price as of December 31, 2021 ($38.94)(a)

  5.92%

Current Monthly Distribution per Common Share(b)

  $0.1920

Current Annualized Distribution per Common Share(b)

  $2.3040

 

  (a)

Current distribution rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance is not an indication of future results.

 
  (b)

The distribution rate is not constant and is subject to change.

 

Market Price and Net Asset Value Per Share Summary

 

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

Closing Market Price

  $ 38.94      $ 36.38        7.04    $  43.53     $  32.58    

Net Asset Value

    38.82        38.72        0.26        44.87       35.93    

TOTAL RETURN BASED ON A $10,000 INVESTMENT

 

LOGO

BSTZ commenced operations on June 27, 2019.

 

  (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 captures large- and mid-cap representation across certain developed and emerging markets.

 

 

 

T R U S T   S U M M A R Y

    37  


Trust Summary  as of December 31, 2021 (continued)    BlackRock Science and Technology Trust II (BSTZ)

 

Performance

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

 

    Average Annual Total Returns  
 

 

 

 
      1 Year      

Since

Inception

 

(a) 

Trust at NAV(b)(c)

    8.41     38.49

Trust at Market Price(b)(c)

    15.75       38.66  

MSCI ACWI Call Overwrite Index(d)

    18.56       15.63  

MSCI ACWI

    18.54       17.80  

 

  (a)

BSTZ commenced operations on June 27, 2019.

 
  (b)

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 
  (c)

The Trust moved from a discount to NAV to a premium during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 
  (d)

An index that incorporates an option overlay component on the MSCI ACWI Index with a 25% overwrite level.

 

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?

The largest contributor to the Trust’s relative performance among individual stocks was its out-of-benchmark position in privately held fintech company Klarna, Inc. The Sweden-based digital payments provider allows shoppers to pay in installments without interest, and its acquisition of e-commerce technology platform specialist Hero Towers bolstered growth. An additional funding round in June 2021 valued Klarna at $45 billion, making it Europe’s most valuable “unicorn” technology startup. Also, an out-of-benchmark position in privately held data software company Databricks, Inc. contributed. An additional funding round during the period valued the company at $38 billion, and Databricks is one of the leading developers of tools for large-scale data analysis as well as being a large player in the cloud software space. Lastly, an overweight position in U.S. semiconductor company Marvell Technology, Inc. Inc. was among top contributors, as the company’s data center, storage, and 5G business segments saw strong and improving demand. The stock performed well after Marvell raised its 2022 guidance in light of increased enterprise demand.

The largest detractor from relative returns was the Trust’s out-of-benchmark position in artificial intelligence company C3.AI, Inc., as the market rotation from growth to value had a substantial negative impact on its stock. An out-of-benchmark position in commercial electric vehicle manufacturer Arrival Ltd.also weighed on relative returns, as the company’s stock came under pressure following weaker-than-expected guidance for revenue and vehicle sales volumes. Lastly, an out-of-benchmark position in Farfetch Ltd. was among top detractors, as the U.K.-based luxury e-commerce company’s stock suffered due to rising yields and the collapse of Archegos Capital Management.

The Trust utilized an options overlay strategy in which calls are written on a portion of the portfolio’s holdings. The Trust’s options overlay strategy marginally detracted from relative performance for the 12-month period.

Describe recent portfolio activity.

During the period, the Trust reduced its exposure to emerging markets-based companies, particularly in China and Brazil, and increased exposure to secular growth, higher-quality technology companies. From an industry perspective, the Trust reduced exposure to companies facing competitive pressures and structural challenges, adding to stable software, semiconductor equipment, and services companies.

Over the long term, the investment adviser has continued to focus on companies that are exposed to long-term secular demand. This includes companies seeing heightened demand from the migration to remote work and increased adoption of emerging technologies, such as artificial intelligence, cloud computing, digital transformation, and e-commerce.

During the period, the Trust initiated five new private investments in privately held technology companies. As of December 31, 2021, the Trust held 22 private investments, comprising 26% of total assets for a total commitment of approximately $800 million.

The Trust’s practice of maintaining a specified level of monthly distributions did not have a material impact on the Trust’s investment strategy. The distribution policy did not result 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 portfolio positioning at period end.

At period end, the Trust held 33% of assets in software, 24% in semiconductors, 16% in services, 15% in internet, 5% in hardware, 4% in content & infrastructure, and 3% in new industries. These industry exposures were the result of bottom-up stock selection.

As of December 31, 2021, the Trust had an options overwriting program in place whereby 21% of the underlying equities were overwritten with call options. These call options were typically written at levels above prevailing market prices (estimated to be 8.5% out of the money) with an average time until expiration of 56 days.

 

 

38  

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


Trust Summary  as of December 31, 2021 (continued)    BlackRock Science and Technology Trust II (BSTZ)

 

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.

Overview of the Trust’s Total Investments

 

TEN LARGEST HOLDINGS

 

   
Security(a)  

Percent of   

Total Investments   

Marvell Technology, Inc.

  5%

Klarna Holdings AB

  4   

Lasertec Corp.

  3   

Tesla, Inc.

  3   

Silergy Corp.

  2   

Kakao Corp.

  2   

SambaNova Systems, Inc.

  2   

Databricks, Inc.

  2   

Zscaler, Inc.

  2   

Endava PLC

  2   

INDUSTRY ALLOCATION

 

     
Industry(a)(b)   12/31/21     12/31/20   

Software

    27   30%

Semiconductors & Semiconductor Equipment

    23     15   

IT Services

    18     19   

Interactive Media & Services

    7     7   

Banks

    4     2   

Automobiles

    4     6   

Internet & Direct Marketing Retail

    4     7   

Entertainment

    3     3   

Electrical Equipment

    1     —   

Electronic Equipment, Instruments & Components

    1     2   

Road & Rail

    1     1   

Hotels, Restaurants & Leisure

    1     —   

Specialty Retail

    1     1   

Diversified Consumer Services

    1     2   

Professional Services

    1     (c)

Food Products

    1     1   

Food & Staples Retailing

    1     —   

Communications Equipment

    1     —   

Capital Markets

        1   

Multi-line Retail

        1   

Health Care Technology

        1   

Diversified Telecommunication Services

        1   

Other*

        (c)
 
(a)

Excludes short-term securities and options written.

(b)

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

(c)

Rounds to less than 1% of total investments.

*

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

 

 

T R U S T   S U M M A R Y

    39  


Trust Summary  as of December 31, 2021    BlackRock Utilities, Infrastructure & Power Opportunities Trust (BUI)

 

Investment Objective

BlackRock Utilities, Infrastructure & Power Opportunities Trust’s (BUI) (the “Trust”) investment objective is to provide total return through a combination of current income, current gains and long-term capital appreciation. The Trust seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its total assets in equity securities issued by companies that are engaged in the Utilities, Infrastructure and Power Opportunities business segments anywhere in the world and by employing a strategy of writing (selling) call and put options. The Trust considers the “Utilities” business segment to include products, technologies and services connected to the management, ownership, operation, construction, development or financing of facilities used to generate, transmit or distribute electricity, water, natural resources or telecommunications, the “Infrastructure” business segment to include companies that own or operate infrastructure assets or that are involved in the development, construction, distribution or financing of infrastructure assets and the “Power Opportunities” business segment to include companies with a significant involvement in, supporting, or necessary to renewable energy technology and development, alternative fuels, energy efficiency, automotive and sustainable mobility and technologies that enable or support the growth and adoption of new power and energy sources. Under normal circumstances, the Trust invests a substantial amount of its total assets in foreign issuers, issuers that primarily trade in a market located outside the United States or issuers that do a substantial amount of business outside the United States. The Trust may invest directly in such securities or synthetically through the use of derivatives.

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

Trust Information

 

   

Symbol on New York Stock Exchange

  BUI

Initial Offering Date

  November 25, 2011    

Current Distribution Rate on Closing Market Price as of December 31, 2021 ($26.62)(a)

  5.45%

Current Monthly Distribution per Common Share(b)

  $ 0.1210

Current Annualized Distribution per Common Share(b)

  $ 1.4520

 

  (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.

 

Market Price and Net Asset Value Per Share Summary

 

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

Closing Market Price

  $ 26.62      $ 25.04        6.31    $  27.77     $  24.03    

Net Asset Value

    25.86        23.80        8.66        26.22       23.05    

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 captures large- and mid-cap representation across certain developed and emerging markets.

 

 

 

40  

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


Trust Summary  as of December 31, 2021 (continued)    BlackRock Utilities, Infrastructure & Power Opportunities Trust (BUI)

 

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)

     15.13      13.32      10.56

Trust at Market Price(a)(b)

     12.65        15.20        10.62  

MSCI World Select Energy, Utilities and Industry Call Overwrite Index(c)

     13.72        N/A        N/A  

MSCI ACWI

     18.54        14.40        11.85  

 

  (a)

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 

 

  (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)

An index that incorporates an option overlay component on the MSCI World Select Energy, Utilities and Industry Index with a 33% overwrite level. The benchmark commenced on December 31, 2018 and therefore the benchmark does not have 5- and 10-year returns.

 

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?

The largest contributor to relative returns was the Trust’s position in wind-power developer China Longyuan Power Group Corp. Ltd., which saw strong gains from its parent company’s plans to merge one of its China A-share listed subsidiaries with China Longyuan and contribute additional renewable energy assets to the group. China Longyuan also benefited from plans by the Chinese government to accelerate wind-power generation. Elsewhere, ON Semiconductor Corp. contributed to relative returns, benefiting from supply chain challenges across the semiconductor industry and higher demand from electric-vehicle manufacturers that drove stronger sales and higher pricing.

The largest detractors from relative returns were the Trust’s positions in clean power utility companies. The group struggled amid perceived risks around interest rate expectations and potential tax increases or price controls to limit the power-price impact on consumers. Among individual stock positions, Enel SpA, Iberdrola SA, and EDP SA notably weighed on performance.

The Trust utilized an options overlay strategy in which calls are written on a portion of the portfolio’s holdings. The Trust’s options overlay strategy contributed positively to relative performance for the 12-month period.

Describe recent portfolio activity.

During the period, the Trust moderately reduced its exposure to the utilities sector. At the beginning of the period, the Trust initially added to positions in energy efficiency companies positively exposed to economic reopening, but it later reduced some of this exposure following strong performance. The Trust rotated this capital into the industrials sector, where valuations were more attractive.

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 portfolio positioning at period end.

At period end, the utilities sector accounted for approximately 52% of the Trust’s assets. The Trust had approximately 30% and 7% of its assets invested in the industrials and energy sectors respectively, and the remainder was invested in other infrastructure- and power-related sectors.

As of December 31, 2021, the Trust had an options overwriting program in place whereby approximately 34% of the underlying equities were overwritten with call options. These call options were typically written at levels above prevailing market prices (estimated to be 3.4% out of the money) with an average time until expiration of 56 days.

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.

 

 

T R U S T   S U M M A R Y

    41  


Trust Summary  as of December 31, 2021 (continued)    BlackRock Utilities, Infrastructure & Power Opportunities Trust (BUI)

 

Overview of the Trust’s Total Investments

 

TEN LARGEST HOLDINGS

 

   
Security(a)   Percent of
Total Investments
 

NextEra Energy, Inc.

    8

Enel SpA

    5  

Rwe AG

    4  

Johnson Controls International PLC

    3  

Waste Management, Inc.

    3  

Iberdrola SA

    3  

Vinci SA

    3  

Schneider Electric SE

    3  

Atlas Copco AB

    3  

Dominion Energy, Inc.

    3  

INDUSTRY ALLOCATION

 

     
Industry(a)(b)   12/31/21     12/31/20  

Electric Utilities

    28     33

Multi-Utilities

    17       14  

Electrical Equipment

    9       7  

Building Products

    8       7  

Oil, Gas & Consumable Fuels

    7       8  

Independent Power and Renewable Electricity Producers

    7       8  

Commercial Services & Supplies

    5       4  

Machinery

    5       2  

Chemicals

    4       5  

Construction & Engineering

    4       4  

Semiconductors & Semiconductor Equipment

    4       5  

Electronic Equipment, Instruments & Components

    2       3  
 

 

(a)

Excludes short-term securities and options written.

(b)

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

 

 

42  

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


Schedule of Investments  

December 31, 2021

  

BlackRock Energy and Resources Trust (BGR)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

 

Common Stocks

 

Energy Equipment & Services — 0.7%  

Schlumberger NV

    69,450     $ 2,080,027  
   

 

 

 
Food Products — 0.8%            

Darling Ingredients, Inc.(a)(b)

    37,324       2,586,180  
   

 

 

 
Metals & Mining — 0.9%            

Glencore PLC

    581,300       2,961,885  
   

 

 

 
Oil, Gas & Consumable Fuels — 97.4%            

Aker BP ASA

    94,301       2,899,623  

ARC Resources Ltd.

    441,330       4,012,249  

BP PLC

    1,852,674       8,301,130  

Cairn Energy PLC

    958,958       2,475,057  

Canadian Natural Resources Ltd.

    306,213       12,938,918  

Cenovus Energy Inc.

    729,241       8,941,484  

Cheniere Energy, Inc.(a)

    57,800       5,862,076  

Chevron Corp.(a)

    366,418       42,999,152  

ConocoPhillips(a)

    302,334       21,822,512  

Devon Energy Corp.(a)

    177,667       7,826,231  

EOG Resources, Inc.(a)

    96,665       8,586,752  

Equinor ASA

    311,233       8,241,228  

Exxon Mobil Corp.(a)(c)

    314,177       19,224,491  

Gazprom PJSC, ADR

    400,350       3,696,888  

Hess Corp.

    104,719       7,752,348  

Kosmos Energy Ltd.(b)

    653,634       2,261,574  

Marathon Petroleum Corp.(a)

    186,834           11,955,508  

Pioneer Natural Resources Co.(c)

    60,704       11,040,843  

Royal Dutch Shell PLC, Class B, ADR(a)

    769,051       33,338,361  

Santos Ltd.

    1,184,886       5,458,144  

Suncor Energy Inc.

    497,484       12,447,424  

TC Energy Corp.

    245,952       11,438,678  

TotalEnergies SE

    531,067       27,031,421  
Security   Shares     Value  

 

 

Oil, Gas & Consumable Fuels (continued)

 

Tourmaline Oil Corp.

    171,783     $ 5,546,162  

Valero Energy Corp.(a)

    126,474       9,499,462  

Williams Cos., Inc.(a)

    376,158       9,795,154  
   

 

 

 
      305,392,870  
   

 

 

 

Total Long-Term Investments — 99.8%
(Cost: $240,891,552)

 

    313,020,962  
   

 

 

 

Short-Term Securities

 

Money Market Funds — 0.9%

 

BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.00%(d)(e)

    2,725,280       2,725,280  
   

 

 

 

Total Short-Term Securities — 0.9%
(Cost: $2,725,280)

 

    2,725,280  
   

 

 

 

Total Investments Before Options Written — 100.7%
(Cost: $243,616,832)

 

    315,746,242  
   

 

 

 

Options Written — (0.6)%

   

  (Premiums Received: $(3,397,497))

 

    (2,076,564
   

 

 

 

Total Investments, Net of Options Written — 100.1%
(Cost: $240,219,335)

 

    313,669,678  

Liabilities in Excess of Other Assets — (0.1)%

 

    (166,208
   

 

 

 

Net Assets — 100.0%

    $  313,503,470  
   

 

 

 

 

(a)

All or a portion of the security has been pledged and/or segregated as collateral in connection with outstanding exchange-traded options written.

(b)

Non-income producing security.

(c)

All or a portion of the security has been pledged as collateral in connection with outstanding OTC derivatives.

(d)

Affiliate of the Trust.

(e)

Annualized 7-day yield as of period end.

 

For Trust compliance purposes, the Trust’s industry classifications refer to one or more of the industry 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 industry sub-classifications for reporting ease.

Affiliates

Investments in issuers considered to be affiliate(s) of the Trust during the year 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
12/31/20
     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

   $  3,418,486      $      $ (693,206 )(a)     $      $      $  2,725,280        2,725,280      $ 357      $  
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 

 

  (a)

Represents net amount purchased (sold).

 

Derivative Financial Instruments Outstanding as of Period End    

Exchange-Traded Options Written    

 

           
Description   

Number of

Contracts

      

Expiration

Date

       Exercise Price       

Notional

Amount (000)

     Value  
Call                                                   

Chevron Corp.

     258          01/07/22        USD      116.25        USD      3,028      $   (52,421

ConocoPhillips

     154          01/07/22        USD      76.00        USD      1,112        (2,233

Exxon Mobil Corp.

     365          01/07/22        USD      65.01        USD      2,233        (701

Marathon Petroleum Corp.

     110          01/07/22        USD      67.00        USD      704        (1,980

 

 

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

    43  


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Energy and Resources Trust (BGR)

 

Exchange-Traded Options Written (continued)

 

           
Description   

Number of

Contracts

      

Expiration

Date

       Exercise Price       

Notional

Amount (000)

     Value  
Call (continued)                                                   

Tourmaline Oil Corp.

     248          01/07/22        CAD      43.00        CAD      1,013      $ (2,353

Valero Energy Corp.

     161          01/07/22        USD      76.00        USD      1,209        (13,444

Chevron Corp.

     326          01/14/22        USD      121.00        USD      3,826        (17,930

ConocoPhillips

     9          01/14/22        USD      75.00        USD      65        (585

Devon Energy Corp.

     385          01/14/22        USD      46.00        USD      1,696        (33,495

Exxon Mobil Corp.

     365          01/14/22        USD      65.01        USD      2,233        (3,724

Valero Energy Corp.

     137          01/14/22        USD      75.00        USD      1,029        (26,578

Williams Cos., Inc.

     413          01/14/22        USD      28.00        USD      1,075        (14,455

Arc Resources Ltd.

     310          01/21/22        CAD      13.50        CAD      357        (858

Arc Resources Ltd.

     336          01/21/22        CAD      13.00        CAD      386        (1,859

Arc Resources Ltd.

     195          01/21/22        CAD      11.50        CAD      224        (7,477

Canadian Natural Resources Ltd.

     593          01/21/22        CAD      54.00        CAD      3,170        (52,270

Canadian Natural Resources Ltd.

     601          01/21/22        CAD      56.00        CAD      3,212        (21,618

Cenovus Energy Inc.

     1,327          01/21/22        CAD      16.50        CAD      2,058        (18,358

Cheniere Energy, Inc.

     93          01/21/22        USD      110.00        USD      943        (4,418

Chevron Corp.

     418          01/21/22        USD      115.00        USD      4,905        (155,705

ConocoPhillips

     78          01/21/22        USD      75.00        USD      563        (7,059

Darling Ingredients, Inc.

     65          01/21/22        USD      80.00        USD      450        (1,138

Devon Energy Corp.

     400          01/21/22        USD      43.00        USD      1,762        (99,000

Exxon Mobil Corp.

     365          01/21/22        USD      65.00        USD      2,233        (7,665

Marathon Petroleum Corp.

     162          01/21/22        USD      67.50        USD      1,037        (9,315

Marathon Petroleum Corp.

     92          01/21/22        USD      65.00        USD      589        (12,190

Royal Dutch Shell PLC, Class B, ADR

     867          01/21/22        USD      47.50        USD      3,758        (8,670

Suncor Energy Inc.

     938          01/21/22        CAD      33.00        CAD      2,969        (23,358

TC Energy Corp.

     672          01/21/22        CAD      62.00        CAD      3,953        (2,656

Tourmaline Oil Corp.

     230          01/21/22        CAD      46.00        CAD      939        (2,727

Valero Energy Corp.

     182          01/21/22        USD      80.00        USD      1,367        (11,284

Williams Cos., Inc.

     617          01/21/22        USD      29.00        USD      1,607        (3,085

Chevron Corp.

     390          01/28/22        USD      120.00        USD      4,577        (60,840

ConocoPhillips

     718          01/28/22        USD      75.00        USD      5,183        (89,750

EOG Resources, Inc.

     58          01/28/22        USD      93.00        USD      515        (10,092

Exxon Mobil Corp.

     121          01/28/22        USD      64.00        USD      740        (6,716

Marathon Petroleum Corp.

     255          01/28/22        USD      66.00        USD      1,632        (35,445

Royal Dutch Shell PLC, Class B, ADR

     375          01/28/22        USD      46.25        USD      1,626        (11,700

Williams Cos., Inc.

     399          01/28/22        USD      27.00        USD      1,039        (9,975

Cheniere Energy, Inc.

     126          01/31/22        USD      110.00        USD      1,278        (11,460

EOG Resources, Inc.

     309          02/11/22        USD      91.00        USD      2,745        (95,945

Arc Resources Ltd.

     217          02/18/22        CAD      13.00        CAD      250        (4,803

Arc Resources Ltd.

     625          02/18/22        CAD      11.50        CAD      719        (40,021

Cenovus Energy Inc.

     1,327          02/18/22        CAD      16.50        CAD      2,058        (58,222

ConocoPhillips

     86          02/18/22        USD      77.50        USD      621        (12,341

ConocoPhillips

     74          02/18/22        USD      75.00        USD      534        (15,984

ConocoPhillips

     29          02/18/22        USD      72.50        USD      209        (9,498

Darling Ingredients, Inc.

     76          02/18/22        USD      69.00        USD      527        (26,610

Marathon Petroleum Corp.

     90          02/18/22        USD      70.00        USD      576        (8,235

Royal Dutch Shell PLC, Class B, ADR

     960          02/18/22        USD      45.00        USD      4,162        (91,200

Suncor Energy Inc.

     952          02/18/22        CAD      32.00        CAD      3,013        (96,709

TC Energy Corp.

     262          02/18/22        CAD      60.00        CAD      1,541        (18,537

Tourmaline Oil Corp.

     174          02/18/22        CAD      40.00        CAD      711        (37,621
                          

 

 

 
                           $  (1,372,313
                          

 

 

 

OTC Options Written    

 

             
Description   Counterparty   Number of
Contracts
    

Expiration

Date

     Exercise Price     

Notional

Amount (000)

    Value  
Call                                             

Aker BP

  Morgan Stanley & Co. International PLC     24,000        01/04/22      NOK     317.86      NOK     6,518     $  

Gazprom PJSC, ADR

  Morgan Stanley & Co. International PLC     32,300        01/04/22      USD     9.62      USD     298       (368

Statoil ASA

  Morgan Stanley & Co. International PLC     55,300        01/05/22      NOK     229.80      NOK     13,045       (37,543

BP PLC

  Goldman Sachs International     101,900        01/11/22      GBP     3.53      GBP     337       (557

Gazprom PJSC, ADR

  Morgan Stanley & Co. International PLC     32,300        01/11/22      USD     9.71      USD     298       (1,189

 

 

44  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Energy and Resources Trust (BGR)

 

OTC Options Written (continued)

 

             
Description   Counterparty   Number of
Contracts
    

Expiration

Date

     Exercise Price     

Notional

Amount (000)

    Value  
Call (continued)                                                 

Total SA

  Goldman Sachs International     17,300        01/11/22        EUR       44.23        EUR       772     $ (19,218

Aker BP

  Goldman Sachs International     12,600        01/13/22        NOK       312.05        NOK       3,422       (51

Statoil ASA

  UBS AG     31,200        01/13/22        NOK       234.66        NOK       7,360       (18,990

Gazprom PJSC, ADR

  Morgan Stanley & Co. International PLC     32,300        01/18/22        USD       9.80        USD       298       (5,064

Statoil ASA

  Morgan Stanley & Co. International PLC     37,100        01/18/22        NOK       230.80        NOK       8,752       (34,552

Total SA

  Goldman Sachs International     43,400        01/18/22        EUR       44.69        EUR       1,937       (44,514

Gazprom PJSC, ADR

  Morgan Stanley & Co. International PLC     32,800        01/20/22        USD       9.58        USD       303       (3,606

Santos Ltd.

  Goldman Sachs International     273,000        01/20/22        AUD       6.91        AUD       1,723       (5,289

Statoil ASA

  Morgan Stanley & Co. International PLC     23,100        01/20/22        NOK       245.85        NOK       5,449       (7,866

Santos Ltd.

  Goldman Sachs International     84,462        01/25/22        AUD       6.53        AUD       533       (8,616

BP PLC

  Morgan Stanley & Co. International PLC     431,600        01/27/22        GBP       3.32        GBP       1,426       (50,028

Glencore PLC

  Goldman Sachs International     76,400        01/27/22        GBP       3.73        GBP       286       (13,184

Total SA

  Goldman Sachs International     71,900        01/27/22        EUR       41.62        EUR       3,209       (253,795

Glencore PLC

  Goldman Sachs International     114,000        02/01/22        GBP       3.81        GBP       427       (17,399

Royal Dutch Shell PLC,
Class B, ADR

  Citibank N.A.     72,000        02/02/22        USD       44.00        USD       3,121       (62,158

BP PLC

  Morgan Stanley & Co. International PLC     170,500        02/03/22        GBP       3.47        GBP       564       (9,944

Santos Ltd.

  JPMorgan Chase Bank N.A.     75,000        02/08/22        AUD       6.74        AUD       473       (6,358

Total SA

  UBS AG     69,300        02/08/22        EUR       44.57        EUR       3,093       (103,962
                  

 

 

 
                   $  (704,251
                  

 

 

 

Balances Reported in the Statements of Assets and Liabilities for Options Written

 

           
Description    Swap
Premiums
Paid
     Swap
Premiums
Received
     Unrealized
Appreciation
     Unrealized
Depreciation
     Value  

Options Written

   $ N/A      $ N/A      $ 1,592,247      $ (271,314    $ (2,076,564

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statements 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

                

Options written

                

Options written at value

   $     $     $   2,076,564     $     $      $      $ 2,076,564  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

For the period ended December 31, 2021, the effect of derivative financial instruments in the Statements 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:

                    

Options purchased(a)

   $      $      $ (25,247    $      $      $      $ (25,247

Options written

                   (14,237,287                           (14,237,287
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $      $      $ (14,262,534    $      $      $      $ (14,262,534
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                    

Options written

   $      $      $ 1,154,640      $      $      $      $ 1,154,640  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)

Options purchased are included in net realized gain (loss) from investments — unaffiliated.

 

 

 

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

    45  


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Energy and Resources Trust (BGR)

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments    

 

 

 

Options:

  

Average value of option contracts purchased

   $ (a) 

Average value of option contracts written

   $ 3,512,106  

 

 

 

  (a)

Derivative not held at any quarter-end. The risk exposure table serves as an indicator of activity during the period.

 

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

Derivative Financial Instruments — Offsetting as of Period End

The Trust’s derivative assets and liabilities (by type) were as follows:

 

     
     Assets        Liabilities  

Derivative Financial Instruments

      

Options

  $        $ 2,076,564  
 

 

 

      

 

 

 

Total derivative assets and liabilities in the Statements of Assets and Liabilities

             2,076,564  
 

 

 

      

 

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

             (1,372,313
 

 

 

      

 

 

 

Total derivative assets and liabilities subject to an MNA

  $        $ 704,251  
 

 

 

      

 

 

 

The following table presents the Trust’s derivative liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral pledged by the Trust:

 

           

Counterparty

   

Derivative

Liabilities

Subject to

an MNA by

Counterparty

 

 

 

 

 

    

    Derivatives

Available

for Offset

 

 

 

    

    Non-Cash

Collateral

Pledged

 

 

(a) 

   

Cash

    Collateral

Pledged

 

 

 

    

Net Amount

of Derivative

Liabilities

 

 

(b) 

Citibank N.A.

  $ 62,158      $      $     $      $ 62,158  

Goldman Sachs International

    362,623               (362,623             

JPMorgan Chase Bank N.A.

    6,358                            6,358  

Morgan Stanley & Co. International PLC

    150,160               (150,160             

UBS AG

    122,952                            122,952  
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 
  $ 704,251      $      $ (512,783   $      $ 191,468  
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

  (a)

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 
  (b)

Net amount represents the net amount payable due to counterparty in the event of default. Net amount may be offset further by the options written receivable/payable on the Statements of Assets and Liabilities.

 

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

                 

Common Stocks

                 

Energy Equipment & Services

   $ 2,080,027        $        $        $ 2,080,027  

Food Products

     2,586,180                            2,586,180  

Metals & Mining

              2,961,885                   2,961,885  

Oil, Gas & Consumable Fuels

     247,289,379          58,103,491                   305,392,870  

Short-Term Securities

                 

Money Market Funds

     2,725,280                            2,725,280  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $  254,680,866        $  61,065,376        $        $  315,746,242  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

 

46  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Energy and Resources Trust (BGR)

 

Fair Value Hierarchy as of Period End (continued)

 

         
      Level 1        Level 2        Level 3        Total  

Derivative Financial Instruments(a)

                 

Liabilities

                 

Equity Contracts

   $     (1,265,697      $     (810,867      $             —        $     (2,076,564
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Derivative financial instruments are options written. Options written are shown at value.

 

See notes to financial statements.

 

 

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

    47  


Schedule of Investments

December 31, 2021

  

BlackRock Enhanced Capital and Income Fund, Inc. (CII)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Aerospace & Defense — 0.3%            

BAE Systems PLC, ADR

    107,020     $ 3,187,591  
   

 

 

 
Air Freight & Logistics — 1.1%            

C.H. Robinson Worldwide, Inc.

    104,301       11,225,917  
   

 

 

 
Automobiles — 2.2%            

General Motors Co.(a)

    362,321       21,242,880  
   

 

 

 
Banks — 2.7%            

Bank of America Corp.(b)

    189,066       8,411,546  

JPMorgan Chase & Co.

    114,191       18,082,145  
   

 

 

 
          26,493,691  
Capital Markets — 3.0%            

Intercontinental Exchange, Inc.

    100,667       13,768,226  

Morgan Stanley

    162,491       15,950,116  
   

 

 

 
      29,718,342  
Chemicals — 3.6%            

Axalta Coating Systems Ltd.(a)

    305,175       10,107,396  

Corteva, Inc.

    523,568       24,754,295  
   

 

 

 
      34,861,691  
Communications Equipment — 3.2%            

Ciena Corp.(a)

    164,522       12,663,258  

Cisco Systems, Inc.

    293,851       18,621,338  
   

 

 

 
      31,284,596  
Construction & Engineering — 1.3%            

Quanta Services, Inc.

    109,918       12,603,198  
   

 

 

 
Consumer Finance — 2.1%            

Ally Financial, Inc.

    233,526       11,118,173  

Capital One Financial Corp.

    67,080       9,732,637  
   

 

 

 
      20,850,810  
Containers & Packaging — 1.4%            

Sealed Air Corp.

    195,860       13,214,674  
   

 

 

 
Diversified Financial Services — 2.4%            

Berkshire Hathaway, Inc., Class B(a)

    78,108       23,354,292  
   

 

 

 
Entertainment — 1.2%            

World Wrestling Entertainment, Inc., Class A

    229,834       11,340,010  
   

 

 

 
Food Products — 0.8%            

Mondelez International, Inc., Class A

    125,420       8,316,600  
   

 

 

 
Health Care Providers & Services — 7.2%            

Anthem, Inc.

    32,695       15,155,441  

Humana, Inc.

    14,728       6,831,730  

Laboratory Corp. of America Holdings(a)

    56,305       17,691,594  

UnitedHealth Group, Inc.

    61,023       30,642,089  
   

 

 

 
      70,320,854  
Health Care Technology — 0.8%            

Veeva Systems, Inc., Class A(a)

    29,226       7,466,658  
   

 

 

 
Hotels, Restaurants & Leisure — 0.7%            

Las Vegas Sands Corp.(a)

    172,808       6,504,493  
   

 

 

 
Insurance — 2.1%            

Fidelity National Financial, Inc.

    109,047       5,690,072  

Progressive Corp.

    141,810       14,556,797  
   

 

 

 
      20,246,869  
Security   Shares     Value  
Interactive Media & Services(a) — 9.2%            

Alphabet, Inc., Class A(b)

    21,069     $ 61,037,736  

Meta Platforms, Inc., Class A

    86,799       29,194,843  
   

 

 

 
      90,232,579  
Internet & Direct Marketing Retail — 5.3%            

Amazon.com, Inc.(a)(b)

    15,404       51,362,173  
   

 

 

 
IT Services — 5.5%            

Fidelity National Information Services, Inc.

    131,281       14,329,321  

FleetCor Technologies, Inc.(a)

    65,492       14,659,729  

Visa, Inc., Class A

    112,390       24,356,037  
   

 

 

 
      53,345,087  
Life Sciences Tools & Services — 1.3%            

Avantor, Inc.(a)

    294,950       12,429,193  
   

 

 

 
Machinery — 2.7%            

Fortive Corp.

    214,193       16,340,784  

Otis Worldwide Corp.

    111,887       9,742,001  
   

 

 

 
          26,082,785  
Media — 3.2%            

Comcast Corp., Class A

    452,002       22,749,261  

Fox Corp., Class A

    221,208       8,162,575  
   

 

 

 
      30,911,836  
Multiline Retail — 3.3%            

Dollar General Corp.

    71,218       16,795,341  

Dollar Tree, Inc.(a)

    110,942       15,589,570  
   

 

 

 
      32,384,911  
Oil, Gas & Consumable Fuels — 3.5%            

ConocoPhillips(b)

    296,788       21,422,158  

EQT Corp.(a)

    595,527       12,988,444  
   

 

 

 
      34,410,602  
Personal Products — 1.2%            

Unilever PLC, ADR

    220,858       11,879,952  
   

 

 

 
Pharmaceuticals — 2.8%            

Novo Nordisk A/S, ADR

    98,683       11,052,496  

Sanofi, ADR

    333,072       16,686,907  
   

 

 

 
      27,739,403  
Real Estate Management & Development — 1.5%        

CBRE Group, Inc., Class A(a)

    133,254       14,459,392  
   

 

 

 
Road & Rail — 2.0%            

Norfolk Southern Corp.

    64,610       19,235,043  
   

 

 

 
Semiconductors & Semiconductor Equipment — 6.0%        

Analog Devices, Inc.

    96,290       16,924,893  

Applied Materials, Inc.

    127,730       20,099,593  

Taiwan Semiconductor Manufacturing Co. Ltd., ADR

    181,600       21,848,296  
   

 

 

 
      58,872,782  
Software — 8.4%            

CDK Global, Inc.

    225,374       9,407,111  

Microsoft Corp.(b)

    214,901       72,275,504  
   

 

 

 
      81,682,615  
Specialty Retail — 3.0%            

O’Reilly Automotive, Inc.(a)

    12,049       8,509,365  

Ross Stores, Inc.

    182,088       20,809,017  
   

 

 

 
      29,318,382  
 

 

 

48  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Capital and Income Fund, Inc. (CII)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

 
Technology Hardware, Storage & Peripherals — 5.2%  

Apple, Inc.(b)

    288,198     $ 51,175,319  
   

 

 

 

Total Long-Term Investments — 100.2%
(Cost: $570,297,394)

      977,755,220  
   

 

 

 

Short-Term Securities

   
Money Market Funds — 1.1%  

BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.00%(c)(d)

    10,297,753       10,297,753  
   

 

 

 

Total Short-Term Securities — 1.1%
(Cost: $10,297,753)

 

    10,297,753  
   

 

 

 

Total Investments Before Options Written — 101.3%
(Cost: $580,595,147)

 

    988,052,973  
   

 

 

 

Options Written — (1.3)%
(Premiums Received: $(11,850,571))

 

    (12,449,136
   

 

 

 

Total Investments, Net of Options Written — 100.0%
(Cost: $568,744,576)

 

    975,603,837  

Liabilities in Excess of Other Assets — 0.0%

 

    (125,332
   

 

 

 

Net Assets — 100.0%

 

  $  975,478,505  
   

 

 

 

 

(a)

Non-income producing security.

(b)

All or a portion of the security has been pledged and/or segregated as collateral in connection with outstanding exchange-traded options written.

(c)

Affiliate of the Trust.

(d)

Annualized 7-day yield as of period end.

 

For Trust compliance purposes, the Trust’s industry classifications refer to one or more of the industry 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 industry sub-classifications for reporting ease.

Affiliates

Investments in issuers considered to be affiliate(s) of the Trust during the year 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
12/31/20
    

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

   $ 11,614,004      $      $ (1,316,251 )(a)     $      $      $ 10,297,753        10,297,753      $ 1,373      $  
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 

 

  (a)

Represents net amount purchased (sold).

 

Derivative Financial Instruments Outstanding as of Period End

Exchange-Traded Options Written

 

           
Description   

Number of

Contracts

      

Expiration

Date

       Exercise Price       

Notional

Amount (000)

       Value  
Call                                                   

Quanta Services, Inc.

     575          01/04/22        USD     123.00        USD     6,593        $ (470

Alphabet Inc., Class A

     41          01/07/22        USD     2,925.00        USD     11,878          (70,110

Amazon.com, Inc.

     10          01/07/22        USD     3,525.00        USD     3,334          (4,175

Analog Devices, Inc.

     34          01/07/22        USD     185.00        USD     598          (2,635

Apple, Inc.

     784          01/07/22        USD     153.38        USD     13,921          (1,896,980

Applied Materials, Inc.

     55          01/07/22        USD     160.00        USD     865          (8,690

Berkshire Hathaway, Inc., Class B

     170          01/07/22        USD     280.00        USD     5,083          (326,400

CDK Global, Inc.

     68          01/07/22        USD     44.62        USD     284          (232

Comcast Corp., Class A

     101          01/07/22        USD     53.00        USD     508          (556

ConocoPhillips

     104          01/07/22        USD     76.00        USD     751          (1,508

Corteva, Inc.

     310          01/07/22        USD     50.13        USD     1,466          (503

Facebook, Inc., Class A

     66          01/07/22        USD     340.00        USD     2,220          (22,770

Fox Corp., Class A

     240          01/07/22        USD     40.26        USD     886          (450

Microsoft Corp.

     372          01/07/22        USD     330.00        USD     12,511          (296,670

Morgan Stanley

     443          01/07/22        USD     102.00        USD     4,348          (8,196

 

 

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

  49


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Capital and Income Fund, Inc. (CII)

 

Exchange-Traded Options Written (continued)

 

           
Description   

Number of

Contracts

      

Expiration

Date

       Exercise Price        Notional
Amount (000)
       Value  
Call (continued)                                                   

Norfolk Southern Corp.

     207          01/07/22        USD     290.00        USD     6,163        $     (172,845

Otis Worldwide Corp.

     126          01/07/22        USD     84.41        USD     1,097          (36,543

Sanofi, ADR

     903          01/07/22        USD     51.04        USD     4,524          (19,770

Taiwan Semiconductor Manufacturing Co. Ltd., ADR

     240          01/07/22        USD     122.00        USD     2,887          (19,320

Unilever PLC, ADR

     89          01/07/22        USD     53.10        USD     479          (8,008

Visa, Inc., Class A

     153          01/07/22        USD     210.00        USD     3,316          (111,690

Comcast Corp., Class A

     184          01/10/22        USD     54.25        USD     926          (300

Visa, Inc., Class A

     149          01/11/22        USD     221.00        USD     3,229          (21,070

Amazon.com, Inc.

     8          01/14/22        USD     3,500.00        USD     2,667          (11,220

Analog Devices, Inc.

     6          01/14/22        USD     195.00        USD     105          (2,880

Anthem, Inc.

     68          01/14/22        USD     435.00        USD     3,152          (201,620

Anthem, Inc.

     48          01/14/22        USD     455.00        USD     2,225          (61,200

Apple, Inc.

     205          01/14/22        USD     165.00        USD     3,640          (269,575

Applied Materials, Inc.

     203          01/14/22        USD     160.00        USD     3,194          (57,449

Bank of America Corp.

     415          01/14/22        USD     45.00        USD     1,846          (23,655

Bank of America Corp.

     414          01/14/22        USD     46.00        USD     1,842          (11,178

Cisco Systems, Inc.

     276          01/14/22        USD     58.00        USD     1,749          (147,660

Comcast Corp., Class A

     184          01/14/22        USD     54.25        USD     926          (806

ConocoPhillips

     259          01/14/22        USD     75.00        USD     1,869          (16,835

Dollar General Corp.

     44          01/14/22        USD     225.00        USD     1,038          (49,720

JPMorgan Chase & Co.

     82          01/14/22        USD     165.00        USD     1,298          (4,223

Las Vegas Sands Corp.

     195          01/14/22        USD     43.00        USD     734          (2,340

Microsoft Corp.

     126          01/14/22        USD     345.00        USD     4,238          (24,192

Mondelez International, Inc., Class A

     279          01/14/22        USD     66.00        USD     1,850          (25,808

Morgan Stanley

     89          01/14/22        USD     104.00        USD     874          (2,047

Morgan Stanley

     354          01/14/22        USD     103.00        USD     3,475          (12,921

Norfolk Southern Corp.

     110          01/14/22        USD     295.00        USD     3,275          (64,350

Taiwan Semiconductor Manufacturing Co. Ltd., ADR

     72          01/14/22        USD     120.00        USD     866          (21,384

UnitedHealth Group, Inc.

     146          01/14/22        USD     450.00        USD     7,331          (774,895

Visa, Inc., Class A

     53          01/14/22        USD     220.00        USD     1,149          (11,183

Ally Financial, Inc.

     416          01/21/22        USD     55.00        USD     1,981          (2,912

Alphabet Inc., Class A

     40          01/21/22        USD     2,990.00        USD     11,588          (73,400

Amazon.com, Inc.

     1          01/21/22        USD     3,750.00        USD     333          (355

Analog Devices, Inc.

     303          01/21/22        USD     190.00        USD     5,326          (10,605

Apple, Inc.

     260          01/21/22        USD     155.00        USD     4,617          (597,350

Applied Materials, Inc.

     192          01/21/22        USD     165.00        USD     3,021          (37,632

Avantor, Inc.

     534          01/21/22        USD     42.50        USD     2,250          (56,070

Avantor, Inc.

     265          01/21/22        USD     40.00        USD     1,117          (68,237

Axalta Coating Systems Ltd.

     423          01/21/22        USD     35.00        USD     1,401          (7,403

Bank of America Corp.

     177          01/21/22        USD     48.00        USD     787          (2,744

Berkshire Hathaway, Inc., Class B

     170          01/21/22        USD     285.00        USD     5,083          (252,025

Capital One Financial Corp.

     244          01/21/22        USD     164.40        USD     3,540          (3,660

CBRE Group, Inc., Class A

     438          01/21/22        USD     110.00        USD     4,753          (73,365

CDK Global, Inc.

     223          01/21/22        USD     42.55        USD     931          (17,622

Ciena Corp.

     235          01/21/22        USD     65.00        USD     1,809          (290,812

Ciena Corp.

     57          01/21/22        USD     75.00        USD     439          (17,670

Cisco Systems, Inc.

     257          01/21/22        USD     60.00        USD     1,629          (89,950

Comcast Corp., Class A

     440          01/21/22        USD     55.00        USD     2,215          (2,860

ConocoPhillips

     359          01/21/22        USD     75.00        USD     2,591          (32,490

Corteva, Inc.

     359          01/21/22        USD     50.00        USD     1,697          (7,180

Dollar General Corp.

     61          01/21/22        USD     230.00        USD     1,439          (46,970

Dollar Tree, Inc.

     123          01/21/22        USD     130.00        USD     1,728          (139,912

EQT Corp.

     1,119          01/21/22        USD     22.00        USD     2,441          (100,710

Fidelity National Financial, Inc.

     112          01/21/22        USD     51.69        USD     584          (16,582

FleetCor Technologies, Inc.

     58          01/21/22        USD     230.00        USD     1,298          (17,400

Fortive Corp.

     693          01/21/22        USD     78.73        USD     5,287          (48,618

Fox Corp., Class A

     136          01/21/22        USD     43.00        USD     502          (2,720

General Motors Co.

     176          01/21/22        USD     65.00        USD     1,032          (5,016

General Motors Co.

     753          01/21/22        USD     62.50        USD     4,415          (46,309

Humana, Inc.

     26          01/21/22        USD     450.00        USD     1,206          (48,880

Intercontinental Exchange, Inc.

     327          01/21/22        USD     135.00        USD     4,472          (103,005

JPMorgan Chase & Co.

     255          01/21/22        USD     165.00        USD     4,038          (19,763

 

 

50  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Capital and Income Fund, Inc. (CII)

 

Exchange-Traded Options Written (continued)

 

           
Description   

Number of

Contracts

      

Expiration

Date

       Exercise Price        Notional
Amount (000)
       Value  
Call (continued)                                                   

Laboratory Corp. of America Holdings

     101          01/21/22        USD     300.00        USD     3,174        $     (170,690

Microsoft Corp.

     387          01/21/22        USD     340.00        USD     13,016          (190,597

Mondelez International, Inc., Class A

     279          01/21/22        USD     65.00        USD     1,850          (48,825

Morgan Stanley

     147          01/21/22        USD     100.00        USD     1,443          (26,166

Novo Nordisk A/S, ADR

     573          01/21/22        USD     115.00        USD     6,418          (60,165

O’Reilly Automotive, Inc.

     35          01/21/22        USD     650.00        USD     2,472          (204,050

Otis Worldwide Corp.

     435          01/21/22        USD     87.53        USD     3,788          (52,746

Progressive Corp.

     225          01/21/22        USD     105.00        USD     2,310          (17,438

Quanta Services, Inc.

     117          01/21/22        USD     120.00        USD     1,342          (12,870

Ross Stores, Inc.

     77          01/21/22        USD     120.00        USD     880          (4,235

Sanofi, ADR

     262          01/21/22        USD     50.00        USD     1,313          (26,855

Sealed Air Corp.

     982          01/21/22        USD     67.41        USD     6,626          (122,514

Taiwan Semiconductor Manufacturing Co. Ltd., ADR

     14          01/21/22        USD     130.00        USD     168          (868

Unilever PLC, ADR

     165          01/21/22        USD     52.50        USD     888          (26,400

UnitedHealth Group, Inc.

     34          01/21/22        USD     490.00        USD     1,707          (66,640

Veeva Systems, Inc., Class A

     123          01/21/22        USD     340.00        USD     3,142          (49,200

World Wrestling Entertainment, Inc., Class A

     447          01/21/22        USD     60.00        USD     2,205          (6,705

Alphabet Inc., Class A

     54          01/28/22        USD     2,975.00        USD     15,644          (184,950

Amazon.com, Inc.

     8          01/28/22        USD     3,500.00        USD     2,667          (30,140

Apple, Inc.

     232          01/28/22        USD     177.50        USD     4,120          (136,880

Applied Materials, Inc.

     354          01/28/22        USD     160.00        USD     5,571          (161,955

Bank of America Corp.

     128          01/28/22        USD     46.00        USD     569          (8,256

Berkshire Hathaway, Inc., Class B

     152          01/28/22        USD     305.00        USD     4,545          (38,228

Capital One Financial Corp.

     426          01/28/22        USD     155.00        USD     6,181          (66,669

Ciena Corp.

     225          01/28/22        USD     70.00        USD     1,732          (173,812

Ciena Corp.

     58          01/28/22        USD     75.00        USD     446          (21,286

Cisco Systems, Inc.

     1,077          01/28/22        USD     60.00        USD     6,825          (368,872

ConocoPhillips

     676          01/28/22        USD     75.00        USD     4,879          (84,500

Dollar General Corp.

     144          01/28/22        USD     230.00        USD     3,396          (120,240

Dollar Tree, Inc.

     409          01/28/22        USD     150.00        USD     5,747          (51,125

Fox Corp., Class A

     31          01/28/22        USD     39.00        USD     114          (1,473

General Motors Co.

     45          01/28/22        USD     61.00        USD     264          (5,715

JPMorgan Chase & Co.

     188          01/28/22        USD     165.00        USD     2,977          (20,680

Las Vegas Sands Corp.

     116          01/28/22        USD     39.00        USD     437          (16,240

Microsoft Corp.

     258          01/28/22        USD     345.00        USD     8,677          (132,225

Norfolk Southern Corp.

     90          01/28/22        USD     290.00        USD     2,679          (109,800

Ross Stores, Inc.

     22          01/28/22        USD     118.00        USD     251          (3,795

UnitedHealth Group, Inc.

     34          01/28/22        USD     485.00        USD     1,707          (83,045

World Wrestling Entertainment, Inc., Class A

     369          01/28/22        USD     54.75        USD     1,821          (19,946

Fidelity National Information Services, Inc.

     117          02/04/22        USD     113.00        USD     1,277          (35,537

Ross Stores, Inc.

     77          02/04/22        USD     115.00        USD     880          (25,025

Apple, Inc.

     334          02/11/22        USD     185.00        USD     5,931          (124,415

Comcast Corp., Class A

     234          02/11/22        USD     52.25        USD     1,178          (19,729

Microsoft Corp.

     210          02/11/22        USD     345.00        USD     7,063          (154,875

Veeva Systems, Inc., Class A

     61          02/14/22        USD     281.00        USD     1,558          (24,180

Avantor, Inc.

     265          02/18/22        USD     40.00        USD     1,117          (91,425

Axalta Coating Systems Ltd.

     645          02/18/22        USD     33.00        USD     2,136          (64,500

Bank of America Corp.

     57          02/18/22        USD     47.00        USD     254          (4,076

CBRE Group, Inc., Class A

     402          02/18/22        USD     110.00        USD     4,362          (130,650

CDK Global, Inc.

     223          02/18/22        USD     44.00        USD     931          (17,399

Cisco Systems, Inc.

     488          02/18/22        USD     60.00        USD     3,092          (204,960

ConocoPhillips

     52          02/18/22        USD     77.50        USD     375          (7,462

ConocoPhillips

     61          02/18/22        USD     75.00        USD     440          (13,176

ConocoPhillips

     358          02/18/22        USD     72.50        USD     2,584          (117,245

Corteva, Inc.

     234          02/18/22        USD     49.00        USD     1,106          (30,420

Facebook, Inc., Class A

     94          02/18/22        USD     365.00        USD     3,162          (58,515

Fidelity National Financial, Inc.

     574          02/18/22        USD     51.72        USD     2,995          (112,451

Fidelity National Information Services, Inc.

     119          02/18/22        USD     115.00        USD     1,299          (37,783

FleetCor Technologies, Inc.

     58          02/18/22        USD     240.00        USD     1,298          (25,230

Fortive Corp.

     656          02/18/22        USD     75.00        USD     5,005          (216,480

General Motors Co.

     294          02/18/22        USD     60.00        USD     1,724          (77,028

JPMorgan Chase & Co.

     82          02/18/22        USD     170.00        USD     1,298          (8,692

 

 

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

  51


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Capital and Income Fund, Inc. (CII)

 

Exchange-Traded Options Written (continued)    

 

           
Description  

Number of

Contracts

      

Expiration

Date

       Exercise Price       

Notional

Amount (000)

     Value  
Call (continued)                                                  

Mondelez International, Inc., Class A

    230          02/18/22        USD      67.50        USD      1,525      $ (25,875

Mondelez International, Inc., Class A

    2          02/18/22        USD      65.00        USD      13        (505

O’Reilly Automotive, Inc.

    40          02/18/22        USD      700.00        USD      2,825        (116,600

Otis Worldwide Corp.

    143          02/18/22        USD      87.00        USD      1,245        (42,758

Progressive Corp.

    113          02/18/22        USD      97.50        USD      1,160        (75,710

Progressive Corp.

    159          02/18/22        USD      105.00        USD      1,632        (44,122

Ross Stores, Inc.

    151          02/18/22        USD      115.00        USD      1,726        (59,645

Sealed Air Corp.

    251          02/18/22        USD      70.00        USD      1,693        (40,788

Unilever PLC, ADR

    519          02/18/22        USD      55.00        USD      2,792        (46,710

Visa, Inc., Class A

    38          02/18/22        USD      230.00        USD      823        (10,773

CDK Global, Inc.

    275          02/25/22        USD      43.00        USD      1,148        (33,039

Comcast Corp., Class A

    439          02/25/22        USD      51.75        USD      2,209        (56,988

JPMorgan Chase & Co.

    113          03/18/22        USD      165.00        USD      1,789        (38,138
                         

 

 

 
                          $   (12,186,959
                         

 

 

 

OTC Options Written

 

             
Description   Counterparty   Number of
Contracts
    

Expiration

Date

     Exercise Price     

Notional

Amount (000)

     Value  
Call                                                    

BAE Systems PLC, ADR

  Credit Suisse International     45,000        01/11/22        USD        31.38        USD        1,340      $ (674

EQT Corp.

  Morgan Stanley & Co. International PLC     96,500        01/11/22        USD        22.62        USD        2,105        (37,779

Corteva, Inc.

  Citibank N.A.     46,400        01/13/22        USD        48.86        USD        2,194        (17,911

BAE Systems PLC, ADR

  Credit Suisse International     35,200        01/20/22        USD        29.82        USD        1,048        (15,489

BAE Systems PLC, ADR

  Credit Suisse International     25,250        01/20/22        USD        31.07        USD        752        (2,246

Corteva, Inc.

  Citibank N.A.     46,500        01/31/22        USD        49.81        USD        2,199        (17,243

Intercontinental Exchange, Inc.

  Citibank N.A.     30,700        01/31/22        USD        136.42        USD        4,199        (86,194

Ally Financial, Inc.

  Citibank N.A.     38,200        02/08/22        USD        50.00        USD        1,819        (36,957

Ally Financial, Inc.

  Citibank N.A.     38,200        02/25/22        USD        50.48        USD        1,819        (47,684
                     

 

 

 
                      $   (262,177
                     

 

 

 

Balances Reported in the Statements of Assets and Liabilities for Options Written    

 

           
Description  

Swap

Premiums

Paid

    

Swap

Premiums

Received

    

Unrealized

Appreciation

    

Unrealized

Depreciation

    Value  

Options Written

  $ N/A      $ N/A      $ 4,604,872      $ (5,203,437   $ (12,449,136

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statements 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

                   

Options written

                   

Options written at value

  $      $      $ 12,449,136      $      $      $      $ 12,449,136  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

 

52  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Capital and Income Fund, Inc. (CII)

 

For the period ended December 31, 2021, the effect of derivative financial instruments in the Statements 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:

                  

Options purchased(a)

  $      $      $ (73,206   $      $      $      $ (73,206

Options written

                  (27,217,173                          (27,217,173
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 
  $      $      $ (27,290,379   $      $      $      $ (27,290,379
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                  

Options written

  $      $      $ (73,853   $      $      $      $ (73,853
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)

Options purchased are included in net realized gain (loss) from investments — unaffiliated.

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments    

 

 

 

Options:

 

Average value of option contracts purchased

  $ (a)  

Average value of option contracts written

  $ 11,145,081  

 

 

 

  (a)

Derivative not held at any quarter-end. The risk exposure table serves as an indicator of activity during the period.

 

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

Derivative Financial Instruments — Offsetting as of Period End

The Trust’s derivative assets and liabilities (by type) were as follows:

 

     
     Assets        Liabilities  

Derivative Financial Instruments

      

Options

  $        $ 12,449,136  
 

 

 

      

 

 

 

Total derivative assets and liabilities in the Statements of Assets and Liabilities

             12,449,136  
 

 

 

      

 

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

             (12,186,959
 

 

 

      

 

 

 

Total derivative assets and liabilities subject to an MNA

  $        $ 262,177  
 

 

 

      

 

 

 

The following table presents the Trust’s derivative liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral pledged by the Trust:

 

           

Counterparty

   

Derivative

Liabilities

Subject to

an MNA by

Counterparty

 

 

 

 

 

    

Derivatives

Available

for Offset

 

 

 

    

Non-Cash

Collateral

Pledged

 

 

 

    

Cash

Collateral

Pledged

 

 

(a) 

   

Net Amount

of Derivative

Liabilities

 

 

(b) 

Citibank N.A.

  $ 205,989      $      $      $ (205,989   $  

Credit Suisse International

    18,409                            18,409  

Morgan Stanley & Co. International PLC

    37,779                            37,779  
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
  $ 262,177      $      $      $ (205,989   $ 56,188  
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

  (a)

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 
  (b)

Net amount represents the net amount payable due to counterparty in the event of default. Net amount may be offset further by the options written receivable/payable on the Statements of Assets and Liabilities.

 

 

 

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

  53


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Capital and Income Fund, Inc. (CII)

 

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

            

Common Stocks

  $ 977,755,220      $      $        $ 977,755,220  

Short-Term Securities

            

Money Market Funds

    10,297,753                        10,297,753  
 

 

 

    

 

 

    

 

 

      

 

 

 
  $ 988,052,973      $      $        $ 988,052,973  
 

 

 

    

 

 

    

 

 

      

 

 

 

Derivative Financial Instruments(a)

            

Liabilities

            

Equity Contracts

  $ (9,581,718    $ (2,867,418    $        $ (12,449,136
 

 

 

    

 

 

    

 

 

      

 

 

 

 

  (a)

Derivative financial instruments are options written. Options written are shown at value.

 

See notes to financial statements.

 

 

54  

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


Schedule of Investments

December 31, 2021

  

BlackRock Enhanced Equity Dividend Trust (BDJ)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

 

Common Stocks

   

Aerospace & Defense — 3.0%

   

BAE Systems PLC

    4,468,146     $ 33,319,819  

Huntington Ingalls Industries, Inc.(a)

    25,743       4,807,248  

Lockheed Martin Corp.(a)

    22,100       7,854,561  

Raytheon Technologies Corp.(a)

    131,690       11,333,242  
   

 

 

 
      57,314,870  

Auto Components — 0.8%

   

Lear Corp.(a)

    78,367       14,337,243  
   

 

 

 
Automobiles — 2.0%            

General Motors Co.(a)(b)

    643,807       37,746,404  
   

 

 

 
Banks — 11.5%            

Bank of America Corp.(a)

    1,104,331       49,131,686  

Citigroup, Inc.(a)(c)

    925,758       55,906,526  

First Citizens BancShares, Inc., Class A

    19,223       15,952,014  

JPMorgan Chase & Co.(a)

    160,833       25,467,906  

Wells Fargo & Co.(a)(c)

    1,521,080       72,981,418  
   

 

 

 
        219,439,550  

Beverages(a) — 2.4%

   

Coca-Cola Co.

    317,289       18,786,682  

Constellation Brands, Inc., Class A

    104,406       26,202,774  
   

 

 

 
      44,989,456  

Capital Markets(a) — 4.7%

   

Apollo Global Management, Inc.

    227,280       16,461,890  

Charles Schwab Corp.

    298,384       25,094,095  

Morgan Stanley

    231,488       22,722,862  

Raymond James Financial, Inc.

    241,795       24,276,218  
   

 

 

 
      88,555,065  

Chemicals(a) — 1.6%

   

Corteva, Inc.

    238,321       11,267,817  

DuPont de Nemours, Inc.

    75,815       6,124,335  

PPG Industries, Inc.

    78,961       13,616,035  
   

 

 

 
      31,008,187  

Communications Equipment — 3.0%

   

Cisco Systems, Inc.(a)

    887,197       56,221,674  
   

 

 

 
Consumer Finance — 0.7%            

Capital One Financial Corp.(a)

    93,898       13,623,661  
   

 

 

 
Containers & Packaging — 0.9%            

Sealed Air Corp.(a)

    245,600       16,570,632  
   

 

 

 
Diversified Financial Services — 0.9%            

Equitable Holdings, Inc.(a)

    501,990       16,460,252  
   

 

 

 
Diversified Telecommunication Services — 1.3%  

Verizon Communications, Inc.(a)(c)

    469,505       24,395,480  
   

 

 

 
Electric Utilities — 0.8%            

American Electric Power Co., Inc.(a)

    101,446       9,025,651  

Edison International

    76,928       5,250,336  
   

 

 

 
      14,275,987  

Entertainment — 0.6%

   

Activision Blizzard, Inc.(a)

    161,690       10,757,236  
   

 

 

 
Health Care Equipment & Supplies — 5.0%            

Alcon, Inc.

    100,495       8,864,196  

Becton Dickinson and Co.(a)

    19,960       5,019,541  

Koninklijke Philips NV

    504,033       18,655,069  
Security   Shares     Value  

 

 

Health Care Equipment & Supplies (continued)

 

Medtronic PLC(a)

    365,515     $ 37,812,527  

Zimmer Biomet Holdings, Inc.(a)

    199,398       25,331,522  
   

 

 

 
      95,682,855  

Health Care Providers & Services — 9.3%

   

Anthem, Inc.(a)

    128,032       59,347,953  

Cigna Corp.(a)

    117,905       27,074,525  

CVS Health Corp.(a)

    246,486       25,427,496  

Humana, Inc.(a)

    61,965       28,743,085  

Laboratory Corp. of America Holdings(b)

    16,656       5,233,482  

McKesson Corp.(a)

    51,257       12,740,953  

UnitedHealth Group, Inc.(a)

    37,866       19,014,033  
   

 

 

 
      177,581,527  

Household Durables — 1.5%

   

Newell Brands, Inc.(a)(c)

    646,089       14,110,584  

Panasonic Corp.

    1,326,900       14,586,329  
   

 

 

 
        28,696,913  

Household Products — 0.3%

   

Reckitt Benckiser Group PLC

    77,130       6,639,629  
   

 

 

 
Industrial Conglomerates — 2.2%  

General Electric Co.(a)

    295,321       27,898,975  

Siemens AG, Registered Shares

    80,529       13,947,847  
   

 

 

 
      41,846,822  

Insurance(a) — 7.5%

   

Allstate Corp.

    71,326       8,391,504  

American International Group, Inc.

    1,020,299       58,014,201  

Fidelity National Financial, Inc.

    438,422       22,876,860  

MetLife, Inc.

    381,601       23,846,246  

Progressive Corp.

    85,350       8,761,178  

Willis Towers Watson PLC

    88,700       21,065,363  
   

 

 

 
      142,955,352  

IT Services(a) — 5.0%

   

Cognizant Technology Solutions Corp., Class A

    425,107       37,715,493  

Fidelity National Information Services, Inc.

    303,787       33,158,351  

Visa, Inc., Class A(c)

    108,065       23,418,766  
   

 

 

 
      94,292,610  

Machinery — 1.0%

   

Komatsu Ltd.

    852,800       19,943,569  
   

 

 

 

Media(a) — 3.1%

   

Comcast Corp., Class A

    691,067       34,781,402  

Fox Corp., Class A

    672,745       24,824,291  
   

 

 

 
      59,605,693  

Multiline Retail — 1.5%

   

Dollar General Corp.(a)

    119,561       28,196,071  
   

 

 

 
Multi-Utilities — 3.1%  

Ameren Corp.

    85,777       7,635,011  

CenterPoint Energy, Inc.(a)

    532,930       14,874,076  

NiSource, Inc.(a)

    432,389       11,938,260  

Public Service Enterprise Group, Inc.(a)

    220,567       14,718,436  

Sempra Energy(a)

    79,210       10,477,899  
   

 

 

 
      59,643,682  

Oil, Gas & Consumable Fuels — 6.4%

 

BP PLC

    7,597,042       34,039,468  

ConocoPhillips(a)

    405,932       29,300,172  

Enterprise Products Partners LP(a)

    1,487,454       32,664,490  

EQT Corp.(a)(b)

    329,440       7,185,086  
 

 

 

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

    55  


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Equity Dividend Trust (BDJ)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

 

Oil, Gas & Consumable Fuels (continued)

 

 

Hess Corp.(a)

    114,120     $ 8,448,303  

Marathon Petroleum Corp.(a)

    168,318       10,770,669  
   

 

 

 
      122,408,188  

Personal Products — 2.0%

   

Unilever PLC, ADR(a)

    710,956       38,242,323  
   

 

 

 
Pharmaceuticals — 5.8%            

AstraZeneca PLC

    340,738       39,787,750  

Bayer AG, Registered Shares

    499,137       26,656,053  

Merck & Co., Inc.(a)

    58,280       4,466,579  

Sanofi

    396,988       39,835,346  
   

 

 

 
        110,745,728  
Professional Services — 1.0%            

Leidos Holdings, Inc.(a)

    216,606       19,256,273  
   

 

 

 
Road & Rail — 1.0%            

Union Pacific Corp.(a)

    77,197       19,448,240  
   

 

 

 
Semiconductors & Semiconductor Equipment — 0.4%        

Analog Devices, Inc.(a)

    47,450       8,340,286  
   

 

 

 
Software(a) — 2.9%            

CDK Global, Inc.

    452,812       18,900,373  

Microsoft Corp.

    25,737       8,655,868  

SS&C Technologies Holdings, Inc.

    333,334       27,326,721  
   

 

 

 
      54,882,962  

Specialty Retail — 1.6%

   

Ross Stores, Inc.(a)

    266,943       30,506,246  
   

 

 

 
Technology Hardware, Storage & Peripherals — 0.7%        

Samsung Electronics Co. Ltd., Registered Shares, GDR

    8,041       13,222,787  
   

 

 

 
Tobacco — 1.4%            

Altria Group, Inc.(a)

    208,332       9,872,853  

British American Tobacco PLC

    437,385       16,240,852  
   

 

 

 
      26,113,705  
Security   Shares     Value  

 

 

Wireless Telecommunication Services — 1.3%

 

Rogers Communications, Inc., Class B

    525,550     $ 25,023,816  
   

 

 

 

Total Long-Term Investments — 98.2%
(Cost: $1,393,556,881)

      1,868,970,974  
   

 

 

 

Short-Term Securities

 

Money Market Funds — 3.3%  

BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.00%(d)(e)

    62,262,015       62,262,015  
   

 

 

 

Total Short-Term Securities — 3.3%
(Cost: $62,262,015)

 

    62,262,015  
   

 

 

 

Total Investments Before Options Written — 101.5%
(Cost: $1,455,818,896)

 

    1,931,232,989  
   

 

 

 

Options Written — (1.3)%
(Premiums Received: $(23,604,331))

 

    (25,447,836
   

 

 

 

Total Investments, Net of Options Written — 100.2%
(Cost: $1,432,214,565)

 

    1,905,785,153  

Liabilities in Excess of Other Assets — (0.2)%

 

    (2,947,037
   

 

 

 

Net Assets — 100.0%

    $  1,902,838,116  
   

 

 

 

 

(a)

All or a portion of the security has been pledged and/or segregated as collateral in connection with outstanding exchange-traded options written.

(b)

Non-income producing security.

(c)

All or a portion of the security has been pledged as collateral in connection with outstanding OTC derivatives.

(d)

Affiliate of the Trust.

(e)

Annualized 7-day yield as of period end.

 

For Trust compliance purposes, the Trust’s industry classifications refer to one or more of the industry 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 industry sub-classifications for reporting ease.

Affiliates

Investments in issuers considered to be affiliate(s) of the Trust during the year 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

12/31/20

    

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

  $  12,016,637      $  50,245,378 (a)    $      $      $      $ 62,262,015        62,262,015      $ 2,794     $  

SL Liquidity Series, LLC, Money Market Series(b)

           0 (a)                                          4,054 (c)       
         

 

 

    

 

 

    

 

 

       

 

 

   

 

 

 
          $      $      $  62,262,015         $ 6,848     $  
         

 

 

    

 

 

    

 

 

       

 

 

   

 

 

 

 

  (a)

Represents net amount purchased (sold).

 
  (b)

As of period end, the entity is no longer held.

 
  (c)

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

 

 

56  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Equity Dividend Trust (BDJ)

 

Derivative Financial Instruments Outstanding as of Period End

Exchange-Traded Options Written

 

           
Description   

Number of

Contracts

      

Expiration

Date

       Exercise Price       

Notional

Amount (000)

       Value  
Call                                                   

Activision Blizzard, Inc.

     304          01/07/22        USD     65.00        USD     2,023        $ (64,752

American International Group, Inc.

     1,345          01/07/22        USD     60.15        USD     7,648          (3,373

Analog Devices, Inc.

     162          01/07/22        USD     185.00        USD     2,847          (12,555

Anthem, Inc.

     223          01/07/22        USD     415.00        USD     10,337          (1,087,125

Bank of America Corp.

     1,587          01/07/22        USD     46.00        USD     7,061          (14,283

CDK Global, Inc.

     1,016          01/07/22        USD     44.62        USD     4,241          (3,470

Cigna Corp.

     170          01/07/22        USD         215.00        USD     3,904          (259,250

Cisco Systems, Inc.

     2,078          01/07/22        USD     59.39        USD     13,168          (756,544

Citigroup, Inc.

     490          01/07/22        USD     67.00        USD     2,959          (1,470

Coca-Cola Co.

     201          01/07/22        USD     57.23        USD     1,190          (39,993

Comcast Corp., Class A

     843          01/07/22        USD     53.00        USD     4,243          (4,637

ConocoPhillips

     885          01/07/22        USD     76.00        USD     6,388          (12,833

Corteva, Inc.

     77          01/07/22        USD     50.13        USD     364          (125

Enterprise Products Partners LP

     1,235          01/07/22        USD     22.00        USD     2,712          (21,613

Fox Corp., Class A

     1,052          01/07/22        USD     40.26        USD     3,882          (1,971

General Electric Co.

     585          01/07/22        USD     102.00        USD     5,526          (1,755

Humana, Inc.

     196          01/07/22        USD     450.00        USD     9,092          (297,920

Lockheed Martin Corp.

     98          01/07/22        USD     340.00        USD     3,483          (160,720

Marathon Petroleum Corp.

     131          01/07/22        USD     67.00        USD     838          (2,358

Medtronic PLC

     222          01/07/22        USD     109.00        USD     2,297          (3,441

MetLife, Inc.

     361          01/07/22        USD     63.00        USD     2,256          (21,299

Microsoft Corp.

     21          01/07/22        USD     330.00        USD     706          (16,748

Morgan Stanley

     431          01/07/22        USD     102.00        USD     4,231          (7,974

Unilever PLC, ADR

     1,650          01/07/22        USD     53.10        USD     8,875          (148,467

Union Pacific Corp.

     125          01/07/22        USD     245.00        USD     3,149          (94,687

Verizon Communications, Inc.

     277          01/07/22        USD     52.30        USD     1,439          (5,402

Visa, Inc., Class A

     163          01/07/22        USD     210.00        USD     3,532          (118,990

Wells Fargo & Co.

     1,803          01/07/22        USD     51.00        USD     8,651          (6,311

Comcast Corp., Class A

     689          01/10/22        USD     54.25        USD     3,468          (1,124

CVS Health Corp.

     418          01/10/22        USD     94.25        USD     4,312          (373,542

Medtronic PLC

     218          01/10/22        USD     123.00        USD     2,255           

Enterprise Products Partners LP

     1,820          01/12/22        USD     22.90        USD     3,997          (7,114

Activision Blizzard, Inc.

     285          01/14/22        USD     65.00        USD     1,896          (73,815

American International Group, Inc.

     472          01/14/22        USD     56.00        USD     2,684          (77,408

Analog Devices, Inc.

     105          01/14/22        USD     195.00        USD     1,846          (50,400

Anthem, Inc.

     156          01/14/22        USD     455.00        USD     7,231          (198,900

Apollo Global Management, Inc.

     399          01/14/22        USD     74.00        USD     2,890          (43,890

Bank of America Corp.

     219          01/14/22        USD     45.00        USD     974          (12,483

Bank of America Corp.

     220          01/14/22        USD     46.00        USD     979          (5,940

Capital One Financial Corp.

     100          01/14/22        USD     160.00        USD     1,451          (9,650

Charles Schwab Corp.

     777          01/14/22        USD     80.00        USD     6,535          (353,535

Cigna Corp.

     274          01/14/22        USD     225.00        USD     6,292          (201,390

Cisco Systems, Inc.

     1,040          01/14/22        USD     58.00        USD     6,590          (556,400

Coca-Cola Co.

     553          01/14/22        USD     56.00        USD     3,274          (183,872

Comcast Corp., Class A

     689          01/14/22        USD     54.25        USD     3,468          (3,016

ConocoPhillips

     81          01/14/22        USD     75.00        USD     585          (5,265

Constellation Brands, Inc., Class A

     226          01/14/22        USD     245.00        USD     5,672          (211,310

Dollar General Corp.

     225          01/14/22        USD     225.00        USD     5,306          (254,250

Enterprise Products Partners LP

     1,135          01/14/22        USD     21.50        USD     2,492          (70,370

Fox Corp., Class A

     601          01/14/22        USD     37.00        USD     2,218          (48,080

Humana, Inc.

     35          01/14/22        USD     470.00        USD     1,624          (16,013

JPMorgan Chase & Co.

     87          01/14/22        USD     165.00        USD     1,378          (4,481

Microsoft Corp.

     18          01/14/22        USD     345.00        USD     605          (3,456

Morgan Stanley

     105          01/14/22        USD     104.00        USD     1,031          (2,415

Morgan Stanley

     422          01/14/22        USD     103.00        USD     4,142          (15,403

PPG Industries, Inc.

     290          01/14/22        USD     165.00        USD     5,001          (232,000

Raytheon Technologies Corp.

     181          01/14/22        USD     87.00        USD     1,558          (15,385

Union Pacific Corp.

     122          01/14/22        USD     250.00        USD     3,074          (57,340

Verizon Communications, Inc.

     686          01/14/22        USD     51.00        USD     3,564          (77,175

Visa, Inc., Class A

     163          01/14/22        USD     220.00        USD     3,532          (34,393

 

 

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

  57


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Equity Dividend Trust (BDJ)

 

Exchange-Traded Options Written (continued)

 

           
Description   

Number of

Contracts

      

Expiration

Date

       Exercise Price       

Notional

Amount (000)

       Value  
Call (continued)                                                   

Wells Fargo & Co.

     1,451          01/14/22        USD     52.00        USD     6,962        $ (17,412

Allstate Corp.

     267          01/21/22        USD     120.00        USD     3,141          (31,372

Altria Group, Inc.

     588          01/21/22        USD     46.00        USD     2,787          (103,446

American Electric Power Co., Inc.

     200          01/21/22        USD     85.00        USD     1,779          (85,000

American Electric Power Co., Inc.

     85          01/21/22        USD     87.50        USD     756          (18,488

American International Group, Inc.

     623          01/21/22        USD     60.00        USD     3,542          (15,887

Anthem, Inc.

     220          01/21/22        USD     450.00        USD     10,198          (391,600

Apollo Global Management, Inc.

     374          01/21/22        USD     80.00        USD     2,709          (7,480

Bank of America Corp.

     1,062          01/21/22        USD     48.00        USD     4,725          (16,461

Becton Dickinson and Co.

     112          01/21/22        USD         260.00        USD     2,817          (21,280

Capital One Financial Corp.

     227          01/21/22        USD     164.40        USD     3,294          (3,405

CDK Global, Inc.

     460          01/21/22        USD     42.55        USD     1,920          (36,351

CenterPoint Energy, Inc.

     1,406          01/21/22        USD     27.00        USD     3,924          (154,660

Charles Schwab Corp.

     380          01/21/22        USD     82.50        USD     3,196          (116,850

Cigna Corp.

     91          01/21/22        USD     220.00        USD     2,090          (103,740

Cisco Systems, Inc.

     900          01/21/22        USD     60.00        USD     5,703          (315,000

Citigroup, Inc.

     2,405          01/21/22        USD     70.00        USD     14,524          (13,228

Cognizant Technology Solutions Corp., Class A

     256          01/21/22        USD     85.00        USD     2,271          (108,800

Cognizant Technology Solutions Corp., Class A

     141          01/21/22        USD     82.50        USD     1,251          (90,945

Comcast Corp., Class A

     283          01/21/22        USD     55.00        USD     1,424          (1,840

ConocoPhillips

     56          01/21/22        USD     75.00        USD     404          (5,068

Constellation Brands, Inc., Class A

     210          01/21/22        USD     235.00        USD     5,270          (366,450

Corteva, Inc.

     526          01/21/22        USD     50.00        USD     2,487          (10,520

CVS Health Corp.

     492          01/21/22        USD     95.00        USD     5,075          (413,280

Dollar General Corp.

     263          01/21/22        USD     230.00        USD     6,202          (202,510

DuPont de Nemours, Inc.

     192          01/21/22        USD     80.00        USD     1,551          (42,816

Enterprise Products Partners LP

     1,806          01/21/22        USD     25.00        USD     3,966          (3,612

EQT Corp.

     108          01/21/22        USD     22.00        USD     236          (9,720

EQT Corp.

     600          01/21/22        USD     24.00        USD     1,309          (19,500

Equitable Holdings, Inc.

     967          01/21/22        USD     35.00        USD     3,171          (16,923

Fidelity National Financial, Inc.

     1,426          01/21/22        USD     51.69        USD     7,441          (211,128

Fidelity National Information Services, Inc.

     143          01/21/22        USD     125.00        USD     1,561          (3,218

Fidelity National Information Services, Inc.

     102          01/21/22        USD     110.00        USD     1,113          (26,775

Fox Corp., Class A

     948          01/21/22        USD     43.00        USD     3,498          (18,960

General Electric Co.

     800          01/21/22        USD     110.00        USD     7,558          (3,600

General Motors Co.

     309          01/21/22        USD     62.50        USD     1,812          (19,004

Hess Corp.

     313          01/21/22        USD     78.00        USD     2,317          (32,082

Humana, Inc.

     118          01/21/22        USD     450.00        USD     5,474          (221,840

Huntington Ingalls Industries, Inc.

     73          01/21/22        USD     196.00        USD     1,363          (14,484

JPMorgan Chase & Co.

     274          01/21/22        USD     165.00        USD     4,339          (21,235

Lear Corp.

     177          01/21/22        USD     190.00        USD     3,238          (52,657

Leidos Holdings, Inc.

     453          01/21/22        USD     95.00        USD     4,027          (11,325

Lockheed Martin Corp.

     26          01/21/22        USD     355.00        USD     924          (14,170

Marathon Petroleum Corp.

     131          01/21/22        USD     67.50        USD     838          (7,533

Marathon Petroleum Corp.

     165          01/21/22        USD     65.00        USD     1,056          (21,863

McKesson Corp.

     82          01/21/22        USD     230.00        USD     2,038          (155,390

Medtronic PLC

     246          01/21/22        USD     125.00        USD     2,545          (1,230

Merck & Co., Inc.

     163          01/21/22        USD     85.00        USD     1,249          (1,304

MetLife, Inc.

     711          01/21/22        USD     65.00        USD     4,443          (27,729

Microsoft Corp.

     51          01/21/22        USD     340.00        USD     1,715          (25,117

Morgan Stanley

     510          01/21/22        USD     100.00        USD     5,006          (90,780

Newell Brands, Inc.

     1,440          01/21/22        USD     24.00        USD     3,145          (14,400

NiSource, Inc.

     1,484          01/21/22        USD     25.61        USD     4,097          (299,370

PPG Industries, Inc.

     155          01/21/22        USD     170.00        USD     2,673          (83,700

Progressive Corp.

     189          01/21/22        USD     105.00        USD     1,940          (14,648

Public Service Enterprise Group, Inc.

     439          01/21/22        USD     63.41        USD     2,929          (152,092

Raytheon Technologies Corp.

     326          01/21/22        USD     90.00        USD     2,806          (7,661

Rogers Communications Inc., Class B

     602          01/21/22        CAD     60.00        CAD     3,626          (52,826

Ross Stores, Inc.

     486          01/21/22        USD     120.00        USD     5,554          (26,730

Sealed Air Corp.

     216          01/21/22        USD     67.41        USD     1,457          (26,948

Sealed Air Corp.

     125          01/21/22        USD     65.00        USD     843          (35,000

SS&C Technologies Holdings, Inc.

     419          01/21/22        USD     80.00        USD     3,435          (86,942

 

 

58  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Equity Dividend Trust (BDJ)

 

Exchange-Traded Options Written (continued)

 

           
Description   

Number of

Contracts

      

Expiration

Date

       Exercise Price       

Notional

Amount (000)

       Value  
Call (continued)                                                   

Unilever PLC, ADR

     897          01/21/22        USD     52.50        USD     4,825        $   (143,520

UnitedHealth Group, Inc.

     24          01/21/22        USD         460.00        USD     1,205          (107,220

UnitedHealth Group, Inc.

     95          01/21/22        USD     490.00        USD     4,770          (186,200

Verizon Communications, Inc.

     1,353          01/21/22        USD     52.50        USD     7,030          (46,002

Visa, Inc., Class A

     35          01/21/22        USD     230.00        USD     758          (2,118

Wells Fargo & Co.

     1,452          01/21/22        USD     52.50        USD     6,967          (22,506

Willis Towers Watson PLC

     143          01/21/22        USD     240.00        USD     3,396          (44,687

Zimmer Biomet Holdings, Inc.

     450          01/21/22        USD     140.00        USD     5,717          (13,500

NiSource, Inc.

     955          01/27/22        USD     26.33        USD     2,637          (127,693

American International Group, Inc.

     945          01/28/22        USD     58.00        USD     5,373          (99,225

Apollo Global Management, Inc.

     477          01/28/22        USD     73.00        USD     3,455          (110,902

Bank of America Corp.

     2,221          01/28/22        USD     46.00        USD     9,881          (143,254

Capital One Financial Corp.

     202          01/28/22        USD     155.00        USD     2,931          (31,613

Cisco Systems, Inc.

     638          01/28/22        USD     60.00        USD     4,043          (218,515

Citigroup, Inc.

     1,475          01/28/22        USD     64.00        USD     8,908          (70,800

Coca-Cola Co.

     1,036          01/28/22        USD     60.00        USD     6,134          (55,944

ConocoPhillips

     337          01/28/22        USD     75.00        USD     2,432          (42,125

Constellation Brands, Inc., Class A

     138          01/28/22        USD     245.00        USD     3,463          (141,450

CVS Health Corp.

     480          01/28/22        USD     102.00        USD     4,952          (132,240

Dollar General Corp.

     186          01/28/22        USD     230.00        USD     4,386          (155,310

DuPont de Nemours, Inc.

     238          01/28/22        USD     80.00        USD     1,923          (74,375

Enterprise Products Partners LP

     2,397          01/28/22        USD     21.50        USD     5,264          (176,179

Fox Corp., Class A

     1,195          01/28/22        USD     39.00        USD     4,410          (56,762

General Electric Co.

     283          01/28/22        USD     104.00        USD     2,674          (15,282

General Motors Co.

     1,046          01/28/22        USD     61.00        USD     6,133          (132,842

JPMorgan Chase & Co.

     257          01/28/22        USD     165.00        USD     4,070          (28,270

Marathon Petroleum Corp.

     442          01/28/22        USD     66.00        USD     2,828          (61,438

McKesson Corp.

     68          01/28/22        USD     235.00        USD     1,690          (107,780

Medtronic PLC

     766          01/28/22        USD     117.00        USD     7,924          (57,450

Merck & Co., Inc.

     83          01/28/22        USD     75.00        USD     636          (22,037

MetLife, Inc.

     368          01/28/22        USD     62.00        USD     2,300          (71,392

MetLife, Inc.

     306          01/28/22        USD     64.00        USD     1,912          (28,611

Microsoft Corp.

     55          01/28/22        USD     345.00        USD     1,850          (28,187

Ross Stores, Inc.

     268          01/28/22        USD     118.00        USD     3,063          (46,230

Union Pacific Corp.

     177          01/28/22        USD     250.00        USD     4,459          (130,095

UnitedHealth Group, Inc.

     95          01/28/22        USD     485.00        USD     4,770          (232,037

Verizon Communications, Inc.

     1,154          01/28/22        USD     51.25        USD     5,996          (125,066

Wells Fargo & Co.

     661          01/28/22        USD     52.00        USD     3,171          (20,822

American International Group, Inc.

     1,228          02/04/22        USD     56.25        USD     6,982          (281,458

CenterPoint Energy, Inc.

     984          02/04/22        USD     27.90        USD     2,746          (68,601

Fidelity National Information Services, Inc.

     545          02/04/22        USD     113.00        USD     5,949          (165,537

Ross Stores, Inc.

     448          02/04/22        USD     115.00        USD     5,120          (145,600

Comcast Corp., Class A

     853          02/11/22        USD     52.25        USD     4,293          (71,917

Activision Blizzard, Inc.

     154          02/18/22        USD     72.50        USD     1,025          (25,872

Allstate Corp.

     140          02/18/22        USD     113.00        USD     1,647          (88,951

Altria Group, Inc.

     560          02/18/22        USD     48.25        USD     2,654          (57,388

American Electric Power Co., Inc.

     286          02/18/22        USD     87.50        USD     2,545          (82,225

American International Group, Inc.

     1,144          02/18/22        USD     60.00        USD     6,505          (123,552

Bank of America Corp.

     762          02/18/22        USD     47.00        USD     3,390          (54,483

CDK Global, Inc.

     370          02/18/22        USD     44.00        USD     1,544          (28,869

CenterPoint Energy, Inc.

     1,074          02/18/22        USD     27.00        USD     2,998          (144,990

Charles Schwab Corp.

     484          02/18/22        USD     85.00        USD     4,070          (141,086

Cigna Corp.

     113          02/18/22        USD     230.00        USD     2,595          (98,875

Cisco Systems, Inc.

     479          02/18/22        USD     60.00        USD     3,035          (201,180

Citigroup, Inc.

     853          02/18/22        USD     67.50        USD     5,151          (26,016

Cognizant Technology Solutions Corp., Class A

     310          02/18/22        USD     85.00        USD     2,750          (172,050

ConocoPhillips

     447          02/18/22        USD     77.50        USD     3,226          (64,144

ConocoPhillips

     426          02/18/22        USD     75.00        USD     3,075          (92,016

Corteva, Inc.

     756          02/18/22        USD     49.00        USD     3,574          (98,280

Equitable Holdings, Inc.

     1,093          02/18/22        USD     32.73        USD     3,584          (169,473

Fidelity National Financial, Inc.

     1,047          02/18/22        USD     51.72        USD     5,463          (205,116

Fidelity National Information Services, Inc.

     353          02/18/22        USD     115.00        USD     3,853          (112,077

 

 

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

  59


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Equity Dividend Trust (BDJ)

 

Exchange-Traded Options Written (continued)

 

           
Description   

Number of

Contracts

      

Expiration

Date

       Exercise Price       

Notional

Amount (000)

     Value  
Call (continued)                                                  

Fidelity National Information Services, Inc.

     102          02/18/22        USD      110.00        USD     1,113      $  (51,000

General Motors Co.

     1,287          02/18/22        USD      60.00        USD     7,546        (337,194

Hess Corp.

     314          02/18/22        USD      82.50        USD     2,325        (43,960

Huntington Ingalls Industries, Inc.

     72          02/18/22        USD      196.25        USD     1,345        (30,653

JPMorgan Chase & Co.

     87          02/18/22        USD      170.00        USD     1,378        (9,222

Lear Corp.

     255          02/18/22        USD      195.00        USD     4,665        (103,912

Leidos Holdings, Inc.

     769          02/18/22        USD      90.00        USD     6,836        (217,242

Marathon Petroleum Corp.

     80          02/18/22        USD      70.00        USD     512        (7,320

McKesson Corp.

     131          02/18/22        USD      230.00        USD     3,256        (289,510

Medtronic PLC

     99          02/18/22        USD      120.00        USD     1,024        (1,287

Medtronic PLC

     460          02/18/22        USD      105.00        USD     4,759        (117,300

Merck & Co., Inc.

     83          02/18/22        USD      77.50        USD     636        (17,721

MetLife, Inc.

     352          02/18/22        USD      65.00        USD     2,200        (37,312

Progressive Corp.

     159          02/18/22        USD      97.50        USD     1,632        (106,530

Progressive Corp.

     134          02/18/22        USD      105.00        USD     1,376        (37,185

Public Service Enterprise Group, Inc.

     1,212          02/18/22        USD      66.16        USD     8,088        (254,931

Raymond James Financial, Inc.

     787          02/18/22        USD        100.00        USD     7,901        (314,800

Raymond James Financial, Inc.

     542          02/18/22        USD      105.00        USD     5,442        (116,530

Raytheon Technologies Corp.

     236          02/18/22        USD      86.25        USD     2,031        (63,575

Rogers Communications Inc., Class B

     687          02/18/22        CAD      60.00        CAD     4,138        (98,302

Ross Stores, Inc.

     266          02/18/22        USD      115.00        USD     3,040        (105,070

Sealed Air Corp.

     641          02/18/22        USD      70.00        USD         4,325        (104,162

Sempra Energy

     102          02/18/22        USD      130.00        USD     1,349        (52,020

SS&C Technologies Holdings, Inc.

     478          02/18/22        USD      80.00        USD     3,919        (179,250

Unilever PLC, ADR

     1,464          02/18/22        USD      55.00        USD     7,875        (131,760

Visa, Inc., Class A

     174          02/18/22        USD      230.00        USD     3,771        (49,329

Wells Fargo & Co.

     719          02/18/22        USD      52.50        USD     3,450        (37,028

Willis Towers Watson PLC

     344          02/18/22        USD      240.00        USD     8,170        (232,200

Zimmer Biomet Holdings, Inc.

     675          02/18/22        USD      125.00        USD     8,575        (452,250

CDK Global, Inc.

     710          02/25/22        USD      43.00        USD     2,964        (85,300

Comcast Corp., Class A

     542          02/25/22        USD      51.75        USD     2,728        (70,359

JPMorgan Chase & Co.

     181          03/18/22        USD      165.00        USD     2,866        (61,087
                         

 

 

 
                          $  (20,740,002
                         

 

 

 

OTC Options Written

 

             
Description    Counterparty   

Number of

Contracts

    

Expiration

Date

   Exercise Price   

Notional

Amount (000)

     Value  
Call                                            

BP PLC

   Goldman Sachs International      1,630,000      01/04/22    GBP   3.53    GBP     5,387      $ (499

SS&C Technologies Holdings, Inc.

   Royal Bank of Canada      41,000      01/06/22    USD   79.60    USD     3,361        (97,640

Astrazeneca PLC

   Morgan Stanley & Co. International PLC      44,800      01/11/22    GBP   89.33    GBP     3,888        (14,370

BAE Systems PLC

   Goldman Sachs International      1,084,600      01/11/22    GBP   5.72    GBP     5,963        (8,882

BP PLC

   Goldman Sachs International      384,400      01/11/22    GBP   3.53    GBP     1,270        (2,100

British American Tobacco PLC

   Morgan Stanley & Co. International PLC      248,000      01/11/22    GBP   26.01    GBP     6,779        (488,763

Cognizant Technology Solutions Corp., Class A

   Bank of America N.A.      36,700      01/11/22    USD   81.00    USD     3,256        (288,753

EQT Corp.

   Morgan Stanley & Co. International PLC      64,400      01/11/22    USD   22.62    USD     1,405        (25,212

Corteva, Inc.

   Citibank N.A.      11,500      01/13/22    USD   48.86    USD     544        (4,439

Komatsu Ltd.

   Morgan Stanley & Co. International PLC      207,700      01/13/22    JPY   3,062.70    JPY     559,440        (2,640

Panasonic Corp.

   Morgan Stanley & Co. International PLC      59,700      01/13/22    JPY   1,459.58    JPY     75,521        (663

Sanofi

   Goldman Sachs International      58,100      01/13/22    EUR   89.59    EUR     5,146        (34,461

BAE Systems PLC

   Goldman Sachs International      557,400      01/18/22    GBP   5.74    GBP     3,065        (8,316

Alcon, Inc.

   UBS AG      37,200      01/20/22    CHF   80.58    CHF     3,004        (53,556

BAE Systems PLC

   UBS AG      506,000      01/20/22    GBP   5.66    GBP     2,782        (22,192

Koninklijke Philips Electronics NV

   Morgan Stanley & Co. International PLC      195,476      01/20/22    EUR   31.96    EUR     6,405        (264,534

Alcon, Inc.

   UBS AG      19,600      01/25/22    CHF   75.34    CHF     1,583        (114,641

Bayer AG, Registered Shares

   Goldman Sachs International      67,000      01/25/22    EUR   45.91    EUR     3,149        (124,287

Koninklijke Philips Electronics NV

   UBS AG      118,700      01/25/22    EUR   32.35    EUR     3,889        (140,368

BAE Systems PLC

   Morgan Stanley & Co. International PLC      303,600      01/27/22    GBP   5.57    GBP     1,669        (29,109

Komatsu Ltd.

   Goldman Sachs International      273,600      01/27/22    JPY   2,727.30    JPY     736,942        (129,068

Panasonic Corp.

   JPMorgan Chase Bank N.A.      237,000      01/27/22    JPY   1,322.79    JPY     299,805        (31,027

 

 

60  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Equity Dividend Trust (BDJ)

 

OTC Options Written (continued)    

 

             
Description   Counterparty  

Number

of Contracts

     Expiration
Date
     Exercise Price     

Notional

Amount (000)

     Value  
Call (continued)                                                

SS&C Technologies Holdings, Inc.

  BNP Paribas SA     52,600        01/27/22      USD     77.30        USD       4,312      $ (287,915

Cognizant Technology Solutions Corp., Class A

  Barclays Bank PLC     60,300        01/31/22      USD     84.16        USD       5,350        (308,726

Corteva, Inc.

  Citibank N.A.     11,500        01/31/22      USD     49.81        USD       544        (4,264

Newell Brands, Inc.

  Royal Bank of Canada     117,600        01/31/22      USD     23.50        USD       2,568        (16,443

Astrazeneca PLC

  Morgan Stanley & Co. International PLC     132,100        02/01/22      GBP     84.70        GBP       11,464        (552,807

Bayer AG, Registered Shares

  Goldman Sachs International     61,900        02/01/22      EUR     46.75        EUR       2,909        (91,411

Bayer AG, Registered Shares

  Goldman Sachs International     76,000        02/03/22      EUR     48.04        EUR       3,572        (64,656

BP PLC

  UBS AG     1,103,400        02/03/22      GBP     3.45        GBP       3,647        (80,264

Sanofi

  Goldman Sachs International     94,000        02/03/22      EUR     88.27        EUR       8,327        (189,073

Panasonic Corp.

  Goldman Sachs International     237,800        02/08/22      JPY     1,285.46        JPY       300,817        (72,475

Reckitt Benckiser Group Plc

  UBS AG     43,600        02/08/22      GBP     63.17        GBP       2,765        (117,476

Siemens AG, Registered Shares

  UBS AG     45,500        02/08/22      EUR     152.85        EUR       6,947        (227,693

Astrazeneca PLC

  Credit Suisse International     2,500        02/10/22      GBP     86.82        GBP       217        (7,397

Samsung Electronics Co. Ltd., Registered Shares, GDR

  UBS AG     4,500        02/10/22      USD     1,679.93        USD       7,421        (203,394

Cognizant Technology Solutions Corp., Class A

  Barclays Bank PLC     66,400        02/11/22      USD     81.26        USD       5,891        (540,035

Newell Brands, Inc.

  Barclays Bank PLC     102,900        02/18/22      USD     23.00        USD       2,247        (58,285
                   

 

 

 
                    $  (4,707,834
                   

 

 

 

Balances Reported in the Statements of Assets and Liabilities for Options Written

 

           
Description   

Swap

Premiums

Paid

  

Swap

Premiums

Received

  

Unrealized

Appreciation

  

Unrealized 

Depreciation 

     Value  
Options Written    $         N/A    $         N/A    $  7,790,296    $ (9,633,801)      $ (25,447,836)

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statements 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

             

Options written

             

Options written at value

  $     $     $  25,447,836     $     $     $     $  25,447,836  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

For the period ended December 31, 2021, the effect of derivative financial instruments in the Statements 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:

             

Options written

  $     $     $  (55,244,521   $     $     $     $  (55,244,521
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

             

Options written

  $     $     $ 7,905,931     $     $     $     $ 7,905,931  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

   

Options:

  

Average value of option contracts written

   $ 21,882,434  

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

 

 

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

  61


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Equity Dividend Trust (BDJ)

 

Derivative Financial Instruments — Offsetting as of Period End

The Trust’s derivative assets and liabilities (by type) were as follows:

 

     
      Assets        Liabilities  

Derivative Financial Instruments

       

Options

   $        $ 25,447,836  
  

 

 

      

 

 

 

Total derivative assets and liabilities in the Statements of Assets and Liabilities

              25,447,836  
  

 

 

      

 

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

              (20,740,002
  

 

 

      

 

 

 

Total derivative assets and liabilities subject to an MNA

   $        $ 4,707,834  
  

 

 

      

 

 

 

The following table presents the Trust’s derivative liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral pledged by the Trust:

 

           

Counterparty

    

Derivative

Liabilities

Subject to

an MNA by

Counterparty

 

 

 

 

 

    

Derivatives

Available

for Offset

 

 

 

    

Non-Cash

Collateral

Pledged

 

 

(a)  

    

Cash

    Collateral

Pledged

 

 

(a)  

    

Net Amount

of Derivative

Liabilities

 

(b) 

Bank of America N.A.

   $ 288,753      $      $      $      $ 288,753  

Barclays Bank PLC

     907,046               (907,046              

BNP Paribas SA

     287,915                             287,915  

Citibank N.A.

     8,703                             8,703  

Credit Suisse International

     7,397               (7,397              

Goldman Sachs International

     725,228               (725,228              

JPMorgan Chase Bank N.A.

     31,027                             31,027  

Morgan Stanley & Co. International PLC

     1,378,098               (1,378,098              

Royal Bank of Canada

     114,083                      (114,083       

UBS AG

     959,584               (959,584              
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 4,707,834      $      $  (3,977,353    $  (114,083    $ 616,398  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 
  (b)

Net amount represents the net amount payable due to counterparty in the event of default. Net amount may be offset further by the options written receivable/payable on the Statements of Assets and Liabilities.

