September 19, 2019
Bissie K. Bonner, Esq.
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019-6099
Re: BlackRock Health Sciences Trust II, File Nos. 333-233373;
811-23466
Dear Ms. Bonner:
We have reviewed the registration statement for BlackRock Health
Sciences Trust II (the
"Trust"), filed on Form N-2 with the Securities and Exchange Commission on
August 20, 2019, and have
the comments below. Comments given in one section apply to other sections in
the filing that contain the
same or similar disclosure. The captions used below correspond to the captions
the Trust uses in the
registration statement. All capitalized terms not otherwise defined herein have
the meaning given to them
in the registration statement.
1. Please confirm in your response letter that FINRA has reviewed the
proposed underwriting terms
and arrangements for the transactions described in the registration
statement, including the amount
of compensation to be allowed or paid to the underwriters and any other
arrangements among the
Trust, the underwriter, and other broker dealers participating in the
distribution, and that FINRA
has issued a statement expressing no objections to the compensation and
other arrangements.
2. We note the disclosure on page 11 of the prospectus states, "The Trust
has, pursuant to an SEC
exemptive order granted to certain (emphasis added) of BlackRock's
closed-end funds, adopted a
plan to support a level distribution of income, capital gains and/or
return of capital (the 'Level
Distribution Plan')." Please advise us if you have submitted or expect
to submit an exemptive
application or no-action request in connection with this registration
statement.
COVER PAGE
3. The Investment Strategy paragraph states, "Under normal market
conditions, the Trust will invest
at least 80% of its total assets in equity securities of companies
engaged in the health sciences and
related industries (emphasis added) and equity derivatives with exposure
to the health sciences
industry." The disclosure further states, "Other health sciences
industries (emphasis added) in
which the Trust may invest include: clinical testing laboratories;
diagnostics; hospital, laboratory
or physician ancillary products and support services; rehabilitation
services; employer health
Bissie K Bonner, Esq.
September 19, 2019
Page 2
insurance management services; and vendors of goods and services
specifically to companies
engaged in the health sciences. . . . Non-human health sciences
industries (emphasis added) 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."
Please clarify the disclosure to precisely describe the related
industries contemplated by the Trust
for compliance with Rule 35d-1 under the Investment Company Act of 1940
(the "40 Act"). Also,
add the term "principally" or similar before the term "engaged."
Finally, disclosure that derivatives
are counted based on market, not notional, value.
4. In the Investment Strategy paragraph the disclosure states, "The Advisor
determines, in its
discretion (emphasis added), whether a company is engaged in the health
sciences and related
industries. . . . 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." Can the Advisor choose
securities that do not meet the
asset/revenue test disclosed? Please harmonize the disclosure. Further,
will those securities count
towards satisfying the Trust's 80% test to invest in health sciences and
related industries? If yes,
please explain to us how that complies with Rule 35d-1 under the 1940
Act. We may have further
comments.
5. In regard to the portfolio securities that represent "equity interests
in real estate investment trusts
that own hospitals," disclose whether those interests will be limited or
general partner interests. If
the Trust anticipates investing as a general partner, add the risks
associated with general
partnerships in the risk disclosure section of the prospectus.
6. In the discussion regarding the Trust's option writing strategy,
consider highlighting the following
disclosure using bold or italicized font: ". . . the Trust will lose
money to the extent that it writes
covered call options and the securities on which it writes these options
appreciate above the exercise
price of the option."
7. In the aforementioned section, the disclosure: "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 (emphasis
added)" should be equally
prominent with the disclosure regarding the Trust's limited term. The
potential tender offer
prevents investors from reasonably predicting whether the Trust will
dissolve or convert, without
a shareholder vote, to a perpetual fund. Please make this change
throughout the document.
