June
30, 2021 (Unaudited)
|
3
|
Legitimate
interests
|
For
our legitimate interests or those of a third party (such as a transaction counterparty
or lender) to:
●
manage and administer your holding in any Funds in which you are invested, and any related accounts on an ongoing basis
●
assess and process any applications or requests made by you
●
open, maintain or close accounts in connection with your investment in, or withdrawal from, the Fund scheme
●
send updates, information and notices or otherwise correspond with you in connection with your investment in the Fund scheme
●
address or investigate any complaints, claims, proceedings or disputes
●
provide you with, and inform you about, our investment products and services
●
monitor and improve our relationships with investors
●
comply with applicable regulatory obligations, including anti-money laundering, sanctions and 'know your client' checks
●
assist our transaction counterparties to comply with their regulatory and legal obligations (including anti-money laundering,
'know your client' and sanctions checks)
●
manage our risk and operations
●
comply with our accounting and tax reporting requirements
●
comply with our audit requirements
●
assist with internal compliance with our policies and processes
●
ensure appropriate group management and governance
●
keep our internal records
●
prepare reports on incidents/accidents
●
protect our business against fraud, breach of confidence, theft of proprietary materials, and other financial or business crimes
(to the extent that this is not required of us by law)
●
analyse and manage commercial risks
●
seek professional advice, including legal advice
●
enable any actual or proposed assignee or transferee, participant or sub-participant of the partnership's or Fund vehicles' rights
or obligations to evaluate proposed transactions
●
facilitate business asset transactions involving the Fund partnership or Fund-related vehicles
●
monitor communications to/from us using our systems
●
protect the security and integrity of our information technology systems
●
protect the security and safety of our buildings and locations where we operate
●
operate, run and schedule online meetings, webinars and conferences (for example, using Zoom and other online meeting platforms)
●
manage our financing arrangements with our financiers and financing transaction counterparties, including payment providers,
intermediaries, correspondent and agent banks
We
only rely on these interests where we have considered that, on balance, the legitimate interests are not overridden by your interests,
fundamental rights or freedoms.
|
Monitoring
as described at (3) above
We
monitor communications where the law requires us to do so. We will also monitor where we are required to do so to comply with our regulatory
rules and practices and, where we are permitted to do so, to protect our business and the security of our systems.
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Privacy Procedures
|
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30, 2021 (Unaudited)
6.
Who we share your Personal Data with
Your
Personal Data will be shared with:
|
WHO
|
WHY
|
|
Fund
associates
|
We
share your Personal Data with our associates, related parties and members of our group. This
is:
●
to manage our relationship with you
●
for the legitimate interests of a third party in carrying out anti-money laundering and compliance checks required of them under
applicable laws and regulations
●
for the purposes set out in this Data Privacy Notice
|
|
Fund
Managers, Depositories, Administrators, Custodians, Investment Advisers
|
●
delivering the services you require
●
managing your investment
●
supporting and administering investment-related activities
●
complying with applicable investment, anti-money laundering and other laws and regulations
|
|
Tax
Authorities
|
●
to comply with applicable laws and regulations
●
where required or requested by tax authorities in the territory in which you are located or domiciled (in particular, Cayman
Island or UK/EEA tax authorities) who, in turn, may share your Personal Data with foreign tax authorities
●
where required or requested by foreign tax authorities, including outside of the territory in which you are located or domiciled
(including outside of the Cayman Islands or UK/EEA)
|
|
Service
Providers
|
●
delivering and facilitating the services needed to support our business
relationship with you
●
supporting and administering investment-related activities
●
where disclosure to the service provider is considered necessary to support Blackstone with the purposes described in section
5 of this Data Privacy Notice
|
|
Financing
Counterparties, Lenders, Correspondent and Agent Banks
|
●
assisting these transaction counterparties with regulatory checks, such
as 'know your client', and anti-money laundering procedures
●
sourcing credit for Fund-related entities in the course of our transactions and fund life cycles
|
|
Our
Lawyers, Auditors and other Professional Advisers
|
●
providing you with investment-related services
●
to comply with applicable legal and regulatory requirements
|
In
exceptional circumstances, we will share your Personal Data with:
|
|
●
|
competent
regulatory, prosecuting and other governmental agencies or litigation counterparties, in
any country or territory; and
|
|
|
●
|
other
organisations and agencies – where we are required to do so by law.
|
For
California residents, in the preceding 12 months, we may have disclosed Personal Data listed in any of the categories in section 3 above
for a business purpose (in particular, as described in this section).