 

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

                 

Common Stocks

                 

Aerospace & Defense

   $ 23,995,051        $  33,319,819        $               —        $ 57,314,870  

Auto Components

     14,337,243                            14,337,243  

Automobiles

     37,746,404                            37,746,404  

Banks

      219,439,550                            219,439,550  

Beverages

     44,989,456                            44,989,456  

Capital Markets

     88,555,065                            88,555,065  

Chemicals

     31,008,187                            31,008,187  

Communications Equipment

     56,221,674                            56,221,674  

Consumer Finance

     13,623,661                            13,623,661  

Containers & Packaging

     16,570,632                            16,570,632  

Diversified Financial Services

     16,460,252                            16,460,252  

Diversified Telecommunication Services

     24,395,480                            24,395,480  

Electric Utilities

     14,275,987                            14,275,987  

Entertainment

     10,757,236                            10,757,236  

Health Care Equipment & Supplies

     68,163,590          27,519,265                   95,682,855  

Health Care Providers & Services

     177,581,527                            177,581,527  

 

 

62  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Equity Dividend Trust (BDJ)

 

Fair Value Hierarchy as of Period End (continued)

 

         
      Level 1        Level 2        Level 3        Total  

Common Stocks (continued)

                 

Household Durables

   $ 14,110,584        $ 14,586,329        $               —        $ 28,696,913  

Household Products

              6,639,629                   6,639,629  

Industrial Conglomerates

     27,898,975          13,947,847                   41,846,822  

Insurance

     142,955,352                            142,955,352  

IT Services

     94,292,610                            94,292,610  

Machinery

              19,943,569                   19,943,569  

Media

     59,605,693                            59,605,693  

Multiline Retail

     28,196,071                            28,196,071  

Multi-Utilities

     59,643,682                            59,643,682  

Oil, Gas & Consumable Fuels

     88,368,720          34,039,468                   122,408,188  

Personal Products

     38,242,323                            38,242,323  

Pharmaceuticals

     4,466,579          106,279,149                   110,745,728  

Professional Services

     19,256,273                            19,256,273  

Road & Rail

     19,448,240                            19,448,240  

Semiconductors & Semiconductor Equipment

     8,340,286                            8,340,286  

Software

     54,882,962                  
         54,882,962  

Specialty Retail

     30,506,246                            30,506,246  

Technology Hardware, Storage & Peripherals

              13,222,787                   13,222,787  

Tobacco

     9,872,853          16,240,852                   26,113,705  

Wireless Telecommunication Services

     25,023,816                            25,023,816  

Short-Term Securities

                 

Money Market Funds

     62,262,015                            62,262,015  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 1,645,494,275        $  285,738,714        $        $ 1,931,232,989  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(a)

                 

Liabilities

                 

Equity Contracts

   $ (16,657,155      $ (8,790,681      $        $ (25,447,836
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Derivative financial instruments are options written. Options written are shown at value.

 

See notes to financial statements.

 

 

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

  63


Schedule of Investments  

December 31, 2021

  

BlackRock Enhanced Global Dividend Trust (BOE)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

 

Common Stocks

   

Canada — 2.6%

   

TELUS Corp.

    940,589     $ 22,151,189  
   

 

 

 
China — 1.1%            

Enn Energy Holdings Ltd.

    512,300       9,657,731  
   

 

 

 
Denmark — 3.2%            

Novo Nordisk A/S, Class B

    240,738       27,041,104  
   

 

 

 
France — 10.1%            

EssilorLuxottica SA

    69,551       14,805,793  

Kering SA

    21,322       17,107,739  

LVMH Moet Hennessy Louis Vuitton SE

    14,424       11,920,479  

Sanofi

    274,973       27,591,878  

Schneider Electric SE

    76,658       15,070,610  
   

 

 

 
      86,496,499  
India — 0.1%            

Jasper Infotech Private Ltd., Series I,
(Acquired 05/07/14, Cost: $2,637,143)(a)(b)(c)

    3,540       848,750  
   

 

 

 
Indonesia — 1.0%            

Bank Rakyat Indonesia Persero Tbk PT

    28,868,800       8,312,081  
   

 

 

 
Ireland — 2.7%            

Medtronic PLC(d)

    223,779       23,149,938  
   

 

 

 
Japan — 1.0%            

KDDI Corp.

    284,400       8,316,908  
   

 

 

 
Mexico — 1.0%            

Wal-Mart de Mexico SAB de CV

    2,393,573       8,894,873  
   

 

 

 
Portugal — 2.5%            

EDP - Energias de Portugal SA

    3,951,082       21,704,490  
   

 

 

 
Singapore — 1.1%            

DBS Group Holdings Ltd.

    404,868       9,805,480  
   

 

 

 
Spain — 0.8%            

Amadeus IT Group SA(b)

    102,659       6,946,342  
   

 

 

 
Switzerland — 0.8%            

Logitech International SA, Registered Shares

    83,156       6,975,759  
   

 

 

 
Taiwan — 3.7%            

MediaTek, Inc.

    213,000       9,139,725  

Taiwan Semiconductor Manufacturing Co. Ltd.

    1,040,000       23,005,834  
   

 

 

 
      32,145,559  
United Kingdom — 19.9%            

AstraZeneca PLC

    185,779       21,693,291  

BAE Systems PLC

    1,181,873       8,813,453  

Diageo PLC

    436,211       23,850,290  

Ferguson PLC

    104,012       18,475,300  

Prudential PLC

    1,212,235       20,962,991  

Reckitt Benckiser Group PLC

    213,057       18,340,716  

Relx PLC

    839,272       27,250,978  

Taylor Wimpey PLC

    3,606,075       8,597,344  

Unilever PLC

    421,469       22,610,315  
   

 

 

 
      170,594,678  
United States(d) — 47.6%            

AbbVie, Inc.(e)

    218,756       29,619,562  
Security   Shares     Value  

 

 
United States (continued)            

American Tower Corp.

    42,738     $ 12,500,865  

Assurant, Inc.

    114,506       17,846,905  

Baker Hughes Co.

    268,619       6,462,973  

Citizens Financial Group, Inc.

    409,555       19,351,474  

Comcast Corp., Class A

    292,529       14,722,985  

Estee Lauder Cos., Inc., Class A

    38,165       14,128,683  

Fidelity National Information Services, Inc.

    190,981       20,845,576  

Hasbro, Inc.

    212,496       21,627,843  

Intercontinental Exchange, Inc.(e)

    191,277       26,160,955  

Intuit, Inc.

    22,588       14,529,053  

M&T Bank Corp.

    111,794       17,169,323  

Microsoft Corp.(e)

    97,490       32,787,837  

Otis Worldwide Corp.

    209,445       18,236,376  

Paychex, Inc.

    68,032       9,286,368  

Philip Morris International, Inc.

    150,940       14,339,300  

Progressive Corp.

    121,762       12,498,869  

Raytheon Technologies Corp.

    101,508       8,735,779  

Synchrony Financial

    272,214       12,628,007  

TE Connectivity Ltd.

    89,803       14,488,816  

Texas Instruments, Inc.(e)

    105,957       19,969,716  

UnitedHealth Group, Inc.(e)

    55,930       28,084,690  

Visa, Inc., Class A

    102,942       22,308,561  
   

 

 

 
      408,330,516  
   

 

 

 

Total Long-Term Investments — 99.2%
(Cost: $675,621,154)

 

    851,371,897  
   

 

 

 

Short-Term Securities

 

Money Market Funds — 1.3%

   

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

    11,262,594       11,262,594  
   

 

 

 

Total Short-Term Securities — 1.3%
(Cost: $11,262,594)

 

    11,262,594  
   

 

 

 

Total Investments Before Options Written — 100.5%
(Cost: $686,883,748)

 

    862,634,491  
   

 

 

 

Options Written — (1.1)%
(Premiums Received: $(8,282,779))

      (9,905,083
   

 

 

 

Total Investments, Net of Options Written — 99.4%
(Cost: $678,600,969)

 

    852,729,408  

Other Assets Less Liabilities — 0.6%

      4,991,203  
   

 

 

 

Net Assets — 100.0%

    $   857,720,611  
   

 

 

 

 

(a)

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(b)

Non-income producing security.

(c)

Restricted security as to resale, excluding 144A securities. The Trust held restricted securities with a current value of $848,750, representing 0.1% of its net assets as of period end, and an original cost of $2,637,143.

(d)

All or a portion of the security has been pledged and/or segregated as collateral in connection with outstanding exchange-traded options written.

(e)

All or a portion of the security has been pledged as collateral in connection with outstanding OTC derivatives.

(f)

Affiliate of the Trust.

(g)

Annualized 7-day yield as of period end.

 

 

 

64  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Global Dividend Trust (BOE)

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Trust during the year 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

12/31/20

   

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

  $     $ 11,262,594 (a)    $     $     $     $  11,262,594       11,262,594     $ 745     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a)

Represents net amount purchased (sold).

 

Derivative Financial Instruments Outstanding as of Period End

Exchange-Traded Options Written

 

           
Description  

Number of

Contracts

    

Expiration

Date

       Exercise Price       

Notional

Amount (000)

       Value  
Call                                                

Estee Lauder Cos., Inc., Class A

    60        01/04/22        USD         336.50        USD         2,221        $  (202,071

Comcast Corp., Class A

    242        01/07/22        USD     53.00        USD     1,218          (1,331

Medtronic PLC

    614        01/07/22        USD     109.00        USD     6,352          (9,517

Microsoft Corp.

    37        01/07/22        USD     330.00        USD     1,244          (29,507

Otis Worldwide Corp.

    231        01/07/22        USD     84.41        USD     2,011          (66,996

Texas Instruments, Inc.

    224        01/07/22        USD     200.00        USD     4,222          (3,248

Visa, Inc., Class A

    164        01/07/22        USD     210.00        USD     3,554          (119,720

Comcast Corp., Class A

    67        01/10/22        USD     54.25        USD     337          (109

Visa, Inc., Class A

    81        01/11/22        USD     221.00        USD     1,755          (11,454

Comcast Corp., Class A

    67        01/14/22        USD     54.25        USD     337          (293

Microsoft Corp.

    59        01/14/22        USD     345.00        USD     1,984          (11,328

Philip Morris International, Inc.

    360        01/14/22        USD     93.00        USD     3,420          (95,400

Raytheon Technologies Corp.

    19        01/14/22        USD     87.00        USD     164          (1,615

Synchrony Financial

    572        01/14/22        USD     49.00        USD     2,654          (18,590

UnitedHealth Group, Inc.

    110        01/14/22        USD     450.00        USD     5,524          (583,825

Visa, Inc., Class A

    32        01/14/22        USD     220.00        USD     693          (6,752

AbbVie, Inc.

    200        01/21/22        USD     120.00        USD     2,708          (314,000

American Tower Corp.

    89        01/21/22        USD     270.00        USD     2,603          (204,255

American Tower Corp.

    146        01/21/22        USD     280.00        USD     4,271          (203,669

Assurant, Inc.

    250        01/21/22        USD     165.00        USD     3,897          (31,250

Assurant, Inc.

    265        01/21/22        USD     155.00        USD     4,130          (92,087

Baker Hughes Co.

    604        01/21/22        USD     27.00        USD     1,453          (6,040

Baker Hughes Co.

    604        01/21/22        USD     26.00        USD     1,453          (12,080

Citizens Financial Group, Inc.

    697        01/21/22        USD     52.50        USD     3,293          (6,970

Comcast Corp., Class A

    341        01/21/22        USD     55.00        USD     1,716          (2,217

Estee Lauder Cos., Inc., Class A

    60        01/21/22        USD     350.00        USD     2,221          (133,500

Estee Lauder Cos., Inc., Class A

    51        01/21/22        USD     380.00        USD     1,888          (17,595

Fidelity National Information Services, Inc.

    377        01/21/22        USD     125.00        USD     4,115          (8,483

Fidelity National Information Services, Inc.

    138        01/21/22        USD     110.00        USD     1,506          (36,225

Hasbro, Inc.

    248        01/21/22        USD     100.00        USD     2,524          (78,120

Hasbro, Inc.

    83        01/21/22        USD     105.00        USD     845          (8,093

Intercontinental Exchange, Inc.

    637        01/21/22        USD     135.00        USD     8,712          (200,655

Intuit, Inc.

    80        01/21/22        USD     700.00        USD     5,146          (14,400

M&T Bank Corp.

    195        01/21/22        USD     165.00        USD     2,995          (12,187

Microsoft Corp.

    87        01/21/22        USD     340.00        USD     2,926          (42,847

Otis Worldwide Corp.

    480        01/21/22        USD     87.53        USD     4,179          (58,203

Paychex, Inc.

    187        01/21/22        USD     125.00        USD     2,553          (226,270

Progressive Corp.

    170        01/21/22        USD     105.00        USD     1,745          (13,175

Raytheon Technologies Corp.

    331        01/21/22        USD     90.00        USD     2,849          (7,779

Synchrony Financial

    345        01/21/22        USD     55.00        USD     1,600          (17,250

Synchrony Financial

    307        01/21/22        USD     50.00        USD     1,424          (6,140

TE Connectivity Ltd.

    202        01/21/22        USD     165.98        USD     3,259          (43,788

TELUS Corp.

    1,518        01/21/22        CAD     29.00        CAD     4,522          (109,804

Texas Instruments, Inc.

    208        01/21/22        USD     195.00        USD     3,920          (28,600

UnitedHealth Group, Inc.

    24        01/21/22        USD     460.00        USD     1,205          (107,220

 

 

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

  65


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Global Dividend Trust (BOE)

 

Exchange-Traded Options Written (continued)

 

 

           
Description  

Number of 

Contracts

      

Expiration

Date

     Exercise Price     

Notional

Amount (000)

    Value  
Call (continued)                                           

UnitedHealth Group, Inc.

    74          01/21/22      USD         490.00      USD         3,716     $ (145,040

Visa, Inc., Class A

    153          01/21/22      USD     230.00      USD     3,316       (9,257

Microsoft Corp.

    200          01/28/22      USD     345.00      USD     6,726       (102,500

Philip Morris International, Inc.

    320          01/28/22      USD     95.00      USD     3,040       (61,760

Texas Instruments, Inc.

    44          01/28/22      USD     195.00      USD     829       (10,362

UnitedHealth Group, Inc.

    74          01/28/22      USD     485.00      USD     3,716       (180,745

Hasbro, Inc.

    306          02/02/22      USD     103.00      USD     3,114       (89,538

Fidelity National Information Services, Inc.

    15          02/04/22      USD     113.00      USD     164       (4,556

Comcast Corp., Class A

    343          02/11/22      USD     52.25      USD     1,726       (28,919

Microsoft Corp.

    55          02/11/22      USD     345.00      USD     1,850       (40,562

AbbVie, Inc.

    616          02/18/22      USD     130.00      USD     8,341       (449,680

Fidelity National Information Services, Inc.

    138          02/18/22      USD     110.00      USD     1,506       (69,000

Intuit, Inc.

    44          02/18/22      USD     680.00      USD     2,830       (51,260

M&T Bank Corp.

    196          02/18/22      USD     155.00      USD     3,010       (104,860

Medtronic PLC

    169          02/18/22      USD     120.00      USD     1,748       (2,197

Otis Worldwide Corp.

    231          02/18/22      USD     87.00      USD     2,011       (69,071

Paychex, Inc.

    187          02/18/22      USD     125.00      USD     2,553       (230,945

Progressive Corp.

    258          02/18/22      USD     97.50      USD     2,648       (172,860

Progressive Corp.

    120          02/18/22      USD     105.00      USD     1,232       (33,300

Raytheon Technologies Corp.

    110          02/18/22      USD     86.25      USD     947       (29,633

TE Connectivity Ltd.

    202          02/18/22      USD     170.00      USD     3,259       (60,600

TELUS Corp.

    787          02/18/22      CAD     30.00      CAD     2,344       (35,152

TELUS Corp.

    1,784          02/18/22      CAD     29.00      CAD     5,315       (161,483

Visa, Inc., Class A

    33          02/18/22      USD     230.00      USD     715       (9,355

Comcast Corp., Class A

    256          02/25/22      USD     51.75      USD     1,288       (33,232
                  

 

 

 
                   $  (5,390,525
                  

 

 

 

OTC Options Written

 

 

             
Description   Counterparty   Number of
Contracts
    Expiration
Date
    Exercise Price    

Notional

Amount (000)

    Value  
Call                                          

Amadeus IT Group SA

  UBS AG     55,800       01/04/22     EUR     64.31     EUR         3,328     $ (371

EDP-Energias De Portugal SA

  Goldman Sachs International     639,400       01/04/22     EUR     4.86     EUR     3,090       (20,587

Essilorluxottica SA

  Goldman Sachs International     28,900       01/04/22     EUR     184.64     EUR     5,411       (102,796

Hasbro, Inc.

  JPMorgan Chase Bank N.A.     31,900       01/04/22     USD         101.75     USD     3,247       (30,393

Reckitt Benckiser Group PLC

  Goldman Sachs International     30,900       01/04/22     GBP     63.44     GBP     1,960       (23,535

Relx PLC

  UBS AG     55,300       01/04/22     EUR     27.88     EUR     1,577       (41,783

Sanofi

  Goldman Sachs International     46,600       01/04/22     EUR     91.24     EUR     4,128       (1,626

Taylor Wimpey PLC

  Morgan Stanley & Co. International PLC     674,000       01/04/22     GBP     1.62     GBP     1,183       (130,728

Relx PLC

  UBS AG     34,000       01/05/22     EUR     27.60     EUR     970       (35,564

Astrazeneca PLC

  Morgan Stanley & Co. International PLC     18,400       01/11/22     GBP     89.33     GBP     1,597       (5,902

BAE Systems PLC

  Morgan Stanley & Co. International PLC     68,500       01/11/22     GBP     5.57     GBP     377       (4,021

Enn Energy Holdings Ltd.

  JPMorgan Chase Bank N.A.     47,300       01/11/22     HKD     143.67     HKD     6,944       (38,017

Ferguson PLC

  Goldman Sachs International     16,300       01/11/22     GBP     119.29     GBP     2,136       (264,020

LVMH Moet Hennessy Louis Vuitton SE

  Morgan Stanley & Co. International PLC     6,500       01/11/22     EUR     737.36     EUR     4,726       (44,580

PPR S.A.

  Goldman Sachs International     1,800       01/11/22     EUR     668.42     EUR     1,272       (77,643

Prudential PLC

  Morgan Stanley & Co. International PLC     101,900       01/11/22     GBP     15.32     GBP     1,299        

Relx PLC

  Credit Suisse International     98,300       01/11/22     EUR     27.99     EUR     2,804       (71,865

Schneider Electric SE

  Morgan Stanley & Co. International PLC     32,300       01/11/22     EUR     159.00     EUR     5,570       (505,906

Taylor Wimpey PLC

  Morgan Stanley & Co. International PLC     274,700       01/11/22     GBP     1.61     GBP     482       (57,156

TELUS Corp.

  Citibank N.A.     15,200       01/11/22     CAD     28.90     CAD     453       (11,174

Unilever PLC

  UBS AG     16,200       01/11/22     GBP     39.57     GBP     639       (9,747

EDP-Energias De Portugal SA

  Barclays Bank PLC     230,400       01/13/22     EUR     4.84     EUR     1,113       (15,811

KDDI Corp.

  JPMorgan Chase Bank N.A.     45,600       01/13/22     JPY     3,472.47     JPY     153,307       (6,585

MediaTek, Inc.

  JPMorgan Chase Bank N.A.     48,000       01/13/22     USD     1,132.99     USD     57,120       (113,482

Wal-Mart de Mexico SAB de CV

  Morgan Stanley & Co. International PLC     266,300       01/13/22     MXN     74.19     MXN     20,263       (32,061

BAE Systems PLC

  Morgan Stanley & Co. International PLC     68,500       01/18/22     GBP     5.57     GBP     377       (5,187

Citizens Financial Group, Inc.

  Citibank N.A.     73,600       01/18/22     USD     48.88     USD     3,478       (44,055

Prudential PLC

  Goldman Sachs International     78,400       01/18/22     GBP     13.67     GBP     999       (4,327

Taylor Wimpey PLC

  Goldman Sachs International     674,000       01/18/22     GBP     1.63     GBP     1,183       (126,421

 

 

66  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Global Dividend Trust (BOE)

 

OTC Options Written (continued)

 

 

             
Description  

Counterparty

  Number of
Contracts
    Expiration
Date
    Exercise Price    

Notional

Amount (000)

    Value  

Call (continued)

               

Unilever PLC

  Goldman Sachs International     29,700       01/18/22     GBP     39.35     GBP     1,172     $ (30,215

Ferguson PLC

  Morgan Stanley & Co. International PLC     13,100       01/19/22     GBP     119.31     GBP     1,717       (213,811

PPR S.A.

  Goldman Sachs International     7,700       01/19/22     EUR     719.20     EUR     5,443       (66,704

Relx PLC

  UBS AG     56,000       01/19/22     EUR     27.95     EUR     1,597       (49,716

BAE Systems PLC

  UBS AG     163,400       01/20/22     GBP     5.66     GBP     898       (7,166

DBS Group Holdings Ltd.

  JPMorgan Chase Bank N.A.     91,100       01/20/22     SGD     32.59     SGD     2,975       (38,615

Ferguson PLC

  UBS AG     12,400       01/20/22     GBP     126.84     GBP     1,625       (88,370

MediaTek, Inc.

  JPMorgan Chase Bank N.A.     48,000       01/20/22     USD       1,132.99     USD     57,120       (125,392

Diageo PLC

  Goldman Sachs International     74,400       01/25/22     GBP     39.14     GBP     3,003       (152,466

Novo Nordisk A/S, Class B

  UBS AG     47,000       01/25/22     DKK     725.84     DKK     34,545       (201,599

Reckitt Benckiser Group PLC

  UBS AG     43,700       01/25/22     GBP     62.93     GBP     2,771       (88,718

Taiwan Semiconductor Manufacturing Co. Ltd.

  JPMorgan Chase Bank N.A.     228,000       01/25/22     USD     613.88     USD       140,220       (104,349

BAE Systems PLC

  Morgan Stanley & Co. International PLC     68,500       01/27/22     GBP     5.57     GBP     377       (6,568

Enn Energy Holdings Ltd.

  JPMorgan Chase Bank N.A.     80,400       01/27/22     HKD     153.72     HKD     11,803       (45,189

KDDI Corp.

  Citibank N.A.     82,300       01/27/22     JPY     3,447.41     JPY     276,693       (29,707

Prudential PLC

  Goldman Sachs International     91,800       01/27/22     GBP     13.22     GBP     1,170       (21,688

Unilever PLC

  Goldman Sachs International     62,800       01/27/22     GBP     38.81     GBP     2,478       (102,570

Intercontinental Exchange, Inc.

  Citibank N.A.     22,300       01/31/22     USD     136.43     USD     3,050       (62,610

Astrazeneca PLC

  Morgan Stanley & Co. International PLC     10,600       02/01/22     GBP     84.70     GBP     920       (44,359

Diageo PLC

  UBS AG     76,400       02/01/22     GBP     40.36     GBP     3,084       (96,703

Relx PLC

  UBS AG     56,000       02/01/22     EUR     28.54     EUR     1,597       (36,328

DBS Group Holdings Ltd.

  UBS AG     91,100       02/03/22     SGD     32.80     SGD     2,975       (42,522

EDP - Energias De Portugal SA

  Credit Suisse International     338,800       02/03/22     EUR     4.85     EUR     1,637       (36,619

Essilorluxottica SA

  Credit Suisse International     9,300       02/03/22     EUR     185.52     EUR     1,741       (60,014

Novo Nordisk A/S, Class B

  UBS AG     61,300       02/03/22     DKK     765.29     DKK     45,056       (134,034

Sanofi

  Goldman Sachs International     49,700       02/03/22     EUR     88.27     EUR     4,402       (99,967

Schneider Electric SE

  Credit Suisse International     2,200       02/03/22     EUR     167.64     EUR     379       (19,417

Unilever PLC

  UBS AG     44,400       02/03/22     GBP     41.42     GBP     1,752       (16,759

Wal-Mart de Mexico SAB de CV

  Morgan Stanley & Co. International PLC     610,000       02/03/22     MXN     77.87     MXN     46,415       (35,952

Enn Energy Holdings Ltd.

  Morgan Stanley & Co. International PLC     102,800       02/04/22     HKD     147.37     HKD     15,091       (102,791

Diageo PLC

  UBS AG     45,500       02/08/22     GBP     40.47     GBP     1,836       (60,348

EDP-Energias De Portugal SA

  UBS AG     230,000       02/08/22     EUR     4.89     EUR     1,111       (24,496

Prudential PLC

  Goldman Sachs International     152,200       02/08/22     GBP     13.06     GBP     1,940       (61,098

Astrazeneca PLC

  Credit Suisse International     73,100       02/10/22     GBP     86.82     GBP     6,344       (216,302

BAE Systems PLC

  Morgan Stanley & Co. International PLC     163,000       02/10/22     GBP     5.51     GBP     896       (31,517

Ferguson PLC

  UBS AG     15,500       02/10/22     GBP     131.79     GBP     2,031       (57,086

Relx PLC

  UBS AG     78,000       02/10/22     EUR     28.73     EUR     2,225       (52,120

Unilever PLC

  Credit Suisse International     36,500       02/10/22     GBP     40.87     GBP     1,440       (25,330
               

 

 

 
                $  (4,514,558
               

 

 

 

Balances Reported in the Statements of Assets and Liabilities for Options Written

 

           
Description   

Swap

Premiums

Paid

    

Swap

Premiums

Received

     Unrealized
Appreciation
  Unrealized
Depreciation
     Value  
Options Written    $         N/A      $        N/A      $  2,563,854   $ (4,186,158)      $ (9,905,083)

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statements 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

             

Options written

             

Options written at value

  $     $     $  9,905,083     $     $     $     $  9,905,083  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

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

  67


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Global Dividend Trust (BOE)

 

For the period ended December 31, 2021, the effect of derivative financial instruments in the Statements 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:

                    

Options written

   $      $      $ (14,904,200    $      $      $      $   (14,904,200
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                    

Options written

   $      $      $ (1,455,465    $      $      $      $ (1,455,465
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments    

 

   

Options:

  

Average value of option contracts written

   $ 8,113,693  

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

Derivative Financial Instruments — Offsetting as of Period End

The Trust’s derivative assets and liabilities (by type) were as follows:

 

     
      Assets      Liabilities  

Derivative Financial Instruments

     

Options

   $      $    9,905,083  
  

 

 

    

 

 

 

Total derivative assets and liabilities in the Statements of Assets and Liabilities

            9,905,083  
  

 

 

    

 

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

            (5,390,525
  

 

 

    

 

 

 

Total derivative assets and liabilities subject to an MNA

   $      $ 4,514,558  
  

 

 

    

 

 

 

The following table presents the Trust’s derivative liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral pledged by the Trust:

 

           

Counterparty

   

Derivative

Liabilities

Subject to

an MNA by

Counterparty

 

 

 

 

 

    

Derivatives

Available

for Offset

 

 

 

    

Non-Cash

Collateral

Pledged

 

 

(a)  

    

Cash

Collateral

Pledged

 

 

 

    

Net Amount

of Derivative

Liabilities

 

 

(b) 

Barclays Bank PLC

  $ 15,811      $      $      $      $ 15,811  

Citibank N.A.

    147,546               (147,546              

Credit Suisse International

    429,547                      (219,000      210,547  

Goldman Sachs International

    1,155,663               (1,135,663      (20,000       

JPMorgan Chase Bank N.A.

    502,022               (502,022              

Morgan Stanley & Co. International PLC

    1,220,539               (1,220,539              

UBS AG

    1,043,430               (949,430      (94,000       
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
  $ 4,514,558      $      $ (3,955,200    $ (333,000    $ 226,358  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 
  (b)

Net amount represents the net amount payable due to counterparty in the event of default. Net amount may be offset further by the options written receivable/payable on the Statements of Assets and Liabilities.

 

 

 

68  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced Global Dividend Trust (BOE)

 

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

                 

Common Stocks

                 

Canada

   $ 22,151,189        $        $        $ 22,151,189  

China

              9,657,731                   9,657,731  

Denmark

              27,041,104                   27,041,104  

France

              86,496,499                   86,496,499  

India

                       848,750          848,750  

Indonesia

              8,312,081                   8,312,081  

Ireland

     23,149,938                            23,149,938  

Japan

              8,316,908                   8,316,908  

Mexico

     8,894,873                            8,894,873  

Portugal

              21,704,490                   21,704,490  

Singapore

              9,805,480                   9,805,480  

Spain

              6,946,342                   6,946,342  

Switzerland

              6,975,759                   6,975,759  

Taiwan

              32,145,559                   32,145,559  

United Kingdom

              170,594,678                   170,594,678  

United States

     408,330,516                            408,330,516  

Short-Term Securities

                 

Money Market Funds

     11,262,594                            11,262,594  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $  473,789,110        $  387,996,631        $     848,750        $  862,634,491  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments

                 

Liabilities

                 

Equity Contracts

   $ (4,752,662      $ (5,152,421      $        $ (9,905,083
  

 

 

      

 

 

      

 

 

      

 

 

 

See notes to financial statements.

 

 

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

  69


Schedule of Investments

December 31, 2021

  

BlackRock Enhanced International Dividend Trust (BGY)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

 

Common Stocks

   

Canada — 4.0%

   

TELUS Corp.

    1,216,960     $ 28,659,819  
   

 

 

 

China — 2.0%

   

Didi Global, Inc., (Acquired 07/08/21, Cost: $1,053,166)(a)

    153,600       764,928  

Enn Energy Holdings Ltd.

    714,000       13,460,121  
   

 

 

 
      14,225,049  

Denmark — 4.2%

   

Novo Nordisk A/S, Class B

    266,576         29,943,380  
   

 

 

 

France — 18.0%

   

Air Liquide SA

    61,686       10,758,304  

EssilorLuxottica SA

    98,194       20,903,223  

Kering SA

    30,556       24,516,653  

LVMH Moet Hennessy Louis Vuitton SE

    23,187       19,162,516  

Sanofi

    304,797       30,584,536  

Schneider Electric SE

    110,181       21,661,077  
   

 

 

 
      127,586,309  
India — 3.0%            

HDFC Bank Ltd.

    994,804       19,694,352  

Jasper Infotech Private Ltd., Series I, (Acquired 05/07/14, Cost: $3,948,600)(a)(b)

    5,300       1,270,728  
   

 

 

 
      20,965,080  
Indonesia — 1.9%            

Bank Rakyat Indonesia Persero Tbk PT

    47,385,900       13,643,637  
   

 

 

 

Japan — 1.7%

   

KDDI Corp.

    419,500       12,267,732  
   

 

 

 

Mexico — 2.4%

   

Wal-Mart de Mexico SAB de CV

    4,546,021       16,893,689  
   

 

 

 

Portugal — 4.0%

   

EDP - Energias de Portugal SA

    5,176,809       28,437,779  
   

 

 

 

Singapore — 4.6%

   

DBS Group Holdings Ltd.

    633,200       15,335,442  

United Overseas Bank Ltd.

    849,800       16,971,962  
   

 

 

 
      32,307,404  
Spain — 3.9%            

Amadeus IT Group SA(c)

    210,632       14,252,252  

Bankinter SA

    2,641,739       13,460,021  
   

 

 

 
      27,712,273  
Switzerland — 1.5%            

Logitech International SA, Registered Shares

    127,703       10,712,701  
   

 

 

 
Taiwan — 6.3%            

MediaTek, Inc.

    383,000       16,434,341  

Taiwan Semiconductor Manufacturing Co. Ltd.

    1,261,000       27,894,574  
   

 

 

 
      44,328,915  
Security   Shares     Value  

 

 

United Kingdom — 31.8%

   

AstraZeneca PLC

    227,776     $ 26,597,252  

BAE Systems PLC

    2,057,347       15,342,030  

Diageo PLC

    493,929       27,006,081  

Ferguson PLC

    149,083       26,481,110  

Prudential PLC

    1,628,154       28,155,414  

Reckitt Benckiser Group PLC

    322,338       27,748,019  

Relx PLC

    968,654       31,451,984  

Taylor Wimpey PLC

    5,973,320       14,241,160  

Unilever PLC

    530,483       28,458,528  
   

 

 

 
      225,481,578  
United States(d)(e) — 10.2%            

Baker Hughes Co.

    537,284       12,927,053  

Estee Lauder Cos., Inc., Class A

    44,370       16,425,774  

Otis Worldwide Corp.

    268,552       23,382,823  

Visa, Inc., Class A

    91,768       19,887,043  
   

 

 

 
      72,622,693  
   

 

 

 

Total Long-Term Investments — 99.5%
(Cost: $556,956,647)

 

    705,788,038  
   

 

 

 

Short-Term Securities

 

Money Market Funds — 0.8%            

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

    5,586,240       5,586,240  
   

 

 

 

Total Short-Term Securities — 0.8%
(Cost: $5,586,240)

      5,586,240  
   

 

 

 

Total Investments Before Options Written — 100.3%
(Cost: $562,542,887)

 

    711,374,278  
   

 

 

 

Options Written — (1.2)%
(Premiums Received: $(6,142,289))

 

    (8,368,684
   

 

 

 

Total Investments, Net of Options Written — 99.1%
(Cost: $556,400,598)

 

    703,005,594  

Other Assets Less Liabilities — 0.9%

 

    6,504,276  
   

 

 

 

Net Assets — 100.0%

 

  $  709,509,870  
   

 

 

 

 

(a)

Restricted security as to resale, excluding 144A securities. The Trust held restricted securities with a current value of $2,035,656, representing 0.3% of its net assets as of period end, and an original cost of $5,001,766.

(b)

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(c)

Non-income producing security.

(d)

All or a portion of the security has been pledged as collateral in connection with outstanding OTC derivatives.

(e)

All or a portion of the security has been pledged and/or segregated as collateral in connection with outstanding exchange-traded options written.

(f)

Affiliate of the Trust.

(g)

Annualized 7-day yield as of period end.

 

 

 

70  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced International Dividend Trust (BGY)

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Trust during the year 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

12/31/20

   

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

  $  287,381     $  5,298,859 (a)    $     $     $     $  5,586,240       5,586,240     $ 782     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a)

Represents net amount purchased (sold).

 

Derivative Financial Instruments Outstanding as of Period End

Exchange-Traded Options Written

 

             
Description        Number of
Contracts
      

Expiration

Date

       Exercise Price        Notional
Amount (000)
    Value  
Call                                                   

Estee Lauder Cos., Inc., Class A

      100          01/04/22        USD         336.50        USD         3,702     $ (336,784

Otis Worldwide Corp.

      589          01/07/22        USD     84.41        USD     5,128       (170,825

Visa, Inc., Class A

      163          01/07/22        USD     210.00        USD     3,532       (118,990

Visa, Inc., Class A

      72          01/11/22        USD     221.00        USD     1,560       (10,181

Visa, Inc., Class A

      32          01/14/22        USD     220.00        USD     693       (6,752

Baker Hughes Co.

      1,208          01/21/22        USD     27.00        USD     2,906       (12,080

Baker Hughes Co.

      1,209          01/21/22        USD     26.00        USD     2,909       (24,180

Estee Lauder Cos., Inc., Class A

      100          01/21/22        USD     350.00        USD     3,702       (222,500

Otis Worldwide Corp.

      155          01/21/22        USD     87.53        USD     1,350       (18,795

TELUS Corp.

      1,887          01/21/22        CAD     29.00        CAD     5,621       (136,496

Visa, Inc., Class A

      66          01/21/22        USD     230.00        USD     1,430       (3,993

Otis Worldwide Corp.

      464          02/18/22        USD     87.00        USD     4,040       (138,740

TELUS Corp.

      1,198          02/18/22        CAD     30.00        CAD     3,569       (53,510

TELUS Corp.

      2,015          02/18/22        CAD     29.00        CAD     6,003       (182,393

Visa, Inc., Class A

      79          02/18/22        USD     230.00        USD     1,712       (22,396
                        

 

 

 
                         $  (1,458,615
                        

 

 

 

OTC Options Written

 

             
Description   Counterparty   Number of
Contracts
    Expiration
Date
    Exercise Price
   

Notional

Amount (000)

    Value  
Call                                          

Amadeus IT Group SA

  UBS AG     71,600       01/04/22     EUR     64.31     EUR     4,270     $ (476

EDP-Energias De Portugal SA

  Goldman Sachs International     789,600       01/04/22     EUR     4.86     EUR     3,815       (25,424

Essilorluxottica SA

  Goldman Sachs International     37,200       01/04/22     EUR     184.64     EUR     6,965       (132,318

Reckitt Benckiser Group PLC

  Goldman Sachs International     51,700       01/04/22     GBP     63.44     GBP     3,279       (39,378

Relx PLC

  UBS AG     36,200       01/04/22     EUR     27.88     EUR     1,032       (27,351

Sanofi

  Goldman Sachs International     19,200       01/04/22     EUR     91.24     EUR     1,701       (670

Taylor Wimpey PLC

  Morgan Stanley & Co. International PLC     1,115,400       01/04/22     GBP     1.62     GBP     1,958       (216,341

United Overseas Bank Ltd.

  UBS AG     233,600       01/04/22     SGD     28.06     SGD     6,284       (18

Relx PLC

  UBS AG     125,000       01/05/22     EUR     27.60     EUR     3,565       (130,748

Astrazeneca PLC

  Morgan Stanley & Co. International PLC     12,400       01/11/22     GBP     89.33     GBP     1,076       (3,977

BAE Systems PLC

  Morgan Stanley & Co. International PLC     22,800       01/11/22     GBP     5.57     GBP     125       (1,338

Enn Energy Holdings Ltd.

  JPMorgan Chase Bank N.A.     88,600       01/11/22     HKD       143.67     HKD       13,006       (71,213

Ferguson PLC

  Goldman Sachs International     24,500       01/11/22     GBP     119.29     GBP     3,211       (396,840

LVMH Moet Hennessy Louis Vuitton SE

  Morgan Stanley & Co. International PLC     10,500       01/11/22     EUR     737.36     EUR     7,634       (72,013

PPR S.A.

  Goldman Sachs International     3,800       01/11/22     EUR     668.41     EUR     2,686       (163,912

Prudential PLC

  Morgan Stanley & Co. International PLC     163,500       01/11/22     GBP     15.32     GBP     2,084        

Relx PLC

  Credit Suisse International     6,000       01/11/22     EUR     27.99     EUR     171       (4,386

Schneider Electric SE

  Morgan Stanley & Co. International PLC     60,500       01/11/22     EUR     159.00     EUR     10,434       (947,595

Taylor Wimpey PLC

  Morgan Stanley & Co. International PLC     457,100       01/11/22     GBP     1.61     GBP     802       (95,107

TELUS Corp.

  Citibank N.A.     126,800       01/11/22     CAD     28.90     CAD     3,777       (93,217

Unilever PLC

  UBS AG     10,300       01/11/22     GBP     39.57     GBP     406       (6,197

United Overseas Bank Ltd.

  Citibank N.A.     74,900       01/11/22     SGD     27.78     SGD     2,015       (3,429

 

 

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

  71


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced International Dividend Trust (BGY)

 

OTC Options Written (continued)

 

             
Description   Counterparty   Number of
Contracts
     Expiration
Date
    Exercise Price    

Notional

Amount (000)

    Value  
Call (continued)                                           

Air Liquide SA

  Morgan Stanley & Co. International PLC     6,200        01/13/22     EUR     152.20     EUR     951     $ (17,121

EDP-Energias De Portugal SA

  Barclays Bank PLC     385,400        01/13/22     EUR     4.84     EUR     1,862       (26,448

KDDI Corp.

  JPMorgan Chase Bank N.A.     94,400        01/13/22     JPY       3,472.47     JPY       317,373       (13,633

MediaTek, Inc.

  JPMorgan Chase Bank N.A.     86,000        01/13/22     USD     1,132.99     USD     102,340       (203,322

Wal-Mart de Mexico SAB de CV

  Morgan Stanley & Co. International PLC     579,000        01/13/22     MXN     74.19     MXN     44,056       (69,709

BAE Systems PLC

  Goldman Sachs International     363,900        01/18/22     GBP     5.74     GBP     2,001       (5,429

Prudential PLC

  Goldman Sachs International     67,000        01/18/22     GBP     13.67     GBP     854       (3,698

Taylor Wimpey PLC

  Goldman Sachs International     1,115,400        01/18/22     GBP     1.63     GBP     1,958       (209,214

Unilever PLC

  Goldman Sachs International     79,400        01/18/22     GBP     39.35     GBP     3,133       (80,777

Air Liquide SA.

  Goldman Sachs International     13,800        01/19/22     EUR     149.32     EUR     2,116       (72,084

Ferguson PLC

  Morgan Stanley & Co. International PLC     15,100        01/19/22     GBP     119.31     GBP     1,979       (246,454

PPR S.A.

  Goldman Sachs International     9,900        01/19/22     EUR     719.20     EUR     6,998       (85,762

Relx PLC

  UBS AG     71,900        01/19/22     EUR     27.95     EUR     2,051       (63,831

BAE Systems PLC

  UBS AG     161,400        01/20/22     GBP     5.66     GBP     887       (7,079

DBS Group Holdings Ltd.

  JPMorgan Chase Bank N.A.     142,500        01/20/22     SGD     32.59     SGD     4,654       (60,403

Ferguson PLC

  UBS AG     23,000        01/20/22     GBP     126.84     GBP     3,014       (163,911

MediaTek, Inc.

  JPMorgan Chase Bank N.A.     86,000        01/20/22     USD     1,132.99     USD     102,340       (224,661

Bankinter SA

  UBS AG     384,700        01/25/22     EUR     4.49     EUR     1,735       (64,085

Diageo PLC

  Goldman Sachs International     131,400        01/25/22     GBP     39.14     GBP     5,303       (269,275

Novo Nordisk A/S, Class B

  UBS AG     106,500        01/25/22     DKK     725.84     DKK     78,278       (456,815

Reckitt Benckiser Group PLC

  UBS AG     61,200        01/25/22     GBP     62.93     GBP     3,881       (124,245

Taiwan Semiconductor Manufacturing Co. Ltd.

  JPMorgan Chase Bank N.A.     230,000        01/25/22     USD     613.88     USD     141,450       (105,264

BAE Systems PLC

  Morgan Stanley & Co. International PLC     22,800        01/27/22     GBP     5.57     GBP     125       (2,186

Enn Energy Holdings Ltd.

  JPMorgan Chase Bank N.A.     202,500        01/27/22     HKD     153.72     HKD     29,727       (113,814

KDDI Corp.

  Citibank N.A.     94,300        01/27/22     JPY     3,447.41     JPY     317,037       (34,039

Prudential PLC

  Goldman Sachs International     169,200        01/27/22     GBP     13.22     GBP     2,156       (39,975

Unilever PLC

  Goldman Sachs International     54,600        01/27/22     GBP     38.81     GBP     2,154       (89,177

Relx PLC

  UBS AG     71,850        02/01/22     EUR     28.54     EUR     2,049       (46,610

Air Liquide SA

  UBS AG     13,900        02/03/22     EUR     157.51     EUR     2,131       (22,262

DBS Group Holdings Ltd.

  UBS AG     142,500        02/03/22     SGD     32.80     SGD     4,654       (66,514

EDP - Energias De Portugal SA

  Credit Suisse International     384,500        02/03/22     EUR     4.84     EUR     1,858       (41,559

Essilorluxottica SA

  Credit Suisse International     16,800        02/03/22     EUR     185.52     EUR     3,146       (108,413

Novo Nordisk A/S, Class B

  UBS AG     13,500        02/03/22     DKK     765.29     DKK     9,923       (29,518

Sanofi

  Goldman Sachs International     87,500        02/03/22     EUR     88.27     EUR     7,751       (175,999

Unilever PLC

  UBS AG     43,700        02/03/22     GBP     41.42     GBP     1,724       (16,495

Wal-Mart de Mexico SAB de CV

  Morgan Stanley & Co. International PLC     1,030,000        02/03/22     MXN     77.87     MXN     78,373       (60,706

Enn Energy Holdings Ltd.

  Morgan Stanley & Co. International PLC     30,200        02/04/22     HKD     147.37     HKD     4,433       (30,197

Diageo PLC

  UBS AG     90,900        02/08/22     GBP     40.47     GBP     3,669       (120,564

EDP-Energias De Portugal SA

  UBS AG     385,000        02/08/22     EUR     4.89     EUR     1,860       (41,004

Prudential PLC

  Goldman Sachs International     170,100        02/08/22     GBP     13.06     GBP     2,168       (68,284

Amadeus IT Group SA

  UBS AG     23,200        02/10/22     EUR     57.18     EUR     1,384       (97,362

Astrazeneca PLC

  Credit Suisse International     112,900        02/10/22     GBP     86.82     GBP     9,797       (334,070

BAE Systems PLC

  Morgan Stanley & Co. International PLC     355,000        02/10/22     GBP     5.51     GBP     1,952       (68,640

Bankinter SA

  UBS AG     540,000        02/10/22     EUR     4.52     EUR     2,435       (91,726

Ferguson PLC

  UBS AG     19,400        02/10/22     GBP     131.79     GBP     2,542       (71,450

Relx PLC

  UBS AG     125,000        02/10/22     EUR     28.73     EUR     3,565       (83,526

Unilever PLC

  Credit Suisse International     50,700        02/10/22     GBP     40.87     GBP     2,000       (35,185

United Overseas Bank Ltd.

  UBS AG     74,000        02/10/22     SGD     27.68     SGD     1,991       (15,626
                

 

 

 
                 $  (6,910,069
                

 

 

 

Balances Reported in the Statements of Assets and Liabilities for Options Written

 

           
Description   

Swap

Premiums

Paid

    

Swap

Premiums

Received

    

Unrealized

Appreciation

 

Unrealized

Depreciation

     Value  
Options Written    $        N/A      $        N/A      $ 1,344,310   $ (3,570,705)      $ (8,368,684)

 

 

72  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced International Dividend Trust (BGY)

 

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statements 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

             

Options written

             

Options written at value

  $     $     $  8,368,684     $     $     $     $  8,368,684  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

For the period ended December 31, 2021, the effect of derivative financial instruments in the Statements 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:

             

Options written

  $     $     $  (16,019,721   $     $     $     $  (16,019,721
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

             

Options written

  $     $     $ (1,541,772   $     $     $     $ (1,541,772
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

   

Options:

  

Average value of option contracts written

   $ 7,043,618  

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

Derivative Financial Instruments — Offsetting as of Period End

The Trust’s derivative assets and liabilities (by type) were as follows:

 

     
      Assets        Liabilities  

Derivative Financial Instruments

       

Options

   $        $ 8,368,684  
  

 

 

      

 

 

 

Total derivative assets and liabilities in the Statements of Assets and Liabilities

              8,368,684  
  

 

 

      

 

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

              (1,458,615
  

 

 

      

 

 

 

Total derivative assets and liabilities subject to an MNA

   $        $ 6,910,069  
  

 

 

      

 

 

 

The following table presents the Trust’s derivative liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral pledged by the Trust:

 

           

Counterparty

    

Derivative

Liabilities

Subject to

an MNA by

Counterparty

 

 

 

 

 

      

Derivatives

Available

for Offset

 

 

 

      

Non-Cash

Collateral

Pledged(a

 

 

) 

      

Cash

Collateral

Pledged

 

 

 

      


Net Amount

of Derivative
Liabilities(b

 

 
) 

Barclays Bank PLC

   $ 26,448        $        $        $        $ 26,448  

Citibank N.A.

     130,685                   (130,685                  

Credit Suisse International

     523,613                   (523,613                  

Goldman Sachs International

     1,858,216                   (1,858,216                  

JPMorgan Chase Bank N.A.

     792,310                   (792,310                  

Morgan Stanley & Co. International PLC

     1,831,384                   (1,510,384        (321,000         

UBS AG

     1,747,413                   (1,747,413                  
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 
   $ 6,910,069        $        $   (6,562,621      $ (321,000      $ 26,448  
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 
  (b)

Net amount represents the net amount payable due to counterparty in the event of default. Net amount may be offset further by the options written receivable/payable on the Statements of Assets and Liabilities.

 

 

 

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

  73


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Enhanced International Dividend Trust (BGY)

 

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

                 

Common Stocks

                 

Canada

   $ 28,659,819        $        $        $ 28,659,819  

China

              14,225,049                   14,225,049  

Denmark

              29,943,380                   29,943,380  

France

              127,586,309                   127,586,309  

India

              19,694,352          1,270,728          20,965,080  

Indonesia

              13,643,637                   13,643,637  

Japan

              12,267,732                   12,267,732  

Mexico

     16,893,689                            16,893,689  

Portugal

              28,437,779                   28,437,779  

Singapore

              32,307,404                   32,307,404  

Spain

              27,712,273                   27,712,273  

Switzerland

              10,712,701                   10,712,701  

Taiwan

              44,328,915                   44,328,915  

United Kingdom

              225,481,578                   225,481,578  

United States

     72,622,693                            72,622,693  

Short-Term Securities

                 

Money Market Funds

     5,586,240                            5,586,240  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $  123,762,441        $  586,341,109        $  1,270,728        $  711,374,278  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(a)

                 

Liabilities

                 

Equity Contracts

   $ (783,290      $ (7,585,394      $        $ (8,368,684
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Derivative financial instruments are options written. Options written are shown at value.

 

See notes to financial statements.

 

 

74  

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


Schedule of Investments

December 31, 2021

  

BlackRock Health Sciences Trust (BME)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   

Biotechnology — 17.3%

   

AbbVie, Inc.

    83,474     $ 11,302,380  

Acumen Pharmaceuticals, Inc., (Acquired 11/20/20, Cost: $580,000)(a)

    152,651       1,031,921  

Agios Pharmaceuticals, Inc.(b)

    21,625       710,814  

Alnylam Pharmaceuticals, Inc.(b)

    16,633       2,820,624  

Ambrx Biopharma, Inc., ADR(b)

    43,409       391,983  

Amgen, Inc.(c)

    64,297       14,464,896  

Apellis Pharmaceuticals, Inc.(b)

    15,300       723,384  

Arcutis Biotherapeutics, Inc.(b)

    42,854       888,792  

Argenx SE, ADR(b)

    7,110       2,489,851  

Biogen, Inc.(b)

    37,060       8,891,435  

BioMarin Pharmaceutical, Inc.(b)

    35,549       3,140,754  

Blueprint Medicines Corp.(b)

    12,238       1,310,812  

Cerevel Therapeutics Holdings, Inc.(b)

    16,785       544,170  

Connect Biopharma Holdings Ltd.(b)

    33,960       174,894  

Decibel Therapeutics, Inc.(b)

    25,174       117,059  

Decibel Therapeutics, Inc.

    21,710       100,952  

Design Therapeutics, Inc.(b)

    13,967       299,033  

Enanta Pharmaceuticals, Inc.(b)

    3,150       235,557  

Everest Medicines Ltd.(b)(d)

    30,500       136,331  

Exact Sciences Corp.(b)

    14,850       1,155,775  

Genmab A/S(b)

    5,298       2,114,713  

Genmab A/S, ADR(b)

    20,621       815,767  

Gilead Sciences, Inc.

    133,519       9,694,815  

Horizon Therapeutics PLC(b)

    19,895       2,143,885  

Imago Biosciences, Inc.(b)

    24,661       584,712  

Imago Biosciences, Inc., (Acquired 11/12/20, Cost: $235,002)(a)

    23,163       547,364  

Immuneering Corp., Class A(b)

    14,456       233,754  

Immunocore Holdings PLC, ADR(b)

    9,668       331,032  

Incyte Corp.(b)

    26,247       1,926,530  

Kodiak Sciences, Inc.(b)

    6,780       574,808  

Kronos Bio, Inc.(b)

    16,099       218,785  

Krystal Biotech, Inc.(b)

    5,553       388,432  

Mirati Therapeutics, Inc.(b)

    8,661       1,270,482  

Monte Rosa Therapeutics, Inc.(b)

    28,575       583,502  

Natera, Inc.(b)

    29,436       2,749,028  

Neurocrine Biosciences, Inc.(b)

    22,637       1,927,993  

Omega Therapeutics, Inc.(b)

    20,226       229,161  

PMV Pharmaceuticals, Inc.(b)

    13,190       304,689  

Point Biopharma Global, Inc.(b)

    27,000       151,200  

Prothena Corp. PLC(b)

    21,064       1,040,562  

PTC Therapeutics, Inc.(b)

    4,745       188,993  

Regeneron Pharmaceuticals, Inc.(b)

    11,420       7,211,958  

Revolution Medicines, Inc.(b)

    10,535       265,166  

Sarepta Therapeutics, Inc.(b)

    20,473       1,843,594  

Seagen, Inc.(b)

    60,833       9,404,782  

Sigilon Therapeutics, Inc.(b)

    19,555       53,972  

Talaris Therapeutics, Inc.(b)

    23,939       366,027  

Taysha Gene Therapies, Inc.(b)

    30,936       360,404  

Tenaya Therapeutics, Inc.(b)(e)

    30,572       579,339  

TScan Therapeutics, Inc.(b)(e)

    29,940       134,730  

Twist Bioscience Corp.(b)

    3,765       291,373  

Vertex Pharmaceuticals, Inc.(b)

    40,578       8,910,929  
   

 

 

 
        108,373,898  

Diversified Financial Services(b) — 0.3%

   

Health Assurance Acquisition Corp., Class A

    90,235       881,596  
Security   Shares     Value  

Diversified Financial Services (continued)

   

Health Sciences Acquisitions Corp.

    13,696     $ 136,960  

Helix Acquisition Corp., Class A

    11,715       115,861  

MedTech Acquisition Corp., Class A(e)

    42,753       422,400  
   

 

 

 
      1,556,817  

Health Care Equipment & Supplies — 26.0%

   

Abbott Laboratories(c)

    259,002       36,451,942  

ABIOMED, Inc.(b)

    15,804       5,676,323  

Alcon, Inc.

    54,785       4,772,869  

Baxter International, Inc.

    97,397       8,360,558  

Boston Scientific Corp.(b)

    323,262       13,732,170  

Cooper Cos., Inc.

    4,645       1,945,976  

DENTSPLY SIRONA, Inc.

    58,495       3,263,436  

DexCom, Inc.(b)

    6,165       3,310,297  

Edwards Lifesciences Corp.(b)

    101,805       13,188,838  

Insulet Corp.(b)

    8,270       2,200,399  

Intuitive Surgical, Inc.(b)

    41,084       14,761,481  

Masimo Corp.(b)

    22,810       6,678,312  

Medtronic PLC

    108,346       11,208,394  

Nevro Corp.(b)

    29,803       2,416,129  

Novocure Ltd.(b)

    10,555       792,469  

ResMed, Inc.

    18,667       4,862,380  

Stryker Corp.

    55,876       14,942,360  

Tandem Diabetes Care, Inc.(b)

    10,265       1,545,088  

Teleflex, Inc.

    19,140       6,287,107  

Zimmer Biomet Holdings, Inc.

    49,807       6,327,481  
   

 

 

 
      162,724,009  

Health Care Providers & Services — 21.0%

   

Agiliti, Inc.(b)

    75,106       1,739,455  

Agilon Health, Inc.(b)

    41,052       1,108,404  

Amedisys, Inc.(b)

    19,757       3,198,263  

AmerisourceBergen Corp.

    31,740       4,217,929  

Anthem, Inc.(c)

    25,047       11,610,286  

Cano Health, Inc., (Acquired 09/02/21, Cost: $1,485,000)(a)

    148,500       1,323,135  

CareMax, Inc., (Acquired 07/22/21, Cost: $257,350)(a)

    25,735       197,645  

CareMax, Inc.(b)

    21,007       161,334  

Centene Corp.(b)

    59,997       4,943,753  

Cigna Corp.

    72,169       16,572,167  

Encompass Health Corp.

    40,167       2,621,298  

Guardant Health, Inc.(b)

    11,675       1,167,734  

HCA Healthcare, Inc.

    13,220       3,396,482  

Henry Schein, Inc.(b)

    42,335       3,282,233  

Humana, Inc.

    23,090       10,710,527  

LHC Group, Inc.(b)

    20,224       2,775,340  

McKesson Corp.

    8,030       1,996,017  

Oak Street Health, Inc.(b)

    54,700       1,812,758  

Quest Diagnostics, Inc.

    31,270       5,410,023  

UnitedHealth Group, Inc.(c)

    105,989       53,221,316  
   

 

 

 
        131,466,099  

Health Care Technology — 0.3%

   

Teladoc Health, Inc.(b)

    21,980       2,018,204  
   

 

 

 

Life Sciences Tools & Services — 12.8%

   

Agilent Technologies, Inc.

    13,960       2,228,714  

Avantor, Inc.(b)

    112,489       4,740,286  

Danaher Corp.

    40,485       13,319,970  

Icon PLC(b)

    14,645       4,535,556  

Illumina, Inc.(b)

    11,672       4,440,496  

IQVIA Holdings, Inc.(b)

    32,163       9,074,469  
 

 

 

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

    75  


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Health Sciences Trust (BME)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

 

Life Sciences Tools & Services (continued)

 

 

IsoPlexis Corp.(b)

    30,336     $ 278,788  

Nautilus Biotechnology, Inc.(b)

    16,560       85,781  

QIAGEN NV(b)

    33,390       1,855,816  

Rapid Micro Biosystems, Inc., Class A(b)

    20,561       218,769  

Thermo Fisher Scientific, Inc.(c)(f)

    55,228       36,850,331  

West Pharmaceutical Services, Inc.

    2,635       1,235,841  

Wuxi Biologics Cayman, Inc.(b)(d)

    115,500       1,367,392  
   

 

 

 
      80,232,209  

Pharmaceuticals — 20.1%

   

AstraZeneca PLC

    50,845       5,937,137  

Bristol-Myers Squibb Co.

    50,693       3,160,709  

Daiichi Sankyo Co. Ltd.

    123,300       3,138,160  

Eli Lilly & Co.

    78,768       21,757,297  

Hansoh Pharmaceutical Group Co. Ltd.(d)

    882,438       2,154,674  

Johnson & Johnson

    143,804       24,600,550  

Merck & Co., Inc.(c)

    160,732       12,318,500  

Pfizer, Inc.(c)

    431,476       25,478,658  

Roche Holding AG

    11,867       4,923,157  

Sanofi

    57,845       5,804,396  

Sanofi, ADR

    54,625       2,736,712  

Zoetis, Inc.

    56,189       13,711,802  
   

 

 

 
      125,721,752  
   

 

 

 

Total Common Stocks — 97.8%
(Cost: $379,946,423)

        612,092,988  
   

 

 

 
    

Benefical

Interest (000)

        

Other Interests(g)

   

Pharmaceuticals — 0.0%

   

Afferent Pharmaceuticals, Inc.(h)

  $ 190       260,519  
   

 

 

 

Total Other Interests — 0.0%
(Cost: $ — )

      260,519  
   

 

 

 
     Shares         

Preferred Securities

   

Preferred Stocks — 0.9%(a)(h)

   

Biotechnology — 0.2%

   

Affinvax, Inc., Series C, (Acquired 01/06/21, Cost: $199,992)

    6,331       219,939  

Cellarity, Inc., Series B, (Acquired 01/15/21, Cost: $265,002)

    44,167       238,502  

Goldfinch Bio, Inc., Series B, (Acquired 06/26/20, Cost: $149,465)

    126,665       172,264  

Laronde, Inc., Series B, (Acquired 07/28/21, Cost: $590,800)

    21,100       590,800  

Neurogene, Inc., Series B, (Acquired 12/14/20, Cost: $260,568)

    106,790       260,568  
   

 

 

 
      1,482,073  

Health Care Equipment & Supplies — 0.4%

 

 

Exo Imaging, Inc., Series C, (Acquired 06/24/21, Cost: $595,999)

    101,741       552,454  
Security   Shares     Value  

 

 

Health Care Equipment & Supplies (continued)

 

 

Nucleix Ltd., Series AA, (Acquired 03/25/21, Cost: $1,070,001)

    367,395     $ 1,146,272  

Quanta Dialysis Technologies Ltd., Series D, (Acquired 06/18/21, Cost: $515,759)

    4,243,029       482,425  

Swift Health Systems, Inc., Series D, (Acquired 08/27/21, Cost: $286,998)

    92,580       286,072  
   

 

 

 
      2,467,223  

Pharmaceuticals — 0.1%

   

Insitro, Inc., Series C, (Acquired 03/10/21, Cost: $560,000)

    30,616       503,939  
   

 

 

 

Software — 0.2%

   

Carbon Health Technologies, Inc., (Acquired 07/09/21, Cost: $907,000)

    907       902,565  
   

 

 

 

Total Preferred Stocks — 0.9%

 

    5,355,800  
   

 

 

 

Total Preferred Securities — 0.9%
(Cost: $5,401,584)

 

    5,355,800  
   

 

 

 

Warrants

   

Diversified Financial Services(b) — 0.0%

 

Health Assurance Acquisition Corp. (Expires 11/12/2025)

    22,558       19,079  

MedTech Acquisition Corp. (Expires 12/18/2025)

    14,251       7,425  
   

 

 

 
      26,504  

Health Care Providers & Services — 0.0%

 

CareMax, Inc. (Expires 06/08/2026)(b)

    4,201       5,923  
   

 

 

 

Pharmaceuticals — 0.0%

   

Nuvation Bio, Inc. (Expires 07/07/2027)(b)

    4,050       7,655  
   

 

 

 

Total Warrants — 0.0%
(Cost: $116,149)

      40,082  
   

 

 

 

Total Long-Term Investments — 98.7%
(Cost: $385,464,156)

 

      617,749,389  
   

 

 

 

Short-Term Securities

   

Money Market Funds — 4.4%

   

BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.00%(i)(j)

    27,581,316       27,581,316  

SL Liquidity Series, LLC, Money Market Series, 0.15%(i)(j)(k)

    211,468       211,489  
   

 

 

 

Total Short-Term Securities — 4.4%
(Cost: $27,792,813)

      27,792,805  
   

 

 

 

Total Investments Before Options Written — 103.1%
(Cost: $413,256,969)

 

    645,542,194  
   

 

 

 

Options Written — (1.5)%
(Premiums Received: $(5,886,890))

 

    (9,621,857
   

 

 

 

Total Investments, Net of Options Written — 101.6%
(Cost: $407,370,079)

 

    635,920,337  

Liabilities in Excess of Other Assets — (1.6)%

 

    (10,145,526
   

 

 

 

Net Assets — 100.0%

    $ 625,774,811  
   

 

 

 

 

(a)

Restricted security as to resale, excluding 144A securities. The Trust held restricted securities with a current value of $8,455,865, representing 1.4% of its net assets as of period end, and an original cost of $7,958,936.

(b)

Non-income producing security.

 

 

 

76  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Health Sciences Trust (BME)

 

(c)

All or a portion of the security has been pledged and/or segregated as collateral in connection with outstanding exchange-traded options written.

(d)

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.

(e)

All or a portion of this security is on loan.

(f)

All or a portion of the security has been pledged as collateral in connection with outstanding OTC derivatives.

(g)

Other interests represent beneficial interests in liquidation trusts and other reorganization or private entities.

(h)

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(i)

Affiliate of the Trust.

(j)

Annualized 7-day yield as of period end.

(k)

All or a portion of this security was purchased with the cash collateral from loaned securities.

 

For Trust compliance purposes, the Trust’s industry classifications refer to one or more of the industry 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 industry sub-classifications for reporting ease.

Affiliates

Investments in issuers considered to be affiliate(s) of the Trust during the year 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
12/31/20
   

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

  $  13,774,637     $  13,806,679 (a)    $     $     $     $ 27,581,316       27,581,316     $ 1,532     $  

SL Liquidity Series, LLC, Money Market Series

    102,701       108,863 (a)            (67     (8     211,489       211,468       21,952 (b)       
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ (67   $ (8   $  27,792,805       $  23,484     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a)

Represents net amount purchased (sold).

 
  (b)

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Derivative Financial Instruments Outstanding as of Period End

Exchange-Traded Options Written

 

           
Description    Number of
Contracts
       Expiration
Date
       Exercise Price        Notional
Amount (000)
       Value  
Call                                                   

Agios Pharmaceuticals, Inc.

     34          01/06/22        USD     42.99        USD     112        $  

Amgen, Inc.

     59          01/07/22        USD     210.00        USD     1,327          (88,942

Anthem, Inc.

     26          01/07/22        USD     415.00        USD     1,205          (126,750

Boston Scientific Corp.

     215          01/07/22        USD     43.00        USD     913          (7,740

Cigna Corp.

     80          01/07/22        USD     215.00        USD     1,837          (122,000

Humana, Inc.

     24          01/07/22        USD     450.00        USD     1,113          (36,480

Sanofi, ADR

     109          01/07/22        USD     51.04        USD     546          (2,386

Tandem Diabetes Care, Inc.

     9          01/07/22        USD     140.00        USD     135          (10,485

Teladoc Health, Inc.

     12          01/07/22        USD     115.00        USD     110          (228

Medtronic PLC

     80          01/10/22        USD     123.00        USD     828           

Alnylam Pharmaceuticals, Inc.

     57          01/11/22        USD     191.00        USD     967          (6,980

Abbott Laboratories

     428          01/14/22        USD     136.00        USD     6,024          (236,470

Amgen, Inc.

     54          01/14/22        USD     220.00        USD     1,215          (35,640

Anthem, Inc.

     14          01/14/22        USD     455.00        USD     649          (17,850

Danaher Corp.

     110          01/14/22        USD     330.00        USD     3,619          (62,150

Edwards Lifesciences Corp.

     224          01/14/22        USD     125.00        USD     2,902          (126,560

Eli Lilly & Co.

     180          01/14/22        USD     255.00        USD     4,972          (405,900

Humana, Inc.

     10          01/14/22        USD     470.00        USD     464          (4,575

Illumina, Inc.

     43          01/14/22        USD     370.00        USD     1,636          (89,010

Intuitive Surgical, Inc.

     27          01/14/22        USD     370.00        USD     970          (19,035

Pfizer, Inc.

     255          01/14/22        USD     54.00        USD     1,506          (133,875

Tandem Diabetes Care, Inc.

     12          01/14/22        USD     140.00        USD     181          (14,100

UnitedHealth Group, Inc.

     198          01/14/22        USD     450.00        USD     9,942          (1,050,885

Vertex Pharmaceuticals, Inc.

     50          01/14/22        USD     215.00        USD     1,098          (41,750

Abbott Laboratories

     144          01/21/22        USD     130.00        USD     2,027          (162,360

AbbVie, Inc.

     123          01/21/22        USD     120.00        USD     1,665          (193,110

 

 

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

  77


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Health Sciences Trust (BME)

 

Exchange-Traded Options Written (continued)

 

           
Description    Number of
Contracts
       Expiration
Date
       Exercise Price        Notional
Amount (000)
       Value  
Call (continued)                                                   

ABIOMED, Inc.

     29          01/21/22        USD         340.00        USD         1,042        $ (76,415

Agilent Technologies, Inc.

     53          01/21/22        USD     170.00        USD     846          (1,988

Agilon Health, Inc.

     78          01/21/22        USD     27.06        USD     211          (11,632

Agios Pharmaceuticals, Inc.

     22          01/21/22        USD     35.00        USD     72          (2,035

Alcon, Inc.

     131          01/21/22        USD     87.50        USD     1,141          (21,942

Alnylam Pharmaceuticals, Inc.

     36          01/21/22        USD     185.00        USD     610          (13,680

Amedisys, Inc.

     75          01/21/22        USD     175.00        USD     1,214          (11,625

Amgen, Inc.

     54          01/21/22        USD     215.00        USD     1,215          (59,670

Anthem, Inc.

     28          01/21/22        USD     450.00        USD     1,298          (49,840

Apellis Pharmaceuticals, Inc.

     58          01/21/22        USD     45.00        USD     274          (23,200

Arcutis Biotherapeutics, Inc.

     40          01/21/22        USD     20.00        USD     83          (7,500

Argenx SE, ADR

     12          01/21/22        USD     340.00        USD     420          (23,940

Avantor, Inc.

     182          01/21/22        USD     42.50        USD     767          (19,110

Avantor, Inc.

     92          01/21/22        USD     40.00        USD     388          (23,690

Baxter International, Inc.

     200          01/21/22        USD     80.00        USD     1,717          (125,000

Biogen, Inc.

     140          01/21/22        USD     250.00        USD     3,359          (93,100

BioMarin Pharmaceutical, Inc.

     24          01/21/22        USD     90.00        USD     212          (6,480

Blueprint Medicines Corp.

     23          01/21/22        USD     105.00        USD     246          (13,225

Boston Scientific Corp.

     100          01/21/22        USD     45.00        USD     425          (1,950

Boston Scientific Corp.

     332          01/21/22        USD     42.00        USD     1,410          (39,674

Bristol-Myers Squibb Co.

     72          01/21/22        USD     60.00        USD     449          (17,928

Centene Corp.

     76          01/21/22        USD     75.00        USD     626          (58,900

Cerevel Therapeutics Holdings, Inc.

     31          01/21/22        USD     45.00        USD     101          (2,325

Cigna Corp.

     124          01/21/22        USD     220.00        USD     2,847          (141,360

Cooper Cos., Inc.

     13          01/21/22        USD     430.00        USD     545          (7,020

Danaher Corp.

     71          01/21/22        USD     320.00        USD     2,336          (92,655

DENTSPLY SIRONA, Inc.

     135          01/21/22        USD     57.50        USD     753          (8,775

DENTSPLY SIRONA, Inc.

     65          01/21/22        USD     55.00        USD     363          (11,862

DexCom, Inc.

     21          01/21/22        USD     660.00        USD     1,128          (4,200

Edwards Lifesciences Corp.

     133          01/21/22        USD     120.00        USD     1,723          (141,645

Enanta Pharmaceuticals, Inc.

     6          01/21/22        USD     90.00        USD     45          (1,560

Encompass Health Corp.

     72          01/21/22        USD     65.00        USD     470          (15,480

Gilead Sciences, Inc.

     254          01/21/22        USD     70.00        USD     1,844          (79,375

Guardant Health, Inc.

     13          01/21/22        USD     115.00        USD     130          (2,178

Guardant Health, Inc.

     9          01/21/22        USD     120.00        USD     90          (720

Henry Schein, Inc.

     155          01/21/22        USD     82.50        USD     1,202          (8,525

Horizon Therapeutics PLC

     73          01/21/22        USD     115.00        USD     787          (8,760

Humana, Inc.

     53          01/21/22        USD     450.00        USD     2,458          (99,640

Icon PLC

     55          01/21/22        USD     290.00        USD     1,703          (124,850

Incyte Corp.

     44          01/21/22        USD     67.50        USD     323          (32,120

Insulet Corp.

     7          01/21/22        USD     310.00        USD     186          (700

Intuitive Surgical, Inc.

     57          01/21/22        USD     360.00        USD     2,048          (70,395

Intuitive Surgical, Inc.

     27          01/21/22        USD     350.00        USD     970          (53,595

IQVIA Holdings, Inc.

     75          01/21/22        USD     270.00        USD     2,116          (105,000

Johnson & Johnson

     270          01/21/22        USD     165.00        USD     4,619          (182,250

Kodiak Sciences, Inc.

     25          01/21/22        USD     110.00        USD     212          (3,875

Masimo Corp.

     28          01/21/22        USD     295.00        USD     820          (21,700

McKesson Corp.

     6          01/21/22        USD     230.00        USD     149          (11,370

Medtronic PLC

     108          01/21/22        USD     125.00        USD     1,117          (540

Merck & Co., Inc.

     335          01/21/22        USD     87.50        USD     2,567          (1,675

Mirati Therapeutics, Inc.

     4          01/21/22        USD     160.00        USD     59          (820

Natera, Inc.

     24          01/21/22        USD     120.00        USD     224          (2,760

Natera, Inc.

     7          01/21/22        USD     105.00        USD     65          (718

Neurocrine Biosciences, Inc.

     83          01/21/22        USD     95.00        USD     707          (5,188

Nevro Corp.

     82          01/21/22        USD     100.00        USD     665          (2,665

Oak Street Health, Inc.

     103          01/21/22        USD     40.00        USD     341          (3,605

Pfizer, Inc.

     400          01/21/22        USD     50.00        USD     2,362          (367,000

Prothena Corp. PLC

     40          01/21/22        USD     55.00        USD     198          (7,300

PTC Therapeutics, Inc.

     18          01/21/22        USD     40.00        USD     72          (5,535

QIAGEN NV

     17          01/21/22        USD     60.00        USD     94          (1,190

Quest Diagnostics, Inc.

     57          01/21/22        USD     155.00        USD     986          (103,455

Regeneron Pharmaceuticals, Inc.

     21          01/21/22        USD     650.00        USD     1,326          (17,325

 

 

78  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Health Sciences Trust (BME)

 

Exchange-Traded Options Written (continued)

 

           
Description    Number of
Contracts
       Expiration
Date
       Exercise Price        Notional
Amount (000)
       Value  
Call (continued)                                                   

ResMed, Inc.

     35          01/21/22        USD         270.00        USD     912        $ (7,175

Revolution Medicines, Inc.

     20          01/21/22        USD     35.00        USD     50          (1,000

Revolution Medicines, Inc.

     10          01/21/22        USD     30.00        USD     25          (375

Sanofi, ADR

     98          01/21/22        USD     50.00        USD     491          (10,045

Sarepta Therapeutics, Inc.

     17          01/21/22        USD     100.00        USD     153          (5,483

Seagen, Inc.

     115          01/21/22        USD     160.00        USD         1,778          (37,950

Stryker Corp.

     110          01/21/22        USD     270.00        USD     2,942          (45,650

Teladoc Health, Inc.

     62          01/21/22        USD     150.00        USD     569          (806

Teleflex, Inc.

     34          01/21/22        USD     370.00        USD     1,117          (16,320

Thermo Fisher Scientific, Inc.

     46          01/21/22        USD     650.00        USD     3,069          (122,820

UnitedHealth Group, Inc.

     59          01/21/22        USD     460.00        USD     2,963          (263,582

UnitedHealth Group, Inc.

     67          01/21/22        USD     490.00        USD     3,364          (131,320

Vertex Pharmaceuticals, Inc.

     49          01/21/22        USD     220.00        USD     1,076          (29,645

West Pharmaceutical Services, Inc.

     10          01/21/22        USD     490.00        USD     469          (3,925

Zimmer Biomet Holdings, Inc.

     103          01/21/22        USD     140.00        USD     1,309          (3,090

Zoetis, Inc.

     207          01/21/22        USD     220.00        USD     5,051          (501,975

Abbott Laboratories

     200          01/28/22        USD     139.00        USD     2,815          (89,000

AmerisourceBergen Corp.

     94          01/28/22        USD     125.00        USD     1,249          (86,950

Amgen, Inc.

     70          01/28/22        USD     225.00        USD     1,575          (33,320

Boston Scientific Corp.

     375          01/28/22        USD     42.00        USD     1,593          (70,687

Bristol-Myers Squibb Co.

     114          01/28/22        USD     64.00        USD     711          (5,814

Centene Corp.

     70          01/28/22        USD     85.00        USD     577          (13,650

Eli Lilly & Co.

     110          01/28/22        USD     285.00        USD     3,038          (51,700

Intuitive Surgical, Inc.

     40          01/28/22        USD     340.00        USD     1,437          (108,200

Johnson & Johnson

     260          01/28/22        USD     175.00        USD     4,448          (27,690

McKesson Corp.

     6          01/28/22        USD     235.00        USD     149          (9,510

Medtronic PLC

     115          01/28/22        USD     117.00        USD     1,190          (8,625

Merck & Co., Inc.

     137          01/28/22        USD     75.00        USD     1,050          (36,373

Pfizer, Inc.

     480          01/28/22        USD     55.00        USD     2,834          (226,800

Tandem Diabetes Care, Inc.

     13          01/28/22        USD     140.00        USD     196          (16,965

Teladoc Health, Inc.

     9          01/28/22        USD     105.00        USD     83          (1,832

UnitedHealth Group, Inc.

     67          01/28/22        USD     485.00        USD     3,364          (163,647

Vertex Pharmaceuticals, Inc.

     50          01/28/22        USD     220.00        USD     1,098          (44,000

Abbott Laboratories

     187          02/18/22        USD     130.00        USD     2,632          (223,465

AbbVie, Inc.

     94          02/18/22        USD     130.00        USD     1,273          (68,620

Agilon Health, Inc.

     35          02/18/22        USD     25.00        USD     95          (10,938

Alcon, Inc.

     71          02/18/22        USD     85.00        USD     619          (37,275

Alnylam Pharmaceuticals, Inc.

     18          02/18/22        USD     220.00        USD     305          (4,140

Argenx SE, ADR

     15          02/18/22        USD     340.00        USD     525          (40,125

Avantor, Inc.

     177          02/18/22        USD     42.50        USD     746          (35,400

Avantor, Inc.

     91          02/18/22        USD     40.00        USD     383          (31,395

Baxter International, Inc.

     159          02/18/22        USD     87.50        USD     1,365          (36,172

BioMarin Pharmaceutical, Inc.

     80          02/18/22        USD     90.00        USD     707          (36,000

Blueprint Medicines Corp.

     23          02/18/22        USD     110.00        USD     246          (12,420

Centene Corp.

     75          02/18/22        USD     85.00        USD     618          (20,812

Cerevel Therapeutics Holdings, Inc.

     32          02/18/22        USD     45.00        USD     104          (2,000

Cigna Corp.

     70          02/18/22        USD     230.00        USD     1,607          (61,250

Enanta Pharmaceuticals, Inc.

     6          02/18/22        USD     90.00        USD     45          (2,010

Encompass Health Corp.

     80          02/18/22        USD     69.00        USD     522          (16,513

Gilead Sciences, Inc.

     254          02/18/22        USD     70.00        USD     1,844          (107,950

Guardant Health, Inc.

     22          02/18/22        USD     115.00        USD     220          (7,755

Incyte Corp.

     45          02/18/22        USD     80.00        USD     330          (10,238

IQVIA Holdings, Inc.

     43          02/18/22        USD     270.00        USD     1,213          (73,100

LHC Group, Inc.

     38          02/18/22        USD     145.00        USD     521          (18,050

Masimo Corp.

     28          02/18/22        USD     305.00        USD     820          (24,500

McKesson Corp.

     11          02/18/22        USD     230.00        USD     273          (24,310

Merck & Co., Inc.

     137          02/18/22        USD     77.50        USD     1,050          (29,249

Natera, Inc.

     13          02/18/22        USD     110.00        USD     121          (3,705

Pfizer, Inc.

     195          02/18/22        USD     51.20        USD     1,151          (161,047

Pfizer, Inc.

     833          02/18/22        USD     65.00        USD     4,919          (86,632

Prothena Corp. PLC

     40          02/18/22        USD     60.00        USD     198          (10,000

QIAGEN NV

     109          02/18/22        USD     60.00        USD     606          (11,718

 

 

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

  79


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Health Sciences Trust (BME)

 

Exchange-Traded Options Written (continued)

 

             
Description        Number of
Contracts
       Expiration
Date
       Exercise Price        Notional
Amount (000)
       Value  
Call (continued)                                                      

Quest Diagnostics, Inc.

      73          02/18/22        USD         175.00        USD         1,263        $ (37,595

Regeneron Pharmaceuticals, Inc.

      22          02/18/22        USD     680.00        USD     1,389          (20,020

Revolution Medicines, Inc.

      10          02/18/22        USD     30.00        USD     25          (975

Sarepta Therapeutics, Inc.

      50          02/18/22        USD     105.00        USD     450          (30,750

Seagen, Inc.

      115          02/18/22        USD     165.00        USD     1,778          (60,950

Stryker Corp.

      61          02/18/22        USD     260.00        USD     1,631          (82,960

Stryker Corp.

      21          02/18/22        USD     280.00        USD     562          (8,348

Teleflex, Inc.

      38          02/18/22        USD     340.00        USD     1,248          (43,700

Thermo Fisher Scientific, Inc.

      43          02/18/22        USD     700.00        USD     2,869          (52,245

Twist Bioscience Corp.

      7          02/18/22        USD     105.00        USD     54          (1,138

Zimmer Biomet Holdings, Inc.

      80          02/18/22        USD     125.00        USD     1,016          (53,600

ABIOMED, Inc.

      29          03/18/22        USD     350.00        USD     1,042          (86,420

Insulet Corp.

      23          03/18/22        USD     310.00        USD     612          (19,090
                           

 

 

 
                            $  (9,330,000
                           

 

 

 

OTC Options Written

 

             
Description    Counterparty   Number of
Contracts
         Expiration
Date
  Exercise Price  

Notional 

Amount (000)

    Value  
Call                                              

Daiichi Sankyo Co. Ltd.

   UBS AG     23,400        01/04/22     JPY       2,879.93     JPY       68,445     $ (16,161

Masimo Corp.

   BNP Paribas SA     2,800        01/04/22     USD     310.04     USD       820       (273

Sanofi

   Goldman Sachs International     6,800        01/04/22     EUR     91.24     EUR       602       (237

Genmab A/S

   Barclays Bank PLC     2,800        01/12/22     USD     40.86     USD       111       (2,376

Astrazeneca PLC

   UBS AG     18,300        01/13/22     GBP     86.80     GBP       1,588       (24,709

Sanofi

   Goldman Sachs International     7,100        01/13/22     EUR     89.59     EUR       629       (4,211

Hansoh Pharmaceutical Group Co. Ltd.

   JPMorgan Chase Bank N.A.     156,000        01/25/22     HKD     16.94     HKD       2,964       (45,994

Roche Holding AG

   Barclays Bank PLC     3,200        01/25/22     CHF     366.54     CHF       1,213       (51,492

Genmab A/S, ADR

   BNP Paribas SA     5,000        01/27/22     USD     41.14     USD       198       (7,183

ResMed, Inc.

   Citibank N.A.     3,500        01/27/22     USD     265.26     USD       912       (14,467

Daiichi Sankyo Co. Ltd.

   JPMorgan Chase Bank N.A.     23,400        02/01/22     JPY     2,888.73     JPY       68,445       (28,706

Roche Holding AG

   Morgan Stanley & Co. International PLC     1,100        02/01/22     CHF     378.49     CHF       417       (9,741

Alnylam Pharmaceuticals, Inc.

   Citibank N.A.     1,800        02/02/22     USD     202.61     USD       305       (5,249

Sanofi

   Goldman Sachs International     8,000        02/03/22     EUR     88.27     EUR       709       (16,091

Hansoh Pharmaceutical Group Co. Ltd.

   UBS AG     112,000        02/04/22     HKD     19.11     HKD       2,128       (15,317

Genmab A/S

   Morgan Stanley & Co. International PLC     2,000        02/10/22     DKK     2,599.95     DKK       5,260       (40,238

Hansoh Pharmaceutical Group Co. Ltd.

   Goldman Sachs International     66,000        02/15/22     HKD     19.37     HKD       1,254       (9,412
                   

 

 

 
                    $ (291,857
                   

 

 

 

Balances Reported in the Statements of Assets and Liabilities for Options Written

 

           
Description   

Swap

Premiums
Paid

     Swap
Premiums
Received
     Unrealized
Appreciation
     Unrealized
Depreciation
     Value  

Options Written

   $ N/A      $ N/A      $ 1,051,465      $ (4,786,432    $  (9,621,857

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statements 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

                    

Options written

                    

Options written at value

   $      $      $  9,621,857      $      $      $      $  9,621,857  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

 

80  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Health Sciences Trust (BME)

 

For the period ended December 31, 2021, the effect of derivative financial instruments in the Statements 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:

                    

Options purchased(a)

   $      $      $ (267,045    $      $      $      $ (267,045

Options written

                   (7,325,999                           (7,325,999
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $      $      $ (7,593,044    $      $      $      $ (7,593,044
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                    

Options written

   $      $      $  (2,422,221    $      $      $      $  (2,422,221
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)

Options purchased are included in net realized gain (loss) from investments — unaffiliated.

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

   

Options:

  

Average value of option contracts purchased

   $ 50,094  

Average value of option contracts written

   $ 6,150,706  

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

Derivative Financial Instruments — Offsetting as of Period End

The Trust’s derivative assets and liabilities (by type) were as follows:

 

     
      Assets      Liabilities  

Derivative Financial Instruments

     

Options

   $      $ 9,621,857  
  

 

 

    

 

 

 

Total derivative assets and liabilities in the Statements of Assets and Liabilities

            9,621,857  
  

 

 

    

 

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

            (9,330,000
  

 

 

    

 

 

 

Total derivative assets and liabilities subject to an MNA

   $      $ 291,857  
  

 

 

    

 

 

 

The following table presents the Trust’s derivative liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral pledged by the Trust:

 

           

Counterparty

    



Derivative
Liabilities
Subject to
an MNA by
Counterparty
 
 
 
 
 
   

  Derivatives
Available
for Offset
 
 
 
   

  Non-Cash
Collateral
Pledged
 
 
(a) 
   

Cash
  Collateral
Pledged
 
 
 
   

Net Amount
of Derivative
Liabilities
 
 
(b) 

Barclays Bank PLC

   $ 53,868     $     $     $     $ 53,868  

BNP Paribas SA

     7,456                         7,456  

Citibank N.A.

     19,716                         19,716  

Goldman Sachs International

     29,951                         29,951  

JPMorgan Chase Bank N.A.

     74,700             (74,700            

Morgan Stanley & Co. International PLC

     49,979                         49,979  

UBS AG

     56,187                         56,187  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 291,857     $     $ (74,700   $     $ 217,157  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  (a)

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 
  (b)

Net amount represents the net amount payable due to counterparty in the event of default. Net amount may be offset further by the options written receivable/payable on the Statements of Assets and Liabilities.

 

 

 

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

  81


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Health Sciences Trust (BME)

 

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

                 

Common Stocks

                 

Biotechnology

   $ 104,442,617        $ 3,931,281        $        $ 108,373,898  

Diversified Financial Services

     1,556,817                            1,556,817  

Health Care Equipment & Supplies

     162,724,009                            162,724,009  

Health Care Providers & Services

     129,945,319          1,520,780                   131,466,099  

Health Care Technology

     2,018,204                            2,018,204  

Life Sciences Tools & Services

     78,864,817          1,367,392                   80,232,209  

Pharmaceuticals

     103,764,228          21,957,524                   125,721,752  

Other Interests

                       260,519          260,519  

Preferred Securities

                 

Preferred Stocks

                       5,355,800          5,355,800  

Warrants

     40,082                            40,082  

Short-Term Securities

                 

Money Market Funds

     27,581,316                            27,581,316  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $  610,937,409        $   28,776,977        $   5,616,319          645,330,705  
  

 

 

      

 

 

      

 

 

      

 

 

 

Investments Valued at NAV(a)

                    211,489  
                 

 

 

 
                  $  645,542,194  
                 

 

 

 

Derivative Financial Instruments(b)

                 

Liabilities

                 

Equity Contracts

   $ (9,131,442      $ (490,415      $        $ (9,621,857
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Certain investments of the Trust were fair valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

 
  (b)

Derivative financial instruments are options written. Options written are shown at value.

 

A reconciliation of Level 3 financial instruments is presented when the Trust had a significant amount of Level 3 investments at the beginning and/or end of the year in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

 

 

 
    

Common

Stocks

    

Other

Interests

    

Preferred

Stocks

     Total  

 

 

Assets

           

Opening balance, as of December 31, 2020

   $ 2,699,612      $ 254,814      $ 1,417,773      $ 4,372,199  

Transfers into Level 3

                           

Transfers out of Level 3

     (715,869                    (715,869

Other(a)

     348,001               (348,001       

Accrued discounts/premiums

                           

Net realized gain (loss)

     1,737,253                      1,737,253  

Net change in unrealized appreciation (depreciation)(b)(c)

     (1,345,342      5,705        (59,725      (1,399,362

Purchases

                   5,095,778        5,095,778  

Sales

     (2,723,655             (750,025      (3,473,680
  

 

 

    

 

 

    

 

 

    

 

 

 

Closing balance, as of December 31, 2021

   $      $ 260,519      $ 5,355,800      $ 5,616,319  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net change in unrealized appreciation (depreciation) on investments still held at December 31, 2021(c)

   $      $ 5,705      $ (59,717    $ (54,012
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)

Certain Level 3 investments were re-classified between Common Stocks and Preferred Stocks.

 
  (b)

Included in the related net change in unrealized appreciation (depreciation) in the Statements of Operations.

 
  (c)

Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at December 31, 2021 is generally due to investments no longer held or categorized as Level 3 at period end.

 

See notes to financial statements.

 

 

82  

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


Schedule of Investments

December 31, 2021

  

BlackRock Health Sciences Trust II (BMEZ)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   

Biotechnology — 29.6%

   

Abbisko Cayman Ltd., (Acquired 10/29/21, Cost: $14,841,983)(a)

    10,378,250     $ 11,765,232  

Acumen Pharmaceuticals, Inc., (Acquired 11/20/20, Cost: $5,419,999)(a)

    1,426,503       9,643,160  

Agios Pharmaceuticals, Inc.(b)(c)

    417,428       13,720,859  

Akouos, Inc.(c)

    287,850       2,446,725  

Alnylam Pharmaceuticals, Inc.(b)(c)

    88,342       14,981,036  

Ambrx Biopharma, Inc., ADR(c)

    1,265,827       11,430,418  

Annexon, Inc.(c)

    237,835       2,732,724  

Applied Molecular Transport, Inc.(c)

    99,096       1,385,362  

Arcus Biosciences, Inc.(c)

    111,190       4,499,859  

Arcutis Biotherapeutics, Inc.(c)

    511,332       10,605,026  

Argenx SE, ADR(c)

    114,339       40,040,374  

Arrowhead Pharmaceuticals, Inc.(c)

    81,025       5,371,958  

Bicycle Therapeutics PLC(c)

    58,600       3,566,982  

BioAtla, Inc.(c)

    138,461       2,717,989  

Biogen, Inc.(c)

    71,495       17,153,080  

Biohaven Pharmaceutical Holding Co. Ltd.(c)

    198,410       27,342,882  

BioMarin Pharmaceutical, Inc.(c)

    148,083       13,083,133  

Biomea Fusion, Inc.(c)

    521,404       3,884,460  

Blueprint Medicines Corp.(c)

    148,890       15,947,608  

C4 Therapeutics, Inc.(c)

    201,293       6,481,635  

Cerevel Therapeutics Holdings, Inc.(c)

    266,656       8,644,988  

Connect Biopharma Holdings Ltd.(c)

    1,125,262       5,795,099  

Decibel Therapeutics, Inc.

    636,792       2,961,083  

Decibel Therapeutics, Inc.(c)

    156,735       728,818  

Enanta Pharmaceuticals, Inc.(c)

    67,443       5,043,388  

Everest Medicines Ltd., (Acquired 05/29/20, Cost: $11,209,200)(a)

    3,113,667           13,896,110  

Everest Medicines Ltd.(c)(d)(e)

    433,000       1,935,447  

Exact Sciences Corp.(c)

    173,565       13,508,564  

Fate Therapeutics, Inc.(c)

    54,634       3,196,635  

Genetron Holdings Ltd., ADR(c)

    214,441       1,308,090  

Genmab A/S(c)

    95,917       38,285,558  

Genmab A/S, ADR(c)

    271,546       10,742,360  

Gracell Biotechnologies, Inc., ADR(c)

    340,846       2,058,710  

Horizon Therapeutics PLC(c)

    221,999       23,922,612  

Icosavax, Inc.(c)(d)

    530,147       12,129,763  

Ideaya Biosciences, Inc.(c)

    195,293       4,616,727  

Imago Biosciences, Inc., (Acquired 11/12/20, Cost: $10,000,009)(a)

    985,657       23,292,028  

Imago Biosciences, Inc.(c)

    135,209       3,205,805  

Immunocore Holdings PLC, ADR(c)

    59,868       2,049,880  

Immunocore Ltd.

    321,900       11,021,856  

Insmed, Inc.(c)

    125,556       3,420,145  

Iovance Biotherapeutics, Inc.(c)

    226,055       4,315,390  

Karuna Therapeutics, Inc.(c)

    32,205       4,218,855  

Keros Therapeutics, Inc.(c)

    200,607       11,737,516  

Kinnate Biopharma, Inc.(c)

    295,538       5,236,933  

Kodiak Sciences, Inc.(c)

    87,252       7,397,225  

Kronos Bio, Inc.(c)

    284,272       3,863,256  

Krystal Biotech, Inc.(c)

    86,357       6,040,672  

Kymera Therapeutics, Inc.(b)(c)

    716,241       45,474,141  

LianBio, ADR(c)

    180,400       1,111,264  

LianBio, Series A, (Acquired 10/28/20, Cost: $5,960,632)(a)

    615,188       3,663,240  

Merus NV(c)

    115,155       3,661,929  

Mirati Therapeutics, Inc.(b)(c)

    94,751       13,899,024  
Security   Shares     Value  
Biotechnology (continued)            

Monte Rosa Therapeutics, Inc., (Acquired 03/11/21, Cost: $7,999,998)(a)

    764,573     $ 15,612,581  

Morphic Holding, Inc.(c)

    94,902       4,496,457  

Natera, Inc.(c)

    373,322       34,864,542  

Neurocrine Biosciences, Inc.(c)

    231,560       19,721,965  

Omega Therapeutics, Inc., Series C, (Acquired 03/04/21, Cost: $7,999,998)(a)(f)

    705,882       7,939,882  

PMV Pharmaceuticals, Inc.(c)

    252,345       5,829,170  

Point Biopharma Global, Inc.(c)

    394,898       2,211,429  

Prometheus Biosciences, Inc.(c)

    239,432       9,467,141  

Prothena Corp. PLC(c)

    343,011       16,944,743  

Rapid Micro Biosystems, Inc., Series D, (Acquired 03/09/21, Cost: $9,896,004)(a)

    549,778       5,831,764  

Rapt Therapeutics, Inc.(c)

    178,545       6,557,958  

Revolution Medicines, Inc.(c)

    280,503       7,060,261  

Rubius Therapeutics, Inc.(c)

    120,890       1,170,215  

Sarepta Therapeutics, Inc.(c)

    327,749       29,513,797  

Seagen, Inc.(b)(c)(g)

    439,030       67,874,038  

Sigilon Therapeutics, Inc.(c)

    564,538       1,558,125  

Talaris Therapeutics, Inc.(c)

    748,614       11,446,308  

Tango Therapeutics, Inc., (Acquired 08/10/21, Cost: $5,000,000)(a)

    500,000       5,470,000  

Tango Therapeutics, Inc.(c)(d)

    167,744       1,835,119  

Taysha Gene Therapies, Inc.(c)

    435,201       5,070,092  

Tenaya Therapeutics, Inc.(c)

    165,729       3,140,565  

Twist Bioscience Corp.(c)

    204,550       15,830,124  

United Therapeutics Corp.(b)(c)

    55,704       12,036,520  

Vertex Pharmaceuticals, Inc.(c)

    235,670       51,753,132  

Zentalis Pharmaceuticals, Inc.(c)

    221,186       18,592,895  
   

 

 

 
      883,012,436  
Diversified Financial Services(c) — 1.7%  

DA32 Life Science Tech Acquisition Corp., Class A(f)

    1,496,819       14,683,795  

Eucrates Biomedical Acquisition Corp.(f)

    897,657       8,761,132  

Health Assurance Acquisition Corp., Class A

    1,361,273       13,299,637  

Health Sciences Acquisitions Corp.

    233,344       2,333,440  

Helix Acquisition Corp., Class A

    216,150       2,137,724  

MedTech Acquisition Corp., Class A(d)

    917,284       9,062,766  
   

 

 

 
      50,278,494  
Electronic Equipment, Instruments & Components — 0.2%  

908 Devices, Inc.(c)

    274,084       7,090,553  
   

 

 

 
Health Care Equipment & Supplies — 28.1%            

ABIOMED, Inc.(b)(c)

    98,637       35,427,092  

Alcon, Inc.

    736,189       64,136,786  

ConvaTec Group PLC(e)

    4,411,215       11,523,339  

Cooper Cos., Inc.

    73,600       30,833,984  

Demant A/S(c)

    466,495       23,887,409  

DexCom, Inc.(b)(c)

    56,427       30,298,478  

Edwards Lifesciences Corp.(c)

    408,458       52,915,734  

Globus Medical, Inc., Class A(c)

    104,070       7,513,854  

GN Store Nord A/S

    192,531       12,080,502  

Hologic, Inc.(b)(c)

    490,210       37,530,478  

Insulet Corp.(c)

    148,550       39,524,699  

Intuitive Surgical, Inc.(c)(g)

    133,373       47,920,919  

Masimo Corp.(c)(g)

    208,281       60,980,511  

Nevro Corp.(b)(c)

    445,125       36,086,284  

Novocure Ltd.(c)

    127,530       9,574,952  

Nyxoah SA(c)(d)

    648,041       14,386,510  

Penumbra, Inc.(c)

    77,878       22,375,907  

Pulmonx Corp.(c)

    137,876       4,421,683  

ResMed, Inc.(b)

    196,756       51,251,003  
 

 

 

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

    83  


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Health Sciences Trust II (BMEZ)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Health Care Equipment & Supplies (continued)  

SI-BONE, Inc.(c)

    204,910     $ 4,551,051  

Silk Road Medical, Inc.(c)

    205,132       8,740,675  

Sonova Holding AG, Registered Shares

    77,355       30,230,083  

STERIS PLC

    131,745       32,068,050  

Straumann Holding AG, Registered Shares

    8,621       18,229,888  

Stryker Corp.

    86,215       23,055,615  

Tandem Diabetes Care, Inc.(b)(c)

    306,030       46,063,636  

Teleflex, Inc.

    136,332       44,782,335  

Zimmer Biomet Holdings, Inc.

    291,793       37,069,383  
   

 

 

 
          837,460,840  
Health Care Providers & Services — 13.6%  

Addus HomeCare Corp.(c)

    42,050       3,932,095  

Agilon Health, Inc.(c)

    282,683       7,632,441  

Alignment Healthcare, Inc.(c)

    339,512       4,773,539  

Amedisys, Inc.(c)

    137,176       22,206,051  

AmerisourceBergen Corp.