PROSPECTUS SUMMARY
Limited Term and Eligible Tender Offer
8. On page 3, consider highlighting with bold or italicized font the
disclosure that states, "The Trust
is not required to conduct additional tender offers following an
Eligible Tender Offer and
conversion to a perpetual structure. Therefore, remaining common
shareholders may not have
another opportunity to participate in a tender offer or exchange their
common shares for the then-
existing NAV per share. There is no guarantee that the Board will
eliminate the Dissolution Date
Bissie K Bonner, Esq.
September 19, 2019
Page 3
following the completion of an Eligible Tender Offer so that the Trust
will have a perpetual
existence."
Investment Policies: Other Strategies
9. If the Trust engages in the short sale of securities, please ensure that
dividend and interest expenses
associated with such short sales are included in Other Expenses in the
Summary of Trust Expenses
table.
Distributions
10. Page 11 states, "A return of capital distribution may involve a return
of the shareholder's original
investment. . . . Shareholders should not draw any conclusions about
the Trust's investment
performance from the amount of these distributions or from the terms of
the Level Distribution
Plan." Please consider adding, "Persons who receive a payment
consisting of a return of capital
may be under the impression that they are receiving net profits when
they are not. Shareholders
should not assume that the source of any distribution from the Trust is
net profit."
11. Consider highlighting with bold or italicized font the following
disclosure: "Though not currently
taxable, such a distribution may lower a shareholder's basis in the
Trust, thus potentially subjecting
the shareholder to future tax consequences in connection with the sale
of Trust shares, even if sold
at a loss to the shareholder's original investment. All or a
significant portion of the Trust's
distributions to shareholders during the Trust's first year of
operations may consist of return of
capital."
Special Risk Considerations: Risks Associated with the Trust's Options Strategy
12. We note that the Trust's options writing strategy, as disclosed on the
cover page, is a principal
investment strategy. Therefore, please disclose the "Risks Associated
with the Trust's Options
Strategy" earlier in the Special Risk Considerations section of the
prospectus.
Special Risk Considerations: Risks of Writing Options
13. Please explain to us how options will be valued for purposes of
calculating the Advisor's
management fee. We may have additional comments after reviewing your
response.
Summary of Trust Expenses
14. Please note that acquired fund fees and expenses greater than 1 basis
point must be shown as a
separate line item.
15. In regard to footnote number 4, confirm to the staff that the Fee
Waiver Agreement's term will be
at least one year from the effectiveness date of the registration
statement. Also, the Fee Waiver
Agreement is considered a material agreement that should be filed as an
exhibit that accompanies
the Trust's pre-effective amendment.
16. If the Advisor is permitted to recapture waived fees, disclose the
terms and conditions of the
reimbursement.
Bissie K Bonner, Esq.
September 19, 2019
Page 4
Investment Management Agreement
17. The disclosure on page 118 states, "A discussion regarding the basis
for the approval of the
Investment Management Agreement by the Board will be available in the
Trust's first report to
shareholders." Per Item 9.1.b of Form N-2, provide the period covered
by the report.
GENERAL COMMENTS
18. We note that portions of the filing are incomplete. We may have
additional comments on such
portions when you complete them in pre-effective amendments, on
disclosures made in response
to this letter, on information you supply to us, or on exhibits added
in any pre-effective
amendments.
19. Responses to this letter should be in the form of a pre-effective
amendment filed pursuant to Rule
472 under the Securities Act of 1933. Where no change will be made in
the filing in response to a
comment, please indicate this fact in a letter to us and briefly
state the basis for your position.
20. If you intend to omit certain information from the form of prospectus
included with the registration
statement that is declared effective in reliance on Rule 430A under
the Securities Act, please
identify the omitted information to us supplementally, preferably
before filing the pre-effective
amendment.
21. We remind you that the company and its management are responsible for
the accuracy and
adequacy of their disclosures, notwithstanding any review, comments,
action or absence of action
by the staff.
Should you have any questions prior to filing a pre-effective
amendment, please feel free to contact
me at 202-551-6769.
Sincerely,
/s/
Deborah L. O'Neal
Deborah L. O'Neal
Senior Counsel
cc: Keith A. OConnell, Branch Chief
Michael J. Spratt, Assistant Director