We
have not sold Personal Data in the 12 months preceding the date of this Data Privacy Notice.
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7.
Do you have to provide us with this Personal Data?
Where
we collect Personal Data from you, we will indicate if:
|
|
●
|
provision
of the Personal Data is necessary for our compliance with a legal obligation; or
|
|
|
●
|
it
is purely voluntary and there are no implications for you if you do not wish to provide us
with it.
|
Unless
otherwise indicated, you should assume that we require the Personal Data for business and/or compliance purposes.
Some
of the Personal Data we request is necessary for us to perform our contract with you and if you do not wish to provide us with this Personal
Data, it will affect our ability to provide our services to you and manage your investment.
8.
Sending your Personal Data internationally
We
will transfer your Personal Data between different countries to affiliates and our group members, Fund management, members of the Fund's
partnership, transaction counterparties, and third party service providers. These countries may not have similarly strict data protection
and privacy laws, and will include those countries in which our affiliates and service providers operate (for example, transfers from
the UK/EEA, Cayman Islands, Australia, Hong Kong, Japan or Singapore to a jurisdiction outside of such territory).
Where
we transfer Personal Data to other members of our group, our service providers or another third party recipient from one country to another,
we will ensure that our arrangements with them are governed by data transfer agreements or appropriate safeguards, designed to ensure
that your Personal Data is protected as required under applicable data protection law (including, where appropriate, under an agreement
on terms approved for this purpose by the European Commission or by obtaining your consent).
Please
contact us if you would like to know more about these agreements or receive a copy of them. Please see below for our contact details.
9.
Consent – and your right to withdraw it
Except
as may otherwise be required by local law, we do not generally rely on obtaining your consent to process your Personal Data. In particular,
we do not generally rely on obtaining your consent where our processing of your personal data is subject only to the data protection
laws of the UK/EEA (in these circumstances we will usually rely on another legal basis more appropriate in the circumstances, including
those set out in section 5 above). If we do rely on consent for processing of your Personal Data, you have the right to withdraw this
consent at any time. Please contact us or send us an email at PrivacyQueries@Blackstone.com at any time if you wish to do so.
Where
required by applicable law, we will obtain your consent for the processing of your Personal Data for direct marketing purposes. If you
do receive direct marketing communications from us (for example, by post, email, fax or telephone), you may opt-out by clicking the link
in the relevant communication, completing the forms provided to you (where relevant), or by contacting us (see 13 below).
10.
Retention and deletion of your Personal Data
We
keep your Personal Data for as long as it is required by us for our legitimate business purposes, to perform our contractual obligations,
or where longer, such longer period as is required or permitted by law or regulatory obligations which apply to us. We will generally:
|
|
●
|
retain
Personal Data about you throughout the life cycle of any investment you are involved in;
and
|
|
|
●
|
retain
some Personal Data after your relationship with us ends.
|
As
a general principle, we do not retain your Personal Data for longer than we need it.
We
will usually delete your Personal Data (at the latest) after you cease to be an investor in any fund and there is no longer any legal
or regulatory requirement, or business purpose, for retaining your Personal Data.
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Privacy Procedures
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11.
Your rights
You
may, subject to certain limitations, have data protection rights depending on the data protection laws that apply to our processing of
your Personal Data, including the right to:
|
|
●
|
access
your Personal Data, and some related information, including the purpose for processing the
Personal Data, the categories of recipients of that Personal Data to the extent that it has
been transferred internationally, and, where the Personal Data has not been collected directly
from you, the source (the category information)
|
|
|
●
|
restrict
the use of your Personal Data in certain circumstances
|
|
|
●
|
have
incomplete or inaccurate Personal Data corrected
|
|
|
●
|
ask
us to stop processing your Personal Data
|
|
|
●
|
require
us to delete your Personal Data in some limited circumstances
|
You
also have the right in some circumstances to request us to "port" your Personal Data in a portable, re-usable format to other
organisations (where this is possible).