    174,010       23,124,189  

Amplifon SpA

    610,945       32,873,820  

Cano Health, Inc., (Acquired 09/02/21, Cost: $21,741,890)(a)

    2,174,189       19,372,024  

CareMax, Inc., (Acquired 07/22/21, Cost: $14,077,000)(a)

    1,407,700       10,811,136  

CareMax, Inc.(c)

    309,553       2,377,367  

Centene Corp.(c)

    332,642       27,409,701  

Chemed Corp.

    22,962       12,147,816  

Encompass Health Corp.(b)

    370,028       24,148,027  

Guardant Health, Inc.(c)

    233,615       23,366,172  

Humana, Inc.

    51,075       23,691,649  

Immuneering Corp., Series B, (Acquired 12/21/20, Cost: $5,999,982)(a)

    817,261       13,119,668  

IsoPlexis Corp., Series D, (Acquired 12/30/20, Cost: $14,800,023)(a)

    1,601,113       14,321,849  

Kindstar Globalgene Technology, Inc., (Acquired 07/08/21, Cost: $5,204,660)(a)

    4,092,500       3,007,358  

LHC Group, Inc.(b)(c)

    233,959       32,106,194  

Oak Street Health, Inc.(c)(g)

    1,199,764       39,760,179  

Quest Diagnostics, Inc.

    165,210       28,582,982  

R1 RCM, Inc.(c)

    386,030       9,839,905  

Rede D’Or Sao Luiz SA(e)

    843,563       6,775,443  

Science 37 Holdings, Inc., (Acquired 10/06/21, Cost: $15,000,000)(a)

    1,500,000       16,976,809  

TScan Therapeutics, Inc., Series C, (Acquired 01/15/21, Cost: $9,999,999)(a)

    855,317       3,836,097  
   

 

 

 
      406,192,511  
Health Care Technology(c) — 0.9%  

Definitive Healthcare Corp.

    150,428       4,111,197  

Sophia Genetics SA

    291,485       4,109,939  

Teladoc Health, Inc.

    184,446       16,935,832  
   

 

 

 
      25,156,968  
Life Sciences Tools & Services — 11.8%  

Agilent Technologies, Inc.

    145,670       23,256,215  

Avantor, Inc.(b)(c)

    645,194       27,188,475  

Berkeley Lights, Inc.(b)(c)

    190,554       3,464,272  

Bruker Corp.

    208,102       17,461,839  

Charles River Laboratories International,
Inc.(c)

    85,445       32,193,967  

Cytek Biosciences, Inc.(c)

    840,842       13,722,541  

Gerresheimer AG

    243,305       23,393,521  

Illumina, Inc.(c)

    61,223       23,291,678  

IQVIA Holdings, Inc.(c)

    136,077       38,392,765  

Lonza Group AG, Registered Shares

    33,777       28,122,323  
Security   Shares     Value  
Life Sciences Tools & Services (continued)  

Mettler-Toledo International, Inc.(b)(c)

    18,255     $ 30,982,569  

Olink Holding AB, ADR(c)

    29,442       535,844  

QIAGEN NV(c)

    299,500       16,646,210  

Sotera Health Co.(c)

    1,179,907       27,786,810  

West Pharmaceutical Services, Inc.

    39,055       18,317,186  

WuXi AppTec Co. Ltd., Class H(e)

    749,992       12,958,584  

Wuxi Biologics Cayman, Inc.(c)(e)

    1,233,303       14,600,943  
   

 

 

 
      352,315,742  
Pharmaceuticals — 4.4%            

Antengene Corp. Ltd., (Acquired 11/18/20, Cost: $7,091,948)(a)

    5,019,274       6,314,686  

Daiichi Sankyo Co. Ltd.

    1,945,700       49,520,820  

Marinus Pharmaceuticals, Inc.(c)

    320,484       3,807,350  

Merck KGaA

    99,895       25,698,693  

Nektar Therapeutics(c)

    335,188       4,528,390  

Nuvation Bio, Inc.(c)

    200,496       1,704,216  

UCB SA

    344,377       39,302,356  
   

 

 

 
      130,876,511  
   

 

 

 

Total Common Stocks — 90.3%
(Cost: $2,155,776,125)

 

    2,692,384,055  
   

 

 

 
     Benefical
Interest (000)
        

Other Interests

 

Biotechnology — 0.1%  

Vividion Therapeutics, Inc.(a)(h)

  $ 3,810       4,000,000  
   

 

 

 

Total Other Interests — 0.1%
(Cost: $ — )

 

    4,000,000  
   

 

 

 
     Shares         

Preferred Securities

 

Preferred Stocks — 8.5%  
Biotechnology — 4.3%  

Affinvax, Inc., Series C, (Acquired 01/06/21, Cost: $5,786,041)(a)(h)

    183,164       6,363,117  

Amunix Pharmaceuticals, Inc., Series B, (Acquired 02/26/21, Cost: $9,999,999)(a)(h)

    5,657,068       26,588,220  

Bright Peak Therapeutics AG, Series B, (Acquired 05/14/21, Cost: $8,000,004)(a)(h)

    2,048,132       8,008,196  

Cellarity, Inc., Series B, (Acquired 01/15/21, Cost: $14,584,998)(a)(h)

    2,430,833       13,126,498  

Design Therapeutics, Inc

    936,636       20,053,377  

Goldfinch Bio, Inc., Series B, (Acquired 06/26/20, Cost: $3,029,231)(a)(h)

    2,567,145       3,491,317  

Laronde, Inc., Series B, (Acquired 07/28/21, Cost: $13,498,156)(a)(h)

    482,077       13,498,156  

Mirvie, Inc., Series B, (Acquired 10/15/21, Cost: $6,250,000)(a)(h)

    2,793,833       6,250,000  

Neurogene, Inc., Series B, (Acquired 12/14/20, Cost: $9,549,916)(a)(h)

    3,913,900       9,549,916  

NiKang Therapeutics, Inc., Series C, (Acquired 05/20/21, Cost: $7,999,996)(a)(h)

    1,394,189       8,797,333  
 

 

 

84  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Health Sciences Trust II (BMEZ)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

 
Biotechnology (continued)  

Numab Therapeutics AG, (Acquired 05/07/21, Cost: $7,770,441)(a)(h)

    815,851     $ 8,837,192  

OnKure, Inc., Series B, (Acquired 03/03/21, Cost: $2,250,000)(a)(h)

    814,244       2,418,305  
   

 

 

 
      126,981,627  
Health Care Equipment & Supplies(a)(h) — 1.3%  

Exo Imaging, Inc., Series C, (Acquired 06/24/21, Cost: $13,225,003)

    2,257,597       12,258,752  

Nucleix Ltd., Series AA, (Acquired 03/25/21, Cost: $6,929,998)

    2,379,480       7,423,977  

Quanta Dialysis Technologies Ltd., Series D, (Acquired 06/18/21, Cost: $14,071,890)

    115,766,240       13,162,413  

Swift Health Systems, Inc., Series D, (Acquired 08/27/21, Cost: $6,441,930)

    2,078,042       6,421,150  
   

 

 

 
      39,266,292  
Health Care Providers & Services(a)(h) — 1.3%  

Adicon Holdings Ltd., (Acquired 12/22/20, Cost: $17,840,000)

    10,696,226       17,648,773  

Everly Well, Inc., Series D, (Acquired 11/25/20, Cost: $9,999,986)

    382,775       20,470,807  
   

 

 

 
      38,119,580  
Pharmaceuticals(a)(h) — 0.5%  

Insitro, Inc.

   

Series B, (Acquired 05/21/20, Cost: $4,999,999)

    802,478       13,208,788  

Series C, (Acquired 03/10/21, Cost: $3,600,018)

    196,818       3,239,624  
   

 

 

 
      16,448,412  
Semiconductors & Semiconductor Equipment — 0.5%  

PsiQuantum Corp., Series D, (Acquired 05/21/21, Cost: $14,999,997)(a)(h)

    571,947       14,922,097  
   

 

 

 
Software — 0.6%            

Carbon Health Technologies, Inc., (Acquired 07/09/21, Cost: $17,100,000)(a)(h)

    17,100       17,016,381  
   

 

 

 

Total Preferred Stocks — 8.5%

 

    252,754,389  
   

 

 

 

Total Preferred Securities — 8.5%
(Cost: $207,927,606)

 

    252,754,389  
   

 

 

 

Warrants

 

Diversified Financial Services(c) — 0.0%  

Eucrates Biomedical Acquisition Corp. (Expires 12/14/2025)

    299,219       173,547  

Health Assurance Acquisition Corp. (Expires 11/12/2025)

    340,318       287,841  

MedTech Acquisition Corp. (Expires 12/18/2025)

    305,761       159,302  
   

 

 

 
      620,690  

 

Security   Shares     Value  

 

 
Health Care Providers & Services — 0.0%  

CareMax, Inc. (Expires 06/08/2026)(c)

    63,808     $ 89,969  
   

 

 

 
Pharmaceuticals — 0.0%  

Nuvation Bio, Inc. (Expires 07/07/2027)(c)

    68,880       130,183  
   

 

 

 

Total Warrants — 0.0%
(Cost: $2,402,502)

 

    840,842  
   

 

 

 

Total Long-Term Investments — 98.9%
(Cost: $2,366,106,233)

 

    2,949,979,286  
   

 

 

 

Short-Term Securities

 

Money Market Funds — 2.2%            

BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.00%(f)(i)

    61,616,484       61,616,484  

SL Liquidity Series, LLC, Money Market Series, 0.15%(f)(i)(j)

    4,939,024       4,939,518  
   

 

 

 

Total Short-Term Securities — 2.2%
(Cost: $66,556,141)

 

    66,556,002  
   

 

 

 

Total Investments Before Options Written — 101.1%
(Cost: $2,432,662,374)

 

    3,016,535,288  
   

 

 

 

Options Written — (0.7)%
(Premiums Received: $(21,476,066))

 

    (23,146,210
   

 

 

 

Total Investments, Net of Options Written — 100.4%
(Cost: $2,411,186,308)

 

    2,993,389,078  

Liabilities in Excess of Other Assets — (0.4)%

 

    (11,502,809
   

 

 

 

Net Assets — 100.0%

 

  $ 2,981,886,269  
   

 

 

 

 

(a)

Restricted security as to resale, excluding 144A securities. The Trust held restricted securities with a current value of $421,574,636, representing 14.1% of its net assets as of period end, and an original cost of $370,170,928.

(b)

All or a portion of the security has been pledged and/or segregated as collateral in connection with outstanding exchange-traded options written.

(c)

Non-income producing security.

(d)

All or a portion of this security is on loan.

(e)

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.

(f)

Affiliate of the Trust.

(g)

All or a portion of the security has been pledged as collateral in connection with outstanding OTC derivatives.

(h)

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(i)

Annualized 7-day yield as of period end.

(j)

All or a portion of this security was purchased with the cash collateral from loaned securities.

 

For Trust compliance purposes, the Trust’s industry classifications refer to one or more of the industry 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 industry sub-classifications for reporting ease.

 

 

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

    85  


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Health Sciences Trust II (BMEZ)

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Trust during the year 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
12/31/20
   

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

  $  18,347,773     $  43,268,711 (a)    $     $     $     $ 61,616,484       61,616,484     $ 5,437     $  

DA32 Life Science Tech Acquisition Corp., Class A

          14,968,190                   (284,395     14,683,795       1,496,819              

Eucrates Biomedical Acquisition Corp.

          8,555,569                   205,563       8,761,132       897,657              

SL Liquidity Series, LLC, Money Market Series

    9,577,690             (4,637,183 )(a)      (851     (138     4,939,518       4,939,024       276,651 (b)       
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ (851   $ (78,970   $  90,000,929       $  282,088     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a)

Represents net amount purchased (sold).

 
  (b)

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Derivative Financial Instruments Outstanding as of Period End

Exchange-Traded Options Written

 

           
Description    Number of
Contracts
       Expiration
Date
       Exercise Price        Notional
Amount (000)
       Value  
Call                                                   

Agios Pharmaceuticals, Inc.

     469          01/06/22        USD     42.99        USD         1,542        $ (4

Tandem Diabetes Care, Inc.

     133          01/07/22        USD     140.00        USD     2,002            (154,945

Teladoc Health, Inc.

     113          01/07/22        USD     115.00        USD     1,038          (2,147

Alnylam Pharmaceuticals, Inc.

     428          01/11/22        USD     191.00        USD     7,258          (52,412

Edwards Lifesciences Corp.

     293          01/14/22        USD         125.00        USD     3,796          (165,545

Humana, Inc.

     153          01/14/22        USD     470.00        USD     7,097          (69,998

Illumina, Inc.

     183          01/14/22        USD     370.00        USD     6,962          (378,810

Intuitive Surgical, Inc.

     64          01/14/22        USD     370.00        USD     2,300          (45,120

Tandem Diabetes Care, Inc.

     195          01/14/22        USD     140.00        USD     2,935          (229,125

Vertex Pharmaceuticals, Inc.

     172          01/14/22        USD     215.00        USD     3,777          (143,620

ABIOMED, Inc.

     148          01/21/22        USD     340.00        USD     5,316          (389,980

Addus HomeCare Corp.

     63          01/21/22        USD     105.00        USD     589          (15,120

Agilent Technologies, Inc.

     283          01/21/22        USD     170.00        USD     4,518          (10,613

Agilon Health, Inc.

     424          01/21/22        USD     27.06        USD     1,145          (63,229

Agios Pharmaceuticals, Inc.

     348          01/21/22        USD     35.00        USD     1,144          (32,190

Alcon, Inc.

     785          01/21/22        USD     87.50        USD     6,839          (131,487

Alnylam Pharmaceuticals, Inc.

     179          01/21/22        USD     185.00        USD     3,035          (68,020

Amedisys, Inc.

     411          01/21/22        USD     175.00        USD     6,653          (63,705

AmerisourceBergen Corp.

     522          01/21/22        USD     133.00        USD     6,937          (165,735

Arcus Biosciences, Inc.

     333          01/21/22        USD     55.00        USD     1,348          (21,645

Arcutis Biotherapeutics, Inc.

     380          01/21/22        USD     20.00        USD     788          (71,250

Argenx SE, ADR

     166          01/21/22        USD     340.00        USD     5,813          (331,170

Arrowhead Pharmaceuticals, Inc.

     243          01/21/22        USD     75.00        USD     1,611          (19,440

Avantor, Inc.

     739          01/21/22        USD     42.50        USD     3,114          (77,595

Avantor, Inc.

     369          01/21/22        USD     40.00        USD     1,555          (95,017

Biogen, Inc.

     107          01/21/22        USD     265.00        USD     2,567          (36,915

Biohaven Pharmaceutical Holding Co. Ltd.

     291          01/21/22        USD     120.00        USD     4,010          (589,275

BioMarin Pharmaceutical, Inc.

     222          01/21/22        USD     90.00        USD     1,961          (59,940

Blueprint Medicines Corp.

     223          01/21/22        USD     105.00        USD     2,389          (128,225

Bruker Corp.

     624          01/21/22        USD     87.50        USD     5,236          (152,880

C4 Therapeutics, Inc.

     321          01/21/22        USD     50.00        USD     1,034          (72,225

C4 Therapeutics, Inc.

     262          01/21/22        USD     45.00        USD     844          (60,260

Centene Corp.

     264          01/21/22        USD     75.00        USD     2,175          (204,600

Cerevel Therapeutics Holdings, Inc.

     399          01/21/22        USD     45.00        USD     1,294          (29,925

Chemed Corp.

     68          01/21/22        USD     510.00        USD     3,597          (170,680

Cooper Cos., Inc.

     177          01/21/22        USD     430.00        USD     7,415          (95,580

DexCom, Inc.

     169          01/21/22        USD     660.00        USD     9,074          (33,800

Edwards Lifesciences Corp.

     79          01/21/22        USD     120.00        USD     1,023          (84,135

 

 

86  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Health Sciences Trust II (BMEZ)

 

Exchange-Traded Options Written (continued)

 

           
Description    Number of
Contracts
       Expiration
Date
       Exercise Price        Notional
Amount (000)
       Value  
Call (continued)                                                   

Edwards Lifesciences Corp.

     275          01/21/22        USD         128.00        USD         3,563        $ (112,750

Enanta Pharmaceuticals, Inc.

     101          01/21/22        USD     90.00        USD     755          (26,260

Encompass Health Corp.

     555          01/21/22        USD     65.00        USD     3,622          (119,325

Exact Sciences Corp.

     260          01/21/22        USD     105.00        USD     2,024          (4,550

Globus Medical, Inc., Class A

     312          01/21/22        USD     70.00        USD     2,253            (117,000

Guardant Health, Inc.

     204          01/21/22        USD     115.00        USD     2,040          (34,170

Guardant Health, Inc.

     283          01/21/22        USD     120.00        USD     2,831          (22,640

Hologic, Inc.

     735          01/21/22        USD     80.00        USD     5,627          (58,800

Horizon Therapeutics PLC

     465          01/21/22        USD     115.00        USD     5,011          (55,800

Ideaya Biosciences, Inc.

     301          01/21/22        USD     25.00        USD     712          (28,595

Insulet Corp.

     254          01/21/22        USD     310.00        USD     6,758          (25,400

Intuitive Surgical, Inc.

     228          01/21/22        USD     360.00        USD     8,192          (281,580

Intuitive Surgical, Inc.

     108          01/21/22        USD     350.00        USD     3,880          (214,380

IQVIA Holdings, Inc.

     135          01/21/22        USD     270.00        USD     3,809          (189,000

Keros Therapeutics, Inc.

     300          01/21/22        USD     55.00        USD     1,755          (171,000

Kodiak Sciences, Inc.

     261          01/21/22        USD     110.00        USD     2,213          (40,455

Kymera Therapeutics, Inc.

     600          01/21/22        USD     60.00        USD     3,809          (393,000

Marinus Pharmaceuticals, Inc.

     481          01/21/22        USD     14.00        USD     571          (21,645

Marinus Pharmaceuticals, Inc.

     240          01/21/22        USD     10.00        USD     285          (49,200

Masimo Corp.

     228          01/21/22        USD     295.00        USD     6,675          (176,700

Merus NV

     330          01/21/22        USD     30.00        USD     1,049          (117,975

Mirati Therapeutics, Inc.

     142          01/21/22        USD     160.00        USD     2,083          (29,110

Morphic Holding, Inc.

     284          01/21/22        USD     70.00        USD     1,346          (142,000

Natera, Inc.

     163          01/21/22        USD     120.00        USD     1,522          (18,745

Natera, Inc.

     46          01/21/22        USD     105.00        USD     430          (4,715

Nektar Therapeutics

     335          01/21/22        USD     16.00        USD     453          (22,613

Neurocrine Biosciences, Inc.

     694          01/21/22        USD     95.00        USD     5,911          (43,375

Nevro Corp.

     708          01/21/22        USD     100.00        USD     5,740          (23,010

Oak Street Health, Inc.

     1,797          01/21/22        USD     40.00        USD     5,955          (62,895

Penumbra, Inc.

     90          01/21/22        USD     290.00        USD     2,586          (94,500

Prometheus Biosciences, Inc.

     400          01/21/22        USD     40.00        USD     1,582          (119,000

Prothena Corp. PLC

     515          01/21/22        USD     55.00        USD     2,544          (93,987

Pulmonx Corp.

     105          01/21/22        USD     45.02        USD     337          (572

Pulmonx Corp.

     120          01/21/22        USD     40.00        USD     385          (6,600

QIAGEN NV

     449          01/21/22        USD     60.00        USD     2,496          (31,430

Quest Diagnostics, Inc.

     245          01/21/22        USD     155.00        USD     4,239          (444,675

Rapt Therapeutics, Inc.

     130          01/21/22        USD     40.00        USD     477          (20,800

ResMed, Inc.

     295          01/21/22        USD     270.00        USD     7,684          (60,475

Revolution Medicines, Inc.

     300          01/21/22        USD     35.00        USD     755          (15,000

Revolution Medicines, Inc.

     240          01/21/22        USD     30.00        USD     604          (9,000

Sarepta Therapeutics, Inc.

     233          01/21/22        USD     100.00        USD     2,098          (75,142

Seagen, Inc.

     658          01/21/22        USD     160.00        USD     10,173          (217,140

SI-BONE, Inc.

     80          01/21/22        USD     25.00        USD     178          (4,000

SI-BONE, Inc.

     260          01/21/22        USD     22.50        USD     577          (27,300

Silk Road Medical, Inc.

     363          01/21/22        USD     55.00        USD     1,547          (29,040

Sotera Health Co.

     1,269          01/21/22        USD     25.25        USD     2,988          (18,309

Tandem Diabetes Care, Inc.

     207          01/21/22        USD     150.00        USD     3,116          (114,885

Teladoc Health, Inc.

     286          01/21/22        USD     150.00        USD     2,626          (3,718

Teleflex, Inc.

     136          01/21/22        USD     370.00        USD     4,467          (65,280

Twist Bioscience Corp.

     105          01/21/22        USD     135.00        USD     813          (6,300

Twist Bioscience Corp.

     168          01/21/22        USD     150.00        USD     1,300          (84,000

United Therapeutics Corp.

     84          01/21/22        USD     210.00        USD     1,815          (77,700

Vertex Pharmaceuticals, Inc.

     361          01/21/22        USD     220.00        USD     7,928          (218,405

Zentalis Pharmaceuticals, Inc.

     330          01/21/22        USD     90.00        USD     2,774          (103,950

Zimmer Biomet Holdings, Inc.

     585          01/21/22        USD     140.00        USD     7,432          (17,550

Centene Corp.

     283          01/28/22        USD     85.00        USD     2,332          (55,185

Pulmonx Corp.

     105          01/28/22        USD     38.00        USD     337          (12,540

Tandem Diabetes Care, Inc.

     195          01/28/22        USD     140.00        USD     2,935          (254,475

Teladoc Health, Inc.

     154          01/28/22        USD     105.00        USD     1,414          (31,339

Vertex Pharmaceuticals, Inc.

     173          01/28/22        USD     220.00        USD     3,799          (152,240

908 Devices, Inc.

     150          02/18/22        USD     35.00        USD     388          (7,125

Addus HomeCare Corp.

     63          02/18/22        USD     90.00        USD     589          (38,430

 

 

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

  87


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Health Sciences Trust II (BMEZ)

 

Exchange-Traded Options Written (continued)

 

           
Description    Number of
Contracts
       Expiration
Date
       Exercise Price        Notional
Amount (000)
       Value  
Call (continued)                                                   

Agilent Technologies, Inc.

     154          02/18/22        USD         170.00        USD         2,459        $ (28,105

Agilon Health, Inc.

     165          02/18/22        USD     25.00        USD     446          (51,563

Alcon, Inc.

     1,423          02/18/22        USD     85.00        USD     12,397          (747,075

Alnylam Pharmaceuticals, Inc.

     89          02/18/22        USD     220.00        USD     1,509          (20,470

Argenx SE, ADR

     177          02/18/22        USD     340.00        USD     6,198          (473,475

Avantor, Inc.

     1,041          02/18/22        USD     42.50        USD     4,387          (208,200

Avantor, Inc.

     369          02/18/22        USD     40.00        USD     1,555          (127,305

Biogen, Inc.

     107          02/18/22        USD     265.00        USD     2,567          (62,060

Biohaven Pharmaceutical Holding Co. Ltd.

     13          02/18/22        USD     130.00        USD     179          (19,760

Biohaven Pharmaceutical Holding Co. Ltd.

     291          02/18/22        USD     120.10        USD     4,010          (695,082

BioMarin Pharmaceutical, Inc.

     222          02/18/22        USD     90.00        USD     1,961          (99,900

Blueprint Medicines Corp.

     223          02/18/22        USD     110.00        USD     2,389          (120,420

Centene Corp.

     450          02/18/22        USD     85.00        USD     3,708          (124,875

Cerevel Therapeutics Holdings, Inc.

     398          02/18/22        USD     45.00        USD     1,290          (24,875

Charles River Laboratories International, Inc.

     256          02/18/22        USD     400.00        USD     9,646          (225,280

Edwards Lifesciences Corp.

     425          02/18/22        USD     125.00        USD     5,506          (352,750

Enanta Pharmaceuticals, Inc.

     101          02/18/22        USD     90.00        USD     755          (33,835

Encompass Health Corp.

     555          02/18/22        USD     69.00        USD     3,622          (114,556

Exact Sciences Corp.

     260          02/18/22        USD     90.00        USD     2,024          (83,200

Fate Therapeutics, Inc.

     163          02/18/22        USD     70.00        USD     954          (42,788

Guardant Health, Inc.

     204          02/18/22        USD     115.00        USD     2,040          (71,910

Hologic, Inc.

     735          02/18/22        USD     80.00        USD     5,627          (134,137

Horizon Therapeutics PLC

     200          02/18/22        USD     115.00        USD     2,155          (53,000

Insmed, Inc.

     376          02/18/22        USD     33.00        USD     1,024          (90,240

IQVIA Holdings, Inc.

     274          02/18/22        USD     270.00        USD     7,731          (465,800

Keros Therapeutics, Inc.

     300          02/18/22        USD     60.00        USD     1,755          (160,500

Kymera Therapeutics, Inc.

     600          02/18/22        USD     60.00        USD     3,809          (531,000

LHC Group, Inc.

     352          02/18/22        USD     145.00        USD     4,830          (167,200

Masimo Corp.

     167          02/18/22        USD     305.00        USD     4,889          (146,125

Mettler-Toledo International, Inc.

     54          02/18/22        USD     1,650.00        USD     9,165          (539,190

Natera, Inc.

     89          02/18/22        USD     110.00        USD     831          (25,365

Nektar Therapeutics

     670          02/18/22        USD     15.00        USD     905          (144,050

Penumbra, Inc.

     90          02/18/22        USD     280.00        USD     2,586          (186,750

Prothena Corp. PLC

     514          02/18/22        USD     60.00        USD     2,539          (128,500

Pulmonx Corp.

     4          02/18/22        USD     40.00        USD     13          (310

QIAGEN NV

     449          02/18/22        USD     60.00        USD     2,496          (48,268

Quest Diagnostics, Inc.

     250          02/18/22        USD     175.00        USD     4,325          (128,750

Rapt Therapeutics, Inc.

     405          02/18/22        USD     40.00        USD     1,488          (121,500

Revolution Medicines, Inc.

     301          02/18/22        USD     30.00        USD     758          (29,348

Sarepta Therapeutics, Inc.

     340          02/18/22        USD     105.00        USD     3,062          (209,100

Seagen, Inc.

     658          02/18/22        USD     165.00        USD     10,173          (348,740

SI-BONE, Inc.

     260          02/18/22        USD     22.50        USD     577          (66,300

Silk Road Medical, Inc.

     252          02/18/22        USD     40.00        USD     1,074          (123,480

Sotera Health Co.

     500          02/18/22        USD     25.00        USD     1,178          (35,000

STERIS PLC

     196          02/18/22        USD     240.00        USD     4,771          (214,620

Stryker Corp.

     258          02/18/22        USD     270.00        USD     6,899          (212,850

Tandem Diabetes Care, Inc.

     188          02/18/22        USD     145.00        USD     2,830          (225,600

Teleflex, Inc.

     272          02/18/22        USD     340.00        USD     8,935          (312,800

Twist Bioscience Corp.

     170          02/18/22        USD     105.00        USD     1,316          (27,625

United Therapeutics Corp.

     83          02/18/22        USD     210.00        USD     1,793          (110,390

West Pharmaceutical Services, Inc.

     117          02/18/22        USD     470.00        USD     5,487          (267,930

Zentalis Pharmaceuticals, Inc.

     333          02/18/22        USD     85.00        USD     2,799          (283,050

Zimmer Biomet Holdings, Inc.

     290          02/18/22        USD     125.00        USD     3,684          (194,300

Sotera Health Co.

     1,269          02/25/22        USD     24.75        USD     2,988          (108,229

ABIOMED, Inc.

     148          03/18/22        USD     350.00        USD     5,316          (441,040

Insulet Corp.

     191          03/18/22        USD     310.00        USD     5,082          (158,530
                          

 

 

 
                           $  (19,800,243
                          

 

 

 

 

 

88  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Health Sciences Trust II (BMEZ)

 

OTC Options Written

 

             
Description   Counterparty   Number of
Contracts
   

  Expiration

Date

  Exercise Price  

Notional

Amount (000)

    Value  

Call

               

Amplifon SpA

  Morgan Stanley & Co. International PLC     75,000     01/04/22     EUR     46.65     EUR       3,559     $ (74,413

Daiichi Sankyo Co. Ltd.

  UBS AG     213,400     01/04/22     JPY     2,879.93     JPY         624,195       (147,379

Demant A/S

  Morgan Stanley & Co. International PLC     70,000     01/04/22     DKK     342.20     DKK       23,457       (12,951

Masimo Corp.

  BNP Paribas SA     22,800     01/04/22     USD     310.04     USD       6,675       (2,223

Sonova Holding AG

  UBS AG     13,100     01/04/22     CHF     399.54     CHF       4,687       (2

STERIS PLC

  Barclays Bank PLC     19,900     01/04/22     USD     237.13     USD       4,844       (132,280

Amplifon SpA

  Morgan Stanley & Co. International PLC     61,800     01/11/22     EUR     46.34     EUR       2,932       (93,584

Gerresheimer AG

  Morgan Stanley & Co. International PLC     20,000     01/11/22     EUR     82.71     EUR       1,694       (55,605

GN Store Nord A/S

  Credit Suisse International     32,000     01/11/22     DKK     411.25     DKK       13,162       (29,599

Sonova Holding AG

  Morgan Stanley & Co. International PLC     10,200     01/11/22     CHF     378.43     CHF       3,650       (8,907

Genmab A/S

  Barclays Bank PLC     31,400     01/12/22     USD     40.86     USD       1,242       (26,643

Convatec Group PLC

  Morgan Stanley & Co. International PLC     500,000     01/13/22     GBP     2.25     GBP       966       (14

Wuxi Biologics Cayman Inc.

  JPMorgan Chase Bank N.A.     370,000     01/13/22     HKD     110.56     HKD       34,244       (6,435

Amplifon SpA

  Morgan Stanley & Co. International PLC     26,400     01/20/22     EUR     42.87     EUR       1,253       (136,310

Genmab A/S

  Credit Suisse International     11,600     01/20/22     DKK     2,750.28     DKK       30,508       (31,789

Straumann Holding AG

  UBS AG     1,300     01/20/22     CHF     2,126.80     CHF       2,518       (4,918

UCB SA

  Goldman Sachs International     40,500     01/20/22     EUR     101.99     EUR       4,064       (51,177

Lonza Group AG

  UBS AG     3,700     01/25/22     CHF     767.92     CHF       2,818       (59,328

Straumann Holding AG

  UBS AG     3,600     01/25/22     CHF       2,015.71     CHF       6,973       (82,984

Amplifon SpA

  UBS AG     20,000     01/27/22     EUR     44.30     EUR       949       (75,033

Convatec Group PLC

  Morgan Stanley & Co. International PLC     323,300     01/27/22     GBP     1.98     GBP       624       (14,230

Demant A/S

  UBS AG     70,000     01/27/22     DKK     323.11     DKK       23,457       (183,723

Genmab A/S, ADR

  BNP Paribas SA     50,000     01/27/22     USD     41.14     USD       1,978       (71,828

GN Store Nord A/S

  Morgan Stanley & Co. International PLC     25,700     01/27/22     DKK     392.26     DKK       10,570       (92,908

ResMed, Inc.

  Citibank N.A.     29,500     01/27/22     USD     265.26     USD       7,684       (121,932

Daiichi Sankyo Co. Ltd.

  JPMorgan Chase Bank N.A.     370,300     02/01/22     JPY     2,888.73     JPY       1,083,128       (454,266

Alnylam Pharmaceuticals, Inc.

  Citibank N.A.     9,000     02/02/22     USD     202.61     USD       1,526       (26,245

Gerresheimer AG

  Credit Suisse International     20,000     02/03/22     EUR     83.94     EUR       1,694       (73,241

Merck KGaA

  UBS AG     30,000     02/03/22     EUR     228.56     EUR       6,810       (181,462

Rede D’or Sao Luiz SA

  Citibank N.A.     253,000     02/03/22     USD     50.85     USD       11,342       (17,960

UCB SA

  UBS AG     40,500     02/03/22     EUR     100.16     EUR       4,064       (118,130

Sotera Health Co.

  Citibank N.A.     50,100     02/07/22     USD     23.67     USD       1,180       (52,495

Convatec Group PLC

  Morgan Stanley & Co. International PLC     500,000     02/08/22     GBP     1.91     GBP       966       (50,148

Lonza Group AG

  UBS AG     6,400     02/08/22     CHF     767.41     CHF       4,874       (152,662

Straumann Holding AG

  UBS AG     3,300     02/08/22     CHF     2,008.84     CHF       6,392       (152,272

UCB SA

  UBS AG     22,400     02/08/22     EUR     100.49     EUR       2,248       (64,332

Genmab A/S

  Morgan Stanley & Co. International PLC     17,200     02/10/22     DKK     2,599.95     DKK       45,236       (346,045

Wuxi Apptec Ltd., Class H

  JPMorgan Chase Bank N.A.     225,000     02/10/22     HKD     153.66     HKD       30,375       (140,514
               

 

 

 
                $  (3,345,967
               

 

 

 

Balances Reported in the Statements of Assets and Liabilities for Options Written

 

           
Description   

Swap

Premiums

Paid

      

Swap

Premiums

Received

      

Unrealized

Appreciation

    

Unrealized

Depreciation

       Value  

Options Written

   $         N/A        $         N/A        $  6,187,136      $ (7,857,280      $ (23,146,210)

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statements 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

                                

Options written

                                

Options written at value

   $        $        $  23,146,210        $        $        $        $  23,146,210  
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

 

 

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

  89


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Health Sciences Trust II (BMEZ)

 

For the period ended December 31, 2021, the effect of derivative financial instruments in the Statements 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:

             

Options purchased

  $     $     $ (4,108   $     $     $     $ (4,108

Options written

                (4,512,182                       (4,512,182
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $     $     $  (4,516,290   $     $     $     $ (4,516,290
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

             

Options written

  $     $     $  14,045,494     $     $     $     $  14,045,494  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

   

Options:

  

Average value of option contracts purchased

   $ (a) 

Average value of option contracts written

   $ 25,274,548  

 

  (a)

Derivative not held at any quarter-end. The risk exposure table serves as an indicator of activity during the period.

 

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

Derivative Financial Instruments — Offsetting as of Period End

The Trust’s derivative assets and liabilities (by type) were as follows:

 

     
      Assets      Liabilities  

Derivative Financial Instruments

     

Options

   $      $ 23,146,210  
  

 

 

    

 

 

 

Total derivative assets and liabilities in the Statements of Assets and Liabilities

            23,146,210  
  

 

 

    

 

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

            (19,800,243
  

 

 

    

 

 

 

Total derivative assets and liabilities subject to an MNA

   $      $ 3,345,967  
  

 

 

    

 

 

 

The following table presents the Trust’s derivative liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral pledged by the Trust:

 

           

Counterparty

    

Derivative

Liabilities

Subject to

an MNA by

Counterparty

 

 

 

 

 

    

Derivatives

Available

for Offset

 

 

 

    

Non-Cash

Collateral

Pledged

 

 

(a) 

    

Cash

Collateral

Pledged

 

 

 

    

Net Amount

of Derivative

Liabilities

 

 

(b) 

Barclays Bank PLC

   $ 158,923      $      $ (158,923    $      $  

BNP Paribas SA

     74,051                             74,051  

Citibank N.A.

     218,632               (198,632      (20,000       

Credit Suisse International

     134,629               (134,629              

Goldman Sachs International

     51,177               (51,177              

JPMorgan Chase Bank N.A.

     601,215               (601,215              

Morgan Stanley & Co. International PLC

     885,115               (869,115      (16,000       

UBS AG

     1,222,225               (1,222,225              
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 3,345,967      $      $  (3,235,916    $ (36,000    $ 74,051  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 
  (b)

Net amount represents the net amount payable due to counterparty in the event of default. Net amount may be offset further by the options written receivable/payable on the Statements of Assets and Liabilities.

 

 

 

90  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Health Sciences Trust II (BMEZ)

 

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

                 

Common Stocks

                 

Biotechnology

   $ 731,694,495        $ 151,317,941        $        $ 883,012,436  

Diversified Financial Services

     50,278,494                            50,278,494  

Electronic Equipment, Instruments & Components

     7,090,553                            7,090,553  

Health Care Equipment & Supplies

     741,509,619          95,951,221                   837,460,840  

Health Care Providers & Services

     285,098,307          121,094,204                   406,192,511  

Health Care Technology

     25,156,968                            25,156,968  

Life Sciences Tools & Services

     273,240,371          79,075,371                   352,315,742  

Pharmaceuticals

     10,039,956          120,836,555                   130,876,511  

Other Interests

                       4,000,000          4,000,000  

Preferred Securities

                 

Preferred Stocks

              20,053,377          232,701,012          252,754,389  

Warrants

                 

Diversified Financial Services

     447,143          173,547                   620,690  

Health Care Providers & Services

     89,969                            89,969  

Pharmaceuticals

     130,183                            130,183  

Short-Term Securities

                 

Money Market Funds

     61,616,484                            61,616,484  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $  2,186,392,542        $  588,502,216        $  236,701,012          3,011,595,770  
  

 

 

      

 

 

      

 

 

      

 

 

 

Investments Valued at NAV(a)

                    4,939,518  
                 

 

 

 
                  $  3,016,535,288  
                 

 

 

 

Derivative Financial Instruments(b)

                 

Liabilities

                 

Equity Contracts

   $ (18,735,310      $ (4,410,900      $        $ (23,146,210
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Certain investments of the Trust were fair valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

 
  (b)

Derivative financial instruments are options written. Options written are shown at value.

 

A reconciliation of Level 3 financial instruments is presented when the Trust had a significant amount of Level 3 investments at the beginning and/or end of the year in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

 

 

 
    

Common

Stocks

      

Other

Interest

      

Preferred

Stocks

       Total  

 

 

Assets

                 

Opening balance, as of December 31, 2020

   $ 28,744,832                 $  112,069,329        $  140,814,161  

Transfers into Level 3(a)

                                 

Transfers out of Level 3(b)

     (28,744,832                          (28,744,832

Other(c)

                       (33,475,075        (33,475,075

Accrued discounts/premiums

                                 

Net realized gain (loss)

                       2,392,568          2,392,568  

Net change in unrealized appreciation (depreciation)(d)(e)

              4,000,000          34,307,661          38,307,661  

 

 

 

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

  91


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Health Sciences Trust II (BMEZ)

 

 

 
   

Common

Stocks

   

Other

Interest

   

Preferred

Stocks

    Total  

 

 

Purchases

  $           $ 156,328,436     $ 156,328,436  

Sales

                (38,921,907     (38,921,907
 

 

 

   

 

 

   

 

 

   

 

 

 

Closing balance, as of December 31, 2021

  $       4,000,000     $  232,701,012     $  236,701,012  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on investments still held at
December 31, 2021(e)

  $       4,000,000     $ 34,307,661     $ 38,307,661  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

  (a)

As of December 31, 2020, the Trust used observable inputs in determining the value of certain investments. As of December 31, 2021, the Trust used significant unobservable inputs in determining the value of the same investments. As a result, investments at beginning of period value were transferred from Level 2 to Level 3 in the disclosure hierarchy.

 
  (b)

As of December 31, 2020, the Trust used significant unobservable inputs in determining the value of certain investments. As of December 31, 2021, the Trust used observable inputs in determining the value of the same investments. As a result, investments at beginning of period value were transferred from Level 3 to Level 2 in the disclosure hierarchy.

 
  (c)

Certain Level 3 investments were re-classified between Common Stocks and Preferred Stocks.

 
  (d)

Included in the related net change in unrealized appreciation (depreciation) in the Statements of Operations.

 
  (e)

Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at December 31, 2021 is generally due to investments no longer held or categorized as Level 3 at period end.

 

The following table summarizes the valuation approaches used and unobservable inputs utilized by the BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) to determine the value of certain of the Trust’s Level 3 financial instruments as of period end.

 

           
       Value        Valuation

Approach

    

Unobservable

Inputs

      

Range of

Unobservable

Inputs

Utilized

 

 

 

(a) 

      

Weighted

Average of

Unobservable

Inputs Based

on Fair Value

 

 

 

 

 

Assets

                      

Preferred Stocks

   $ 232,701,012        Market      Revenue Multiple        6.50x - 7.75x          6.81x  
             EBITDA Multiple        10.50x           
             Volatility        50% - 81%          65%  
             Time to Exit        1.0 - 4.0          2.3  
             Market Adjustment Multiple        0.90x - 2.90x          1.39x  
             Recent Transactions      $ 2.24 - $28.00          $  12.96  

Other Interests

     4,000,000        Market      Recent Transactions        $  1.05           
                      
  

 

 

                     
   $  236,701,012                      
  

 

 

                     

 

  (a)

A significant change in unobservable input would have resulted in a correlated (inverse) significant change to value.

 

See notes to financial statements.

 

 

92  

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


Schedule of Investments  

December 31, 2021

  

BlackRock Innovation and Growth Trust (BIGZ)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   

Aerospace & Defense — 4.0%

   

Axon Enterprise, Inc.(a)(b)

    683,396     $   107,293,172  

HEICO Corp.

    361,607       52,150,962  
   

 

 

 
      159,444,134  
Auto Components — 2.4%            

Fox Factory Holding Corp.(b)

    549,506       93,470,971  
   

 

 

 
Biotechnology(b) — 2.0%            

Halozyme Therapeutics, Inc.

    1,232,909       49,575,271  

Natera, Inc.

    304,281       28,416,802  
   

 

 

 
      77,992,073  
Building Products — 2.4%            

AZEK Co., Inc.(b)

    2,078,325       96,101,748  
   

 

 

 
Chemicals — 1.2%            

Amyris, Inc.(a)(b)

    8,984,474       48,606,004  
   

 

 

 
Diversified Consumer Services(b) — 2.3%            

Bright Horizons Family Solutions, Inc.

    129,293       16,275,403  

Duolingo, Inc., Class A

    204,766       21,727,720  

Ideal Image, Class A, (Acquired 05/05/21, Cost: $50,000,000)(c)(d)

    6,224       52,682,173  
   

 

 

 
      90,685,296  
Electrical Equipment — 1.6%            

Shoals Technologies Group, Inc., Class A(b)

    2,604,084       63,279,241  
   

 

 

 
Electronic Equipment, Instruments & Components — 2.2%  

908 Devices, Inc.(b)(e)

    2,309,607       59,749,533  

Halma PLC

    679,598       29,466,596  
   

 

 

 
      89,216,129  
Entertainment — 2.4%            

Kahoot! AS(b)

    18,487,119       96,721,421  
   

 

 

 
Equity Real Estate Investment Trusts (REITs) — 1.5%  

Innovative Industrial Properties, Inc.

    112,343       29,536,098  

Rexford Industrial Realty, Inc.

    387,685       31,445,130  
   

 

 

 
      60,981,228  
Food Products — 1.4%            

Freshpet, Inc.(b)

    571,503       54,447,091  
   

 

 

 
Health Care Equipment & Supplies(b) — 6.8%        

Figs, Inc., Class A(f)

    1,699,365       46,834,500  

Inmode Ltd.

    392,738       27,719,448  

Masimo Corp.(g)

    374,550       109,660,749  

Outset Medical, Inc.

    1,365,479       62,934,927  

Pulmonx Corp.

    756,543       24,262,334  
   

 

 

 
        271,411,958  
Health Care Technology(b) — 5.0%            

Certara, Inc.

    2,162,372       61,454,612  

Health Catalyst, Inc.

    1,270,148       50,323,264  

Phreesia, Inc.(a)(g)

    2,067,205       86,119,760  
   

 

 

 
      197,897,636  
Hotels, Restaurants & Leisure — 2.8%            

Penn National Gaming, Inc.(a)(b)

    1,070,555       55,508,277  
Security   Shares     Value  

Hotels, Restaurants & Leisure (continued)

   

Planet Fitness, Inc., Class A(b)(g)

    411,169     $ 37,243,688  

Wingstop, Inc.

    107,010       18,491,328  
   

 

 

 
        111,243,293  
Internet & Direct Marketing Retail — 1.6%            

Fiverr International Ltd.(b)

    569,170       64,714,629  
   

 

 

 
IT Services — 7.1%            

DigitalOcean Holdings, Inc.(b)

    1,020,109       81,945,356  

Globant SA(b)

    324,877       102,040,617  

Nuvei Corp.(b)(h)

    756,644       49,049,218  

Salt Pay Co., Ltd., (Acquired 11/16/21, Cost: $49,999,974)(c)(d)

    25,742       49,999,973  
   

 

 

 
      283,035,164  
Life Sciences Tools & Services — 7.9%            

10X Genomics, Inc., Class A(b)(g)

    783,624       116,728,631  

Bio-Techne Corp.

    213,004       110,195,489  

Olink Holding AB, ADR(b)

    1,420,271       25,848,932  

Repligen Corp.(b)

    213,187       56,460,445  

Seer, Inc., Class A(b)

    287,523       6,558,400  
   

 

 

 
      315,791,897  
Machinery — 1.6%            

Chart Industries, Inc.(b)

    404,924       64,581,329  
   

 

 

 
Road & Rail — 1.5%            

Saia, Inc.(b)

    180,724       60,909,410  
   

 

 

 
Semiconductors & Semiconductor Equipment — 9.0%        

Ambarella, Inc.(b)

    225,251       45,701,176  

Azenta Inc.

    491,418       50,670,110  

Entegris, Inc.(g)

    856,476       118,690,444  

Lattice Semiconductor Corp.(b)

    498,597       38,421,885  

Monolithic Power Systems, Inc.(a)

    208,219       102,720,679  
   

 

 

 
        356,204,294  
Software — 18.4%            

Avalara, Inc.(a)(b)

    710,533       91,736,916  

Bill.Com Holdings, Inc.(a)(b)

    386,572       96,314,414  

Blackline, Inc.(b)

    422,675       43,763,769  

Five9, Inc.(a)(b)

    871,384       119,658,451  

Gitlab, Inc., Class A(b)

    608,447       52,934,889  

Grammarly, Inc., (Acquired 11/17/21, Cost: $26,250,012)(c)(d)

    1,001,454       26,248,109  

Lightspeed Commerce, Inc.(b)

    1,641,382       66,280,717  

nCino, Inc.(b)

    1,115,326       61,186,784  

Patreon, Inc., (Acquired 08/19/21, Cost: $11,732,736)(b)(c)(d)

    208,333       11,666,648  

Paylocity Holding Corp.(a)(b)

    368,392       86,999,455  

SiteMinder Ltd.(b)

    10,145,520       49,898,081  

Snorkel AI, Inc., (Acquired 06/30/21, Cost: $2,999,997)(b)(c)(d)

    199,738       2,860,248  

Snyk Ltd., (Acquired 09/02/21, Cost: $25,961,537)(b)(c)(d)

    1,809,860       23,582,476  
   

 

 

 
      733,130,957  
 

 

 

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

    93  


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Innovation and Growth Trust (BIGZ)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

 

Specialty Retail(b) — 1.5%

   

Leslie’s, Inc.

    768,758     $ 18,188,814  

Vroom, Inc.(g)

    3,801,181       41,014,743  
   

 

 

 
      59,203,557  
   

 

 

 

Total Common Stocks — 86.6%
(Cost: $3,840,123,440)

        3,449,069,460  
   

 

 

 
   

Par

(000)

       

 

 

Convertible Notes

   
Specialty Retail — 0.3%            

Super73, Inc. (Acquired: 12/21/21, Cost: $12,000,000), 0.00%(c)(d)

  $ 12,000       12,000,000  
   

 

 

 

Total Convertible Notes — 0.3%
(Cost: $12,000,000)

      12,000,000  
   

 

 

 
    Shares        

 

 

Preferred Securities

 

Preferred Stocks — 13.7%(c)(d)            
Aerospace & Defense — 1.3%            

Relativity Space, Inc., Series E, (Acquired 05/27/21, Cost: $50,000,009)

    2,189,612       50,580,037  
   

 

 

 
Banks — 0.9%            

Varo Money Inc., Series E, (Acquired 08/27/21, Cost: $40,000,001)

    4,316,904       36,780,022  
   

 

 

 
Capital Markets — 1.3%            

The Production Board LLC, Series A, (Acquired 06/04/21, Cost: $50,000,001)

    16,666,667       50,027,501  
   

 

 

 
Entertainment — 0.4%            

Discord, Inc., Series I, (Acquired 09/13/21, Cost: $17,999,912)

    32,690       16,198,222  
   

 

 

 
Food Products — 0.8%            

Motif Food Works, Inc., Series B, (Acquired 06/08/21, Cost: $39,999,986)

    1,972,240       32,325,014  
   

 

 

 
Hotels, Restaurants & Leisure — 0.8%            

Dapper Labs, Inc., Series 7, (Acquired 07/20/21, Cost: $29,999,946)

    191,067       29,999,430  
   

 

 

 
IT Services — 0.6%            

Via Transportation, Inc., Series G, (Acquired 11/05/21, Cost: $24,999,974)

    549,357       24,999,974  
   

 

 

 
Leisure Products — 1.1%            

Under Canvas, Inc., Class A, (Acquired 08/19/21, Cost: $49,999,982)

    2,172,486       44,731,487  
   

 

 

 
Semiconductors & Semiconductor Equipment — 1.2%  

PsiQuantum Corp., Series D, (Acquired 05/21/21, Cost: $39,999,990)

    1,525,192       39,792,259  

Rivos, Series A, (Acquired 12/03/21, Cost: $7,996,292)

    999,228       7,996,322  
   

 

 

 
      47,788,581  

Software — 4.7%

   

Anchor Labs, Inc. , Series D, (Acquired 11/24/21, Cost: $9,999,995)(b)

    428,785       9,999,266  
Security   Shares     Value  

 

 

Software (continued)

   

AnyRoad, Inc., Series B, (Acquired 12/07/21, Cost: $14,999,995)

    2,745,894     $ 14,999,995  

Deepgram, Inc., (Acquired 10/22/21, Cost: $11,999,997)(b)

    2,165,400       11,974,662  

Dragos, Inc., Series D, (Acquired 09/28/21, Cost: $39,999,959)

    900,760       39,831,607  

Genesys Cloud Services, Inc., (Acquired 11/24/21, Cost: $30,000,101)(b)

    4,651,163       30,000,001  

Grammarly, Inc., Series 3, (Acquired 11/17/21, Cost: $8,750,004)(b)

    333,818       8,749,370  

Patreon, Inc., Series D, (Acquired 07/14/21, Cost: $23,333,352)

    416,667       23,333,352  

SkySafe, Inc., Series B, (Acquired 12/02/21, Cost: $4,999,999)

    909,438       4,999,999  

Snorkel AI, Inc., Series C, (Acquired 06/30/21, Cost: $10,999,994)

    732,373       10,487,582  

Snyk Ltd., (Acquired 09/02/21, Cost: $24,038,470)

    1,675,797       21,835,635  

Validere Technologies Inc., Series B, (Acquired 10/21/21, Cost: $10,000,000)(b)

    4,684,060       9,996,299  
   

 

 

 
      186,207,768  
Wireless Telecommunication Services — 0.6%  

Loft Orbital Solutions, Inc., (Acquired 10/14/21, Cost: $24,999,992)(b)

    1,365,305       24,930,469  
   

 

 

 

Total Preferred Stocks — 13.7%

      544,568,505  
   

 

 

 

Total Preferred Securities — 13.7%
(Cost: $565,117,951)

 

    544,568,505  
   

 

 

 

Total Long-Term Investments — 100.6%
(Cost: $4,417,241,391)

 

    4,005,637,965  
   

 

 

 

Short-Term Securities

   

Money Market Funds — 0.2%

   

BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.00%(e)(i)

    1,836,203       1,836,203  

SL Liquidity Series, LLC, Money Market Series, 0.15%(e)(i)(j)

    5,203,957       5,204,477  
   

 

 

 

Total Short-Term Securities — 0.2%
(Cost: $7,040,984)

      7,040,680  
   

 

 

 

Total Investments Before Options Written — 100.8%
(Cost: $4,424,282,375)

 

     4,012,678,645  
   

 

 

 

Options Written — (0.3)%
(Premiums Received: $(17,415,488))

      (11,001,039
   

 

 

 

Total Investments, Net of Options Written — 100.5%
(Cost: $4,406,866,887)

 

    4,001,677,606  

Liabilities in Excess of Other Assets — (0.5)%

 

    (20,025,097 ) 
   

 

 

 

Net Assets — 100.0%

    $ 3,981,652,509  
   

 

 

 

 

(a)

All or a portion of the security has been pledged as collateral in connection with outstanding OTC derivatives.

(b)

Non-income producing security.

(c)

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(d)

Restricted security as to resale, excluding 144A securities. The Trust held restricted securities with a current value of $723,608,132, representing 18.2% of its net assets as of period end, and an original cost of $744,062,207.

(e)

Affiliate of the Trust.

(f)

All or a portion of this security is on loan.

(g)

All or a portion of the security has been pledged and/or segregated as collateral in connection with outstanding exchange-traded options written.

 

 

 

94  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Innovation and Growth Trust (BIGZ)

 

(h)

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.

(i)

Annualized 7-day yield as of period end.

(j)

All or a portion of this security was purchased with the cash collateral from loaned securities.

 

 

For Trust compliance purposes, the Trust’s industry classifications refer to one or more of the industry 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 industry sub-classifications for reporting ease.

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

03/29/21

 

(a) 

   

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

 

 

 

 

 

908 Devices, Inc.

  $     $  104,284,603     $ (27,980   $ (20,994   $ (44,486,096   $ 59,749,533       2,309,607     $     $  

BlackRock Liquidity Funds, T-Fund, Institutional Class

          1,836,203 (b)                        1,836,203       1,836,203       42,953        

iShares Russell 2000 Growth ETF(c)

          214,699,815       (212,175,613     (2,524,202                              

iShares Russell Mid-Cap Growth ETF(c)

          211,658,254       (226,065,994     14,407,740                                

SL Liquidity Series, LLC, Money Market Series

          5,206,475 (b)            (1,694     (304     5,204,477       5,203,957       118,573 (d)       
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $  11,860,850     $ (44,486,400   $  66,790,213       $  161,526     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a)

Commencement of operations.

 
  (b)

Represents net amount purchased (sold).

 
  (c)

As of period end, the entity is no longer held.

 
  (d)

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Derivative Financial Instruments Outstanding as of Period End

Exchange-Traded Options Written

 

           
Description   

Number of

Contracts

      

Expiration

Date

       Exercise Price       

Notional

Amount (000)

       Value  
Call                                                   

Ambarella, Inc.

     76          01/07/22        USD     250.00        USD     1,542        $ (5,700

Penn National Gaming, Inc.

     366          01/07/22        USD     58.00        USD     1,898          (5,124

Ambarella, Inc.

     79          01/14/22        USD     235.00        USD     1,603          (8,493

Amyris, Inc.

     2,500          01/14/22        USD     7.00        USD     1,353          (25,000

Penn National Gaming, Inc.

     340          01/14/22        USD     58.00        USD     1,763          (16,830

10X Genomics, Inc., Class A

     120          01/21/22        USD     170.00        USD     1,788          (30,600

10X Genomics, Inc., Class A

     428          01/21/22        USD     160.00        USD     6,375          (154,080

908 Devices, Inc.

     480          01/21/22        USD     30.00        USD     1,242          (15,600

Ambarella, Inc.

     75          01/21/22        USD     250.00        USD     1,522          (6,188

Amyris, Inc.

     3          01/21/22        USD     12.00        USD     2          (15

Amyris, Inc.

     2,000          01/21/22        USD     9.00        USD     1,082          (10,000

Avalara, Inc.

     604          01/21/22        USD     175.00        USD     7,798          (84,560

Avalara, Inc.

     86          01/21/22        USD     150.00        USD     1,110          (6,450

Axon Enterprise, Inc.

     362          01/21/22        USD     190.00        USD     5,683          (8,145

AZEK Co., Inc.

     1,037          01/21/22        USD     45.00        USD     4,795          (209,992

Bill.Com Holdings, Inc.

     306          01/21/22        USD     340.00        USD     7,624          (9,945

Bio-Techne Corp.

     152          01/21/22        USD     520.00        USD     7,864          (187,720

Blackline, Inc.

     266          01/21/22        USD     125.00        USD     2,754          (5,320

Bright Horizons Family Solutions, Inc.

     207          01/21/22        USD     135.00        USD     2,606          (35,190

Bright Horizons Family Solutions, Inc.

     50          01/21/22        USD     130.00        USD     629          (9,250

Brooks Automation, Inc.

     294          01/21/22        USD     120.00        USD     3,031          (4,410

Certara, Inc.

     962          01/21/22        USD     38.05        USD     2,734          (3,700

Certara, Inc.

     288          01/21/22        USD     30.00        USD     818          (54,000

Chart Industries, Inc.

     283          01/21/22        USD     170.00        USD     4,514          (82,778

 

 

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

  95


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Innovation and Growth Trust (BIGZ)

 

Exchange-Traded Options Written (continued)

 

           
Description   

Number of

Contracts

      

Expiration

Date

       Exercise Price       

Notional

Amount (000)

       Value  
Call (continued)                                                   

DigitalOcean Holdings, Inc.

     300          01/21/22        USD     126.00        USD     2,410        $ (584

DigitalOcean Holdings, Inc.

     110          01/21/22        USD     90.00        USD     884          (21,175

Duolingo, Inc., Class A

     67          01/21/22        USD     120.00        USD     711          (14,405

Entegris, Inc.

     488          01/21/22        USD     155.00        USD     6,763          (14,640

Figs, Inc., Class A

     1,485          01/21/22        USD     40.00        USD     4,093          (11,138

Five9, Inc.

     305          01/21/22        USD     170.00        USD     4,188          (32,788

Five9, Inc.

     500          01/21/22        USD     140.00        USD     6,866          (245,000

Fiverr International Ltd.

     330          01/21/22        USD     195.00        USD     3,752          (3,300

Fox Factory Holding Corp.

     69          01/21/22        USD     180.00        USD     1,174          (12,075

Fox Factory Holding Corp.

     138          01/21/22        USD     175.00        USD     2,347          (36,570

Freshpet, Inc.

     275          01/21/22        USD     132.00        USD     2,620          (46

Freshpet, Inc.

     170          01/21/22        USD     110.00        USD     1,620          (10,625

Gitlab, Inc., Class A

     179          01/21/22        USD     145.00        USD     1,557          (13,425

Gitlab, Inc., Class A

     112          01/21/22        USD     110.00        USD     974          (1,960

Globant SA

     214          01/21/22        USD     300.00        USD     6,722          (436,560

Halozyme Therapeutics, Inc.

     1,000          01/21/22        USD     39.00        USD     4,021          (305,000

Health Catalyst, Inc.

     886          01/21/22        USD     55.00        USD     3,510          (44,300

HEICO Corp.

     524          01/21/22        USD     145.00        USD     7,557          (153,270

Inmode Ltd.

     422          01/21/22        USD     97.50        USD     2,978          (6,330

Innovative Industrial Properties, Inc.

     81          01/21/22        USD     260.00        USD     2,130          (82,215

Lattice Semiconductor Corp.

     374          01/21/22        USD     90.00        USD     2,882          (33,660

Lattice Semiconductor Corp.

     225          01/21/22        USD     80.00        USD     1,734          (39,375

Leslie’s Inc.

     687          01/21/22        USD     23.00        USD     1,625          (91,027

Lightspeed Commerce Inc.

     344          01/21/22        CAD     135.00        CAD     1,757          (3,807

Lightspeed Commerce Inc.

     423          01/21/22        CAD     92.00        CAD     2,161          (4,682

Lightspeed Commerce Inc.

     213          01/21/22        CAD     64.00        CAD     1,088          (6,735

Masimo Corp.

     267          01/21/22        USD     295.00        USD     7,817          (206,925

Monolithic Power Systems, Inc.

     151          01/21/22        USD     530.00        USD     7,449          (50,963

Natera, Inc.

     390          01/21/22        USD     120.00        USD     3,642          (44,850

Natera, Inc.

     14          01/21/22        USD     105.00        USD     131          (1,435

nCino, Inc.

     542          01/21/22        USD     73.55        USD     2,973          (539

Nuvei Corp.

     415          01/21/22        CAD     145.00        CAD     3,403          (9,186

Nuvei Corp.

     221          01/21/22        CAD     88.00        CAD     1,812          (42,804

Outset Medical, Inc.

     342          01/21/22        USD     55.00        USD     1,576          (32,490

Outset Medical, Inc.

     77          01/21/22        USD     50.00        USD     355          (10,010

Paylocity Holding Corp.

     134          01/21/22        USD     270.00        USD     3,165          (16,415

Paylocity Holding Corp.

     134          01/21/22        USD     290.00        USD     3,165          (18,760

Penn National Gaming, Inc.

     188          01/21/22        USD     70.00        USD     975          (1,222

Penn National Gaming, Inc.

     183          01/21/22        USD     65.00        USD     949          (3,111

Phreesia, Inc.

     93          01/21/22        USD     75.00        USD     387          (20,460

Phreesia, Inc.

     659          01/21/22        USD     65.00        USD     2,745          (3,295

Planet Fitness, Inc., Class A

     414          01/21/22        USD     100.00        USD     3,750          (17,595

Pulmonx Corp.

     362          01/21/22        USD     45.02        USD     1,161          (1,973

Pulmonx Corp.

     87          01/21/22        USD     40.00        USD     279          (4,785

Repligen Corp.

     186          01/21/22        USD     280.00        USD     4,926          (62,775

Saia, Inc.

     123          01/21/22        USD     347.00        USD     4,145          (115,858

Seer Inc., Class A

     310          01/21/22        USD     35.00        USD     707          (57,350

Shoals Technologies Group, Inc., Class A

     88          01/21/22        USD     35.00        USD     214          (440

Shoals Technologies Group, Inc., Class A

     100          01/21/22        USD     40.00        USD     243          (1,000

Shoals Technologies Group, Inc., Class A

     1,240          01/21/22        USD     30.00        USD     3,013          (21,700

Vroom, Inc.

     1,000          01/21/22        USD     27.50        USD     1,079          (75,000

Vroom, Inc.

     500          01/21/22        USD     20.00        USD     540          (2,500

Wingstop, Inc.

     155          01/21/22        USD     175.00        USD     2,678          (72,850

Ambarella, Inc.

     85          01/28/22        USD     220.00        USD     1,725          (57,800

Lattice Semiconductor Corp.

     246          01/28/22        USD     78.50        USD     1,896          (68,754

Lattice Semiconductor Corp.

     138          01/28/22        USD     80.76        USD     1,063          (26,849

Penn National Gaming, Inc.

     400          01/28/22        USD     54.00        USD     2,074          (81,400

Pulmonx Corp.

     335          01/28/22        USD     38.00        USD     1,074          (40,009

Planet Fitness, Inc., Class A

     184          01/31/22        USD     88.00        USD     1,667          (101,847

Fiverr International Ltd.

     450          02/04/22        USD     140.05        USD     5,117          (82,813

Halozyme Therapeutics, Inc.

     310          02/04/22        USD     34.75        USD     1,247          (193,739

Axon Enterprise, Inc.

     207          02/09/22        USD     161.00        USD     3,250          (161,275

 

 

96  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Innovation and Growth Trust (BIGZ)

 

Exchange-Traded Options Written (continued)

 

           
Description     

Number of

Contracts

      

Expiration

Date

     Exercise Price     

Notional

Amount (000)

     Value  
Call (continued)                                                 

10X Genomics, Inc., Class A

       415        02/18/22      USD    160.00      USD      6,182      $ (294,650

908 Devices, Inc.

       350        02/18/22      USD    35.00      USD      905        (16,625

Avalara, Inc.

       80        02/18/22      USD    165.00      USD      1,033        (3,600

Axon Enterprise, Inc.

       210        02/18/22      USD    165.00      USD      3,297        (126,000

AZEK Co., Inc.

       354        02/18/22      USD    45.00      USD      1,637        (115,050

Bill.Com Holdings, Inc.

       256        02/18/22      USD    300.00      USD      6,378        (284,160

Bio-Techne Corp.

       78        02/18/22      USD    520.00      USD      4,035        (196,170

Blackline, Inc.

       174        02/18/22      USD    115.00      USD      1,802        (36,975

Brooks Automation, Inc.

       105        02/18/22      USD    115.00      USD      1,083        (27,300

Certara, Inc.

       105        02/18/22      USD    30.00      USD      298        (26,775

Certara, Inc.

       370        02/18/22      USD    35.00      USD      1,052        (24,050

Chart Industries, Inc.

       283        02/18/22      USD    170.00      USD      4,514        (199,515

DigitalOcean Holdings, Inc.

       106        02/18/22      USD    130.00      USD      851        (5,300

DigitalOcean Holdings, Inc.

       400        02/18/22      USD    85.00      USD      3,213        (248,000

Duolingo, Inc., Class A

       219        02/18/22      USD    120.00      USD      2,324        (120,450

Entegris, Inc.

       757        02/18/22      USD    150.00      USD      10,491        (251,702

Figs, Inc., Class A

       900        02/18/22      USD    30.00      USD      2,480        (159,750

Five9, Inc.

       414        02/18/22      USD    160.00      USD      5,685        (76,590

Fox Factory Holding Corp.

       104        02/18/22      USD    175.00      USD      1,769        (66,040

Freshpet, Inc.

       386        02/18/22      USD    110.00      USD      3,677        (93,605

Gitlab, Inc., Class A

       112        02/18/22      USD    105.00      USD      974        (20,720

Globant SA

       129        02/18/22      USD    310.00      USD      4,052        (293,475

Halozyme Therapeutics, Inc.

       350        02/18/22      USD    41.00      USD      1,407        (49,000

Inmode Ltd.

       150        02/18/22      USD    82.50      USD      1,059        (36,375

Innovative Industrial Properties, Inc.

       82        02/18/22      USD    270.00      USD      2,156        (85,280

Masimo Corp.

       65        02/18/22      USD    305.00      USD      1,903        (56,875

Monolithic Power Systems, Inc.

       151        02/18/22      USD    540.00      USD      7,449        (146,470

Natera, Inc.

       34        02/18/22      USD    110.00      USD      318        (9,690

nCino, Inc.

       510        02/18/22      USD    65.00      USD      2,798        (33,150

nCino, Inc.

       565        02/18/22      USD    60.00      USD      3,100        (103,112

Nuvei Corp.

       221        02/18/22      CAD    96.00      CAD      1,812        (68,137

Outset Medical, Inc.

       522        02/18/22      USD    50.00      USD      2,406        (174,870

Outset Medical, Inc.

       522        02/18/22      USD    55.00      USD      2,406        (70,470

Paylocity Holding Corp.

       129        02/18/22      USD    270.00      USD      3,046        (38,700

Phreesia, Inc.

       461        02/18/22      USD    55.00      USD      1,921        (19,593

Pulmonx Corp.

       13        02/18/22      USD    40.00      USD      42        (1,008
                            

 

 

 
                             $  (7,893,791
                            

 

 

 

OTC Options Written

 

             
Description    Counterparty     

Number of

Contracts

      

Expiration

Date

   Exercise Price   

Notional

Amount (000)

     Value  
Call                                                      

Rexford Industrial Realty, Inc.

   Bank of America N.A.        30,100        01/03/22      USD      68.25      USD        2,441      $  (387,094

Fox Factory Holding Corp.

   Citibank N.A.        38,400        01/04/22      USD      195.60      USD        6,532         

Halma PLC

   Goldman Sachs International        60,500        01/04/22      GBP      31.49      GBP        1,938        (52,186

Kahoot! AS

   UBS AG        500,000        01/04/22      NOK      52.23      NOK        23,037        (5,476

Leslie’s Inc.

   JPMorgan Chase Bank N.A.        68,600        01/04/22      USD      22.05      USD        1,623        (112,430

Masimo Corp.

   BNP Paribas SA        21,100        01/04/22      USD      310.04      USD        6,178        (2,058

Repligen Corp.

   JPMorgan Chase Bank N.A.        12,400        01/04/22      USD      296.69      USD        3,284        (165

Lightspeed Commerce Inc.

   Morgan Stanley & Co. International PLC        46,600        01/06/22      CAD      85.40      CAD        2,380        (2

Shoals Technologies Group, Inc., Class A

   Citibank N.A.        62,000        01/06/22      USD      33.54      USD        1,507        (1

Kahoot! AS

   Morgan Stanley & Co. International PLC        569,150        01/11/22      NOK      54.68      NOK        26,223        (18,038

Shoals Technologies Group, Inc., Class A

   Citibank N.A.        29,800        01/11/22      USD      32.17      USD        724        (184

AZEK Co., Inc.

   Morgan Stanley & Co. International PLC        103,800        01/12/22      USD      40.32      USD        4,800        (667,408

Shoals Technologies Group, Inc., Class A

   Citibank N.A.        59,700        01/14/22      USD      35.85      USD        1,451        (34

Kahoot! AS

   Goldman Sachs International        290,000        01/18/22      NOK      52.94      NOK        13,362        (30,127

Halma PLC

   Morgan Stanley & Co. International PLC        39,400        01/20/22      GBP      32.71      GBP        1,262        (22,059

Kahoot! AS

   Goldman Sachs International        300,000        01/25/22      NOK      55.56      NOK        13,822        (29,267

Shoals Technologies Group, Inc., Class A

   Barclays Bank PLC        70,000        01/26/22      USD      34.66      USD        1,701        (1,544

Phreesia, Inc.

   Citibank N.A.        40,000        01/27/22      USD      57.01      USD        1,666        (16,340

 

 

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

  97


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Innovation and Growth Trust (BIGZ)

 

OTC Options Written (continued)

 

             
Description    Counterparty     

Number of

Contracts

      

Expiration

Date

   Exercise Price   

Notional

Amount (000)

     Value  
Call (continued)                                                      

Certara, Inc.

   Citibank N.A.        22,000        01/28/22      USD      29.91      USD        625      $ (50,161

AZEK Co., Inc.

   Barclays Bank PLC        58,400        01/31/22      USD      44.01      USD        2,700        (172,204

Bio-Techne Corp.

   BNP Paribas SA        7,900        01/31/22      USD      510.73      USD        4,087        (195,850

Blackline, Inc.

   BNP Paribas SA        17,400        01/31/22      USD      111.10      USD        1,802        (35,998

DigitalOcean Holdings, Inc.

   Barclays Bank PLC        51,200        01/31/22      USD      97.04      USD        4,113        (81,286

Globant SA

   Citibank N.A.        12,900        01/31/22      USD      300.48      USD        4,052        (289,870

Rexford Industrial Realty, Inc.

   JPMorgan Chase Bank N.A.        22,200        01/31/22      USD      77.59      USD        1,801        (100,922

Kahoot! AS

   Barclays Bank PLC        500,000        02/01/22      NOK      55.20      NOK        23,037        (71,140

10X Genomics, Inc., Class A

   BNP Paribas SA        13,400        02/02/22      USD      154.22      USD        1,996        (94,199

Avalara, Inc.

   Barclays Bank PLC        17,300        02/02/22      USD      146.13      USD        2,234        (31,107

Axon Enterprise, Inc.

   JPMorgan Chase Bank N.A.        21,200        02/02/22      USD      159.27      USD        3,328        (147,638

Brooks Automation, Inc.

   Citibank N.A.        21,000        02/02/22      USD      108.62      USD        2,165        (67,452

Fox Factory Holding Corp.

   Barclays Bank PLC        10,400        02/02/22      USD      180.93      USD        1,769        (26,509

Paylocity Holding Corp.

   Citibank N.A.        13,300        02/02/22      USD      239.88      USD        3,141        (129,358

Saia, Inc.

   Citibank N.A.        13,900        02/02/22      USD      335.26      USD        4,685        (258,157

Halma PLC

   Goldman Sachs International        8,500        02/08/22      GBP      32.06      GBP        272        (10,984
                           

 

 

 
                            $  (3,107,248
                           

 

 

 

Balances Reported in the Statements of Assets and Liabilities for Options Written

 

           
Description   

Swap

Premiums

Paid

  

Swap

Premiums

Received

  

Unrealized

Appreciation

  

Unrealized

Depreciation

     Value 
Options Written    $        N/A    $        N/A    $  9,733,526    $  (3,319,077)      $  (11,001,039)

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statements 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

             

Options written

             

Options written at value

  $     $     $  11,001,039     $     $     $     $  11,001,039  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

For the period ended December 31, 2021, the effect of derivative financial instruments in the Statements 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:

             

Options purchased

  $     $     $ (264,537   $     $     $     $ (264,537

Options written

                (14,153,519                       (14,153,519
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $     $     $  (14,418,056   $     $     $     $  (14,418,056
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

             

Options written

  $     $     $ 6,414,449     $     $     $     $ 6,414,449  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

   

Options:

  

Average value of option contracts purchased

   $ (a) 

Average value of option contracts written

   $ 26,870,475  

 

  (a)

Derivative not held at any quarter-end. The risk exposure table serves as an indicator of activity during the period.

 

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

 

 

98  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Innovation and Growth Trust (BIGZ)

 

Derivative Financial Instruments — Offsetting as of Period End

The Trust’s derivative assets and liabilities (by type) were as follows:

 

     
      Assets        Liabilities  

Derivative Financial Instruments

       

Options

   $        $ 11,001,039  

Total derivative assets and liabilities in the Statements of Assets and Liabilities

              11,001,039  
  

 

 

      

 

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

              (7,893,791
  

 

 

      

 

 

 

Total derivative assets and liabilities subject to an MNA

   $        $ 3,107,248  
  

 

 

      

 

 

 

The following table presents the Trust’s derivative liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral pledged by the Trust:

 

           

Counterparty

    

Derivative

Liabilities

Subject to

an MNA by

Counterparty

 

 

 

 

 

      

Derivatives

Available

for Offset

 

 

 

      

Non-Cash

Collateral

Pledged

 

 

(a) 

      

Cash

Collateral

Pledged

 

 

 

      

Net Amount

of Derivative

Liabilities(b

 

 

) 

Bank of America N.A.

   $ 387,094        $        $ (387,094      $        $  

Barclays Bank PLC

     383,790                   (383,790                  

BNP Paribas SA

     328,105                            (30,000        298,105  

Citibank N.A.

     811,557                   (811,557                  

Goldman Sachs International

     122,564                   (122,564                  

JPMorgan Chase Bank N.A.

     361,155                   (361,155                  

Morgan Stanley & Co. International PLC

     707,507                   (540,414                 167,093  

UBS AG

     5,476                                     5,476  
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 
   $ 3,107,248        $        $  (2,606,574      $ (30,000      $ 470,674  
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 
  (b)

Net amount represents the net amount payable due to counterparty in the event of default. Net amount may be offset further by the options written receivable/payable on the Statements of Assets and Liabilities.

 

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

                 

Common Stocks

                 

Aerospace & Defense

   $     159,444,134        $        $        $     159,444,134  

Auto Components

     93,470,971                            93,470,971  

Biotechnology

     77,992,073                            77,992,073  

Building Products

     96,101,748                            96,101,748  

Chemicals

     48,606,004                            48,606,004  

Diversified Consumer Services

     38,003,123                   52,682,173          90,685,296  

Electrical Equipment

     63,279,241                            63,279,241  

Electronic Equipment, Instruments & Components

     59,749,533          29,466,596                   89,216,129  

Entertainment

              96,721,421                   96,721,421  

Equity Real Estate Investment Trusts (REITs)

     60,981,228                            60,981,228  

Food Products

     54,447,091                            54,447,091  

Health Care Equipment & Supplies

     271,411,958                            271,411,958  

Health Care Technology

     197,897,636                            197,897,636  

Hotels, Restaurants & Leisure

     111,243,293                            111,243,293  

Internet & Direct Marketing Retail

     64,714,629                            64,714,629  

IT Services

     233,035,191                   49,999,973          283,035,164  

Life Sciences Tools & Services

     315,791,897                            315,791,897  

Machinery

     64,581,329                            64,581,329  

 

 

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

  99


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Innovation and Growth Trust (BIGZ)

 

Fair Value Hierarchy as of Period End (continued)

 

         
      Level 1        Level 2        Level 3        Total  

Common Stocks (continued)

                 

Road & Rail

   $ 60,909,410        $        $        $ 60,909,410  

Semiconductors & Semiconductor Equipment

     356,204,294                            356,204,294  

Software

     668,773,476                   64,357,481          733,130,957  

Specialty Retail

     59,203,557                            59,203,557  

Convertible Notes

                       12,000,000          12,000,000  

Preferred Securities

                 

Preferred Stocks

                       544,568,505          544,568,505  

Short-Term Securities

                 

Money Market Funds

     1,836,203                            1,836,203  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $  3,157,678,019        $  126,188,017        $ 723,608,132          4,007,474,168  
  

 

 

      

 

 

      

 

 

      

 

 

 

Investments Valued at NAV(a)

                    5,204,477  
                 

 

 

 
                  $  4,012,678,645  
                 

 

 

 

Derivative Financial Instruments(b)

                 

Liabilities

                 

Equity Contracts

   $ (7,095,805      $ (3,905,234      $        $ (11,001,039
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Certain investments of the Trust were fair valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

 
  (b)

Derivative financial instruments are options written. Options written are shown at value.

 

A reconciliation of Level 3 financial instruments is presented when the Trust had a significant amount of Level 3 investments at the beginning and/or end of the period in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

 

 

 
     Common
Stocks
     Convertible
Notes
     Preferred
Stocks
     Total  

 

 

Assets

           

Opening balance, as of December 31, 2020

   $             $      $  

Transfers into Level 3

                           

Transfers out of Level 3

                           

Accrued discounts/premiums

                           

Net realized gain (loss)

                           

Net change in unrealized appreciation (depreciation)(a)(b)

     95,372               (20,549,446      (20,454,074

Purchases

     166,944,255        12,000,000        565,117,951        744,062,206  

Sales

                           
  

 

 

    

 

 

    

 

 

    

 

 

 

Closing balance, as of December 31, 2021

   $  167,039,627        12,000,000      $  544,568,505      $  723,608,132  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net change in unrealized appreciation (depreciation) on investments still held at December 31, 2021(b)

   $ 95,372             $ (20,549,446    $ (20,454,074
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)

Included in the related net change in unrealized appreciation (depreciation) in the Statements of Operations.

 
  (b)

Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at December 31, 2021 is generally due to investments no longer held or categorized as Level 3 at period end.

 

The following table summarizes the valuation approaches used and unobservable inputs utilized by the BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) to determine the value of certain of the Trust’s Level 3 financial instruments as of period end.

 

 

           
       Value       

Valuation

Approach

    

Unobservable

Inputs

      

Range of

Unobservable

Inputs

Utilized

 

 

 

(a) 

      

Weighted

Average of

Unobservable

Inputs Based

on Fair Value

 

 

 

 

 

Assets

                      

Common Stocks

     $  167,039,627        Market      Revenue Multiple        22.00x - 31.00x          30.03x  
             EBITDA Multiple        17.25x         
             Recent Transactions        $ 26.21 - $1,942.35          $ 1,119.93  

Convertible Notes

     12,000,000        Market      Recent Transactions        $ 100.00           

Preferred Stocks

     544,568,505        Market      Revenue Multiple        7.25x - 31.00x        14.30x  
             Time to Exit        3.0 - 5.0          3.7  
             Volatility        42% - 90%          62%  
             Recent Transactions        2.13 - $157.01          $ 42.55  

 

 

100  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Innovation and Growth Trust (BIGZ)

 

           
       Value       

Valuation

Approach

    

Unobservable

Inputs

      

Range of

Unobservable

Inputs

Utilized

 

 

 

(a) 

      

Weighted

Average of

Unobservable

Inputs Based

on Fair Value

 

 

 

 

 

             Market Adjustment Multiple        1.00x - 1.00x          1.00x  
  

 

 

                     
     $  723,608,132                      
  

 

 

                     

 

  (a)

A significant change in unobservable input would have resulted in a correlated (inverse) significant change to value.

 

See notes to financial statements.

 

 

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

  101


Schedule of Investments  

December 31, 2021

  

BlackRock Resources & Commodities Strategy Trust (BCX)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

 

Common Stocks

   
Chemicals — 14.6%            

CF Industries Holdings, Inc.(a)(b)

    553,231     $ 39,157,690  

FMC Corp.(b)

    260,025       28,574,147  

Koninklijke DSM NV

    77,640       17,485,017  

Nutrien Ltd.(b)

    529,041       39,783,883  

Sociedad Quimica y Minera de Chile SA, ADR(b)

    133,215       6,718,033  
   

 

 

 
      131,718,770  
Containers & Packaging — 1.3%            

Packaging Corp. of America(b)

    85,308       11,614,684  
   

 

 

 
Electronic Equipment, Instruments & Components — 1.3%  

Trimble, Inc.(b)(c)

    139,986       12,205,379  
   

 

 

 
Food Products — 8.9%            

Bunge Ltd.(b)

    331,854       30,981,889  

Darling Ingredients, Inc.(b)(c)

    155,316       10,761,846  

Hofseth International AS, (Acquired 05/26/21, Cost: $10,198,057)(c)(d)(e)

    18,993,283       9,834,654  

Kerry Group PLC, Class A

    145,298       18,745,718  

Nestle SA, Registered Shares

    70,298       9,814,816  
   

 

 

 
      80,138,923  
Machinery(b) — 3.5%            

AGCO Corp.

    117,352       13,615,179  

Deere & Co.

    52,807       18,106,992  
   

 

 

 
      31,722,171  
Metals & Mining — 29.7%            

Anglo American PLC

    867,456       35,680,390  

ArcelorMittal SA(b)

    444,242       14,140,223  

BHP Group PLC

    1,254,836       37,337,291  

First Quantum Minerals Ltd.

    999,016       23,906,253  

Freeport-McMoRan, Inc.(b)

    91,060       3,799,934  

Glencore PLC

    8,585,532       43,745,670  

Neo Lithium Corp.(c)

    1,790,715       8,946,851  

Newcrest Mining Ltd.

    632,738       11,332,406  

Newmont Corp.(a)(b)

    428,038       26,546,917  

Polyus PJSC, Registered Shares, GDR(f)

    114,130       10,080,644  

Stelco Holdings, Inc.

    269,355       8,777,274  

Teck Resources Ltd.(b)

    377,705       10,885,458  

Vale SA, ADR

    2,329,925       32,665,549  
   

 

 

 
      267,844,860  
Oil, Gas & Consumable Fuels — 40.2%            

Canadian Natural Resources Ltd.

    579,998       24,507,604  

Chevron Corp.(a)(b)

    457,029       53,632,353  

ConocoPhillips(b)

    383,076       27,650,426  

EOG Resources, Inc.

    87,202       7,746,154  

Equinor ASA

    648,712       17,177,431  

Exxon Mobil Corp.(a)(b)

    418,676       25,618,784  

Gazprom PJSC, ADR

    1,943,600       17,947,477  

Hess Corp.

    149,477       11,065,782  

Kosmos Energy Ltd.(c)

    1,777,243       6,149,261  

LUKOIL PJSC, ADR

    72,659       6,510,309  

Marathon Petroleum Corp.(b)

    165,361       10,581,450  

Pioneer Natural Resources Co.

    81,724       14,863,961  

Royal Dutch Shell PLC, Class B, ADR(b)

    1,032,228       44,747,084  

Suncor Energy Inc.

    991,241       24,801,595  
Security   Shares     Value  

 

 

Oil, Gas & Consumable Fuels (continued)

 

 

TotalEnergies SE.

      1,175,214     $ 59,818,637  

Valero Energy Corp.(b)

      124,846       9,377,183  
     

 

 

 
        362,195,491  
Paper & Forest Products — 0.0%  

Precious Woods Holding AG, Registered Shares(c)

      20,000       279,851  
     

 

 

 

Total Common Stocks — 99.5%
(Cost: $656,116,657)

 

    897,720,129  
     

 

 

 
         

Par

(000)

       

 

 

Corporate Bonds

 

Metals & Mining — 0.5%        

Osisko Gold Royalties Ltd., 4.00%, 12/31/22

    CAD       5,556       4,437,069  
     

 

 

 

Total Corporate Bonds — 0.5%
(Cost: $4,434,866)

 

      4,437,069  
     

 

 

 

Total Long-Term Investments — 100.0%
(Cost: $660,551,523)

 

      902,157,198  
     

 

 

 
    Shares        

 

 

Short-Term Securities

 

 
Money Market Funds — 1.8%        

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

      16,654,313       16,654,313  
     

 

 

 

Total Short-Term Securities — 1.8%
(Cost: $16,654,313)

 

    16,654,313  
     

 

 

 

Options Purchased — 0.0%
(Cost: $1,311)

 

     
     

 

 

 

Total Investments Before Options Written — 101.8%
(Cost: $677,207,147)

 

    918,811,511  
     

 

 

 

Options Written — (1.0)%
(Premiums Received: $(8,020,674))

 

    (9,395,723
     

 

 

 

Total Investments, Net of Options Written — 100.8%
(Cost: $669,186,473)

 

    909,415,788  

Liabilities in Excess of Other Assets — (0.8)%

 

    (7,633,899
     

 

 

 

Net Assets — 100.0%

      $  901,781,889  
     

 

 

 

 

(a)

All or a portion of the security has been pledged as collateral in connection with outstanding OTC derivatives.

(b)

All or a portion of the security has been pledged and/or segregated as collateral in connection with outstanding exchange-traded options written.

(c)

Non-income producing security.

(d)

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(e)

Restricted security as to resale, excluding 144A securities. The Trust held restricted securities with a current value of $9,834,654, representing 1.1% of its net assets as of period end, and an original cost of $10,198,057.

(f)

This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

(g)

Affiliate of the Trust.

(h)

Annualized 7-day yield as of period end.

 

 

For Trust compliance purposes, the Trust’s industry classifications refer to one or more of the industry 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 industry sub-classifications for reporting ease.

 

 

102  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Resources & Commodities Strategy Trust (BCX)

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Trust during the year 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

12/31/20

   

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

  $  289,665     $  16,364,648 (a)    $     $     $     $  16,654,313       16,654,313     $ 1,251     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a)

Represents net amount purchased (sold).

 

Derivative Financial Instruments Outstanding as of Period End

OTC Options Purchased

 

             
Description   Counterparty  

Number of

Contracts

      

Expiration

Date

     Exercise Price       

Notional

Amount (000)

     Value  
Call                                                    

Aker BP

  Goldman Sachs International     27,500        01/04/22        NOK       317.85        NOK   7,469      $  
                           

 

 

 

Exchange-Traded Options Written

 

           
Description   Number of
Contracts
       Expiration
Date
     Exercise Price     

Notional

Amount (000)

       Value  
Call                                                  

ArcelorMittal SA

    821        01/07/22        USD     31.00        USD       2,613        $ (87,436

Chevron Corp.

    485        01/07/22        USD     116.25        USD       5,691          (98,543

ConocoPhillips

    457        01/07/22        USD     76.00        USD       3,299          (6,627

Deere & Co.

    69        01/07/22        USD     365.00        USD       2,366          (1,070

Exxon Mobil Corp.

    301        01/07/22        USD     65.01        USD       1,842          (578

Marathon Petroleum Corp.

    95        01/07/22        USD     67.00        USD       608          (1,710

Valero Energy Corp.

    72        01/07/22        USD     76.00        USD       541          (6,012

ArcelorMittal SA

    821        01/14/22        USD     31.00        USD       2,613          (117,813

CF Industries Holdings, Inc.

    733        01/14/22        USD     63.00        USD       5,188          (531,425

Chevron Corp.

    390        01/14/22        USD     121.00        USD       4,577          (21,450

ConocoPhillips

    121        01/14/22        USD     75.00        USD       873          (7,865

Deere & Co.

    33        01/14/22        USD     375.00        USD       1,132          (644

Exxon Mobil Corp.

    301        01/14/22        USD     65.01        USD       1,842          (3,071

Freeport-McMoRan, Inc.

    420        01/14/22        USD     40.00        USD       1,753          (92,610

Newmont Corp.

    528        01/14/22        USD     59.00        USD       3,275          (179,520

Nutrien Ltd.

    739        01/14/22        USD     73.00        USD       5,557          (221,700

Valero Energy Corp.

    98        01/14/22        USD     75.00        USD       736          (19,012

AGCO Corp.

    217        01/21/22        USD     120.00        USD       2,518          (35,262

Bunge Ltd.

    613        01/21/22        USD     100.00        USD       5,723          (19,923

Canadian Natural Resources Ltd.

    561        01/21/22        CAD     54.00        CAD       2,999          (49,450

Canadian Natural Resources Ltd.

    1,584        01/21/22        CAD     56.00        CAD       8,466          (56,976

CF Industries Holdings, Inc.

    420        01/21/22        USD     65.00        USD       2,973          (264,600

CF Industries Holdings, Inc.

    436        01/21/22        USD     72.50        USD       3,086          (64,310

Chevron Corp.

    482        01/21/22        USD     115.00        USD       5,656          (179,545

ConocoPhillips

    206        01/21/22        USD     75.00        USD       1,487          (18,643

Darling Ingredients, Inc.

    287        01/21/22        USD     80.00        USD       1,989          (5,023

Exxon Mobil Corp.

    302        01/21/22        USD     65.00        USD       1,848          (6,342

First Quantum Minerals Ltd.

    589        01/21/22        CAD     29.00        CAD       1,783          (90,332

FMC Corp.

    490        01/21/22        USD     110.00        USD       5,385          (96,775

Freeport-McMoRan, Inc.

    251        01/21/22        USD     43.00        USD       1,047          (22,716

Marathon Petroleum Corp.

    190        01/21/22        USD     67.50        USD       1,216          (10,925

Marathon Petroleum Corp.

    8        01/21/22        USD     65.00        USD       51          (1,060

Newmont Corp.

    527        01/21/22        USD     62.50        USD       3,268          (77,205

Packaging Corp. of America

    316        01/21/22        USD     135.00        USD       4,302          (82,950

Royal Dutch Shell PLC, Class B, ADR

    829        01/21/22        USD     47.50        USD       3,594          (8,290

Sociedad Quimica y Minera de Chile SA, ADR

    246        01/21/22        USD     75.00        USD       1,241          (65,190

Stelco Holdings Inc.

    498        01/21/22        CAD     49.00        CAD       2,053          (6,890

 

 

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

  103


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Resources & Commodities Strategy Trust (BCX)

 

Exchange-Traded Options Written (continued)

           
Description  

Number of

Contracts

      

Expiration

Date

   Exercise Price   

Notional

Amount (000)

    Value  
Call (continued)                                           

Suncor Energy Inc.

    2,342        01/21/22      CAD     33.00      CAD       7,412     $ (58,321

Teck Resources Ltd.

    825        01/21/22      USD     29.00      USD       2,378       (78,787

Valero Energy Corp.

    291        01/21/22      USD     80.00      USD       2,186       (18,042

CF Industries Holdings, Inc.

    457        01/28/22      USD     68.00      USD       3,235       (191,940

Chevron Corp.

    334        01/28/22      USD     120.00      USD       3,919       (52,104

ConocoPhillips

    239        01/28/22      USD     75.00      USD       1,725       (29,875

Deere & Co.

    93        01/28/22      USD     365.00      USD       3,189       (18,135

Exxon Mobil Corp.

    491        01/28/22      USD     65.00      USD       3,004       (18,413

Exxon Mobil Corp.

    154        01/28/22      USD     64.00      USD       942       (8,547

Marathon Petroleum Corp.

    118        01/28/22      USD     66.00      USD       755       (16,402

Newmont Corp.

    528        01/28/22      USD     63.00      USD       3,275       (81,840

Nutrien Ltd.

    802        01/28/22      USD     71.00      USD       6,031       (413,030

Royal Dutch Shell PLC, Class B, ADR

    1,045        01/28/22      USD     46.25      USD       4,530       (32,604

Teck Resources Ltd.

    572        01/28/22      USD     29.50      USD       1,649       (50,622

Nutrien Ltd.

    416        02/04/22      USD     77.00      USD       3,128       (76,960

EOG Resources, Inc.

    322        02/11/22      USD     91.00      USD       2,860       (99,981

AGCO Corp.

    217        02/18/22      USD     125.00      USD       2,518       (75,407

ConocoPhillips

    228        02/18/22      USD     77.50      USD       1,646       (32,718

ConocoPhillips

    166        02/18/22      USD     72.50      USD       1,198       (54,365

Darling Ingredients, Inc.

    287        02/18/22      USD     69.00      USD       1,989       (100,489

FMC Corp.

    472        02/18/22      USD     110.00      USD       5,187       (177,000

Marathon Petroleum Corp.

    200        02/18/22      USD     70.00      USD       1,280       (18,300

Royal Dutch Shell PLC, Class B, ADR

    911        02/18/22      USD     45.00      USD       3,949       (86,545

Sociedad Quimica y Minera de Chile SA, ADR

    246        02/18/22      USD     60.00      USD       1,241       (103,320

Stelco Holdings Inc.

    498        02/18/22      CAD     46.00      CAD       2,053       (85,628

Suncor Energy Inc.

    1,325        02/18/22      CAD     32.00      CAD       4,194       (134,600

Trimble, Inc.

    517        02/18/22      USD     90.00      USD       4,508       (130,542
                  

 

 

 
                   $  (4,804,010
                  

 

 

 

OTC Options Written

             
Description   Counterparty   

Number of

Contracts

      

Expiration

Date

   Exercise Price   

Notional

Amount (000)

     Value  
Call                                                   

Aker BP

  Morgan Stanley & Co. International PLC      27,500        01/04/22      NOK      317.86      NOK        7,469      $  

Gazprom PJSC, ADR

  Morgan Stanley & Co. International PLC      211,300        01/04/22      USD      9.62      USD        1,952        (2,405

Statoil ASA

  Morgan Stanley & Co. International PLC      161,000        01/05/22      NOK      229.81      NOK        37,544        (109,301

BHP Group PLC

  Goldman Sachs International      139,500        01/11/22      GBP      19.99      GBP        3,068        (376,682

Gazprom PJSC, ADR

  Morgan Stanley & Co. International PLC      211,300        01/11/22      USD      9.71      USD        1,952        (7,776

Glencore PLC

  Morgan Stanley & Co. International PLC      336,000        01/11/22      GBP      3.76      GBP        1,265        (31,709

Koninklijke DSM N.V

  Credit Suisse International      16,300        01/11/22      EUR      197.47      EUR        3,224        (48,610

LUKOIL PJSC, ADR

  Morgan Stanley & Co. International PLC      5,900        01/11/22      USD      95.01      USD        528        (77

Total SA

  Goldman Sachs International      77,500        01/11/22      EUR      44.23      EUR        3,465        (86,094

Anglo American PLC

  Goldman Sachs International      62,000        01/13/22      GBP      29.02      GBP        1,884        (142,116

Statoil ASA

  UBS AG      25,000        01/13/22      NOK      234.66      NOK        5,830        (15,216

Anglo American PLC

  Morgan Stanley & Co. International PLC      190,560        01/18/22      GBP      29.65      GBP        5,791        (374,032

BHP Group PLC

  UBS AG      278,500        01/18/22      GBP      19.17      GBP        6,126        (1,104,510

Gazprom PJSC, ADR

  Morgan Stanley & Co. International PLC      211,300        01/18/22      USD      9.80      USD        1,952        (33,128

Statoil ASA

  Morgan Stanley & Co. International PLC      25,000        01/18/22      NOK      230.80      NOK        5,830        (23,283

Total SA

  Goldman Sachs International      106,500        01/18/22      EUR      44.69      EUR        4,761        (109,235

Gazprom PJSC, ADR

  Morgan Stanley & Co. International PLC      85,200        01/20/22      USD      9.58      USD        787        (9,366

Statoil ASA

  Morgan Stanley & Co. International PLC      29,100        01/20/22      NOK      245.86      NOK        6,786        (9,909

Newcrest Mining Ltd.

  JPMorgan Chase Bank N.A.      126,100        01/25/22      AUD      24.33      AUD        3,104        (77,707

Glencore PLC

  Goldman Sachs International      720,600        01/27/22      GBP      3.73      GBP        2,713        (124,349

Koninklijke DSM N.V

  Goldman Sachs International      19,800        01/27/22      EUR      195.85      EUR        3,917        (103,665

Total SA

  Goldman Sachs International      130,900        01/27/22      EUR      41.62      EUR        5,842        (462,054

Bunge Ltd.

  Citibank N.A.      61,400        01/31/22      USD      91.61      USD        5,732        (216,287

Glencore PLC

  Goldman Sachs International      1,360,100        02/01/22      GBP      3.81      GBP        5,120        (207,589

Nestle SA, Registered Shares

  Morgan Stanley & Co. International PLC      13,000        02/01/22      CHF      125.04      CHF        1,654        (47,595

Royal Dutch Shell PLC, Class B, ADR

  Citibank N.A.      103,400        02/02/22      USD      44.00      USD        4,482        (89,265

Kerry Group PLC, Class A

  UBS AG      53,700        02/03/22      EUR      115.68      EUR        6,085        (71,673

 

 

104  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Resources & Commodities Strategy Trust (BCX)

 

OTC Options Written (continued)

             
Description    Counterparty   

Number of

Contracts

      

Expiration

Date

    Exercise Price    

Notional

Amount (000)

       Value  
Call (continued)                                                      

LUKOIL PJSC, ADR

   Credit Suisse International      21,000          02/03/22     USD        90.41     USD      1,880        $ (37,513

Nestle SA, Registered Shares

   UBS AG      13,000          02/08/22     CHF        128.85     CHF      1,654          (22,497

Newcrest Mining Ltd.

   JPMorgan Chase Bank N.A.      108,000          02/08/22     AUD        23.75     AUD      2,659          (107,585

Total SA

   UBS AG      119,900          02/08/22     EUR        44.57     EUR      5,361          (179,871

Anglo American PLC

   UBS AG      68,400          02/10/22     GBP        30.70     GBP      2,079          (133,624

Glencore PLC

   Credit Suisse International      760,000          02/10/22     GBP        3.77     GBP      2,861          (149,969

Public Joint Stock Polyus, GDR

   Morgan Stanley & Co. International PLC      21,000          02/10/22     USD        88.64     USD      1,853          (77,021
                           

 

 

 
                            $  (4,591,713
                           

 

 

 

Balances Reported in the Statements of Assets and Liabilities for Options Written

 

           
Description   

Swap

Premiums

Paid

    

Swap

Premiums

Received

    

Unrealized

Appreciation

  

Unrealized

Depreciation

   Value 
Options Written    $        N/A      $        N/A      $  2,096,639    $ (3,471,688)    $ (9,395,723)

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statements 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

             

Options written

             

Options written at value

  $     $     $  9,395,723     $     $     $     $  9,395,723  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

For the period ended December 31, 2021, the effect of derivative financial instruments in the Statements 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:

                                

Options purchased(a)

   $        $        $ (21,778      $        $        $        $ (21,778

Options written

                       (30,769,396                                   (30,769,396
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 
   $        $        $  (30,791,174      $        $        $        $  (30,791,174
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                                

Options purchased(b)

   $        $        $ (1,311      $        $        $        $ (1,311

Options written

                       5,449,330                                     5,449,330  
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 
   $        $        $ 5,448,019        $        $        $        $ 5,448,019  
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Options purchased are included in net realized gain (loss) from investments — unaffiliated.

 
  (b)

Options purchased are included in net change in unrealized appreciation (depreciation) on investments — unaffiliated.

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

   

Options:

  

Average value of option contracts purchased

   $ 1,870  

Average value of option contracts written

   $  7,951,354  

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

 

 

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

  105


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Resources & Commodities Strategy Trust (BCX)

 

Derivative Financial Instruments — Offsetting as of Period End

The Trust’s derivative assets and liabilities (by type) were as follows:

 

     
      Assets        Liabilities  

Derivative Financial Instruments

       

Options

   $        $ 9,395,723  
  

 

 

      

 

 

 

Total derivative assets and liabilities in the Statements of Assets and Liabilities

              9,395,723  
  

 

 

      

 

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

              (4,804,010
  

 

 

      

 

 

 

Total derivative assets and liabilities subject to an MNA

   $        $ 4,591,713  
  

 

 

      

 

 

 

The following table presents the Trust’s derivative liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral pledged by the Trust:

 

           

Counterparty

    

Derivative

Liabilities

Subject to

an MNA by

Counterparty

 

 

 

 

 

    

Derivatives

Available

for Offset

 

 

 

    

  Non-Cash

Collateral

Pledged

 

 

(a) 

   

Cash

  Collateral

Pledged

 

 

 

    

Net Amount

of Derivative

Liabilities

 

 

(b) 

Citibank N.A.

   $ 305,552      $      $     $ (270,000    $ 35,552  

Credit Suisse International

     236,092               (236,092             

Goldman Sachs International

     1,611,784               (1,611,784             

JPMorgan Chase Bank N.A.

     185,292                            185,292  

Morgan Stanley & Co. International PLC

     725,602               (725,602             

UBS AG

     1,527,391               (1,527,391             
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 
   $ 4,591,713      $      $ (4,100,869   $ (270,000    $ 220,844  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

  (a)

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 
  (b)

Net amount represents the net amount payable due to counterparty in the event of default. Net amount may be offset further by the options written receivable/payable on the Statements of Assets and Liabilities.

 

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

                 

Common Stocks

                 

Chemicals

   $ 114,233,753        $ 17,485,017        $        $ 131,718,770  

Containers & Packaging

     11,614,684                            11,614,684  

Electronic Equipment, Instruments & Components

     12,205,379                            12,205,379  

Food Products

     41,743,735          28,560,534          9,834,654          80,138,923  

Machinery

     31,722,171                            31,722,171  

Metals & Mining

     129,668,459          138,176,401                   267,844,860  

Oil, Gas & Consumable Fuels

     260,741,637          101,453,854                   362,195,491  

Paper & Forest Products

              279,851                   279,851  

Corporate Bonds

     4,437,069                            4,437,069  

Short-Term Securities

                 

Money Market Funds

     16,654,313                            16,654,313  

Options Purchased

                 

Equity Contracts

                                0  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $  623,021,200        $  285,955,657        $  9,834,654        $  918,811,511  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(a)

                 

Equity Contracts

   $        $        $        $  

 

 

106  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Resources & Commodities Strategy Trust (BCX)

 

Fair Value Hierarchy as of Period End (continued)

 

                                                                                   
         
      Level 1        Level 2        Level 3        Total  

Liabilities

                 

Equity Contracts

   $ (4,568,725      $ (4,826,998      $             —        $ (9,395,723
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ (4,568,725      $ (4,826,998      $        $ (9,395,723
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Derivative financial instruments are options written. Options written are shown at value.

 

A reconciliation of Level 3 financial instruments is presented when the Trust had a significant amount of Level 3 investments at the beginning and/or end of the year in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

 

 

 
     Common
Stocks
 

 

 

Assets

  

Opening balance, as of December 31, 2020

   $  

Transfers into Level 3

      

Transfers out of Level 3

      

Accrued discounts/premiums

      

Net realized gain (loss)

      

Net change in unrealized appreciation (depreciation)(a)(b)

     (363,403

Purchases

     10,198,057  

Sales

      
  

 

 

 

Closing balance, as of December 31, 2021

   $ 9,834,654  
  

 

 

 

Net change in unrealized appreciation (depreciation) on investments still held at December 31, 2021(b)

   $ (363,403
  

 

 

 

 

  (a)

Included in the related net change in unrealized appreciation (depreciation) in the Statements of Operations.

 
  (b)

Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at December 31, 2021 is generally due to investments no longer held or categorized as Level 3 at period end.

 

The following table summarizes the valuation approaches used and unobservable inputs utilized by the BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) to determine the value of certain of the Trust’s Level 3 investments as of period end.

 

         
       Value         

Valuation

Approach

 

 

    

Unobservable

Inputs(a)

      

Range of

Unobservable

Inputs

Utilized

 

 

 

(a) 

Assets

                 

Common Stocks

   $ 9,834,654          Market        EBITDA Multiple        15.75x  
                 
  

 

 

                
   $  9,834,654                 
  

 

 

                

 

  (a)

A significant change in unobservable input would have resulted in a correlated (inverse) significant change to value.

 

See notes to financial statements.

 

 

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

  107


Consolidated Schedule of Investments  

December 31, 2021

  

BlackRock Science and Technology Trust (BST)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   

Airlines — 0.1%

   

Lilium NV, (Acquired 09/13/21,
Cost: $3,500,000)(a)

    350,000     $ 2,425,500  
   

 

 

 
Automobiles — 3.1%            

Arrival SA, (Acquired 09/27/21,
Cost: $6,054,721)(a)

    835,013       6,195,796  

Arrival SA(b)(c)

    255,430       1,895,291  

Rivian Automotive, Inc., Class A(b)(c)

    78,653       8,155,530  

Tesla, Inc.(b)(c)

    33,525       35,428,549  
   

 

 

 
        51,675,166  
Banks — 2.1%            

Klarna Holdings AB, (Acquired 08/07/19, Cost: $7,971,978)(a)(d)

    26,430       36,095,339  
   

 

 

 
Capital Markets — 0.2%            

Coinbase Global, Inc., Class A(b)(c)

    15,249       3,848,390  
   

 

 

 
Diversified Consumer Services — 0.2%            

Think & Learn Private Ltd., (Acquired 09/30/20, Cost: $1,524,948)(a)(d)

    997       3,134,792  
   

 

 

 
Electrical Equipment(c) — 1.0%            

Fluence Energy, Inc.

    332,617       11,827,860  

Shoals Technologies Group, Inc., Class A(b)

    186,699       4,536,786  
   

 

 

 
      16,364,646  
Electronic Equipment, Instruments & Components — 0.8%  

Samsung SDI Co. Ltd.(c)

    23,749       13,061,282  
   

 

 

 
Entertainment — 0.6%            

Roku, Inc.(b)(c)

    46,767       10,672,229  
   

 

 

 
Hotels, Restaurants & Leisure(c) — 1.0%            

Airbnb, Inc., Class A(b)

    37,782       6,290,325  

SiteMinder Ltd.

    2,145,680       10,552,965  
   

 

 

 
      16,843,290  
Interactive Media & Services — 8.0%            

Alphabet, Inc., Class A(b)(c)

    15,340       44,440,594  

Kakao Corp.(c)

    277,541       26,208,818  

Meta Platforms, Inc., Class A(b)(c)

    68,973       23,199,069  

Snap, Inc., Class A(b)(c)

    288,083       13,548,543  

Z Holdings Corp.

    2,013,100       11,615,567  

ZoomInfo Technologies, Inc.(b)(c)

    247,538       15,891,940  
   

 

 

 
      134,904,531  
Internet & Direct Marketing Retail — 3.6%  

Amazon.com, Inc.(b)(c)

    10,548       35,170,618  

Delivery Hero SE(c)(e)

    91,619       10,141,356  

Jasper Infotech Private Ltd., Series I, (Acquired 08/18/15, Cost: $1,998,435)(a)(d)

    1,054       252,707  

MercadoLibre, Inc.(b)(c)

    11,717       15,799,203  
   

 

 

 
      61,363,884  
IT Services — 17.4%            

Accenture PLC, Class A(b)

    52,691       21,843,054  

Adyen NV(c)(e)

    4,805       12,613,123  

Automattic, Inc., Series E, (Acquired 02/03/21, Cost: $7,999,945)(a)(d)

    94,117       8,061,121  

Block, Inc., Class A(b)(c)

    117,879       19,038,637  

GMO Payment Gateway, Inc.

    88,800       11,057,965  

Marqeta, Inc., Class A(b)(c)

    393,939       6,763,933  

Mastercard, Inc., Class A(b)

    79,688       28,633,492  

MongoDB, Inc.(b)(c)

    34,790       18,416,087  

Okta, Inc.(b)(c)

    78,094       17,506,332  
Security   Shares     Value  
IT Services (continued)            

PayPal Holdings, Inc.(b)(c)

    120,588     $ 22,740,485  

Salt Pay Co., Ltd., (Acquired 12/17/21,
Cost: $24,999,987)(a)(d)

    12,871       24,999,987  

Shopify, Inc., Class A(b)(c)

    13,332       18,363,363  

Snowflake, Inc., Class A(b)(c)

    13,836       4,686,945  

Thoughtworks Holding, Inc.(b)(c)(f)

    469,678       12,592,067  

TRAX Ltd., Series D, (Acquired 02/18/21,
Cost: $1,999,989)(a)(d)

    38,361       1,955,644  

TRAX Ltd., Series E, (Acquired 09/12/19,
Cost: $4,000,013)(a)(d)

    106,667       5,437,884  

Twilio, Inc., Class A(b)(c)

    73,673       19,401,048  

Visa, Inc., Class A(b)

    108,573       23,528,855  

Wise PLC, Class A(c)

    1,418,170       14,583,561  
   

 

 

 
      292,223,583  
Professional Services — 1.1%            

Planet Labs, (Acquired 12/07/21,
Cost: $10,000,000)(a)

    1,000,000       5,473,249  

Recruit Holdings Co. Ltd.

    200,300       12,189,394  
   

 

 

 
      17,662,643  
Road & Rail — 1.0%            

Ant Group Co., Ltd, Series C, (Acquired 05/18/18, Cost: $6,492,863)(a)(d)

    1,703,548       6,541,624  

Didi Global, Inc., (Acquired 07/08/21, Cost: $3,016,964)(a)

    440,012       2,191,260  

Lyft, Inc., Class A(b)(c)

    200,874       8,583,346  
   

 

 

 
      17,316,230  
Semiconductors & Semiconductor Equipment — 15.5%  

Advanced Micro Devices, Inc.(b)(c)

    116,805       16,808,240  

Alphawave IP Group PLC(c)(f)

    1,539,553       4,163,556  

Analog Devices, Inc.(b)

    48,346       8,497,776  

ASML Holding NV

    38,821       31,096,391  

Globalfoundries, Inc.(b)(c)

    169,368       11,003,839  

Lam Research Corp.(b)

    42,915       30,862,322  

Marvell Technology, Inc.(b)

    643,118       56,266,394  

Monolithic Power Systems, Inc.(b)

    34,453       16,996,699  

Renesas Electronics Corp.(c)

    1,178,800       14,641,522  

Soitec SA(c)

    77,414       18,967,281  

STMicroelectronics NV

    294,072       14,460,969  

Taiwan Semiconductor Manufacturing Co. Ltd., ADR(b)

    170,423       20,503,591  

Wolfspeed, Inc.(b)(c)

    146,517       16,376,205  
   

 

 

 
        260,644,785  
Software — 22.6%            

Adobe, Inc.(b)(c)

    36,933       20,943,227  

AppLovin Corp., Class A(b)(c)

    177,617       16,742,178  

Atlassian Corp. PLC, Class A(b)(c)

    46,973       17,910,335  

Autodesk, Inc.(b)(c)

    47,688       13,409,389  

Avalara, Inc.(b)(c)

    84,392       10,895,851  

AvidXchange Holdings, Inc.(b)(c)

    337,955       5,089,602  

AvidXchange, Inc., (Acquired 07/29/20,
Cost: $2,022,088)(a)

    165,028       2,415,595  

Cadence Design Systems, Inc.(b)(c)

    100,929       18,808,119  

Coupa Software, Inc.(b)(c)

    60,634       9,583,204  

Crowdstrike Holdings, Inc., Class A(b)(c)

    52,735       10,797,491  

CS Disco, Inc.(b)(c)

    212,149       7,584,327  

Databricks, Inc., (Acquired 07/24/20,
Cost: $960,476)(a)(d)

    19,999       4,048,198  
 

 

 

108  

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


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust (BST)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Software (continued)            

DataRobot, Inc., Series F, (Acquired 03/01/21,
Cost: $583,275)(a)(d)

    38,789     $ 1,154,749  

Elastic NV(b)(c)

    67,504       8,309,067  

Freshworks, Inc., Class A(b)(c)

    165,642       4,349,759  

GitLab, Inc., Series E, (Acquired 09/10/19,
Cost: $2,915,501)(a)

    156,500       13,229,727  

Grammarly, Inc., (Acquired 11/17/21,
Cost: $18,749,975)(a)(d)

    715,323       18,748,616  

Intuit, Inc.(b)

    30,003       19,298,530  

Microsoft Corp.(b)

    216,485       72,808,235  

Patreon, Inc., (Acquired 08/19/21,
Cost: $3,352,226)(a)(d)

    59,524       3,333,344  

Paycom Software, Inc.(b)(c)

    14,104       5,855,840  

salesforce.com, Inc.(b)(c)

    58,281       14,810,950  

ServiceNow, Inc.(b)(c)

    34,251       22,232,667  

Snorkel AI, Inc., (Acquired 06/30/21,
Cost: $997,636)(a)(d)

    66,422       951,163  

Snyk Ltd., (Acquired 09/02/21,
Cost: $5,192,307)(a)(d)

    361,972       4,716,495  

Unity Software, Inc.(b)(c)

    116,832       16,705,808  

Xero Ltd.(c)

    130,197       13,326,857  

Zscaler, Inc.(b)(c)

    69,368       22,290,019  
   

 

 

 
      380,349,342  
Specialty Retail — 0.5%  

Cazoo Group Ltd., (Acquired 10/08/20,
Cost: $5,162,370)(a)

    1,298,058       7,709,880  
   

 

 

 
Technology Hardware, Storage & Peripherals — 4.6%  

Apple, Inc.(b)

    432,559       76,809,502  
   

 

 

 

Total Common Stocks — 83.4%
(Cost: $584,351,893)

 

      1,403,105,014  
   

 

 

 
    

Par

(000)

        

Convertible Notes

 

Software — 0.5%

   

Warhol, Inc.(Acquired: 12/14/21,
Cost: $8,000,000), 0.00%(a)(d)

  $ 80       8,000,000  
   

 

 

 

Total Convertible Notes — 0.5%
(Cost: $8,000,000)

 

    8,000,000  
   

 

 

 
     Shares         

Preferred Securities

 

Preferred Stocks — 14.3%(a)(d)

 

Chemicals — 0.6%

   

Solugen, Inc., (Acquired 09/02/21,
Cost: $9,999,977)

    269,284       9,923,115  
   

 

 

 

Diversified Consumer Services — 0.2%

   

Think & Learn Private Ltd., Series F, (Acquired 09/30/20, Cost: $3,052,975)

    1,054       3,314,013  
   

 

 

 
Security   Shares     Value  

Diversified Financial Services — 0.6%

 

Trumid Holdings LLC, Class L, (Acquired 09/15/21,
Cost: $9,999,695)(g)

    11,420     $ 10,273,081  
   

 

 

 

Electrical Equipment — 0.5%

 

Credo Technology Group Holding Ltd.

   

Series D, (Acquired 03/20/20,
Cost: $5,000,001)

    1,001,382       7,830,807  

Series D+, (Acquired 01/22/20,
Cost: $404,498)

    69,679       544,890  
   

 

 

 
      8,375,697  
Entertainment — 0.4%            

Discord, Inc., Series I, (Acquired 09/13/21,
Cost: $7,000,088)

    12,713       6,299,418  
   

 

 

 

Food & Staples Retailing — 0.4%

 

Grubmarket, Inc., Series E, (Acquired 10/18/21,
Cost: $6,999,994)

    709,724       6,997,879  
   

 

 

 

Food Products — 0.8%

 

Farmer’s Business Network, Inc.

   

(Acquired 09/15/21, Cost: $6,999,963)

    112,616       7,293,012  

Series F, (Acquired 07/31/20,
Cost: $2,999,886)

    90,750       5,876,970  
   

 

 

 
        13,169,982  
Interactive Media & Services — 0.9%  

ByteDance Ltd., Series E-1, (Acquired 11/11/20,
Cost: $9,999,959)

    91,262       14,925,915  
   

 

 

 

IT Services — 1.0%

   

Deep Instinct Ltd., Series D-2, (Acquired 03/19/21, Cost: $2,999,391)

    493,493       3,118,876  

Trumid Holdings LLC(g)

   

Class J-A, (Acquired 07/24/20,
Cost: $2,499,716)

    5,038       4,532,034  

Class J-B, (Acquired 07/24/20,
Cost: $1,499,830)

    5,038       4,532,030  

Voltron Data, Inc., (Acquired 07/14/21,
Cost: $5,000,000)

    9,090,909       5,363,636  
   

 

 

 
      17,546,576  

Road & Rail — 0.3%

   

FlixMobility GmbH, Series F, (Acquired 07/26/19,
Cost: $5,482,937)

    275       5,673,457  
   

 

 

 

Semiconductors & Semiconductor Equipment — 3.1%

 

Psiquantum Corp., Series C, (Acquired 09/09/19,
Cost: $3,200,234)

    690,003       14,110,561  

PsiQuantum Corp., Series D, (Acquired 05/21/21,
Cost: $5,000,025)

    190,650       4,974,059  

Rivos, Series A, (Acquired 12/03/21,
Cost: $12,003,705)

    1,500,000       12,003,750  

SambaNova Systems, Inc., Series C, (Acquired 02/20/20,
Cost: $9,972,125)

    187,300       20,295,828  
   

 

 

 
      51,384,198  

Software — 5.5%

   

Databricks, Inc.

   

Series F, (Acquired 10/22/19,
Cost: $3,999,999)

    93,135       18,852,387  

Series G, (Acquired 02/01/21,
Cost: $4,500,001)

    25,371       5,135,598  

DataRobot, Inc., Series F, (Acquired 10/27/20,
Cost: $2,999,996)

    228,276       6,795,776  

Grammarly, Inc., Series 3, (Acquired 11/17/21,
Cost: $6,249,992)

    238,441       6,249,538  
 

 

 

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

    109  


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust (BST)

(Percentages shown are based on Net Assets)

 

Security   Shares      Value  
Software (continued)             

MNTN Digital, Inc., (Acquired 11/05/21,
Cost: $24,999,980)

    1,088,598      $ 25,005,096  

Patreon, Inc., Series D, (Acquired 07/14/21,
Cost: $6,666,632)

    119,047        6,666,632  

Prosimo, Inc., Series B, (Acquired 11/04/21,
Cost: $4,999,998)

    2,515,811        4,981,306  

Snorkel AI, Inc., Series C, (Acquired 06/30/21,
Cost: $4,999,985)

    332,896        4,767,071  

Snyk Ltd., (Acquired 09/02/21,
Cost: $4,807,688)

    335,159        4,367,122  

Unqork, Inc.

    

Series B, (Acquired 09/19/19,
Cost: $3,198,416)

    281,080        8,111,969  

Series C, (Acquired 09/18/20,
Cost: $1,303,260)

    47,600        1,373,736  
    

 

 

 
       92,306,231  
    

 

 

 

Total Preferred Stocks — 14.3%

       240,189,562  
    

 

 

 

Total Preferred Securities — 14.3%
(Cost: $178,840,946)

 

     240,189,562  
    

 

 

 

Warrants

    

IT Services — 0.0%

    

TRAX Ltd., (Acquired 09/12/19, Cost: $0)(a)(d)

    17,065        117,749  
    

 

 

 

Total Warrants — 0.0%
(Cost: $ — )

 

     117,749  
    

 

 

 

Total Long-Term Investments — 98.2%
(Cost: $771,192,839)

 

     1,651,412,325  
    

 

 

 

Short-Term Securities

    

Money Market Funds — 2.6%

    

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

    42,574,872        42,574,872  

SL Liquidity Series, LLC, Money Market
Series, 0.15%(h)(i)(j)

    840,312        840,396  
    

 

 

 

Total Short-Term Securities — 2.6%
(Cost: $43,415,268)

       43,415,268  
    

 

 

 

Total Investments Before Options Written — 100.8%
(Cost: $814,608,107)

 

     1,694,827,593  
    

 

 

 

Options Written — (0.6)%
(Premiums Received: $(15,509,931))

 

     (9,725,028
    

 

 

 

Total Investments, Net of Options Written — 100.2%
(Cost: $799,098,176)

 

     1,685,102,565  

Liabilities in Excess of Other Assets — (0.2)%

 

     (3,936,127
    

 

 

 

Net Assets — 100.0%

     $ 1,681,166,438  
    

 

 

 
(a)

Restricted security as to resale, excluding 144A securities. The Trust held restricted securities with a current value of $407,379,981, representing 24.2% of its net assets as of period end, and an original cost of $306,336,643.

(b)

All or a portion of the security has been pledged and/or segregated as collateral in connection with outstanding exchange-traded options written.

(c)

Non-income producing security.

(d)

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(e)

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.

(f)

All or a portion of this security is on loan.

(g)

All or a portion of the security is held by a wholly-owned subsidiary. See Note 1 of the Notes to Consolidated Financial Statements for details on the wholly-owned subsidiary.

(h)

Affiliate of the Trust.

(i)

Annualized 7-day yield as of period end.

(j)

All or a portion of this security was purchased with the cash collateral from loaned securities.

 

 

For Trust compliance purposes, the Trust’s industry classifications refer to one or more of the industry 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 industry sub-classifications for reporting ease.

 

 

110  

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


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust (BST)

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Trust during the year 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

12/31/20

   

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

  $  9,266,737     $  33,308,135 (a)    $     $     $     $ 42,574,872       42,574,872     $ 4,959     $  

SL Liquidity Series, LLC, Money Market Series

          841,774 (a)            (1,378           840,396       840,312       757,849 (b)       
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $  (1,378   $     $ 43,415,268       $  762,808     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a)

Represents net amount purchased (sold).

 
  (b)

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Derivative Financial Instruments Outstanding as of Period End

Exchange-Traded Options Written

 

           
Description   Number of
Contracts
    

    Expiration

Date

             Exercise Price     

Notional

            Amount (000)

     Value  
Call                                            

Airbnb, Inc., Class A

    38        01/07/22      USD      200.00      USD      633      $ (133

Alphabet Inc., Class A

    14        01/07/22      USD      2,925.00      USD      4,056        (23,940

Amazon.com, Inc.

    10        01/07/22      USD      3,525.00      USD      3,334        (4,175

Analog Devices, Inc.

    4        01/07/22      USD      185.00      USD      70        (310

Apple, Inc.

    235        01/07/22      USD      153.38      USD      4,173            (568,610

Atlassian PLC, Class A

    40        01/07/22      USD      395.00      USD      1,525        (12,800

Autodesk, Inc.

    38        01/07/22      USD      280.00      USD      1,069        (17,575

Block, Inc.

    112        01/07/22      USD      225.00      USD      1,809        (336

Coinbase Global, Inc., Class A

    14        01/07/22      USD      360.00      USD      353        (70

Coupa Software, Inc.

    44        01/07/22      USD      215.00      USD      695        (6,600

Coupa Software, Inc.

    30        01/07/22      USD      190.00      USD      474        (300

Crowdstrike Holdings, Inc., Class A

    84        01/07/22      USD      245.00      USD      1,720        (840

Facebook, Inc., Class A

    129        01/07/22      USD      340.00      USD      4,339        (44,505

Lyft, Inc., Class A

    12        01/07/22      USD      44.00      USD      51        (702

Marvell Technology, Inc.

    602        01/07/22      USD      77.00      USD      5,267        (665,210

Mastercard, Inc., Class A

    40        01/07/22      USD      353.27      USD      1,437        (32,534

Microsoft Corp.

    134        01/07/22      USD      330.00      USD      4,507        (106,865

MongoDB, Inc.

    12        01/07/22      USD      560.00      USD      635        (3,630

Okta, Inc.

    66        01/07/22      USD      235.00      USD      1,480        (8,448

PayPal Holdings, Inc.

    59        01/07/22      USD      200.00      USD      1,113        (3,186

Roku, Inc.

    80        01/07/22      USD      250.00      USD      1,826        (15,360

salesforce.com, Inc.

    63        01/07/22      USD      285.00      USD      1,601        (315

ServiceNow, Inc.

    65        01/07/22      USD      690.00      USD      4,219        (7,475

Shopify, Inc., Class A

    24        01/07/22      USD      1,824.00      USD      3,306        (2

Snap, Inc., Class A

    241        01/07/22      USD      51.00      USD      1,133        (4,820

Snowflake, Inc., Class A

    20        01/07/22      USD      390.00      USD      678        (1,050

Taiwan Semiconductor Manufacturing Co. Ltd., ADR

    45        01/07/22      USD      122.00      USD      541        (3,623

Visa, Inc., Class A

    54        01/07/22      USD      210.00      USD      1,170        (39,420

Zscaler, Inc.

    68        01/07/22      USD      350.00      USD      2,185        (3,536

Visa, Inc., Class A

    45        01/11/22      USD      221.00      USD      975        (6,363

Wolfspeed, Inc.

    486        01/13/22      USD      120.00      USD      5,432        (57,994

Accenture PLC, Class A

    96        01/14/22      USD      370.00      USD      3,980        (430,560

Adobe, Inc.

    11        01/14/22      USD      660.00      USD      624        (435

Advanced Micro Devices, Inc.

    439        01/14/22      USD      140.00      USD      6,317        (324,860

Alphabet Inc., Class A

    20        01/14/22      USD      3,025.00      USD      5,794        (12,300

Amazon.com, Inc.

    4        01/14/22      USD      3,500.00      USD      1,334        (5,610

Analog Devices, Inc.

    84        01/14/22      USD      195.00      USD      1,476        (40,320

Apple, Inc.

    53        01/14/22      USD      165.00      USD      941        (69,695

Apple, Inc.

    723        01/14/22      USD      180.00      USD      12,838        (173,881

Arrival SA

    547        01/14/22      USD      10.00      USD      406        (10,940

Atlassian PLC, Class A

    8        01/14/22      USD      405.00      USD      305        (3,080

 

 

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

  111


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust (BST)

 

Exchange-Traded Options Written (continued)

 

           
Description   Number of
Contracts
    

    Expiration

Date

             Exercise Price     

Notional

            Amount (000)

     Value  
Call (continued)                                            

Lam Research Corp.

    76        01/14/22      USD      720.00      USD      5,466      $   (125,400

Marvell Technology, Inc.

    388        01/14/22      USD      83.00      USD      3,395        (216,310

MercadoLibre, Inc.

    5        01/14/22      USD      1,200.00      USD      674        (78,125

Microsoft Corp.

    326        01/14/22      USD      345.00      USD      10,964        (62,592

Okta, Inc.

    44        01/14/22      USD      235.00      USD      986        (10,736

Rivian Automotive, Inc., Class A

    130        01/14/22      USD      140.00      USD      1,348        (2,600

Shopify, Inc., Class A

    9        01/14/22      USD        1,430.00      USD      1,240        (24,075

Snowflake, Inc., Class A

    25        01/14/22      USD      380.00      USD      847        (4,063

Taiwan Semiconductor Manufacturing Co. Ltd., ADR

    213        01/14/22      USD      125.00      USD      2,563        (24,601

Taiwan Semiconductor Manufacturing Co. Ltd., ADR

    38        01/14/22      USD      120.00      USD      457        (11,286

Tesla, Inc.

    42        01/14/22      USD      1,200.00      USD      4,438        (44,835

Visa, Inc., Class A

    169        01/14/22      USD      220.00      USD      3,662        (35,659

Zscaler, Inc.

    26        01/14/22      USD      335.00      USD      835        (13,000

Accenture PLC, Class A

    82        01/21/22      USD      400.00      USD      3,399        (145,960

Adobe, Inc.

    30        01/21/22      USD      670.00      USD      1,701        (975

Advanced Micro Devices, Inc.

    119        01/21/22      USD      150.00      USD      1,712        (49,385

Airbnb, Inc., Class A

    41        01/21/22      USD      220.00      USD      683        (226

Alphabet Inc., Class A

    6        01/21/22      USD      2,990.00      USD      1,738        (11,010

Amazon.com, Inc.

    13        01/21/22      USD      3,750.00      USD      4,335        (4,615

Analog Devices, Inc.

    75        01/21/22      USD      190.00      USD      1,318        (2,625

Apple, Inc.

    66        01/21/22      USD      155.00      USD      1,172        (151,635

Applovin Corp., Class A

    230        01/21/22      USD      115.00      USD      2,168        (10,350

Applovin Corp., Class A

    288        01/21/22      USD      100.00      USD      2,715        (75,600

Atlassian PLC, Class A

    77        01/21/22      USD      450.00      USD      2,936        (12,898

Autodesk, Inc.

    24        01/21/22      USD      330.00      USD      675        (468

Avalara, Inc.

    117        01/21/22      USD      165.00      USD      1,511        (5,850

AvidXchange Holdings, Inc.

    209        01/21/22      USD      30.00      USD      315        (15,675

Block, Inc.

    104        01/21/22      USD      240.00      USD      1,680        (728

Cadence Design Systems, Inc.

    148        01/21/22      USD      195.00      USD      2,758        (27,750

Coinbase Global, Inc., Class A

    28        01/21/22      USD      315.00      USD      707        (4,130

Coupa Software, Inc.

    30        01/21/22      USD      175.00      USD      474        (4,800

Crowdstrike Holdings, Inc., Class A

    25        01/21/22      USD      290.00      USD      512        (138

Crowdstrike Holdings, Inc., Class A

    2        01/21/22      USD      220.00      USD      41        (615

CS Disco, Inc.

    341        01/21/22      USD      55.00      USD      1,219        (20,460

Elastic NV

    86        01/21/22      USD      200.00      USD      1,059        (2,150

Facebook, Inc., Class A

    67        01/21/22      USD      350.00      USD      2,254        (24,957

Freshworks Inc., Class A

    137        01/21/22      USD      41.73      USD      360        (625

Globalfoundries Inc.

    132        01/21/22      USD      90.00      USD      858        (9,240

Globalfoundries Inc.

    143        01/21/22      USD      70.00      USD      929        (26,812

Intuit, Inc.

    20        01/21/22      USD      700.00      USD      1,286        (3,600

Lam Research Corp.

    26        01/21/22      USD      675.00      USD      1,870        (135,525

Lyft, Inc., Class A

    219        01/21/22      USD      55.00      USD      936        (1,533

Marqeta, Inc.

    750        01/21/22      USD      32.50      USD      1,288        (3,750

Marqeta, Inc.

    750        01/21/22      USD      27.50      USD      1,288        (5,625

Marvell Technology, Inc.

    312        01/21/22      USD      75.00      USD      2,730        (397,020

Marvell Technology, Inc.

    722        01/21/22      USD      95.00      USD      6,317        (41,154

Mastercard, Inc., Class A

    41        01/21/22      USD      370.00      USD      1,473        (15,682

MercadoLibre, Inc.

    10        01/21/22      USD      1,740.00      USD      1,348        (1,025

Microsoft Corp.

    91        01/21/22      USD      340.00      USD      3,061        (44,817

MongoDB, Inc.

    12        01/21/22      USD      580.00      USD      635        (8,580

Monolithic Power Systems, Inc.

    56        01/21/22      USD      530.00      USD      2,763        (18,900

Okta, Inc.

    43        01/21/22      USD      250.00      USD      964        (4,945

PayPal Holdings, Inc.

    112        01/21/22      USD      230.00      USD      2,112        (2,184

Rivian Automotive, Inc., Class A

    123        01/21/22      USD      150.00      USD      1,275        (2,768

Roku, Inc.

    76        01/21/22      USD      310.00      USD      1,734        (3,686

salesforce.com, Inc.

    71        01/21/22      USD      280.00      USD      1,804        (3,373

ServiceNow, Inc.

    30        01/21/22      USD      700.00      USD      1,947        (12,300

Shoals Technologies Group, Inc., Class A

    166        01/21/22      USD      35.00      USD      403        (830

Shoals Technologies Group, Inc., Class A

    197        01/21/22      USD      40.00      USD      479        (1,970

Shopify, Inc., Class A

    9        01/21/22      USD      1,560.00      USD      1,240        (7,965

Shopify, Inc., Class A

    18        01/21/22      USD      1,600.00      USD      2,479        (10,620

Snap, Inc., Class A

    210        01/21/22      USD      60.00      USD      988        (1,785

 

 

112  

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


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust (BST)

 

Exchange-Traded Options Written (continued)

           
Description   Number of
Contracts
    

    Expiration

Date

             Exercise Price     

Notional

            Amount (000)

     Value  
Call (continued)                                            

Snowflake, Inc., Class A

    19        01/21/22      USD      395.00      USD      644      $ (2,898

Taiwan Semiconductor Manufacturing Co. Ltd., ADR

    295        01/21/22      USD      130.00      USD      3,549        (18,290

Tesla, Inc.

    90        01/21/22      USD      1,170.00      USD      9,511        (196,875

Thoughtworks Holding, Inc.

    351        01/21/22      USD      40.00      USD      941        (8,775

Thoughtworks Holding, Inc.

    605        01/21/22      USD      35.00      USD      1,622        (18,150

Twilio, Inc., Class A

    80        01/21/22      USD      330.00      USD      2,107        (2,440

Visa, Inc., Class A

    70        01/21/22      USD      230.00      USD      1,517        (4,235

Wolfspeed, Inc.

    191        01/21/22      USD      135.00      USD      2,135        (6,685

ZoomInfo Technologies, Inc.

    384        01/21/22      USD      80.00      USD      2,465        (6,720

ZoomInfo Technologies, Inc.

    410        01/21/22      USD      70.00      USD      2,632        (43,050

Zscaler, Inc.

    68        01/21/22      USD      360.00      USD      2,185        (11,968

Adobe, Inc.

    84        01/28/22      USD      615.00      USD      4,763        (22,554

Airbnb, Inc., Class A

    48        01/28/22      USD      190.00      USD      799        (5,856

Alphabet Inc., Class A

    12        01/28/22      USD      2,975.00      USD      3,476        (41,100

Amazon.com, Inc.

    7        01/28/22      USD      3,500.00      USD      2,334        (26,372

Apple, Inc.

    50        01/28/22      USD      177.50      USD      888        (29,500

Atlassian PLC, Class A

    27        01/28/22      USD      375.00      USD      1,029        (69,120

Autodesk, Inc.

    44        01/28/22      USD      290.00      USD      1,237        (20,900

Block, inc.

    29        01/28/22      USD      205.00      USD      468        (1,494

Coinbase Global, Inc., Class A

    9        01/28/22      USD      290.00      USD      227        (4,725

Mastercard, Inc., Class A

    44        01/28/22      USD      360.00      USD      1,581        (46,200

Microsoft Corp.

    135        01/28/22      USD      345.00      USD      4,540        (69,187

MongoDB, Inc.

    31        01/28/22      USD      510.00      USD      1,641        (120,280

MongoDB, Inc.

    32        01/28/22      USD      520.00      USD      1,694        (107,040

Okta, Inc.

    53        01/28/22      USD      245.00      USD      1,188        (16,297

salesforce.com, Inc.

    63        01/28/22      USD      280.00      USD      1,601        (5,292

Snap, Inc., Class A

    125        01/28/22      USD      51.00      USD      588        (13,687

Tesla, Inc.

    25        01/28/22      USD      1,200.00      USD      2,642        (64,812

Twilio, Inc., Class A

    67        01/28/22      USD      290.00      USD      1,764        (27,135

Zscaler, Inc.

    54        01/28/22      USD      325.00      USD      1,735        (71,010

ServiceNow, Inc.

    59        02/04/22      USD      680.00      USD      3,830        (111,805

Apple, Inc.

    278        02/11/22      USD      185.00      USD      4,936        (103,555

Microsoft Corp.

    17        02/11/22      USD      345.00      USD      572        (12,538

Zscaler, Inc.

    96        02/11/22      USD      350.00      USD      3,085        (78,000

Applovin Corp., Class A

    281        02/18/22      USD      115.00      USD      2,649        (61,117

Autodesk, Inc.

    48        02/18/22      USD      300.00      USD      1,350        (22,680

Avalara, Inc.

    45        02/18/22      USD      165.00      USD      581        (2,025

Avalara, Inc.

    13        02/18/22      USD      160.00      USD      168        (1,723

Cadence Design Systems, Inc.

    325        02/18/22      USD      175.00      USD      6,056        (528,125

CS Disco, Inc.

    270        02/18/22      USD      43.00      USD      965        (34,613

Elastic NV

    43        02/18/22      USD      130.00      USD      529        (26,015

Facebook, Inc., Class A

    42        02/18/22      USD      365.00      USD      1,413        (26,145

Freshworks Inc., Class A

    149        02/18/22      USD      30.00      USD      391        (22,350

Globalfoundries Inc.

    275        02/18/22      USD      75.00      USD      1,787        (70,812

Intuit, Inc.

    120        02/18/22      USD      680.00      USD      7,719        (139,800

Lam Research Corp.

    43        02/18/22      USD      710.00      USD      3,092        (181,890

Lyft, Inc., Class A

    135        02/18/22      USD      60.00      USD      577        (2,498

Lyft, Inc., Class A

    52        02/18/22      USD      45.00      USD      222        (12,844

Marvell Technology, Inc.

    315        02/18/22      USD      77.50      USD      2,756        (356,737

Marvell Technology, Inc.

    722        02/18/22      USD      95.00      USD      6,317        (129,960

Mastercard, Inc., Class A

    134        02/18/22      USD      375.00      USD      4,815        (106,195

MercadoLibre, Inc.

    9        02/18/22      USD      1,300.00      USD      1,214        (103,815

MongoDB, Inc.

    13        02/18/22      USD      560.00      USD      688        (31,850

MongoDB, Inc.

    56        02/18/22      USD      630.00      USD      2,964        (44,520

Monolithic Power Systems, Inc.

    56        02/18/22      USD      540.00      USD      2,763        (54,320

Okta, Inc.

    38        02/18/22      USD      260.00      USD      852        (9,842

PayPal Holdings, Inc.

    80        02/18/22      USD      210.00      USD      1,509        (29,200

Thoughtworks Holding, Inc.

    570        02/18/22      USD      30.00      USD      1,528        (82,650

Unity Software, Inc.

    92        02/18/22      USD      160.00      USD      1,316        (56,120

 

 

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

  113


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust (BST)

 

Exchange-Traded Options Written (continued)

 

           
Description    Number of
Contracts
       Expiration
Date
       Exercise
Price
      

Notional

Amount (000)

       Value  
Call (continued)                                                   

Visa, Inc., Class A

     29          02/18/22        USD     230.00        USD     628        $ (8,222

Unity Software, Inc.

     187          02/25/22        USD     167.00        USD     2,674          (95,954
                          

 

 

 
                           $  (8,335,571
                          

 

 

 

OTC Options Written

 

             
Description   Counterparty  

Number of

Contracts

    

Expiration

Date

  Exercise Price  

Notional

Amount (000)

     Value  
Call                                          

Shoals Technologies Group, Inc., Class A

 

Citibank N.A.

    17,000      01/06/22   USD    33.54       USD      413      $  

Adyen NV

 

Goldman Sachs International

    1,600      01/11/22   EUR    2,657.40   EUR      3,698        (2,280

Alphawave IP Group PLC

 

Goldman Sachs International

    248,650      01/11/22   GBP    1.97   GBP      497        (80,505

Gmo Payment Gateway Inc.

 

UBS AG

    8,800      01/11/22   JPY    15,831.10   JPY      126,280        (1,490

Shoals Technologies Group, Inc., Class A

 

Citibank N.A.

    5,350      01/11/22   USD    32.17   USD      130        (33

Soitec SA

 

Morgan Stanley & Co. International PLC

    4,000      01/11/22   EUR    241.64   EUR      861        (1,010

Xero Ltd.

 

UBS AG

    42,000      01/11/22   AUD    152.88   AUD      5,940        (18,973

Yahoo Japan Corp.

 

Goldman Sachs International

    72,600      01/11/22   JPY    842.20   JPY      48,453        (34

Kapstone Paper & Packaging

 

JPMorgan Chase Bank N.A.

    7,700      01/13/22   USD    755,425.00   USD      5,043,500        (140

Shoals Technologies Group, Inc., Class A

 

Citibank N.A.

    10,700      01/14/22   USD    35.85   USD      260        (6

Alphawave IP Group PLC

 

Goldman Sachs International

    117,200      01/18/22   GBP    1.98   GBP      234        (47,378

Delivery Hero SE

 

Goldman Sachs International

    7,000      01/18/22   EUR    124.95   EUR      686        (1,017

Gmo Payment Gateway Inc.

 

UBS AG

    8,800      01/18/22   JPY    15,831.10   JPY      126,280        (4,051

Soitec SA

 

Morgan Stanley & Co. International PLC

    4,500      01/18/22   EUR    245.96   EUR      968        (1,978

Yahoo Japan Corp.

 

Goldman Sachs International

    335,000      01/19/22   JPY    781.94   JPY      223,579        (2,258

ASML Holding NV

 

UBS AG

    12,700      01/20/22   EUR    711.73   EUR      8,975        (295,195

Recruit Holdings Co. Ltd.

 

UBS AG

    29,200      01/20/22   JPY    7,641.39   JPY      203,582        (4,100

Stadlauer Malzfabrik AG

 

Goldman Sachs International

    42,900      01/20/22   EUR    44.42   EUR      1,861        (33,768

Yahoo Japan Corp.

 

Goldman Sachs International

    509,400      01/20/22   JPY    760.34   JPY      339,974        (4,338

Recruit Holdings Co. Ltd.

 

JPMorgan Chase Bank N.A.

    40,100      01/25/22   JPY    7,300.49   JPY      279,577        (30,263

Stadlauer Malzfabrik AG

 

Barclays Bank PLC

    32,900      01/25/22   EUR    44.42   EUR      1,427        (30,716

Monolithic Power Systems, Inc.

 

Barclays Bank PLC

    5,100      01/26/22   USD    573.46   USD      2,516        (15,661

Shoals Technologies Group, Inc., Class A

 

Barclays Bank PLC

    5,000      01/26/22   USD    34.66   USD      122        (110

Soitec SA

 

UBS AG

    2,100      01/27/22   EUR    248.44   EUR      452        (1,796

Soitec SA

 

Morgan Stanley & Co. International PLC

    12,900      02/01/22   EUR    230.58   EUR      2,776        (43,458

Fluence Energy, Inc., Class A

 

UBS AG

    54,000      02/02/22   USD    34.93   USD      1,920        (161,747

Unity Software, Inc.

 

Credit Suisse International

    9,150      02/02/22   USD    146.88   USD      1,308        (78,000

Delivery Hero SE

 

Goldman Sachs International

    24,000      02/03/22   EUR    102.41   EUR      2,352        (114,254

Kakao Corp.

 

JPMorgan Chase Bank N.A.

    49,900      02/03/22   USD    125,717.20   USD      5,613,750        (34,366

Renesas Electronics Corp.

 

JPMorgan Chase Bank N.A.

    399,200      02/03/22   JPY    1,488.90   JPY      568,062        (101,589

Soitec SA

 

Credit Suisse International

    3,800      02/03/22   EUR    218.10   EUR      818        (31,456

Soitec SA

 

Goldman Sachs International

    7,400      02/08/22   EUR    220.05   EUR      1,592        (59,523

Gmo Payment Gateway Inc.

 

JPMorgan Chase Bank N.A.

    12,000      02/10/22   JPY    15,418.62   JPY      172,200        (28,146

Recruit Holdings Co. Ltd.

 

JPMorgan Chase Bank N.A.

    24,600      02/10/22   JPY    7,260.94   JPY      171,511        (31,325

Stmicroelectronics NV

 

Credit Suisse International

    62,000      02/10/22   EUR    45.56   EUR      2,689        (68,551

Kakao Corp.

 

UBS AG

    44,000      02/15/22   USD    123,870.46   USD      4,950,000        (59,942
                   

 

 

 
                    $  (1,389,457
                   

 

 

 

Balances Reported in the Consolidated Statements of Assets and Liabilities for Options Written

 

           
Description   

Swap

Premiums

Paid

  

Swap

Premiums

Received

  

Unrealized

Appreciation

  

Unrealized

Depreciation

   Value
Options Written    $       N/A    $      N/A    $ 8,601,195    $ (2,816,292)    $ (9,725,028)

 

 

114  

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


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust (BST)

 

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Consolidated Statements 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

 

                 

Options written

                    

Options written at value

   $      $      $  9,725,028      $      $      $      $  9,725,028  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

For the period ended December 31, 2021, the effect of derivative financial instruments in the Consolidated Statements 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:

                    

Options purchased(a)

   $      $      $ 181,793      $      $      $      $ 181,793  

Options written

                   (20,336,133                           (20,336,133
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $      $      $  (20,154,340    $      $      $      $  (20,154,340
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation
(Depreciation) on:

 

                 

Options written

   $      $      $ 13,778,870      $      $      $      $ 13,778,870  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)

Options purchased are included in net realized gain (loss) from investments — unaffiliated.

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

   

Options:

  

Average value of option contracts purchased

   $ (a) 

Average value of option contracts written

   $ 12,036,475  

 

  (a)

Derivative not held at any quarter-end. The risk exposure table serves as an indicator of activity during the period.

 

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

Derivative Financial Instruments — Offsetting as of Period End

The Trust’s derivative assets and liabilities (by type) were as follows:

 

     
      Assets        Liabilities  

Derivative Financial Instruments

       

Options

   $        $ 9,725,028  
  

 

 

      

 

 

 

Total derivative assets and liabilities in the Consolidated Statements of Assets and Liabilities

              9,725,028  
  

 

 

      

 

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

              (8,335,571
  

 

 

      

 

 

 

Total derivative assets and liabilities subject to an MNA

   $        $ 1,389,457  
  

 

 

      

 

 

 

 

 

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

  115


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust (BST)

 

The following table presents the Trust’s derivative liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral pledged by the Trust:

 

           

Counterparty

    

Derivative

Liabilities

Subject to

an MNA by

Counterparty

 

 

 

 

 

      

Derivatives

Available

for Offset

 

 

 

      

Non-Cash

Collateral

Pledged

 

 

 

      

Cash

Collateral

Pledged

 

 

(a) 

      

Net Amount

of Derivative

Liabilities

 

 

(b) 

Barclays Bank PLC

   $ 46,487        $        $        $        $ 46,487  

Citibank N.A.

     39                            (39         

Credit Suisse International

     178,007                                     178,007  

Goldman Sachs International

     345,355                            (345,355         

JPMorgan Chase Bank N.A.

     225,829                            (170,000        55,829  

Morgan Stanley & Co. International PLC

     46,446                            (46,446         

UBS AG

     547,294                            (547,294         
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 
   $ 1,389,457        $        $        $  (1,109,134      $ 280,323  
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 

 

  (b)

Net amount represents the net amount payable due to counterparty in the event of default. Net amount may be offset further by the options written receivable/payable on the Consolidated Statements of Assets and Liabilities.

 

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 Consolidated 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 Consolidated Schedule of Investments above.

 

         
      Level 1        Level 2        Level 3        Total  

Assets

                 

Investments

                 

Long-Term Investments

                 

Common Stocks

                 

Airlines

   $        $ 2,425,500        $        $ 2,425,500  

Automobiles

     45,479,370          6,195,796                   51,675,166  

Banks

                       36,095,339          36,095,339  

Capital Markets

     3,848,390                            3,848,390  

Diversified Consumer Services

                       3,134,792          3,134,792  

Electrical Equipment

     16,364,646                            16,364,646  

Electronic Equipment, Instruments & Components

              13,061,282                   13,061,282  

Entertainment

     10,672,229                            10,672,229  

Hotels, Restaurants & Leisure

     16,843,290                            16,843,290  

Interactive Media & Services

     97,080,146          37,824,385                   134,904,531  

Internet & Direct Marketing Retail

     50,969,821          10,141,356          252,707          61,363,884  

IT Services

     213,514,298          38,254,649          40,454,636          292,223,583  

Professional Services

              17,662,643                   17,662,643  

Road & Rail

     8,583,346          2,191,260          6,541,624          17,316,230  

Semiconductors & Semiconductor Equipment

     181,478,622          79,166,163                   260,644,785  

Software

     318,424,598          28,972,179          32,952,565          380,349,342  

Specialty Retail

              7,709,880                   7,709,880  

Technology Hardware, Storage & Peripherals

     76,809,502                            76,809,502  

Convertible Notes

                       8,000,000          8,000,000  

Preferred Securities

                 

Preferred Stocks

                       240,189,562          240,189,562  

Warrants

                       117,749          117,749  

Short-Term Securities

                 

Money Market Funds

     42,574,872                            42,574,872  

Unfunded SPAC PIPE Commitments(a)

                                 
  

 

 

      

 

 

      

 

 

      

 

 

 
   $  1,082,643,130        $  243,605,093        $   367,738,974          1,693,987,197  
  

 

 

      

 

 

      

 

 

      

 

 

 

Investments Valued at NAV(b)

                    840,396  
                 

 

 

 
                  $  1,694,827,593  
                 

 

 

 

 

 

116  

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


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust (BST)

 

Fair Value Hierarchy as of Period End (continued)

 

                                                                                               
         
      Level 1        Level 2        Level 3        Total  

Derivative Financial Instruments(c)

                 

Liabilities

                 

Equity Contracts

   $     (7,538,876      $     (2,186,152      $        $     (9,725,028
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Unfunded SPAC PIPE commitments are valued at the unrealized appreciation (depreciation) on the commitment.

 

 

  (b)

Certain investments of the Trust were fair valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

 

 

  (c)

Derivative financial instruments are options written. Options written are shown at value.

 

A reconciliation of Level 3 financial instruments is presented when the Trust had a significant amount of Level 3 investments at the beginning and/or end of the year in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

 

             
     

Common

Stocks

   

Convertible

Notes

   

Preferred

Stocks

   

Unfunded

SPAC

PIPE

Commitments

    Warrants     Total  

Assets

            

Opening balance, as of December 31, 2020

   $ 37,043,595     $     $ 124,970,280     $     $   189,763     $ 162,203,638  

Transfers into Level 3

                                    

Transfers out of Level 3

     (8,988,277                             (8,988,277

Other(a)

     17,923,197             (17,923,197                  

Accrued discounts/premiums

                                    

Net realized gain (loss)

     521,556             4,698,018                   5,219,574  

Net change in unrealized appreciation
(depreciation)(b)(c)

     20,127,887             34,041,015       (d)      (72,014     54,096,888  

Purchases

     63,875,339       8,000,000       133,227,071                   205,102,410  

Sales

     (11,071,634           (38,823,625                 (49,895,259
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Closing balance, as of December 31, 2021

   $  119,431,663     $  8,000,000     $  240,189,562     $ (d)    $ 117,749     $  367,738,974  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on investments still held at December 31, 2021(c)

   $ 22,059,309     $     $ 53,735,664     $ (d)    $ (72,014   $ 75,722,959  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  (a)

Certain Level 3 investments were re-classified between Common Stocks and Preferred Stocks.

 

 

  (b)

Included in the related net change in unrealized appreciation (depreciation) in the Consolidated Statements of Operations.

 

 

  (c)

Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at December 31, 2021 is generally due to investments no longer held or categorized as Level 3 at period end.

 

 

  (d)

Rounds to less than $1.

 

The following table summarizes the valuation approaches used and unobservable inputs utilized by the BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) to determine the value of certain of the Trust’s Level 3 financial instruments as of period end.

 

           
       Value         
Valuation
Approach
 
 
  

Unobservable

Inputs

      

Range of

Unobservable

Inputs

Utilized

 

 

 

(a) 

      

Weighted

Average of

Unobservable

Inputs Based

on Fair Value

 

 

 

 

 

Assets

                    

Common Stocks

   $   119,431,663          Income      Discount Rate        14%           
           Exit Multiple        9.50x           
          Market      Revenue Multiple        4.25x - 32.00x          20.12x  
           Volatility        33% - 33%          33%  
           Time to Exit        0.5 - 0.5          0.5  

Convertible Notes

     8,000,000          Market      Recent Transactions        $   100.00           

Preferred Stocks

     240,189,562          Market      Revenue Multiple        3.15x - 32.00x          18.31x  
           Volatility        50% - 75%          55%  
           Time to Exit        4.0 - 4.0          4.0  
           Recent Transactions      $ 1.98 - $56.00          $  20.78  

Warrants

     117,749          Market      Revenue Multiple        11.00x           
           Volatility        33%           

 

 

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

  117


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust (BST)

 

           
       Value         

Valuation

Approach

 

 

    

Unobservable

Inputs

      

Range of

Unobservable

Inputs

Utilized

 

 

 

(a)  

      

Weighted 

Average of 

Unobservable 

Inputs Based 

on Fair Value 

 

 

 

 

 

             Time to Exit        0.5          —   
  

 

 

                     
   $   367,738,974                      
  

 

 

                     

 

  (a)

A significant change in unobservable input would have resulted in a correlated (inverse) significant change to value.

 

See notes to financial statements.

 

 

118  

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


Consolidated Schedule of Investments

December 31, 2021

  

BlackRock Science and Technology Trust II (BSTZ)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   

Aerospace & Defense — 0.3%

 

Astra Space, Inc., (Acquired 08/20/21,
Cost: $12,000,000)(a)

    1,200,000     $ 8,316,000  
   

 

 

 

Airlines — 0.2%

   

Lilium NV, (Acquired 09/13/21,
Cost: $8,500,000)(a)

    850,000       5,890,500  
   

 

 

 

Automobiles — 3.6%

   

Arrival SA, (Acquired 09/27/21,
Cost: $20,182,398)(a)

    2,783,376       20,652,650  

Tesla, Inc.(b)(c)

    84,712       89,521,947  
   

 

 

 
      110,174,597  
Banks — 3.9%            

Klarna Holdings AB, (Acquired 08/07/19, Cost: $23,354,997)(a)(c)(d)

    86,839       118,595,654  
   

 

 

 

Capital Markets — 0.2%

 

Coinbase Global, Inc., Class A(c)

    27,822       7,021,438  
   

 

 

 

Diversified Consumer Services — 0.5%

 

Think & Learn Private Ltd., (Acquired 09/30/20, Cost: $7,113,729)(a)(c)(d)

    4,651       14,623,790  
   

 

 

 

Electrical Equipment — 0.3%

 

Shoals Technologies Group, Inc., Class A(c)

    396,963       9,646,201  
   

 

 

 

Electronic Equipment, Instruments & Components — 1.3%

 

Samsung SDI Co. Ltd.(c)

    71,175       39,144,249  
   

 

 

 

Entertainment(c) — 2.6%

   

HYBE Co. Ltd.

    121,331       35,538,050  

Roku, Inc.

    102,250       23,333,450  

Take-Two Interactive Software, Inc.

    116,092       20,631,870  
   

 

 

 
      79,503,370  
Hotels, Restaurants & Leisure — 1.2%  

SiteMinder Ltd.(c)

    7,271,400       35,762,475  
   

 

 

 

Interactive Media & Services(c) — 5.3%

 

Eventbrite, Inc., Class A

    748,770       13,058,549  

Kakao Corp.

    736,130       69,514,405  

Snap, Inc., Class A

    991,722       46,640,686  

ZoomInfo Technologies, Inc.

    513,553       32,970,102  
   

 

 

 
      162,183,742  
Internet & Direct Marketing Retail(c) — 3.6%  

Delivery Hero SE(e)

    235,611       26,079,907  

Farfetch Ltd., Class A

    944,210       31,564,940  

MercadoLibre, Inc.(b)

    25,590       34,505,556  

Ozon Holdings PLC, ADR

    584,607       17,310,213  
   

 

 

 
        109,460,616  
IT Services — 15.9%            

Adyen NV(c)(e)

    14,925       39,178,119  

Automattic, Inc., Series E, (Acquired 02/03/21, Cost: $34,000,000)(a)(c)(d)

    400,000       34,260,000  

Block, Inc., Class A(b)(c)

    285,008       46,031,642  

Cloudflare, Inc., Class A(c)

    252,090       33,149,835  

Dlocal Ltd.(c)

    433,216       15,461,479  

Endava PLC, ADR(c)

    336,360       56,481,571  

GMO Payment Gateway, Inc.

    225,400       28,068,304  

Grid Dynamics Holdings, Inc.(c)

    1,174,694       44,603,131  

Locaweb Servicos de Internet SA(c)(e)

    11,831,349       27,449,057  

MongoDB, Inc.(c)

    80,445       42,583,561  

Okta, Inc.(c)

    145,504       32,617,632  

Shift4 Payments, Inc., Class A(c)

    292,958       16,971,057  
Security   Shares     Value  

IT Services (continued)

 

TRAX Ltd., Series D, (Acquired 02/18/21,
Cost: $9,999,998)(a)(c)(d)

    191,806     $ 9,778,270  

TRAX Ltd., Series E, (Acquired 09/12/19,
Cost: $10,999,987)(a)(c)(d)

    293,333       14,954,116  

Twilio, Inc., Class A(c)

    165,051       43,464,530  
   

 

 

 
      485,052,304  
Professional Services(c) — 0.8%  

CoStar Group, Inc.(b)

    184,293       14,564,676  

Legalzoom.com, Inc.

    677,631       10,889,530  
   

 

 

 
      25,454,206  
Road & Rail — 0.7%            

Lyft, Inc., Class A(b)(c)

    474,493       20,275,086  
   

 

 

 

Semiconductors & Semiconductor Equipment — 18.4%

 

Alphawave IP Group PLC(c)(f)

    1,734,157       4,689,842  

ASM International NV

    56,775       25,061,473  

BE Semiconductor Industries NV

    285,445       24,266,437  

CNEX Labs, Inc., (Acquired 12/14/21,
Cost: $5,699,998)(a)(d)

    1,161,804       5,007,375  

Lasertec Corp.

    316,800       97,036,293  

Lattice Semiconductor Corp.(c)

    507,451       39,104,174  

MACOM Technology Solutions Holdings, Inc., Class H(c)

    320,182       25,070,251  

Marvell Technology, Inc.(b)

    1,576,567       137,933,847  

Monolithic Power Systems, Inc.

    91,900       45,337,027  

Silergy Corp.

    418,000       75,656,437  

Soitec SA(c)

    180,977       44,341,355  

Wolfspeed, Inc.(c)

    330,702       36,962,563  
   

 

 

 
        560,467,074  
Software — 20.8%            

Altium Ltd.

    909,520       29,867,419  

AppLovin Corp., Class A(c)

    364,534       34,360,975  

Atlassian Corp. PLC, Class A(c)

    98,985       37,741,991  

Avalara, Inc.(c)

    178,711       23,073,377  

AvidXchange Holdings, Inc.(c)

    626,605       9,436,671  

AvidXchange, Inc., (Acquired 07/29/20,
Cost: $7,474,330)(a)

    610,000       8,928,865  

Confluent, Inc., Class A(c)

    204,756       15,610,598  

Coupa Software, Inc.(c)

    81,308       12,850,729  

Crowdstrike Holdings, Inc., Class A(c)

    147,993       30,301,567  

Databricks, Inc., (Acquired 07/24/20,
Cost: $5,501,686)(a)(c)(d)

    114,553       23,187,818  

DataRobot, Inc., Series F, (Acquired 03/01/21,
Cost: $1,384,813)(a)(c)(d)

    92,093       2,741,609  

Elastic NV(c)

    170,979       21,045,805  

Freee KK(c)

    371,500       20,425,100  

GitLab, Inc., Series E, (Acquired 09/10/19,
Cost: $11,670,984)(a)

    626,482       52,959,656  

Kakaopay Corp., (Acquired 10/22/21,
Cost: $9,483,703)(a)

    122,803       17,410,693  

Lightspeed Commerce, Inc.(c)

    651,145       26,293,914  

Procore Technologies, Inc.(c)

    76,288       6,100,751  

Rakus Co. Ltd.

    1,236,700       33,187,823  

Samsara, Inc., Class A, Class A(c)

    642,531       18,061,547  

Snorkel AI, Inc., (Acquired 10/13/20,
Cost: $2,017,593)(a)(c)(d)

    500,250       7,163,580  

Snyk Ltd., (Acquired 11/02/20,
Cost: $9,287,400)(a)(c)(d)

    1,267,643       16,517,388  

Synopsys, Inc.(c)

    110,015       40,540,528  

Trade Desk, Inc., Class A(c)

    280,580       25,712,351  
 

 

 

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

    119  


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust II (BSTZ)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Software (continued)

   

Unity Software, Inc.(c)

    247,242     $ 35,353,134  

Xero Ltd.(c)

    262,237       26,842,362  

Zscaler, Inc.(b)(c)

    185,686       59,666,482  
   

 

 

 
      635,382,733  
Specialty Retail — 1.0%            

Cazoo Group Ltd., (Acquired 10/08/20,
Cost: $20,649,536)(a)

    5,192,246       30,839,605  
   

 

 

 

Total Common Stocks — 80.6%
(Cost: $1,085,615,741)

      2,457,793,640  
   

 

 

 

Preferred Securities

 

Preferred Stocks — 18.6%(a)

 

Communications Equipment — 0.5%

 

Astranis Space Technologies Corp., Series C, (Acquired 03/19/21, Cost: $17,000,010)(d)

    775,515       15,719,689  
   

 

 

 

Diversified Consumer Services — 0.5%

 

Think & Learn Private Ltd., Series F, (Acquired 09/30/20, Cost: $14,251,080)(d)

    4,920       15,469,586  
   

 

 

 

Diversified Financial Services — 0.1%

 

Snorkel Al, Inc., Series B, (Acquired 10/13/20, Cost: $999,996)(d)

    247,943       3,550,544  
   

 

 

 

Electrical Equipment(d) — 1.1%

 

Credo Technology Group Holding Ltd.

   

Series D, (Acquired 03/20/20,
Cost: $19,999,997)

    4,005,527       31,323,221  

Series D+, (Acquired 01/22/20,
Cost: $1,617,982)

    278,714       2,179,544  
   

 

 

 
        33,502,765  
Food & Staples Retailing — 0.6%  

GrubMarket, Inc. , Series D, (Acquired 07/23/20, Cost: $8,000,001)(d)

    1,762,969       17,382,874  
   

 

 

 

Food Products — 0.8%

   

Farmer’s Business Network, Inc., Series F, (Acquired 07/31/20, Cost: $11,961,002)(d)

    361,834       23,432,370  
   

 

 

 

Interactive Media & Services(d) — 1.9%

 

ByteDance Ltd., Series E-1, (Acquired 11/11/20, Cost: $35,000,075)

    319,419       52,241,029  

ResearchGate GmbH, Series D, (Acquired 09/24/20, Cost: $6,999,988)

    424,688       6,778,021  
   

 

 

 
      59,019,050  
IT Services — 1.6%            

Deep Instinct Ltd., Series D-2, (Acquired 03/19/21, Cost: $12,000,008)(d)

    1,974,374       12,478,044  

Trumid Holdings LLC(g)

   

Class J-A, (Acquired 07/24/20,
Cost: $9,999,857)

    20,154       18,129,934  

Class J-B, (Acquired 07/24/20,
Cost: $5,999,914)

    20,154       18,129,919  
   

 

 

 
      48,737,897  
Road & Rail — 0.6%            

FlixMobility GmbH, Series F, (Acquired 07/26/19, Cost: $16,947,253)(d)

    850       17,536,139  
   

 

 

 

Semiconductors & Semiconductor Equipment(d) — 4.8%

 

Mythic AI, Inc., Series C, (Acquired 01/26/21, Cost: $7,000,000)

    1,018,908       7,774,268  

Psiquantum Corp., Series C, (Acquired 09/09/19, Cost: $9,101,310)

    1,962,335       40,129,751  
Security   Shares     Value  

Semiconductors & Semiconductor Equipment (continued)

 

PsiQuantum Corp., Series D, (Acquired 05/21/21, Cost: $19,999,969)

    762,595     $ 19,896,103  

SambaNova Systems, Inc.

   

Series C, (Acquired 02/20/20,
Cost: $33,904,161)

    636,800       69,003,648  

Series D, (Acquired 04/09/21,
Cost: $6,999,979)

    73,670       7,982,881  
   

 

 

 
      144,786,651  
Software(d) — 6.1%            

Databricks, Inc.

   

Series F, (Acquired 10/22/19,
Cost: $13,200,019)

    307,346       62,212,977  

Series G, (Acquired 02/01/21,
Cost: $18,500,004)

    104,303       21,113,013  

DataRobot, Inc., Series F, (Acquired 10/27/20, Cost: $11,499,999)

    875,059       26,050,507  

Rapyd Financial Network Ltd., Series E, (Acquired 03/31/21, Cost: $13,999,978)

    190,705       16,169,877  

Snyk Ltd. , (Acquired 11/02/20,
Cost: $13,212,590)

    2,663,936       34,711,086  

Unqork, Inc.

   

Series B, (Acquired 09/19/19,
Cost: $6,801,016)

    597,680       17,249,045  

Series C, (Acquired 09/18/20,
Cost: $7,994,787)

    292,000       8,427,120  
   

 

 

 
      185,933,625  
   

 

 

 

Total Preferred Stocks — 18.6%

 

    565,071,190  
   

 

 

 

Total Preferred Securities — 18.6%
(Cost: $322,990,975)

 

    565,071,190  
   

 

 

 

Warrants

   

IT Services — 0.0%

   

TRAX Ltd., (Acquired 09/12/19,
Cost: $0)(a)(c)(d)

    46,928       323,803  
   

 

 

 

Total Warrants — 0.0%
(Cost: $ — )

      323,803  
   

 

 

 

Total Long-Term Investments — 99.2%
(Cost: $1,408,606,716)

      3,023,188,633  
   

 

 

 

Short-Term Securities

 

Money Market Funds — 1.6%

 

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

    46,915,934       46,915,934  

SL Liquidity Series, LLC, Money Market Series, 0.15%(h)(i)(j)

    1,949,024       1,949,219  
   

 

 

 

Total Short-Term Securities — 1.6%
(Cost: $48,865,153)

 

    48,865,153  
   

 

 

 

Total Investments Before Options Written — 100.8%
(Cost: $1,457,471,869)

 

    3,072,053,786  
   

 

 

 

Options Written — (0.7)%
(Premiums Received: $(27,273,522))

 

    (20,246,879
   

 

 

 

Total Investments, Net of Options Written — 100.1%
(Cost: $1,430,198,347)

 

    3,051,806,907  

Liabilities in Excess of Other Assets — (0.1)%

 

    (2,845,275
   

 

 

 

Net Assets — 100.0%

    $  3,048,961,632  
   

 

 

 

 

(a)

Restricted security as to resale, excluding 144A securities. The Trust held restricted securities with a current value of $957,222,562, representing 31.4% of its net assets as of period end, and an original cost of $522,312,127.

(b)

All or a portion of the security has been pledged and/or segregated as collateral in connection with outstanding exchange-traded options written.

(c)

Non-income producing security.

 

 

 

120  

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


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust II (BSTZ)

 

(d)

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(e)

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.

(f)

All or a portion of this security is on loan.

(g)

All or a portion of the security is held by a wholly-owned subsidiary. See Note 1 of the Notes to Consolidated Financial Statements for details on the wholly-owned subsidiary.

(h)

Affiliate of the Trust.

(i)

Annualized 7-day yield as of period end.

(j)

All or a portion of this security was purchased with the cash collateral from loaned securities.

 

For Trust compliance purposes, the Trust’s industry classifications refer to one or more of the industry 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 industry sub-classifications for reporting ease.

Affiliates

Investments in issuers considered to be affiliate(s) of the Trust during the year 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

12/31/20

   

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

  $  21,688,765     $  25,227,169 (a)    $     $     $     $ 46,915,934       46,915,934     $ 6,664     $  

SL Liquidity Series, LLC, Money Market Series

          1,948,564 (a)            655             1,949,219       1,949,024       202,730 (b)       
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 655     $     $  48,865,153       $  209,394     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a)

Represents net amount purchased (sold).

 
  (b)

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Derivative Financial Instruments Outstanding as of Period End

Exchange-Traded Options Written

           
Description    Number of
Contracts
      

Expiration

Date

       Exercise Price       

Notional

Amount (000)

       Value  
Call                                                     

Atlassian PLC, Class A

     34          01/07/22        USD      395.00        USD      1,296        $ (10,880

Block, Inc.

     158          01/07/22        USD      225.00        USD      2,552          (474

Coinbase Global, Inc., Class A

     14          01/07/22        USD      360.00        USD      353          (70

Coinbase Global, Inc., Class A

     24          01/07/22        USD      350.00        USD      606          (120

Coupa Software, Inc.

     78          01/07/22        USD      215.00        USD      1,233          (11,700

Coupa Software, Inc.

     25          01/07/22        USD      190.00        USD      395          (250

Crowdstrike Holdings, Inc., Class A

     183          01/07/22        USD      245.00        USD      3,747          (1,830

Lyft, Inc., Class A

     155          01/07/22        USD      44.00        USD      662          (9,068

Marvell Technology, Inc.

     1,246          01/07/22        USD      77.00        USD      10,901          (1,376,830

MongoDB, Inc.

     40          01/07/22        USD      560.00        USD      2,117          (12,100

Okta, Inc.

     80          01/07/22        USD      235.00        USD      1,793          (10,240

Roku, Inc.

     170          01/07/22        USD      250.00        USD      3,879          (32,640

Snap, Inc., Class A

     1,323          01/07/22        USD      51.00        USD      6,222          (26,460

Take-Two Interactive Software, Inc.

     162          01/07/22        USD      170.00        USD      2,879          (140,940

Trade Desk, Inc., Class A

     337          01/07/22        USD      106.00        USD      3,088          (3,370

Zscaler, Inc.

     164          01/07/22        USD      350.00        USD      5,270          (8,528

Ozon Holdings PLC

     867          01/10/22        USD      48.50        USD      2,567           

Wolfspeed, Inc.

     1,022          01/13/22        USD      120.00        USD      11,423          (121,955

Atlassian PLC, Class A

     162          01/14/22        USD      405.00        USD      6,177          (62,370

Marvell Technology, Inc.

     785          01/14/22        USD      83.00        USD      6,868          (437,637

MercadoLibre, Inc.

     18          01/14/22        USD      1,200.00        USD      2,427          (281,250

Okta, Inc.

     48          01/14/22        USD      235.00        USD      1,076          (11,712

Tesla, Inc.

     102          01/14/22        USD      1,200.00        USD      10,779          (108,885

Zscaler, Inc.

     51          01/14/22        USD      335.00        USD      1,639          (25,500

Applovin Corp., Class A

     387          01/21/22        USD      115.00        USD      3,648          (17,415

Applovin Corp., Class A

     387          01/21/22        USD      100.00        USD      3,648          (101,587

 

 

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

  121


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust II (BSTZ)

 

Exchange-Traded Options Written (continued)

           
Description   

Number of

Contracts

      

Expiration

Date

       Exercise Price       

Notional

Amount (000)

       Value  

Call (continued)

                          

Atlassian PLC, Class A

     65          01/21/22        USD     450.00        USD     2,478        $  (10,888

Avalara, Inc.

     171          01/21/22        USD     165.00        USD     2,208          (8,550

AvidXchange Holdings, Inc.

     350          01/21/22        USD     30.00        USD     527          (26,250

Block, Inc.

     112          01/21/22        USD     240.00        USD     1,809          (784

Cloudflare, Inc., Class A

     190          01/21/22        USD     210.00        USD     2,499          (1,520

Coinbase Global, Inc., Class A

     30          01/21/22        USD     315.00        USD     757          (4,425

Confluent, Inc., Class A

     165          01/21/22        USD     90.00        USD     1,258          (17,325

Confluent, Inc., Class A

     205          01/21/22        USD     80.00        USD     1,563          (69,700

CoStar Group, Inc.

     225          01/21/22        USD     85.00        USD     1,778          (2,250

Coupa Software, Inc.

     59          01/21/22        USD     175.00        USD     932          (9,440

Crowdstrike Holdings, Inc., Class A

     80          01/21/22        USD     290.00        USD     1,638          (440

Crowdstrike Holdings, Inc., Class A

     32          01/21/22        USD     220.00        USD     655          (9,840

Dlocal Ltd., Class A

     433          01/21/22        USD     40.00        USD     1,545          (28,145

Elastic NV

     224          01/21/22        USD     200.00        USD     2,757          (5,600

Endava PLC

     100          01/21/22        USD     165.00        USD     1,679          (78,000

Endava PLC

     231          01/21/22        USD     175.00        USD     3,879          (99,907

Eventbrite, Inc., Class A

     1,020          01/21/22        USD     22.50        USD     1,779          (15,300

Farfetch Ltd., Class A

     1,255          01/21/22        USD     47.00        USD     4,195          (15,060

Farfetch Ltd., Class A

     1,000          01/21/22        USD     45.00        USD     3,343          (9,000

Lattice Semiconductor Corp.

     532          01/21/22        USD     90.00        USD     4,100          (47,880

Lattice Semiconductor Corp.

     845          01/21/22        USD     80.00        USD     6,512          (147,875

Legalzoom.com, Inc.

     649          01/21/22        USD     22.23        USD     1,043          (1,574

Lightspeed Commerce Inc.

     1,074          01/21/22        CAD     135.00        CAD     5,486          (11,887

Lightspeed Commerce Inc.

     537          01/21/22        CAD     92.00        CAD     2,743          (5,943

Lyft, Inc., Class A

     515          01/21/22        USD     55.00        USD     2,201          (3,605

MACOM Technology Solutions Holdings, Inc.

     400          01/21/22        USD     77.75        USD     3,132          (121,127

Marvell Technology, Inc.

     638          01/21/22        USD     75.00        USD     5,582          (811,855

Marvell Technology, Inc.

     1,388          01/21/22        USD     95.00        USD     12,144          (79,116

MercadoLibre, Inc.

     17          01/21/22        USD     1,740.00        USD     2,292          (1,743

MongoDB, Inc.

     32          01/21/22        USD     580.00        USD     1,694          (22,880

Monolithic Power Systems, Inc.

     145          01/21/22        USD     580.00        USD     7,153          (69,600

Monolithic Power Systems, Inc.

     56          01/21/22        USD     530.00        USD     2,763          (18,900

Okta, Inc.

     48          01/21/22        USD     250.00        USD     1,076          (5,520

Ozon Holdings PLC

     300          01/21/22        USD     35.00        USD     888          (5,250

Procore Technologies, Inc.

     213          01/21/22        USD     95.00        USD     1,703          (102,240

Roku, Inc.

     143          01/21/22        USD     310.00        USD     3,263          (6,936

Shift4 Payments, Inc., Class A

     102          01/21/22        USD     80.00        USD     591          (3,570

Shift4 Payments, Inc., Class A

     83          01/21/22        USD     60.00        USD     481          (21,165

Shoals Technologies Group, Inc., Class A

     374          01/21/22        USD     35.00        USD     909          (1,870

Shoals Technologies Group, Inc., Class A

     430          01/21/22        USD     40.00        USD     1,045          (4,300

Snap, Inc., Class A

     1,063          01/21/22        USD     60.00        USD     4,999          (9,036

Square, Inc., Class A

     90          01/21/22        USD     210.00        USD     1,454          (2,070

Synopsys, Inc.

     118          01/21/22        USD     360.00        USD     4,348          (172,280

Take-Two Interactive Software, Inc.

     186          01/21/22        USD     180.00        USD     3,306          (63,240

Tesla, Inc.

     200          01/21/22        USD     1,170.00        USD     21,136          (437,500

Trade Desk, Inc., Class A

     275          01/21/22        USD     114.00        USD     2,520          (8,250

Twilio, Inc., Class A

     205          01/21/22        USD     330.00        USD     5,398          (6,253

Wolfspeed, Inc.

     300          01/21/22        USD     135.00        USD     3,353          (10,500

ZoomInfo Technologies, Inc.

     656          01/21/22        USD     80.00        USD     4,212          (11,480

ZoomInfo Technologies, Inc.

     884          01/21/22        USD     70.00        USD     5,675          (92,820

Zscaler, Inc.

     139          01/21/22        USD     360.00        USD     4,466          (24,464

Atlassian PLC, Class A

     35          01/28/22        USD     375.00        USD     1,335          (89,600

Block, inc.

     211          01/28/22        USD     205.00        USD     3,408          (10,867

Coinbase Global, Inc., Class A

     15          01/28/22        USD     290.00        USD     379          (7,875

Lattice Semiconductor Corp.

     144          01/28/22        USD     78.50        USD     1,110          (40,246

Lattice Semiconductor Corp.

     520          01/28/22        USD     80.76        USD     4,007          (101,170

MongoDB, Inc.

     68          01/28/22        USD     510.00        USD     3,600          (263,840

MongoDB, Inc.

     68          01/28/22        USD     520.00        USD     3,600          (227,460

Okta, Inc.

     57          01/28/22        USD     245.00        USD     1,278          (17,527

Tesla, Inc.

     36          01/28/22        USD     1,200.00        USD     3,804          (93,330

Trade Desk, Inc., Class A

     510          01/28/22        USD     97.00        USD     4,674          (153,000

Twilio, Inc., Class A

     125          01/28/22        USD     290.00        USD     3,292          (50,625

 

 

122  

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


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust II (BSTZ)

 

Exchange-Traded Options Written (continued)

           
Description   

Number of

Contracts

      

Expiration

Date

       Exercise Price       

Notional

Amount (000)

       Value  
Call (continued)                                                   

Zscaler, Inc.

     165          01/28/22        USD     325.00        USD     5,302        $ (216,975

Zscaler, Inc.

     223          02/11/22        USD     350.00        USD     7,166          (181,187

Applovin Corp., Class A

     684          02/18/22        USD     115.00        USD     6,447          (148,770

Avalara, Inc.

     75          02/18/22        USD     165.00        USD     968          (3,375

Avalara, Inc.

     111          02/18/22        USD     160.00        USD     1,433          (14,708

Cloudflare, Inc., Class A

     370          02/18/22        USD     175.00        USD     4,866          (94,905

Confluent, Inc., Class A

     244          02/18/22        USD     75.00        USD     1,860          (222,040

CoStar Group, Inc.

     320          02/18/22        USD     81.50        USD     2,529          (60,329

Dlocal Ltd., Class A

     433          02/18/22        USD     40.00        USD     1,545          (82,270

Elastic NV

     117          02/18/22        USD     130.00        USD     1,440          (70,785

Endava PLC

     257          02/18/22        USD     150.00        USD     4,316          (567,970

Eventbrite, Inc., Class A

     480          02/18/22        USD     17.50        USD     837          (67,200

Farfetch Ltd., Class A

     577          02/18/22        USD     35.00        USD     1,929          (115,688

Grid Dynamics Holdings, Inc.

     1,200          02/18/22        USD     40.00        USD     4,556          (288,000

Legalzoom.com, Inc.

     106          02/18/22        USD     17.50        USD     170          (8,745

Lyft, Inc., Class A

     216          02/18/22        USD     60.00        USD     923          (3,996

Lyft, Inc., Class A

     62          02/18/22        USD     45.00        USD     265          (15,314

MACOM Technology Solutions Holdings, Inc.

     560          02/18/22        USD     80.00        USD     4,385          (288,400

Marvell Technology, Inc.

     861          02/18/22        USD     77.50        USD     7,533          (975,082

Marvell Technology, Inc.

     1,388          02/18/22        USD     95.00        USD     12,144          (249,840

MercadoLibre, Inc.

     16          02/18/22        USD     1,300.00        USD     2,157          (184,560

MongoDB, Inc.

     25          02/18/22        USD     560.00        USD     1,323          (61,250

MongoDB, Inc.

     88          02/18/22        USD     630.00        USD     4,658          (69,960

Monolithic Power Systems, Inc.

     56          02/18/22        USD     540.00        USD     2,763          (54,320

Okta, Inc.

     199          02/18/22        USD     260.00        USD     4,461          (51,541

Unity Software, Inc.

     223          02/18/22        USD     160.00        USD     3,189          (136,030

Unity Software, Inc.

     283          02/25/22        USD     167.00        USD     4,047          (145,214
                          

 

 

 
                           $   (10,992,958
                          

 

 

 

OTC Options Written

             
Description   Counterparty     

Number of

Contracts

      

Expiration

Date

  Exercise Price    

Notional

Amount (000)

       Value  
Call                                                       

Cloudflare, Inc., Class A

 

Citibank N.A.

       45,000        01/04/22   USD        198.38         USD        5,918        $                 —  

Grid Dynamics Holdings, Inc.

  Citibank N.A.        58,000        01/04/22   USD        30.81     USD        2,202          (415,580

Lightspeed Commerce Inc.

 

Morgan Stanley & Co. International PLC

       35,900        01/06/22   CAD        85.40     CAD        1,834          (1

Shoals Technologies Group, Inc., Class A

 

Citibank N.A.

       31,000        01/06/22   USD        33.54     USD        753           

Silergy Corp.

 

UBS AG

       44,000        01/10/22   USD        5,683.25     USD        221,100          (17,007

Adyen NV

 

Goldman Sachs International

       4,200        01/11/22   EUR        2,657.40     EUR        9,708          (5,984

Alphawave IP Group PLC

 

Goldman Sachs International

       63,850        01/11/22   GBP        1.97     GBP        128          (20,673

BE Semiconductor Industries NV

 

Morgan Stanley & Co. International PLC

       46,300        01/11/22   EUR        87.95     EUR        3,473          (549

Delivery Hero AG

 

Goldman Sachs International

       52,600        01/11/22   EUR        132.30     EUR        5,155          (218

Gmo Payment Gateway Inc.

 

UBS AG

       15,700        01/11/22   JPY        15,831.10     JPY        225,295          (2,659

Hybe Ltd.

 

Goldman Sachs International

       34,000        01/11/22   USD        442,980.00     USD        11,866,000          (463

Shoals Technologies Group, Inc., Class A

 

Citibank N.A.

       9,950        01/11/22   USD        32.17     USD        242          (62

Silergy Corp.

 

UBS AG

       44,000        01/11/22   USD        5,683.25     USD        221,100          (21,080

Soitec SA

 

Morgan Stanley & Co. International PLC

       10,000        01/11/22   EUR        241.64     EUR        2,152          (2,525

Xero Ltd.

 

UBS AG

       41,100        01/11/22   AUD        152.88     AUD        5,813          (18,566

FREEE KK

 

Goldman Sachs International

       3,200        01/13/22   JPY        8,109.14     JPY        20,352          (40

Kapstone Paper & Packaging

 

JPMorgan Chase Bank N.A.

       10,300        01/13/22   USD        755,425.00     USD        6,746,500          (187

Grid Dynamics Holdings, Inc.

 

Citibank N.A.

       58,200        01/14/22   USD        30.94     USD        2,210          (415,605

Shoals Technologies Group, Inc., Class A

 

Citibank N.A.

       19,800        01/14/22   USD        35.85     USD        481          (11

Alphawave IP Group PLC

 

Goldman Sachs International

       134,000        01/18/22   GBP        1.98     GBP        268          (54,170

Delivery Hero SE

 

Goldman Sachs International

       13,400        01/18/22   EUR        124.95     EUR        1,313          (1,946

Gmo Payment Gateway Inc.

 

UBS AG

       15,700        01/18/22   JPY        15,831.10     JPY        225,295          (7,227

Soitec SA

 

Morgan Stanley & Co. International PLC

       9,800        01/18/22   EUR        245.96     EUR        2,109          (4,308

FREEE KK

 

JPMorgan Chase Bank N.A.

       40,000        01/19/22   JPY        7,155.12     JPY        254,400          (22,684

Altium Ltd.

 

UBS AG

       236,650        01/20/22   AUD        43.43     AUD        10,694          (420,909

Asm International NV

 

Goldman Sachs International

       6,800        01/20/22   EUR        396.65     EUR        2,643          (63,887

Samsung SDI Co. Ltd.

 

UBS AG

       9,700        01/20/22   USD        739,475.79     USD        6,353,500          (3,325

 

 

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

  123


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust II (BSTZ)

 

OTC Options Written (continued)

             
Description   Counterparty     

Number of

Contracts

      

Expiration

Date

  Exercise Price  

Notional

Amount (000)

       Value  
Call (continued)                                                         

Altium Ltd.

 

JPMorgan Chase Bank N.A.

       73,000        01/25/22     AUD        43.51         AUD          3,299        $ (134,709

Rakus Ltd.

 

JPMorgan Chase Bank N.A.

       112,300        01/25/22     JPY        3,376.47     JPY          348,130          (79,945

Monolithic Power Systems, Inc.

 

Barclays Bank PLC

       11,000        01/26/22     USD        573.46     USD          5,427          (33,779

Shoals Technologies Group, Inc., Class A

 

Barclays Bank PLC

       10,000        01/26/22     USD        34.66     USD          243          (221

Soitec SA

 

UBS AG

       6,400        01/27/22     EUR        248.44     EUR          1,377          (5,473

Grid Dynamics Holdings, Inc.

 

BNP Paribas SA

       90,000        01/28/22     USD        39.33     USD          3,417          (155,863

Legalzoom.com, Inc.

 

Barclays Bank PLC

       60,000        01/28/22     USD        19.32     USD          964          (16,631

Endava PLC

 

JPMorgan Chase Bank N.A.

       20,000        01/31/22     USD        162.24     USD          3,358          (233,282

Rakus Ltd.

 

JPMorgan Chase Bank N.A.

       137,000        02/01/22     JPY        3,492.79     JPY          424,700          (84,703

Soitec SA

 

Morgan Stanley & Co. International PLC

       28,100        02/01/22     EUR        230.58     EUR          6,047          (94,663

Synopsys, Inc.

 

Barclays Bank PLC

       21,200        02/02/22     USD        375.14     USD          7,812          (226,186

Unity Software, Inc.

 

Credit Suisse International

       22,950        02/02/22     USD        146.88     USD          3,282          (195,639

Altium Ltd.

 

JPMorgan Chase Bank N.A.

       54,100        02/03/22     AUD        46.34     AUD          2,445          (48,559

Endava PLC

 

Citibank N.A.

       30,000        02/03/22     USD        154.41     USD          5,038          (512,490

Kakao Corp.

 

JPMorgan Chase Bank N.A.

       171,000        02/03/22     USD        125,717.20     USD          19,237,500          (117,768

Locaweb Servicos De Internet SA

 

Morgan Stanley & Co. International PLC

       2,366,000        02/03/22     USD        14.28     USD          31,137          (395,288

Rakus Ltd.

 

JPMorgan Chase Bank N.A.

       121,700        02/03/22     JPY        3,287.57     JPY          377,270          (140,265

Soitec SA

 

Credit Suisse International

       6,900        02/03/22     EUR        218.10     EUR          1,485          (57,118

Grid Dynamics Holdings, Inc.

 

BNP Paribas SA

       90,000        02/04/22     USD        39.33     USD          3,417          (178,566

FREEE KK

 

JPMorgan Chase Bank N.A.

       68,200        02/08/22     JPY        6,596.20     JPY          433,752          (188,279

Lasertec Corp.

 

JPMorgan Chase Bank N.A.

       95,000        02/08/22     JPY        32,181.60     JPY          3,352,550          (3,350,123

Silergy Corp.

 

JPMorgan Chase Bank N.A.

       36,000        02/08/22     USD        4,690.64     USD          180,900          (646,974

Soitec SA

 

Goldman Sachs International

       11,100        02/08/22     EUR        220.05     EUR          2,389          (89,284

Asm International NV

 

Morgan Stanley & Co. International PLC

       15,900        02/10/22     EUR        396.48     EUR          6,180          (252,355

BE Semiconductor Industries NV

 

Credit Suisse International

       39,300        02/10/22     EUR        81.71     EUR          2,948          (63,441

Gmo Payment Gateway Inc.

 

JPMorgan Chase Bank N.A.

       36,000        02/10/22     JPY        15,418.62     JPY          516,600          (84,438

Xero Ltd.

 

Morgan Stanley & Co. International PLC

       37,500        02/10/22     AUD        147.94     AUD          5,304          (124,599

Shift4 Payments, Inc., Class A

 

Barclays Bank PLC

       40,000        02/11/22     USD        60.00     USD          2,317          (175,771

Kakao Corp.

 

UBS AG

       49,800        02/15/22     USD        123,870.46     USD          5,602,500          (67,843
                              

 

 

 
                               $   (9,253,921
                              

 

 

 

Balances Reported in the Consolidated Statements of Assets and Liabilities for Options Written

 

           
Description   

Swap

Premiums

Paid

    

Swap

Premiums

Received

    

Unrealized

Appreciation

 

Unrealized

Depreciation

     Value
Options Written    $        N/A      $        N/A      $ 15,017,392   $ (7,990,749)      $  (20,246,879)

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Consolidated Statements 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

                             

Options written

                             

Options written at value

   $        $        $ 20,246,879      $        $     $        $  20,246,879  
  

 

 

      

 

 

      

 

    

 

 

      

 

 

   

 

 

      

 

 

 

 

 

124  

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


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust II (BSTZ)

 

For the period ended December 31, 2021, the effect of derivative financial instruments in the Consolidated Statements 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:

                  

Options purchased(a)

  $      $      $ (1,996   $      $      $      $ (1,996

Options written

                  (58,346,478                          (58,346,478
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 
  $      $      $  (58,348,474   $      $      $      $  (58,348,474
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                  

Options written

  $      $      $ 33,557,764     $      $      $      $ 33,557,764  
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)

Options purchased are included in net realized gain (loss) from investments — unaffiliated.

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

   

Options:

 

Average value of option contracts purchased

  $ (a) 

Average value of option contracts written

  $ 28,144,606  

 

  (a)

Derivative not held at any quarter-end. The risk exposure table serves as an indicator of activity during the period.

 

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

Derivative Financial Instruments — Offsetting as of Period End

The Trust’s derivative assets and liabilities (by type) were as follows:

 

     
     Assets      Liabilities  

Derivative Financial Instruments

    

Options

  $      $ 20,246,879  
 

 

 

    

 

 

 

Total derivative assets and liabilities in the Consolidated Statements of Assets and Liabilities

           20,246,879  
 

 

 

    

 

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

           (10,992,958
 

 

 

    

 

 

 

Total derivative assets and liabilities subject to an MNA

  $      $ 9,253,921  
 

 

 

    

 

 

 

The following table presents the Trust’s derivative liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral pledged by the Trust:

 

                                                                                                                  
           
Counterparty    

Derivative

Liabilities

Subject to

an MNA by

Counterparty

 

 

 

 

 

    

Derivatives

Available

for Offset

 

 

 

    

Non-Cash

Collateral

Pledged

 

 

 

    

Cash

Collateral

Pledged

 

 

(a)  

   

Net Amount

of Derivative

Liabilities

 

 

(b)  

Barclays Bank PLC

  $ 452,588      $      $      $ (300,000   $ 152,588  

BNP Paribas SA

    334,429                      (310,000     24,429  

Citibank N.A.

    1,343,748                      (1,200,000     143,748  

Credit Suisse International

    316,198                      (316,198      

Goldman Sachs International

    236,665                      (236,665      

JPMorgan Chase Bank N.A.

    5,131,916                      (4,790,000     341,916  

Morgan Stanley & Co. International PLC

    874,288                      (480,000     394,288  

UBS AG

    564,089                      (230,000     334,089  
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
  $ 9,253,921      $      $      $ (7,862,863   $ 1,391,058  
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

  (a)

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 
  (b)

Net amount represents the net amount payable due to counterparty in the event of default. Net amount may be offset further by the options written receivable/payable on the Consolidated Statements of Assets and Liabilities.

 

 

 

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

  125


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust II (BSTZ)

 

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 Consolidated 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 Consolidated Schedule of Investments above.

 

                                                                                                                   
         
     Level 1        Level 2        Level 3        Total  

Assets

                

Investments

                

Long-Term Investments

                

Common Stocks

                

Aerospace & Defense

  $        $ 8,316,000        $        $ 8,316,000  

Airlines

             5,890,500                   5,890,500  

Automobiles

    89,521,947          20,652,650                   110,174,597  

Banks

                      118,595,654          118,595,654  

Capital Markets

    7,021,438                            7,021,438  

Diversified Consumer Services

                      14,623,790          14,623,790  

Electrical Equipment

    9,646,201                            9,646,201  

Electronic Equipment, Instruments & Components

             39,144,249                   39,144,249  

Entertainment

    43,965,320          35,538,050                   79,503,370  

Hotels, Restaurants & Leisure

    35,762,475                            35,762,475  

Interactive Media & Services

    92,669,337          69,514,405                   162,183,742  

Internet & Direct Marketing Retail

    83,380,709          26,079,907                   109,460,616  

IT Services

    331,364,438          94,695,480          58,992,386          485,052,304  

Professional Services

    25,454,206                            25,454,206  

Road & Rail

    20,275,086                            20,275,086  

Semiconductors & Semiconductor Equipment

    289,097,704          266,361,995          5,007,375          560,467,074  

Software

    396,150,420          189,621,918          49,610,395          635,382,733  

Specialty Retail

             30,839,605                   30,839,605  

Preferred Securities

                

Preferred Stocks

                      565,071,190          565,071,190  

Warrants

                      323,803          323,803  

Short-Term Securities

                

Money Market Funds

    46,915,934                            46,915,934  

Unfunded SPAC PIPE Commitments(a)

                                
 

 

 

      

 

 

      

 

 

      

 

 

 
  $ 1,471,225,215        $ 786,654,759        $ 812,224,593          3,070,104,567  
 

 

 

      

 

 

      

 

 

      

 

 

 

Investments Valued at NAV(b)

                   1,949,219  
                

 

 

 
                 $  3,072,053,786  
                

 

 

 

Derivative Financial Instruments(c)

                

Liabilities

                

Equity Contracts

  $ (10,401,343      $ (9,845,536      $        $ (20,246,879
 

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Unfunded SPAC PIPE commitments are valued at the unrealized appreciation (depreciation) on the commitment.

 
  (b)

Certain investments of the Trust were fair valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

 
  (c)

Derivative financial instruments are options written. Options written are shown at value.

 

A reconciliation of Level 3 financial instruments is presented when the Trust had a significant amount of Level 3 investments at the beginning and/or end of the year in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

 

 

 
   

Common

Stocks

   

Preferred

Stocks

   

Unfunded

SPAC

PIPE

Commitments

    Warrants     Total  

 

 

Assets

         

Opening balance, as of December 31, 2020

  $  116,083,688     $  401,750,866     $     $ 521,839     $  518,356,393  

Transfers into Level 3(a)

                             

Transfers out of Level 3(b)

    (35,281,219                       (35,281,219

Other(c)

    35,281,219       (35,281,219                  

Accrued discounts/premiums

                             

Net realized gain (loss)

    1,767,477       12,454,000                   14,221,477  

Net change in unrealized appreciation (depreciation)(d)(e)

    98,693,844       173,127,874       (f)      (198,036     271,623,682  

 

 

126  

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


Consolidated Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Science and Technology Trust II (BSTZ)

 

 

 
    

Common

Stocks

   

Preferred

Stocks

   

Unfunded

SPAC

PIPE

Commitments

    Warrants     Total  

 

 

Purchases

   $ 58,584,805     $ 130,500,023     $     $     $ 189,084,828  

Sales

     (28,300,214     (117,480,354                 (145,780,568
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Closing balance, as of December 31, 2021

   $ 246,829,600     $ 565,071,190     $ (f)    $ 323,803     $ 812,224,593  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on investments still held at December 31, 2021(e)

   $   101,449,537     $ 221,717,099     $ (f)    $  (198,036   $ 322,968,600  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  (a)

As of December 31, 2020, the Trust used observable inputs in determining the value of certain investments. As of December 31, 2021, the Trust used significant unobservable inputs in determining the value of the same investments. As a result, investments at beginning of period value were transferred from Level 2 to Level 3 in the disclosure hierarchy.

 
  (b)

As of December 31, 2020, the Trust used significant unobservable inputs in determining the value of certain investments. As of December 31, 2021, the Trust used observable inputs in determining the value of the same investments. As a result, investments at beginning of period value were transferred from Level 3 to Level 2 in the disclosure hierarchy.

 
  (c)

Certain Level 3 investments were re-classified between Common Stocks and Preferred Stocks.

 
  (d)

Included in the related net change in unrealized appreciation (depreciation) in the Consolidated Statements of Operations.

 
  (e)

Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at December 31, 2021 is generally due to investments no longer held or categorized as Level 3 at period end.

 
  (f)

Rounds to less than $1.

 

The following table summarizes the valuation approaches used and unobservable inputs utilized by the BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) to determine the value of certain of the Trust’s Level 3 financial instruments as of period end.

 

 

 
     Value        Valuation

Approach

      

Unobservable

Inputs

 

 

      

Range of

Unobservable

Inputs

Utilized

 

 

 

(a)  

      

Weighted    

Average of    

Unobservable    

Inputs Based    

on Fair Value    

 

 

 

 

 

 

 

Assets

                      

Common Stocks

   $ 246,829,600        Market        Revenue Multiple          3.50x - 32.00x          21.32x      
               Volatility          33% - 70%          39%      
               Time to Exit          0.5 - 2.0          0.8      

Preferred Stocks

     565,071,190        Market        Revenue Multiple          3.15x - 33.50x          19.60x      
               Volatility          27% - 55%          48%      
               Time to Exit          3.0 - 4.0          3.9      
              
Recent
Transactions
 
 
       $ 9.86          —      

Warrants

     323,803        Market        Revenue Multiple          11.00x          —      
               Volatility          33%          —      
               Time to Exit          0.5          —      
  

 

 

                     
   $   812,224,593                      
  

 

 

                     

 

  (a)

A significant change in unobservable input would have resulted in a correlated (inverse) significant change to value.

 

See notes to financial statements.

 

 

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

  127


Schedule of Investments  

December 31, 2021

  

BlackRock Utilities, Infrastructure & Power Opportunities Trust (BUI)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

 

 

Common Stocks

   

Building Products — 7.5%

   

Johnson Controls International PLC(a)

    216,609     $     17,612,478  

Kingspan Group PLC

    94,115       11,226,505  

Trane Technologies PLC(a)

    65,850       13,303,675  
   

 

 

 
      42,142,658  
Chemicals — 4.5%            

Air Liquide SA

    40,467       7,057,619  

LG Chem Ltd.

    4,400       2,274,631  

Linde PLC(b)

    25,478       8,841,059  

Sika AG, Registered Shares

    16,890       7,019,774  
   

 

 

 
      25,193,083  
Commercial Services & Supplies(a) — 5.0%  

Waste Connections, Inc.

    81,550       11,112,819  

Waste Management, Inc.

    100,050       16,698,345  
   

 

 

 
      27,811,164  
Construction & Engineering — 3.9%            

Quanta Services, Inc.(a)

    59,910       6,869,281  

Vinci SA

    141,000       14,891,684  
   

 

 

 
      21,760,965  
Electric Utilities — 28.1%            

American Electric Power Co., Inc.(a)

    128,750       11,454,887  

Duke Energy Corp.(a)

    121,918       12,789,198  

Edison International(a)

    121,150       8,268,488  

EDP - Energias de Portugal SA

    1,439,900       7,909,807  

Enel SpA

    3,475,725       27,792,168  

Exelon Corp.(a)

    154,158       8,904,166  

FirstEnergy Corp.(a)

    191,550       7,966,565  

Iberdrola SA

    1,401,175       16,589,878  

Neoenergia SA

    1,250,200       3,632,649  

NextEra Energy, Inc.(a)(c)

    496,130       46,318,697  

Xcel Energy, Inc.(a)

    84,490       5,719,973  
   

 

 

 
      157,346,476  
Electrical Equipment — 8.8%            

Ballard Power Systems, Inc.(a)(b)

    201,213       2,527,235  

Eaton Corp. PLC(a)

    48,040       8,302,273  

Prysmian SpA

    180,550       6,791,595  

Schneider Electric SE

    75,232       14,790,265  

Sunrun, Inc.(a)(b)

    66,750       2,289,525  

Vestas Wind Systems A/S

    332,650       10,130,898  

Xinjiang Goldwind Science & Technology
Co. Ltd., Class H

    2,274,400       4,440,189  
   

 

 

 
      49,271,980  
Electronic Equipment, Instruments & Components — 2.2%  

Hexagon AB, B Shares

    280,850       4,448,817  

Rogers Corp.(b)

    19,696       5,377,008  

Samsung SDI Co. Ltd.(b)

    4,650       2,557,369  
   

 

 

 
      12,383,194  
Independent Power and Renewable Electricity Producers — 6.9%  

AES Corp.(a)

    384,590       9,345,537  

China Longyuan Power Group Corp. Ltd., Class H

    3,129,000       7,308,771  

EDP Renovaveis SA

    450,792       11,210,055  

ReNew Energy Global PLC(b)

    661,000       5,142,580  

Scatec ASA(d)

    212,950       3,676,574  

Sunnova Energy International, Inc.(a)(b)

    80,050       2,234,996  
   

 

 

 
      38,918,513  
Security   Shares     Value  

 

 
Machinery — 4.9%            

Atlas Copco AB, B Shares

    250,500     $ 14,714,431  

Ingersoll Rand, Inc.(a)

    201,900       12,491,553  
   

 

 

 
      27,205,984  
Multi-Utilities — 16.8%            

CMS Energy Corp.(a)

    219,810       14,298,640  

Dominion Energy, Inc.(a)(c)

    183,848       14,443,099  

National Grid PLC

    982,124       14,161,527  

NiSource, Inc.(a)

    224,850       6,208,109  

Public Service Enterprise Group, Inc.(a)

    193,392       12,905,048  

Rwe AG

    515,250       20,876,144  

Sempra Energy(a)

    83,650       11,065,222  
   

 

 

 
      93,957,789  
Oil, Gas & Consumable Fuels — 7.0%            

Enterprise Products Partners LP(a)

    244,563       5,370,604  

Kinder Morgan, Inc.(a)

    540,450       8,571,537  

TC Energy Corp.

    271,400       12,622,208  

Williams Cos., Inc.(a)

    497,255       12,948,520  
   

 

 

 
      39,512,869  
Semiconductors & Semiconductor Equipment — 3.8%  

Analog Devices, Inc.(a)

    28,974       5,092,760  

Canadian Solar, Inc.(b)

    79,040       2,473,162  

First Solar, Inc.(a)(b)

    26,934       2,347,567  

Infineon Technologies AG

    119,950       5,522,313  

ON Semiconductor Corp.(a)(b)

    82,780       5,615,625  
   

 

 

 
      21,051,427  
   

 

 

 

Total Long-Term Investments — 99.4%
(Cost: $354,598,073)

      556,556,102  
   

 

 

 

Short-Term Securities

   

Money Market Funds — 1.3%

   

BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.00%(e)(f)

    7,380,748       7,380,748  
   

 

 

 

Total Short-Term Securities — 1.3%
(Cost: $7,380,748)

 

    7,380,748  
   

 

 

 

Total Investments Before Options Written — 100.7%
(Cost: $361,978,821)

 

    563,936,850  
   

 

 

 

Options Written — (1.0)%
(Premiums Received: $(4,433,535))

 

    (5,639,070
   

 

 

 

Total Investments, Net of Options Written — 99.7%
(Cost: $357,545,286)

 

    558,297,780  

Other Assets Less Liabilities — 0.3%

 

    1,506,913  
   

 

 

 

Net Assets — 100.0%

 

  $  559,804,693  
   

 

 

 

 

(a)

All or a portion of the security has been pledged and/or segregated as collateral in connection with outstanding exchange-traded options written.

 
(b)

Non-income producing security.

 
(c)

All or a portion of the security has been pledged as collateral in connection with outstanding OTC derivatives.

 
(d)

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.

 
(e)

Affiliate of the Trust.

 
(f)

Annualized 7-day yield as of period end.

 

 

 

For Trust compliance purposes, the Trust’s industry classifications refer to one or more of the industry 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 industry sub-classifications for reporting ease.

 

 

128  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Utilities, Infrastructure & Power Opportunities Trust (BUI)

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Trust during the year 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

12/31/20

   

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

  $ 8,385,590     $     $  (1,004,842 )(a)    $     $     $ 7,380,748       7,380,748     $ 1,025     $  

SL Liquidity Series, LLC, Money Market Series(b)

                (17 )(a)       17                         12,661 (c)       
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 17     $     $  7,380,748       $  13,686     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a)

Represents net amount purchased (sold).

 
  (b)

As of period end, the entity is no longer held.

 
  (c)

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

Derivative Financial Instruments Outstanding as of Period End

Exchange-Traded Options Written

 

           
Description   Number of
Contracts
    

    Expiration

Date

             Exercise Price     

Notional

            Amount (000)

     Value  
Call                                                

Quanta Services, Inc.

    65        01/04/22        USD        123.00        USD        745      $ (53

Enterprise Products Partners LP

    76        01/07/22        USD        22.00        USD        167        (1,330

CMS Energy Corp.

    410        01/12/22        USD        62.00        USD        2,667           (131,888

Enterprise Products Partners LP

    265        01/12/22        USD        22.90        USD        582        (1,036

Analog Devices, Inc.

    10        01/14/22        USD        195.00        USD        176        (4,800

Eaton Corp. PLC

    103        01/14/22        USD        175.00        USD        1,780        (18,798

Williams Cos., Inc.

    746        01/14/22        USD        28.00        USD        1,943        (26,110

AES Corp.

    437        01/21/22        USD        25.00        USD        1,062        (10,925

American Electric Power Co., Inc.

    214        01/21/22        USD        85.00        USD        1,904        (90,950

American Electric Power Co., Inc.

    11        01/21/22        USD        87.50        USD        98        (2,393

Analog Devices, Inc.

    91        01/21/22        USD        190.00        USD        1,600        (3,185

Ballard Power Systems, Inc.

    287        01/21/22        USD        17.00        USD        360        (1,435

CMS Energy Corp.

    359        01/21/22        USD        65.00        USD        2,335        (38,592

Dominion Energy, Inc.

    351        01/21/22        USD        77.50        USD        2,757        (61,425

Duke Energy Corp.

    185        01/21/22        USD        105.00        USD        1,941        (26,825

Enterprise Products Partners LP

    265        01/21/22        USD        25.00        USD        582        (530

Exelon Corp.

    6        01/21/22        USD        55.00        USD        35        (1,785

First Solar, Inc.

    43        01/21/22        USD        120.00        USD        375        (301

FirstEnergy Corp.

    335        01/21/22        USD        40.00        USD        1,393        (59,462

Ingersoll Rand, Inc.

    118        01/21/22        USD        65.00        USD        730        (6,195

Kinder Morgan, Inc.

    824        01/21/22        USD        17.00        USD        1,307        (4,532

NextEra Energy, Inc.

    880        01/21/22        USD        87.94        USD        8,216        (507,234

NiSource, Inc.

    393        01/21/22        USD        26.00        USD        1,085        (64,845

ON Semiconductor Corp.

    321        01/21/22        USD        65.00        USD        2,180        (136,425

Public Service Enterprise Group, Inc.

    444        01/21/22        USD        63.41        USD        2,963        (153,825

Quanta Services, Inc.

    168        01/21/22        USD        120.00        USD        1,926        (18,480

Sempra Energy

    143        01/21/22        USD        126.50        USD        1,892        (94,067

Sunnova Energy International, Inc.

    130        01/21/22        USD        35.00        USD        363        (4,550

Sunrun, Inc.

    72        01/21/22        USD        60.00        USD        247        (540

TC Energy Corp.

    494        01/21/22        CAD        62.00        CAD        2,906        (1,953

Trane Technologies PLC

    82        01/21/22        USD        200.00        USD        1,657        (39,770

Waste Connections, Inc.

    111        01/21/22        USD        135.00        USD        1,513        (34,410

Waste Management, Inc.

    182        01/21/22        USD        170.00        USD        3,038        (21,385

Williams Cos., Inc.

    634        01/21/22        USD        29.00        USD        1,651        (3,170

Xcel Energy, Inc.

    165        01/21/22        USD        65.07        USD        1,117        (49,386

Xcel Energy, Inc.

    130        01/21/22        USD        70.00        USD        880        (4,550

NiSource, Inc.

    393        01/27/22        USD        26.33        USD        1,085        (52,548

Eaton Corp. PLC

    65        01/28/22        USD        170.00        USD        1,123        (39,325

Enterprise Products Partners LP

    249        01/28/22        USD        21.50        USD        547        (18,301

First Solar, Inc.

    51        01/28/22        USD        97.00        USD        445        (5,279

 

 

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

  129


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Utilities, Infrastructure & Power Opportunities Trust (BUI)

 

Exchange-Traded Options Written (continued)

           
Description  

Number of

Contracts

    

    Expiration

Date

             Exercise Price     

Notional

            Amount (000)

     Value  
Call (continued)                                                

Johnson Controls International PLC

    379        01/28/22        USD        80.00        USD        3,082      $  (105,172

Kinder Morgan, Inc.

    814        01/28/22        USD        16.50        USD        1,291        (15,466

Waste Management, Inc.

    168        01/28/22        USD        165.00        USD        2,804        (73,080

Williams Cos., Inc.

    360        01/28/22        USD        27.00        USD        937        (9,000

Waste Connections, Inc.

    174        02/07/22        USD        136.00        USD        2,371        (61,440

Edison International

    165        02/11/22        USD        67.40        USD        1,126        (32,413

Sunnova Energy International, Inc.

    150        02/11/22        USD        33.00        USD        419        (18,368

AES Corp.

    910        02/18/22        USD        26.00        USD        2,211        (22,750

American Electric Power Co., Inc.

    225        02/18/22        USD        87.50        USD        2,002        (64,687

Ballard Power Systems, Inc.

    417        02/18/22        USD        14.00        USD        524        (22,935

Dominion Energy, Inc.

    292        02/18/22        USD        80.00        USD        2,294        (36,500

Duke Energy Corp.

    241        02/18/22        USD        105.00        USD        2,528        (59,045

Edison International

    259        02/18/22        USD        67.50        USD        1,768        (59,570

Exelon Corp.

    533        02/18/22        USD        54.51        USD        3,079        (197,261

FirstEnergy Corp.

    335        02/18/22        USD        41.00        USD        1,393        (48,575

Ingersoll Rand, Inc.

    588        02/18/22        USD        60.00        USD        3,638        (205,800

Johnson Controls International PLC

    379        02/18/22        USD        80.00        USD        3,082        (134,545

Kinder Morgan, Inc.

    253        02/18/22        USD        17.00        USD        401        (3,289

NextEra Energy, Inc.

    890        02/18/22        USD        88.00        USD        8,309        (567,894

Public Service Enterprise Group, Inc.

    232        02/18/22        USD        66.16        USD        1,548        (48,799

Sempra Energy

    149        02/18/22        USD        130.00        USD        1,971        (75,990

Sunrun, Inc.

    161        02/18/22        USD        45.00        USD        552        (13,685

TC Energy Corp.

    455        02/18/22        CAD        60.00        CAD        2,677        (32,193

Trane Technologies PLC

    148        02/18/22        USD        210.00        USD        2,990        (56,980
                   

 

 

 
                    $  (3,708,030
                   

 

 

 

OTC Options Written

 

             
Description   Counterparty   

Number of

Contracts

    

    Expiration

Date

    Exercise Price    

Notional

Amount (000)

     Value  
Call                                                 

Hexagon AB, B Shares

 

Goldman Sachs International

     55,100        01/04/22           SEK       137.22           SEK       7,915      $      (36,603

Vinci SA

 

Morgan Stanley & Co. International PLC

     19,700        01/04/22       EUR       95.31       EUR       1,830        (3,295

Neoenergia SA

 

Citibank N.A.

     249,000        01/10/22       USD       17.26       USD       4,034        (1,392

EDP Renovaveis SA

 

Morgan Stanley & Co. International PLC

     81,900        01/11/22       EUR       23.57       EUR       1,794        (5,474

Enel SpA

 

Goldman Sachs International

     489,900        01/11/22       EUR       7.24       EUR       3,452        (9,626

Iberdrola SA

 

Morgan Stanley & Co. International PLC

     248,000        01/11/22       EUR       10.12       EUR       2,582        (78,861

Infineon Technologies AG

 

Morgan Stanley & Co. International PLC

     23,500        01/11/22       EUR       43.81       EUR       958        (1,561

Kingspan Group PLC

 

Morgan Stanley & Co. International PLC

     33,000        01/11/22       EUR       103.58       EUR       3,465        (91,929

Prysmian SpA

 

Credit Suisse International

     61,400        01/11/22       EUR       34.79       EUR       2,033        (1,972

Schneider Electric SE

 

Morgan Stanley & Co. International PLC

     17,100        01/11/22       EUR       159.00       EUR       2,949        (267,833

Vestas Wind Systems A/S

 

Goldman Sachs International

     20,900        01/11/22       DKK       244.68       DKK       4,180        (101

Vinci SA

 

UBS AG

     27,200        01/13/22       EUR       92.97       EUR       2,527        (45,082

Enel SpA

 

Credit Suisse International

     344,800        01/19/22       EUR       6.83       EUR       2,429        (101,689

Atlas Copco AB, B Shares

 

Morgan Stanley & Co. International PLC

     30,200        01/20/22       SEK       509.49       SEK       16,072        (88,767

Iberdrola SA

 

Credit Suisse International

     243,700        01/20/22       EUR       10.05       EUR       2,537        (96,349

Infineon Technologies AG

 

Morgan Stanley & Co. International PLC

     18,500        01/20/22       EUR       42.06       EUR       754        (10,010

Rwe AG

 

Credit Suisse International

     46,500        01/20/22       EUR       35.95       EUR       1,661        (31,249

Samsung SDI Co. Ltd.

 

UBS AG

     1,600        01/20/22       USD       739,475.79       USD       1,048,000        (549

Vestas Wind Systems A/S

 

Credit Suisse International

     90,700        01/20/22       DKK       225.26       DKK       18,140        (12,497

EDP - Energias de Portugal SA

 

Morgan Stanley & Co. International PLC

     214,300        01/25/22       EUR       4.98       EUR       1,035        (11,224

Linde PLC

 

UBS AG

     4,200        01/25/22       EUR       290.20       EUR       1,285        (75,580

National Grid PLC

 

Morgan Stanley & Co. International PLC

     148,100        01/25/22       GBP       10.27       GBP       1,570        (85,975

Rwe AG

 

Barclays Bank PLC

     33,100        01/25/22       EUR       35.17       EUR       1,182        (40,928

Sika AG, Registered Shares

 

UBS AG

     3,400        01/25/22       CHF       371.52       CHF       1,293        (44,933

Xinjiang Goldwind Science & Technology Co. Ltd., Class H

 

JPMorgan Chase Bank N.A.

     400,000        01/25/22       HKD       18.40       HKD       6,088        (5,273

Hexagon AB, B Shares

 

UBS AG

     53,500        01/27/22       SEK       137.33       SEK       7,685        (43,212

Neoenergia SA

 

Morgan Stanley & Co. International PLC

     188,600        02/01/22       USD       18.43       USD       3,055        (1,098

Scatec ASA

 

Credit Suisse International

     74,500        02/01/22       NOK       160.14       NOK       11,380        (39,570

Air Liquide SA

 

UBS AG

     14,100        02/03/22       EUR       157.51       EUR       2,162        (22,582

 

 

130  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Utilities, Infrastructure & Power Opportunities Trust (BUI)

 

OTC Options Written (continued)

 

             
Description   Counterparty   

Number of

Contracts

    

    Expiration

Date

    Exercise Price    

Notional

Amount (000)

     Value  
Call (continued)                                                 

Atlas Copco AB, B Shares

 

Credit Suisse International

     57,500        02/03/22           SEK       505.42           SEK       30,602      $ (206,145

EDP - Energias De Portugal SA

 

Credit Suisse International

     144,800        02/03/22       EUR       4.84       EUR       700        (15,651

EDP Renovaveis SA

 

Credit Suisse International

     41,400        02/03/22       EUR       21.52       EUR       907        (48,789

Schneider Electric SE

 

Credit Suisse International

     9,300        02/03/22       EUR       167.64       EUR       1,604        (82,080

EDP Renovaveis SA

 

Morgan Stanley & Co. International PLC

     34,500        02/08/22       EUR       21.70       EUR       756        (38,688

Enel SpA

 

UBS AG

     381,800        02/08/22       EUR       6.85       EUR       2,690        (75,213

National Grid PLC

 

UBS AG

     195,600        02/08/22       GBP       10.80       GBP       2,073        (35,876

Sika AG, Registered Shares

 

Goldman Sachs International

     2,600        02/08/22       CHF       385.74       CHF       989        (20,225

Xinjiang Goldwind Science & Technology Co. Ltd., Class H

 

JPMorgan Chase Bank N.A.

     396,000        02/08/22       HKD       18.80       HKD       6,027        (8,991

LG Chem Ltd.

 

JPMorgan Chase Bank N.A.

     1,500        02/10/22       USD       750,124.90       USD       922,500        (2,900

Linde PLC

 

Credit Suisse International

     4,700        02/10/22       EUR       311.99       EUR       1,438        (28,137

Rwe AG

 

Credit Suisse International

     100,700        02/10/22       EUR       36.01       EUR       3,597        (113,131
                  

 

 

 
                   $  (1,931,040
                  

 

 

 

Balances Reported in the Statements of Assets and Liabilities for Options Written

 

           
Description  

Swap

Premiums

Paid

  

Swap

Premiums

Received

  

Unrealized

Appreciation

  

Unrealized

Depreciation

   Value
Options Written   $        N/A    $        N/A    $    1,166,451    $ (2,371,986)    $ (5,639,070)

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statements 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

                   

Options written

                   

Options written at value

  $      $      $   5,639,070      $      $      $      $  5,639,070  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

For the period ended December 31, 2021, the effect of derivative financial instruments in the Statements 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:

                  

Options written

  $      $      $  (10,476,083   $      $      $      $  (10,476,083
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

                  

Options written

  $      $      $ 557,087     $      $      $      $ 557,087  
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

   

Options:

 

Average value of option contracts written

  $ 4,014,111  

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

 

 

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

  131


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Utilities, Infrastructure & Power Opportunities Trust (BUI)

 

Derivative Financial Instruments — Offsetting as of Period End

The Trust’s derivative assets and liabilities (by type) were as follows:

 

     
      Assets        Liabilities  

Derivative Financial Instruments

Options

   $        $ 5,639,070  
  

 

 

      

 

 

 

Total derivative assets and liabilities in the Statements of Assets and Liabilities

              5,639,070  
  

 

 

      

 

 

 

Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)

              (3,708,030
  

 

 

      

 

 

 

Total derivative assets and liabilities subject to an MNA

   $        $ 1,931,040  
  

 

 

      

 

 

 

The following table presents the Trust’s derivative liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral pledged by the Trust:

 

                                                                                                             
           

Counterparty

    

Derivative

Liabilities

Subject to

an MNA by

Counterparty

 

 

 

 

 

      

Derivatives

Available

for Offset

 

 

 

      

Non-Cash

Collateral

Pledged

 

 

(a)  

      

Cash

Collateral

Pledged

 

 

 

      

Net Amount

of Derivative

Liabilities

 

 

(b) 

Barclays Bank PLC

   $ 40,928        $        $        $        $ 40,928  

Citibank N.A.

     1,392                                     1,392  

Credit Suisse International

     777,259                   (777,259                  

Goldman Sachs International

     66,555                            (40,000        26,555  

JPMorgan Chase Bank N.A.

     17,164                                     17,164  

Morgan Stanley & Co. International PLC

     684,715                   (684,715                  

UBS AG

     343,027                   (309,527        (33,500         
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 
   $ 1,931,040        $        $   (1,771,501      $ (73,500      $ 86,039  
  

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

 
  (b)

Net amount represents the net amount payable due to counterparty in the event of default. Net amount may be offset further by the options written receivable/payable on the Statements of Assets and Liabilities.

 

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

                 

Common Stocks

                 

Building Products

   $ 30,916,153        $ 11,226,505        $        $ 42,142,658  

Chemicals

              25,193,083                   25,193,083  

Commercial Services & Supplies

     27,811,164                            27,811,164  

Construction & Engineering

     6,869,281          14,891,684                   21,760,965  

Electric Utilities

     101,421,974          55,924,502                   157,346,476  

Electrical Equipment

     13,119,033          36,152,947                   49,271,980  

Electronic Equipment, Instruments & Components

     5,377,008          7,006,186                   12,383,194  

Independent Power and Renewable Electricity Producers

     16,723,113          22,195,400                   38,918,513  

Machinery

     12,491,553          14,714,431                   27,205,984  

Multi-Utilities

     58,920,118          35,037,671                   93,957,789  

Oil, Gas & Consumable Fuels

     39,512,869                            39,512,869  

Semiconductors & Semiconductor Equipment

     15,529,114          5,522,313                   21,051,427  

Short-Term Securities

                 

Money Market Funds

     7,380,748                            7,380,748  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $  336,072,128        $  227,864,722        $        $  563,936,850  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

 

132  

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


Schedule of Investments  (continued)

December 31, 2021

  

BlackRock Utilities, Infrastructure & Power Opportunities Trust (BUI)

 

Fair Value Hierarchy as of Period End (continued)

 

 

 
     Level 1        Level 2        Level 3        Total  

 

 

Derivative Financial Instruments(a)

                 

Liabilities

                 

Equity Contracts

   $   (1,791,818      $   (3,847,252      $           —        $   (5,639,070
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

Derivative financial instruments are options written. Options written are shown at value.

 

See notes to financial statements.

 

 

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

  133


 

Statements of Assets and Liabilities  

December 31, 2021

 

    BGR     CII      BDJ      BOE  

 

 

ASSETS

         

Investments, at value — unaffiliated(a)

  $ 313,020,962     $  977,755,220      $  1,868,970,974      $  851,371,897  

Investments, at value — affiliated(b)

    2,725,280       10,297,753        62,262,015        11,262,594  

Cash

    32,990       43,500        455,152        57,899  

Cash pledged:

         

Collateral — exchange-traded options written

                        4,880,000  

Collateral — OTC derivatives

          290,000        140,000        333,000  

Foreign currency, at value(c)

    37,929              2,780        26  

Receivables:

         

Investments sold

    132,412              1,095,164         

Options written

    81,765       286,225        111,517        40,868  

Dividends — unaffiliated

    598,870       475,194        2,212,244        1,554,445  

Dividends — affiliated

    18       41        326        62  
 

 

 

   

 

 

    

 

 

    

 

 

 

Total assets

    316,630,226       989,147,933        1,935,250,172        869,500,791  
 

 

 

   

 

 

    

 

 

    

 

 

 

LIABILITIES

         

Options written, at value(d)

    2,076,564       12,449,136        25,447,836        9,905,083  

Payables:

         

Investments purchased

    207              1,928,899         

Accounting services fees

    11,001       12,270        23,500        14,761  

Custodian fees

    9,501       6,802        44,707        26,709  

Income dividend distributions

    57,982              1,938,723        142,052  

Investment advisory fees

    257,079       690,533        1,281,639        587,417  

Trustees’ and Officer’s fees

    607,194       307,680        1,309,527        898,815  

Options written

          59,507        152,630        13,348  

Other accrued expenses

    26,654       24,658        54,465        46,742  

Professional fees

    68,985       105,182        196,425        127,333  

Transfer agent fees

    11,589       13,660        33,705        17,920  
 

 

 

   

 

 

    

 

 

    

 

 

 

Total liabilities

    3,126,756       13,669,428        32,412,056        11,780,180  
 

 

 

   

 

 

    

 

 

    

 

 

 

NET ASSETS

  $ 313,503,470     $ 975,478,505      $ 1,902,838,116      $ 857,720,611  
 

 

 

   

 

 

    

 

 

    

 

 

 

NET ASSETS CONSIST OF

         

Paid-in capital(e)(f)(g)

  $ 542,351,895     $ 561,558,505      $ 1,309,265,007      $ 718,537,151  

Accumulated earnings (loss)

    (228,848,425     413,920,000        593,573,109        139,183,460  
 

 

 

   

 

 

    

 

 

    

 

 

 

NET ASSETS

  $ 313,503,470     $ 975,478,505      $ 1,902,838,116      $ 857,720,611  
 

 

 

   

 

 

    

 

 

    

 

 

 

Net asset value(e)(f)(g)

  $ 10.77     $ 22.10      $ 10.23      $ 13.40  
 

 

 

   

 

 

    

 

 

    

 

 

 

(a)  Investments, at cost — unaffiliated

  $ 240,891,552     $ 570,297,394      $ 1,393,556,881      $ 675,621,154  

(b)  Investments, at cost — affiliated

  $ 2,725,280     $ 10,297,753      $ 62,262,015      $ 11,262,594  

(c)  Foreign currency, at cost

  $ 37,640     $      $ 2,847      $ 28  

(d)  Premiums received

  $ 3,397,497     $ 11,850,571      $ 23,604,331      $ 8,282,779  

(e)  Shares outstanding

    29,108,471       44,132,101        186,003,434        64,025,316  

(f)   Shares authorized

    Unlimited       200 million        Unlimited        Unlimited  

(g)  Par value

  $ 0.001     $ 0.10      $ 0.001      $ 0.001  

See notes to financial statements.

 

 

134  

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


 

Statements of Assets and Liabilities  (continued)

December 31, 2021

 

    BGY      BME     BMEZ      BIGZ  

 

 

ASSETS

         

Investments, at value — unaffiliated(a)(b)

  $ 705,788,038      $ 617,749,389     $ 2,926,534,359      $ 3,945,888,432  

Investments, at value — affiliated(c)

    5,586,240        27,792,805       90,000,929        66,790,213  

Cash

    116,375        877       118,828         

Cash pledged:

         

Collateral — exchange-traded options written

    4,091,000                      

Collateral — OTC derivatives

    321,000              36,000        30,000  

Foreign currency, at value(d)

    125,457        83       1,055        1,101  

Receivables:

         

Investments sold

    2,230,173        2,724,200 (e)       755,152        5,930,398  

Securities lending income — affiliated

           1,458       16,566        2,394  

Dividends — unaffiliated

    1,538,612        439,647       759,180        459,716  

Dividends — affiliated

    41        145       153        22  

From affiliate

           12,661               

Deferred offering costs

           91,501               

Prepaid expenses

                 48,373        89,817  
 

 

 

    

 

 

   

 

 

    

 

 

 

Total assets

    719,796,936        648,812,766       3,018,270,595        4,019,192,093  
 

 

 

    

 

 

   

 

 

    

 

 

 

LIABILITIES

         

Bank overdraft

                        139,778  

Collateral on securities loaned

           211,572       4,940,637        5,206,475  

Options written, at value(f)

    8,368,684        9,621,857       23,146,210        11,001,039  

Payables:

         

Investments purchased

    15,005        12,481,544               

Accounting services fees

    12,270        7,254       103,226        140,107  

Capital shares redeemed

                        12,193,772  

Custodian fees

    30,056        20,845       89,342        70,662  

Deferred foreign capital gain tax

    231,371                      

Federal income tax

           12,114               

Income dividend distributions

    162,044              4,620,754        4,314,391  

Investment advisory fees

    529,140        516,052       3,098,668        4,273,239  

Offering costs

           20,427               

Trustees’ and Officer’s fees

    762,112        31,677       129,838        59,595  

Other accrued expenses

    51,886        34,737       200,292        46,909  

Professional fees

    108,192        69,416       34,697        11,481  

Transfer agent fees

    16,306        10,460       20,662        82,136  
 

 

 

    

 

 

   

 

 

    

 

 

 

Total liabilities

    10,287,066        23,037,955       36,384,326        37,539,584  
 

 

 

    

 

 

   

 

 

    

 

 

 

NET ASSETS

  $ 709,509,870      $ 625,774,811     $ 2,981,886,269      $ 3,981,652,509  
 

 

 

    

 

 

   

 

 

    

 

 

 

NET ASSETS CONSIST OF

         

Paid-in capital(g)(h)(i)

  $ 606,225,184      $ 390,506,049     $ 2,253,396,500      $ 4,587,017,292  

Accumulated earnings (loss)

    103,284,686        235,268,762       728,489,769        (605,364,783
 

 

 

    

 

 

   

 

 

    

 

 

 

NET ASSETS

  $  709,509,870      $  625,774,811     $  2,981,886,269      $  3,981,652,509  
 

 

 

    

 

 

   

 

 

    

 

 

 

Net asset value(g)(h)(i)

  $ 6.81      $ 47.96     $ 26.47      $ 16.72  
 

 

 

    

 

 

   

 

 

    

 

 

 

(a)  Investments, at cost — unaffiliated

  $ 556,956,647      $ 385,464,156     $ 2,342,582,475      $ 4,313,005,762  

(b)  Securities loaned, at value

  $      $ 205,305     $ 4,776,505      $ 5,079,308  

(c)  Investments, at cost — affiliated

  $ 5,586,240      $ 27,792,813     $ 90,079,899      $ 111,276,613  

(d)  Foreign currency, at cost

  $ 125,084      $ 84     $ 1,039      $ 1,094  

(e)  $1,767,466 is expected to be collected after December 31, 2022.

         

(f)   Premiums received

  $ 6,142,289      $ 5,886,890     $ 21,476,066      $ 17,415,488  

(g)  Shares outstanding

    104,237,971        13,047,269       112,669,825        238,185,709  

(h)  Shares authorized

    Unlimited        Unlimited       Unlimited        Unlimited  

(i)   Par value

  $ 0.001      $ 0.001     $ 0.001      $ 0.001  

See notes to financial statements.

 

 

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

  135


 

Statements of Assets and Liabilities  (continued)

December 31, 2021

 

    BCX     BST(a)      BSTZ(a)      BUI  

 

 

ASSETS

         

Investments, at value — unaffiliated(b)(c)

  $ 902,157,198     $ 1,651,412,325      $  3,023,188,633      $  556,556,102  

Investments, at value — affiliated(d)

    16,654,313       43,415,268        48,865,153        7,380,748  

Cash

          297,188        208,398        589,258  

Cash pledged as collateral for OTC derivatives

    270,000       1,610,000        8,060,000        73,500  

Foreign currency, at value(e)

    87,845       1,628        1,371         

Receivables:

         

Investments sold

    1,385,576       9,887,333        75        3,900  

Options written

    110,936       205,177        195,559         

Securities lending income — affiliated

          41,933        6,433         

Capital shares sold

                        572,850  

Dividends — unaffiliated

    1,699,342       185,490        220,363        930,190  

Dividends — affiliated

    65       287        448        32  

Deferred offering costs

          177,517               15,668  

Prepaid expenses

          5,213                
 

 

 

   

 

 

    

 

 

    

 

 

 

Total assets

    922,365,275       1,707,239,359        3,080,746,433        566,122,248  
 

 

 

   

 

 

    

 

 

    

 

 

 

LIABILITIES

         

Bank overdraft

    185,937                      

Collateral on securities loaned

          841,775        1,949,206         

Options written, at value(f)

    9,395,723       9,725,028        20,246,879        5,639,070  

Payables:

         

Investments purchased

    9,471,345       8,316,602                

Accounting services fees

    14,766       12,270        102,321        12,270  

Custodian fees

    17,901       43,460        67,714        16,068  

Deferred capital gain tax

          1,441,234        5,470,222         

Income dividend distributions

    124,979       4,026,146                

Investment advisory fees

    743,800       1,374,593        3,257,933        461,911  

Offering costs

          4,000               27,388  

Trustees’ and Officer’s fees

    360,572       7,253        136,340        2,070  

Options written

          97,843        6,228         

Other accrued expenses

    132,174       82,791        318,541        85,198  

Professional fees

    119,921       83,354        208,105        64,718  

Transfer agent fees

    16,268       16,572        21,312        8,862  
 

 

 

   

 

 

    

 

 

    

 

 

 

Total liabilities

    20,583,386       26,072,921        31,784,801        6,317,555  
 

 

 

   

 

 

    

 

 

    

 

 

 

NET ASSETS

  $ 901,781,889     $ 1,681,166,438      $ 3,048,961,632      $ 559,804,693  
 

 

 

   

 

 

    

 

 

    

 

 

 

NET ASSETS CONSIST OF

         

Paid-in capital(g)(h)(i)

  $ 1,106,191,760     $ 795,202,915      $ 1,514,886,596      $ 381,410,703  

Accumulated earnings (loss)

    (204,409,871     885,963,523        1,534,075,036        178,393,990  
 

 

 

   

 

 

    

 

 

    

 

 

 

NET ASSETS

  $ 901,781,889     $ 1,681,166,438      $ 3,048,961,632      $ 559,804,693  
 

 

 

   

 

 

    

 

 

    

 

 

 

Net asset value(g)(h)(i)

  $ 10.21     $ 52.40      $ 38.82      $ 25.86  
 

 

 

   

 

 

    

 

 

    

 

 

 

(a)  Consolidated Statement of Assets and Liabilities.

         

(b)  Investments, at cost — unaffiliated

  $ 660,552,834     $ 771,192,839      $ 1,408,606,716      $ 354,598,073  

(c)  Securities loaned, at value

  $     $ 855,268      $ 1,875,935      $  

(d)  Investments, at cost — affiliated

  $ 16,654,313     $ 43,415,268      $ 48,865,153      $ 7,380,748  

(e)  Foreign currency, at cost

  $ 87,273     $ 1,656      $ 1,342      $  

(f)   Premiums received

  $ 8,020,674     $ 15,509,931      $ 27,273,522      $ 4,433,535  

(g)  Shares outstanding

    88,315,994       32,083,371        78,538,036        21,651,663  

(h)  Shares authorized

    Unlimited       Unlimited        Unlimited        Unlimited  

(i)   Par value

  $ 0.001     $ 0.001      $ 0.001      $ 0.001  

See notes to financial statements.

 

 

136  

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


 

Statements of Operations

Year Ended December 31, 2021

 

                                                                                       
    BGR     CII     BDJ      BOE  

 

 

INVESTMENT INCOME

        

Dividends — unaffiliated

  $ 12,117,954     $ 10,457,835     $ 44,817,852      $ 20,260,810  

Dividends — affiliated

    357       1,373       2,794        745  

Securities lending income — affiliated — net

                4,054         

Foreign taxes withheld

    (678,314     (181,286     (1,176,675      (626,811
 

 

 

   

 

 

   

 

 

    

 

 

 

Total investment income

    11,439,997       10,277,922       43,648,025        19,634,744  
 

 

 

   

 

 

   

 

 

    

 

 

 

EXPENSES

        

Investment advisory

    3,445,835       7,889,210       15,249,546        8,324,322  

Trustees and Officer

    107,870       95,038       285,087        184,550  

Transfer agent

    69,590       81,150       162,639        95,519  

Professional

    65,177       92,171       116,915        101,230  

Accounting services

    42,029       48,758       93,512        58,710  

Custodian

    36,454       32,152       130,583        103,561  

Registration

    10,423       15,420       90,400        22,920  

Miscellaneous

    35,796       74,523       116,957        55,016  
 

 

 

   

 

 

   

 

 

    

 

 

 

Total expenses

    3,813,174       8,328,422       16,245,639        8,945,828  

Less:

        

Fees waived and/or reimbursed by the Manager

    (632,880     (3,964     (9,799      (1,458,826
 

 

 

   

 

 

   

 

 

    

 

 

 

Total expenses after fees waived and/or reimbursed

    3,180,294       8,324,458       16,235,840        7,487,002  
 

 

 

   

 

 

   

 

 

    

 

 

 

Net investment income

    8,259,703       1,953,464       27,412,185        12,147,742  
 

 

 

   

 

 

   

 

 

    

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

        

Net realized gain (loss) from:

        

Investments — unaffiliated

    (4,735,839     97,901,672       281,643,501        79,281,977  

Foreign currency transactions

    (47,802           51,902        (203,487

Options written

    (14,237,287     (27,217,173     (55,244,521      (14,904,200

Payment by affiliate

    25,456                     
 

 

 

   

 

 

   

 

 

    

 

 

 
    (18,995,472     70,684,499       226,450,882        64,174,290  
 

 

 

   

 

 

   

 

 

    

 

 

 

Net change in unrealized appreciation (depreciation) on:

        

Investments — unaffiliated

    98,322,160       107,648,528       63,592,742        45,303,217  

Foreign currency translations

    (7,227           (42,425      (69,621

Options written

    1,154,640       (73,853     7,905,931        (1,455,465
 

 

 

   

 

 

   

 

 

    

 

 

 
    99,469,573       107,574,675       71,456,248        43,778,131  
 

 

 

   

 

 

   

 

 

    

 

 

 

Net realized and unrealized gain

    80,474,101       178,259,174       297,907,130        107,952,421  
 

 

 

   

 

 

   

 

 

    

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $  88,733,804     $ 180,212,638     $ 325,319,315      $ 120,100,163  
 

 

 

   

 

 

   

 

 

    

 

 

 

See notes to financial statements.

 

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

  137


 

Statements of Operations  (continued)

Year Ended December 31, 2021

 

                                                                                               
    BGY     BME     BMEZ     BIGZ(a)  

 

 

INVESTMENT INCOME

       

Dividends — unaffiliated

  $ 17,372,777     $ 6,458,167     $ 6,794,808     $ 8,664,340  

Dividends — affiliated

    782       1,532       5,437       42,953  

Securities lending income — affiliated — net

          21,952       276,651       118,573  

Foreign taxes withheld

    (1,085,632     (79,721     (393,701      
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    16,287,927       6,401,930       6,683,195       8,825,866  
 

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

       

Investment advisory

    7,005,794       5,898,369       41,309,410       43,612,551  

Trustees and Officer

    158,682       40,031       194,704       171,333  

Custodian

    127,533       80,407       280,446       157,631  

Professional

    98,220       97,125       216,639       428,373  

Transfer agent

    88,211       67,679       125,261       128,999  

Accounting services

    48,758       28,854       326,183       315,288  

Registration

    36,936       11,658              

Offering

          61,531              

Miscellaneous

    59,887       67,435       467,025       109,900  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses excluding excise tax

    7,624,021       6,353,089       42,919,668       44,924,075  

Excise Tax

          12,114              
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    7,624,021       6,365,203       42,919,668       44,924,075  

Less:

       

Fees waived and/or reimbursed by the Manager

    (702,840     (5,096     (15,118     (362,833
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed

    6,921,181       6,360,107       42,904,550       44,561,242  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income (loss)

    9,366,746       41,823       (36,221,355     (35,735,376
 

 

 

   

 

 

   

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

       

Net realized gain (loss) from:

       

Investments — unaffiliated

    61,890,631 (b)      54,102,268       374,700,990       (197,928,462

Investments — affiliated

          (67     (851     11,860,850  

Foreign currency transactions

    (381,094     (4,943     (61,561     497,260  

Options written

    (16,019,721     (7,325,999     (4,512,182     (14,153,519
 

 

 

   

 

 

   

 

 

   

 

 

 
    45,489,816       46,771,259       370,126,396       (199,723,871
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

       

Investments — unaffiliated

    21,644,086 (c)      14,731,301       (635,695,797     (367,117,330

Investments — affiliated

          (8     (78,970     (44,486,400

Foreign currency translations

    (118,842     (2,824     (22,155     649  

Options written

    (1,541,772     (2,422,221     14,045,494       6,414,449  
 

 

 

   

 

 

   

 

 

   

 

 

 
    19,983,472       12,306,248       (621,751,428     (405,188,632
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gain (loss)

    65,473,288       59,077,507       (251,625,032     (604,912,503
 

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

  $  74,840,034     $ 59,119,330     $  (287,846,387   $  (640,647,879
 

 

 

   

 

 

   

 

 

   

 

 

 

(a)  The Trust commenced operations on March 29, 2021.

       

(b)  Net of foreign capital gain tax and capital gain tax refund, if applicable of

  $ (241,408   $     $     $  

(c)  Net of reduction in deferred foreign capital gain tax of

  $ 148,052     $     $     $  

See notes to financial statements.

 

138  

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


 

Statements of Operations  (continued)

Year Ended December 31, 2021

 

                                                                                       
    BCX     BST(a)     BSTZ(a)     BUI  

 

 

INVESTMENT INCOME

       

Dividends — unaffiliated

  $ 36,499,708     $ 2,754,170     $ 2,079,559     $ 10,270,046  

Dividends — affiliated

    1,251       4,959       6,664       1,025  

Interest — unaffiliated

    173,132                    

Securities lending income — affiliated — net

          757,849       202,730       12,661  

Non-cash dividends — unaffiliated

                      700,678  

Foreign taxes withheld

    (1,628,249     (115,532     (199,561     (678,983
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    35,045,842       3,401,446       2,089,392       10,305,427  
 

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

       

Investment advisory

    8,505,829       15,499,688       40,230,294       5,050,528  

Trustees and Officer

    106,630       93,359       193,300       30,530  

Transfer agent

    105,425       111,747       145,408       61,574  

Professional

    96,926       225,967       519,032       78,589  

Custodian

    75,249       146,026       311,186       68,311  

Accounting services

    58,664       48,758       318,503       48,759  

Registration

    31,826       9,613       28,045       9,936  

Offering

          29,000             29,000  

Miscellaneous

    114,080       99,305       462,605       81,561  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    9,094,629       16,263,463       42,208,373       5,458,788  

Less:

       

Fees waived and/or reimbursed by the Manager

    (3,874     (791,441     (18,673     (62,200
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed

    9,090,755       15,472,022       42,189,700       5,396,588  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income (loss)

    25,955,087       (12,070,576     (40,100,308     4,908,839  
 

 

 

   

 

 

   

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

       

Net realized gain (loss) from:

       

Investments — unaffiliated

    87,055,636       168,816,973       317,658,363       21,469,026  

Investments — affiliated

          (1,378     655       17  

Foreign currency transactions

    (236,788     (157,845     (597,507     1,135  

Options written

    (30,769,396     (20,336,133     (58,346,478     (10,476,083
 

 

 

   

 

 

   

 

 

   

 

 

 
    56,049,452       148,321,617       258,715,033       10,994,095  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

       

Investments — unaffiliated

    110,130,312       (14,065,351 )(b)      (3,619,983 )(b)       52,600,677  

Foreign currency translations

    (25,978     (1,268     (2,773     (25,404

Options written

    5,449,330       13,778,870       33,557,764       557,087  
 

 

 

   

 

 

   

 

 

   

 

 

 
    115,553,664       (287,749     29,935,008       53,132,360  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gain

    171,603,116       148,033,868       288,650,041       64,126,455  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ 197,558,203     $ 135,963,292     $  248,549,733     $ 69,035,294  
 

 

 

   

 

 

   

 

 

   

 

 

 

(a)  Consolidated Statement of Operations.

       

(b)  Net of increase in deferred capital gain tax of

  $     $ (1,441,234   $ (5,470,222   $  

See notes to financial statements.

 

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

  139


Statements of Changes in Net Assets

 

                                                                                       
    BGR     CII  
 

 

 

   

 

 

 
    Year Ended December 31,     Year Ended December 31,  
 

 

 

   

 

 

 
    2021     2020     2021     2020  

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

  $ 8,259,703     $ 9,391,948     $ 1,953,464     $ 5,811,399  

Net realized gain (loss)

    (18,995,472     (88,982,831     70,684,499       26,868,142  

Net change in unrealized appreciation (depreciation)

    99,469,573       (33,080,100     107,574,675       64,682,735  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    88,733,804       (112,670,983     180,212,638       97,362,276  
 

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

From net investment income and net realized gain

    (8,262,936     (9,329,536     (48,643,844     (46,327,470

Return of capital

    (4,835,876     (10,213,545            
 

 

 

   

 

 

   

 

 

   

 

 

 

Decrease in net assets resulting from distributions to shareholders

    (13,098,812     (19,543,081     (48,643,844     (46,327,470
 

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

Reinvestment of distributions

                236,509        

Redemption of shares resulting from share repurchase program (including transaction costs)

          (4,813,281            
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets derived from capital share transactions

          (4,813,281     236,509        
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

       

Total increase (decrease) in net assets

    75,634,992       (137,027,345     131,805,303       51,034,806  

Beginning of year

    237,868,478       374,895,823       843,673,202       792,638,396  
 

 

 

   

 

 

   

 

 

   

 

 

 

End of year

  $  313,503,470     $ 237,868,478     $  975,478,505     $  843,673,202  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

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

See notes to financial statements.

 

140  

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


Statements of Changes in Net Assets (continued)

 

                                                                                                   
    BDJ     BOE  
 

 

 

   

 

 

 
    Year Ended December 31,     Year Ended December 31,  
 

 

 

   

 

 

 
    2021     2020     2021     2020  

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

  $ 27,412,185     $ 34,483,661     $ 12,147,742     $ 16,919,404  

Net realized gain (loss)

    226,450,882       25,963,990       64,174,290       (20,345,581

Net change in unrealized appreciation (depreciation)

    71,456,248       (79,304,070     43,778,131       45,992,227  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    325,319,315       (18,856,419     120,100,163       42,566,050  
 

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

From net investment income and net realized gain

    (161,603,504     (112,342,324     (48,404,308     (16,818,451

Return of capital

                      (32,343,267
 

 

 

   

 

 

   

 

 

   

 

 

 

Decrease in net assets resulting from distributions to shareholders

    (161,603,504     (112,342,324     (48,404,308     (49,161,718
 

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

Redemption of shares resulting from share repurchase program (including transaction costs)

          (11,354,242     (205,246     (14,886,112
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

       

Total increase (decrease) in net assets

    163,715,811       (142,552,985     71,490,609       (21,481,780

Beginning of year

    1,739,122,305       1,881,675,290       786,230,002       807,711,782  
 

 

 

   

 

 

   

 

 

   

 

 

 

End of year

  $  1,902,838,116     $ 1,739,122,305     $ 857,720,611     $ 786,230,002  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

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

See notes to financial statements.

 

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

  141


Statements of Changes in Net Assets (continued)

 

    BGY      BME  
 

 

 

    

 

 

 
    Year Ended December 31,      Year Ended December 31,  
 

 

 

    

 

 

 
    2021      2020      2021      2020  

 

 

INCREASE (DECREASE) IN NET ASSETS

          

OPERATIONS

          

Net investment income

  $ 9,366,746      $ 12,589,207      $ 41,823      $ 68,856  

Net realized gain (loss)

    45,489,816        (25,760,822      46,771,259        21,389,585  

Net change in unrealized appreciation (depreciation)

    19,983,472        56,961,229        12,306,248        58,101,987  
 

 

 

    

 

 

    

 

 

    

 

 

 

Net increase in net assets resulting from operations

    74,840,034        43,789,614        59,119,330        79,560,428  
 

 

 

    

 

 

    

 

 

    

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

          

From net investment income and net realized gain

    (30,180,220      (12,744,924      (30,764,942      (27,390,801

Return of capital

    (12,098,701      (29,856,975              
 

 

 

    

 

 

    

 

 

    

 

 

 

Decrease in net assets resulting from distributions to shareholders

    (42,278,921      (42,601,899      (30,764,942      (27,390,801
 

 

 

    

 

 

    

 

 

    

 

 

 

CAPITAL SHARE TRANSACTIONS

          

Net proceeds from the issuance of shares

                  49,710,285        45,251,850  

Reinvestment of distributions

                  1,760,978        1,742,431  

Redemption of shares resulting from share repurchase program (including transaction costs)

           (7,486,085              
 

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in net assets derived from capital share transactions

           (7,486,085      51,471,263        46,994,281  
 

 

 

    

 

 

    

 

 

    

 

 

 

Capital contribution from affiliate

                  12,661         
 

 

 

    

 

 

    

 

 

    

 

 

 

NET ASSETS

          

Total increase (decrease) in net assets

    32,561,113        (6,298,370      79,838,312        99,163,908  

Beginning of year

    676,948,757        683,247,127        545,936,499        446,772,591  
 

 

 

    

 

 

    

 

 

    

 

 

 

End of year

  $  709,509,870      $  676,948,757      $  625,774,811      $  545,936,499  
 

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)

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

See notes to financial statements.

 

142  

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


Statements of Changes in Net Assets (continued)

 

    BMEZ      BIGZ  
 

 

 

    

 

 

 
           Period from      Period from  
    Year Ended        01/30/20 (a)       03/29/21 (a) 
    12/31/21      to 12/31/20      to 12/31/21  

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment loss

  $ (36,221,355    $ (24,489,080    $ (35,735,376

Net realized gain (loss)

    370,126,396        131,179,423        (199,723,871

Net change in unrealized appreciation (depreciation)

    (621,751,428      1,203,954,044        (405,188,632
 

 

 

    

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

    (287,846,387      1,310,644,387        (640,647,879
 

 

 

    

 

 

    

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(b)

       

From net realized gain

    (192,905,388      (101,402,843       

Return of capital

                  (170,149,458
 

 

 

    

 

 

    

 

 

 

Decrease in net assets resulting from distributions to shareholders

    (192,905,388      (101,402,843      (170,149,458
 

 

 

    

 

 

    

 

 

 

CAPITAL SHARE TRANSACTIONS

       

Net proceeds from the issuance of shares

           2,253,296,500        4,861,848,440  

Reinvestment of distributions

                  4,569,561  

Redemption of shares resulting from share repurchase program (including transaction costs)

                  (74,068,155
 

 

 

    

 

 

    

 

 

 

Net increase in net assets derived from capital share transactions

           2,253,296,500        4,792,349,846  
 

 

 

    

 

 

    

 

 

 

NET ASSETS

       

Total increase (decrease) in net assets

    (480,751,775      3,462,538,044        3,981,552,509  

Beginning of period

    3,462,638,044        100,000        100,000  
 

 

 

    

 

 

    

 

 

 

End of period

  $  2,981,886,269      $  3,462,638,044      $  3,981,652,509  
 

 

 

    

 

 

    

 

 

 

 

(a)

Commencement of operations.

(b)

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

See notes to financial statements.

 

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

  143


Statements of Changes in Net Assets (continued)

 

    BCX      BST(a)  
 

 

 

    

 

 

 
    Year Ended December 31,      Year Ended December 31,  
 

 

 

    

 

 

 
    2021      2020      2021      2020  

 

 

INCREASE (DECREASE) IN NET ASSETS

          

OPERATIONS

          

Net investment income (loss)

  $ 25,955,087      $ 17,695,239      $ (12,070,576    $ (6,690,031

Net realized gain (loss)

    56,049,452        (51,657,513      148,321,617        11,596,671  

Net change in unrealized appreciation (depreciation)

    115,553,664        22,570,394        (287,749      516,296,551  
 

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

    197,558,203        (11,391,880      135,963,292        521,203,191  
 

 

 

    

 

 

    

 

 

    

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(b)

          

From net investment income and net realized gain

    (33,607,537      (20,310,556      (126,451,369      (49,046,315

Return of capital

    (8,784,140      (27,173,604              
 

 

 

    

 

 

    

 

 

    

 

 

 

Decrease in net assets resulting from distributions to shareholders

    (42,391,677      (47,484,160      (126,451,369      (49,046,315
 

 

 

    

 

 

    

 

 

    

 

 

 

CAPITAL SHARE TRANSACTIONS

          

Net proceeds from the issuance of shares

                  12,814,651        80,490,747  

Proceeds from rights offering (Note 10)

                  359,278,213         

Reinvestment of distributions

                  2,217,548        2,024,962  

Redemption of shares resulting from share repurchase program (including transaction costs)

           (17,262,335              
 

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in net assets derived from capital share transactions

           (17,262,335      374,310,412        82,515,709  
 

 

 

    

 

 

    

 

 

    

 

 

 

NET ASSETS

          

Total increase (decrease) in net assets

    155,166,526        (76,138,375      383,822,335        554,672,585  

Beginning of year

    746,615,363        822,753,738        1,297,344,103        742,671,518  
 

 

 

    

 

 

    

 

 

    

 

 

 

End of year

  $  901,781,889      $  746,615,363      $  1,681,166,438      $  1,297,344,103  
 

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)

Consolidated Statement of Changes in Net Assets.

(b)

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

See notes to financial statements.

 

144  

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


Statements of Changes in Net Assets (continued)

 

    BSTZ(a)      BUI  
 

 

 

    

 

 

 
    Year Ended December 31,      Year Ended December 31,  
 

 

 

    

 

 

 
    2021      2020      2021      2020  

 

 

INCREASE (DECREASE) IN NET ASSETS

          

OPERATIONS

          

Net investment income (loss)

  $ (40,100,308    $ (23,552,855    $ 4,908,839      $ 5,932,846  

Net realized gain

    258,715,033        68,051,628        10,994,095        5,076,772  

Net change in unrealized appreciation (depreciation)

    29,935,008        1,440,501,253        53,132,360        47,279,667  
 

 

 

    

 

 

    

 

 

    

 

 

 

Net increase in net assets resulting from operations

    248,549,733        1,485,000,026        69,035,294        58,289,285  
 

 

 

    

 

 

    

 

 

    

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(b)

          

From net investment income and net realized gain

    (240,726,364      (85,373,164      (20,325,579      (22,859,592

Return of capital

           (11,848,839      (9,081,858      (3,077,573
 

 

 

    

 

 

    

 

 

    

 

 

 

Decrease in net assets resulting from distributions to shareholders

    (240,726,364      (97,222,003      (29,407,437      (25,937,165
 

 

 

    

 

 

    

 

 

    

 

 

 

CAPITAL SHARE TRANSACTIONS

          

Net proceeds from the issuance of shares

                  74,073,395        27,563,701  

Reinvestment of distributions

    17,394,255               1,577,468        1,273,042  
 

 

 

    

 

 

    

 

 

    

 

 

 

Net increase in net assets derived from capital share transactions

    17,394,255               75,650,863        28,836,743  
 

 

 

    

 

 

    

 

 

    

 

 

 

NET ASSETS

          

Total increase in net assets

    25,217,624        1,387,778,023        115,278,720        61,188,863  

Beginning of year

    3,023,744,008        1,635,965,985        444,525,973        383,337,110  
 

 

 

    

 

 

    

 

 

    

 

 

 

End of year

  $  3,048,961,632      $  3,023,744,008      $  559,804,693      $  444,525,973  
 

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)

Consolidated Statement of Changes in Net Assets.

(b)

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

See notes to financial statements.

 

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

  145


Statements of Cash Flows

Year Ended December 31, 2021

 

    BGR     CII     BDJ     BOE  

 

 

CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES

       

Net increase in net assets resulting from operations

  $ 88,733,804     $ 180,212,638     $ 325,319,315     $ 120,100,163  

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities

       

Proceeds from sales of long-term investments and principal paydowns/payups

    190,368,210       327,443,300       991,103,670       597,241,267  

Purchases of long-term investments

    (172,911,180     (254,273,053     (751,078,648     (533,638,917

Net proceeds from sales (purchases) of short-term securities

    693,206       1,316,251       (50,245,378     (11,262,594

Premiums paid on closing options written

    (38,623,633     (120,468,874     (253,801,096     (76,761,573

Premiums received from options written

    24,584,110       92,586,150       195,290,121       61,989,046  

Net realized (gain) loss on investments and options written

    20,333,981       (70,678,756     (224,954,670     (64,038,178

Net unrealized appreciation on investments, options written and foreign currency translations

    (99,476,800     (107,574,675     (71,498,673     (43,847,752

(Increase) Decrease in Assets

       

Receivables

       

Dividends — affiliated

    91       293       (109     142  

Dividends — unaffiliated

    (339,958     226,110       187,149       828,268  

Prepaid expenses

    7,014       2,923       82,666        

Increase (Decrease) in Liabilities

       

Payables

       

Accounting services fees

    (11,667     (12,336     (23,682     (14,851

Custodian fees

    (19,936     (17,505     (49,649     (26,234

Investment advisory fees

    54,947       91,240       117,810       42,936  

Trustees’ and Officer’s fees

    67,854       53,881       181,077       121,350  

Other accrued expenses

    (17,327     5,699       15,643       (44,477

Professional fees

    4,080       18,605       28,623       12,983  

Transfer agent fees

    (1,627     (1,913     (884     (1,185
 

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

    13,445,169       48,929,978       160,673,285       50,700,394  
 

 

 

   

 

 

   

 

 

   

 

 

 

CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES

       

Cash dividends paid to shareholders

    (13,103,202     (48,626,478     (160,010,762     (48,411,693

Net payments on redemption of capital shares

    (330,212                 (559,569

Decrease in bank overdraft

                (66,281     (1,372,586
 

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used for financing activities

    (13,433,414     (48,626,478     (160,077,043     (50,343,848
 

 

 

   

 

 

   

 

 

   

 

 

 

CASH IMPACT FROM FOREIGN EXCHANGE FLUCTUATIONS

       

Cash impact from foreign exchange fluctuations

    238             (47     8,609  
 

 

 

   

 

 

   

 

 

   

 

 

 

CASH AND FOREIGN CURRENCY

       

Net increase in restricted and unrestricted cash and foreign currency

    11,993       303,500       596,195       365,155  

Restricted and unrestricted cash and foreign currency at beginning of year

    58,926       30,000       1,737       4,905,770  
 

 

 

   

 

 

   

 

 

   

 

 

 

Restricted and unrestricted cash and foreign currency at end of year

  $ 70,919     $ 333,500     $ 597,932     $ 5,270,925  
 

 

 

   

 

 

   

 

 

   

 

 

 

NON-CASH FINANCING ACTIVITIES

       

Reinvestment of distributions

  $     $ 236,509     $     $  
 

 

 

   

 

 

   

 

 

   

 

 

 

RECONCILIATION OF RESTRICTED AND UNRESTRICTED CASH AND FOREIGN CURRENCY AT THE END OF YEAR TO THE STATEMENTS OF ASSETS AND LIABILITIES

       

Cash

  $ 32,990     $ 43,500     $ 455,152     $ 57,899  

Cash pledged

       

Collateral — exchange-traded options written

                      4,880,000  

Collateral — OTC derivatives

          290,000       140,000       333,000  

Foreign currency at value

    37,929             2,780       26  
 

 

 

   

 

 

   

 

 

   

 

 

 
  $ 70,919     $ 333,500     $ 597,932     $ 5,270,925  
 

 

 

   

 

 

   

 

 

   

 

 

 

See notes to financial statements.

 

146  

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


Statements of Cash Flows  (continued)

Year Ended December 31, 2021

 

    BGY     BME     BMEZ     BIGZ  

 

 

CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES

       

Net increase (decrease) in net assets resulting from operations

  $ 74,840,034     $ 59,119,330     $ (287,846,387   $ (640,647,879

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

    528,397,040       280,627,703       1,760,038,052       2,337,830,108  

Purchases of long-term investments

    (485,599,164     (280,663,252     (1,472,688,426     (6,955,507,410

Net purchases of short-term securities

    (5,298,859     (13,915,542     (38,631,529     (7,042,678

Premiums paid on closing options written

    (62,305,089     (53,046,170     (213,210,154     (181,055,525

Premiums received from options written

    46,083,774       45,197,448       196,547,058       192,757,090  

Net realized (gain) loss on investments and options written

    (46,045,485     (46,812,320     (371,071,094     200,221,123  

Net unrealized (appreciation) depreciation on investments, options written and foreign currency translations

    (14,594,430     (12,309,072     621,729,273       405,189,281  

(Increase) Decrease in Assets

       

Receivables

       

Dividends — affiliated

    254       238       259       (22

Dividends — unaffiliated

    825,363       6,424       (165,493     (459,716

From the Manager

          (12,661            

Securities lending income — affiliated

          (1,213     33,372       (2,394

Prepaid expenses

          4,777       (28,155     (89,817

Deferred offering costs

          35,305              

Increase (Decrease) in Liabilities

       

Collateral on securities loaned at value

          108,871       (4,637,183     5,206,475  

Payables

       

Accounting services fees

    (12,336     (66,809     (24,004     140,107  

Custodian fees

    (12,787     20,845       (2,362     70,662  

Deferred foreign capital gain tax

    (148,052                  

Federal income tax

          12,114              

Investment advisory fees

    19,195       67,004       (466,534     4,273,239  

Trustees’ and Officer’s fees

    101,483       6,216       82,391       59,595  

Other accrued expenses

    (54,104     27,190       125,383       46,909  

Professional fees

    5,134       14,776       (83,796     11,481  

Transfer agent fees

    (974     10,460       (17,396     82,136  

Capital contribution from affiliate

          12,661              
 

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used for) operating activities

    36,200,997       (21,555,677     189,683,275       (4,638,917,235
 

 

 

   

 

 

   

 

 

   

 

 

 

CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES

       

Cash dividends paid to shareholders

    (42,285,334     (29,003,964     (190,585,926     (161,265,506

Payments for offering costs

          20,427              

Net payments on redemption of capital shares

                      (61,874,383

Increase (decrease) in bank overdraft

                (205,455     139,778  

Proceeds from issuance of capital shares

          50,328,479             4,861,848,440  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used for) for financing activities

    (42,285,334     21,344,942       (190,791,381     4,638,848,329  
 

 

 

   

 

 

   

 

 

   

 

 

 

CASH IMPACT FROM FOREIGN EXCHANGE FLUCTUATIONS

       

Cash impact from foreign exchange fluctuations

    2,920       (1     (16     7  
 

 

 

   

 

 

   

 

 

   

 

 

 

CASH AND FOREIGN CURRENCY

       

Net decrease in restricted and unrestricted cash and foreign currency

    (6,081,417     (210,736     (1,108,122     (68,899

Restricted and unrestricted cash and foreign currency at beginning of period

    10,735,249       211,696       1,264,005       100,000  
 

 

 

   

 

 

   

 

 

   

 

 

 

Restricted and unrestricted cash and foreign currency at end of period

  $ 4,653,832     $ 960     $ 155,883     $ 31,101  
 

 

 

   

 

 

   

 

 

   

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

       

Cash paid during the year for interest expense

  $     $ 12,114     $     $  
 

 

 

   

 

 

   

 

 

   

 

 

 

NON-CASH FINANCING ACTIVITIES

       

Reinvestment of distributions

  $     $ 1,760,978     $     $ 4,569,561  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

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

  147


Statements of Cash Flows  (continued)

Year Ended December 31, 2021

 

    BGY      BME      BMEZ      BIGZ  

 

 

RECONCILIATION OF RESTRICTED AND UNRESTRICTED CASH AND FOREIGN CURRENCY AT THE END OF PERIOD TO THE STATEMENTS OF ASSETS AND LIABILITIES

          

Cash

  $ 116,375      $ 877      $ 118,828      $  

Cash pledged

          

Collateral — exchange-traded options written

    4,091,000                       

Collateral — OTC derivatives

    321,000               36,000        30,000  

Foreign currency at value

    125,457        83        1,055        1,101  
 

 

 

    

 

 

    

 

 

    

 

 

 
  $     4,653,832      $           960      $         155,883      $         31,101  
 

 

 

    

 

 

    

 

 

    

 

 

 

See notes to financial statements.

 

148  

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


Statements of Cash Flows  (continued)

Year Ended December 31, 2021

 

    BCX     BST(a)     BSTZ(a)     BUI  

 

 

CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES

       

Net increase in net assets resulting from operations

  $ 197,558,203     $ 135,963,292     $ 248,549,733     $ 69,035,294  

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 and principal paydowns/payups

    600,582,789       453,225,188       921,150,756       97,065,516  

Purchases of long-term investments

    (535,774,001     (644,579,452     (578,900,784     (142,670,706

Net proceeds from sales (purchases) of short-term securities

    (16,364,649     (34,149,909     (27,175,732     725,954  

Premiums paid on closing options written

    (100,190,431     (138,718,618     (304,985,776     (40,742,993

Premiums received from options written

    68,330,679       118,865,918       242,052,315       30,845,301  

Net realized gain on investments and options written

    (54,986,686     (148,468,063     (259,316,070     (8,091,181

Net unrealized appreciation on investments, options written and foreign currency translations

    (115,579,642     (1,154,753     (35,408,002     (53,157,764

(Increase) Decrease in Assets

       

Receivables

       

Dividends — affiliated

    54       86       460       236  

Dividends — unaffiliated

    (847,503     (27,690     115,768       19,521  

Securities lending income — affiliated

          (41,933     8,187        

Prepaid expenses

          4,320       2,482       7,830  

Deferred offering costs

          33,404             82,051  

Increase (Decrease) in Liabilities

       

Collateral on securities loaned at value

          841,775       1,949,206        

Payables

       

Accounting services fees

    (14,862     (12,336     (3,443     (12,336

Custodian fees

    (34,008     (43,317     (18,784     (17,233

Deferred foreign capital gain tax

          1,441,234       5,470,222        

Investment advisory fees

    114,243       422,928       184,053       104,974  

Trustees’ and Officer’s fees

    42,284       6,521       82,311       1,351  

Other accrued expenses

    33,750       (79,450     (47,423     5,787  

Professional fees

    18,312       64,237       218,040       4,059  

Transfer agent fees

    (3,451     (1,939     (1,925     (1,250
 

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used for) operating activities

    42,885,081       (256,408,557     213,925,594       (46,795,589
 

 

 

   

 

 

   

 

 

   

 

 

 

CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES

       

Cash dividends paid to shareholders

    (42,394,763     (120,207,675     (225,091,632     (27,829,969

Payments for offering costs

          1,065             21,784  

Net payments on redemption of capital shares

    (542,457                  

Increase in bank overdraft

    185,937                    

Proceeds from issuance of capital shares

          14,638,394             74,237,875  

Proceeds from rights offering

          359,278,213              
 

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used for) for financing activities

    (42,751,283     253,709,997       (225,091,632     46,429,690  
 

 

 

   

 

 

   

 

 

   

 

 

 

CASH IMPACT FROM FOREIGN EXCHANGE FLUCTUATIONS

       

Cash impact from foreign exchange fluctuations

    495       (31     (50      
 

 

 

   

 

 

   

 

 

   

 

 

 

CASH AND FOREIGN CURRENCY

       

Net increase (decrease) in restricted and unrestricted cash and foreign currency

    134,293       (2,698,591     (11,166,088     (365,899

Restricted and unrestricted cash and foreign currency at beginning of year

    223,552       4,607,407       19,435,857       1,028,657  
 

 

 

   

 

 

   

 

 

   

 

 

 

Restricted and unrestricted cash and foreign currency at end of year

  $ 357,845     $ 1,908,816     $ 8,269,769     $ 662,758  
 

 

 

   

 

 

   

 

 

   

 

 

 

NON-CASH FINANCING ACTIVITIES

       

Reinvestment of distributions

  $     $ 2,217,548     $ 17,394,255     $ 1,577,468  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

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

  149


Statements of Cash Flows  (continued)

Year Ended December 31, 2021

 

    BCX      BST(a)      BSTZ(a)      BUI  

 

 

RECONCILIATION OF RESTRICTED AND UNRESTRICTED CASH AND FOREIGN CURRENCY AT THE END OF YEAR TO THE STATEMENTS OF ASSETS AND LIABILITIES

          

Cash

  $      $ 297,188      $ 208,398      $ 589,258  

Cash pledged

          

Collateral — OTC derivatives

    270,000        1,610,000        8,060,000        73,500  

Foreign currency at value

    87,845        1,628        1,371         
 

 

 

    

 

 

    

 

 

    

 

 

 
  $       357,845      $     1,908,816      $     8,269,769      $      662,758  
 

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)

Consolidated Statement of Cash Flows.

See notes to financial statements.

 

150  

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


Financial Highlights

(For a share outstanding throughout each period)

 

    BGR  
    Year Ended December 31,  
     2021     2020      2019      2018      2017  
           

Net asset value, beginning of year

  $ 8.17     $ 12.57      $ 11.98      $ 15.79      $ 16.33  
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    0.28       0.32        0.34        0.28        0.40 (b) 

Net realized and unrealized gain (loss)

    2.77       (4.06      1.18        (3.16      (0.01
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    3.05       (3.74      1.52        (2.88      0.39  
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Distributions(c)

            

From net investment income

    (0.28     (0.32      (0.34      (0.27      (0.40

Return of capital

    (0.17     (0.34      (0.59      (0.66      (0.53
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total distributions

    (0.45     (0.66      (0.93      (0.93      (0.93
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of year

  $ 10.77     $ 8.17      $ 12.57      $ 11.98      $ 15.79  
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Market price, end of year

  $ 9.48     $ 7.10      $ 11.88      $ 10.45      $ 14.18  
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total Return(d)

            

Based on net asset value

    38.36 %(e)      (29.03 )%       13.74      (18.84 )%       3.49
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Based on market price

    40.14     (34.74 )%       23.23      (21.16 )%       5.11
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets(f)

            

Total expenses

    1.33     1.37      1.35      1.29      1.31
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and/or reimbursed

    1.11     1.15      1.16      1.14      1.18
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income

    2.88     3.77      2.67      1.87      2.69 %(b) 
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

            

Net assets, end of year (000)

  $  313,503     $  237,868      $  374,896      $  357,391      $  471,062  
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate

    61     62      24      32      24
 

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)

Based on average shares outstanding.

(b)

Net investment income per share and the ratio of net investment income to average net assets include $0.15 per share and 0.99%, respectively, resulting from a special dividend from BakerHughes, Inc. in July 2017.

(c)

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

(d)

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.

(e)

Includes payment from an affiliate, which had no impact on the Trust’s total return.

(f)

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

See notes to financial statements.

 

F I N A N C I A L   H I G H L I G H T S

  151


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    CII  
    Year Ended December 31,  
     2021      2020      2019      2018      2017  
           

Net asset value, beginning of year

  $ 19.12      $ 17.96      $ 15.28      $ 17.19      $ 15.08  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    0.04        0.13        0.18        0.17        0.15  

Net realized and unrealized gain (loss)

    4.04        2.08        3.50        (1.09      2.95  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    4.08        2.21        3.68        (0.92      3.10  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions(b)

             

From net investment income

    (0.04      (0.13      (0.19      (0.17 )(c)       (0.15

From net realized gain

    (1.06      (0.92      (0.44      (0.28 )(c)        

Return of capital

                  (0.37      (0.54      (0.84
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total distributions

    (1.10      (1.05      (1.00      (0.99      (0.99
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of year

  $ 22.10      $ 19.12      $ 17.96      $ 15.28      $ 17.19  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Market price, end of year

  $ 22.12      $ 17.40      $ 17.25      $ 14.08      $ 16.38  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return(d)

             

Based on net asset value

    21.97      13.94      25.08      (5.44 )%       21.69
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Based on market price

    34.15      7.97      30.38      (8.56 )%       27.54
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets(e)

             

Total expenses

    0.90      0.91      0.91      0.90      0.93
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and/or reimbursed

    0.90      0.91      0.91      0.90      0.93
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income

    0.21      0.78      1.08      1.00      0.94
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

             

Net assets, end of year (000)

  $  975,479      $  843,673      $  792,638      $  674,077      $  758,400  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate

    27      46      32      27      32
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)

Based on average shares outstanding.

(b)

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

(c)

Amount previously presented incorrectly as solely distributions from net investment income has been revised to reflect the proper classification of distributions between net realized gain and net investment income.

(d)

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.

(e)

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

See notes to financial statements.

 

152  

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


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    BDJ  
    Year Ended December 31,  
     2021      2020      2019      2018     2017  
           

Net asset value, beginning of year

  $ 9.35      $ 10.03      $ 8.74      $ 9.96     $ 9.22  
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net investment income(a)

    0.15        0.18        0.18        0.18 (b)      0.16  

Net realized and unrealized gain (loss)

    1.60        (0.26      1.86        (0.84     1.14  
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net increase (decrease) from investment operations

    1.75        (0.08      2.04        (0.66     1.30  
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Distributions(c)

            

From net investment income

    (0.28      (0.15      (0.08      (0.18 )(d)      (0.17

From net realized gain

    (0.59      (0.45      (0.67      (0.38 )(d)      (0.39
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total distributions

    (0.87      (0.60      (0.75      (0.56     (0.56
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net asset value, end of year

  $ 10.23      $ 9.35      $ 10.03      $ 8.74     $ 9.96  
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Market price, end of year

  $ 10.08      $ 8.47      $ 9.92      $ 7.77     $ 9.23  
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total Return(e)

            

Based on net asset value

    19.33      0.77      24.52      (6.59 )%      15.06
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Based on market price

    29.80      (7.70 )%       38.53      (10.39 )%      20.63
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Ratios to Average Net Assets(f)

            

Total expenses

    0.85      0.86      0.87      0.85     0.86
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed

    0.85      0.86      0.87      0.85     0.86
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net investment income

    1.44      2.15      1.99      1.85 %(b)      1.73
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Supplemental Data

            

Net assets, end of year (000)

  $  1,902,838      $  1,739,122      $  1,881,675      $  1,638,237     $  1,868,457  
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Portfolio turnover rate

    40      48      40      34     42
 

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

(a)

Based on average shares outstanding.

(b)

Net investment income per share and the ratio of net investment income to average net assets includes $0.01 per share and 0.14%, respectively, resulting from a special dividend.

(c)

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

(d)

Amount previously presented incorrectly as solely distributions from net investment income has been revised to reflect the proper classification of distributions between net realized gain and net investment income.

(e)

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.

(f)

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

See notes to financial statements.

 

F I N A N C I A L   H I G H L I G H T S

  153


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    BOE  
    Year Ended December 31,  
     2021      2020      2019      2018      2017  
           

Net asset value, beginning of year.

  $ 12.28      $ 12.32      $ 11.07      $ 13.22      $ 13.38  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    0.19        0.26        0.30        0.31        0.17  

Net realized and unrealized gain (loss)

    1.69        0.46        1.71        (1.61      1.96  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    1.88        0.72        2.01        (1.30      2.13  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions(b)

             

From net investment income

    (0.19      (0.26      (0.31      (0.31 )(c)       (0.19

From net realized gain

    (0.57                    (0.52 )(c)       (2.10

Return of capital

           (0.50      (0.45      (0.02       
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total distributions

    (0.76      (0.76      (0.76      (0.85      (2.29
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of year

  $ 13.40      $ 12.28      $ 12.32      $ 11.07      $ 13.22  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Market price, end of year

  $ 12.18      $ 10.91      $ 10.99      $ 9.37      $ 12.51  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return(d)

             

Based on net asset value

    16.21      7.65      19.54      (9.63 )%       17.22 %(e) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Based on market price

    18.89      7.22      25.98      (19.16 )%       28.28
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets(f)

             

Total expenses

    1.07      1.09      1.12      1.08      1.09
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and/or reimbursed

    0.90      0.92      0.94      0.94      1.02
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income

    1.46      2.33      2.62      2.52      1.20
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

             

Net assets, end of year (000)

  $  857,721      $  786,230      $  807,712      $  754,602      $  911,227  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate

    65      61      26      28      133
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)

Based on average shares outstanding.

(b)

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

(c)

Amount previously presented incorrectly as solely distributions from net investment income has been revised to reflect the proper classification of distributions between net realized gain and net investment income.

(d)

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.

(e)

Includes payment from an affiliate, which had no impact on the Trust’s total return.

(f)

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

See notes to financial statements.

 

154  

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


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    BGY  
    Year Ended December 31,  
     2021     2020     2019     2018     2017  
           

Net asset value, beginning of year

  $ 6.49     $ 6.47     $ 5.79     $ 7.06     $ 6.28  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.09       0.12       0.16       0.17 (b)      0.09  

Net realized and unrealized gain (loss)

    0.64       0.31       0.93       (1.00     1.15  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    0.73       0.43       1.09       (0.83     1.24  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (0.14     (0.13     (0.16     (0.16 )(d)      (0.09

From net realized gain

    (0.15           (0.19     (0.28 )(d)       

Return of capital

    (0.12     (0.28     (0.06           (0.37
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (0.41     (0.41     (0.41     (0.44     (0.46
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 6.81     $ 6.49     $ 6.47     $ 5.79     $ 7.06  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Market price, end of year

  $ 6.28     $ 5.87     $ 5.89     $ 4.98     $ 6.52  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return(e)

         

Based on net asset value

    11.92     8.18     20.20     (11.48 )%      20.88 %(f) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Based on market price

    14.11     7.49     27.22     (17.55 )%      27.23
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets(g)

         

Total expenses

    1.09     1.10     1.13     1.09     1.12
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed

    0.99     1.00     1.03     0.99     1.02
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    1.34     1.99     2.57     2.59 %(b)       1.31
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $  709,510     $  676,949     $  683,247     $  623,234     $  769,678  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate

    71     60     28     60     90
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Based on average shares outstanding.

(b)

Net investment income per share and the ratio of net investment income to average net assets includes $0.10 per share and 29%, respectively, resulting from a non-recurring dividend.

(c)

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

(d)

Amount previously presented incorrectly as solely distributions from net investment income has been revised to reflect the proper classification of distributions between net realized gain and net investment income.

(e)

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.

(f)

Includes payment from an affiliate, which had no impact on the Trust’s total return.

(g)

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

See notes to financial statements.

 

F I N A N C I A L   H I G H L I G H T S

  155


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

     BME  
     Year Ended December 31,  
      2021      2020      2019      2018      2017  
           

Net asset value, beginning of year

   $ 45.66      $ 41.19      $ 35.87      $ 35.69      $ 31.30  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

            0.01        0.06        0.07        0.02  

Net realized and unrealized gain

     4.74        6.86        7.66        2.51        6.77  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase from investment operations

     4.74        6.87        7.72        2.58        6.79  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Distributions(b)

              

From net investment income

     (0.00 )(c)       (0.05      (0.12      (0.07 )(d)       (0.04

From net realized gain

     (2.44      (2.35      (2.28      (2.33 )(d)       (2.11

Return of capital

                                 (0.25
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total distributions

     (2.44      (2.40      (2.40      (2.40      (2.40
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of year

   $ 47.96      $ 45.66      $ 41.19      $ 35.87      $ 35.69  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Market price, end of year

   $ 48.50      $ 47.59      $ 42.50      $ 36.45      $ 36.50  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Return(e)

              

Based on net asset value

     10.66 %(f)       17.50      22.26      7.26      22.17
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Based on market price

     7.37      18.69      24.15      6.57      23.17
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets(g)

              

Total expenses

     1.08      1.10      1.09      1.11      1.12
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived and/or reimbursed

     1.08      1.10      1.09      1.11      1.12
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income

     0.01      0.01      0.16      0.19      0.06
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

              

Net assets, end of year (000)

   $  625,775      $  545,936      $  446,773      $  352,675      $  331,858  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate

     49      28      47      37      38
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a)

Based on average shares outstanding.

(b)

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

(c)

Amount is greater than $(0.005) per share.

(d)

Amount previously presented incorrectly as solely distributions from net investment income has been revised to reflect the proper classification of distributions between net realized gain and net investment income.

(e)

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.

(f)

Includes payment from an affiliate, which had no impact on the Trust’s total return.

(g)

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

See notes to financial statements.

 

156  

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


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    BMEZ  
     

Year Ended

12/31/21

 

 

   

Period from

01/30/20

to 12/31/20

 

(a) 

 

     

Net asset value, beginning of period

  $ 30.73     $ 20.00  
 

 

 

   

 

 

 

Net investment loss(b)

    (0.32     (0.22

Net realized and unrealized gain (loss)

    (2.23     11.85  
 

 

 

   

 

 

 

Net increase (decrease) from investment operations

    (2.55     11.63  
 

 

 

   

 

 

 

Distributions from net realized gain(c)

    (1.71     (0.90
 

 

 

   

 

 

 

Net asset value, end of period

  $ 26.47     $ 30.73  
 

 

 

   

 

 

 

Market price, end of period

  $ 25.36     $ 28.65  
 

 

 

   

 

 

 

Total Return(d)

   

Based on net asset value

    (8.31 )%      59.62 %(e)(f) 
 

 

 

   

 

 

 

Based on market price

    (5.76 )%      48.82 %(f)  
 

 

 

   

 

 

 

Ratios to Average Net Assets(g)

   

Total expenses

    1.30     1.29 %(h)  
 

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed

    1.30     1.28 %(h)  
 

 

 

   

 

 

 

Net investment loss

    (1.10 )%      (1.00 )%(h)  
 

 

 

   

 

 

 

Supplemental Data

   

Net assets, end of period (000)

  $  2,981,886     $  3,462,638  
 

 

 

   

 

 

 

Portfolio turnover rate

    44     43
 

 

 

   

 

 

 

 

(a)

Commencement of operations.

(b)

Based on average shares outstanding.

(c)

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

(d)

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.

(e)

Includes payment from an affiliate, which had no impact on the Trust’s total return.

(f)

Aggregate total return.

(g)

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

(h)

Annualized.

See notes to financial statements.

 

F I N A N C I A L   H I G H L I G H T S

  157


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    BIGZ  
     

Period from

03/29/21

to 12/31/21

 

(a) 

 

Net asset value, beginning of period

  $ 20.00  
 

 

 

 

Net investment loss(b)

    (0.15

Net realized and unrealized loss

    (2.43
 

 

 

 

Net decrease from investment operations

    (2.58
 

 

 

 

Distribution from return of capital(c)

    (0.70
 

 

 

 

Net asset value, end of period

  $ 16.72  
 

 

 

 

Market price, end of period

  $ 14.54  
 

 

 

 

Total Return(d)

 

Based on net asset value

    (13.03 )%(e) 
 

 

 

 

Based on market price

    (24.37 )%(e) 
 

 

 

 

Ratios to Average Net Assets(f)

 

Total expenses

    1.29 %(g)  
 

 

 

 

Total expenses after fees waived and/or reimbursed

    1.28 %(g)  
 

 

 

 

Net investment loss

    (1.02 )%(g) 
 

 

 

 

Supplemental Data

 

Net assets, end of period (000)

  $  3,981,653  
 

 

 

 

Portfolio turnover rate

    55
 

 

 

 

 

(a)

Commencement of operations.

(b)

Based on average shares outstanding.

(c)

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

(d)

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.

(e)

Aggregate total return.

(f)

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

(g)

Annualized.

See notes to financial statements.

 

158  

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


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    BCX  
    Year Ended December 31,  
     2021     2020     2019     2018     2017  
           

Net asset value, beginning of year

  $ 8.45     $ 9.04     $ 8.44     $ 10.64     $ 9.86  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.29       0.20       0.23       0.22       0.20 (b)  

Net realized and unrealized gain (loss)

    1.95       (0.26     0.99       (1.80     1.19  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    2.24       (0.06     1.22       (1.58     1.39  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

    (0.38     (0.23     (0.23     (0.19     (0.24

Return of capital

    (0.10     (0.30     (0.39     (0.43     (0.37
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (0.48     (0.53     (0.62     (0.62     (0.61
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 10.21     $ 8.45     $ 9.04     $ 8.44     $ 10.64  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Market price, end of year

  $ 9.35     $ 7.41     $ 8.07     $ 7.06     $ 9.77  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return(d)

         

Based on net asset value

    27.20     1.56     15.88     (14.90 )%      15.60
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Based on market price

    32.83     (0.23 )%      23.67     (22.47 )%      26.55
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets(e)

         

Total expenses

    1.07     1.09     1.11     1.08     1.08
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed

    1.07     1.09     1.11     1.08     1.08
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    3.05     2.62     2.56     2.17     2.06 %(b)  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $  901,782     $  746,615     $  822,754     $  798,282     $  1,027,472  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate

    66     78     69     66     73
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Based on average shares outstanding.

(b)

Net investment income per share and the ratio of net investment income to average net assets include less than $0.04 per share and 0.39% respectively, resulting from a special dividend from Baker Hughes Inc. in July 2017.

(c)

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

(d)

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.

(e)

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

See notes to financial statements.

 

F I N A N C I A L   H I G H L I G H T S

  159


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    BST  
    Year Ended December 31,  
    2021 (a)      2020 (a)       2019       2018       2017  
           

Net asset value, beginning of year

  $ 51.94     $ 32.45     $ 26.21     $ 27.73     $ 20.10  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment loss(b)

    (0.43     (0.28     (0.17     (0.13     (0.05

Net realized and unrealized gain

    5.84       21.82       9.92       0.37       8.96  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase from investment operations

    5.41       21.54       9.75       0.24       8.91  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(c)

         

From net investment income

                      (d)       (0.05

From net realized gain

    (4.27     (2.05     (3.51     (1.76 )(d)       (0.22

Return of capital

                            (1.01
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (4.27     (2.05     (3.51     (1.76     (1.28
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Dilutive effect of rights offer (Note 10)

    (0.68                        
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 52.40     $ 51.94     $ 32.45     $ 26.21     $ 27.73  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Market price, end of year

  $ 49.97     $ 53.30     $ 33.27     $ 27.48     $ 26.69  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return(e)

         

Based on net asset value

    9.44     68.76 %(f)       37.82     0.24     45.73
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Based on market price

    1.70     68.92     34.77     9.18     57.15
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets(g)

         

Total expenses

    1.05     1.09     1.08     1.09     1.09
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed

    1.00     0.99     0.92     0.89     0.89
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment loss

    (0.78 )%      (0.73 )%      (0.52 )%      (0.43 )%      (0.19 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $  1,681,166     $  1,297,344     $  742,672     $  587,908     $  620,300  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate

    31     20     32     53     41
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Consolidated Financial Highlights.

(b)

Based on average shares outstanding.

(c)

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

(d)

Amount previously presented incorrectly as solely distributions from net investment income has been revised to reflect the proper classification of distributions between net realized gain and net investment income.

(e)

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.

(f)

For financial reporting purposes, the market value of a certain investment was adjusted as of the report date. Accordingly, the net asset value (“NAV”) per share and total return performance based on NAV presented herein are different than the information previously published as of December 31, 2020.

(g)

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

See notes to financial statements.

 

160  

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


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    BSTZ  
     

Period from

06/27/19

to 12/31/19

 

(b)  

 

    Year Ended December 31,(a)  
   

 

2021

    2020  
       

Net asset value, beginning of period

  $ 38.72     $ 20.95     $ 20.00  
 

 

 

   

 

 

   

 

 

 

Net investment loss(c)

    (0.51     (0.30     (0.05

Net realized and unrealized gain

    3.69       19.32       1.50  
 

 

 

   

 

 

   

 

 

 

Net increase from investment operations

    3.18       19.02       1.45  
 

 

 

   

 

 

   

 

 

 

Distributions(d)

     

From net realized gain

    (3.08     (1.10      

Return of capital

          (0.15     (0.50
 

 

 

   

 

 

   

 

 

 

Total distributions

    (3.08     (1.25     (0.50
 

 

 

   

 

 

   

 

 

 

Net asset value, end of period

  $ 38.82     $ 38.72     $ 20.95  
 

 

 

   

 

 

   

 

 

 

Market price, end of period

  $ 38.94     $ 36.38     $ 20.50  
 

 

 

   

 

 

   

 

 

 

Total Return(e)

     

Based on net asset value

    8.41     94.60 %(f)       7.40 %(g)  
 

 

 

   

 

 

   

 

 

 

Based on market price

    15.75     86.85     5.10 %(g)  
 

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets(h)

     

Total expenses

    1.31     1.33     1.32 %(i)  
 

 

 

   

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed

    1.31     1.33     1.30 %(i)  
 

 

 

   

 

 

   

 

 

 

Net investment loss

    (1.25 )%      (1.16 )%      (0.48 )%(i)  
 

 

 

   

 

 

   

 

 

 

Supplemental Data

     

Net assets, end of period (000)

  $  3,048,962     $  3,023,744     $ 1,635,966  
 

 

 

   

 

 

   

 

 

 

Portfolio turnover rate

    18     45     16
 

 

 

   

 

 

   

 

 

 

 

(a)

Consolidated Financial Highlights.

(b)

Commencement of operations.

(c)

Based on average shares outstanding.

(d)

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

(e)

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.

(f)

Includes payment from an affiliate, which had no impact on the Trust’s total return.

(g)

Aggregate total return.

(h)

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

(i)

Annualized.

See notes to financial statements.

 

F I N A N C I A L   H I G H L I G H T S

  161


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    BUI  
    Year Ended December 31,  
     2021     2020     2019     2018     2017  

Net asset value, beginning of year

  $ 23.80     $ 22.02     $ 18.77     $ 21.12     $ 19.42  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    0.24       0.33       0.37       0.49       0.56  

Net realized and unrealized gain (loss)

    3.27       2.90       4.33       (1.39     2.59  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    3.51       3.23       4.70       (0.90     3.15  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions(b)

         

From net investment income

    (0.24     (0.20     (0.24     (0.63 )(c)       (0.47

From net realized gain

    (0.76     (1.08     (1.06     (0.81 )(c)       (0.98

Return of capital

    (0.45     (0.17     (0.15     (0.01      
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (1.45     (1.45     (1.45     (1.45     (1.45
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

  $ 25.86     $ 23.80     $ 22.02     $ 18.77     $ 21.12  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Market price, end of year

  $ 26.62     $ 25.04     $ 22.31     $ 19.76     $ 21.62  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return(d)

         

Based on net asset value

    15.13     15.87     25.63     (4.40 )%      16.62
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Based on market price

    12.65     20.32     20.91     (1.68 )%      25.93
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets(e)

         

Total expenses

    1.08     1.13     1.12     1.12     1.11
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses after fees waived and/or reimbursed

    1.07     1.10     1.10     1.09     1.09
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    0.97     1.58     1.78     2.46     2.70
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

         

Net assets, end of year (000)

  $  559,805     $  444,526     $  383,337     $  318,933     $  357,776  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate

    20     39     39     28     31
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Based on average shares outstanding.

(b)

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

(c)

Amount previously presented incorrectly as solely distributions from net investment income has been revised to reflect the proper classification of distributions between net realized gain and net investment income.

(d)

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.

(e)

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

See notes to financial statements.

 

162  

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


 

Notes to Financial Statements

 

1.

ORGANIZATION

The following are registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as closed-end management investment companies and are referred to herein collectively as the “Trusts”, or individually as a “Trust”:

 

       
Trust Name   Herein Referred To As    Organized    Diversification
Classification

BlackRock Energy and Resources Trust

  BGR    Delaware    Non-diversified

BlackRock Enhanced Capital and Income Fund, Inc.

  CII    Maryland    Diversified

BlackRock Enhanced Equity Dividend Trust

  BDJ    Delaware    Diversified

BlackRock Enhanced Global Dividend Trust

  BOE    Delaware    Diversified

BlackRock Enhanced International Dividend Trust

  BGY    Delaware    Diversified

BlackRock Health Sciences Trust

  BME    Delaware    Diversified

BlackRock Health Sciences Trust II

  BMEZ    Maryland    Non-diversified

BlackRock Innovation and Growth Trust(a)

  BIGZ    Maryland    Non-diversified

BlackRock Resources & Commodities Strategy Trust

  BCX    Delaware    Non-diversified

BlackRock Science and Technology Trust

  BST    Delaware    Diversified

BlackRock Science and Technology Trust II

  BSTZ    Delaware    Non-diversified

BlackRock Utilities, Infrastructure & Power Opportunities Trust

  BUI    Delaware    Diversified

 

  (a)

BlackRock Innovation and Growth Trust commenced operations on March 29, 2021.

 

The Boards of Directors and Boards of Trustees of the Trusts are collectively referred to throughout this report as the “Board,” and the trustees thereof are collectively referred to throughout this report as “Trustees”. The Trusts determine and make available for publication the net asset values (“NAVs”) of their Common Shares on a daily basis.

The Trusts, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, are 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.

Prior to commencement of operations on March 29, 2021, BIGZ had no operations other than those relating to organizational matters and the sale of 5,000 common shares on February 05, 2021 to BlackRock Financial Management, Inc., an affiliate of BIGZ, for $100,000. Investment operations for BIGZ commenced on March 29, 2021.

Basis of Consolidation: The accompanying consolidated financial statements of BST include the accounts of BST Subsidiary, LLC (the “BST Taxable Subsidiary”), which is a wholly-owned taxable subsidiary of BST. The BST Taxable Subsidiary enables BST to hold an investment in an operating partnership and satisfy Regulated Investment Company (“RIC”) tax requirements. Income earned and gains realized on the investment held by the BST Taxable Subsidiary are subject to US federal and state taxes to such subsidiary. A tax provision for income, if any, is shown as income tax in the Consolidated Statement of Operations for BST. A tax provision for realized and unrealized gains, if any, is included as a reduction of realized and/or unrealized gain (loss) in the Consolidated Statement of Operations for BST. BST may invest up to 25% of its total assets in the BST Taxable Subsidiary. The net assets of the BST Taxable Subsidiary as of period end were $19,337,145, which is 1.2% of BST’s consolidated net assets. Intercompany accounts and transactions, if any, have been eliminated. The BST Taxable Subsidiary is subject to the same investment policies and restrictions that apply to BST.

The accompanying consolidated financial statements of BSTZ include the accounts of BSTZ Subsidiary, LLC (the “BSTZ Taxable Subsidiary”), which is a wholly-owned taxable subsidiary of BSTZ. The BSTZ Taxable Subsidiary enables BSTZ to hold an investment in an operating partnership and satisfy Regulated Investment Company (“RIC”) tax requirements. Income earned and gains realized on the investment held by the BSTZ Taxable Subsidiary are subject to US federal and state taxes to such subsidiary. A tax provision for income, if any, is shown as income tax in the Consolidated Statement of Operations for BSTZ. A tax provision for realized and unrealized gains, if any, is included as a reduction of realized and/or unrealized gain (loss) in the Consolidated Statement of Operations for BSTZ. BSTZ may invest up to 25% of its total assets in the BSTZ Taxable Subsidiary. The net assets of the BSTZ Taxable Subsidiary as of period end were $36,259,853, which is 1.2% of BSTZ’s consolidated net assets. Intercompany accounts and transactions, if any, have been eliminated. The BSTZ Taxable Subsidiary is subject to the same investment policies and restrictions that apply to BSTZ.

 

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. Each 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. Dividends from foreign securities where the ex-dividend dates may have passed are subsequently recorded when the Trusts are informed of the ex-dividend dates. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. Upon notification from issuers, a portion of the dividend income received from a real estate investment trust may be redesignated as a reduction of cost of the related investment and/or realized gain. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized daily on an accrual basis.

Foreign Currency Translation: Each Trust’s books and records are maintained in U.S. dollars. Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of trading on the New York Stock Exchange (“NYSE”). Purchases and sales of investments are

 

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

  163


Notes to Financial Statements  (continued)

 

recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the investments denominated in that currency will lose value; the opposite effect occurs if the U.S. dollar falls in relative value.

Each Trust does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of investments for financial reporting purposes. Accordingly, the effects of changes in exchange rates on investments are not segregated in the Statements of Operations from the effects of changes in market prices of those investments, but are included as a component of net realized and unrealized gain (loss) from investments. Each Trust reports realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Foreign Taxes: The Trusts may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, capital gains on investments, or certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which each Trust invests. These foreign taxes, if any, are paid by each Trust and are reflected in its Statements of Operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on stock dividends are presented as “Foreign taxes withheld”, and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable or deferred as of December 31, 2021, if any, are disclosed in the Statements of Assets and Liabilities.

The Trusts file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. The Trusts may record a reclaim receivable based on collectability, which includes factors such as the jurisdiction’s applicable laws, payment history and market convention. The Statements of Operations include tax reclaims recorded as well as professional and other fees, if any, associated with recovery of foreign withholding taxes.

Segregation and Collateralization: In cases where a Trust enters into certain investments (e.g., options written) that would be treated as “senior securities” for 1940 Act purposes, a 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. Doing so allows the investments to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, the Trusts 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 paid by the Trusts are recorded on the ex-dividend dates. Subject to the Trusts’ managed distribution plan, the Trusts intend to make monthly cash distributions to shareholders, which may consist of net investment income, and net realized and unrealized gains on investments and/or return of capital.

The character of distributions is determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. The portion of distributions that exceeds a Trust’s current and accumulated earnings and profits, which are measured on a tax basis, will constitute a non-taxable return of capital. See Income Tax Information note for the tax character of each Trust’s distributions paid during the year.

Deferred Compensation Plan: Under the Deferred Compensation Plan (the “Plan”) approved by each Trust’s Board, the trustees who are not “interested persons” of the Trusts, 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 each Trust, as applicable. Deferred compensation liabilities, if any, are included in the Trustees’ and Officer’s fees payable in the Statements of Assets and Liabilities and will remain as a liability of the Trusts until such amounts are distributed in accordance with the Plan.

Organization and Offering Costs: Prior to commencement of operations, organization costs associated with the establishment of BIGZ and offering expenses of BIGZ with respect to the issuance of shares in the amounts of $150,500 and $1,225,050, respectively, were paid by the Manager. BIGZ is not obligated to repay any such organizational costs or offering expenses paid by the Manager.

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

Other: Expenses directly related to a Trust are charged to that 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: Each 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. Each 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.

 

164  

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


Notes to Financial Statements  (continued)

 

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Trust’s assets and liabilities:

 

   

Equity investments traded on a recognized securities exchange are valued at that day’s official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day may be valued at the last available bid (long positions) or ask (short positions) price.

 

   

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. 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.

 

   

The Trusts value their investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon their pro rata ownership in the underlying fund’s net assets.

 

   

Exchange-traded options are valued at the mean between the last bid and ask prices at the close of the options market in which the options trade. An exchange-traded option for which there is no mean price is valued at the last bid (long positions) or ask (short positions) price. If no bid or ask price is available, the prior day’s price will be used, unless it is determined that the prior day’s price no longer reflects the fair value of the option. Over-the-counter (“OTC”) options and options on swaps (“swaptions”) are valued by an independent pricing service using a mathematical model, which incorporates a number of market data factors, such as the trades and prices of the underlying instruments.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of trading on the NYSE. Each business day, the Trusts use current market factors supplied by independent pricing services to value certain foreign instruments (“Systematic Fair Value Price”). The Systematic Fair Value Price is designed to value such foreign securities at fair value as of the close of trading on the NYSE, which follows the close of the local markets.

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 each 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.

For investments in equity or debt issued by privately held companies or funds (“Private Company” or collectively, the “Private Companies”) and other Fair Valued Investments, the fair valuation approaches that are used by the Global Valuation Committee and third-party pricing services utilize one or a combination of, but not limited to, the following inputs.

 

   
     Standard Inputs Generally Considered By Third-Party Pricing Services

Market approach

 

(i)  recent market transactions, including subsequent rounds of financing, in the underlying investment or comparable issuers;

(ii) recapitalizations and other transactions across the capital structure; and

(iii)   market multiples of comparable issuers.

Income approach

 

(i)  future cash flows discounted to present and adjusted as appropriate for liquidity, credit, and/or market risks;

(ii) quoted prices for similar investments or assets in active markets; and

(iii)   other risk factors, such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates.

Cost approach.

 

(i)  audited or unaudited financial statements, investor communications and financial or operational metrics issued by the Private Company;

(ii) changes in the valuation of relevant indices or publicly traded companies comparable to the Private Company;

(iii)   relevant news and other public sources; and

(iv)   known secondary market transactions in the Private Company’s interests and merger or acquisition activity in companies comparable to the Private Company.

Investments in series of preferred stock issued by Private Companies are typically valued utilizing market approach in determining the enterprise value of the company. Such investments often contain rights and preferences that differ from other series of preferred and common stock of the same issuer. Enterprise valuation techniques such as an option pricing model (“OPM”), a probability weighted expected return model (“PWERM”), current value method or a hybrid of those techniques are used as deemed appropriate

 

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

  165


Notes to Financial Statements  (continued)

 

under the circumstances. The use of these valuation techniques involve a determination of the exit scenarios of the investment in order to appropriately allocate the enterprise value of the company among the various parts of its capital structure.

The Private Companies are not subject to the public company disclosure, timing, and reporting standards applicable to other investments held by a Trust. Typically, the most recently available information by a Private Company is as of a date that is earlier than the date a Trust is calculating its NAV. This factor may result in a difference between the value of the investment and the price a Trust could receive upon the sale of the investment.

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 each 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 Private Companies 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.

As of December 31, 2021, certain investments of BME, BMEZ, BIGZ, BST and BSTZ were fair valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

 

4.

SECURITIES AND OTHER INVESTMENTS

Preferred Stocks: Preferred stock has a preference over common stock in liquidation (and generally in receiving dividends as well), but is subordinated to the liabilities of the issuer in all respects. As a general rule, the market value of preferred stock with a fixed dividend rate and no conversion element varies inversely with interest rates and perceived credit risk, while the market price of convertible preferred stock generally also reflects some element of conversion value. Because preferred stock is junior to debt securities and other obligations of the issuer, deterioration in the credit quality of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similar stated yield characteristics. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions.

Warrants: Warrants entitle a fund to purchase a specified number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date of the warrants, if any. If the price of the underlying stock does not rise above the strike price before the warrant expires, the warrant generally expires without any value and a fund will lose any amount it paid for the warrant. Thus, investments in warrants may involve more risk than investments in common stock. Warrants may trade in the same markets as their underlying stock; however, the price of the warrant does not necessarily move with the price of the underlying stock.

Special Purpose Acquisition Companies: Special purpose acquisition companies (SPACs) are companies that have no operations but go public with the intention of merging with or acquiring a company using the proceeds of the SPAC’s initial public offering. The Trusts may enter into a commitment with a SPAC for a private investment in a public equity (PIPE) and will satisfy the commitment if and when the SPAC completes its merger or acquisition. Securities purchased through PIPE transactions will be restricted from trading and considered illiquid until a registration statement for the shares is filed and declared effective. Unfunded SPAC PIPE commitments are marked-to-market and any unrealized appreciation (depreciation) is separately presented in the Statements of Assets and Liabilities and Statements of Operations. As of period end, the Trusts had the following unfunded SPAC PIPE commitments:

 

 

 
Trust Name   Investment Name   

Commitment

Amount

     Value      Unrealized
Appreciation
(Depreciation)
 

 

 

BST

  Acorns Holdings, Inc.    $ 4,500,000      $ 4,500,000      $  

BSTZ

  Acorns Holdings, Inc.      10,500,000        10,500,000         

 

 

Securities Lending: Certain Trusts may lend their securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Trusts collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by each Trust is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Trust and any additional required collateral is delivered to the Trust, or excess collateral returned by the Trust, on the next business day. During the term of the loan, the Trusts are entitled to all distributions made on or in respect of the loaned securities, but do not

 

166  

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


Notes to Financial Statements  (continued)

 

receive interest income on securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedules of Investments. Any non-cash collateral received cannot be sold, re-invested or pledged by the Trust, except in the event of borrower default. The securities on loan, if any, are disclosed in the Trusts’ Schedules of Investments. The market value of any securities on loan and the value of any related collateral are shown separately in the Statements of Assets and Liabilities as a component of investments at value – unaffiliated, and collateral on securities loaned at value, respectively.

Securities lending transactions are entered into by the Trusts under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Trusts, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the Trusts can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

As of period end, the following table is a summary of the Trusts’ securities on loan by counterparty which are subject to offset under an MSLA:

 

         
Trust Name/Counterparty    
Securities
Loaned at Value
 
 
    
Cash Collateral
Received
 
(a) 
   
Non-Cash Collateral
Received at Fair Value
 
(a) 
   

Net

Amount

 

(b) 

BME

        

Goldman Sachs & Co. LLC

  $ 168,958      $ (168,958   $     $  

Morgan Stanley

    342        (342            

Toronto Dominion Bank

    36,005        (36,005            
 

 

 

    

 

 

   

 

 

   

 

 

 
  $ 205,305      $ (205,305   $     $  
 

 

 

    

 

 

   

 

 

   

 

 

 

BMEZ

        

Barclays Capital, Inc.

  $ 554,658      $ (554,658   $     $  

BofA Securities, Inc.

    510,600        (510,600            

Citigroup Global Markets, Inc.

    2,449,479        (2,449,479            

Credit Suisse Securities (USA) LLC

    111,746        (111,746            

Goldman Sachs & Co. LLC

    1,150,022        (1,150,022            
 

 

 

    

 

 

   

 

 

   

 

 

 
  $ 4,776,505      $ (4,776,505   $     $  
 

 

 

    

 

 

   

 

 

   

 

 

 

BIGZ

        

Morgan Stanley

  $ 5,079,308      $ (5,079,308   $     $  
 

 

 

    

 

 

   

 

 

   

 

 

 

BST

        

Goldman Sachs & Co. LLC

  $ 828,458      $ (813,990   $     $ 14,468  

JPMorgan Securities LLC

    26,810        (26,406           404  
 

 

 

    

 

 

   

 

 

   

 

 

 
  $ 855,268      $ (840,396   $     $ 14,872  
 

 

 

    

 

 

   

 

 

   

 

 

 

BSTZ

        

Goldman Sachs & Co. LLC

  $ 1,875,935      $ (1,875,935   $     $  
 

 

 

    

 

 

   

 

 

   

 

 

 

 

  (a)

Collateral received in excess of the market value of securities on loan is not presented in this table. The total cash collateral received by each Trust is disclosed in the Trust’s Statements of Assets and Liabilities.

 
  (b)

The market value of the loaned securities is determined as of December 31, 2021. Additional collateral is delivered to each Trust on the next business day in accordance with the MSLA. The net amount would be subject to the borrower default indemnity in the event of default by the counterparty.

 

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Trusts benefit from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned to the extent the collateral received does not cover the value on the securities loaned in the event of borrower default. Each Trust could incur a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. Such losses are borne entirely by the Trusts.

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

The Trusts engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Trusts and/or to manage their 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 Schedules of Investments. These contracts may be transacted on an exchange or OTC.

Options: The Trusts may purchase and write call and put options to increase or decrease their exposure to the risks of underlying instruments, including equity risk, interest rate risk and/or commodity price risk and/or, in the case of options written, to generate gains from options premiums.

 

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

  167


Notes to Financial Statements  (continued)

 

A call option gives the purchaser (holder) of the option the right (but not the obligation) to buy, and obligates the seller (writer) to sell (when the option is exercised) the underlying instrument at the exercise or strike price at any time or at a specified time during the option period. A put option gives the holder the right to sell and obligates the writer to buy the underlying instrument at the exercise or strike price at any time or at a specified time during the option period.

Premiums paid on options purchased and premiums received on options written, as well as the daily fluctuation in market value, are included in investments at value –unaffiliated and options written at value, respectively, in the Statements of Assets and Liabilities. When an instrument is purchased or sold through the exercise of an option, the premium is offset against the cost or proceeds of the underlying instrument. When an option expires, a realized gain or loss is recorded in the Statements of Operations to the extent of the premiums received or paid. When an option is closed or sold, a gain or loss is recorded in the Statements of Operations to the extent the cost of the closing transaction exceeds the premiums received or paid. When the Trusts write a call option, such option is typically “covered,” meaning that they hold the underlying instrument subject to being called by the option counterparty. When the Trusts write a put option, cash is segregated in an amount sufficient to cover the obligation. These amounts, which are considered restricted, are included in cash pledged as collateral for options written in the Statements of Assets and Liabilities.

In purchasing and writing options, the Trusts bear the risk of an unfavorable change in the value of the underlying instrument or the risk that they may not be able to enter into a closing transaction due to an illiquid market. Exercise of a written option could result in the Trusts purchasing or selling a security when they otherwise would not, or at a price different from the current market value.

Master Netting Arrangements: In order to define its contractual rights and to secure rights that will help it mitigate its counterparty risk, a Trust may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its counterparties. An ISDA Master Agreement is a bilateral agreement between a Trust and a counterparty that governs certain OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, a Trust may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency or other events.

Collateral Requirements: For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the mark-to-market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by the Trust and the counterparty.

Cash collateral that has been pledged to cover obligations of the Trusts and cash collateral received from the counterparty, if any, is reported separately in the Statements of Assets and Liabilities as cash pledged as collateral and cash received as collateral, respectively. Non-cash collateral pledged by the Trusts, if any, is noted in the Schedules of Investments. Generally, the amount of collateral due from or to a counterparty is subject to a certain minimum transfer amount threshold before a transfer is required, which is determined at the close of business of the Trusts. Any additional required collateral is delivered to/pledged by the Trusts on the next business day. Typically, the counterparty is not permitted to sell, re-pledge or use cash and non-cash collateral it receives. A Trust generally agrees not to use non-cash collateral that it receives but may, absent default or certain other circumstances defined in the underlying ISDA Master Agreement, be permitted to use cash collateral received. In such cases, interest may be paid pursuant to the collateral arrangement with the counterparty. To the extent amounts due to the Trusts from the counterparties are not fully collateralized, each Trust bears the risk of loss from counterparty non-performance. Likewise, to the extent the Trusts have delivered collateral to a counterparty and stand ready to perform under the terms of their agreement with such counterparty, each Trust bears the risk of loss from a counterparty in the amount of the value of the collateral in the event the counterparty fails to return such collateral. Based on the terms of agreements, collateral may not be required for all derivative contracts.

For financial reporting purposes, the Trusts do not offset derivative assets and derivative liabilities that are subject to netting arrangements, if any, in the Statements of Assets and Liabilities.

 

6.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory: Each Trust entered into an Investment Advisory Agreement with the Manager, the Trusts’ 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 each Trust’s portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of each Trust.

For such services, each Trust, except BCX pays the Manager a monthly fee at the following annual rates:

Average weekly value of each Trust’s net assets:

 

 

 
    BGR     BDJ     BOE     BME     

 

 

Investment advisory fees

    1.20     0.80     1.00     1.00%  

 

 

Average daily value of each Trust’s net assets:

 

 

 
    CII     BGY     BUI     

 

 

Investment advisory fees

    0.85     1.00     1.00%  

 

 

Average daily value of each Trust’s managed assets:

 

 

 
    BMEZ     BIGZ     BST     BSTZ     

 

 

Investment advisory fees

    1.25     1.25     1.00     1.25%  

 

 

 

168  

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


Notes to Financial Statements  (continued)

 

For such services, BCX pays the Manager a monthly fee of 1.00% of the sum of the average daily value of the net assets of the Trust (excluding the value of the Trust’s interest in the BCX Subsidiary, LLC (the “BCX Taxable Subsidiary”), which is a wholly-owned taxable subsidiary of BCX) and the average daily value of the net assets of its subsidiary, which fee is allocated pro rata between the Trust and the BCX Taxable Subsidiary based on the average daily value of their respective net assets (excluding, in the case of the Trust, the value of the Trust’s interest in the BCX Taxable Subsidiary). The BCX Taxable Subsidiary had no net assets or activity during the period ended December 31, 2021.

For purposes of calculating these fees, “net assets” mean the total assets of CII and BCX minus the sum of its accrued liabilities.

For purposes of calculating these fees, “managed assets” are determined as total assets of BMEZ, BIGZ, BST and BSTZ (including any assets attributable to money borrowed for investment purposes) less the sum of its accrued liabilities (other than money borrowed for investment purposes).

For purposes of calculating these fees, “net assets” mean the total assets of BGR, BDJ, BOE, BGY, BME and BUI minus the sum of its accrued liabilities (which includes liabilities represented by TOB Trusts and the liquidation preference of any outstanding preferred shares).

With respect to BGR, BOE, BGY, BCX and BUI, the Manager entered into separate sub-advisory agreements with BlackRock International Limited (“BIL”), an affiliate of the Manager. The Manager pays BIL for services it provides for that portion of each Trust for which BIL acts as sub-adviser, a monthly fee that is equal to a percentage of the investment advisory fees paid by each Trust to the Manager.

The Manager provides investment management and other services to BST Taxable Subsidiary and BSTZ Taxable Subsidiary. The Manager does not receive separate compensation from the BST Taxable Subsidiary or BSTZ Taxable Subsidiary for providing investment management or administrative services. However, BST and BSTZ pay the Manager based on the Trust’s net assets, which includes the assets of the BST Taxable Subsidiary and BSTZ Taxable Subsidiary.

Distribution Fees: BME, BST and BUI have entered into Distribution Agreements with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager, to provide for distribution of BME’s, BST’s and BUI’s common shares on a reasonable best efforts basis through an equity shelf offering (a “Shelf Offering”) (the “Distribution Agreement”). Pursuant to the Distribution Agreement, BME, BST and BUI will compensate BRIL with respect to sales of common shares at a commission rate of 1.00% of the gross proceeds of the sale of BME’s, BST’s and BUI’s common shares and a portion of such commission is re-allowed to broker-dealers engaged by BRIL. The commissions retained by BRIL during the year ended December 31, 2021 amounted to $100,497, $25,900, and $149,810 for each of BME, BST and BUI, respectively.

Expense Limitations, Waivers and Reimbursements: The Manager has contractually agreed to waive a portion of the investment advisory fees on BST as a percentage of its average daily managed assets as follows:

 

 

 
          Expiration Date    

 

 

BST

    0.05     December 31, 2021    

 

 

The Manager voluntarily agreed to waive a portion of the investment advisory fees on the following Trusts as a percentage of their average weekly net assets (BGR and BOE) or average daily net assets (BGY and BUI), as follows:

 

 

 
    BGR    BOE     BGY     BUI      

 

 
  0.220%      0.175     0.100     0.025%  

 

 

These voluntary waivers may be reduced or discontinued at any time without notice. Effective July 1, 2021, the voluntary waiver agreement between the Manager and BUI was terminated.

For the year ended December 31, 2021, the investment advisory fees waived, which are included in fees waived and/or reimbursed by the Manager in the Statements of Operations, were as follows:

 

 

 
Trust Name  

Fees Waived and/or Reimbursed

by the Manager

 

 

 

BGR

  $ 631,737  

BOE

    1,456,756  

BGY

    700,580  

BST

    774,985  

BUI

    59,319  

 

 

With respect to each Trust, the Manager contractually agreed to waive its investment advisory fees by the amount of investment advisory fees each 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 a Trust. These amounts are included in fees waived and/or reimbursed by the Manager in the Statements of Operations. For the year ended December 31, 2021, the amounts waived were as follows:

 

 

 
Trust Name  

Fees Waived and/or Reimbursed

by the Manager

 

 

 

BGR

  $ 1,143  

CII

    3,964  

BDJ

    9,799  

BOE

    2,070  

BGY

    2,260  

BME

    5,096  

 

 

 

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

  169


Notes to Financial Statements  (continued)

 

 

 
Trust Name  

Fees Waived and/or Reimbursed

by the Manager

 

 

 

BMEZ

  $ 15,118  

BIGZ

    67,742  

BCX

    3,874  

BST

    16,456  

BSTZ

    18,673  

BUI

    2,881  

 

 

The Manager contractually agreed to waive its investment advisory fee with respect to any portion of each 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 Trusts’ Independent Trustees. These amounts are included in fees waived and/or reimbursed by the Manager in the Statements of Operations. For the year ended December 31, 2021, the amounts waived in investment advisory fees pursuant to these arrangements were as follows:

 

 

 
Trust Name  

Fees Waived and/or Reimbursed

by the Manager

 

 

 

BIGZ

  $ 295,091  

 

 

Securities Lending: The U.S. Securities and Exchange Commission (“SEC”) has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Trusts, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Trusts are responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company, Money Market Series, managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the Money Market Series to an annual rate of 0.04%. The investment adviser to the Money Market Series will not charge any advisory fees with respect to shares purchased by the Trusts. The Money Market Series may, under certain circumstances, impose a liquidity fee of up to 2% of the value withdrawn or temporarily restrict withdrawals for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. Each Trust retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to the current securities lending agreement, BIM may lend securities only when the difference between the borrower rebate rate and the risk free rate exceeds a certain level (such securities, the “specials only securities”). Each Trust retains 82% of securities lending income (which excludes collateral investment expenses).

In addition, commencing the business day following the date that the aggregate securities lending income earned across the BlackRock Fixed-Income Complex in a calendar year exceeds a specified threshold, each Trust, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income (which excludes collateral investment expenses) in an amount equal to 85% of securities lending income.

The share of securities lending income earned by each Trust is shown as securities lending income — affiliated — net in the Statements of Operations. For the year ended December 31, 2021, each Trust paid BIM the following amounts for securities lending agent services:

 

 

 
Trust Name   Amounts  

 

 

BDJ

  $ 890  

BME

    4,056  

BMEZ

    47,962  

BIGZ

    20,925  

BST

    134,795  

BSTZ

    39,260  

BUI

    2,778  

 

 

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

Other Transactions: During the year ended December 31, 2021, BGR received a reimbursement of $25,456 from an affiliate, which is included in payment by affiliate in the Statements of Operations, related to an operating event.

During the year ended December 31, 2021, BME recorded a reimbursement of $12,661 from an affiliate, which is included in capital contribution from affiliate in the Statements of Changes in Net Assets, related to an operating event.

 

170  

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


Notes to Financial Statements  (continued)

 

The Trusts may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common trustees. For the year ended December 31, 2021, the purchase and sale transactions and any net realized gains (losses) with affiliated funds in compliance with Rule 17a-7 under the 1940 Act were as follows:

 

 

 
Trust Name   Purchases      Sales      Net Realized
Gain (Loss)
 

 

 

BOE

  $ 1,063,708      $      $  

BGY

    1,779,537                

BME

           124,568        60,786  

BMEZ

    4,139,432                

BST

           345,836        (297,088

BSTZ

           1,121,662        (963,760

 

 

 

7.

PURCHASES AND SALES

For the year ended December 31, 2021, purchases and sales of investments, excluding short-term investments, were as follows:

 

 

 
Trust Name   Purchases      Sales  

 

 

BGR

  $ 171,698,255      $ 190,448,449  

CII

    253,721,407        326,631,881  

BDJ

    753,007,547        992,198,834  

BOE

    533,638,917        597,241,267  

BGY

    485,614,169        530,889,516  

BME

    292,763,540        283,311,207  

BMEZ

    1,456,942,919        1,760,144,598  

BIGZ

    6,955,242,873        2,343,760,506  

BCX

    545,074,034        597,820,893  

BST

    652,882,791        463,067,890  

BSTZ

    578,898,788        921,126,832  

BUI

    141,962,994        97,069,416  

 

 

 

8.

INCOME TAX INFORMATION

It is each 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.

Each 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 each 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 each 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 Trusts 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 Trusts’ financial statements.

U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or NAVs per share. As of period end, permanent differences attributable to non-deductible expenses, net operating losses and income recognized from the Trust’s wholly owned subsidiary were reclassified to the following accounts:

 

 

 
                BDJ                 BME                     BIGZ                     BST                 BSTZ                 BUI  

 

 

Paid-in capital

    $        (3,860     $        (73,645     $        (35,283,096     $        (12,127,804     $        (9,348,434     $        (29,000

Accumulated earnings (loss)

    3,860       73,645       35,283,096       12,127,804       9,348,434       29,000  

 

 

The tax character of distributions paid was as follows:

 

 

 
Trust Name   Year Ended
12/31/21
     Year Ended
12/31/20
 

 

 

BGR

    

Ordinary income

  $ 8,262,936      $ 9,329,536  

Return of capital

    4,835,876        10,213,545  
 

 

 

    

 

 

 
  $ 13,098,812      $ 19,543,081  
 

 

 

    

 

 

 

CII

    

Ordinary income

  $ 2,005,386      $ 5,824,766  

Long-term capital gains

    46,638,458        40,502,704  
 

 

 

    

 

 

 
  $   48,643,844      $   46,327,470  
 

 

 

    

 

 

 

 

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

  171


Notes to Financial Statements  (continued)

 

 

 
Trust Name   Year Ended
12/31/21
     Year Ended
12/31/20
 

 

 

BDJ

    

Ordinary income

  $ 58,615,347      $ 27,765,611  

Long-term capital gains

    102,988,157        84,576,713  
 

 

 

    

 

 

 
  $   161,603,504      $   112,342,324  
 

 

 

    

 

 

 

BOE

    

Ordinary income

  $ 48,404,308      $ 16,818,451  

Return of capital

           32,343,267  
 

 

 

    

 

 

 
  $ 48,404,308      $ 49,161,718  
 

 

 

    

 

 

 

BGY

    

Ordinary income

  $ 30,180,220      $ 12,744,924  

Return of capital

    12,098,701        29,856,975  
 

 

 

    

 

 

 
  $ 42,278,921      $ 42,601,899  
 

 

 

    

 

 

 

BME

    

Ordinary income

  $ 51,302      $ 7,153,739  

Long-term capital gains

    30,713,640        20,237,062  
 

 

 

    

 

 

 
  $ 30,764,942      $ 27,390,801  
 

 

 

    

 

 

 

BMEZ

    

Ordinary income

  $ 111,413,529      $ 101,402,843  

Long-term capital gains

    81,491,859         
 

 

 

    

 

 

 
  $ 192,905,388      $ 101,402,843  
 

 

 

    

 

 

 

BIGZ

    

Return of capital

  $ 170,149,458      $  
 

 

 

    

 

 

 

BCX

    

Ordinary income

  $ 33,607,537      $ 20,310,556  

Return of capital

    8,784,140        27,173,604  
 

 

 

    

 

 

 
  $ 42,391,677      $ 47,484,160  
 

 

 

    

 

 

 

BST

    

Long-term capital gains

  $ 126,451,369      $ 49,046,315  
 

 

 

    

 

 

 

BSTZ

    

Ordinary income

  $      $ 6,255,953  

Long-term capital gains

    240,726,364        79,117,211  

Return of capital

           11,848,839  
 

 

 

    

 

 

 
  $ 240,726,364      $ 97,222,003  
 

 

 

    

 

 

 

BUI

    

Ordinary income

  $ 14,683,563      $ 8,067,250  

Long-term capital gains

    5,642,016        14,792,342  

Return of capital

    9,081,858        3,077,573  
 

 

 

    

 

 

 
  $ 29,407,437      $ 25,937,165  
 

 

 

    

 

 

 

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

 

 

 
Trust Name   Undistributed
Ordinary Income
     Undistributed
Long-Term
Capital Gains
     Non-Expiring
Capital Loss
Carryforwards(a)
    Net Unrealized
Gains (Losses)(b)
    Qualified
Late-Year Loss(c)
    Total  

 

 

BGR

  $      $      $ (269,130,117   $ 40,281,692     $     $ (228,848,425

CII

           20,374,274              393,545,726             413,920,000  

BDJ

    14,874,300        138,284,738              440,414,071             593,573,109  

BOE

                        146,884,800       (7,701,340     139,183,460  

BGY

                        113,282,609       (9,997,923     103,284,686  

BME

           16,759,687              218,509,075             235,268,762  

BMEZ

    82,094,690        100,955,454              545,439,625             728,489,769  

BIGZ

                  (168,343,640     (437,021,143           (605,364,783

BCX

                  (412,547,801     208,137,930             (204,409,871

BST

           28,490,400              857,596,247       (123,124     885,963,523  

BSTZ

           6,184,587              1,548,409,790       (20,519,341     1,534,075,036  

BUI

                        178,413,872       (19,882     178,393,990  

 

 

 

  (a)

Amounts available to offset future realized capital gains.

 

 

172  

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


Notes to Financial Statements  (continued)

 

  (b)

The difference between book-basis and tax-basis net unrealized gains (losses) was attributable primarily to the tax deferral of losses on wash sales and straddles, the realization for tax purposes of unrealized gains (losses) on certain options and foreign currency exchange contracts, the characterization of corporate actions, the realization for tax purposes of unrealized gains on investments in passive foreign investment companies, the timing and recognition of partnership income and the deferral of compensation to Trustees.

 

 

  (c)

The Trust has elected to defer certain qualified late-year losses and recognize such losses in the next taxable year.

 

During the year ended December 31, 2021, the Trusts listed below utilized the following amounts of their respective capital loss carryforward:

 

 

 
Trust Name   Amounts  

 

 

BOE

  $  36,829,140  

BGY

    34,422,227  

BCX

    46,588,947  

 

 

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)
 

 

 

BGR

  $ 266,636,290      $ 51,034,027      $ (603,142   $ 50,430,885  

CII

    582,266,575        423,920,359        (18,732,526     405,187,833  

BDJ

    1,463,164,439        503,186,626        (36,961,581     466,225,045  

BOE

    690,101,546        188,179,682        (17,269,041     170,910,641  

BGY

    568,940,271        155,734,625        (15,527,013     140,207,612  

BME

    413,791,725        239,815,611        (11,800,109     228,015,502  

BMEZ

    2,438,608,737        745,570,679        (169,314,272     576,256,407  

BIGZ

    4,448,984,915        339,800,163        (769,691,984     (429,891,821

BCX

    698,018,432        236,318,805        (16,900,775     219,418,030  

BST

    816,422,916        917,279,245        (33,089,665     884,189,580  

BSTZ

    1,458,905,085        1,664,592,576        (44,417,232     1,620,175,344  

BUI

    360,713,121        207,808,899        (5,798,886     202,010,013  

 

 

 

9.

PRINCIPAL RISKS

In the normal course of business, the Trusts invest in securities or other instruments and may enter into certain transactions, and such activities subject each 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 Trusts and their investments. BME’s, BST’s and BUI’s prospectuses provide details of the risks to which each Trust is subject.

The Trusts may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00, which may be subject to redemption gates or liquidity fees under certain circumstances.

Each 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. A Trust may not be able to readily dispose of such investments at prices that approximate those at which a Trust could sell such investments if they were more widely traded and, as a result of such illiquidity, a 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 a 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: 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.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. A Trust may invest in illiquid investments. An illiquid investment is any investment that a Trust reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. A Trust may experience difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause each Trust’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of a Trust may lose value, regardless of the individual results of the securities and other instruments in which a Trust invests.

 

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

  173


Notes to Financial Statements  (continued)

 

The price a Trust could receive upon the sale of any particular portfolio investment may differ from a Trust’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs may significantly impact the resulting fair value and therefore a Trust’s results of operations. As a result, the price received upon the sale of an investment may be less than the value ascribed by a Trust, and a Trust could realize a greater than expected loss or lesser than expected gain upon the sale of the investment. A Trust’s ability to value its investments may also be impacted by technological issues and/or errors by pricing services or other third-party service providers.

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

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.

For OTC options purchased, each Trust bears the risk of loss in the amount of the premiums paid plus the positive change in market values net of any collateral held by the Trusts should the counterparty fail to perform under the contracts. Options written by the Trusts do not typically give rise to counterparty credit risk, as options written generally obligate the Trusts, and not the counterparty, to perform. The Trusts may be exposed to counterparty credit risk with respect to options written to the extent each Trust deposits collateral with its counterparty to a written option.

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 each Trust’s portfolio are disclosed in its Schedule of Investments.

As of period end, the Trusts listed below invested a significant portion of their assets in securities in the following sectors:

 

 

 
Sectors   Trust Name  

 

 

Energy

    BGR, BCX  

Financials

    BDJ  

Health Care

    BME, BMEZ  

Information Technology

    BST, BSTZ  

Materials

    BCX  

Utilities

    BUI  

 

 

Changes in economic conditions affecting such sectors would have a greater impact on the Trusts and could affect the value, income and/or liquidity of positions in such securities.

Certain Trusts invest a significant portion of their assets in securities within a single or limited number of market sectors. When a Trust concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions affecting such sectors may have a significant impact on the Trust and could affect the income from, or the value or liquidity of, the Trust’s portfolio. Investment percentages in specific sectors are presented in the Schedules of Investments.

Certain Trusts invest a substantial amount of their assets in issuers located in a single country or a limited number of countries. When a Trust concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions in those countries may have a significant impact on their investment performance and could affect the income from, or the value or liquidity of, the Trust’s portfolio. Unanticipated or sudden political or social developments may cause uncertainty in the markets and as a result adversely affect the Trust’s investments. Foreign issuers may not be subject to the same uniform accounting, auditing and financial reporting standards and practices as used in the United States. Foreign securities markets may also be more volatile and less liquid than U.S. securities and may be less subject to governmental supervision not typically associated with investing in U.S. securities. Investment percentages in specific countries are presented in the Schedules of Investments.

Certain Trusts invest a significant portion of their assets in securities of issuers located in Europe or with significant exposure to European issuers or countries. The European financial markets have recently experienced volatility and adverse trends due to concerns about economic downturns in, or rising government debt levels of, several European countries. These events may spread to other countries in Europe and may affect the value and liquidity of certain of the Trusts’ investments.

Responses to the financial problems by European governments, central banks and others, including austerity measures and reforms, may not work, may result in social unrest and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets and asset valuations around the world. In addition, the United Kingdom has withdrawn from the European Union, and one or more other countries may withdraw from the European Union and/or abandon the Euro, the common currency of the European Union. The impact of these actions, especially if they occur in a disorderly fashion, is not clear but could be significant and far reaching.

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 Trusts 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 Trusts is uncertain.

 

174  

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


Notes to Financial Statements  (continued)

 

10.

CAPITAL SHARE TRANSACTIONS

Each Trust is authorized to issue an unlimited number of shares, with the exception of CII, all of which were initially classified as Common Shares. CII is authorized to issue 200 million Common Shares. The par value for each Trust’s Common Shares is $0.001, except for CII, which is $0.10. The Board is authorized, however, to reclassify any unissued Common Shares to Preferred Shares without the approval of Common Shareholders.

BME, BST and BUI have each filed a prospectus with the SEC allowing it to issue an additional 5,000,000, 13,000,000 and 5,000,000 Common Shares, respectively, through an equity Shelf Offering. Under the Shelf Offerings, BME, BST and BUI, 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 each Trust’s NAV per Common Share (calculated within 48 hours of pricing). As of period end, 2,393,277, 3,591,658 and 533,850 Common Shares, respectively, remain available for issuance under the Shelf Offerings. During the year ended, December 31, 2021, BME, BST and BUI issued 1,053,578, 242,731 and 2,910,832 shares, respectively, under the Shelf Offering. See Additional Information — Shelf Offering Program for additional information.

Initial costs incurred by each of BME, BST and BUI in connection with its Shelf Offering are recorded as “Deferred offering costs” in the Statements 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. Any subsequent costs incurred to keep the filing active will be charged to expense as incurred.

For the periods shown, shares issued and outstanding increased by the following amounts as a result of shares issued through the Shelf Offering:

 

 

 
    Year Ended  
 

 

 

 
Trust Name   12/31/21      12/31/20  

 

 

BME

    1,053,578        1,066,906  

BST

    242,731        2,038,416  

BUI

    2,910,832        1,205,766  

 

 

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

 

 

 
    Year Ended  
 

 

 

 
Trust Name   12/31/21      12/31/20  

 

 

CII

    10,701         

BME

    37,877        42,015  

BIGZ

    231,136         

BST

    40,859        52,101  

BSTZ

    448,074         

BUI

    63,066        59,571  

 

 

The Trusts participate in an open market share repurchase program (the “Repurchase Program”). From December 1, 2020 through November 30, 2021, each Trust (other than BSTZ and BMEZ) 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, each 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, for each Trust (other than BIGZ, BSTZ and BMEZ) or November 18, 2021 (for BIGZ, BSTZ and BMEZ) subject to certain conditions. There is no assurance that the Trusts will purchase shares in any particular amounts. For the year ended December 31, 2021, BGR, CII, BDJ, BGY, BME, BMEZ, BCX, BST, BSTZ and BUI did not repurchase any shares.

The total cost of the shares repurchased is reflected in the Trusts’ Statements of Changes in Net Assets. For the periods shown, shares repurchased and cost, including transaction costs, were as follows:

 

 

 
    BGR  
 

 

 

 
    Shares      Amounts  

 

 

Year Ended December 31, 2021

         $  

Year Ended December 31, 2020

    716,855        4,813,281  

 

 
   

 

 
    BDJ  
 

 

 

 
    Shares      Amounts  

 

 

Year Ended December 31, 2021

         $  

Year Ended December 31, 2020

    1,538,971        11,354,242  

 

 
   

 

 
    BOE  
 

 

 

 
    Shares      Amounts  

 

 

Year Ended December 31, 2021

    18,558      $ 205,246  

Year Ended December 31, 2020

    1,539,117        14,886,112  

 

 
   

 

 
    BGY  
 

 

 

 
    Shares      Amounts  

 

 

Year Ended December 31, 2021

         $  

Year Ended December 31, 2020

    1,441,544        7,486,085  

 

 

 

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

  175


Notes to Financial Statements  (continued)

 

 

 
    BIGZ  
 

 

 

 
    Shares      Amounts  

 

 

Period Ended December 31, 2021

    5,142,849      $ 74,068,155  

 

 
    

 

 
    BCX  
 

 

 

 
    Shares      Amounts  

 

 

Year Ended December 31, 2021

         $  

Year Ended December 31, 2020

    2,744,110        17,262,335  

 

 

With respect to BIGZ, for the period ended December 31, 2021, shares issued and outstanding increased by 220,000,000 from the initial public offering and 23,092,422 from the underwriters’ exercising the over-allotment option.

Shares of BMEZ issued and outstanding for the period January 30, 2020 to December 31, 2020, increased by 105,000,000 from the Trust’s initial public offering and 7,664,825 from the underwriters’ exercising the over-allotment option.

For the year ended December 31, 2021, shares issued and outstanding remained constant for BGR, BDJ, BGY, BMEZ and BCX. For the year ended December 31, 2020, shares issued and outstanding remained constant for CII and BSTZ.

As of the close of business on June 18, 2021, BST issued transferrable rights to its Common Shareholders of record, entitling the holders of those rights to subscribe for shares of BST’s common stock (the “Offer”). Shareholders received one right for each outstanding Common Share owned on the record date. The rights entitled their holders to purchase one new Common Share for every three rights held (1-for-3). The Offer expired on July 14, 2021. BST received from the Offer gross proceeds of $359,278,213 for the issuance of 6,822,923 Common Shares. The rights offering resulted in $(0.68) or (1.24)% NAV dilution since the Common Shares were issued below BST’s NAV. BST received the entire proceeds from the shares issued under the Offer since the Manager agreed to pay for all expenses (including sales commissions) related to the Offer.

As of December 31, 2021, BlackRock Financial Management, Inc., an affiliate of the Trust, owned 5,000 Shares of BIGZ.

 

11.

SUBSEQUENT EVENTS

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

The Trusts 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

 

 

 

BGR

    01/03/22        01/14/22        01/31/22         $ 0.037500  
    02/01/22        02/15/22        02/28/22           0.037500  

CII

    01/03/22        01/14/22        01/31/22           0.099500  
    02/01/22        02/15/22        02/28/22           0.099500  

BDJ

    01/03/22        01/14/22        01/31/22           0.050000  
    02/01/22        02/15/22        02/28/22           0.050000  

BOE

    01/03/22        01/14/22        01/31/22           0.063000  
    02/01/22        02/15/22        02/28/22           0.063000  

BGY

    01/03/22        01/14/22        01/31/22           0.033800  
    02/01/22        02/15/22        02/28/22           0.033800  

BME

    01/03/22        01/14/22        01/31/22           0.213000  
    02/01/22        02/15/22        02/28/22           0.213000  

BMEZ

    01/03/22        01/14/22        01/31/22           0.145000  
    02/01/22        02/15/22        02/28/22           0.145000  

BIGZ

    01/03/22        01/14/22        01/31/22           0.100000  
    02/01/22        02/15/22        02/28/22           0.100000  

BCX

    01/03/22        01/14/22        01/31/22           0.040000  
    02/01/22        02/15/22        02/28/22           0.040000  

BST

    01/03/22        01/14/22        01/31/22           0.250000  
    02/01/22        02/15/22        02/28/22           0.250000  

BSTZ

    01/03/22        01/14/22        01/31/22           0.192000  
    02/01/22        02/15/22        02/28/22           0.192000  

BUI

    01/03/22        01/14/22        01/31/22           0.121000  
    02/01/22        02/15/22        02/28/22           0.121000  

 

 

 

176  

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


Report of Independent Registered Public Accounting Firm

 

To the Shareholders and Board of Trustees/Directors of BlackRock Energy and Resources Trust, BlackRock Enhanced Capital and Income Fund, Inc., BlackRock Enhanced Equity Dividend Trust, BlackRock Enhanced Global Dividend Trust, BlackRock Enhanced International Dividend Trust, BlackRock Health Sciences Trust, BlackRock Health Sciences Trust II, BlackRock Innovation and Growth Trust, BlackRock Resources & Commodities Strategy Trust, BlackRock Science and Technology Trust, BlackRock Science and Technology Trust II and BlackRock Utilities, Infrastructure & Power Opportunities Trust:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statements of assets and liabilities of BlackRock Energy and Resources Trust, BlackRock Enhanced Capital and Income Fund, Inc., BlackRock Enhanced Equity Dividend Trust, BlackRock Enhanced Global Dividend Trust, BlackRock Enhanced International Dividend Trust, BlackRock Health Sciences Trust, BlackRock Health Sciences Trust II, BlackRock Innovation and Growth Trust, BlackRock Resources & Commodities Strategy Trust, BlackRock Science and Technology Trust, BlackRock Science and Technology Trust II and BlackRock Utilities, Infrastructure & Power Opportunities Trust, (the “Funds”), including the schedules of investments, as of December 31, 2021, the related statements of operations, cash flows, changes in net assets and the financial highlights for the periods indicated in the table below, and the related notes. Such financial statements and financial highlights of BlackRock Science and Technology Trust and BlackRock Science and Technology Trust II are consolidated as of and for the two years in the period ended December 31, 2021. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Funds as of December 31, 2021, and the results of their operations, their cash flows, changes in their net assets and the financial highlights for the periods indicated in the table below, in conformity with accounting principles generally accepted in the United States of America.

 

       
Fund  

Statements of Operations and Statements

of Cash Flows

  Statements of Changes in Net Assets   Financial Highlights

BlackRock Energy and Resources Trust, BlackRock Enhanced Capital and Income Fund, Inc., BlackRock Enhanced Equity Dividend Trust, BlackRock Enhanced Global Dividend Trust, BlackRock Enhanced International Dividend Trust, BlackRock Health Sciences Trust, BlackRock Resources & Commodities Strategy Trust, BlackRock Science and Technology Trust and BlackRock Utilities, Infrastructure & Power Opportunities Trust

  For the year ended December 31, 2021   For each of the two years in the period ended December 31, 2021   For each of the five years in the period ended December 31, 2021

BlackRock Science and Technology Trust II

  For the year ended December 31, 2021   For each of the two years in the period ended December 31, 2021   For each of the two years in the period ended December 31, 2021 and for the period from June 27, 2019 (commencement of operations) through December 31, 2019

BlackRock Health Sciences Trust II

  For the year ended December 31, 2021   For the year ended December 31, 2021 and for the period from January 30, 2020 (commencement of operations) through December 31, 2020

BlackRock Innovation and Growth Trust

  For the period from April 29, 2021 (commencement of operations) through December 31, 2021

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ 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 Funds 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 Funds are not required to have, nor were we engaged to perform, an audit of their 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 Funds’ 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.

 

 

R E P O R T   O F   I N D E P E N D E N T   R E G I S T E R E D   P U B L I C   A C C O U N T I N G   F I R M

  177


Important Tax Information  (unaudited)   

 

The following amounts, or maximum amounts allowable by law, are hereby designated as qualified dividend income for individuals for the fiscal year ended December 31, 2021:

 

 

 
Trust Name  

Qualified Dividend

Income

 

 

 

BGR

  $ 10,879,665  

CII

    9,778,887  

BDJ

    36,926,815  

BOE

    14,824,143  

BGY

    12,198,874  

BME

    5,858,399  

BMEZ

    5,322,834  

BCX

    34,697,298  

BUI

    7,851,513  

 

 

The Trusts hereby designate the following amounts, or maximum amounts allowable by law, as capital gain dividends, subject to a long-term capital gains tax rate of not greater than 20%, for the fiscal year ended December 31, 2021:

 

 

 
Trust Name  

20% Rate Long-Term

Capital Gain Dividends

 

 

 

CII

  $ 46,638,458  

BDJ

    102,988,157  

BME

    30,713,640  

BMEZ

    81,491,859  

BST

    126,451,369  

BSTZ

    240,726,364  

BUI

    5,642,016  

 

 

The Trusts intend to pass through to their shareholders the following amounts, or maximum amounts allowable by law, of foreign source income earned and foreign taxes paid for the fiscal year ended December 31, 2021:

 

 

 
Trust Name  

        Foreign Source

Income Earned

    

Foreign

            Taxes Paid

 

 

 

BOE

  $ 6,404,676      $ 621,814  

BGY

    13,608,906        1,228,139  

BCX

    20,150,504        1,303,100  

BUI

    2,629,430        671,929  

 

 

The following percentages, or maximum percentages allowable by law, of ordinary income distributions paid during the fiscal year ended December 31, 2021 qualified for the dividends-received deduction for corporate shareholders:

 

 

 
Trust Name  

Dividends-Received   

Deduction    

 

 

 

BGR

    76.44%  

CII

    100.00     

BDJ

    74.83     

BOE

    17.48     

BGY

    2.00     

BME

    100.00     

BMEZ

    1.58     

BCX

    28.23     

BUI

    23.85     

 

 

The Trusts hereby designate the following amounts, or maximum amounts allowable by law, as qualified short-term capital gains eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations for the fiscal year ended December 31, 2021:

 

 

 
Trust Name  

Qualified

Short-Term

Capital Gains

 

 

 

BDJ

  $ 6,084,091  

BOE

    36,290,613  

BGY

    15,886,432  

BMEZ

    111,413,529  

BUI

    9,762,872  

 

 

 

 

178  

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


Investment Objectives, Policies and Risks

 

    

 

Recent Changes

The following information is a summary of certain changes since December 31, 2020 (for each Trust other than BIGZ) and since March 25, 2021 (the effective date of the registration statement relating to BIGZ’s initial public offering). This information may not reflect all of the changes that have occurred since you purchased the relevant Fund.

Effective July 29, 2021, each of BST, BSTZ, BMEZ and BIGZ intends to invest in excess of 25% of its total assets in (i) liquid 144A securities and Regulation S securities and (ii) securities that are temporarily restricted in connection with going public but not otherwise illiquid and privately placed.

Except as noted above, during each 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 Enhanced Global Dividend Trust (BOE)

The Trust’s investment objective is primarily to seek current income and current gains, with a secondary objective of long-term capital appreciation. The Trust’s investment objective is not a fundamental policy and may be changed without prior shareholder approval.

The Trust seeks to achieve its investment objective by investing primarily in equity securities issued by companies located in countries throughout the world and by utilizing an option writing strategy to enhance current gains. BlackRock Advisors, LLC (the “Manager”) or BlackRock International Limited (“BIL” and together with the Manager, the “Advisors”), the Trust’s sub-advisor, from time to time may vary the percentage of the Trust’s assets invested in any particular type of equity security, based on factors such as market and economic conditions, fiscal and monetary policy and the relative security valuation of the various equity asset classes.

The Trust also seeks to achieve its investment objective by employing a strategy of writing (selling) call and put options on indices of securities and sectors of securities. The Trust intends to write covered put and call options with respect to approximately 30% to 45% of its total assets, although this percentage may vary from time to time with market conditions. In addition to its option strategy on indices, the Trust may pursue a strategy that includes the writing (selling) of both call and put options on individual common stocks. These option strategies are intended to generate current gains from option premiums as a means to enhance distributions payable to the Trust’s shareholders. As the Trust writes calls and puts over more of its portfolio, its ability to benefit from capital appreciation becomes more limited.

Under normal market conditions, the Trust is required to invest at least 80% of its net assets in dividend-paying equity securities and at least 40% of its assets outside of the U.S. (unless market conditions are not deemed favorable by Trust management, in which case the Trust would invest at least 30% of its assets outside of the U.S.). Equity securities in which the Trust invests include common stocks, preferred stocks, convertible securities, warrants, depositary receipts and equity interests in real estate investment trusts. The Trust may invest in companies located anywhere in the world. The Trust may invest in companies of any size market capitalization, but intends to invest primarily in the securities of large capitalization companies. The Trust may invest in companies conducting initial public offerings. The Trust may invest up to 25% of its total assets in equity securities of issuers in emerging countries. The Trust may invest up to 20% of its total assets in debt securities, including debt securities issued by companies located in emerging markets. The Trust may invest up to 10% of its total assets in non-investment grade debt securities, commonly known as “junk bonds.”

Application of the Trust’s investment philosophy, from time to time, may cause the Trust to invest a significant portion of its assets in a particular country or region of the world. The Trust’s investment strategy causes it to invest in issuers located in a number of countries throughout the world, but the actual number of countries represented in the Trust’s portfolio will vary over time. Under normal market conditions, the Trust invests in the equity securities of issuers in at least three different countries, including the United States. However, the Trust may invest in the securities of non-U.S. issuers without limit.

The Trust may engage in various portfolio strategies to seek to increase its return or to hedge its portfolio against movements in interest rates, in currency rates and in the securities markets through the use of derivatives, such as indexed and inverse securities, options, futures, options on futures, interest rate transactions, including interest rate swaps, total return swaps and credit default swaps and short selling and foreign exchange transactions. Each of these portfolio strategies is described below. No assurance can be given that the Trust will employ these strategies or that, if employed, they will be effective.

The percentage limitations applicable to the Trust’s portfolio described herein apply only at the time of investment, and the Trust will not be required to sell securities due to subsequent changes in the value of securities it owns.

To the extent the Trust invests in dividend-paying common stocks, the Advisors currently intend to emphasize those securities that: (i) are eligible to pay “qualified dividend” income and/or (ii) make payments that are eligible for the dividends received deduction allowed to corporate taxpayers pursuant to Section 243 of the Internal Revenue Code of 1986, as amended (the “Code”). Long-term capital gains and qualified dividend income are currently eligible for reduced U.S. federal income tax rates for individuals. Long-term capital gains and qualified dividend income included in distributions of a regulated investment company (a “RIC”) to its individual shareholders are generally passed through to such shareholders and taxed at such reduced rates. Pursuant to Section 243 of the Code, corporations generally may deduct a portion of the dividend income they receive from domestic corporations. Corporate shareholders of a RIC generally are permitted to claim a deduction with respect to that portion of their dividend distributions attributable to amounts that the RIC designates as qualifying for the Dividends Received Deduction. Although the Trust has the ability to borrow money for investment purposes, it has no current intention to do so. If, however, the Trust did use leverage, the use of leverage through borrowings may reduce the amount of dividends it can designate as qualifying for the Dividends Received Deduction which will, in turn, limit the tax benefit to a corporate shareholder of investing in the Trust. Corporate shareholders should consider whether an investment in the Trust is appropriate in light of the Trust’s ability to borrow. No assurance can be given as to what percentage of the dividends paid on the Trust’s common stock will be eligible for: (i) the reduced U.S. federal income tax rate for qualified dividend income and long-term capital gains for individuals or (ii) the Dividends Received Deduction for corporate shareholders of the Trust.

In selecting investments for the Trust, the Advisors combine fundamental research with a top-down strategy, analyzing 70 sub-industry groups on an ongoing basis. The Advisors seek to identify companies that it believes have the potential to outperform the market. The Advisors’ investment techniques for the Trust include assessing industry

 

 

I N V E S T M E N T   O 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

  179


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

structure and dynamics, evaluating growth catalysts on an industry and individual company basis and assessing a company’s valuation relative to the broad market and its respective industry group. The Advisors seek to invest in companies that it believes have sizeable market opportunities, global, regional or local competitive advantages, sound business models and financial strength, proven management teams and compelling relative and absolute valuations.

Leverage: The Trust may, but does not currently intend to, incur indebtedness or issue preferred shares for investment purposes.

BlackRock Science and Technology Trust (BST)

The Trust’s investment objectives are to provide income and total return through a combination of current income, current gains and long-term capital appreciation. The Trust’s investment objectives may be changed by the Board of Trustees (the “Board”) without prior shareholder approval.

BlackRock Advisors, LLC (the “Manager”) may consider a variety of factors when choosing investments for the Trust, such as:

 

   

selecting companies with the potential for rapid and sustainable growth from the development, advancement and use of science and/or technology (high growth science and technology stocks); and

 

   

identifying companies that have above-average return potential based on factors such as revenue and earnings growth, profitability, valuation and dividend yield (cyclical science and technology stocks).

In addition, a variety of countries, including emerging market countries, and industries are likely to be represented in the Trust’s portfolio.

The Trust generally will sell a stock when, in the Manager’s opinion, the stock is fully valued, there is a need to rebalance the portfolio or there is a better opportunity elsewhere.

The Trust may engage in active and frequent trading of portfolio securities to seek to achieve its investment objectives.

Under normal market conditions, the Trust invests at least 80% of its total assets in equity securities issued by U.S. and non-U.S. science and technology companies in any market capitalization range, selected for their rapid and sustainable growth potential from the development, advancement and use of science and/or technology (high growth science and technology stocks), and/or potential to generate current income from advantageous dividend yields (cyclical science and technology stocks).

Science and technology companies are companies whose products, processes or services, in the Manager’s view, are being, or are expected to be, significantly benefited by the use or commercial application of scientific or technological developments or discoveries. These companies include companies that, in the Manager’s view, derive a competitive advantage by the application of scientific or technological developments or discoveries to grow their business or increase their competitive advantage, as well as companies that utilize science and/or technology as an agent of change to significantly enhance their business opportunities.

Science, technology and science- or technology-related companies may include companies operating in any industry, including, but not limited to software, internet software & services, IT services, hardware, communications equipment, semiconductors and semiconductor equipment, media, internet retail, consumer finance, life sciences tools & services, biotechnology, pharmaceuticals, energy, defense/aerospace, diversified telecom services and wireless telecom services. Examples of potential high growth companies include those operating in IT services, the internet, software and sciences; examples of potential cyclical companies include those operating in hardware, telecom, semiconductors and components. The Manager determines, in its discretion, whether a company is a science, technology or science- or technology-related company.

The Trust may invest in companies of any market capitalization located anywhere in the world, including companies located in emerging markets. Equity securities in which the Trust may invest include common stocks, preferred stocks, convertible securities, warrants, depositary receipts, exchange-traded funds and equity interests in real estate investment trusts and master limited partnerships. From time to time, the Trust may invest in shares of companies through initial public offerings. The Trust may also invest, without limit, in privately placed or restricted securities (including in Rule 144A securities, which are privately placed securities purchased by qualified institutional buyers), illiquid securities and securities in which no secondary market is readily available, including those of private companies. Issuers of these securities may not have a class of securities registered, and may not be subject to periodic reporting, pursuant to the Securities Exchange Act of 1934, as amended. The Trust currently intends to invest up to 25% of its total assets, measured at the time of investment, in illiquid privately placed or restricted securities. Foreign securities in which the Trust may invest may be U.S. dollar-denominated or non-U.S. dollar-denominated.

The Trust may also invest in securities of other open- or closed-end investment companies, including exchange-traded funds and business development companies, subject to applicable regulatory limits, that invest primarily in securities of the types in which the Trust may invest directly. The Trust classifies its investments in such investment companies as “equity securities” for purposes of its investment policies based upon such investment companies’ stated investment objectives, policies and restrictions.

The Trust will concentrate its investments in companies operating in one or more industries within the technology group of industries.

The Trust may invest up to 20% of its total assets in equity securities issued by companies that are not science or technology companies and in debt securities issued by any issuer, including non-investment grade debt securities. The Trust’s investments in non-investment grade securities and those deemed to be of similar quality are considered speculative with respect to the issuer’s capacity to pay interest and repay principal and are commonly referred to as “junk” or “high yield” securities.

As part of its investment strategy, the Trust intends to employ a strategy of writing (selling) covered call options on a portion of the common stocks in its portfolio, writing (selling) other call and put options on individual common stocks, and, to a lesser extent, writing (selling) call and put index options. This options writing strategy is intended to generate current gains from options premiums and to enhance the Trust’s risk-adjusted returns. A substantial portion of the options written by the Trust may be over-the-counter options.

During temporary defensive periods (i.e., in response to adverse market, economic or political conditions), the Trust may invest up to 100% of its total assets in liquid, short-term investments, including high quality, short-term securities. The Trust may not achieve its investment objectives under these circumstances. The Manager’s

 

 

180  

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


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

determination that it is temporarily unable to follow the Trust’s investment strategy or that it is impractical to do so will generally occur only in situations in which a market disruption event has occurred and where trading in the securities selected through application of the Trust’s investment strategy is extremely limited or absent.

The Trust may invest in structured instruments (such as equity-linked notes) for investment purposes, as an alternative or complement to its options writing strategy or for risk management or leveraging purposes.

The Trust may purchase and sell futures contracts, enter into various interest rate transactions such as swaps, caps, floors or collars, currency transactions such as currency forward contracts, currency futures contracts, currency swaps or options on currency or currency futures and swap contracts (including, but not limited to, credit default swaps) and may purchase and sell exchange-listed and over-the-counter put and call options on securities and swap contracts, financial indices and futures contracts and use other derivative instruments or management techniques for duration management and other risk management purposes, including to attempt to protect against possible changes in the market value of the Trust’s portfolio resulting from trends in the securities markets and changes in interest rates or to protect the Trust’s unrealized gains in the value of its portfolio securities, to facilitate the sale of portfolio securities for investment purposes, to establish a position in the securities markets as a temporary substitute for purchasing particular securities or to enhance income or gain.

The Trust may lend securities with a value of up to 33 1/3% of its total assets (including such loans) to financial institutions that provide cash or securities issued or guaranteed by the U.S. Government as collateral.

The Trust may also engage in short sales of securities. The Trust will not make a short sale if, after giving effect to such sale, the market value of all securities sold short exceeds 25% of the value of its Managed Assets or the Trust’s aggregate short sales of a particular class of securities exceeds 25% of the outstanding securities of that class. The Trust may make short sales “against the box” without respect to such limitations. In this type of short sale, at the time of the sale the Trust owns or has the immediate and unconditional right to acquire at no additional cost the identical security. “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).

Unless otherwise stated herein, the Trust’s investment policies are non-fundamental policies and may be changed by the Board without prior shareholder approval. The percentage limitations applicable to the Trust’s portfolio described herein apply only at the time of initial investment and the Trust will not be required to sell investments due to subsequent changes in the value of investments that it owns. The Trust’s policy to invest at least 80% of its total assets in equity securities issued by U.S. and non-U.S. science and technology companies in any market capitalization range may be changed by the Board; however, if this policy changes, the Trust will provide shareholders at least 60 days’ written notice before implementation of the change in compliance with rules of the Securities and Exchange Commission.

Leverage: The Trust currently does not intend to borrow money or issue debt securities or preferred shares. Although it has no present intention to do so, the Trust reserves the right to borrow money from banks or other financial institutions, or issue debt securities or preferred shares, in the future if it believes that market conditions would be conducive to the successful implementation of a leveraging strategy through borrowing money or issuing debt securities or preferred shares.

The Trust may enter into reverse repurchase agreements with respect to its portfolio investments subject to certain investment restrictions.

The Trust may enter into “dollar roll” transactions.

The Trust may enter into derivative transactions that have economic leverage embedded in them.

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.

BlackRock Energy and Resources Trust (BGR)

The Trust’s investment objective is to provide total return through a combination of current income and capital appreciation. The Trust seeks to achieve this objective by investing primarily in equity securities of companies engaged in the energy and natural resources business and equity derivatives with exposure to the energy and natural resources industry.

Under normal market conditions, the Trust invests at least 80% of its total assets in equity securities of energy and natural resources companies and equity derivatives with exposure to the energy and natural resources industry. The Trust will not invest, under normal market conditions, less than 25% of its total assets in securities of energy and natural resources companies and equity derivatives with exposure to the energy and natural resources industry without shareholder approval. Companies in the energy and natural resources industry include those companies involved in the exploration, production or distribution of energy or natural resources, such as gas, oil, metals and minerals as well as related transportation companies and equipment manufacturers. These equity securities may include common stocks, preferred shares, convertible securities, warrants, depositary receipts, equity interests in Canadian Royalty Trusts and equity interests in master limited partnerships (“MLPs”). The Trust will not invest more than 25% of its total assets in MLPs. The Trust may invest in companies located anywhere in the world. The Trust expects to invest primarily in companies located in developed countries, but may invest in companies located in emerging markets. Under normal market conditions, the Trust will invest at least 30% of its total assets in at least two countries other than the United States. The Trust may invest in companies of any market capitalization, including small capitalization and mid-capitalization companies. The Trust does not intend to invest directly in commodities.

As part of its strategy, the Trust currently intends to employ an option strategy of writing (selling) covered call options on common stocks. The Trust seeks to produce current income and gains generated from option writing premiums. In addition to its covered call strategy the Trust may, to a lesser extent, pursue an option strategy that includes the sale (writing) of both put options and call options on certain of the common stocks in the Trust’s portfolio.

 

 

I N V E S T M E N T   O 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

  181


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

The Trust may invest up to 20% of its total assets in other U.S. and other non-U.S. investments. These investments may include equity and debt securities of companies not engaged in the energy and natural resources industry. The Trust reserves the right to invest up to 10% of its total assets in non-investment grade debt securities, commonly known as “junk bonds.”

In addition to the option strategies discussed above, the Trust may engage in transactions such as options, futures, swaps, foreign currency transactions including forward foreign currency contracts, currency swaps or options on currency and currency futures and other derivatives transactions for hedging purposes or to enhance total return. The Trust may also engage in short sales of securities.

The percentage limitations applicable to the Trust’s portfolio described herein apply only at the time of investment and the Trust will not be required to sell securities due to subsequent changes in the value of securities it owns.

Application of the Trust’s investment philosophy, from time to time, may cause the Trust to invest a significant portion of its assets in a particular country or region of the world. The Trust anticipates that its investment strategy will cause it to invest in a number of countries throughout the world, but the actual number of countries represented in the Trust’s portfolio will vary over time. The Trust anticipates that application of its investment philosophy currently would cause it to invest in issuers located in 10 countries globally, including the United States. Under normal market conditions, the Trust will invest in the equity securities of issuers in at least three different countries, including the United States, and will invest at least 30% of its total assets at the time of investment in the equity securities of non-United States issuers. However, the Trust may invest in the securities of non-United States issuers without limit.

Leverage: The Trust may, but does not currently intend to, incur indebtedness or issue preferred shares for investment purposes.

BlackRock Enhanced Capital and Income Fund, Inc. (CII)

The Trust’s investment objective is to provide current income and capital appreciation. The Trust’s investment objective is a fundamental policy and may not be changed without the approval of a majority of the outstanding voting securities of the Acquiring Fund (as defined in the Investment Company Act of 1940, as amended (the “1940 Act”).

The Trust seeks to achieve its investment objective by investing in a portfolio of equity securities of U.S. and foreign issuers. BlackRock Advisors, LLC (the “Manager”) from time to time may vary the percentage of the Trust’s assets invested in any particular type of equity security based on such factors as market and economic conditions, fiscal and monetary policy and the relative security valuation of the various equity asset classes.

The Trust also seeks to achieve its investment objective by employing a strategy of writing (selling) call and put options on indices of securities and sectors of securities. In addition to its option strategy on indices, the Trust may pursue a strategy that includes the writing (selling) of both call and put options on individual common stocks. These option strategies are intended to generate current gains from option premiums as a means to enhance distributions payable to the Trust’s stockholders. As the Trust writes calls and puts over more of its portfolio, its ability to benefit from capital appreciation becomes more limited.

To the extent the Trust invests in dividend-paying common stocks, the Manager currently intends to emphasize those securities that: (i) are eligible to pay “qualified dividend” income and/or (ii) make payments that are eligible for the dividends received deduction allowed to corporate taxpayers (“Dividends Received Deduction”) pursuant to Section 243 of the Internal Revenue Code of 1986, as amended (the “Code”). Long-term capital gains and qualified dividend income are currently eligible for reduced U.S. federal income tax rates for individuals. Long-term capital gains and qualified dividend income included in distributions of a regulated investment company (a “RIC”) to its individual stockholders are generally passed through to such stockholders and taxed at such reduced rates. Pursuant to Section 243 of the Code, corporations generally may deduct a portion of the dividend income they receive from domestic corporations. Corporate stockholders of a RIC generally are permitted to claim a deduction with respect to that portion of their dividend distributions attributable to amounts that the RIC designates as qualifying for the Dividends Received Deduction. Although the Trust has the ability to borrow money for investment purposes, it has no current intention to do so. If, however, the Trust did use leverage, the use of leverage through borrowings may reduce the amount of dividends it can designate as qualifying for the Dividends Received Deduction which will, in turn, limit the tax benefit to a corporate stockholder of investing in the Trust. Corporate stockholders should consider whether an investment in the Trust is appropriate in light of the Trust’s ability to borrow. No assurance can be given as to what percentage of the dividends paid on the Trust’s common stock will be eligible for: (i) the reduced U.S. federal income tax rate for qualified dividend income and long-term capital gains for individuals or (ii) the Dividends Received Deduction for corporate stockholders of the Trust.

Investment in the Trust’s common stock offers the individual investor several potential benefits. The Trust offers investors the opportunity to invest in a professionally managed portfolio which contains common stocks and preferred securities of U.S. and foreign issuers. The Manager provides professional management, which includes the extensive securities and credit analysis needed to invest in common stocks, preferred securities and foreign securities. The Trust also relieves the investor of the burdensome administrative details involved in managing a portfolio of such investments. These benefits are at least partially offset by the expenses involved in running an investment company. Such expenses primarily consist of advisory fees and operational costs. The use of leverage also involves certain expenses and risk considerations.

The Trust may engage in various portfolio strategies to seek to increase its return or to hedge its portfolio against movements in interest rates, in currency rates and in the securities markets through the use of derivatives, such as indexed and inverse securities, options, futures, options on futures, total return swaps, short selling and foreign exchange transactions. No assurance can be given that the Trust will employ these strategies or that, if employed, they will be effective.

The Trust may vary its investment objective and policies for temporary defensive purposes during periods in which the Manager believes that conditions in the securities markets or other economic, financial or political conditions warrant and in order to keep the Trust’s cash fully invested, including during the periods which the net proceeds of the offering are being invested. Under such conditions, the Trust may invest up to 100% of its total assets in securities issued or guaranteed by the United States government or its instrumentalities or agencies, certificates of deposit, bankers’ acceptances and other bank obligations, commercial paper rated in the highest category by an established rating service, or other debt securities deemed by the Manager to be consistent with a defensive posture, or may hold its assets in cash.

 

 

182  

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


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

Leverage: The Trust does not currently intend to, but may, leverage its portfolio through borrowings, the issuance of debt securities, the issuance of preferred stock or a combination thereof.

BlackRock Enhanced Equity Dividend Trust (BDJ)

The Trust’s primary investment objective is to provide current income and current gains, with a secondary objective of long-term capital appreciation. The Trust’s investment objectives are not fundamental and may be changed by the Board of Trustees without shareholder approval.

The Trust seeks to achieve its investment objectives by investing in common stocks that pay dividends and have the potential for capital appreciation and by utilizing an option writing strategy to enhance distributions to its shareholders. The Trust uses an option strategy that writes options on approximately 50-60% of its total assets.

Under normal market conditions, the Trust invests at least 80% of its total assets in dividend-paying equities and may invest up to 20% of its total assets in equity securities of issuers that do not pay dividends.

To the extent the Trust invests in dividend-paying common stocks, BlackRock Advisors, LLC (the “Manager”) may emphasize those securities that: (i) are eligible to pay “qualified dividend” income, and/or (ii) make payments that are eligible for the dividends received deduction allowed to corporate taxpayers pursuant to Section 243 of the Internal Revenue Code of 1986, as amended (the “Code”). Long-term capital gains and qualified dividend income are currently eligible for reduced U.S. federal income tax rates for individuals. Long-term capital gains and qualified dividend income properly reported as being included in distributions of a regulated investment company (a “RIC”) to its individual shareholders are generally passed through to such shareholders and taxed at such reduced rates. Pursuant to Section 243 of the Code, corporations generally may deduct a portion of the dividend income they receive from domestic corporations. Corporate shareholders of a RIC generally are permitted to claim a deduction with respect to that portion of their dividend distributions attributable to amounts that the RIC reports as qualifying for the dividends received deduction. Although the Trust has the ability to borrow money for investment purposes, it has no current intention to do so. If, however, the Trust did use leverage, the use of leverage through borrowings may reduce the amount of dividends it can designate as qualifying for the dividends received deduction which will, in turn, limit the tax benefit to a corporate shareholder of investing in the Trust. Corporate shareholders should consider whether an investment in the Trust is appropriate in light of the Trust’s ability to borrow. No assurance can be given as to what percentage of the dividends paid on the Trust’s common stock will be eligible for: (i) the reduced U.S. federal income tax rate for qualified dividend income and long-term capital gains for individuals, or (ii) the dividends received deduction for corporate shareholders of the Trust.

The Trust may invest up to 20% of its total assets in preferred securities.

The Trust may invest in shares of real estate investment trusts.

The Trust may invest up to 20% of its total assets in non-U.S. securities, which may include securities denominated in U.S. dollars or in foreign currencies or multinational currency units. The Trust may invest in foreign securities of emerging market issuers, but investments in such securities will not comprise more than 10% of its total assets. The Trust will consider a company a U.S. company and not a foreign company if it meets one or more of the following tests: (i) such company was organized in the United States; (ii) such company’s primary business office is in the United States; (iii) the principal trading market for such company’s assets are located in the United States; (iv) 50% or more of such company’s assets are located in the United States; or (v) 50% or more of such issuer’s revenues are derived from the United States.

The Trust may enter into forward currency contracts to purchase or sell foreign currencies for a fixed amount of U.S. dollars or another foreign currency.

The Trust may enter into are interest rate swaps and the purchase or sale of interest rate caps and floors. The Trust expects to enter into these transactions primarily to preserve a return or spread on a particular investment or portion of its portfolio as a duration management technique or to protect against any increase in the price of securities the Trust anticipates purchasing at a later date. The Trust intends to use these transactions for hedging and risk management purposes and not as a speculative investment. The Trust will not sell interest rate caps or floors that it does not own. The Trust will only enter into interest rate swap, cap or floor transactions with counterparties the Investment Advisor believes to be creditworthy at the time they enter into such transactions.

The Trust will not make a short sale if, after giving effect to such sale, the market value of all securities sold short exceeds 25% of the value of the Trust’s total assets or the Trust’s aggregate short sales of a particular class of securities exceeds 25% of the outstanding securities of that class. The Trust may also make short sales “against the box” without respect to such limitations.

Leverage: The Trust may also borrow funds for investment purposes and/or issue debt securities or preferred shares to purchase additional securities. These practices are known as “leverage.” The Trust may borrow from banks and other financial institutions and may also borrow additional funds using such investment techniques as the Manager may from time to time determine. The Trust may borrow in an amount up to 5% of its total assets for temporary or emergency purposes.

The Trust currently does not intend to incur indebtedness or issue preferred shares for investment purposes, except in connection with derivative instruments such as exchange listed and over-the-counter put and call options on securities, financial futures, equity indices, and other financial instruments, purchase and sell futures contracts and options thereon, swaps, forward foreign currency contracts and various interest rate transactions, short sales, repurchase agreements, reverse repurchase agreements, when issued or forward commitment transactions and similar investment strategies.

BlackRock Health Sciences Trust (BME)

The Trust’s investment objective is to provide total return through a combination of current income, current gains and long-term capital appreciation. The Trust seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its total assets in equity securities of companies engaged in the health sciences and related industries and equity derivatives with exposure to the health sciences industry. Equity derivatives in which the Trust invests as part of this non-fundamental investment policy include purchased and sold (written) call and put options on equity securities of companies in the health sciences and related industries.

 

 

I N V E S T M E N T   O 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

  183


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

The Trust’s investment objective may be changed by the Board of Trustees without prior shareholder approval; however, the Trust will not change its policy of investing, under normal market conditions, at least 80% of its total assets in equity securities of companies engaged in the health sciences and related industries and equity derivatives with exposure to the health sciences industry unless it provides shareholders with notice at least 60 days prior to changing this non-fundamental policy, or unless such change was previously approved by shareholders.

Companies in the health sciences industry include health care providers as well as businesses involved in researching, developing, producing, distributing or delivering medical, dental, optical, pharmaceutical or biotechnology products, supplies, equipment or services or that provide support services to these companies. These companies also include those that own or operate health facilities and hospitals or provide related administrative, management or financial support. Other health sciences industries in which the Trust may invest include: clinical testing laboratories; diagnostics; hospital, laboratory or physician ancillary products and support services; rehabilitation services; employer health insurance management services; and vendors of goods and services specifically to companies engaged in the health sciences. BlackRock Advisors, LLC (the “Manager”) determines, in its discretion, whether a company is engaged in the health sciences and related industries.

While the Trust will invest primarily in companies providing products and services for human health, it may also invest in companies whose products or services relate to the growth or survival of animals and plants. Non-human health sciences industries include companies engaged in the development, production or distribution of products or services that: increase crop, animal and animal product yields by enhancing growth or increasing disease resistance, improve agricultural product characteristics, such as taste, appearance, nutritional content and shelf life; reduce the cost of producing agricultural products; or improve pet health.

The Trust will consider a company to be principally engaged in a health sciences or related industry if 50% or more of its revenues are derived from, or 50% or more of its assets are related to, its health sciences business. Although the Trust generally will invest in companies included in the Russell 3000® Index, the Trust may invest in equity securities of health sciences companies with any size market capitalization, including small and mid-cap health sciences companies and companies that are not included in the Russell 3000® Index.

As part of its investment strategy, the Trust employs an option strategy of writing (selling) covered call options on common stocks in its portfolio, writing other call and put options on individual common stocks and, to a lesser extent, writing call and put options on indices of health sciences securities. The Trust seeks to generate current gains from options premiums and to enhance the Trust’s risk-adjusted returns. The Trust generally intends to write call and put options with respect to approximately 30% to 50% of its total assets, although this percentage may vary from time to time with market conditions.

The Trust invests primarily in equity securities, including common stocks, preferred stocks, convertible securities, warrants and depositary receipts, of issuers engaged in the health sciences or related industries and equity interests in real estate investment trusts (“REITs”) that own hospitals. The Trust may invest in companies of any size market capitalization.

The Trust may invest in preferred securities, including preferred securities that may be converted into common stock or other securities of the same or a different issuer. The types of preferred securities in which the Trust may invest include trust preferred securities.

The Trust may invest in convertible securities. A convertible security is a bond, debenture, note, preferred security or other security that may be converted into or exchanged for a prescribed amount of common stock or other equity security of the same or a different issuer within a particular period of time at a specified price or formula.

The Trust may purchase warrants, which are privileges issued by corporations enabling the owners to subscribe to and purchase a specified number of shares of the corporation at a specified price during a specified period of time.

The Trust may invest in sponsored and unsponsored American Depositary Receipts (“ADRs”), European Depositary Receipts (“EDRs”), Global Depositary Receipts (“GDRs”) and other similar global instruments.

The Trust may invest in equity interests of REITs. REITs possess certain risks which differ from an investment in common stocks. REITs are financial vehicles that pool investor’s capital to purchase or finance real estate. REITs may concentrate their investments in specific geographic areas or in specific property types (i.e., hotels, shopping malls, residential complexes and office buildings).

The Trust may invest without limitation in securities of U.S. issuers and non-U.S. issuers located in countries throughout the world, including in developed and emerging markets. Foreign securities in which the Trust may invest may be U.S. dollar-denominated or non-U.S. dollar-denominated. For purposes of the Trust, a company is deemed to be a non-U.S. company if it meets the following tests: (i) such company was not organized in the United States; (ii) such company’s primary business office is not in the United States; (iii) the principal trading market for such company’s securities is not located in the United States; (iv) less than 50% of such company’s assets are located in the United States; or (v) 50% or more of such issuer’s revenues are derived from outside the United States.

The Trust may invest up to 20% of its total assets in other investments. These investments may include equity and debt securities of companies not engaged in the health sciences industry. Fixed-income securities in which the Trust may invest include bonds or other debt securities issued by U.S. or foreign (non-U.S.) corporations or other business entities and U.S. Government and agency securities. The Trust has no set policy regarding portfolio maturity or duration of the fixed-income securities it may hold, and such securities may be of any maturity.

The Trust reserves the right to invest up to 10% of its total assets in securities rated, at the time of investment, below investment grade quality, such as those rated “Ba” or below by Moody’s Investors Service, Inc. and “BB” or below by S&P Global Ratings, or securities comparably rated by other rating agencies or in securities determined by the Manager to be of comparable quality. Such securities commonly are referred to as “high yield” or “junk” bonds.

The Trust may invest in registered investment companies in accordance with the Investment Company Act of 1940, as amended (the “1940 Act”). The 1940 Act generally prohibits the Trust from investing more than 5% of its assets in any one other investment company or more than 10% of its assets in all other investment companies.

 

 

184  

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


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

In addition to the option strategies discussed above, the Trust may engage in strategic transactions to facilitate portfolio management, mitigate risks and generate total return. The Trust may use a variety of other investment management techniques and instruments. The Trust may purchase and sell futures contracts, enter into various interest rate transactions such as swaps, caps, floors or collars, currency transactions such as currency forward contracts, currency futures contracts, currency swaps or options on currency or currency futures and swap contracts (including, but not limited to, credit default swaps) and may purchase and sell exchange-listed and over-the-counter put and call options on securities and swap contracts, financial indices and futures contracts and use other derivative instruments or management techniques. The Trust also may purchase derivative instruments that combine features of these instruments.

In connection with its hedging and other risk management strategies, the Trust may also enter into contracts for the purchase or sale for future delivery (“future contracts”) of securities, aggregates of securities, financial indices, and U.S. Government debt securities or options on the foregoing to hedge the value of its portfolio securities that might result from a change in interest rates or market movements. The Trust may engage in such transactions for bona fide hedging, risk management and other appropriate portfolio management purposes.

The Trust may enter into such transactions without limit for bona fide strategic purposes, including risk management and duration management and other portfolio strategies. The Trust may also engage in transactions in futures contracts or related options for non-strategic purposes to enhance income or gain provided that the Trust will not enter into a futures contract or related option (except for closing transactions) for purposes other than bona fide strategic purposes, or risk management including duration management unless it does so consistent with the rules of the Commodities Futures Trading Commission (the “CFTC”).

The Trust may engage in options and futures transactions on exchanges and options in the over-the-counter (“OTC”) markets.

The Trust intends to enter into options and futures transactions only with banks or dealers the Manager believes to be creditworthy at the time they enter into such transactions.

The CFTC subjects advisers to registered investment companies to regulation by the CFTC if a fund that is advised by the investment adviser either (i) invests, directly or indirectly, more than a prescribed level of its liquidation value in CFTC-regulated futures, options and swaps (“CFTC Derivatives”), or (ii) markets itself as providing investment exposure to such instruments. To the extent the Trust uses CFTC Derivatives, it intends to do so below such prescribed levels and will not market itself as a “commodity pool” or a vehicle for trading such instruments. Accordingly, the Manager has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act (“CEA”) pursuant to Rule 4.5 under the CEA. The Manager is not, therefore, subject to registration or regulation as a “commodity pool operator” under the CEA in respect of the Trust.

In order to enhance income or reduce fluctuations in net asset value, the Trust may sell or purchase call options on securities and indices based upon the prices of futures contracts and debt or equity securities that are traded on U.S. and non-U.S. securities exchanges and on the over-the-counter markets.

As with calls, the Trust may purchase put options on securities (whether or not it holds such securities in its portfolio), indices or future contracts. For the same purposes, the Trust may also sell puts on securities, indices or futures contracts on such securities if the Trust’s contingent obligations on such puts are secured by designating cash or liquid assets on its books and records having a value not less than the exercise price. The Trust will not sell puts if, as a result, more than 50% of the Trust’s assets would be required to be segregated on its books to cover its potential obligation under its hedging and other investment transactions.

The Trust may enter into interest rate swaps and the purchase or sale of interest rate caps and floors. The Trust expects to enter into these transactions primarily to preserve a return or spread on a particular investment or portion of its portfolio as a duration management technique or to protect against any increase in the price of securities the Trust anticipates purchasing at a later date. The Trust may enter into interest rate swaps, caps and floors on either an asset-based or liability-based basis.

The Trust intends to use these transactions for risk management purposes and not as a speculative investment. The Trust will not sell interest rate caps or floors that it does not own. The Trust will only enter into interest rate swap, cap or floor transactions with counterparties the Manager believes to be creditworthy at the time they enter into such transactions.

The Trust may engage in credit derivative transactions. There are two broad categories of credit derivatives: default price risk derivatives and market spread derivatives. Default price risk derivatives are linked to the price of reference securities or loans after a default by the issuer or borrower, respectively. Market spread derivatives are based on the risk that changes in market factors, such as credit spreads, can cause a decline in the value of a security, loan or index. There are three basic transactional forms for credit derivatives: swaps, options and structured instruments.

The Trust may enter into forward currency contracts to purchase or sell foreign currencies for a fixed amount of U.S. dollars or another foreign currency. A forward currency contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days (term) from the date of the forward currency contract agreed upon by the parties, at a price set at the time the forward currency contract is entered into. Forward currency contracts are traded directly between currency traders (usually large commercial banks) and their customers.

The Trust may make short sales of securities for risk management, in order to maintain portfolio flexibility or to enhance income or gain. The Trust will not make a short sale if, after giving effect to such sale, the market value of all securities sold short exceeds 25% of the value of its total assets or the Trust’s aggregate short sales of a particular class of securities exceeds 25% of the outstanding securities of that class. The Trust may also make short sales “against the box” without respect to such limitations. In this type of short sale, at the time of the sale, the Trust owns or has the immediate and unconditional right to acquire at no additional cost the identical security.

The Trust may invest in illiquid investments. Illiquid investments are subject to legal or contractual restrictions on disposition or lack an established secondary market. The sale of restricted and illiquid investments often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than does the sale of investments eligible for trading on national securities exchanges or in the over-the-counter markets. Restricted investments may sell at a price lower than similar investments that are not subject to restrictions on resale.

 

 

I N V E S T M E N T   O 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

  185


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

The Trust may purchase securities on a “when-issued” basis and may purchase or sell securities on a “forward commitment” basis in order to acquire the security or to hedge against anticipated changes in interest rates and prices. When-issued securities and forward commitments may be sold prior to the settlement date, but the Trust will enter into when-issued and forward commitments only with the intention of actually receiving or delivering the securities, as the case may be.

The Trust may lend securities with a value up to 33 1/3% of its total assets (including such loans) to banks, brokers and other financial institutions.

As temporary investments, the Trust may invest in repurchase agreements. The Trust will only enter into repurchase agreements with registered securities dealers or domestic banks that, in the opinion of the Manager, present minimal credit risk.

The Trust may deviate from its investment strategy and invest all or any portion of its assets in cash, cash equivalents or short-term debt securities when the Manager determines that it is temporarily unable to follow the Trust’s investment strategy or that it is impractical to do so or pending re-investment of proceeds received in connection with the sale of a security. The Trust may not achieve its investment objective when it does so. The Manager’s determination that it is temporarily unable to follow the Trust’s investment strategy or that it is impractical to do so will generally occur only in situations in which a market disruption event has occurred and where trading in the securities selected through application of the Trust’s investment strategy is extremely limited or absent. Short-term debt investments include U.S. Government securities, including bills, notes and bonds differing as to maturity and rates of interest that are either issued or guaranteed by the U.S. Treasury or by U.S. Government agencies or instrumentalities, certificates of deposit issued against funds deposited in a bank or a savings and loan association, repurchase agreements, which involve purchases of debt securities, and commercial paper, which consists of short-term unsecured promissory notes, including variable rate master demand notes issued by corporations to finance their current operations. Investments in commercial paper will be limited to commercial paper rated in the highest categories by a major rating agency and which mature within one year of the date of purchase or carry a variable or floating rate of interest.

Leverage: The Trust does not currently borrow money for investment purposes or have preferred shares outstanding, and has no present intention of borrowing money for investment purposes or issuing preferred shares in the future.

The Trust may enter into derivative transactions that have economic leverage embedded in them.

The Trust may enter into reverse repurchase agreements and “dollar roll” transactions.

BlackRock Enhanced International Dividend Trust (BGY)

The Trust’s primary investment objective is to seek current income and current gains, with a secondary objective of long-term capital appreciation. “Current gains” means gains realized from the Trust’s option strategy (described below) pursuant to which the Trust seeks to enhance monthly distributions to investors. The Trust’s investment objectives may be changed without shareholder approval.

The Trust seeks to achieve its objectives by investing primarily in equity securities issued by companies of any market capitalization located in countries throughout the world and utilizing an option writing (selling) strategy to enhance current gains. Under normal circumstances, the Trust invests at least 80% of its net assets in dividend-paying equity securities issued by non-U.S. companies of any market capitalization, but intends to invest primarily in securities of large capitalization companies. The Trust may invest up to 20% of its total assets in equity securities of issuers located in the United States. The Trust may invest up to 50% of its total assets in equity securities of issuers located in emerging market countries. Emerging market countries generally include every nation in the world except the United States, Canada, Japan, Australia, New Zealand and most countries in Western Europe. Equity securities in which the Trust anticipates investing include common stocks, preferred stocks, convertible securities, warrants, depositary receipts and equity interests in real estate investment trusts.

Under normal circumstances, the Trust anticipates it will allocate a substantial amount (approximately 40% or more — unless market conditions are not deemed favorable by BlackRock Advisors, LLC (the “Manager”) or BlackRock International Limited (“BIL” and together with the Manager, the “Advisors”), the Trust’s sub-advisor, in which case the Trust would invest at least 30%) — of its total assets in securities of (i) foreign government issuers, (ii) issuers organized or located outside the U.S., (iii) issuers which primarily trade in a market located outside the U.S., or (iv) issuers doing a substantial amount of business outside the U.S., which the Trust considers to be companies that derive at least 50% of their revenue or profits from business outside the U.S. or have at least 50% of their sales or assets outside the U.S. The Trust will allocate its assets among various regions and countries, including the United States (but in no less than three different countries). For temporary defensive purposes, the Trust may deviate very substantially from the allocation described above.

The Trust seeks to generate current dividends and income by investing in equity securities that pay dividends. The Trust will seek income a portion of which is classified as “qualified dividend income,” which is dividend income that is eligible to be taxed at a maximum U.S. federal income tax rate of generally 20%. The lower U.S. federal tax rates generally apply to dividend income from taxable domestic corporations and certain qualified foreign corporations, provided that holding period and other requirements are met by both the Trust and the shareholder.

As part of its investment strategy, the Trust intends to write (sell) covered call and put options on individual common stocks, stock indices and stock sectors. The Trust may utilize over-the-counter options to a significant extent in order to employ its option strategy. This option strategy is intended to generate current gains from option premiums as a means to enhance distributions payable to the Trust’s shareholders. As the Trust writes covered calls over more of its portfolio, its ability to benefit from capital appreciation becomes more limited.

A call option written by the Trust on a security is “covered” if the Trust owns the security underlying the call or has an absolute and immediate right to acquire that security without additional cash consideration (or, if additional cash consideration is required, the Trust’s custodian segregates sufficient cash or other assets determined to be liquid by the Advisors (in accordance with procedures established by the Board of Trustees (the “Board”))) upon conversion or exchange of other securities held by the Trust. A call option is also covered if the Trust holds a call on the same security as the call written where the exercise price of the call held is (i) equal to or less than the exercise price of

 

 

186  

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


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

the call written or (ii) greater than the exercise price of the call written, provided the difference is maintained by the Trust in segregated assets determined to be liquid by the Advisors as described above.

A put option written by the Trust on a security is “covered” if the Trust segregates assets determined to be liquid by the Advisors (in accordance with procedures established by the Board) equal to the exercise price. A put option is also covered if the Trust holds a put on the same security as the put written where the exercise price of the put held is (i) equal to or greater than the exercise price of the put written or (ii) less than the exercise price of the put written, provided the difference is maintained by the Trust in segregated assets determined to be liquid by the Advisors as described above.

An index- or sector-oriented option is considered “covered” if the Trust maintains with its custodian assets determined to be liquid in an amount equal to the contract value of the applicable basket of securities. An index or sector call option also is covered if the Trust holds a call on the same basket of securities as the call written where the exercise price of the call held is (i) equal to or less than the exercise price of the call written or (ii) greater than the exercise price of the call written, provided the difference is maintained by the Trust in segregated assets determined to be liquid. An index or sector put option also is covered if the Trust holds a put on the same basket of securities as the put written where the exercise price of the put held is (i) equal to or more than the exercise price of the put written or (ii) less than the exercise price of the put written, provided the difference is maintained by the Trust in segregated assets determined to be liquid. Because index and sector options both refer to options on baskets of securities and generally have similar characteristics, we refer to these types of options collectively as “index options.”

The Trust generally intends to write covered put and call options with respect to approximately 30% to 45% of its total assets, although this percentage may vary from time to time with market conditions. As the Trust writes covered calls over more of its portfolio, its ability to benefit from capital appreciation becomes more limited.

The Trust may hold or have exposure to equity securities of issuers of any size, including small and medium capitalization companies, and to issuers in any industry or sector. The Trust will not invest 25% or more of its total assets in securities of issuers in any single industry.

The Trust may invest in the securities of smaller, less seasoned companies. The Trust also may engage in short sales of securities and may lend its portfolio securities to banks or dealers which meet the creditworthiness standards established by the Board.

Although not intended to be a significant element in the Trust’s investment strategy, from time to time the Trust may purchase and sell derivative instruments such as exchange-listed and over-the-counter put and call options on securities, financial futures, equity indices and other financial instruments, purchase and sell financial futures contracts and options thereon, engage in swaps and purchase derivative instruments that combine features of these instruments for hedging and risk management purposes or to enhance total return. The percentage limitations set herein apply at the time of investment, and the Trust will not be required to sell securities because of subsequent changes in market values.

Leverage: Although the Agreement and Declaration of Trust of the Trust provides that the Board of the Trust may authorize the Trust to issue preferred shares or incur indebtedness, the Trust currently does not intend to issue preferred shares or incur indebtedness for investment purposes.

BlackRock Resources & Commodities Strategy Trust (BCX)

The Trust’s primary investment objective is to seek high current income and current gains, with a secondary objective of capital appreciation. The Trust will seek to achieve its objectives by investing substantially all of its assets in equity securities issued by commodity or natural resources companies, derivatives with exposure to commodity or natural resources companies or investments in securities and derivatives linked to the underlying price movement of commodities or natural resources, including commodity-linked derivatives such as commodity-linked notes, commodity futures, forward contracts and swaps and other similar derivative instruments and investment vehicles that invest in commodities, natural resources or commodity-linked derivatives. The Trust’s investment objectives are not fundamental and may be changed by the Board of Trustees of the Trust (the “Board”).

The Trust will seek to achieve its investment objectives, under normal market conditions, by investing at least 80% of its total assets in equity securities issued by commodity or natural resources companies, derivatives with exposure to commodity or natural resources companies or investments in securities and derivatives linked to the underlying price movement of commodities or natural resources, including commodity-linked derivatives such as commodity-linked notes, commodity futures, forward contracts and swaps and other similar derivative instruments and investment vehicles that invest in commodities, natural resources or commodity-linked derivatives. Commodities and natural resources include, without limitation, minerals, metals (including precious, industrial and rare metals), steel, agricultural products and commodities, livestock, environmental commodities, wool, ethanol, chemicals, forest products (including wood, pulp and paper), plastic, rubber, sugar, cotton, cocoa, coffee, basic materials, building materials, water, oil, gas, consumable fuel, energy and other natural resources. Commodity and natural resources companies, include, but are not limited to, companies in commodities, natural resources and energy businesses and in associated businesses and companies that provide services or have exposure to such businesses (collectively, the “Commodities and Natural Resources Sector”). These companies include, without limitation, companies engaged in the exploration, ownership, production, refinement, processing, transportation, distribution or marketing of commodities or natural resources, companies that use commodities and natural resources extensively in their products, including companies that are engaged in businesses such as integrated oil, oil and gas exploration and production, gold, metals and minerals, steel and iron ore production, aluminum and related products, energy services, and technology, metal production, forest products, including timber and related wood and paper products, chemicals, fertilizer and agricultural chemicals, building materials, coal and other consumable fuel, alternative energy sources, environmental services and agricultural products (including crop growers, owners of plantations, and companies that produce and process foods), as well as related transportation companies and equipment manufacturers. The Trust will consider a company to be a commodity or natural resources company if: (i) at least 50% of the company’s assets, income, sales or profits are committed to or derived from the Commodities and Natural Resources Sector; or (ii) a third party classification (such as (a) Standard Industry Classifications and the North American Industry Classification System, each of which is published by the Executive Office of the President, Office of Management and Budget and (b) classifications used by third party data providers including, without limitation, FactSet Research Systems Inc. and MSCI Barra), has given the company an industry or sector classification consistent with the Commodities and Natural Resources Sector.

 

 

I N V E S T M E N T   O 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

  187


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

Equity securities held by the Trust may include common stocks, preferred stocks, convertible securities, warrants, depositary receipts, equity interests in Canadian Royalty Trusts, and equity interests in master limited partnerships (“MLPs”). The Trust will not invest more than 25% of the value of its total assets in MLPs. The Trust’s economic exposure to securities and derivatives linked to the underlying price movements of commodities or natural resources, including commodity-linked derivatives such as commodity-linked notes, commodity futures, forward contracts and swaps and other similar derivative instruments and investment vehicles that invest in commodities, natural resources or commodity-linked derivatives (“Commodity-Related Instruments”) will not exceed 20% of its total assets. Commodity-Related Instruments may include, but will not be limited to, investments in structured notes, partnership interests, exchange-traded funds that make commodity-related or natural resources-related investments, mutual funds and strategic transactions, including futures contracts on commodities and natural resources, forward contracts on commodities and natural resources and swap contracts on commodities and natural resources.

The Trust may invest in such Commodity-Related Instruments either directly or indirectly through the BlackRock Cayman Resources & Commodities Strategy Fund, Ltd., a wholly-owned subsidiary of the Trust formed in the Cayman Islands (the “Subsidiary”). Investments in the Subsidiary are intended to provide the Trust with exposure to commodities market returns within the limitations of the federal tax requirements that apply to the Trust. The Trust may gain exposure to certain Commodity-Related Instruments and certain other commodity-related and natural resources-related investments that, if the Trust invested in such investments directly, would not produce qualifying income for purposes of the income tests applicable to regulated investment companies under the Internal Revenue Code of 1986, as amended, by investing in the Subsidiary. The Manager is the manager of the Subsidiary. The Subsidiary (unlike the Trust) may invest without limitation in commodity-related instruments.

The Subsidiary will be managed pursuant to compliance policies and procedures that are the same, in all material respects, as the policies and procedures adopted by the Trust. As a result, the Manager, in managing the Subsidiary’s portfolio, will be subject to the same investment policies and restrictions that apply to the management of the Trust, and, in particular, to the requirements relating to portfolio leverage, liquidity, brokerage, and the timing and method of the valuation of the Subsidiary’s portfolio investments and shares of the Subsidiary. The Trust’s Chief Compliance Officer will oversee implementation of the Subsidiary’s policies and procedures, and make periodic reports to the Board regarding the Subsidiary’s compliance with its policies and procedures. The Trust and Subsidiary will test for compliance with certain investment restrictions on a consolidated basis, except that with respect to the Subsidiary’s investments in certain securities that may involve leverage, the Subsidiary will comply with asset segregation requirements to the same extent as the Trust.

The Manager will provide investment management and other services to the Subsidiary pursuant to the investment management agreement among the Manager, the Trust and the Subsidiary. The Trust and the Subsidiary will pay the Manager based on the Trust’s assets (excluding the value of the Trust’s interest in the Subsidiary) and the Subsidiary’s assets, respectively. The Subsidiary has also entered into separate contracts for the provision of custody and audit services with the same or with affiliates of the same service providers that provide those services to the Trust. The financial statements of the Subsidiary are consolidated with the Trust’s financial statements in the Trust’s annul and semi-annual reports.

Although the Trust is permitted to invest up to 20% of its total assets in Commodity-Related Instruments, the Trust is not required to invest in Commodity-Related Instruments and does not currently expect to invest in securities and derivatives linked to the underlying price movement of commodities or natural resources. The Trust may invest in Commodity-Related Instruments (either directly or through the Subsidiary) when BlackRock Advisors, LLC (the “Manager”) or BlackRock International Limited (“BIL” and together with the Manager, the “Advisors”), the Trust’s sub-advisor, believes it is advantageous for the Trust to do so.

While permitted, the Trust does not currently expect to invest in securities and derivatives linked to the underlying price movement of commodities or natural resources; therefore, the Trust does not currently intend to invest any assets in the Subsidiary.

The Commodity Futures Trading Commission (the “CFTC”) subjects advisers to registered investment companies to regulation by the CFTC if a fund that is advised by the investment adviser either (i) invests directly or indirectly more than a prescribed level of its liquidation value in CFTC-regulated futures, options and swaps (“CFTC Derivatives”), or (ii) markets itself as providing investment exposure to such instruments. To the extent the Trust uses CFTC Derivatives, it intends to do so below such prescribed levels and will not market itself as a “commodity pool” or a vehicle for trading such instruments. Accordingly, the Manager has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act (“CEA”) pursuant to Rule 4.5 under the CEA. The Manager is not, therefore, subject to registration or regulation as a “commodity pool operator” under the CEA in respect of the Trust.

The Trust may invest in companies of any market capitalization located anywhere in the world. The Trust expects to invest primarily in companies located in developed countries, but may invest in companies located in emerging markets.

The Trust may invest up to 20% of its total assets in debt securities issued by companies in the Commodities and Natural Resources Sector or any type of securities issued by companies that are not in the Commodities and Natural Resources Sector.

As part of its investment strategy, the Trust may employ a strategy of writing (selling) covered call options on a portion of the common stocks in its portfolio, writing (selling) covered put options and, to a lesser extent, writing (selling) covered call and put options on indices of securities and sectors of securities. This option strategy is intended to generate current gains from option premiums as a means to enhance distributions payable to the Trust’s shareholders.

In addition to the option strategies discussed above, the Trust may engage in strategic transactions for hedging purposes or to enhance total return. The Trust may also engage in short sales of securities.

The Trust may lend securities with a value up to 33 1/3% of its total assets (including such loans) to financial institutions that provide cash or securities issued or guaranteed by the U.S. Government as collateral.

The Trust may implement various temporary “defensive” strategies at times when the Advisors determine that conditions in the markets make 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 short-term debt securities that may be either tax-exempt or taxable.

 

 

188  

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


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

Under current market conditions, the Trust currently does not intend to engage in short sales or incur indebtedness or issue preferred shares for investment purposes, except the Trust may engage for hedging purposes, risk management, or to enhance total return, including engaging in transactions, such as options, futures, swaps, foreign currency transactions, such as forward foreign currency contracts, currency swaps or options on currency and currency futures and other derivatives transactions , repurchase agreements, reverse repurchase agreements, when issued or forward commitment transactions and similar investment strategies, which may give rise to a form of leverage.

Unless otherwise stated herein, the Trust’s investment objectives and investment policies are non-fundamental policies and may be changed by the Board. In addition, the percentage limitations applicable to the Trust’s portfolio described herein apply only at the time of investment, and the Trust will not be required to sell investments due to subsequent changes in the value of investments that it owns.

BlackRock Utilities, Infrastructure & Power Opportunities Trust (BUI)

The Trust’s investment objective is to provide total return through a combination of current income, current gains and long-term capital appreciation. The Trust’s investment objective may be changed by the Board of Trustees of the Trust (the “Board”) without prior shareholder approval.

The Trust seeks to achieve its investment objective by investing primarily in equity securities issued by companies that are engaged in the Utilities, Infrastructure or Power Opportunities business segments (as defined below) anywhere in the world and by employing a strategy of writing (selling) covered call and put options.

Under normal market conditions, the Trust will invest at least 80% of its total assets in equity securities issued by companies that are engaged in the Utilities, Infrastructure or Power Opportunities business segments. The Trust considers the “Utilities” business segment to include products, technologies and services connected to the management, ownership operation, construction, development or financing of facilities used to generate, transmit or distribute electricity, water, natural resources or telecommunications, the “Infrastructure” business segment to include companies that own or operate infrastructure assets or that are involved in the development, construction, distribution or financing of infrastructure assets (as described herein), and the “Power Opportunities” business segment to include companies with a significant involvement in, supporting, or necessary to renewable energy technology and development, alternative fuels, energy efficiency, automotive and sustainable mobility and technologies that enable or support the growth and adoption of new power and energy sources. Such companies may include, among others, electrical equipment producers (such as wind turbine manufacturers), producers of industrial and specialty chemicals (such as building insulation producers) and semi-conductor and equipment companies (such as solar panel manufacturers).

The Trust may invest in companies of any market capitalization. Under normal circumstances, the Trust invests a substantial amount of its total assets in foreign issuers, issuers that primarily trade in a market located outside the United States or issuers that do a substantial amount of business outside the United States. Although the Trust expects to invest primarily in companies located in developed countries, it may invest in companies located in emerging markets. Equity securities in which the Trust may invest include common stocks, preferred stocks, convertible securities, warrants, depositary receipts, exchange-traded funds, equity interests in real estate investment trusts, Canadian Royalty Trusts and master limited partnerships (“MLPs”). The Trust will not invest more than 25% of the value of its total assets in MLPs. The Trust may invest directly in equity securities or synthetically through the use of derivatives.

The Trust may invest up to 20% of its total assets in equity securities issued by companies that are not engaged in the Utilities, Infrastructure or Power Opportunities business segments and debt securities issued by any issuer, including up to 10% of its total assets in non-investment grade debt securities. The Trust’s investments in non-investment grade securities and those deemed to be of similar quality are considered speculative with respect to the issuer’s capacity to pay interest and repay principal and are commonly referred to as “junk” or “high yield” securities.

As part of its investment strategy, the Trust intends to employ a strategy of writing (selling) covered call options on a portion of the common stocks in its portfolio, writing (selling) other call and put options on individual common stocks, and, to a lesser extent, writing (selling) call and put index options. This options writing strategy is intended to generate current gains from options premiums and to enhance the Trust’s risk-adjusted returns. A substantial portion of the options written by the Trust may be over-the-counter options.

During temporary defensive periods (i.e., in response to adverse market, economic or political conditions), the Trust may invest up to 100% of its total assets in liquid, short-term investments, including high quality, short-term securities. The Trust may not achieve its investment objective under these circumstances. BlackRock Advisors, LLC’s (the “Manager”) and BlackRock International Limited’s (“BIL” and together with the Manager, the “Advisors”), the Trust’s sub-advisor, determination that they are temporarily unable to follow the Trust’s investment strategy or that it is impractical to do so will generally occur only in situations in which a market disruption event has occurred and where trading in the securities selected through application of the Trust’s investment strategy is extremely limited or absent.

The Trust may purchase and sell futures contracts, enter into various interest rate transactions such as swaps, caps, floors or collars, currency transactions such as currency forward contracts, currency futures contracts, currency swaps or options on currency or currency futures and swap contracts (including, but not limited to, credit default swaps) and may purchase and sell exchange-listed and over-the-counter put and call options on securities and swap contracts, financial indices and futures contracts and use other derivative instruments or management techniques for duration management and other risk management purposes, including to attempt to protect against possible changes in the market value of the Trust’s portfolio resulting from trends in the securities markets and changes in interest rates or to protect the Trust’s unrealized gains in the value of its portfolio securities, to facilitate the sale of portfolio securities for investment purposes, to establish a position in the securities markets as a temporary substitute for purchasing particular securities or to enhance income or gain.

The Trust may lend securities with a value up to 33 1/3% of its total assets (including such loans) to financial institutions that provide cash or securities issued or guaranteed by the U.S. Government as collateral.

The Trust may also engage in short sales of securities. The Trust will not make a short sale if, after giving effect to such sale, the market value of all securities sold short exceeds 15% of the value of its total assets or the Trust’s aggregate short sales of a particular class of securities exceeds 15% of the outstanding securities of that class. The Trust may make short sales “against the box” without respect to such limitations. In this type of short sale, at the time of the sale the Trust owns or has the immediate and unconditional right to acquire at no additional cost the identical security.

 

 

I N V E S T M E N T   O 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

  189


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

Unless otherwise stated herein, the Trust’s investment objective and policies are non-fundamental policies and may be changed by the Board without prior shareholder approval. The Trust’s policy to invest at least 80% of its total assets in equity securities issued by companies that are engaged in the Utilities, Infrastructure and Power Opportunities business segments may be changed by the Board; however, if this policy changes, the Trust will provide shareholders at least 60 days’ written notice before implementation of the change in compliance with rules of the Securities and Exchange Commission.

Leverage: The Trust currently does not intend to borrow money or issue debt securities or preferred shares. Although it has no present intention to do so, the Trust reserves the right to borrow money from banks or other financial institutions, or issue debt securities or preferred shares, in the future if it believes that market conditions would be conducive to the successful implementation of a leveraging strategy through borrowing money or issuing debt securities or preferred shares. Any such leveraging will not be fully achieved until the proceeds resulting from the use of leverage have been invested in accordance with the Trust’s investment objective and policies.

The Trust may enter into reverse repurchase agreements with respect to its portfolio investments subject to certain investment restrictions.

The Trust may enter into derivative transactions that have economic leverage embedded in them.

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.

BlackRock Science & Technology Trust II (BSTZ)

The Trust’s investment objectives are to provide total return and income through a combination of current income, current gains and long-term capital appreciation. The Trust’s investment objectives may be changed by the Board of Trustees of the Trust (the “Board”) without prior shareholder approval.

BlackRock Advisors, LLC (the “Manager”) may consider a variety of factors when choosing investments for the Trust, but expects to select companies with the potential for rapid and sustainable growth from the development, advancement and use of science and/or technology.

In addition, a variety of countries, including emerging market countries, and industries are likely to be represented in the Trust’s portfolio.

The Trust generally will sell a stock when, in the Manager’s opinion, the stock is fully valued, there is a need to rebalance the portfolio or there is a better opportunity elsewhere.

The Trust may engage in active and frequent trading of portfolio securities to seek to achieve its investment objectives.

Under normal market conditions, the Trust will invest at least 80% of its total assets in equity securities issued by U.S. and non-U.S. science and technology companies in any market capitalization range, selected for their rapid and sustainable growth potential from the development, advancement and use of science and/or technology.

Science and technology companies are companies whose products, processes or services, in the Manager’s view, are being, or are expected to be, significantly benefited by the use or commercial application of scientific or technological developments or discoveries. These companies include companies that, in the Manager’s view, derive a competitive advantage by the application of scientific or technological developments or discoveries to grow their business or increase their competitive advantage, as well as companies that utilize science and/or technology as an agent of change to significantly enhance their business opportunities.

Science, technology and science- or technology-related companies may include companies operating in any industry, including, but not limited to software, internet software & services, IT services, hardware, communications equipment, semiconductors and semiconductor equipment, media, internet retail, consumer finance, life sciences tools & services, biotechnology, pharmaceuticals, energy, defense/aerospace, diversified telecom services and wireless telecom services. It is anticipated that the Trust’s investments will be focused on companies within such industries that the Manager expects will generate a majority of their revenues from the development, advancement, use or sale of new and emerging, or “next generation,” science- or technology-related products, processes or services. There is no assurance, however, that any of the Trust’s assets will be invested in such companies at any time. The Manager determines, in its discretion, whether a company is a science, technology or science- or technology-related company.

The Trust may invest in companies of any market capitalization located anywhere in the world, including companies located in emerging markets. Equity securities in which the Trust may invest include common stocks, preferred stocks, convertible securities, warrants, depositary receipts, exchange-traded funds (“ETFs”) and equity interests in real estate investment trusts (“REITs”) and master limited partnerships. The Trust may invest in shares of companies through initial public offerings (“IPOs”). The Trust may also invest, without limit, in privately placed or restricted securities (including in Rule 144A securities, which are privately placed securities purchased by qualified institutional buyers), illiquid securities and securities in which no secondary market is readily available, including those of private companies. Issuers of these securities may not have a class of securities registered, and may not be subject to periodic reporting, pursuant to the Securities Exchange Act of 1934, as amended. Under normal market conditions, the Trust currently intends to invest up to 25% of its total assets, measured at the time of investment, in illiquid privately placed or restricted securities. The Trust expects certain of such investments to be in “pre-IPO securities,” which are securities of new and early stage companies, often funded by venture capital, whose securities have not been offered to the public and are not publicly traded. Foreign securities in which the Trust may invest may be U.S. dollar-denominated or non-U.S. dollar-denominated.

The Trust may also invest in securities of other open- or closed-end investment companies, including ETFs and business development companies, subject to applicable regulatory limits, that invest primarily in securities of the types in which the Trust may invest directly. The Trust classifies its investments in such investment companies as “equity securities” for purposes of its investment policies based upon such investment companies’ stated investment objectives, policies and restrictions.

The Trust will concentrate its investments in companies operating in one or more industries within the technology group of industries.

The Trust may invest up to 20% of its total assets in equity securities issued by companies that are not science or technology companies and in debt securities issued by any issuer, including non-investment grade debt securities. The Trust’s investments in non-investment grade securities and those deemed to be of similar quality are considered speculative with respect to the issuer’s capacity to pay interest and repay principal and are commonly referred to as “junk” or “high yield” securities.

 

 

190  

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


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

As part of its investment strategy, the Trust intends to employ a strategy of writing (selling) covered call options on a portion of the common stocks in its portfolio, writing (selling) other call and put options on individual common stocks, and, to a lesser extent, writing (selling) call and put index options. This options writing strategy is intended to generate current gains from options premiums and to enhance the Trust’s risk-adjusted returns. A substantial portion of the options written by the Trust may be over-the-counter options.

During temporary defensive periods (i.e., in response to adverse market, economic or political conditions), the Trust may invest up to 100% of its total assets in liquid, short-term investments, including high quality, short-term securities. The Trust may not achieve its investment objectives under these circumstances. The Manager’s determination that it is temporarily unable to follow the Trust’s investment strategy or that it is impractical to do so will generally occur only in situations in which a market disruption event has occurred and where trading in the securities selected through application of the Trust’s investment strategy is extremely limited or absent.

The Trust may invest in structured instruments (such as equity-linked notes) for investment purposes, as an alternative or complement to its options writing strategy or for risk management or leveraging purposes.

The Trust may purchase and sell futures contracts, enter into various interest rate transactions such as swaps, caps, floors or collars, currency transactions such as currency forward contracts, currency futures contracts, currency swaps or options on currency or currency futures and swap contracts (including, but not limited to, credit default swaps) and may purchase and sell exchange-listed and over-the-counter put and call options on securities and swap contracts, financial indices and futures contracts and use other derivative instruments or management techniques for duration management and other risk management purposes, including to attempt to protect against possible changes in the market value of the Trust’s portfolio resulting from trends in the securities markets and changes in interest rates or to protect the Trust’s unrealized gains in the value of its portfolio securities, to facilitate the sale of portfolio securities for investment purposes, to establish a position in the securities markets as a temporary substitute for purchasing particular securities or to enhance income or gain.

The Trust may lend securities with a value of up to 33 1/3% of its total assets (including such loans) to financial institutions that provide cash or securities issued or guaranteed by the U.S. Government as collateral.

The Trust may also engage in short sales of securities. The Trust will not make a short sale if, after giving effect to such sale, the market value of all securities sold short exceeds 25% of the value of its Managed Assets or the Trust’s aggregate short sales of a particular class of securities exceeds 25% of the outstanding securities of that class. The Trust may make short sales “against the box” without respect to such limitations. In this type of short sale, at the time of the sale the Trust owns or has the immediate and unconditional right to acquire at no additional cost the identical security. “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).

Unless otherwise stated herein, the Trust’s investment policies are non-fundamental policies and may be changed by the Board without prior shareholder approval. The percentage limitations applicable to the Trust’s portfolio described herein apply only at the time of initial investment and the Trust will not be required to sell investments due to subsequent changes in the value of investments that it owns. The Trust’s policy to invest at least 80% of its total assets in equity securities issued by U.S. and non-U.S. science and technology companies in any market capitalization range may be changed by the Board; however, if this policy changes, the Trust will provide shareholders at least 60 days’ written notice before implementation of the change in compliance with rules of the Securities and Exchange Commission.

Leverage: The Trust currently does not intend to borrow money or issue debt securities or preferred shares. Although it has no present intention to do so, the Trust reserves the right to borrow money from banks or other financial institutions, or issue debt securities or preferred shares, in the future if it believes that market conditions would be conducive to the successful implementation of a leveraging strategy through borrowing money or issuing debt securities or preferred shares. Any such leveraging will not be fully achieved until the proceeds resulting from the use of leverage have been invested in accordance with the Trust’s investment objectives and policies.

The Trust may enter into reverse repurchase agreements with respect to its portfolio investments subject to certain investment restrictions.

The Trust may enter into “dollar roll” transactions.

The Trust may enter into derivative transactions that have economic leverage embedded in them.

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.

BlackRock Health Sciences Trust II (BMEZ)

The Trust’s investment objectives are to provide total return and income through a combination of current income, current gains and long-term capital appreciation. The Trust’s investment objectives may be changed by the Board of Trustees of the Trust (the “Board”) without prior shareholder approval.

BlackRock Advisors, LLC (the “Manager”) believes that the knowledge and experience of its Health Sciences Team enable it to evaluate the macro environment and assess its impact on health sciences companies and the various sub-industries within the health sciences group of industries. Within this framework, the Manager identifies stocks with attractive characteristics, evaluates the use of options and provides ongoing portfolio risk management.

The top-down or macro component of the investment process is designed to assess the various interrelated macro variables affecting the health sciences group of industries as a whole. The Manager evaluates health sciences sub-industries (i.e., pharmaceuticals, biotechnology, medical devices, healthcare services, etc.). Selection of sub-industries within the health sciences group of industries is a result of both the Manager’s sub-industry analysis, as well as the Manager’s bottom-up fundamental company analysis. Risk/reward analysis is a key component of both top-down and bottom-up analysis.

Bottom-up security selection is focused on identifying companies with the most attractive characteristics within each sub-industry of the health sciences group of industries. The Manager seeks to identify companies with strong product potential, solid earnings growth and/or earnings power which are under appreciated by investors, a quality

 

 

I N V E S T M E N T   O 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

  191


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

management team and compelling relative and absolute valuation. The Manager believes that the knowledge and experience of its Health Sciences Team enables it to identify attractive health sciences securities.

The Manager intends to utilize option strategies that consist of writing (selling) call options on a portion of the common stocks in the Trust’s portfolio, as well as other option strategies such as writing other calls and puts or using options to manage risk. The portfolio management team will work closely to determine which option strategies to pursue to seek to generate current gains from options premiums and to enhance the Trust’s risk-adjusted returns.

Under normal market conditions, the Trust will invest at least 80% of its total assets in equity securities of companies principally engaged in the health sciences group of industries and equity derivatives with exposure to the health sciences group of industries. Equity derivatives in which the Trust invests as part of this non-fundamental investment policy include purchased and sold (written) call and put options on equity securities of companies in the health sciences group of industries.

The Trust will consider a company to be principally engaged in the health sciences group of industries if (i) it is classified in an industry within the health sciences group of industries by a third-party industry classification system or (ii) it is not classified in any industry by such third-party industry classification system and the Manager determines that the company is principally engaged in the health sciences group of industries.

Companies in the health sciences group of industries include health care providers as well as businesses involved in researching, developing, producing, distributing or delivering medical, dental, optical, pharmaceutical or biotechnology products, supplies, equipment or services or that provide support services to these companies. These companies also include those that own or operate health facilities and hospitals or provide related administrative, management or financial support. Other companies in the health sciences group of industries in which the Trust may invest include: clinical testing laboratories; diagnostics; hospital, laboratory or physician ancillary products and support services; rehabilitation services; employer health insurance management services; and vendors of goods and services specifically to companies engaged in the health sciences. The Trust will concentrate its investments in the health sciences group of industries.

While the Trust will invest primarily in companies providing products and services for human health, it may also invest in companies whose products or services relate to the growth or survival of animals and plants. Non-human health sciences companies include those engaged in the development, production or distribution of products or services that: increase crop, animal and animal product yields by enhancing growth or increasing disease resistance; improve agricultural product characteristics, such as taste, appearance, nutritional content and shelf life; reduce the cost of producing agricultural products; or improve pet health.

The Trust may invest in companies of any market capitalization located anywhere in the world, including companies located in emerging markets. The Trust will focus its investments in mid- and small-capitalization companies. Foreign securities in which the Trust may invest may be U.S. dollar-denominated or non-U.S. dollar-denominated.

The Trust invests primarily in equity securities, including common stocks, preferred stocks, convertible securities, warrants and depositary receipts, of health sciences companies and limited partnership interests in REITs that own hospitals.

The Trust may invest in shares of companies through IPOs. The Trust may also invest, without limit, in privately placed or restricted securities (including in Rule 144A securities, which are privately placed securities purchased by qualified institutional buyers), illiquid securities and securities in which no secondary market is readily available, including those of private companies. Issuers of these securities may not have a class of securities registered, and may not be subject to periodic reporting, pursuant to the Securities Exchange Act of 1934, as amended. The Trust intends to invest up to 25% of its total assets, measured at the time of investment, in illiquid privately placed or restricted securities. The Trust expects certain of such investments to be in “late-stage private securities,” which are securities of private companies that have demonstrated sustainable business operations and generally have a well-known product or service with a strong market presence. Late-stage private companies have generally had large cash flows from their core business operations and are expanding into new markets with their products or services. Late-stage private companies may also be referred to as “pre-IPO companies.”

The Trust may invest up to 20% of its total assets in other investments, including equity securities issued by companies that are not principally engaged in the health sciences group of industries and debt securities issued by any issuer, including non-investment grade debt securities. The Trust’s investments in non-investment grade securities and those deemed to be of similar quality are considered speculative with respect to the issuer’s capacity to pay interest and repay principal and are commonly referred to as “junk” or “high yield” securities. The Trust has no set policy regarding portfolio maturity or duration of the fixed-income securities it may hold, and such securities may be of any maturity.

As part of its investment strategy, the Trust intends to employ a strategy of writing (selling) covered call options on a portion of the common stocks in its portfolio, writing (selling) other call and put options on individual common stocks, and, to a lesser extent, writing (selling) call and put index options. This options writing strategy is intended to generate current gains from options premiums and to enhance the Trust’s risk-adjusted returns. A substantial portion of the options written by the Trust may be over-the-counter (“OTC”) options.

During temporary defensive periods (i.e., in response to adverse market, economic or political conditions), the Trust may invest up to 100% of its total assets in liquid, short-term investments, including high quality, short-term securities. The Trust may not achieve its investment objectives under these circumstances. The Manager’s determination that it is temporarily unable to follow the Trust’s investment strategy or that it is impractical to do so will generally occur only in situations in which a market disruption event has occurred and where trading in the securities selected through application of the Trust’s investment strategy is extremely limited or absent.

The Trust may purchase and sell futures contracts, enter into various interest rate transactions such as swaps, caps, floors or collars, currency transactions such as currency forward contracts, currency futures contracts, currency swaps or options on currency or currency futures and swap contracts (including, but not limited to, credit default swaps) and may purchase and sell exchange-listed and OTC put and call options on securities and swap contracts, financial indices and futures contracts and use other derivative instruments or management techniques for duration management and other risk management purposes, including to attempt to protect against possible changes in the market value of the Trust’s portfolio resulting from trends in the securities markets and changes in interest rates or to protect the Trust’s unrealized gains in the value of its portfolio

 

 

192  

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


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

securities, to facilitate the sale of portfolio securities for investment purposes, to establish a position in the securities markets as a temporary substitute for purchasing particular securities or to enhance income or gain.

The Trust may also invest in securities of other open- or closed-end investment companies, including exchange-traded funds and business development companies, subject to applicable regulatory limits, that invest primarily in securities of the types in which the Trust may invest directly. The Trust classifies its investments in such investment companies as “equity securities” for purposes of its investment policies based upon such investment companies’ stated investment objectives, policies and restrictions.

The Trust may lend securities with a value of up to 33 1/3% of its total assets (including such loans) to financial institutions that provide cash or securities issued or guaranteed by the U.S. Government as collateral.

The Trust may also engage in short sales of securities. The Trust will not make a short sale if, after giving effect to such sale, the market value of all securities sold short exceeds 25% of the value of its Managed Assets or the Trust’s aggregate short sales of a particular class of securities exceeds 25% of the outstanding securities of that class. The Trust may make short sales “against the box” without respect to such limitations. In this type of short sale, at the time of the sale the Trust owns or has the immediate and unconditional right to acquire at no additional cost the identical security. “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).

Unless otherwise stated herein, the Trust’s investment policies are non-fundamental policies and may be changed by the Board without prior shareholder approval. The percentage limitations applicable to the Trust’s portfolio described herein apply only at the time of initial investment and the Trust will not be required to sell investments due to subsequent changes in the value of investments that it owns. The Trust’s investment objectives may be changed by the Board without prior shareholder approval; however, the Trust will not change its policy of investing, under normal market conditions, at least 80% of its total assets in equity securities of companies principally engaged in the health sciences group of industries and equity derivatives with exposure to the health sciences group of industries unless it provides shareholders at least 60 days’ written notice before implementation of the change in compliance with rules of the Securities and Exchange Commission.

Leverage: The Trust currently does not intend to borrow money or issue debt securities or preferred shares. Although it has no present intention to do so, the Trust reserves the right to borrow money from banks or other financial institutions, or issue debt securities or preferred shares, in the future if it believes that market conditions would be conducive to the successful implementation of a leveraging strategy through borrowing money or issuing debt securities or preferred shares. Any such leveraging will not be fully achieved until the proceeds resulting from the use of leverage have been invested in accordance with the Trust’s investment objectives and policies.

The Trust may enter into reverse repurchase agreements with respect to its portfolio investments subject to certain investment restrictions.

The Trust may enter into “dollar roll” transactions.

The Trust may enter into derivative transactions that have economic leverage embedded in them.

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.

BlackRock Innovation and Growth Trust (BIGZ)

The Trust’s investment objectives are to provide total return and income through a combination of current income, current gains and long-term capital appreciation. The Trust is not intended as, and you should not construe it to be, a complete investment program. There can be no assurance that the Trust’s investment objectives will be achieved or that the Trust’s investment program will be successful. The Trust’s investment objectives may be changed by the Board of Trustees of the Trust (the “Board”) without prior shareholder approval.

In selecting investments for the Trust, BlackRock Advisors, LLC (the “Manager”) focuses on equity securities of mid- and small-capitalization growth companies that are “innovative.” These are companies that have introduced, or are seeking to introduce, a new product or service that potentially changes the marketplace. In evaluating innovative companies, the Manager seeks to identify, using its own internal research and analysis, companies capitalizing on innovation or that are enabling the further development of the theme of innovation in the markets in which they operate.

Among other things, common criteria for innovative companies across industries may include developing new products, selling in new markets or channels, applying a new or superior technology to legacy industries, refining existing processes for efficiency, changing or pivoting business model, or creating tools that empower new breakthroughs.

In addition, the Trust seeks to invest in companies where, in the opinion of the Manager, free cash flow is likely to grow for a sustained period. Factors considered in the Manager’s analysis of a company may include 1) a large and underpenetrated addressable market, 2) a technology or service model that creates recurring demand for product, and 3) a competitive landscape that allows for stable or expanding margins. The Manager’s outlook for a company based upon these and other factors is then compared to the outlook of the company implied in the current share price of the company. The Manager looks to invest in companies where its view of future cash flows is more favorable than that which it believes is reflected by the current price.

The Manager will identify trends that have ramifications for individual companies or entire industries. Risk/reward analysis is a key component of both top-down and bottom-up analysis.

Bottom-up security selection is focused on identifying innovative companies with the most attractive growth characteristics. The Manager seeks to identify companies with strong product potential, solid earnings growth and/or earnings power which are under appreciated by investors, a quality management team and compelling relative and absolute valuation. The Manager believes that the knowledge and experience of its investment team enables it to identify attractive innovative companies.

 

 

I N V E S T M E N T   O 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

  193


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

The Trust intends to utilize option strategies that consist of writing (selling) call options on a portion of the common stocks in its portfolio, as well as other option strategies such as writing other calls and puts or using options to manage risk. The portfolio management team will work closely to determine which option strategies to pursue to seek to generate current gains from options premiums and to enhance the Trust’s risk-adjusted returns.

The Trust will invest primarily in equity securities issued by mid- and small-capitalization companies that the Manager believes have above-average earnings growth potential.

Equity securities include common stocks, preferred stocks, convertible securities, warrants and depositary receipts, though the Trust seeks to buy primarily common stock. Although universal definitions of mid-capitalization companies and small-capitalization companies do not exist, the Trust generally defines mid-capitalization and small-capitalization companies as those companies with market capitalizations, at the time of the Trust’s investment, comparable in size to the companies in the Russell 2500 Growth Index (between $11.8 million and $35.03 billion as of December 31, 2021). In the future, the Trust may define mid- and small-capitalization companies using a different index or classification system.

The Trust may invest in shares of companies through IPOs. The Trust may also invest, without limit, in privately placed or restricted securities (including in Rule 144A securities, which are privately placed securities purchased by qualified institutional buyers), illiquid securities and securities in which no secondary market is readily available, including those of private companies. Issuers of these securities may not have a class of securities registered, and may not be subject to periodic reporting, pursuant to the Exchange Act. Under normal market conditions, the Trust currently intends to invest up to 25% of its total assets, measured at the time of investment, in illiquid privately placed or restricted securities. The Trust expects certain of such investments to be in “late-stage private securities,” which are securities of private companies that have demonstrated sustainable business operations and generally have a well-known product or service with a strong market presence. Late-stage private companies have generally had large cash flows from their core business operations and are expanding into new markets with their products or services. Late-stage private companies may also be referred to as “pre-IPO companies.”

The Trust may invest up to 25% of its assets in securities of foreign companies, including companies located in emerging markets. Foreign securities in which the Trust may invest may be U.S. dollar-denominated or non-U.S. dollar-denominated.

The Trust may also invest in securities of other open- or closed-end investment companies, including exchange-traded funds and business development companies, subject to applicable regulatory limits, that invest primarily in securities of the types in which the Trust may invest directly. The Trust classifies its investments in such investment companies as “equity securities” for purposes of its investment policies based upon such investment companies’ stated investment objectives, policies and restrictions.

As part of its investment strategy, the Trust intends to employ a strategy of writing (selling) covered call options on a portion of the common stocks in its portfolio, writing (selling) other call and put options on individual common stocks, including uncovered call and put options, and, to a lesser extent, writing (selling) covered and uncovered call and put index options. This options writing strategy is intended to generate current gains from options premiums and to enhance the Trust’s risk-adjusted returns. A substantial portion of the options written by the Trust may be over-the-counter options.

The Trust may also purchase and sell futures contracts, enter into various interest rate transactions such as swaps, caps, floors or collars, currency transactions such as currency forward contracts, currency futures contracts, currency swaps or options on currency or currency futures and swap contracts (including, but not limited to, credit default swaps) and may purchase and sell exchange-listed and over-the-counter (“OTC”) put and call options on securities and swap contracts, financial indices and futures contracts and use other derivative instruments or management techniques for duration management and other risk management purposes, including to attempt to protect against possible changes in the market value of the Trust’s portfolio resulting from trends in the securities markets and changes in interest rates or to protect the Trust’s unrealized gains in the value of its portfolio securities, to facilitate the sale of portfolio securities for investment purposes, to establish a position in the securities markets as a temporary substitute for purchasing particular securities or to enhance income or gain.

During temporary defensive periods (i.e., in response to adverse market, economic or political conditions), the Trust may invest up to 100% of its total assets in liquid, short-term investments, including high quality, short-term securities. The Trust may not achieve its investment objectives under these circumstances. The Manager’s determination that it is temporarily unable to follow the Trust’s investment strategy or that it is impractical to do so will generally occur only in situations in which a market disruption event has occurred and where trading in the securities selected through application of the Trust’s investment strategy is extremely limited or absent.

The Trust may lend securities with a value of up to 33 1/3% of its total assets (including such loans) to financial institutions that provide cash or securities issued or guaranteed by the U.S. Government as collateral.

The Trust may engage in active and frequent trading of portfolio securities to achieve its investment objectives.

Unless otherwise stated herein, the Trust’s investment policies are non-fundamental policies and may be changed by the Board without prior shareholder approval. The percentage limitations applicable to the Trust’s portfolio described in this prospectus apply only at the time of initial investment and the Trust will not be required to sell investments due to subsequent changes in the value of investments that it owns. The Trust’s investment objectives may be changed by the Board without prior shareholder approval.

Leverage: The Trust currently does not intend to borrow money or issue debt securities or preferred shares. The Trust is, however, permitted to borrow money or issue debt securities in an amount up to 33 1/3% of its Managed Assets (50% of its net assets), and issue preferred shares in an amount up to 50% of its Managed Assets (100% of its net assets). “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). Although it has no present intention to do so, the Trust reserves the right to borrow money from banks or other financial institutions, or issue debt securities or preferred shares, in the future if it believes that market conditions would be conducive to the successful implementation of a leveraging strategy through borrowing money or issuing debt securities or preferred shares.

The Trust is permitted to leverage its portfolio by entering into one or more credit facilities.

 

 

194  

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


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

The Trust may enter into reverse repurchase agreements with respect to its portfolio investments subject to the Trust’s investment restrictions.

The Trust may enter into “dollar roll” transactions.

The Trust may enter into derivative transactions that have economic leverage embedded in them.

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 each 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 a Trust will meet its investment objective or that the Trust’s performance will be positive for any period of time. Each risk noted below is applicable to each Trust unless the specific Trust or Trusts are noted in a parenthetical.

Non-Diversification Risk (BGR, BCX, BSTZ, BMEZ and BIGZ): The Trust is a non-diversified fund. Because the Trust may invest in securities of a smaller number of issuers, it may be more exposed to the risks associated with and developments affecting an individual issuer than a fund that invests more widely.

Limited Term Risk (BSTZ, BMEZ and BIGZ): In accordance with the Trust’s Agreement and Declaration of Trust, the Trust intends to dissolve as of the first business day following the twelfth anniversary of the effective date of the Trust’s initial registration statement (the “Dissolution Date”); provided that the Board may, by a vote of a majority of the Board and seventy-five percent (75%) of the members of the Board who either (i) have been a member of the Board for a period of at least thirty-six months (or since the commencement of the Trust’s operations, if less than thirty-six months) or (ii) were nominated to serve as a member of the Board by a majority of the Continuing Trustees then members of the Board (a “Board Action Vote”), without shareholder approval, extend the Dissolution Date: (i) once for up to one year, and (ii) once for up to an additional six months, to a date up to and including eighteen months after the initial Dissolution Date (which date shall then become the Dissolution Date). As of a date within twelve months preceding the Dissolution Date (as may be extended as described above), the Board may, by a Board Action Vote, cause the Trust to conduct a tender offer to all common shareholders to purchase 100% of the then outstanding common shares of the Trust at a price equal to the net asset value (“NAV”) per common share on the expiration date of the tender offer (an “Eligible Tender Offer”). The Board has established that the Trust must have at least $200 million of aggregate net assets immediately following the completion of an Eligible Tender Offer to ensure the continued viability of the Trust (the “Dissolution Threshold”). In an Eligible Tender Offer, the Trust will offer to purchase all common shares held by each common shareholder; provided that if the payment for properly tendered common shares would result in the Trust having aggregate net assets below the Dissolution Threshold, the Eligible Tender Offer will be canceled and no common shares will be repurchased pursuant to the Eligible Tender Offer. Instead, the Trust will begin (or continue) liquidating its portfolio and proceed to dissolve on or about the Dissolution Date. If the payment for properly tendered common shares would result in the Trust having aggregate net assets greater than or equal to the Dissolution Threshold, all common shares properly tendered and not withdrawn will be purchased by the Trust pursuant to the terms of the Eligible Tender Offer. Following the completion of an Eligible Tender Offer, the Board may, by a Board Action Vote, eliminate the Dissolution Date without shareholder approval and provide for the Trust’s perpetual existence.

Unless the limited term provision of the Trust’s Agreement and Declaration of Trust is amended by shareholders in accordance with the Agreement and Declaration of Trust, or unless the Trust completes an Eligible Tender Offer and converts to perpetual existence, the Trust will dissolve on or about the first business day following the Dissolution Date. The Trust is not a so called “target date” or “life cycle” fund whose asset allocation becomes more conservative over time as its target date, often associated with retirement, approaches. In addition, the Trust is not a “target term” fund and thus does not seek to return its initial public offering price per common share upon dissolution. As the assets of the Trust will be liquidated in connection with its dissolution, the Trust may be required to sell portfolio securities when it otherwise would not, including at times when market conditions are not favorable, which may cause the Trust to lose money. In addition, as the Trust approaches the Dissolution Date, the Manager may invest the proceeds of sold, matured or called securities in money market mutual funds, cash, cash equivalents, securities issued or guaranteed by the U.S. government or its instrumentalities or agencies, high quality, short-term money market instruments, short-term debt securities, certificates of deposit, bankers’ acceptances and other bank obligations, commercial paper or other liquid debt securities, which may adversely affect the Trust’s investment performance. Rather than reinvesting proceeds received from sales of or payments received in respect of portfolio securities, the Trust may distribute such proceeds in one or more liquidating distributions prior to the final dissolution, which may cause the Trust’s fixed expenses to increase when expressed as a percentage of net assets attributable to common shares, or the Trust may invest the proceeds in lower yielding securities or hold the proceeds in cash or cash equivalents, which may adversely affect the performance of the Trust. The final distribution of net assets upon dissolution may be more than, equal to or less than $20.00 per common share. Because the Trust may adopt a plan of liquidation and make liquidating distributions in advance of the Dissolution Date, the total value of the Trust’s assets returned to common shareholders upon dissolution will be impacted by decisions of the Board and the Manager regarding the timing of adopting a plan of liquidation and making liquidating distributions. This may result in common shareholders receiving liquidating distributions with a value more or less than the value that would have been received if the Trust had liquidated all of its assets on the Dissolution Date, or any other potential date for liquidation, and distributed the proceeds thereof to shareholders.

If the Trust conducts an Eligible Tender Offer, the Trust anticipates that funds to pay the aggregate purchase price of shares accepted for purchase pursuant to the tender offer will be first derived from any cash on hand and then from the proceeds from the sale of portfolio investments held by the Trust. The risks related to the disposition of securities in connection with the Trust’s dissolution also would be present in connection with the disposition of securities in connection with an Eligible Tender Offer. It is likely that during the pendency of a tender offer, and possibly for a time thereafter, the Trust will hold a greater than normal percentage of its total assets in cash and cash equivalents, which may impede the Trust’s ability to achieve its investment objectives and decrease returns to shareholders. The tax effect of any such dispositions of portfolio investments will depend on the difference between the price at which the investments are sold and the tax basis of the Trust in the investments.

Any capital gains recognized on such dispositions, as reduced by any capital losses the Trust realizes in the year of such dispositions and by any available capital loss carryforwards, will be distributed to shareholders as capital gain dividends (to the extent of net long-term capital gains over net short-term capital losses) or ordinary dividends

 

 

I N V E S T M E N T   O 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

  195


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

(to the extent of net short-term capital gains over net long-term capital losses) during or with respect to such year, and such distributions will generally be taxable to common shareholders. If the Trust’s tax basis for the investments sold is less than the sale proceeds, the Trust will recognize capital gains, which the Trust intends to distribute to common shareholders. In addition, the Trust’s purchase of tendered common shares pursuant to an Eligible Tender Offer will have tax consequences for tendering common shareholders and may have tax consequences for non-tendering common shareholders.

The purchase of common shares by the Trust pursuant to an Eligible Tender Offer will have the effect of increasing the proportionate interest in the Trust of non-tendering common shareholders. All common shareholders remaining after an Eligible Tender Offer will be subject to any increased risks associated with the reduction in the Trust’s assets resulting from payment for the tendered common shares, such as greater volatility due to decreased diversification and proportionately higher expenses. The reduced assets of the Trust as a result of an Eligible Tender Offer may result in less investment flexibility for the Trust and may have an adverse effect on the Trust’s investment performance. Such reduction in the Trust’s assets may also cause common shares of the Trust to become thinly traded or otherwise negatively impact secondary trading of common shares. A reduction in assets, and the corresponding increase in the Trust’s expense ratio, could result in lower returns and put the Trust at a disadvantage relative to its peers and potentially cause the Trust’s common shares to trade at a wider discount, or smaller premium, to NAV than they otherwise would. Furthermore, the portfolio of the Trust following an Eligible Tender Offer could be significantly different and, therefore, common shareholders retaining an investment in the Trust could be subject to greater risk. For example, the Trust may be required to sell its more liquid, higher quality portfolio investments to purchase common shares that are tendered in an Eligible Tender Offer, which would leave a less liquid, lower quality portfolio for remaining shareholders. The prospects of an Eligible Tender Offer may attract arbitrageurs who would purchase the common shares prior to the tender offer for the sole purpose of tendering those shares which could have the effect of exacerbating the risks described herein for shareholders retaining an investment in the Trust following an Eligible Tender Offer.

The Trust is not required to conduct an Eligible Tender Offer. If the Trust conducts an Eligible Tender Offer, there can be no assurance that the payment for tendered common shares would not result in the Trust having aggregate net assets below the Dissolution Threshold, in which case the Eligible Tender Offer will be canceled, no common shares will be repurchased pursuant to the Eligible Tender Offer and the Trust will liquidate on the Dissolution Date (subject to possible extensions). Following the completion of an Eligible Tender Offer in which the payment for tendered common shares would result in the Trust having aggregate net assets greater than or equal to the Dissolution Threshold, the Board may, by a Board Action Vote, eliminate the Dissolution Date without shareholder approval and provide for the Trust’s perpetual existence. Thereafter, the Trust will have a perpetual existence. There is no guarantee that the Board will eliminate the Dissolution Date following the completion of an Eligible Tender Offer so that the Trust will have a perpetual existence. The Manager may have a conflict of interest in recommending to the Board that the Dissolution Date be eliminated and the Trust have a perpetual existence. The Trust is not required to conduct additional tender offers following an Eligible Tender Offer and conversion to perpetual existence. Therefore, remaining common shareholders may not have another opportunity to participate in a tender offer. Shares of closed-end management investment companies frequently trade at a discount from their NAV, and as a result remaining common shareholders may only be able to sell their shares at a discount to NAV.

Although it is anticipated that the Trust will have distributed substantially all of its net assets to shareholders as soon as practicable after the Dissolution Date, securities for which no market exists or securities trading at depressed prices, if any, may be placed in a liquidating trust. Securities placed in a liquidating trust may be held for an indefinite period of time, potentially several years or longer, until they can be sold or pay out all of their cash flows. During such time, the shareholders will continue to be exposed to the risks associated with the Trust and the value of their interest in the liquidating trust will fluctuate with the value of the liquidating trust’s remaining assets. Additionally, the tax treatment of the liquidating trust’s assets may differ from the tax treatment applicable to such assets when held by the Trust. To the extent the costs associated with a liquidating trust exceed the value of the remaining securities, the liquidating trust trustees may determine to dispose of the remaining securities in a manner of their choosing. The Trust cannot predict the amount, if any, of securities that will be required to be placed in a liquidating trust or how long it will take to sell or otherwise dispose of such securities.

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.

Equity Securities Risk: Stock markets are volatile. The price of equity securities fluctuates based on changes in a company’s financial condition and overall market and economic conditions.

Common Stock Risk: Common stocks represent equity ownership in a company. Stock markets are volatile. The price of common stock will fluctuate and can decline and reduce the value of a portfolio investing in equities. The value of common stock purchased by the Trust could decline if the financial condition of the companies the Trust invests in declines or if overall market and economic conditions deteriorate. The value of equity securities may also decline due to factors that affect a particular industry or industries, such as labor shortages or an increase in production costs and competitive conditions within an industry. In addition, the value may decline due to general market conditions that are not specifically related to a company or industry, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or generally adverse investor sentiment.

Small and Mid-Capitalization Company Risk: Companies with small or mid-size market capitalizations will normally have more limited product lines, markets and financial resources and will be dependent upon a more limited management group than larger capitalized companies. In addition, it is more difficult to get information on smaller companies, which tend to be less well known, have shorter operating histories, do not have significant ownership by large investors and are followed by relatively few securities analysts.

Preferred Securities Risk: Preferred securities may pay fixed or adjustable rates of return. Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. In addition, a company’s preferred securities generally pay dividends only after the company makes required payments to holders of its bonds

 

 

196  

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


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

and other debt. For this reason, the value of preferred securities will usually react more strongly than bonds and other debt to actual or perceived changes in the company’s financial condition or prospects. Preferred securities of smaller companies may be more vulnerable to adverse developments than preferred securities of larger companies.

Convertible Securities Risk (BOE, BST, BDJ, BGR, BME, BGY, BCX, BUI, BSTZ, BMEZ and BIGZ): The market value of a convertible security performs like that of a regular debt security; that is, if market interest rates rise, the value of a convertible security usually falls. In addition, convertible securities are subject to the risk that the issuer will not be able to pay interest or dividends when due, and their market value may change based on changes in the issuer’s credit rating or the market’s perception of the issuer’s creditworthiness. Since it derives a portion of its value from the common stock into which it may be converted, a convertible security is also subject to the same types of market and issuer risks that apply to the underlying common stock.

Warrants Risk (BOE, BST, BGR, BME, BGY, BCX, BUI, BSTZ, BMEZ and BIGZ): If the price of the underlying stock does not rise above the exercise price before the warrant expires, the warrant generally expires without any value and the Trust will lose any amount it paid for the warrant. Thus, investments in warrants may involve substantially more risk than investments in common stock. Warrants may trade in the same markets as their underlying stock; however, the price of the warrant does not necessarily move with the price of the underlying stock.

Depositary Receipts Risk (BOE, BST, BGR, BME, BGY, BCX, BUI, BSTZ, BMEZ and BIGZ): Depositary receipts are generally subject to the same risks as the foreign securities that they evidence or into which they may be converted. In addition to investment risks associated with the underlying issuer, depositary receipts expose the Trust to additional risks associated with the non-uniform terms that apply to depositary receipt programs, credit exposure to the depository bank and to the sponsors and other parties with whom the depository bank establishes the programs, currency risk and the risk of an illiquid market for depositary receipts. The issuers of unsponsored depositary receipts are not obligated to disclose information that is, in the United States, considered material. Therefore, there may be less information available regarding these issuers and there may not be a correlation between such information and the market value of the depositary receipts.

REIT Investment Risk (BOE, BST, BDJ, BME, BGY, BUI, BSTZ and BMEZ): Investments in REITs involve unique risks. REITs may have limited financial resources, may trade less frequently and in limited volume, may engage in dilutive offerings of securities and may be more volatile than other securities. REIT issuers may also fail to maintain their exemptions from investment company registration or fail to qualify for the “dividends paid deduction” under the Internal Revenue Code of 1986, as amended, which allows REITs to reduce their corporate taxable income for dividends paid to their shareholders.

Master Limited Partnerships Risk (BST, BGR, BCX, BUI and BSTZ): The common units of a master limited partnership (“MLP”) are listed and traded on U.S. securities exchanges and their value fluctuates predominantly based on prevailing market conditions and the success of the MLP. Unlike owners of common stock of a corporation, owners of common units have limited voting rights and have no ability to annually elect directors. In the event of liquidation, common units have preference over subordinated units, but not over debt or preferred units, to the remaining assets of the MLP.

Canadian Royalty Trust Risk (BGR, BCX and BUI): Canadian Royalty Trusts are exposed to many of the same risks as energy and natural resources companies, such as commodity pricing risk, supply and demand risk and depletion and exploration risk.

Initial Public Offerings (“IPOs”) Risk (BOE, BST, BME, BSTZ, BMEZ and BIGZ): The Trust may invest in shares of companies through IPOs. Securities issued in IPOs have no trading history, and information about the companies may be available for limited periods of time. In addition, the prices of securities sold in IPOs may be highly volatile or may decline shortly after the IPO.

Investments in Unseasoned Companies (BOE, BDJ, BME, BGY, BCX, BSTZ, BMEZ and BIGZ): The Trust may invest in the securities of smaller, less seasoned companies. These investments may present greater opportunities for growth, but also involve greater risks than customarily are associated with investments in securities of more established companies. Some of the companies in which the Trust may invest may be start-up companies which may have insubstantial operational or earnings histories or may have limited products, markets, financial resources or management depth. Some may also be emerging companies at the research and development stage with no products or technologies to market or approved for marketing. Securities of emerging companies may lack an active secondary market and may be subject to more abrupt or erratic price movements than securities of larger, more established companies or stock market averages in general. Competitors of certain companies may have substantially greater financial resources than many of the companies in which the Trust may invest. Further, an unseasoned company is more at risk of loss in an adverse market due to its lack of financial resources and ability to sustain itself for an extended period of time in such a market.

Dividend-Paying Equity Securities Risk (BOE, CII, BDJ and BGY): Dividends on common equity securities that the Trust may hold are not fixed but are declared at the discretion of an issuer’s board of directors. Companies that have historically paid dividends on their securities are not required to continue to pay dividends on such securities. There is no guarantee that the issuers of the common equity securities in which the Trust invests will declare dividends in the future or that, if declared, they will remain at current levels or increase over time. Therefore, there is the possibility that such companies could reduce or eliminate the payment of dividends in the future. Dividend producing equity securities, in particular those whose market price is closely related to their yield, may exhibit greater sensitivity to interest rate changes. The Trust’s investments in dividend producing equity securities may also limit its potential for appreciation during a broad market advance.

The prices of dividend producing equity securities can be highly volatile. Investors should not assume that the Trust’s investments in these securities will necessarily reduce the volatility of the Trust’s NAV or provide “protection,” compared to other types of equity securities, when markets perform poorly.

Investment Style Risk: Under certain market conditions, growth investments have performed better during the later stages of economic expansion and value investments have performed better during periods of economic recovery. Therefore, these investment styles may over time go in and out of favor. At times when the investment style used by the Trust is out of favor, the Trust may underperform other equity funds that use different investment styles.

Risks Associated with the Trust’s Options Strategy: The ability of the Trust to generate current gains from options premiums and to enhance the Trust’s risk-adjusted returns is partially dependent on the successful implementation of its options strategy. There are several risks associated with transactions in options on securities. For example, there are significant differences between the securities and options markets that could result in an imperfect correlation between these markets, causing a given

 

 

I N V E S T M E N T   O 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

  197


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

transaction not to achieve its objectives. A decision as to whether, when and how to use options involves the exercise of skill and judgment, and even a well-conceived transaction may be unsuccessful to some degree because of market behavior or unexpected events.

 

   

Risks of Writing Options — As the writer of a covered call option, the Trust forgoes, during the option’s life, the opportunity to profit from increases in the market value of the security covering the call option above the sum of the premium and the strike price of the call, but has retained the risk of loss should the price of the underlying security decline. In other words, as the Trust writes covered calls over more of its portfolio, the Trust’s ability to benefit from capital appreciation becomes more limited.

If the Trust writes call options on individual securities or index call options that include securities, in each case, that are not in the Trust’s portfolio or that are not in the same proportion as securities in the Trust’s portfolio, the Trust will experience loss, which theoretically could be unlimited, if the value of the individual security, index or basket of securities appreciates above the exercise price of the index option written by the Trust.

When the Trust writes put options, it bears the risk of loss if the value of the underlying stock declines below the exercise price minus the put premium. If the option is exercised, the Trust could incur a loss if it is required to purchase the stock underlying the put option at a price greater than the market price of the stock at the time of exercise plus the put premium the Trust received when it wrote the option. While the Trust’s potential gain in writing a put option is limited to the premium received from the purchaser of the put option, the Trust risks a loss equal to the entire exercise price of the option minus the put premium.

 

   

Exchange-Listed Options Risks — There can be no assurance that a liquid market will exist when the Trust seeks to close out an exchange-listed option position. Reasons for the absence of a liquid secondary market on an exchange include the following: (i) there may be insufficient trading interest in certain options; (ii) restrictions may be imposed by an exchange on opening transactions or closing transactions or both; (iii) trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of options; (iv) unusual or unforeseen circumstances may interrupt normal operations on an exchange; (v) the facilities of an exchange or the Options Clearing Corporation (the “OCC”) may not at all times be adequate to handle current trading volume; or (vi) one or more exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of options (or a particular class or series of options).

 

   

Over-the-Counter Options Risk — The Trust may write (sell) unlisted OTC options. OTC options differ from exchange-listed options in that they are two-party contracts, with exercise price, premium and other terms negotiated between buyer and seller, and generally do not have as much market liquidity as exchange-listed options. The OTC options written by the Trust will not be issued, guaranteed or cleared by the OCC. In addition, the Trust’s ability to terminate OTC options may be more limited than with exchange-traded options. Banks, broker-dealers or other financial institutions participating in such transactions may fail to settle a transaction in accordance with the terms of the option as written. In the event of default or insolvency of the counterparty, the Trust may be unable to liquidate an OTC option position.

 

   

Index Options Risk — The Trust may sell index put and call options from time to time. The purchaser of an index put option has the right to any depreciation in the value of the index below the exercise price of the option on or before the expiration date. The purchaser of an index call option has the right to any appreciation in the value of the index over the exercise price of the option on or before the expiration date. Because the exercise of index options is settled in cash, sellers of index call options, such as the Trust, cannot provide in advance for their potential settlement obligations by acquiring and holding the underlying securities. The Trust will lose money if it is required to pay the purchaser of an index option the difference between the cash value of the index on which the option was written and the exercise price and such difference is greater than the premium received by the Trust for writing the option.

 

   

Limitation on Options Writing Risk — The number of call options the Trust can write is limited by the total assets the Trust holds. Furthermore, the Trust’s exchange- listed options transactions will be subject to limitations established by each of the exchanges, boards of trade or other trading facilities, if any, on which such options are traded and cleared.

 

   

Tax Risk — Income on options on individual stocks will generally not be recognized by the Trust for tax purposes until an option is exercised, lapses or is subject to a “closing transaction” (as defined by applicable regulations) pursuant to which the Trust’s obligations with respect to the option are otherwise terminated. If the option lapses without exercise or is otherwise subject to a closing transaction, the premiums received by the Trust from the writing of such options will generally be characterized as short-term capital gain. If an option written by the Trust is exercised, the Trust may recognize taxable gain depending on the exercise price of the option, the option premium, and the tax basis of the security underlying the option. The character of any gain on the sale of the underlying security as short-term or long-term capital gain will depend on the holding period of the Trust in the underlying security. In general, distributions received by shareholders of the Trust that are attributable to short-term capital gains recognized by the Trust from its options writing activities will be taxed to such shareholders as ordinary income and will not be eligible for the reduced tax rate applicable to qualified dividend income.

Index options will generally be “marked-to-market” for U.S. federal income tax purposes. As a result, the Trust will generally recognize gain or loss on the last day of each taxable year equal to the difference between the value of the index option on that date and the adjusted basis of the index option. The adjusted basis of the index option will consequently be increased by such gain or decreased by such loss. Any gain or loss with respect to index options will be treated as short-term capital gain or loss to the extent of 40% of such gain or loss and long-term capital gain or loss to the extent of 60% of such gain or loss. Because the mark-to-market rules may cause the Trust to recognize gain in advance of the receipt of cash, the Trust may be required to dispose of investments in order to meet its U.S. federal income tax distribution requirements.

Debt Securities Risk (BOE, BST, BGR, BME, BCX, BUI, BSTZ and BMEZ): 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.

 

 

198  

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


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

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 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.

 

   

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.

Junk Bonds Risk (BOE, BST, BGR, BME, BCX, BUI, BSTZ and BMEZ): 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.

U. S. Government Obligations Risk (CII, BME, BCX, BUI, BSTZ and BMEZ): 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.

Structured Products Risk (BST, BME, BCX, BSTZ and BMEZ): Holders of structured products bear risks of the underlying investments, index or reference obligation and are subject to counterparty risk. The Trust may have the right to receive payments only from the structured product, and generally does not have direct rights against the issuer or the entity that sold the assets to be securitized. Certain structured products may be thinly traded or have a limited trading market. In addition to the general risks associated with debt securities discussed herein, structured products carry additional risks, including, but not limited to: the possibility that distributions from collateral securities will not be adequate to make interest or other payments; the quality of the collateral may decline in value or default; and the possibility that the structured products are subordinate to other classes. Structured notes are based upon the movement of one or more factors, including currency exchange rates, interest rates, reference bonds and stock indices, and changes in interest rates and impact of these factors may cause significant price fluctuations. Additionally, changes in the reference instrument or security may cause the interest rate on the structured note to be reduced to zero.

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.

 

 

I N V E S T M E N T   O 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

  199


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

   

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 Securities and Exchange Commission (the “SEC”) adopted new 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.

Foreign Securities Risk: Foreign investments often involve special risks not present in U.S. investments that can increase the chances that the Trust will lose money. These risks include:

 

   

The Trust generally holds its foreign securities and cash in foreign banks and securities depositories, which may be recently organized or new to the foreign custody business and may be subject to only limited or no regulatory oversight.

 

   

Changes in foreign currency exchange rates can affect the value of the Trust’s portfolio.

 

   

The economies of certain foreign markets may not compare favorably with the economy of the United States with respect to such issues as growth of gross national product, reinvestment of capital, resources and balance of payments position.

 

   

The governments of certain countries, or the U.S. Government with respect to certain countries, may prohibit or impose substantial restrictions through capital controls and/or sanctions on foreign investments in the capital markets or certain industries in those countries, which may prohibit or restrict the ability to own or transfer currency, securities, derivatives or other assets.

 

   

Many foreign governments do not supervise and regulate stock exchanges, brokers and the sale of securities to the same extent as does the United States and may not have laws to protect investors that are comparable to U.S. securities laws.

 

   

Settlement and clearance procedures in certain foreign markets may result in delays in payment for or delivery of securities not typically associated with settlement and clearance of U.S. investments.

 

   

The Trust’s claims to recover foreign withholding taxes may not be successful, and if the likelihood of recovery of foreign withholding taxes materially decreases, due to, for example, a change in tax regulation or approach in the foreign country, accruals in the Trust’s net asset value for such refunds may be written down partially or in full, which will adversely affect the Trust’s net asset value.

Foreign Currency Transactions Risk (BGR, BDJ, BME and BCX): The Trust may invest in forward foreign currency exchange contracts. Forward foreign currency exchange contracts do not eliminate movements in the value of non-U.S. currencies and securities but rather allow the Trust to establish a fixed rate of exchange for a future point in time. This strategy can have the effect of reducing returns and minimizing opportunities for gain.

Emerging Markets Risk: Emerging markets are riskier than more developed markets because they tend to develop unevenly and may never fully develop. Investments in emerging markets may be considered speculative. Emerging markets are more likely to experience hyperinflation and currency devaluations, which adversely affect returns to U.S. investors. In addition, many emerging securities markets have far lower trading volumes and less liquidity than developed markets.

Concentration Risk (BST, BGR, BME, BCX, BSTZ and BMEZ): The Trust’s strategy of concentrating a particular industry means that its performance will be closely tied to the performance of a particular market segment. The Trust’s concentration in these companies may present more risks than if it were broadly diversified over numerous industries and sectors of the economy. A downturn in these companies would have a larger impact on the Trust than on a fund that does not concentrate in such companies. At times, the performance of these companies will lag the performance of other industries or the broader market as a whole.

Science and Technology Risk (BST and BSTZ): The Trust’s investments in science and technology companies expose the Trust to special risks. For example, rapid advances in science and technology might cause existing products to become obsolete, and the Trust’s returns could suffer to the extent it holds an affected company’s shares. Companies in a number of science and technology industries are also subject to more government regulations and approval processes than many other industries. This fact may affect a company’s overall profitability and cause its stock price to be more volatile. Additionally, science and technology companies are dependent upon consumer and business acceptance as new technologies evolve.

 

 

200  

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


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

Health Sciences and Healthcare Companies Risk (BME and BMEZ): The Trust’s investments in health sciences companies are subject to a number of risks, including the adverse impact of legislative actions and government regulations. These actions and regulations can affect the approval process for patents, medical devices and drugs, the funding of research and medical care programs, and the operation and licensing of facilities and personnel. The goods and services of health sciences companies are subject to risks of rapid technological change and obsolescence, product liability litigation, and intense price and other competitive pressures.

Energy Sector Risk (BGR): The market value of securities in the energy sector may decline for many reasons, including, among others, changes in energy prices, energy supply and demand, government regulations and energy conservation efforts. Energy companies can be significantly affected by the supply of, and demand for, specific products (e.g., oil and natural gas) and services, exploration and production spending, government subsidization, world events and general economic conditions. In 2020, the energy sector has experienced increased volatility. In particular, significant market volatility occurred and is continuing in the crude oil markets as well as the oil futures markets, which resulted in the market price of the front month futures contract falling fell below zero for a period of time.

Energy and Natural Resources Risk (BCX): The Trust’s investments in energy and natural resources companies are especially affected by variations in the commodities markets (that may be due to market events, regulatory developments or other factors that the Trust cannot control) and these companies may lack the resources and the broad business lines to weather hard times. Energy companies can be significantly affected by the supply of and demand for specific products and services, the supply of and demand for oil and gas, the price of oil and gas, exploration and production spending, government regulation, world events and economic conditions. Natural resources companies can be significantly affected by events relating to international political developments, energy conservation, the success of exploration projects, commodity prices, and tax and government regulations.

Commodities Related Investments Risk (BCX): Exposure to the commodities markets may subject the Trust to greater volatility than investments in traditional securities. The value of commodity-linked derivative investments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, embargoes, tariffs and international economic, political and regulatory developments.

Commodities Market Risk (BCX): Stocks of companies engaged in commodities related industries, such as energy or natural resources companies, are especially affected by variations in the commodities markets (that may be due to market events, regulatory developments or other factors that the Trust cannot control) and these companies may lack the resources and the broad business lines to weather hard times.

Risks of Investing in Utilities, Infrastructure and Power Opportunities Issuers (BUI): Investments in issuers in the Utilities, Infrastructure and Power Opportunities business segments are subject to certain risks, including the following, among others:

 

   

Utilities Companies Risk — A variety of factors may adversely affect the business or operations of Utilities issuers, including, but not limited to: high interest costs in connection with capital construction and improvement programs; governmental regulation of rates charged to customers (including the potential that costs incurred by the utility change more rapidly than the rate the utility is permitted to charge its customers); costs associated with compliance with and changes in environmental and other regulations; effects of economic slowdowns and surplus capacity; increased competition from other providers of utility services; inexperience with and potential losses resulting from a developing deregulatory environment; costs associated with reduced availability of certain types of fuel; the effects of energy conservation policies; effects of a national energy policy; technological innovations; potential impact of terrorist activities; the impact of natural or man-made disasters; regulation by various governmental authorities, including the imposition of special tariffs; and changes in tax laws, regulatory policies and accounting standards.

 

   

Infrastructure Companies Risk — Infrastructure issuers may be susceptible to a variety of factors that may adversely affect their business and operations, including, but not limited to: high interest costs in connection with capital construction programs; high leverage; costs associated with environmental and other regulations; surplus capacity costs; and reduced investment in public and private infrastructure projects. A slowdown in new infrastructure projects in developing or developed markets may constrain the abilities of Infrastructure issuers to grow in global markets. Other developments, such as significant changes in population levels or changes in the urbanization and industrialization of developing countries, may reduce demand for products or services provided by Infrastructure issuers.

 

   

Power Opportunities Companies Risk — A variety of factors may adversely affect the business or operations of Power Opportunities issuers, including, but not limited to: research and development costs related to new technologies; the success or failure of efforts to develop or implement new or existing technologies; government regulation (including environmental regulation); world events and economic conditions, the cyclical nature of the energy sector; intense competition; events relating to domestic and international political developments; energy conservation; environmental costs and liabilities; and the success of exploration projects.

Innovative Securities Risk (BIGZ): There can be no assurance that a company identified as innovative by the Manager will ultimately introduce a new product or service or that such product or service may not be significantly delayed.

Supply and Demand Risk (BGR): A decrease in the production of natural gas, natural gas liquids (“NGLs”), crude oil, coal or other energy commodities or a decrease in the volume of such commodities available for transportation, mining, processing, storage or distribution may adversely impact the financial performance of energy and natural resources companies. Production declines and volume decreases could be caused by various factors, including catastrophic events affecting production, depletion of resources, labor difficulties, environmental proceedings, increased regulations, equipment failures and unexpected maintenance problems, import supply disruption, increased competition from alternative energy sources or commodity prices. Alternatively, a sustained decline in demand for such commodities could also adversely affect the financial performance of energy and natural resources companies. Factors which could lead to a decline in demand include economic recession or other adverse economic conditions, higher fuel taxes or governmental regulations, increases in fuel economy, consumer shifts to the use of alternative fuel sources, changes in commodity prices, or weather.

Depletion and Exploration Risk (BGR): Many energy and natural resources companies are either engaged in the production of natural gas, NGLs, crude oil, refined petroleum products or coal, or are engaged in transporting, storing, distributing and processing these items on behalf of shippers. To maintain or grow their revenues, these companies or their customers need to maintain or expand their reserves through exploration of new sources of supply, through the development of existing sources, through

 

 

I N V E S T M E N T   O 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

  201


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

acquisitions, or through long-term contracts to acquire reserves. The financial performance of energy and natural resources companies may be adversely affected if they, or the companies to whom they provide the service, are unable to cost-effectively acquire additional reserves sufficient to replace the natural decline.

Commodity Pricing Risk (BGR): The operations and financial performance of energy and natural resources companies may be directly affected by energy commodity prices, especially those energy and natural resources companies which own the underlying energy commodity. Commodity prices fluctuate for several reasons, including changes in market and economic conditions, the impact of weather on demand, levels of domestic production and imported commodities, energy conservation, domestic and foreign governmental regulation and taxation and the availability of local, intrastate and interstate transportation systems. Volatility of commodity prices, which may lead to a reduction in production or supply, may also negatively impact the performance of energy and natural resources companies which are solely involved in the transportation, processing, storing, distribution or marketing of commodities. Volatility of commodity prices may also make it more difficult for energy and natural resources companies to raise capital to the extent the market perceives that their performance may be directly or indirectly tied to commodity prices.

Leverage Risk: The Trust utilizes leverage for investment purposes by entering into reverse repurchase agreements, derivative instruments with leverage embedded in then and dollar rolls, as applicable. 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.

Reverse Repurchase Agreements Risk (BST, BDJ, BME, BCX, BUI, BSTZ, BMEZ and BIGZ): 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.

Dollar Rolls Risk (BST, BME, BSTZ, BMEZ and BIGZ): Dollar rolls involve the risk that the market value of the securities that the Trust is committed to buy may decline below the price of the securities the Trust has sold. These transactions may involve leverage.

When-Issued and Delayed Delivery Securities and Forward Commitments Risk (BDJ, BME, BCX, BSTZ and BMEZ): When-issued and delayed delivery securities and forward commitments involve the risk that the security the Trust buys will lose value prior to its delivery. There also is the risk that the security will not be issued or that the other party to the transaction will not meet its obligation. If this occurs, the Trust may lose both the investment opportunity for the assets it set aside to pay for the security and any gain in the security’s price.

Short Sales Risk (BST, BDJ, BGY, BCX, BUI, BSTZ and BMEZ): Because making short sales in securities that it does not own exposes the Trust to the risks associated with those securities, such short sales involve speculative exposure risk. The Trust will incur a loss as a result of a short sale if the price of the security increases between the date of the short sale and the date on which the Trust replaces the security sold short.

Repurchase Agreements and Purchase and Sale Contracts Risk (BDJ, BME, BCX, BSTZ and BMEZ): If the other party to a repurchase agreement or purchase and sale contract defaults on its obligation under the agreement, the Trust may suffer delays and incur costs or lose money in exercising its rights under the agreement. If the seller fails to repurchase the security in either situation and the market value of the security declines, the Trust may lose money.

Risks Associated with Private Company Investments (BST, BSTZ, BMEZ and BIGZ): Private companies are generally not subject to SEC reporting requirements, are not required to maintain their accounting records in accordance with generally accepted accounting principles, and are not required to maintain effective internal controls over financial reporting. As a result, the Manager may not have timely or accurate information about the business, financial condition and results of operations of the private companies in which the Trust invests. There is risk that the Trust may invest on the basis of incomplete or inaccurate information, which may adversely affect the Trust’s investment performance. Private companies in which the Trust may invest may have limited financial resources, shorter operating histories, more asset concentration risk, narrower product lines and smaller market shares than larger businesses, which tend to render such private companies more vulnerable to competitors’ actions and market conditions, as well as general economic downturns.

These companies generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their

 

 

202  

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


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

competitive position. These companies may have difficulty accessing the capital markets to meet future capital needs, which may limit their ability to grow or to repay their outstanding indebtedness upon maturity. In addition, the Trust’s investment also may be structured as pay-in-kind securities with minimal or no cash interest or dividends until the company meets certain growth and liquidity objectives.

Typically, investments in private companies are in restricted securities that are not traded in public markets and subject to substantial holding periods, so that the Trust may not be able to resell some of its holdings for extended periods, which may be several years. There can be no assurance that the Trust will be able to realize the value of private company investments in a timely manner.

 

   

Late-Stage Private Companies Risk (BMEZ and BIGZ) — Investments in late-stage private companies involve greater risks than investments in shares of companies that have traded publicly on an exchange for extended periods of time. These investments may present significant opportunities for capital appreciation but involve a high degree of risk that may result in significant decreases in the value of these investments. The Trust may not be able to sell such investments when the Manager deems it appropriate to do so because they are not publicly traded. As such, these investments are generally considered to be illiquid until a company’s public offering (which may never occur) and are often subject to additional contractual restrictions on resale following any public offering that may prevent the Trust from selling its shares of these companies for a period of time. See “Illiquid Investments Risk.” Market conditions, developments within a company, investor perception or regulatory decisions may adversely affect a late-stage private company and delay or prevent such a company from ultimately offering its securities to the public. If a company does issue shares in an IPO, IPOs are risky and volatile and may cause the value of the Trust’s investment to decrease significantly.

 

   

Pre-IPO Securities Risk (BSTZ) — Investments in pre-IPO securities involve greater risks than investments in shares of companies that have traded publicly on an exchange for extended periods of time. These investments may present significant opportunities for capital appreciation but involve a high degree of risk that may result in significant decreases in the value of these investments. Issuers of pre-IPO securities may not have established products, experienced management or earnings history. The Trust may not be able to sell such investments when the Manager deems it appropriate to do so because they are not publicly traded. As such, these investments are generally considered to be illiquid until a company’s public offering (which may never occur) and are often subject to additional contractual restrictions on resale following any public offering that may prevent the Trust from selling its shares of these companies for a period of time. See “Illiquid Investments Risk.” Market conditions, developments within a company, investor perception or regulatory decisions may adversely affect an issuer of pre-IPO securities and delay or prevent such an issuer from ultimately offering its securities to the public. If a company does issue shares in an IPO, IPOs are risky and volatile and may cause the value of the Trust’s investment to decrease significantly.

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 (BST, BME, BCX, BUI, BSTZ, BMEZ and BIGZ): Subject to the limitations set forth in the 1940 Act and the rules thereunder, the Trust may acquire shares in other investment companies and in exchange-traded funds (“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 (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 fund, the ability of the Trust itself to hold other investment companies may be limited.

Subsidiary Risk (BCX): By investing in the Subsidiary, the Trust is indirectly exposed to the risks associated with the Subsidiary’s investments. The commodity-related instruments held by the Subsidiary are generally similar to those that are permitted to be held by the Trust and are subject to the same risks that apply to similar investments if held directly by the Trust (see “Commodities Related Investments Risk” above). There can be no assurance that the investment objective of the Subsidiary will be achieved. The Subsidiary is not registered under the 1940 Act, and, unless otherwise noted, is not subject to all the investor protections of the 1940 Act. However, the Trust wholly owns and controls the Subsidiary, and the Trust and the Subsidiary are both managed by Manager, making it unlikely that the Subsidiary will take action contrary to the interests of the Trust and its shareholders. The Board has oversight responsibility for the investment activities of the Trust, including its investment in the Subsidiary, and the Trust’s role as sole shareholder of the Subsidiary. The Subsidiary is subject to the same investment restrictions and limitations, and follows the same compliance policies and procedures, as the Trust. Changes in the laws of the United States and/or the Cayman Islands could result in the inability of the Trust and/or the Subsidiary to operate as described and could adversely affect the Trust.

Securities Lending Risk (BST, BDJ, BME, BGY, BCX, BUI, BSTZ, BMEZ and BIGZ): Securities lending involves the risk that the borrower may fail to return the securities in a timely manner or at all. As a result, the Trust may lose money and there may be a delay in recovering the loaned securities. The Trust could also lose money if it does not

 

 

I N V E S T M E N T   O 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

  203


Investment Objectives, Policies and Risks  (continued)

Recent Changes (continued)

 

recover the securities and/or the value of the collateral falls, including the value of investments made with cash collateral. These events could trigger adverse tax consequences for the Trust.

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.

 

 

204  

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


Automatic Dividend Reinvestment Plan

 

Pursuant to BGR, CII, BDJ, BOE, BGY, BME, BMEZ, BIGZ, BCX, BST, BSTZ and BUI’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 respective 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 BGR, CII, BDJ, BOE, BGY, BME, BMEZ, BIGZ, BCX, BST, BSTZ and BUI declare a dividend or determine 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 Trusts (“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 each 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.

Each Trust reserves the right to amend or terminate the Reinvestment Plan. There is no direct service charge to participants in the Reinvestment Plan; however, each Trust reserves the right to amend the Reinvestment Plan to include a service charge payable by the participants. Participants in BMEZ, BIGZ, BST and BSTZ that request a sale of shares are subject to a $2.50 sales fee and a $0.15 per share sold brokerage commission fee. Participants in BGR, CII, BDJ, BOE, BGY, BME, BME, BCX and BUI that request a sale of shares are subject to a $0.02 per share sold brokerage commission. 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.

 

 

A U T O M A T I C   D I V I D E N D   R E I N V E S T M E N T   P L A N

  205


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

 

 

206  

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


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

 

 

T R U S T E E   A N D   O F F I C E R   I N F O R M A T I O N

  207


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 Fund 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.

 

 

208  

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


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.

 

Effective June 10, 2021, Stayce D. Harris and J. Phillip Holloman were each appointed to serve as a Trustee of the Trusts. Effective July 30, 2021, Lorenzo A. Flores was appointed to serve as a Trustee of the Trusts.

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

Effective June 1, 2021, BIGZ’s portfolio managers are William Broadbent, Chris Accettella, Kyle McClements,Phil Ruvinsky and Misha Lozovik. Mr. Lozovik has been a Director at BlackRock since 2016.

Effective June 30, 2021, BDJ’s portfolio managers are Chris Accettella, Kyle McClements,Tony DeSpirito and David Zhao.

Effective January 12, 2022, BOE’s and BGY’s portfolio managers are Chris Accettella, Kyle McClements, Olivia Treharne and Molly Greenen. Ms. Greenen has been a Director at BlackRock since 2013.

 

 

T R U S T E E   A N D   O F F I C E R   I N F O R M A T I O N

  209


Additional Information

 

Proxy Results

The Annual Meeting of Shareholders was held on July 29, 2021 for shareholders of record on June 1, 2021, to elect trustee nominees for each Trust. There were no broker non-votes with regard to any of the Trusts.

Shareholders elected the Class II Trustees as follows:

 

  

 

  J. Phillip Holloman      Catherine A. Lynch      Karen P. Robards      Frank J. Fabozzi  
 

 

 

    

 

 

    

 

 

    

 

 

 
Trust Name   Votes For     Votes Withheld      Votes For     Votes Withheld      Votes For     Votes Withheld      Votes For     Votes Withheld  

BDJ

    145,255,580       3,024,757        143,013,134       5,267,203        142,726,811       5,553,526        141,670,128       6,610,209  

BGR

    22,572,169       593,643        21,885,262       1,280,550        21,864,973       1,300,839        21,877,626       1,288,186  

BOE

    54,287,333       1,911,524        47,446,660       8,752,197        47,438,891       8,759,966        47,439,479       8,759,378  

BME

    9,999,927       240,549        10,068,651       171,825        10,051,707       188,769        9,995,120       245,356  

BGY

    88,956,905       3,056,844        82,535,090       9,478,659        82,499,383       9,514,366        82,438,739       9,575,010  

BCX

    71,367,846       895,473        68,639,415       3,623,904        68,522,990       3,740,329        68,558,704       3,704,615  

BUI

    15,766,378       357,718        15,756,893       367,203        15,762,216       361,880        15,750,302       373,794  

BST

    20,051,987       328,993        20,131,461       249,519        20,123,060       257,920        20,070,487       310,493  

For the Trusts listed above,Trustees whose term of office continued after the Annual Meeting of Shareholders because they were not up for election are Michael J. Castellano, Richard E. Cavanagh, Cynthia L. Egan, Robert Fairbairn, Stayce Harris, R. Glenn Hubbard, John M. Perlowski and W. Carl Kester. Lorenzo A. Flores was appointed as a Trustee effective July 30, 2021.

Shareholders elected the Class II Trustees as follows:

 

  

 

  R. Glenn Hubbard      W. Carl Kester      John M. Perlowski      Karen P. Robards  
 

 

 

    

 

 

    

 

 

    

 

 

 
Trust Name   Votes For     Votes Withheld      Votes For     Votes Withheld      Votes For     Votes Withheld      Votes For     Votes Withheld  

BSTZ

    68,592,567       1,189,461        68,625,689       1,156,339        68,688,739       1,093,289        68,714,043       1,067,985  

BMEZ

    102,094,639       1,405,121        102,046,888       1,452,872        102,083,689       1,416,071        102,168,627       1,331,133  

CII

    28,130,521       8,874,582        35,436,253       1,568,850        35,663,369       1,341,734        28,009,282       8,995,821  

For the Trusts listed above, Trustees whose term of office continued after the Annual Meeting of Shareholders because they were not up for election are Michael J. Castellano, Richard E. Cavanagh, Cynthia L. Egan, Robert Fairbairn, Stayce Harris, J. Phillip Holloman, Catherine A. Lynch and Frank J. Fabozzi. Lorenzo A. Flores was appointed as a Trustee effective July 30, 2021.

Trust Certification

The Trusts are listed for trading on the NYSE and have filed with the NYSE their annual chief executive officer certification regarding compliance with the NYSE’s listing standards. The Trusts 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 Trusts 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.

 

 

210  

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


Additional Information  (continued)

 

Dividend Policy

Each Trust’s policy is to make monthly distributions to shareholders. In order to provide shareholders with a more stable level of dividend distributions, each 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 each Trust.

The distributions paid by a Trust for any particular month may be more or less than the amount of net investment income earned by a Trust during such month. Furthermore, the final tax characterization of distributions is determined after the year-end of a Trust and is reported in each Trust’s annual report to shareholders. Distributions can be characterized as ordinary income, capital gains and/or return of capital. Each 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 a 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

The Trusts, other than BME, BST and BUI, do not make available copies of their Statements of Additional Information because the Trusts’ shares, other than BME, BST and BUI, are not continuously offered, which means that the Statement of Additional Information of each Trust, other than BME, BST and BUI, has not been updated after completion of the respective Trust’s offerings and the information contained in each Trust’s Statement of Additional Information may have become outdated.

BME’s, BST’s and BUI’s Statements of Additional Information include additional information about the Board and are available, without charge upon request by calling (800)882-0052.

The following information is a summary of certain changes since December 31, 2020. This information may not reflect all of the changes that have occurred since you purchased the relevant Trust.

Except if noted otherwise herein, there were no changes to the Trusts’ charters or by-laws that would delay or prevent a change of control of the Trusts 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 Trusts’ portfolios.

In accordance with Section 23(c) of the Investment Company Act of 1940, each 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 Trusts 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 Trusts and does not, and is not intended to, incorporate BlackRock’s website in this report.

Electronic Delivery

Shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual shareholder reports and, for BME, BST and BUI only, prospectuses, by enrolling in the electronic delivery program. Electronic copies of shareholder reports and, for BME, BST and BUI only, 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 Trusts will mail only one copy of shareholder documents, including for BME, BST and BUI only, 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 Trusts at (800) 882-0052.

 

 

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

  211


Additional Information  (continued)

 

Availability of Quarterly Schedule of Investments

The Trusts file their complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to their reports on Form N-PORT. The Trusts’ Forms N-PORT are available on the SEC’s website at sec.gov. Additionally, each 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 Trusts use to determine how to vote proxies relating to portfolio securities and information about how the Trusts voted proxies relating to securities held in the Trusts’ portfolios 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 Trusts 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 Trusts. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Trusts and does not, and is not intended to, incorporate BlackRock’s website in this report.

Shelf Offering Program

From time-to-time, BME, BST and BUI may seek to raise additional equity capital through an equity shelf program (a “Shelf Offering”). In a Shelf Offering, BME, BST and BUI 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 BME’s, BST’s and BUI’s net asset value (“NAV”) per Common Share (calculated within 48 hours of pricing). While any such Shelf Offering may allow BME, BST and BUI 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.

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.

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.

 

 

212  

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


Additional Information  (continued)

 

Trust and Service Providers

Investment Adviser

BlackRock Advisors, LLC

Wilmington, DE 19809

Sub-Adviser

BlackRock International Limited(a)

Edinburgh, EH3 8BL

United Kingdom

Accounting Agent and Custodian

State Street Bank and Trust Company

Boston, MA 02111

Transfer Agent

Computershare Trust Company, N.A.

Canton, MA 02021

 

Distributor

BlackRock Investments, LLC(b)

New York, NY 10022

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Boston, MA 02116

Legal Counsel

Willkie Farr & Gallagher LLP

New York, NY 10019

Address of the Trusts

100 Bellevue Parkway

Wilmington, DE 19809

 

 

(a)

For BGR, BOE, BGY, BCX and BUI.

(b)

For BME, BST and BUI.

 

 

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

  213


Glossary of Terms Used in this Report

 

Currency Abbreviation
AUD    Australian Dollar
CAD    Canadian Dollar
CHF    Swiss Franc
DKK    Danish Krone
EUR    Euro
GBP    British Pound
HKD    Hong Kong Dollar
JPY    Japanese Yen
MXN    Mexican Peso
NOK    Norwegian Krone
SEK    Swedish Krona
SGD    Singapore Dollar
USD    United States Dollar
Portfolio Abbreviation
ADR    American Depositary Receipt
GDR    Global Depositary Receipt
LP    Limited Partnership
PJSC    Public Joint Stock Company
REIT    Real Estate Investment Trust
SAB    Special Assessment Bonds
 

 

 

214  

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


 

 

 

 

 

 

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.

CEF-BK9-12/21-AR

 

 

LOGO

   LOGO


(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    
End
   Previous
Fiscal Year    
End
   Current
Fiscal Year    
End
   Previous
Fiscal Year    
End
   Current
Fiscal Year    
End
   Previous
Fiscal Year    
End
   Current
Fiscal Year    
End
   Previous
Fiscal Year    
End
BlackRock Utilities, Infrastructure & Power Opportunities Trust        $36,158    $37,230    $4,207    $4,000    $18,400    $17,400    $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 ( the “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 End    Previous Fiscal Year End

(b) Audit-Related Fees1

   $0    $0

(c) Tax Fees2

   $0    $0

(d) All Other Fees3

   $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.

3 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., unanticipated but permissible services). The Committee is informed of each service approved

 

3


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
End
 

Previous Fiscal Year

End

       
BlackRock Utilities, Infrastructure & Power Opportunities Trust   $22,607   $21,400

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 End

  

Previous Fiscal

Year End

$2,032,000

   $1,984,000

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 Registrants

 

  (a)

The following individuals are members of the registrant’s separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(58)(A)):

Frank J. Fabozzi

Lorenzo A. Flores

J. Phillip Holloman

 

4


Catherine A. Lynch

Karen P. Robards

 

  (b)

Not Applicable

 

Item 6 –

Investments

(a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1(a) of this Form.

(b) Not Applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing.

 

Item 7 –

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – The board of directors has delegated the voting of proxies for the Fund’s portfolio securities to the Investment Adviser pursuant to the Investment Adviser’s proxy voting guidelines. Under these guidelines, the Investment Adviser will vote proxies related to Fund securities in the best interests of the Fund and its stockholders. From time to time, a vote may present a conflict between the interests of the Fund’s stockholders, on the one hand, and those of the Investment Adviser, or any affiliated person of the Fund or the Investment Adviser, on the other. In such event, provided that the Investment Adviser’s Equity Investment Policy Oversight Committee, or a sub-committee thereof (the “Oversight Committee”) is aware of the real or potential conflict or material non-routine matter and if the Oversight Committee does not reasonably believe it is able to follow its general voting guidelines (or if the particular proxy matter is not addressed in the guidelines) and vote impartially, the Oversight Committee may retain an independent fiduciary to advise the Oversight Committee on how to vote or to cast votes on behalf of the Investment Adviser’s clients. If the Investment Adviser determines not to retain an independent fiduciary, or does not desire to follow the advice of such independent fiduciary, the Oversight Committee shall determine how to vote the proxy after consulting with the Investment Adviser’s Portfolio Management Group and/or the Investment Adviser’s Legal and Compliance Department and concluding that the vote cast is in its client’s best interest notwithstanding the conflict. A copy of the Fund’s Proxy Voting Policy and Procedures are attached as Exhibit 99.PROXYPOL, a copy of the Fund’s Global Corporate Governance  & Engagement Principles are attached as Exhibit 99.GLOBAL.CORP.GOV and a copy of the Fund’s Corporate Governance and Proxy Voting Guidelines for U.S. Securities are attached as Exhibit 99.US.CORP.GOV. Information on how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, (i) at www.blackrock.com and (ii) on the SEC’s website at http://www.sec.gov.

 

Item 8 –

Portfolio Managers of Closed-End Management Investment Companies

(a)(1) As of the date of filing this Report:

The registrant is managed by a team of investment professionals comprised of Kyle G. McClements, CFA, Managing Director at BlackRock, Christopher Accettella, Director at BlackRock and Alastair Bishop, Managing Director at BlackRock. Messrs. McClements, Accettella and Bishop are the Fund’s portfolio managers and are responsible for the day-to-day management of the Fund’s portfolio and the selection of its investments. Messrs. McClements and Accettella have been

 

5


members of the Fund’s portfolio management team since 2011. Mr. Bishop has been a member of the Fund’s portfolio management team since 2017.

 

  Portfolio Manager   Biography  
  Kyle G. McClements, CFA   Managing Director of BlackRock since 2009; Director of BlackRock from 2006 to 2008; Vice President of BlackRock in 2005; Vice President of State Street Research & Management from 2004 to 2005.       
  Christopher Accettella   Director of BlackRock since 2008; Vice President of BlackRock, Inc. from 2005 to 2008.  
  Alastair Bishop   Managing Director of BlackRock since 2019; Director of BlackRock from 2010 to 2018.  

(a)(2) As of December 31, 2021:

 

    

(ii) Number of Other Accounts Managed

and Assets by Account Type

  

(iii) Number of Other Accounts and

Assets for Which Advisory Fee is

Performance-Based

(i) Name of

Portfolio Manager

 

Other

    Registered    

Investment

Companies

  

    Other Pooled    

Investment

Vehicles

  

Other

    Accounts    

  

Other

    Registered    

Investment

Companies

  

    Other Pooled    

Investment

Vehicles

  

Other

    Accounts    

Kyle G. McClements, CFA

  12    7    0    0    0    0
             
    $18.61 Billion    $1.36 Billion    $0    $0    $0    $0

Christopher Accettella

  12    4    0    0    0    0
             
    $18.61 Billion    $742.2 Million    $0    $0    $0    $0

Alastair Bishop

  7    14    3    0    1    0
             
    $4.02 Billion    $13.69 Billion    $30.32 Million    $0    $4.30 Million    $0

(iv) Portfolio Manager Potential Material Conflicts of Interest

BlackRock has built a professional working environment, firm-wide compliance culture and compliance procedures and systems designed to protect against potential incentives that may favor one account over another. BlackRock has adopted policies and procedures that address the allocation of investment opportunities, execution of portfolio transactions, personal trading by employees and other potential conflicts of interest that are designed to ensure that all client accounts are treated equitably over time. Nevertheless, BlackRock furnishes investment management and advisory services to numerous clients in addition to the Fund, and BlackRock may, consistent with applicable law, make investment recommendations to other clients or accounts (including accounts which are hedge funds or have performance or higher fees paid to BlackRock, or in which portfolio managers have a personal interest in the receipt of such fees), which may be the same as or different from those made to the Fund. In addition, BlackRock, Inc., its affiliates and significant shareholders and any officer, director, shareholder or employee may or may not have an interest in the securities whose purchase and sale BlackRock recommends to the Fund. BlackRock, Inc., or any of its affiliates or significant shareholders, or any officer, director, shareholder, employee or any member of their families may take different actions than those recommended to the Fund by BlackRock with respect to the same securities. Moreover, BlackRock may refrain from rendering any advice or services concerning

 

6


securities of companies of which any of BlackRock, Inc.’s (or its affiliates’ or significant shareholders’) officers, directors or employees are directors or officers, or companies as to which BlackRock, Inc. or any of its affiliates or significant shareholders or the officers, directors and employees of any of them has any substantial economic interest or possesses material non-public information. Certain portfolio managers also may manage accounts whose investment strategies may at times be opposed to the strategy utilized for a fund. It should also be noted that Mr. Bishop may be managing hedge fund and/or long only accounts, or may be part of a team managing hedge fund and/or long only accounts, subject to incentive fees. Mr. Bishop may therefore be entitled to receive a portion of any incentive fees earned on such accounts.

As a fiduciary, BlackRock owes a duty of loyalty to its clients and must treat each client fairly. When BlackRock purchases or sells securities for more than one account, the trades must be allocated in a manner consistent with its fiduciary duties. BlackRock attempts to allocate investments in a fair and equitable manner among client accounts, with no account receiving preferential treatment. To this end, BlackRock, Inc. has adopted policies that are intended to ensure reasonable efficiency in client transactions and provide BlackRock with sufficient flexibility to allocate investments in a manner that is consistent with the particular investment discipline and client base, as appropriate.

(a)(3) As of December 31, 2021:

Portfolio Manager Compensation Overview

The discussion below describes the portfolio managers’ compensation as of December 31, 2021.

BlackRock’s financial arrangements with its portfolio managers, its competitive compensation and its career path emphasis at all levels reflect the value senior management places on key resources. Compensation may include a variety of components and may vary from year to year based on a number of factors. The principal components of compensation include a base salary, a performance-based discretionary bonus, participation in various benefits programs and one or more of the incentive compensation programs established by BlackRock.

Base Compensation. Generally, portfolio managers receive base compensation based on their position with the firm.

Discretionary Incentive Compensation – Mr. Bishop

Generally, discretionary incentive compensation for Active Equity portfolio managers is based on a formulaic compensation program. BlackRock’s formulaic portfolio manager compensation program is based on team revenue and pre-tax investment performance relative to appropriate competitors or benchmarks over 1-, 3- and 5-year performance periods, as applicable. In most cases, these benchmarks are the same as the benchmark or benchmarks against which the performance of the funds or other accounts managed by the portfolio managers are measured. BlackRock’s Chief Investment Officers determine the benchmarks or rankings against which the performance of funds and other accounts managed by each portfolio management team is compared and the period of time over which performance is evaluated. With respect to this portfolio manager, such benchmarks for the Fund and other accounts are: Bloomberg Commodity Index Total Return; FTSE Gold Mines Index (Gross Total Return); FTSE Gold Mining Index -

 

7


expressed in JPY; FTSE Gold Mining Index - GBP Price; LIBOR 3 Month Index; MSCI 10/40 DW Energy (Net); MSCI ACWI Metals & Mining 30% Buffer 10/40 (1994) GBP Net TR; MSCI ACWI Metals & Mining 30% Buffer 10/40 (1994) USD Net TR; MSCI World Energy Net Daily TR Index; NYSE Arca Gold Miners Index EUR Net Total Return; S&P Global Natural Resources Index; S&P Global Natural Resources Index - In GBP; S&P Global Natural Resources Net Return.

A smaller element of portfolio manager discretionary compensation may include consideration of: financial results, expense control, profit margins, strategic planning and implementation, quality of client service, market share, corporate reputation, capital allocation, compliance and risk control, leadership, technology and innovation. These factors are considered collectively by BlackRock management and the relevant Chief Investment Officers.

Discretionary Incentive Compensation – Messrs. Accettella and McClements

Discretionary incentive compensation is a function of several components: the performance of BlackRock, Inc., the performance of the portfolio manager’s group within BlackRock, the investment performance, including risk-adjusted returns, of the firm’s assets or strategies under management or supervision by that portfolio manager, and/or the individual’s performance and contribution to the overall performance of these portfolios and BlackRock. Among other things, BlackRock’s Chief Investment Officers make a subjective determination with respect to each portfolio manager’s compensation based on the performance of the funds, other accounts or strategies managed by each portfolio manager. Performance is generally measured on a pre-tax basis over various time periods including 1-, 3- and 5- year periods, as applicable. The performance of some funds, other accounts or strategies may not be measured against a specific benchmark.

Distribution of Discretionary Incentive Compensation. Discretionary incentive compensation is distributed to portfolio managers in a combination of cash, deferred BlackRock, Inc. stock awards, and/or deferred cash awards that notionally track the return of certain BlackRock investment products.

Portfolio managers receive their annual discretionary incentive compensation in the form of cash. Portfolio managers whose total compensation is above a specified threshold also receive deferred BlackRock, Inc. stock awards annually as part of their discretionary incentive compensation. Paying a portion of discretionary incentive compensation in the form of deferred BlackRock, Inc. stock puts compensation earned by a portfolio manager for a given year “at risk” based on BlackRock’s ability to sustain and improve its performance over future periods. In some cases, additional deferred BlackRock, Inc. stock may be granted to certain key employees as part of a long-term incentive award to aid in retention, align interests with long-term shareholders and motivate performance. Deferred BlackRock, Inc. stock awards are generally granted in the form of BlackRock, Inc. restricted stock units that vest pursuant to the terms of the applicable plan and, once vested, settle in BlackRock, Inc. common stock. The portfolio managers of this Fund have deferred BlackRock, Inc. stock awards.

For certain portfolio managers, a portion of the discretionary incentive compensation is also distributed in the form of deferred cash awards that notionally track the returns of select

 

8


BlackRock investment products they manage, which provides direct alignment of portfolio manager discretionary incentive compensation with investment product results. Deferred cash awards vest ratably over a number of years and, once vested, settle in the form of cash. Only portfolio managers who manage specified products and whose total compensation is above a specified threshold are eligible to participate in the deferred cash award program.

Other Compensation Benefits. In addition to base salary and discretionary incentive compensation, portfolio managers may be eligible to receive or participate in one or more of the following:

Incentive Savings Plans — BlackRock, Inc. has created a variety of incentive savings plans in which BlackRock, Inc. employees are eligible to participate, including a 401(k) plan, the BlackRock Retirement Savings Plan (RSP), and the BlackRock Employee Stock Purchase Plan (ESPP). The employer contribution components of the RSP include a company match equal to 50% of the first 8% of eligible pay contributed to the plan capped at $5,000 per year, and a company retirement contribution equal to 3-5% of eligible compensation up to the Internal Revenue Service limit ($290,000 for 2021). The RSP offers a range of investment options, including registered investment companies and collective investment funds managed by the firm. BlackRock, Inc. contributions follow the investment direction set by participants for their own contributions or, absent participant investment direction, are invested into a target date fund that corresponds to, or is closest to, the year in which the participant attains age 65. The ESPP allows for investment in BlackRock, Inc. common stock at a 5% discount on the fair market value of the stock on the purchase date. Annual participation in the ESPP is limited to the purchase of 1,000 shares of common stock or a dollar value of $25,000 based on its fair market value on the purchase date. Messrs. Accettella and McClements are eligible to participate in these plans.

United Kingdom-based portfolio managers are also eligible to participate in broad-based plans offered generally to BlackRock employees, including broad-based retirement, health and other employee benefit plans. For example, BlackRock has created a variety of incentive savings plans in which BlackRock employees are eligible to participate, including the BlackRock Retirement Savings Plan (RSP) and the BlackRock Employee Stock Purchase Plan (ESPP). The employer contribution to the RSP is between 10% and 15% of eligible pay capped at £160,000 per annum. The RSP offers a range of investment options, including several collective investment funds managed by the firm. BlackRock contributions follow the investment direction set by participants for their own contributions or, in the absence of an investment election being made, are invested into a target date fund that corresponds to, or is closest to, the year in which the participant attains age 65. The ESPP allows for investment in BlackRock common stock at a 5% discount on the fair market value of the stock on the purchase date. Annual participation in the ESPP is limited to the purchase of 1,000 shares of common stock or a US dollar value of $25,000 based on its fair market value on the purchase date. Mr. Bishop is eligible to participate in these plans.

(a)(4) Beneficial Ownership of Securities – As of December 31, 2021.

 

Portfolio Manager  

Dollar Range of Equity Securities

of the Fund Beneficially Owned

Kyle McClements, CFA   $100,001 - $500,000
Christopher Accettella   $10,001 - $50,000
Alastair Bishop   $50,001 - $100,000

 

9


(b) Not Applicable

 

Item 9 –

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable due to no such purchases during the period covered by this report.

 

Item 10 –

Submission of Matters to a Vote of Security Holders – There have been no material changes to these procedures.

 

Item 11 –

Controls and Procedures

(a) The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended.

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 12 –

Disclosure of Securities Lending Activities for Closed-End Management Investment Companies

(a) The following table shows the dollar amounts of income, and dollar amounts of fees and/or compensation paid, relating to the Fund’s securities lending activities during the fiscal year ended December 31, 2021.

BlackRock Utilities, Infrastructure & Power Opportunities Trust

(1)    Gross income from securities lending activities      $15,578      
(2)    Fees and/or compensation for securities lending activities and related services   
   (a)   Securities lending income paid to BIM for services as securities lending agent      $2,778            
   (b)   Collateral management expenses (including fees deducted from a polled cash collateral vehicle) not included in (a)      $127            
   (c)   Administrative fees not included in (a)      $0            
   (d)   Indemnification fees not included in (a)      $0            
   (e)   Rebate (paid to borrowers)      $12            
   (f)   Other fees not included in (a)      $0            
(3)    Aggregate fees/compensation for securities lending activities      $2,917      
(4)    Net income from securities lending activities      $12,661      

(b) BlackRock Investment Management, LLC (“BIM”) serves as securities lending agent for the Fund and in that role administers the Fund’s securities lending program pursuant to the terms of a securities lending agency agreement entered into between the Fund and BIM.

 

Item 13 –

Exhibits attached hereto

 

10


(a)(1) Code of Ethics – See Item 2

(a)(2) Section 302 Certifications are attached

(a)(3) Any written solicitation to purchase securities under Rule 23c-1 – Not Applicable

(a)(4) Change in Registrant’s independent public accountant – Not Applicable

(b) Section 906 Certifications are attached

(c) Notices to the registrant’s common shareholders in accordance with the order under Section  6(c) of the 1940 Act granting an exemption from Section 19(b) of the 1940 Act and Rule 19b-1 under the 1940 Act, dated May 9, 20091

 

 

1 The Fund has received exemptive relief from the Securities and Exchange Commission permitting it to make periodic distributions of long-term capital gains with respect to its outstanding common stock as frequently as twelve times each year, and as frequently as distributions are specified by or in accordance with the terms of its outstanding preferred stock. This relief is conditioned, in part, on an undertaking by the Fund to make the disclosures to the holders of the Fund’s common shares, in addition to the information required by Section 19(a) of the 1940 Act and Rule 19a-1 thereunder. The Fund is likewise obligated to file with the SEC the information contained in any such notice to shareholders and, in that regard, has attached hereto copies of each such notice made during the period.

 

11


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BlackRock Utilities, Infrastructure & Power Opportunities Trust

 

   By:     

/s/ John M. Perlowski                            

       John M. Perlowski
       Chief Executive Officer (principal executive officer) of
       BlackRock Utilities, Infrastructure & Power Opportunities Trust

Date: February 24, 2022

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

   By:     

/s/ John M. Perlowski                            

       John M. Perlowski
       Chief Executive Officer (principal executive officer) of
       BlackRock Utilities, Infrastructure & Power Opportunities Trust

Date: February 24, 2022

 

   By:     

/s/ Trent Walker                            

       Trent Walker
       Chief Financial Officer (principal financial officer) of
       BlackRock Utilities, Infrastructure & Power Opportunities Trust

Date: February 24, 2022

 

12

EX-99. CERT

CERTIFICATION PURSUANT TO RULE 30a-2(a) UNDER THE 1940 ACT AND SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

 

I, John M. Perlowski, Chief Executive Officer (principal executive officer) of BlackRock Utilities, Infrastructure & Power Opportunities Trust, certify that:

1.            I have reviewed this report on Form N-CSR of BlackRock Utilities, Infrastructure & Power Opportunities Trust;

2.            Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.            Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4.            The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

a)            designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)            designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)            evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d)            disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.            The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)            all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b)            any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 24, 2022

/s/ John M. Perlowski        

John M. Perlowski

Chief Executive Officer (principal executive officer) of

BlackRock Utilities, Infrastructure & Power Opportunities Trust


EX-99. CERT

CERTIFICATION PURSUANT TO RULE 30a-2(a) UNDER THE 1940 ACT AND SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

 

I, Trent Walker, Chief Financial Officer (principal financial officer) of BlackRock Utilities, Infrastructure & Power Opportunities Trust, certify that:

1.            I have reviewed this report on Form N-CSR of BlackRock Utilities, Infrastructure & Power Opportunities Trust;

2.            Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.            Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4.            The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

a)            designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)            designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)            evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d)            disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.            The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)            all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b)            any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 24, 2022

/s/ Trent Walker        

Trent Walker

Chief Financial Officer (principal financial officer) of

BlackRock Utilities, Infrastructure & Power Opportunities Trust

 

Exhibit 99.906CERT

Certification Pursuant to Rule 30a-2(b) under the 1940 Act and

Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. § 1350, the undersigned officer of BlackRock Utilities, Infrastructure & Power Opportunities Trust (the “Registrant”), hereby certifies, to the best of his knowledge, that the Registrant’s Report on Form N-CSR for the period ended December 31, 2021 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: February 24, 2022

/s/ John M. Perlowski        

John M. Perlowski

Chief Executive Officer (principal executive officer) of

BlackRock Utilities, Infrastructure & Power Opportunities Trust

Pursuant to 18 U.S.C. § 1350, the undersigned officer of BlackRock Utilities, Infrastructure & Power Opportunities Trust (the “Registrant”), hereby certifies, to the best of his knowledge, that the Registrant’s Report on Form N-CSR for the period ended December 31, 2021 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: February 24, 2022

/s/ Trent Walker        

Trent Walker

Chief Financial Officer (principal financial officer) of

BlackRock Utilities, Infrastructure & Power Opportunities Trust

This certification is being furnished pursuant to Rule 30a-2(b) under the Investment Company Act of 1940, as amended, and 18 U.S.C. § 1350 and is not being filed as part of the Form N-CSR with the Securities and Exchange Commission.

BlackRock Utilities, Infrastructure & Power Opportunities Trust

Cusip: 09248D104

Ticker: BUI

 

Record Date

    December 17, 2021  

Pay Date

          December 31, 2021  

Distribution Amount per share

  $ 0.121000  

The following table sets forth the estimated amounts of the current distribution and the cumulative distributions paid this fiscal year to date from the following sources: net income, net realized short-term capital gains, net realized long-term capital gains and return of capital. All amounts are expressed per common share.

 

                         % Breakdown of the  
           % Breakdown      Total Cumulative      Total Cumulative  
           of the Current      Distributions for the      Distributions for the  
    Current Distribution      Distribution      Fiscal Year to Date      Fiscal Year to Date  

Net Income

  $ 0.024397        20%      $ 0.224593        15%  

Net Realized Short-Term Capital Gains

  $ -            0%      $ -            0%  

Net Realized Long-Term Capital Gains

  $ -            0%      $ 0.515860        36%  

Return of Capital

  $ 0.096603        80%      $ 0.711547        49%  
 

 

 

    

 

 

    

 

 

    

 

 

 

Total (per common share)

  $ 0.121000        100%      $ 1.452000        100%  
 

 

 

    

 

 

    

 

 

    

 

 

 

Average annual total return (in relation to NAV) for the 5-year period ending on November 30, 2021

 

        13.21%  
          

 

 

 

Annualized current distribution rate expressed as a percentage of NAV as of November 30, 2021

 

        5.83%  
          

 

 

 

Cumulative total return (in relation to NAV) for the fiscal year through November 30, 2021

 

        10.30%  
          

 

 

 

Cumulative fiscal year distributions as a percentage of NAV as of November 30, 2021

 

        5.35%  
          

 

 

 

You should not draw any conclusions about the Trust’s investment performance from the amount of this distribution or from the terms of the Trust’s Managed Distribution Plan.

The Fund estimates that it has distributed more than its net income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital does not necessarily reflect the Fund’s investment performance and should not be confused with ‘yield’ or ‘income’.

When distributions exceed total return performance, the difference will reduce the Fund’s net asset value per share.

The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.

Contact Number: 800-882-0052


BlackRock Utilities, Infrastructure & Power Opportunities Trust

Cusip: 09248D104

Ticker: BUI

 

Record Date

    January 14, 2022  

Pay Date

          January 31, 2022  

Distribution Amount per share

  $ 0.121000  

The following table sets forth the estimated amounts of the current distribution and the cumulative distributions paid this fiscal year to date from the following sources: net income, net realized short-term capital gains, net realized long-term capital gains and return of capital. All amounts are expressed per common share.

 

                         % Breakdown of the  
           % Breakdown      Total Cumulative      Total Cumulative  
           of the Current      Distributions for the      Distributions for the  
    Current Distribution      Distribution      Fiscal Year to Date      Fiscal Year to Date  

Net Income

  $ 0.014948        12%      $ 0.014948        12%  

Net Realized Short-Term Capital Gains

  $ 0.007730        6%      $ 0.007730        6%  

Net Realized Long-Term Capital Gains

  $ -            0%      $ -            0%  

Return of Capital

  $ 0.098322        82%      $ 0.098322        82%  
 

 

 

    

 

 

    

 

 

    

 

 

 

Total (per common share)

  $ 0.121000        100%      $ 0.121000        100%  
 

 

 

    

 

 

    

 

 

    

 

 

 

Average annual total return (in relation to NAV) for the 5-year period ending on December 31, 2021

 

        13.31%  
          

 

 

 

Annualized current distribution rate expressed as a percentage of NAV as of December 31, 2021

 

        5.62%  
          

 

 

 

Cumulative total return (in relation to NAV) for the fiscal year through December 31, 2021

 

        15.09%  
          

 

 

 

Cumulative fiscal year distributions as a percentage of NAV as of December 31, 2021

 

        0.47%  
          

 

 

 

You should not draw any conclusions about the Trust’s investment performance from the amount of this distribution or from the terms of the Trust’s Managed Distribution Plan.

The Fund estimates that it has distributed more than its net income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital does not necessarily reflect the Fund’s investment performance and should not be confused with ‘yield’ or ‘income’.

When distributions exceed total return performance, the difference will reduce the Fund’s net asset value per share.

The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.

Contact Number: 800-882-0052


BlackRock Utilities, Infrastructure & Power Opportunities Trust

Cusip: 09248D104

Ticker: BUI

 

Record Date

    February 15, 2022  

Pay Date

          February 28, 2022  

Distribution Amount per share

  $ 0.121000  

The following table sets forth the estimated amounts of the current distribution and the cumulative distributions paid this fiscal year to date from the following sources: net income, net realized short-term capital gains, net realized long-term capital gains and return of capital. All amounts are expressed per common share.

 

                         % Breakdown of the  
           % Breakdown      Total Cumulative      Total Cumulative  
           of the Current      Distributions for the      Distributions for the  
    Current Distribution      Distribution      Fiscal Year to Date      Fiscal Year to Date  

Net Income

  $ 0.032707        27%      $ 0.047457        19%  

Net Realized Short-Term Capital Gains

  $ 0.056867        47%      $ 0.064597        27%  

Net Realized Long-Term Capital Gains

  $ 0.031426        26%      $ 0.129946        54%  

Return of Capital

  $ -            0%      $ -            0%  
 

 

 

    

 

 

    

 

 

    

 

 

 

Total (per common share)

  $ 0.121000        100%      $ 0.242000        100%  
 

 

 

    

 

 

    

 

 

    

 

 

 

Average annual total return (in relation to NAV) for the 5-year period ending on January 31, 2022

 

        11.64%  
          

 

 

 

Annualized current distribution rate expressed as a percentage of NAV as of January 31, 2022

 

        5.95%  
          

 

 

 

Cumulative total return (in relation to NAV) for the fiscal year through January 31, 2022

 

        -5.10%  
          

 

 

 

Cumulative fiscal year distributions as a percentage of NAV as of January 31, 2022

 

        0.50%  
          

 

 

 

You should not draw any conclusions about the Trust’s investment performance from the amount of this distribution or from the terms of the Trust’s Managed Distribution Plan.

The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.

Contact Number: 800-882-0052

Closed-End Fund Proxy Voting Policy

August 1, 2021

 

LOGO

 

 

  Closed-End Fund Proxy Voting Policy

 

   Procedures Governing Delegation of Proxy Voting to Fund Adviser

 

 

  Effective Date: August 1, 2021

 

 

 

  Applies to the following types of Funds registered under the 1940 Act:

   Open-End Mutual Funds (including money market funds)

   Money Market Funds Only

   iShares and BlackRock ETFs

   Closed-End Funds

   Other

 

 

Objective and Scope

Set forth below is the Closed-End Fund Proxy Voting Policy.

Policy / Document Requirements and Statements

The Boards of Trustees/Directors (the “Directors”) of the closed-end funds advised by BlackRock Advisors, LLC (“BlackRock”) (the “Funds”) have the responsibility for the oversight of voting proxies relating to portfolio securities of the Funds, and have determined that it is in the best interests of the Funds and their shareholders to delegate that responsibility to BlackRock as part of BlackRock’s authority to manage, acquire and dispose of account assets, all as contemplated by the Funds’ respective investment management agreements.

BlackRock has adopted guidelines and procedures (together and as from time to time amended, the “BlackRock Proxy Voting Guidelines”) governing proxy voting by accounts managed by BlackRock. BlackRock will cast votes on behalf of each of the Funds on specific proxy issues in respect of securities held by each such Fund in accordance with the BlackRock Proxy Voting Guidelines; provided, however, that in the case of underlying closed-end funds (including business development companies and other similarly-situated asset pools) held by the Funds that have, or are proposing to adopt, a classified board structure, BlackRock will typically (a) vote in favor of proposals to adopt classification and against proposals to eliminate classification, and (b) not vote against directors as a result of their adoption of a classified board structure.

BlackRock will report on an annual basis to the Directors on (1) a summary of all proxy votes that BlackRock has made on behalf of the Funds in the preceding year together with a representation that all votes were in accordance with the BlackRock Proxy Voting Guidelines (as modified pursuant to the immediately preceding paragraph), and (2) any changes to the BlackRock Proxy Voting Guidelines that have not previously been reported.

 

 

 

LOGO

 

  Public   Page 1 of 1

LOGO


Contents

 

Introduction to BlackRock

    3  

Philosophy on investment stewardship

    3  

Key themes

    5  

Boards and directors

    6  

Auditors and audit-related issues

    9  

Capital structure, mergers, asset sales, and other special transactions

    10  

Compensation and benefits

    10  

Environmental and social issues

    11  

General corporate governance matters and shareholder protections

    13  

Shareholder proposals

    14  

BlackRock’s oversight of its investment stewardship activities

    15  

Vote execution

    16  

Conflicts management policies and procedures

    16  

Securities lending

    18  

Voting guidelines

    19  

Reporting and vote transparency

    19  

 

The purpose of this document is to provide an overarching explanation of BlackRock’s approach globally to our responsibilities as a shareholder on behalf of our clients, our expectations of companies, and our commitments to clients in terms of our own governance and transparency.

 

BlackRock Investment Stewardship   Global Principles  |  2


Introduction to BlackRock

BlackRock’s purpose is to help more and more people experience financial well-being. We manage assets on behalf of institutional and individual clients, across a full spectrum of investment strategies, asset classes, and regions. Our client base includes pension plans, endowments, foundations, charities, official institutions, insurers, and other financial institutions, as well as individuals around the world. As part of our fiduciary duty to our clients, we have determined that it is generally in the best long-term interest of our clients to promote sound corporate governance as an informed, engaged shareholder. At BlackRock, this is the responsibility of the Investment Stewardship team.

Philosophy on investment stewardship

Companies are responsible for ensuring they have appropriate governance structures to serve the interests of shareholders and other key stakeholders. We believe that there are certain fundamental rights attached to shareholding. Companies and their boards should be accountable to shareholders and structured with appropriate checks and balances to ensure that they operate in shareholders’ best interests to create sustainable value. Shareholders should have the right to vote to elect, remove, and nominate directors, approve the appointment of the auditor, and amend the corporate charter or by-laws. Shareholders should be able to vote on key board decisions that are material to the protection of their investment, including but not limited to, changes to the purpose of the business, dilution levels and preemptive rights, and the distribution of income and capital structure. In order to make informed decisions, we believe that shareholders have the right to sufficient and timely information. In addition, shareholder voting rights should be proportionate to their economic ownership—the principle of “one share, one vote” helps achieve this balance.

Consistent with these shareholder rights, we believe BlackRock has a responsibility to monitor and provide feedback to companies in our role as stewards of our clients’ investments. Investment stewardship is how we use our voice as an investor to promote sound corporate governance and business practices to help maximize long-term shareholder value for our clients, the vast majority of whom are investing for long-term goals such as retirement. BlackRock Investment Stewardship (“BIS”) does this through engagement with management teams and/or board members on material business issues, including but not limited to environmental, social, and governance (“ESG”) matters and, for those clients who have given us authority, through voting proxies in their best long-term economic interests. We also participate in the public dialogue to help shape global norms and industry standards with the goal of supporting a policy framework consistent with our clients’ interests as long-term shareholders.

BlackRock looks to companies to provide timely, accurate, and comprehensive disclosure on all material governance and business matters, including ESG-related issues. This transparency allows shareholders to appropriately understand and assess how relevant risks and opportunities are being effectively identified and managed. Where company reporting and disclosure is inadequate or we believe the approach taken may be inconsistent with sustainable, long-term value creation, we will engage with a company and/or vote in a manner that encourages progress.

BlackRock views engagement as an important activity; engagement provides us with the opportunity to improve our understanding of the business and risks and opportunities that are material to the companies in which our clients invest, including those related to ESG. Engagement also informs our voting decisions. As long-term investors on behalf of clients, we seek to have regular and continuing dialogue with executives and board directors to advance sound governance and sustainable business practices, as well as to understand the effectiveness of the company’s management and oversight of

 

BlackRock Investment Stewardship   Global Principles  |  3


material issues. Engagement is an important mechanism for providing feedback on company practices and disclosures, particularly where we believe they could be enhanced. Similarly, it provides us an opportunity to hear directly from company boards and management on how they believe their actions are aligned with sustainable, long-term value creation. We primarily engage through direct dialogue, but may use other tools such as written correspondence, to share our perspectives.

We generally vote in support of management and boards that demonstrate an approach consistent with creating sustainable, long-term value. If we have concerns about a company’s approach, we may choose to explain our expectations to the company’s board and management. Following our engagement, we may signal through our voting that we have outstanding concerns, generally by voting against the reelection of directors we view as having responsibility for an issue. We apply our regional proxy voting guidelines to achieve the outcome we believe is most aligned with our clients’ long-term economic interests.

 

BlackRock Investment Stewardship   Global Principles  |  4


Key themes

We recognize that accepted standards and norms of corporate governance can differ between markets. However, we believe there are certain fundamental elements of governance practice that are intrinsic globally to a company’s ability to create long-term value. This set of global themes are set out in this overarching set of principles (the “Principles”), which are anchored in transparency and accountability. At a minimum, we believe companies should observe the accepted corporate governance standards in their domestic market and ask that, if they do not, they explain how their approach better supports sustainable long-term value creation.

These Principles cover seven key themes:

 

Boards and directors

 

 

Auditors and audit-related issues

 

 

Capital structure, mergers, asset sales, and other special transactions

 

 

Compensation and benefits

 

 

Environmental and social issues

 

 

General corporate governance matters and shareholder protections

 

 

Shareholder proposals

Our regional and market-specific voting guidelines explain how these Principles inform our voting decisions in relation to specific ballot items for shareholder meetings.

 

BlackRock Investment Stewardship   Global Principles  |  5


Boards and directors

Our primary focus is on the performance of the board of directors. The performance of the board is critical to the economic success of the company and the protection of shareholders’ interests. As part of their responsibilities, board members owe fiduciary duties to shareholders in overseeing the strategic direction and operation of the company. For this reason, BIS sees engaging with and the election of directors as one of our most important and impactful responsibilities.

We support boards whose approach is consistent with creating sustainable, long-term value. This includes the effective management of strategic, operational, financial, and material ESG factors and the consideration of key stakeholder interests. The board should establish and maintain a framework of robust and effective governance mechanisms to support its oversight of the company’s strategic aims. We look to the board to articulate the effectiveness of these mechanisms in overseeing the management of business risks and opportunities and the fulfillment of the company’s purpose. Disclosure of material issues that affect the company’s long-term strategy and value creation, including material ESG factors, is essential for shareholders to be able to appropriately understand and assess how risks are effectively identified, managed and mitigated.

Where a company has not adequately disclosed and demonstrated it has fulfilled these responsibilities, we will consider voting against the re-election of directors whom we consider having particular responsibility for the issue. We assess director performance on a case-by-case basis and in light of each company’s circumstances, taking into consideration our assessment of their governance, business practices that support sustainable, long-term value creation, and performance. In serving the interests of shareholders, the responsibility of the board of directors includes, but is not limited to, the following:

 

 

Establishing an appropriate corporate governance structure

 

 

Supporting and overseeing management in setting long-term strategic goals and applicable measures of value-creation and milestones that will demonstrate progress, and taking steps to address anticipated or actual obstacles to success

 

 

Providing oversight on the identification and management of material, business operational, and sustainability-related risks

 

 

Overseeing the financial resilience of the company, the integrity of financial statements, and the robustness of a company’s Enterprise Risk Management1 framework

 

 

Making decisions on matters that require independent evaluation, which may include mergers, acquisitions and dispositions, activist situations or other similar cases

 

 

1 Enterprise risk management is a process, effected by the entity’s board of directors, management, and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within the risk appetite, to provide reasonable assurance regarding the achievement of objectives. (Committee of Sponsoring Organizations of the Treadway Commission (COSO), Enterprise Risk Management — Integrated Framework, September 2004, New York, NY).

 

    BlackRock Investment Stewardship   Global Principles  |  6


 

Establishing appropriate executive compensation structures

 

 

Addressing business issues, including environmental and social risks and opportunities, when they have the potential to materially impact the company’s long-term value

There should be clear definitions of the role of the board, the committees of the board, and senior management. Set out below are ways in which boards and directors can demonstrate a commitment to acting in the best long-term economic interests of all shareholders.

We will seek to engage with the appropriate directors where we have concerns about the performance of the company, board, or individual directors and may signal outstanding concerns in our voting.

Regular accountability

BlackRock believes that directors should stand for re-election on a regular basis, ideally annually. In our experience, annual re-elections allow shareholders to reaffirm their support for board members or hold them accountable for their decisions in a timely manner. When board members are not re-elected annually, we believe it is good practice for boards to have a rotation policy to ensure that, through a board cycle, all directors have had their appointment re-confirmed, with a proportion of directors being put forward for re-election at each annual general meeting.

Effective board composition

Regular director elections also give boards the opportunity to adjust their composition in an orderly way to reflect the evolution of the company’s strategy and the market environment. BlackRock believes it is beneficial for new directors to be brought onto the board periodically to refresh the group’s thinking and in a manner that supports both continuity and appropriate succession planning. We consider the average overall tenure of the board, where we are seeking a balance between the knowledge and experience of longer-serving members and the fresh perspectives of newer members. We expect companies to keep under regular review the effectiveness of their board (including its size), and assess directors nominated for election or re-election in the context of the composition of the board as a whole. This assessment should consider a number of factors, including the potential need to address gaps in skills, experience, diversity, and independence.

When nominating new directors to the board, we ask that there is sufficient information on the individual candidates so that shareholders can assess the suitability of each individual nominee and the overall board composition. These disclosures should give an understanding of how the collective experience and expertise of the board aligns with the company’s long-term strategy and business model.

We are interested in diversity in the board room as a means to promoting diversity of thought and avoiding ‘group think’. We ask boards to disclose how diversity is considered in board composition, including demographic characteristics such as gender, race/ethnicity and age; as well as professional characteristics, such as a director’s industry experience, specialist areas of expertise and geographic location. We assess a board’s diversity in the context of a company’s domicile, business model and strategy. Self-identified board demographic diversity can usefully be disclosed in aggregate, consistent with local law. We believe boards should aspire to meaningful diversity of membership, at least consistent with local regulatory requirements and best practices, while recognizing that building a strong, diverse board can take time.

This position is based on our view that diversity of perspective and thought – in the board room, in the management team and throughout the company – leads to better long term economic outcomes for

 

    BlackRock Investment Stewardship   Global Principles  |  7


companies. Academic research already reveals correlations between specific dimensions of diversity and effects on decision-making processes and outcomes.2 In our experience, greater diversity in the board room contributes to more robust discussions and more innovative and resilient decisions. Over time, greater diversity in the board room can also promote greater diversity and resilience in the leadership team, and the workforce more broadly. That diversity can enable companies to develop businesses that more closely reflect and resonate with the customers and communities they serve.

We expect there to be a sufficient number of independent directors, free from conflicts of interest or undue influence from connected parties, to ensure objectivity in the decision-making of the board and its ability to oversee management. Common impediments to independence may include but are not limited to:

 

 

Current or recent employment at the company or a subsidiary

 

 

Being, or representing, a shareholder with a substantial shareholding in the company

 

 

Interlocking directorships

 

 

Having any other interest, business, or other relationship which could, or could reasonably be perceived to, materially interfere with a director’s ability to act in the best interests of the company and its shareholders.

BlackRock believes that boards are most effective at overseeing and advising management when there is a senior independent board leader. This director may chair the board, or, where the chair is also the CEO (or is otherwise not independent), be designated as a lead independent director. The role of this director is to enhance the effectiveness of the independent members of the board through shaping the agenda, ensuring adequate information is provided to the board, and encouraging independent participation in board deliberations. The lead independent director or another appropriate director should be available to shareholders in those situations where an independent director is best placed to explain and contextualize a company’s approach.

There are matters for which the board has responsibility that may involve a conflict of interest for executives or for affiliated directors. BlackRock believes that objective oversight of such matters is best achieved when the board forms committees comprised entirely of independent directors. In many markets, these committees of the board specialize in audit, director nominations, and compensation matters. An ad hoc committee might also be formed to decide on a special transaction, particularly one involving a related party, or to investigate a significant adverse event.

Sufficient capacity

As the role and expectations of a director are increasingly demanding, directors must be able to commit an appropriate amount of time to board and committee matters. It is important that directors have the

 

 

2 For example, the role of gender diversity on team cohesion and participative communication is explored by: Post, C., 2015, When is female leadership an advantage? Coordination requirements, team cohesion, and team interaction norms, Journal of Organizational Behavior, 36, 1153-1175. http://dx.doi.org/10.1002/job.2031.

 

    BlackRock Investment Stewardship   Global Principles  |  8


capacity to meet all of their responsibilities – including when there are unforeseen events – and therefore, they should not take on an excessive number of roles that would impair their ability to fulfill their duties.

Auditors and audit-related issues

BlackRock recognizes the critical importance of financial statements, which should provide a true and fair picture of a company’s financial condition. Accordingly, the assumptions made by management and reviewed by the auditor in preparing the financial statements should be reasonable and justified.    

The accuracy of financial statements, inclusive of financial and non-financial information, is of paramount importance to BlackRock. Investors increasingly recognize that a broader range of risks and opportunities have the potential to materially impact financial performance. Over time, we expect increased scrutiny of the assumptions underlying financial reports, particularly those that pertain to the impact of the transition to a low carbon economy on a company’s business model and asset mix.

In this context, audit committees, or equivalent, play a vital role in a company’s financial reporting system by providing independent oversight of the accounts, material financial and non-financial information, internal control frameworks, and in the absence of a dedicated risk committee, Enterprise Risk Management systems. BlackRock believes that effective audit committee oversight strengthens the quality and reliability of a company’s financial statements and provides an important level of reassurance to shareholders.    

We hold members of the audit committee or equivalent responsible for overseeing the management of the audit function. Audit committees or equivalent should have clearly articulated charters that set out their responsibilities and have a rotation plan in place that allows for a periodic refreshment of the committee membership to introduce fresh perspectives to audit oversight.

We take particular note of critical accounting matters, cases involving significant financial restatements, or ad hoc notifications of material financial weakness. In this respect, audit committees should provide timely disclosure on the remediation of Key and Critical Audit Matters identified either by the external auditor or Internal Audit function.

The integrity of financial statements depends on the auditor being free of any impediments to being an effective check on management. To that end, we believe it is important that auditors are, and are seen to be, independent. Where an audit firm provides services to the company in addition to the audit, the fees earned should be disclosed and explained. Audit committees should have in place a procedure for assessing annually the independence of the auditor and the quality of the external audit process.

Comprehensive disclosure provides investors with a sense of the company’s long-term operational risk management practices and, more broadly, the quality of the board’s oversight. The audit committee or equivalent, or a dedicated risk committee, should periodically review the company’s risk assessment and risk management policies and the significant risks and exposures identified by management, the internal auditors or the independent accountants, and management’s steps to address them. In the absence of robust disclosures, we may reasonably conclude that companies are not adequately managing risk.

 

    BlackRock Investment Stewardship   Global Principles  |  9


Capital structure, mergers, asset sales, and other special transactions

The capital structure of a company is critical to shareholders as it impacts the value of their investment and the priority of their interest in the company relative to that of other equity or debt investors. Preemptive rights are a key protection for shareholders against the dilution of their interests.

Effective voting rights are basic rights of share ownership. We believe strongly in one vote for one share as a guiding principle that supports effective corporate governance. Shareholders, as the residual claimants, have the strongest interest in protecting company value, and voting power should match economic exposure.

In principle, we disagree with the creation of a share class with equivalent economic exposure and preferential, differentiated voting rights. In our view, this structure violates the fundamental corporate governance principle of proportionality and results in a concentration of power in the hands of a few shareholders, thus disenfranchising other shareholders and amplifying any potential conflicts of interest. However, we recognize that in certain markets, at least for a period of time, companies may have a valid argument for listing dual classes of shares with differentiated voting rights. We believe that such companies should review these share class structures on a regular basis or as company circumstances change. Additionally, they should seek shareholder approval of their capital structure on a periodic basis via a management proposal at the company’s shareholder meeting. The proposal should give unaffiliated shareholders the opportunity to affirm the current structure or establish mechanisms to end or phase out controlling structures at the appropriate time, while minimizing costs to shareholders.

In assessing mergers, asset sales, or other special transactions, BlackRock’s primary consideration is the long-term economic interests of our clients as shareholders. Boards proposing a transaction need to clearly explain the economic and strategic rationale behind it. We will review a proposed transaction to determine the degree to which it can enhance long-term shareholder value. We would prefer that proposed transactions have the unanimous support of the board and have been negotiated at arm’s length. We may seek reassurance from the board that executives’ and/or board members’ financial interests in a given transaction have not adversely affected their ability to place shareholders’ interests before their own. Where the transaction involves related parties, we would expect the recommendation to support it to come from the independent directors, and ideally, the terms also have been assessed through an independent appraisal process. In addition, it is good practice that it be approved by a separate vote of the non-conflicted parties.

BlackRock believes that shareholders have a right to dispose of company shares in the open market without unnecessary restriction. In our view, corporate mechanisms designed to limit shareholders’ ability to sell their shares are contrary to basic property rights. Such mechanisms can serve to protect and entrench interests other than those of the shareholders. We believe that shareholders are broadly capable of making decisions in their own best interests. We expect any so-called ‘shareholder rights plans’ proposed by a board to be subject to shareholder approval upon introduction and periodically thereafter.

Compensation and benefits

BlackRock expects a company’s board of directors to put in place a compensation structure that incentivizes and rewards executives appropriately. There should be a clear link between variable pay and operational and financial performance. Performance metrics should be stretching and aligned with a

 

    BlackRock Investment Stewardship   Global Principles  |  10


company’s strategy and business model. BIS does not have a position on the use of ESG-related criteria, but believes that where companies choose to include them, they should be as rigorous as other financial or operational targets. Long-term incentive plans should vest over timeframes aligned with the delivery of long-term shareholder value. Compensation committees should guard against contractual arrangements that would entitle executives to material compensation for early termination of their employment. Finally, pension contributions and other deferred compensation arrangements should be reasonable in light of market practice.

We are not supportive of one-off or special bonuses unrelated to company or individual performance. Where discretion has been used by the compensation committee or its equivalent, we expect disclosure relating to how and why the discretion was used, and how the adjusted outcome is aligned with the interests of shareholders. We acknowledge that the use of peer group evaluation by compensation committees can help ensure competitive pay; however, we are concerned when the rationale for increases in total compensation at a company is solely based on peer benchmarking rather than a rigorous measure of outperformance. We encourage companies to clearly explain how compensation outcomes have rewarded outperformance against peer firms.

We believe consideration should be given to building claw back provisions into incentive plans such that executives would be required to forgo rewards when they are not justified by actual performance and/or when compensation was based on faulty financial reporting or deceptive business practices. We also favor recoupment from any senior executive whose behavior caused material financial harm to shareholders, material reputational risk to the company, or resulted in a criminal investigation, even if such actions did not ultimately result in a material restatement of past results.

Non-executive directors should be compensated in a manner that is commensurate with the time and effort expended in fulfilling their professional responsibilities. Additionally, these compensation arrangements should not risk compromising directors’ independence or aligning their interests too closely with those of the management, whom they are charged with overseeing.

We use third party research, in addition to our own analysis, to evaluate existing and proposed compensation structures. We may vote against members of the compensation committee or equivalent board members for poor compensation practices or structures.

Environmental and social issues

We believe that well-managed companies will deal effectively with material environmental and social (“E&S”) factors relevant to their businesses. Governance is the core structure by which boards can oversee the creation of sustainable, long-term value. Appropriate risk oversight of E&S considerations stems from this construct.

Robust disclosure is essential for investors to effectively evaluate companies’ strategy and business practices related to material E&S risks and opportunities. Given the increased understanding of material sustainability risks and opportunities, and the need for better information to assess them, BlackRock will advocate for continued improvement in companies’ reporting, where necessary, and will express any concerns through our voting where a company’s actions or disclosures are inadequate.

BlackRock encourages companies to use the framework developed by the Task Force on Climate-related Financial Disclosures (TCFD) to disclose their approach to ensuring they have a sustainable business model and to supplement that disclosure with industry-specific metrics such as those identified by the

 

BlackRock Investment Stewardship   Global Principles  |  11


Sustainability Accounting Standards Board (SASB).3 While the TCFD framework was developed to support climate-related risk disclosure, the four pillars of the TCFD Governance, Strategy, Risk Management, and Metrics and Targets are a useful way for companies to disclose how they identify, assess, manage, and oversee a variety of sustainability-related risks and opportunities. SASB’s industry-specific guidance (as identified in its materiality map) is beneficial in helping companies identify key performance indicators (KPIs) across various dimensions of sustainability that are considered to be financially material and decision-useful within their industry. We recognize that some companies may report using different standards, which may be required by regulation, or one of a number of private standards. In such cases, we ask that companies highlight the metrics that are industry- or company-specific.

Companies may also adopt or refer to guidance on sustainable and responsible business conduct issued by supranational organizations such as the United Nations or the Organization for Economic Cooperation and Development. Further, industry-specific initiatives on managing specific operational risks may be useful. Companies should disclose any global standards adopted, the industry initiatives in which they participate, any peer group benchmarking undertaken, and any assurance processes to help investors understand their approach to sustainable and responsible business practices.

Climate risk

BlackRock believes that climate change has become a defining factor in companies’ long-term prospects. We ask every company to help its investors understand how it may be impacted by climate-related risk and opportunities, and how these factors are considered within their strategy in a manner consistent with the company’s business model and sector. Specifically, we ask companies to articulate how their business model is aligned to a scenario in which global warming is limited to well below 2°C, moving towards global net zero emissions by 2050.

In Stewardship, we understand that climate change can be very challenging for many companies, as they seek to drive long-term value by mitigating risks and capturing opportunities. A growing number of companies, financial institutions, as well as governments, have committed to advancing net zero. There is growing consensus that companies can benefit from the more favorable macro-economic environment under an orderly, timely and just transition to net zero.4 Many companies are asking what their role should be in contributing to a just transition – in ensuring a reliable energy supply and protecting the most vulnerable from energy price shocks and economic dislocation. They are also seeking more clarity as to the public policy path that will help align greenhouse gas reduction actions with commitments.

In this context, we ask companies to disclose a business plan for how they intend to deliver long-term financial performance through the transition to global net zero, consistent with their business model and sector. We encourage companies to demonstrate that their plans are resilient under likely

 

 

3 The International Financial Reporting Standards (IFRS) Foundation announced in November 2021 the formation of an International Sustainability Standards Board (ISSB) to develop a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ information needs. The IFRS Foundation plans to complete consolidation of the Climate Disclosure Standards Board (CDSB—an initiative of CDP) and the Value Reporting Foundation (VRF—which houses the Integrated Reporting Framework and the SASB Standards) by June 2022.

4 For example, BlackRock’s Capital Markets Assumptions anticipate 25 points of cumulative economic gains over a 20-year period in an orderly transition as compared to the alternative. This better macro environment will support better economic growth, financial stability, job growth, productivity, as well as ecosystem stability and health outcomes.

 

BlackRock Investment Stewardship   Global Principles  |  12


decarbonization pathways, and the global aspiration to limit warming to 1.5°C.5 We also encourage companies to disclose how considerations related to having a reliable energy supply and just transition affect their plans.

We look to companies to set short-, medium- and long-term science-based targets, where available for their sector, for greenhouse gas reductions and to demonstrate how their targets are consistent with the long-term economic interests of their shareholders. Companies have an opportunity to use and contribute to the development of alternative energy sources and low-carbon transition technologies that will be essential to reaching net zero. We also recognize that some continued investment is required to maintain a reliable, affordable supply of fossil fuels during the transition. We ask companies to disclose how their capital allocation across alternatives, transition technologies, and fossil fuel production is consistent with their strategy and their emissions reduction targets.

Key stakeholder interests

We believe that, to advance long-term shareholders’ interests, companies should consider the interests of their key stakeholders. It is for each company to determine its key stakeholders based on what is material to its business, but they are likely to include employees, business partners (such as suppliers and distributors), clients and consumers, government, and the communities in which they operate.

Considering the interests of key stakeholders recognizes the collective nature of long-term value creation and the extent to which each company’s prospects for growth are tied to its ability to foster strong sustainable relationships with and support from those stakeholders. Companies should articulate how they address adverse impacts that could arise from their business practices and affect critical business relationships with their stakeholders. We expect companies to implement, to the extent appropriate, monitoring processes (often referred to as due diligence) to identify and mitigate potential adverse impacts and grievance mechanisms to remediate any actual adverse material impacts. The maintenance of trust within these relationships can be equated with a company’s long-term success.

To ensure transparency and accountability, companies should disclose how they have identified their key stakeholders and considered their interests in business decision-making, demonstrating the applicable governance, strategy, risk management, and metrics and targets. This approach should be overseen by the board, which is well positioned to ensure that the approach taken is informed by and aligns with the company’s strategy and purpose.

General corporate governance matters and shareholder protections

BlackRock believes that shareholders have a right to material and timely information on the financial performance and viability of the companies in which they invest. In addition, companies should publish information on the governance structures in place and the rights of shareholders to influence these

 

 

5 The global aspiration is reflective of aggregated efforts; companies in developed and emerging markets are not equally equipped to transition their business and reduce emissions at the same rate—those in developed markets with the largest market capitalization are better positioned to adapt their business models at an accelerated pace. Government policy and regional targets may be reflective of these realities.

 

BlackRock Investment Stewardship   Global Principles  |  13


structures. The reporting and disclosure provided by companies help shareholders assess whether their economic interests have been protected and the quality of the board’s oversight of management. We believe shareholders should have the right to vote on key corporate governance matters, including changes to governance mechanisms, to submit proposals to the shareholders’ meeting, and to call special meetings of shareholders.

Corporate Form

We believe it is the responsibility of the board to determine the corporate form that is most appropriate given the company’s purpose and business model.6 Companies proposing to change their corporate form to a public benefit corporation or similar entity should put it to a shareholder vote if not already required to do so under applicable law. Supporting documentation from companies or shareholder proponents proposing to alter the corporate form should clearly articulate how the interests of shareholders and different stakeholders would be impacted as well as the accountability and voting mechanisms that would be available to shareholders. As a fiduciary on behalf of clients, we generally support management proposals if our analysis indicates that shareholders’ interests are adequately protected. Relevant shareholder proposals are evaluated on a case-by-case basis.

Shareholder proposals

In most markets in which BlackRock invests on behalf of clients, shareholders have the right to submit proposals to be voted on by shareholders at a company’s annual or extraordinary meeting, as long as eligibility and procedural requirements are met. The matters that we see put forward by shareholders address a wide range of topics, including governance reforms, capital management, and improvements in the management or disclosure of E&S risks.

BlackRock is subject to certain requirements under antitrust law in the United States that place restrictions and limitations on how BlackRock can interact with the companies in which we invest on behalf of our clients, including our ability to submit shareholder proposals. As noted above, we can vote on proposals put forth by others.

When assessing shareholder proposals, we evaluate each proposal on its merit, with a singular focus on its implications for long-term value creation. We consider the business and economic relevance of the issue raised, as well as its materiality and the urgency with which we believe it should be addressed. We take into consideration the legal effect of the proposal, as shareholder proposals may be advisory or legally binding depending on the jurisdiction. We would not support proposals that we believe would result in over-reaching into the basic business decisions of the issuer.

Where a proposal is focused on a material business risk that we agree needs to be addressed and the intended outcome is consistent with long-term value creation, we will look to the board and management to demonstrate that the company has met the intent of the request made in the shareholder proposal. Where our analysis and/or engagement indicate an opportunity for improvement in the company’s approach to the issue, we may support shareholder proposals that are reasonable and not unduly constraining on management. Alternatively, or in addition, we may vote against the re-election of one or

 

 

6 Corporate form refers to the legal structure by which a business is organized.

 

BlackRock Investment Stewardship   Global Principles  |  14


more directors if, in our assessment, the board has not responded sufficiently or with an appropriate sense of urgency. We may also support a proposal if management is on track, but we believe that voting in favor might accelerate progress.

BlackRock’s oversight of its investment stewardship activities

Oversight

We hold ourselves to a very high standard in our investment stewardship activities, including proxy voting. To meet this standard, BIS is comprised of BlackRock employees who do not have other responsibilities other than their roles in BIS. BIS is considered an investment function.

BlackRock maintains three regional advisory committees (“Stewardship Advisory Committees”) for (a) the Americas; (b) Europe, the Middle East and Africa (“EMEA”); and (c) Asia-Pacific, generally consisting of senior BlackRock investment professionals and/or senior employees with practical boardroom experience. The regional Stewardship Advisory Committees review and advise on amendments to BIS proxy voting guidelines covering markets within each respective region (“Guidelines”). The advisory committees do not determine voting decisions, which are the responsibility of BIS.

In addition to the regional Stewardship Advisory Committees, the Investment Stewardship Global Oversight Committee (“Global Committee”) is a risk-focused committee, comprised of senior representatives from various BlackRock investment teams, a senior legal representative, the Global Head of Investment Stewardship (“Global Head”), and other senior executives with relevant experience and team oversight. The Global Oversight Committee does not determine voting decisions, which are the responsibility of BIS.

The Global Head has primary oversight of the activities of BIS, including voting in accordance with the Guidelines, which require the application of professional judgment and consideration of each company’s unique circumstances. The Global Committee reviews and approves amendments to these Principles. The Global Committee also reviews and approves amendments to the regional Guidelines, as proposed by the regional Stewardship Advisory Committees.

In addition, the Global Committee receives and reviews periodic reports regarding the votes cast by BIS, as well as updates on material process issues, procedural changes, and other risk oversight considerations. The Global Committee reviews these reports in an oversight capacity as informed by the BIS corporate governance engagement program and the Guidelines.

BIS carries out engagement with companies, monitors and executes proxy votes, and conducts vote operations (including maintaining records of votes cast) in a manner consistent with the relevant Guidelines. BIS also conducts research on corporate governance issues and participates in industry discussions to contribute to and keep abreast of important developments in the corporate governance field. BIS may utilize third parties for certain of the foregoing activities and performs oversight of those third parties. BIS may raise complicated or particularly controversial matters for internal discussion with the relevant investment teams and governance specialists for discussion and guidance prior to making a voting decision.

 

BlackRock Investment Stewardship   Global Principles  |  15


Vote execution

We carefully consider proxies submitted to funds and other fiduciary account(s) (“Fund” or “Funds”) for which we have voting authority. BlackRock votes (or refrains from voting) proxies for each Fund for which we have voting authority based on our evaluation of the best long-term economic interests of our clients as shareholders, in the exercise of our independent business judgment, and without regard to the relationship of the issuer of the proxy (or any shareholder proponent or dissident shareholder) to the Fund, the Fund’s affiliates (if any), BlackRock or BlackRock’s affiliates, or BlackRock employees (see “Conflicts management policies and procedures”, below).

When exercising voting rights, BlackRock will normally vote on specific proxy issues in accordance with the Guidelines for the relevant market. The Guidelines are reviewed annually and are amended consistent with changes in the local market practice, as developments in corporate governance occur, or as otherwise deemed advisable by the applicable Stewardship Advisory Committees. BIS analysts may, in the exercise of their professional judgment, conclude that the Guidelines do not cover the specific matter upon which a proxy vote is required or that an exception to the Guidelines would be in the best long-term economic interests of BlackRock’s clients.

In the uncommon circumstance of there being a vote with respect to fixed income securities or the securities of privately held issuers, the decision generally will be made by a Fund’s portfolio managers and/or BIS based on their assessment of the particular transactions or other matters at issue.

In certain markets, proxy voting involves logistical issues which can affect BlackRock’s ability to vote such proxies, as well as the desirability of voting such proxies. These issues include, but are not limited to: (i) untimely notice of shareholder meetings; (ii) restrictions on a foreigner’s ability to exercise votes; (iii) requirements to vote proxies in person; (iv) “share-blocking” (requirements that investors who exercise their voting rights surrender the right to dispose of their holdings for some specified period in proximity to the shareholder meeting); (v) potential difficulties in translating the proxy; (vi) regulatory constraints; and (vii) requirements to provide local agents with unrestricted powers of attorney to facilitate voting instructions. We are not supportive of impediments to the exercise of voting rights such as share-blocking or overly burdensome administrative requirements.

As a consequence, BlackRock votes proxies in these situations on a “best-efforts” basis. In addition, BIS may determine that it is generally in the best interests of BlackRock’s clients not to vote proxies (or not to vote our full allocation) if the costs (including but not limited to opportunity costs associated with share-blocking constraints) associated with exercising a vote are expected to outweigh the benefit the client would derive by voting on the proposal.

Portfolio managers have full discretion to vote the shares in the Funds they manage based on their analysis of the economic impact of a particular ballot item on their investors. Portfolio managers may, from time to time, reach differing views on how best to maximize economic value with respect to a particular investment. Therefore, portfolio managers may, and sometimes do, vote shares in the Funds under their management differently from BIS or from one another. However, because BlackRock’s clients are mostly long-term investors with long-term economic goals, ballots are frequently cast in a uniform manner.

Conflicts management policies and procedures

BIS maintains policies and procedures that seek to prevent undue influence on BlackRock’s proxy voting activity. Such influence might stem from any relationship between the investee company (or any

 

BlackRock Investment Stewardship   Global Principles  |  16


shareholder proponent or dissident shareholder) and BlackRock, BlackRock’s affiliates, a Fund or a

Fund’s affiliates, or BlackRock employees. The following are examples of sources of perceived or potential conflicts of interest:

 

 

BlackRock clients who may be issuers of securities or proponents of shareholder resolutions

 

 

BlackRock business partners or third parties who may be issuers of securities or proponents of shareholder resolutions

 

 

BlackRock employees who may sit on the boards of public companies held in Funds managed by BlackRock

 

 

Significant BlackRock, Inc. investors who may be issuers of securities held in Funds managed by BlackRock

 

 

Securities of BlackRock, Inc. or BlackRock investment funds held in Funds managed by BlackRock

 

 

BlackRock, Inc. board members who serve as senior executives or directors of public companies held in Funds managed by BlackRock

BlackRock has taken certain steps to mitigate perceived or potential conflicts including, but not limited to, the following:

 

 

Adopted the Guidelines which are designed to advance our clients’ interests in the companies in which BlackRock invests on their behalf.

 

 

Established a reporting structure that separates BIS from employees with sales, vendor management, or business partnership roles. In addition, BlackRock seeks to ensure that all engagements with corporate issuers, dissident shareholders or shareholder proponents are managed consistently and without regard to BlackRock’s relationship with such parties. Clients or business partners are not given special treatment or differentiated access to BIS. BIS prioritizes engagements based on factors including, but not limited to, our need for additional information to make a voting decision or our view on the likelihood that an engagement could lead to positive outcome(s) over time for the economic value of the company. Within the normal course of business, BIS may engage directly with BlackRock clients, business partners and/or third parties, and/or with employees with sales, vendor management, or business partnership roles, in discussions regarding our approach to stewardship, general corporate governance matters, client reporting needs, and/or to otherwise ensure that proxy-related client service levels are met.

 

 

Determined to engage, in certain instances, an independent fiduciary to vote proxies as a further safeguard to avoid potential conflicts of interest, to satisfy regulatory compliance requirements, or as may be otherwise required by applicable law. In such circumstances, the independent fiduciary provides BlackRock’s proxy voting agent with instructions, in accordance with the Guidelines, as to how to vote such proxies, and BlackRock’s proxy voting agent votes the proxy in accordance with the independent fiduciary’s determination. BlackRock uses an independent fiduciary to vote proxies of BlackRock, Inc. and companies affiliated with BlackRock, Inc. BlackRock may also use an independent fiduciary to vote proxies of:

o    public companies that include BlackRock employees on their boards of directors,

o    public companies of which a BlackRock, Inc. board member serves as a senior executive or a member of the board of directors,

 

    BlackRock Investment Stewardship   Global Principles  |  17


o    public companies that are the subject of certain transactions involving BlackRock Funds,

o    public companies that are joint venture partners with BlackRock, and

o    public companies when legal or regulatory requirements compel BlackRock to use an independent fiduciary.

In selecting an independent fiduciary, we assess several characteristics, including but not limited to: independence, an ability to analyze proxy issues and vote in the best economic interest of our clients, reputation for reliability and integrity, and operational capacity to accurately deliver the assigned votes in a timely manner. We may engage more than one independent fiduciary, in part to mitigate potential or perceived conflicts of interest at an independent fiduciary. The Global Committee appoints and reviews the performance of the independent fiduciaries, generally on an annual basis.

Securities lending

When so authorized, BlackRock acts as a securities lending agent on behalf of Funds. Securities lending is a well-regulated practice that contributes to capital market efficiency. It also enables funds to generate additional returns for a fund, while allowing fund providers to keep fund expenses lower.

With regard to the relationship between securities lending and proxy voting, BlackRock’s approach is informed by our fiduciary responsibility to act in our clients’ best interests. In most cases, BlackRock anticipates that the potential long-term value to the Fund of voting shares would be less than the potential revenue the loan may provide the Fund. However, in certain instances, BlackRock may determine, in its independent business judgment as a fiduciary, that the value of voting outweighs the securities lending revenue loss to clients and would therefore recall shares to be voted in those instances.

The decision to recall securities on loan as part of BlackRock’s securities lending program in order to vote is based on an evaluation of various factors that include, but are not limited to, assessing potential securities lending revenue alongside the potential long-term value to clients of voting those securities (based on the information available at the time of recall consideration).7 BIS works with colleagues in the Securities Lending and Risk and Quantitative Analysis teams to evaluate the costs and benefits to clients of recalling shares on loan.

Periodically, BlackRock reviews our process for determining whether to recall securities on loan in order to vote and may modify it as necessary.

 

  

 

7 Recalling securities on loan can be impacted by the timing of record dates. In the United States, for example, the record date of a shareholder meeting typically falls before the proxy statements are released. Accordingly, it is not practicable to evaluate a proxy statement, determine that a vote has a material impact on a fund and recall any shares on loan in advance of the record date for the annual meeting. As a result, managers must weigh independent business judgement as a fiduciary, the benefit to a fund’s shareholders of recalling loaned shares in advance of an estimated record date without knowing whether there will be a vote on matters which have a material impact on the fund (thereby forgoing potential securities lending revenue for the fund’s shareholders) or leaving shares on loan to potentially earn revenue for the fund (thereby forgoing the opportunity to vote).

 

BlackRock Investment Stewardship   Global Principles  |  18


Voting guidelines

The issue-specific Guidelines published for each region/country in which we vote are intended to summarize BlackRock’s general philosophy and approach to issues that may commonly arise in the proxy voting context in each market where we invest. The Guidelines are not intended to be exhaustive. BIS applies the Guidelines on a case-by-case basis, in the context of the individual circumstances of each company and the specific issue under review. As such, the Guidelines do not indicate how BIS will vote in every instance. Rather, they reflect our view about corporate governance issues generally, and provide insight into how we typically approach issues that commonly arise on corporate ballots.

Reporting and vote transparency

We are committed to transparency in the stewardship work we do on behalf of clients. We inform clients about our engagement and voting policies and activities through direct communication and through disclosure on our website. Each year we publish an annual report that provides a global overview of our investment stewardship engagement and voting activities. Additionally, we make public our market-specific voting guidelines for the benefit of clients and companies with whom we engage. We also publish commentaries to share our perspective on market developments and emerging key themes.

At a more granular level, we publish quarterly our vote record for each company that held a shareholder meeting during the period, showing how we voted on each proposal and explaining any votes against management proposals or on shareholder proposals. For shareholder meetings where a vote might be high profile or of significant interest to clients, we may publish a vote bulletin after the meeting, disclosing and explaining our vote on key proposals. We also publish a quarterly list of all companies with which we engaged and the key topics addressed in the engagement meeting.

In this way, we help inform our clients about the work we do on their behalf in promoting the governance and business models that support long-term sustainable value creation.

 

BlackRock Investment Stewardship   Global Principles  |  19


 

Want to know more?

blackrock.com/stewardship     |     contactstewardship@blackrock.com

This document is provided for information and educational purposes only. Investing involves risk, including the loss of principal.

Prepared by BlackRock, Inc.

©2022 BlackRock, Inc. All rights reserved. BLACKROCK is a trademark of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.

 

 

LOGO   

LOGO


 

Contents

 

Introduction

    3  

Voting guidelines

    3  

Boards and directors

    3  

Auditors and audit-related issues

    11  

Capital structure proposals

    11  

Mergers, acquisitions, asset sales, and other special transactions

    12  

Executive compensation

    13  

Environmental and social issues

    16  

General corporate governance matters

    19  

Shareholder protections

    20  

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 2


These guidelines should be read in conjunction with the BlackRock Investment Stewardship Global Principles.

Introduction

We believe BlackRock has a responsibility to monitor and provide feedback to companies, in our role as stewards of our clients’ investments. BlackRock Investment Stewardship (“BIS”) does this through engagement with management teams and/or board members on material business issues, including environmental, social, and governance (“ESG”) matters and, for those clients who have given us authority, through voting proxies in the best long-term economic interests of their assets.

The following issue-specific proxy voting guidelines (the “Guidelines”) are intended to summarize BIS’ regional philosophy and approach to engagement and voting on ESG factors, as well as our expectations of directors, for U.S. securities. These Guidelines are not intended to limit the analysis of individual issues at specific companies or provide a guide to how BIS will engage and/or vote in every instance. They are applied with discretion, taking into consideration the range of issues and facts specific to the company, as well as individual ballot items at annual and special meetings.

Voting guidelines

These guidelines are divided into eight key themes, which group together the issues that frequently appear on the agenda of annual and extraordinary meetings of shareholders:

 

 

Boards and directors

 

 

Auditors and audit-related issues

 

 

Capital structure

 

 

Mergers, acquisitions, asset sales, and other special transactions

 

 

Executive compensation

 

 

Environmental and social issues

 

 

General corporate governance matters

 

 

Shareholder protections

Boards and directors

The effective performance of the board is critical to the economic success of the company and the protection of shareholders’ interests. As part of their responsibilities, board members owe fiduciary duties to shareholders in overseeing the strategic direction, operations, and risk management of the company. For this reason, BIS sees engagement with and the election of directors as one of our most critical responsibilities.

Disclosure of material issues that affect the company’s long-term strategy and value creation, including material ESG factors, is essential for shareholders to appropriately understand and assess how effectively the board is identifying, managing, and mitigating risks.

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 3


Where we conclude that a board has failed to address or disclose one or more material issues within a specified timeframe, we may hold directors accountable or take other appropriate action in the context of our voting decisions.

Director elections

Where a board has not adequately demonstrated, through actions and company disclosures, how material issues are appropriately identified, managed, and overseen, we will consider voting against the re-election of those directors responsible for the oversight of such issues, as indicated below.

Independence

We expect a majority of the directors on the board to be independent. In addition, all members of key committees, including audit, compensation, and nominating/ governance committees, should be independent. Our view of independence may vary from listing standards.

Common impediments to independence may include:

 

 

Employment as a senior executive by the company or a subsidiary within the past five years

 

 

An equity ownership in the company in excess of 20%

 

 

Having any other interest, business, or relationship (professional or personal) which could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of the company

We may vote against directors serving on key committees who we do not consider to be independent, including at controlled companies.

Oversight

We expect the board to exercise appropriate oversight of management and the business activities of the company. Where we believe a board has failed to exercise sufficient oversight, we may vote against the responsible committees and/or individual directors. The following illustrates common circumstances:

 

 

With regard to material ESG risk factors, or where the company has failed to provide shareholders with adequate disclosure to conclude appropriate strategic consideration is given to these factors by the board, we may vote against directors of the responsible committee, or the most relevant director

 

 

With regard to accounting practices or audit oversight, e.g., where the board has failed to facilitate quality, independent auditing. If substantial accounting irregularities suggest insufficient oversight, we will consider voting against the current audit committee, and any other members of the board who may be responsible

 

 

During a period in which executive compensation appears excessive relative to the performance of the company and compensation paid by peers, we may vote against the members of the compensation committee

 

 

Where a company has proposed an equity compensation plan that is not aligned with shareholders’ interests, we may vote against the members of the compensation committee

 

 

Where the board is not comprised of a majority of independent directors (this may not apply in the case of a controlled company), we may vote against the chair of the nominating/governance committee, or where no chair exists, the nominating/governance

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 4


 

committee member with the longest tenure

 

 

Where it appears the director has acted (at the company or at other companies) in a manner that compromises their ability to represent the best long-term economic interests of shareholders, we may vote against that individual

 

 

Where a director has a multi-year pattern of poor attendance at combined board and applicable committee meetings, or a director has poor attendance in a single year with no disclosed rationale, we may vote against that individual. Excluding exigent circumstances, BIS generally considers attendance at less than 75% of the combined board and applicable committee meetings to be poor attendance

 

 

Where a director serves on an excessive number of boards, which may limit their capacity to focus on each board’s needs, we may vote against that individual . The following identifies the maximum number of boards on which a director may serve, before BIS considers them to be over-committed:

 

     Public Company Executive   # Outside Public Boards1   Total # of Public Boards

Director A

    1   2

Director B2

      3   4

Responsiveness to shareholders

We expect a board to be engaged and responsive to its shareholders, including acknowledging voting outcomes for director elections, compensation, shareholder proposals, and other ballot items. Where we believe a board has not substantially addressed shareholder concerns, we may vote against the responsible committees and/or individual directors. The following illustrates common circumstances:

 

 

The independent chair or lead independent director, members of the nominating/governance committee, and/or the longest tenured director(s), where we observe a lack of board responsiveness to shareholders, evidence of board entrenchment, and/or failure to plan for adequate board member succession

 

 

The chair of the nominating/governance committee, or where no chair exists, the nominating/governance committee member with the longest tenure, where board member(s) at the most recent election of directors have received against votes from more than 25% of shares voted, and the board has not taken appropriate action to respond to shareholder concerns. This may not apply in cases where BIS did not support the initial against vote

 

 

1 In addition to the company under review.

2 Including fund managers whose full-time employment involves responsibility for the investment and oversight of fund vehicles, and those who have employment as professional investors and provide oversight for those holdings.

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 5


 

The independent chair or lead independent director and/or members of the nominating/governance committee, where a board fails to consider shareholder proposals that receive substantial support, and the proposals, in our view, have a material impact on the business, shareholder rights, or the potential for long-term value creation

Shareholder rights

We expect a board to act with integrity and to uphold governance best practices. Where we believe a board has not acted in the best interests of its shareholders, we may vote against the appropriate committees and/or individual directors. The following illustrates common circumstances:

 

 

The independent chair or lead independent director and members of the nominating/governance committee, where a board implements or renews a poison pill without shareholder approval

 

 

The independent chair or lead independent director and members of the nominating/governance committee, where a board amends the charter/articles/bylaws and where the effect may be to entrench directors or to significantly reduce shareholder rights

 

 

Members of the compensation committee where the company has repriced options without shareholder approval If a board maintains a classified structure, it is possible that the director(s) with whom we have a particular concern may not be subject to election in the year that the concern arises. In such situations, if we have a concern regarding the actions of a committee and the responsible member(s), we will generally register our concern by voting against all available members of the relevant committee.

Board composition and effectiveness

We encourage boards to periodically refresh their membership to ensure relevant skills and experience within the boardroom. To this end, regular performance reviews and skills assessments should be conducted by the nominating/governance committee or the lead independent director. When nominating new directors to the board, we ask that there is sufficient information on the individual candidates so that shareholders can assess the suitability of each individual nominee and the overall board composition. Where boards find that age limits or term limits are the most efficient and objective mechanism for ensuring periodic board refreshment, we generally defer to the board’s determination in setting such limits. BIS will also consider the average board tenure to evaluate processes for board renewal. We may oppose boards that appear to have an insufficient mix of short-, medium-, and long-tenured directors.

Furthermore, we expect boards to be comprised of a diverse selection of individuals who bring their personal and professional experiences to bear in order to create a constructive debate of a variety of views and opinions in the boardroom. We are interested in diversity in the board room as a means to promoting diversity of thought and avoiding “group think”. We ask boards to disclose how diversity is considered in board composition, including demographic factors such as gender, race, ethnicity, and age; as well as professional characteristics, such as a director’s industry experience, specialist areas of expertise, and geographic location. We assess a board’s diversity in the context of a company’s domicile, business model, and strategy. We believe boards should aspire to 30% diversity of membership and encourage

 

BlackRock Investment Stewardship

  Proxy voting guidelines for U.S. securities | 6


companies to have at least two directors on their board who identify as female and at least one who identifies as a member of an underrepresented group.3

We ask that boards disclose:

 

 

The aspects of diversity that the company believes are relevant to its business and how the diversity characteristics of the board, in aggregate, are aligned with a company’s long-term strategy and business model

 

 

The process by which candidates are identified and selected, including whether professional firms or other resources outside of incumbent directors’ networks have been engaged to identify and/or assess candidates, and whether a diverse slate of nominees is considered for all available board nominations

 

 

The process by which boards evaluate themselves and any significant outcomes of the evaluation process, without divulging inappropriate and/or sensitive details

This position is based on our view that diversity of perspective and thought – in the boardroom, in the management team, and throughout the company – leads to better long-term economic outcomes for companies. Academic research already reveals correlations between specific dimensions of diversity and effects on decision-making processes and outcomes.4 In our experience, greater diversity in the boardroom contributes to more robust discussions and more innovative and resilient decisions. Over time, it can also promote greater diversity and resilience in the leadership team and workforce more broadly, enabling companies to develop businesses that more closely reflect and resonate with the customers and communities they serve.

To the extent that, based on our assessment of corporate disclosures, a company has not adequately accounted for diversity in its board composition within a reasonable timeframe, we may vote against members of the nominating/governance committee for an apparent lack of commitment to board effectiveness. We recognize that building high-quality, diverse boards can take time. We will look to the largest companies (e.g., S&P 500) for continued leadership. Our publicly available commentary provides more information on our approach to board diversity.

Board size

We typically defer to the board in setting the appropriate size and believe directors are generally in the best position to assess the optimal board size to ensure effectiveness. However, we may oppose boards that appear too small to allow for the necessary range of skills and experience or too large to function efficiently.

 

 

3 Including, but not limited to, individuals who identify as Black or African American, Hispanic or Latinx, Asian, Native Ameri can or Alaska Native, or Native Hawaiian or Pacific Islander; individuals who identify as LGBTQ+; individuals who identify as underrepresented based on national, Indigenous, religious, or cultural identity; individuals with disabilities; and veterans.

4 For example, the role of gender diversity on team cohesion and participative communication is explored by Post, C., 2015, When is female leadership an advantage? Coordination requirements, team cohesion, and team interaction norms, Journal of Organizational Behavior, 36, 1153-1175.

 

BlackRock Investment Stewardship

  Proxy voting guidelines for U.S. securities | 7


CEO and management succession planning

There should be a robust CEO and senior management succession plan in place at the board level that is reviewed and updated on a regular basis. We expect succession planning to cover scenarios over both the long-term, consistent with the strategic direction of the company and identified leadership needs over time, as well as the short-term, in the event of an unanticipated executive departure. We encourage the company to explain its executive succession planning process, including where accountability lies within the boardroom for this task, without prematurely divulging sensitive information commonly associated with this exercise.

Classified board of directors/staggered terms

We believe that directors should be re-elected annually; classification of the board generally limits shareholders’ rights to regularly evaluate a board’s performance and select directors. While we will typically support proposals requesting board de-classification, we may make exceptions, should the board articulate an appropriate strategic rationale for a classified board structure. This may include when a company needs consistency and stability during a time of transition, e.g., newly public companies or companies undergoing a strategic restructuring. A classified board structure may also be justified at non-operating companies, e.g., closed-end funds or business development companies (“BDC”),5 in certain circumstances. We would, however, expect boards with a classified structure to periodically review the rationale for such structure and consider when annual elections might be more appropriate.

Without a voting mechanism to immediately address concerns about a specific director, we may choose to vote against the directors up for election at the time (see “Shareholder rights” for additional detail).

Contested director elections

The details of contested elections, or proxy contests, are assessed on a case-by-case basis. We evaluate a number of factors, which may include: the qualifications of the dissident and management candidates; the validity of the concerns identified by the dissident; the viability of both the dissident’s and management’s plans; the ownership stake and holding period of the dissident; the likelihood that the dissident’s solutions will produce the desired change; and whether the dissident represents the best option for enhancing long-term shareholder value.

Cumulative voting

We believe that a majority vote standard is in the best long-term interests of shareholders. It ensures director accountability through the requirement to be elected by more than half of the votes cast. As such, we will generally oppose proposals requesting the adoption of cumulative voting, which may disproportionately aggregate votes on certain issues or director candidates.

Director compensation and equity programs

We believe that compensation for directors should be structured to attract and retain directors, while also aligning their interests with those of shareholders. We believe director compensation packages that are based on the company’s long-term value creation and include some form of long-term equity compensation are more likely to meet this goal. In addition, we expect directors to build meaningful shareownership over time.

 

5A BDC is a special investment vehicle under the Investment Company Act of 1940 that is designed to facilitate capital formati on for small and middle-market companies.

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 8


Majority vote requirements

BIS believes that directors should generally be elected by a majority of the shares voted and will normally support proposals seeking to introduce bylaws requiring a majority vote standard for director elections. Majority vote standards assist in ensuring that directors who are not broadly supported by shareholders are not elected to serve as their representatives. Some companies with a plurality voting standard have adopted a resignation policy for directors who do not receive support from at least a majority of votes cast. Where we believe that the company already has a sufficiently robust majority voting process in place, we may not support a shareholder proposal seeking an alternative mechanism.

We note that majority voting may not be appropriate in all circumstances, for example, in the context of a contested election, or for majority-controlled companies.

Risk oversight

Companies should have an established process for identifying, monitoring, and managing business and material ESG risks. Independent directors should have access to relevant management information and outside advice, as appropriate, to ensure they can properly oversee risk. We encourage companies to provide transparency around risk management, mitigation, and reporting to the board. We are particularly interested in understanding how risk oversight processes evolve in response to changes in corporate strategy and/or shifts in the business and related risk environment. Comprehensive disclosure provides investors with a sense of the company’s long-term risk management practices and, more broadly, the quality of the board’s oversight. In the absence of robust disclosures, we may reasonably conclude that companies are not adequately managing risk.

Separation of chair and CEO

We believe that independent leadership is important in the boardroom. There are two commonly accepted structures for independent board leadership: 1) an independent chair; or 2) a lead independent director when the roles of chair and CEO are combined.

In the absence of a significant governance concern, we defer to boards to designate the most appropriate leadership structure to ensure adequate balance and independence.6

In the event that the board chooses a combined chair/CEO model, we generally support the designation of a lead independent director if they have the power to: 1) provide formal input into board meeting agendas; 2) call meetings of the independent directors; and 3) preside at meetings of independent directors. Furthermore, while we anticipate that most directors will be elected annually, we believe an

 

 

6 To this end, we do not view shareholder proposals asking for the separation of chair and CEO to be a proxy for other concerns we may have at the company for which a vote against directors would be more appropriate. Rather, support for such a proposal might arise in the case of overarching and sustained governance concerns such as lack of independence or failure to oversee a material risk over consecutive years.

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 9


element of continuity is important for this role to provide appropriate leadership balance to the chair/CEO.

The following table illustrates examples of responsibilities under each board leadership model:

 

  Combined Chair/CEO Model    Separate Chair Model
    Chair/CEO    Lead Independent Director    Chair
 

Authority to call full meetings of the board of directors

 

  

Attends full meetings of the board of directors

 

  

Authority to call full meetings of the board of directors

 

 Board Meetings       

Authority to call meetings of independent directors

 

    
      

Briefs CEO on issues arising from executive sessions

 

    
 
 Agenda  

Primary responsibility for shaping board agendas, consulting with the lead independent director

 

  

Collaborates with chair/CEO to set board agenda and board information

 

  

Primary responsibility for shaping board agendas, in conjunction with CEO

 

 Board  Communications  

Communicates with all directors on key issues and concerns outside of full board meetings

 

  

Facilitates discussion among independent directors on key issues and concerns outside of full board meetings, including contributing to the oversight of CEO and management succession planning

 

  

Facilitates discussion among independent directors on key issues and concerns outside of full board meetings, including contributing to the oversight of CEO and management succession planning

 

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 10


Auditors and audit-related issues

BIS recognizes the critical importance of financial statements to provide a complete and accurate portrayal of a company’s financial condition. Consistent with our approach to voting on directors, we seek to hold the audit committee of the board responsible for overseeing the management of the audit function at a company. We may vote against the audit committee members where the board has failed to facilitate quality, independent auditing. We look to public disclosures for insight into the scope of the audit committee responsibilities, including an overview of audit committee processes, issues on the audit committee agenda, and key decisions taken by the audit committee. We take particular note of cases involving significant financial restatements or material weakness disclosures, and we expect timely disclosure and remediation of accounting irregularities.

The integrity of financial statements depends on the auditor effectively fulfilling its role. To that end, we favor an independent auditor. In addition, to the extent that an auditor fails to reasonably identify and address issues that eventually lead to a significant financial restatement, or the audit firm has violated standards of practice, we may also vote against ratification.

From time to time, shareholder proposals may be presented to promote auditor independence or the rotation of audit firms. We may support these proposals when they are consistent with our views as described above.

Capital structure proposals

Equal voting rights

BIS believes that shareholders should be entitled to voting rights in proportion to their economic interests. We believe that companies that look to add or that already have dual or multiple class share structures should review these structures on a regular basis, or as company circumstances change. Companies with multiple share classes should receive shareholder approval of their capital structure on a periodic basis via a management proposal on the company’s proxy. The proposal should give unaffiliated shareholders the opportunity to affirm the current structure or establish mechanisms to end or phase out controlling structures at the appropriate time, while minimizing costs to shareholders.

Blank check preferred stock

We frequently oppose proposals requesting authorization of a class of preferred stock with unspecified voting, conversion, dividend distribution, and other rights (“blank check” preferred stock) because they may serve as a transfer of authority from shareholders to the board and as a possible entrenchment device. We generally view the board’s discretion to establish voting rights on a when-issued basis as a potential anti-takeover device, as it affords the board the ability to place a block of stock with an investor sympathetic to management, thereby foiling a takeover bid without a shareholder vote.

Nonetheless, we may support the proposal where the company:

 

 

Appears to have a legitimate financing motive for requesting blank check authority

 

 

Has committed publicly that blank check preferred shares will not be used for anti-takeover purposes

 

 

Has a history of using blank check preferred stock for financings

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 11


 

Has blank check preferred stock previously outstanding such that an increase would not necessarily provide further anti-takeover protection but may provide greater financing flexibility

Increase in authorized common shares

BIS will evaluate requests to increase authorized shares on a case-by-case basis, in conjunction with industry-specific norms and potential dilution, as well as a company’s history with respect to the use of its common shares.

Increase or issuance of preferred stock

We generally support proposals to increase or issue preferred stock in cases where the company specifies the voting, dividend, conversion, and other rights of such stock and where the terms of the preferred stock appear reasonable.

Stock splits

We generally support stock splits that are not likely to negatively affect the ability to trade shares or the economic value of a share. We generally support reverse stock splits that are designed to avoid delisting or to facilitate trading in the stock, where the reverse split will not have a negative impact on share value (e.g., one class is reduced while others remain at pre-split levels). In the event of a proposal for a reverse split that would not proportionately reduce the company’s authorized stock, we apply the same analysis we would use for a proposal to increase authorized stock.

Mergers, acquisitions, asset sales, and other special transactions

In assessing mergers, acquisitions, asset sales, or other special transactions – including business combinations involving Special Purpose Acquisition Companies (“SPACs”) – BIS’ primary consideration is the long-term economic interests of our clients as shareholders. We expect boards proposing a transaction to clearly explain the economic and strategic rationale behind it. We will review a proposed transaction to determine the degree to which it enhances long-term shareholder value. While mergers, acquisitions, asset sales, business combinations, and other special transaction proposals vary widely in scope and substance, we closely examine certain salient features in our analyses, such as:

 

 

The degree to which the proposed transaction represents a premium to the company’s trading price. We consider the share price over multiple time periods prior to the date of the merger announcement. We may consider comparable transaction analyses provided by the parties’ financial advisors and our own valuation assessments. For companies facing insolvency or bankruptcy, a premium may not apply

 

 

There should be clear strategic, operational, and/or financial rationale for the combination

 

 

Unanimous board approval and arm’s-length negotiations are preferred. We will consider whether the transaction involves a dissenting board or does not appear to be the result of an arm’s-length bidding process. We may also consider whether executive and/or board members’ financial interests appear likely to affect their ability to place shareholders’ interests before their own

 

 

We prefer transaction proposals that include the fairness opinion of a reputable financial advisor assessing the value of the transaction to shareholders in comparison to recent similar transactions

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 12


Poison pill plans

Where a poison pill is put to a shareholder vote by management, our policy is to examine these plans individually. Although we have historically opposed most plans, we may support plans that include a reasonable “qualifying offer clause.” Such clauses typically require shareholder ratification of the pill and stipulate a sunset provision whereby the pill expires unless it is renewed. These clauses also tend to specify that an all-cash bid for all shares that includes a fairness opinion and evidence of financing does not trigger the pill, but forces either a special meeting at which the offer is put to a shareholder vote or requires the board to seek the written consent of shareholders, where shareholders could rescind the pill at their discretion. We may also support a pill where it is the only effective method for protecting tax or other economic benefits that may be associated with limiting the ownership changes of individual shareholders.

We generally vote in favor of shareholder proposals to rescind poison pills.

Reimbursement of expense for successful shareholder campaigns

We generally do not support shareholder proposals seeking the reimbursement of proxy contest expenses, even in situations where we support the shareholder campaign. We believe that introducing the possibility of such reimbursement may incentivize disruptive and unnecessary shareholder campaigns.

Executive compensation

BIS expects a company’s board of directors to put in place a compensation structure that incentivizes and rewards executives appropriately and is aligned with shareholder interests, particularly the generation of sustainable long-term value.

We expect the compensation committee to carefully consider the specific circumstances of the company and the key individuals the board is focused on incentivizing. We encourage companies to ensure that their compensation plans incorporate appropriate and rigorous performance metrics consistent with corporate strategy and market practice. Performance-based compensation should include metrics that are relevant to the business and stated strategy or risk mitigation efforts. Goals, and the processes used to set these goals, should be clearly articulated and appropriately rigorous. We use third party research, in addition to our own analysis, to evaluate existing and proposed compensation structures. We hold members of the compensation committee, or equivalent board members, accountable for poor compensation practices or structures.

BIS believes that there should be a clear link between variable pay and company performance that drives value creation for our clients as shareholders. We are generally not supportive of one-off or special bonuses unrelated to company or individual performance. Where discretion has been used by the compensation committee, we expect disclosure relating to how and why the discretion was used and further, how the adjusted outcome is aligned with the interests of shareholders.

We acknowledge that the use of peer group evaluation by compensation committees can help calibrate competitive pay; however, we are concerned when the rationale for increases in total compensation is solely based on peer benchmarking, rather than absolute outperformance.

We support incentive plans that foster the sustainable achievement of results – both financial and non-financial, including ESG – consistent with the company’s strategic initiatives. The vesting and holding timeframes associated with incentive plans should facilitate a focus on long-term value creation. Compensation committees should guard against contractual arrangements that would entitle executives

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 13


to material compensation for early termination of their contract. Finally, pension contributions and other deferred compensation arrangements should be reasonable in light of market practices. Our publicly available commentary provides more information on our approach to executive compensation.

“Say on Pay” advisory resolutions

In cases where there is a “Say on Pay” vote, BIS will respond to the proposal as informed by our evaluation of compensation practices at that particular company and in a manner that appropriately addresses the specific question posed to shareholders. Where we conclude that a company has failed to align pay with performance, we will vote against the management compensation proposal and relevant compensation committee members.

Frequency of “Say on Pay” advisory resolutions

BIS will generally support annual advisory votes on executive compensation. We believe shareholders should have the opportunity to express feedback on annual incentive programs and changes to long-term compensation before multiple cycles are issued.

Clawback proposals

We generally favor recoupment from any senior executive whose compensation was based on faulty financial reporting or deceptive business practices. We also favor recoupment from any senior executive whose behavior caused material financial harm to shareholders, material reputational risk to the company, or resulted in a criminal proceeding, even if such actions did not ultimately result in a material restatement of past results. This includes, but is not limited to, settlement agreements arising from such behavior and paid for directly by the company. We typically support shareholder proposals on these matters unless the company already has a robust clawback policy that sufficiently addresses our concerns.

Employee stock purchase plans

We believe employee stock purchase plans (“ESPP”) are an important part of a company’s overall human capital management strategy and can provide performance incentives to help align employees’ interests with those of shareholders. The most common form of ESPP qualifies for favorable tax treatment under Section 423 of the Internal Revenue Code. We will typically support qualified ESPP proposals.

Equity compensation plans

BIS supports equity plans that align the economic interests of directors, managers, and other employees with those of shareholders. We believe that boards should establish policies prohibiting the use of equity awards in a manner that could disrupt the intended alignment with shareholder interests (e.g., the use of stock as collateral for a loan; the use of stock in a margin account; the use of stock in hedging or derivative transactions). We may support shareholder proposals requesting the establishment of such policies.

Our evaluation of equity compensation plans is based on a company’s executive pay and performance relative to peers and whether the plan plays a significant role in a pay-for-performance disconnect. We generally oppose plans that contain “evergreen” provisions, which allow for the unlimited increase of shares reserved without requiring further shareholder approval after a reasonable time period. We also generally oppose plans that allow for repricing without shareholder approval. We may also oppose plans that provide for the acceleration of vesting of equity awards even in situations where an actual change of control may not occur. We encourage companies to structure their change of control provisions to require

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 14


the termination of the covered employee before acceleration or special payments are triggered (commonly referred to as “double trigger” change of control provisions).    

Golden parachutes

We generally view golden parachutes as encouragement to management to consider transactions that might be beneficial to shareholders. However, a large potential pay-out under a golden parachute arrangement also presents the risk of motivating a management team to support a sub-optimal sale price for a company.    

When determining whether to support or oppose an advisory vote on a golden parachute plan, BIS may consider several factors, including:

 

 

Whether we believe that the triggering event is in the best interests of shareholders

 

 

Whether management attempted to maximize shareholder value in the triggering event

 

 

The percentage of total premium or transaction value that will be transferred to the management team, rather than shareholders, as a result of the golden parachute payment

 

 

Whether excessively large excise tax gross-up payments are part of the pay-out

 

 

Whether the pay package that serves as the basis for calculating the golden parachute payment was reasonable in light of performance and peers

 

 

Whether the golden parachute payment will have the effect of rewarding a management team that has failed to effectively manage the company

It may be difficult to anticipate the results of a plan until after it has been triggered; as a result, BIS may vote against a golden parachute proposal even if the golden parachute plan under review was approved by shareholders when it was implemented.

We may support shareholder proposals requesting that implementation of such arrangements require shareholder approval.

Option exchanges

We believe that there may be legitimate instances where underwater options create an overhang on a company’s capital structure and a repricing or option exchange may be warranted. We will evaluate these instances on a case-by-case basis. BIS may support a request to reprice or exchange underwater options under the following circumstances:

 

 

The company has experienced significant stock price decline as a result of macroeconomic trends, not individual company performance

 

 

Directors and executive officers are excluded; the exchange is value neutral or value creative to shareholders; tax, accounting, and other technical considerations have been fully contemplated

 

 

There is clear evidence that absent repricing, the company will suffer serious employee incentive or retention and recruiting problems

BIS may also support a request to exchange underwater options in other circumstances, if we determine that the exchange is in the best interests of shareholders.

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 15


Supplemental executive retirement plans

BIS may support shareholder proposals requesting to put extraordinary benefits contained in supplemental executive retirement plans (“SERP”) to a shareholder vote unless the company’s executive pension plans do not contain excessive benefits beyond what is offered under employee-wide plans.

Environmental and social issues

We believe that well-managed companies deal effectively with material ESG factors relevant to their businesses. Governance is the core means by which boards can oversee the creation of sustainable long-term value. Appropriate risk oversight of environmental and social (“E&S”) considerations stems from this construct.

Robust disclosure is essential for investors to effectively gauge the impact of companies’ business practices and strategic planning related to E&S risks and opportunities. When a company’s reporting is inadequate, investors, including BlackRock, will increasingly conclude that the company is not appropriately managing risk. Given the increased understanding of material sustainability risks and opportunities, and the need for better information to assess them, BIS will advocate for continued improvement in companies’ reporting and will express concerns through our voting where disclosures or the business practices underlying them are inadequate.

BIS encourages companies to disclose their approach to maintaining a sustainable business model. We believe that reporting aligned with the framework developed by the Task Force on Climate-related Financial Disclosures (“TCFD”), supported by industry-specific metrics such as those identified by the Sustainability Accounting Standards Board (“SASB”), can provide a comprehensive picture of a company’s sustainability approach and performance. While the TCFD framework was developed to support climate-related risk disclosure, the four pillars of the TCFD Governance, Strategy, Risk Management, and Metrics and Targets are a useful way for companies to disclose how they identify, assess, manage, and oversee a variety of sustainability-related risks and opportunities. SASB’s industry-specific guidance (as identified in its materiality map) is beneficial in helping companies identify key performance indicators (“KPIs”) across various dimensions of sustainability that are considered to be financially material and decision-useful within their industry. We recognize that some companies may report using different standards, which may be required by regulation, or one of a number of private standards. In such cases, we ask that companies highlight the metrics that are industry- or company-specific.

Accordingly, we ask companies to:

 

   

Disclose the identification, assessment, management, and oversight of sustainability-related risks in accordance with the four pillars of TCFD

 

   

Publish investor-relevant, industry-specific, material metrics and rigorous targets, aligned with SASB or comparable sustainability reporting standards

Companies should also disclose any supranational standards adopted, the industry initiatives in which they participate, any peer group benchmarking undertaken, and any assurance processes to help investors understand their approach to sustainable and responsible business conduct.

 

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 16


Climate risk

BlackRock believes that climate change has become a defining factor in companies’ long-term prospects. We ask every company to help its investors understand how it may be impacted by climate-related risk and opportunities, and how these factors are considered within strategy in a manner consistent with the company’s business model and sector. Specifically, we ask companies to articulate how their business model is aligned to a scenario in which global warming is limited to well below 2°C, moving towards global net zero emissions by 2050.

BIS understands that climate change can be very challenging for many companies, as they seek to drive long-term value by mitigating risks and capturing opportunities. A growing number of companies, financial institutions, as well as governments, have committed to advancing net zero. There is growing consensus that companies can benefit from the more favorable macro-economic environment under an orderly, timely, and just transition to net zero.7 Many companies are asking what their role should be in contributing to a just transition – in ensuring a reliable energy supply and protecting the most vulnerable from energy price shocks and economic dislocation. They are also seeking more clarity as to the public policy path that will help align greenhouse gas reduction actions with commitments.

In this context, we ask companies to disclose a business plan for how they intend to deliver long-term financial performance through the transition to global net zero, consistent with their business model and sector. We encourage companies to demonstrate that their plans are resilient under likely decarbonization pathways, and the global aspiration to limit warming to 1.5°C.8 We also encourage companies to disclose how considerations related to having a reliable energy supply and just transition affect their plans.

We look to companies to set short-, medium-, and long-term science-based targets, where available for their sector, for greenhouse gas reductions and to demonstrate how their targets are consistent with the long-term economic interests of their shareholders. Companies have an opportunity to use and contribute to the development of alternative energy sources and low-carbon transition technologies that will be essential to reaching net zero. We also recognize that some continued investment is required to maintain a reliable, affordable supply of fossil fuels during the transition. We ask companies to disclose how their capital allocation across alternatives, transition technologies, and fossil fuel production is consistent with their strategy and their emissions reduction targets.

In determining how to vote, we will continue to assess whether a company’s disclosures are aligned with the TCFD and provide short-, medium-, and long-term reduction targets for Scope 1 and 2 emissions. We may signal concerns about a company’s plans or disclosures in our voting on director elections, particularly at companies facing material climate risks. We may support shareholder proposals that ask

 

 

7 For example, BlackRock’s Capital Markets Assumptions anticipate 25 points of cumulative economic gains over a 20-year period in an orderly transition as compared to the alternative. This better macro environment will support better economic growth, financial stability, job growth, productivity, as well as ecosystem stability and health outcomes.

8 The global aspiration is reflective of aggregated efforts; companies in developed and emerging markets are not equally equipped to transition their business and reduce emissions at the same rate—those in developed markets with the largest market capitalization are better positioned to adapt their business models at an accelerated pace. Government policy and regional targets may be reflective of these realities.

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 17


companies to disclose climate plans aligned with our expectations. Our publicly available commentary provides more information on our approach to climate risk.

Key stakeholder interests

We believe that in order to deliver long-term value for shareholders, companies should also consider the interests of their key stakeholders. While stakeholder groups may vary across industries, they are likely to include employees; business partners (such as suppliers and distributors); clients and consumers; government and regulators; and the communities in which a company operates. Companies that build strong relationships with their key stakeholders are more likely to meet their own strategic objectives, while poor relationships may create adverse impacts that expose a company to legal, regulatory, operational, and reputational risks and jeopardize their social license to operate. We expect companies to effectively oversee and mitigate these risks with appropriate due diligence processes and board oversight. Our publicly available commentaries provide more information on our approach.

Human capital management

A company’s approach to human capital management (“HCM”) is a critical factor in fostering an inclusive, diverse, and engaged workforce, which contributes to business continuity, innovation, and long-term value creation. Consequently, we expect companies to demonstrate a robust approach to HCM and provide shareholders with disclosures to understand how their approach aligns with their stated strategy and business model.

We believe that clear and consistent disclosures on these matters are critical for investors to make an informed assessment of a company’s HCM practices. We expect companies to disclose the steps they are taking to advance diversity, equity, and inclusion; job categories and workforce demographics; and their responses to the U.S. Equal Employment Opportunity Commission’s EEO-1 Survey. Where we believe a company’s disclosures or practices fall short relative to the market or peers, or we are unable to ascertain the board and management’s effectiveness in overseeing related risks and opportunities, we may vote against members of the appropriate committee or support relevant shareholder proposals. Our publicly available commentary provides more information on our approach to HCM.

Corporate political activities

Companies may engage in certain political activities, within legal and regulatory limits, in order to support public policy matters material to the companies’ long-term strategies. These activities can also create risks, including: the potential for allegations of corruption; certain reputational risks; and risks that arise from the complex legal, regulatory, and compliance considerations associated with corporate political spending and lobbying activity. Companies that engage in political activities should develop and maintain robust processes to guide these activities and mitigate risks, including board oversight.

When presented with shareholder proposals requesting increased disclosure on corporate political activities, BIS will evaluate publicly available information to consider how a company’s lobbying and political activities may impact the company. We will also evaluate whether there is general consistency between a company’s stated positions on policy matters material to its strategy and the material positions taken by significant industry groups of which it is a member. We may decide to support a shareholder proposal requesting additional disclosures if we identify a material inconsistency or feel that further transparency may clarify how the company’s political activities support its long-term strategy. Our publicly available commentary provides more information on our approach to corporate political activities.

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 18


General corporate governance matters

Adjourn meeting to solicit additional votes

We generally support such proposals unless the agenda contains items that we judge to be detrimental to shareholders’ best long-term economic interests.

Bundled proposals

We believe that shareholders should have the opportunity to review substantial governance changes individually without having to accept bundled proposals. Where several measures are grouped into one proposal, BIS may reject certain positive changes when linked with proposals that generally contradict or impede the rights and economic interests of shareholders.

Exclusive forum provisions

BIS generally supports proposals to seek exclusive forum for certain shareholder litigation. In cases where a board unilaterally adopts exclusive forum provisions that we consider unfavorable to the interests of shareholders, we will vote against the independent chair or lead independent director and members of the nominating/governance committee.

Multi-jurisdictional companies

Where a company is listed on multiple exchanges or incorporated in a country different from its primary listing, we will seek to apply the most relevant market guideline(s) to our analysis of the company’s governance structure and specific proposals on the shareholder meeting agenda. In doing so, we typically consider the governance standards of the company’s primary listing, the market standards by which the company governs itself, and the market context of each specific proposal on the agenda. If the relevant standards are silent on the issue under consideration, we will use our professional judgment as to what voting outcome would best protect the long-term economic interests of investors. We expect companies to disclose the rationale for their selection of primary listing, country of incorporation, and choice of governance structures, particularly where there is conflict between relevant market governance practices.

Other business

We oppose voting on matters where we are not given the opportunity to review and understand those measures and carry out an appropriate level of shareholder oversight.

Reincorporation

Proposals to reincorporate from one state or country to another are most frequently motivated by considerations of anti-takeover protections, legal advantages, and/or cost savings. We will evaluate, on a case-by-case basis, the economic and strategic rationale behind the company’s proposal to reincorporate. In all instances, we will evaluate the changes to shareholder protections under the new charter/articles/bylaws to assess whether the move increases or decreases shareholder protections. Where we find that shareholder protections are diminished, we may support reincorporation if we determine that the overall benefits outweigh the diminished rights.

IPO governance

We expect boards to consider and disclose how the corporate governance structures adopted upon initial public offering (“IPO”) are in shareholders’ best long-term interests. We also expect boards to conduct a

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 19


regular review of corporate governance and control structures, such that boards might evolve foundational corporate governance structures as company circumstances change, without undue costs and disruption to shareholders. In our letter on unequal voting structures, we articulate our view that “one vote for one share” is the preferred structure for publicly-traded companies. We also recognize the potential benefits of dual class shares to newly public companies as they establish themselves; however, we believe that these structures should have a specific and limited duration. We will generally engage new companies on topics such as classified boards and supermajority vote provisions to amend bylaws, as we believe that such arrangements may not be in the best interest of shareholders in the long-term.

We will typically apply a one-year grace period for the application of certain director-related guidelines (including, but not limited to, responsibilities on other public company boards and board composition concerns), during which we expect boards to take steps to bring corporate governance standards in line with our expectations.

Further, if a company qualifies as an emerging growth company (an “EGC”) under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), we will give consideration to the NYSE and NASDAQ governance exemptions granted under the JOBS Act for the duration such a company is categorized as an EGC. We expect an EGC to have a totally independent audit committee by the first anniversary of its IPO, with our standard approach to voting on auditors and audit-related issues applicable in full for an EGC on the first anniversary of its IPO.

Corporate form

Proposals to change a corporation’s form, including those to convert to a public benefit corporation (“PBC”) structure, should clearly articulate how the interests of shareholders and different stakeholders would be augmented or adversely affected, as well as the accountability and voting mechanisms that would be available to shareholders. We generally support management proposals if our analysis indicates that shareholders’ interests are adequately protected. Corporate form shareholder proposals are evaluated on a case-by-case basis.

Shareholder protections

Amendment to charter/articles/bylaws

We believe that shareholders should have the right to vote on key corporate governance matters, including changes to governance mechanisms and amendments to the charter/articles/bylaws. We may vote against certain directors where changes to governing documents are not put to a shareholder vote within a reasonable period of time, particularly if those changes have the potential to impact shareholder rights (see “Director elections”). In cases where a board’s unilateral adoption of changes to the charter/articles/bylaws promotes cost and operational efficiency benefits for the company and its shareholders, we may support such action if it does not have a negative effect on shareholder rights or the company’s corporate governance structure.

When voting on a management or shareholder proposal to make changes to the charter/articles/bylaws, we will consider in part the company’s and/or proponent’s publicly stated rationale for the changes; the company’s governance profile and history; relevant jurisdictional laws; and situational or contextual circumstances which may have motivated the proposed changes, among other factors. We will typically support amendments to the charter/articles/bylaws where the benefits to shareholders outweigh the costs of failing to make such changes.

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 20


Proxy access

We believe that long-term shareholders should have the opportunity, when necessary and under reasonable conditions, to nominate directors on the company’s proxy card.

In our view, securing the right of shareholders to nominate directors without engaging in a control contest can enhance shareholders’ ability to meaningfully participate in the director election process, encourage board attention to shareholder interests, and provide shareholders an effective means of directing that attention where it is lacking. Proxy access mechanisms should provide shareholders with a reasonable opportunity to use this right without stipulating overly restrictive or onerous parameters for use, and also provide assurances that the mechanism will not be subject to abuse by short-term investors, investors without a substantial investment in the company, or investors seeking to take control of the board.

In general, we support market-standardized proxy access proposals, which allow a shareholder (or group of up to 20 shareholders) holding three percent of a company’s outstanding shares for at least three years the right to nominate the greater of up to two directors or 20% of the board. Where a standardized proxy access provision exists, we will generally oppose shareholder proposals requesting outlier thresholds.

Right to act by written consent

In exceptional circumstances and with sufficiently broad support, shareholders should have the opportunity to raise issues of substantial importance without having to wait for management to schedule a meeting. We therefore believe that shareholders should have the right to solicit votes by written consent provided that: 1) there are reasonable requirements to initiate the consent solicitation process (in order to avoid the waste of corporate resources in addressing narrowly supported interests); and 2) shareholders receive a minimum of 50% of outstanding shares to effectuate the action by written consent. We may oppose shareholder proposals requesting the right to act by written consent in cases where the proposal is structured for the benefit of a dominant shareholder to the exclusion of others, or if the proposal is written to discourage the board from incorporating appropriate mechanisms to avoid the waste of corporate resources when establishing a right to act by written consent. Additionally, we may oppose shareholder proposals requesting the right to act by written consent if the company already provides a shareholder right to call a special meeting that we believe offers shareholders a reasonable opportunity to raise issues of substantial importance without having to wait for management to schedule a meeting.

Right to call a special meeting

In exceptional circumstances and with sufficiently broad support, shareholders should have the opportunity to raise issues of substantial importance without having to wait for management to schedule a meeting. Accordingly, shareholders should have the right to call a special meeting in cases where a reasonably high proportion of shareholders (typically a minimum of 15% but no higher than 25%) are required to agree to such a meeting before it is called. However, we may oppose this right in cases where the proposal is structured for the benefit of a dominant shareholder, or where a lower threshold may lead to an ineffective use of corporate resources. We generally believe that a right to act via written consent is not a sufficient alternative to the right to call a special meeting.

Simple majority voting

We generally favor a simple majority voting requirement to pass proposals. Therefore, we will support the reduction or the elimination of supermajority voting requirements to the extent that we determine shareholders’ ability to protect their economic interests is improved. Nonetheless, in situations where

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 21


there is a substantial or dominant shareholder, supermajority voting may be protective of minority shareholder interests and we may support supermajority voting requirements in those situations.

Virtual meetings

Shareholders should have the opportunity to participate in the annual and special meetings for the companies in which they are invested, as these meetings facilitate an opportunity for shareholders to provide feedback and hear from the board and management. While these meetings have traditionally been conducted in-person, virtual meetings are an increasingly viable way for companies to utilize technology to facilitate shareholder accessibility, inclusiveness, and cost efficiencies. We expect shareholders to have a meaningful opportunity to participate in the meeting and interact with the board and management in these virtual settings; companies should facilitate open dialogue and allow shareholders to voice concerns and provide feedback without undue censorship. Relevant shareholder proposals are assessed on a case-by-case basis.

 

BlackRock Investment Stewardship   Proxy voting guidelines for U.S. securities | 22


 

Want to know more?

blackrock.com/stewardship     |     contactstewardship@blackrock.com

This document is provided for information and educational purposes only. Investing involves risk, including the loss of principal.

Prepared by BlackRock, Inc.

©2022 BlackRock, Inc. All rights reserved. BLACKROCK is a trademark of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.

 

 

LOGO