California
residents may also request certain information about our disclosure of Personal Data during the prior year, including category information
(as defined above).
We
review and verify requests to protect your Personal Data, and will action data protection requests fairly and in accordance with applicable
data protection laws and principles.
If
you wish to exercise any of these rights, please contact us (details below).
12.
Concerns or queries
We
take your concerns very seriously. We encourage you to bring it to our attention if you have any concerns about our processing your Personal
Data. This Data Privacy Notice was drafted with simplicity and clarity in mind. We are, of course, happy to provide any further information
or explanation needed. Our contact details are below.
Please
also contact us via any of the below methods if you have a disability and require an alternative format of this notice.
If
you want to make a complaint, you can also contact the body regulating data protection in your country, where you live or work, or the
location where the data protection issue arose. In particular:
|
Country
|
Supervisory
Authority
|
|
Cayman
Islands
|
Cayman
Islands Ombudsman (available at: https://ombudsman.ky)
|
|
European
Union
|
A
list of the EU data protection authorities and contact details is available by clicking this
link:
http://ec.europa.eu/newsroom/article29/item-detail.cfm?item_id=612080
|
|
United
Kingdom
|
Information
Commissioner's Office (available at: https://ico.org.uk/global/contact-us/)
|
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Report | June 30, 2021
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13.
Contact us
Please
contact us if you have any questions about this Data Privacy Notice or the Personal Data we hold about you.
Contact
us by email or access our web form by emailing PrivacyQueries@Blackstone.com.
Contact
us in writing using this address:
|
Address
|
For
EU/UK related queries:
40
Berkeley Square, London, W1J 5AL, United Kingdom
All
other queries:
345
Park Avenue, New York, NY 10154
|
A
list of country-specific addresses and contacts for locations where we operate is available at https://www.blackstone.com/privacy#appendixA.
14.
Changes to this Data Privacy Notice
We
keep this Data Privacy Notice under regular review. Please check regularly for any updates at our investor portal (www.bxaccess.com).
This
Data Privacy Notice was last updated in July 2020.
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Approval
of Investment Advisory Agreement
|
|
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June
30, 2021 (Unaudited)
|
The
Investment Company Act of 1940, as amended (the “1940 Act”), requires that the Board of Trustees (collectively, the “Board”)
of each of Blackstone Senior Floating Rate Term Fund (“BSL”), Blackstone Long-Short Credit Income Fund (“BGX”),
and Blackstone Strategic Credit Fund (“BGB,” and together with BSL and BGX, the “Funds” and each a “Fund”),
including a majority of its members who are not considered to be “interested persons” under the 1940 Act (the “Independent
Trustees”) voting separately, approve on an annual basis the continuation of the Fund’s investment advisory agreement (each,
an “Agreement” and collectively, the “Agreements”) with the Fund’s investment adviser, Blackstone Liquid
Credit Strategies LLC (the “Adviser”). At a joint meeting (the “Contract Renewal Meeting”) held telephonically
on May 26, 2021, the Board, including the Independent Trustees, considered, and unanimously approved, the continuation of each Agreement
for an additional one-year term. To assist in its consideration, prior to the Contract Renewal Meeting, the Independent Trustees, through
their Independent Legal Counsel (“Independent Counsel”) had requested, received and considered a variety of information (together
with the information provided at the Contract Renewal Meeting, the “Contract Renewal Information”) about the Adviser, as
well as the advisory arrangements for the Funds, certain portions of which are discussed below. In preparation for the Contract Renewal
Meeting, the Independent Trustees met telephonically in a private session (the “Review Session”) prior to the Contract Renewal
Meeting with Independent Counsel to review the Contract Renewal Information. No representatives of the Funds, the Adviser, or Fund management
were present at the Review Session. In addition to the Contract Renewal Information, the Board received performance and other information
since each Fund’s inception related to the services rendered by the Adviser to such Fund. The Board’s evaluation took into
account the information received since each Fund’s inception and also reflected the knowledge and familiarity gained as members
of the Board with respect to the investment advisory and other services provided to each Fund by the Adviser under that Fund’s
Agreement.
Board
Approval of the Continuation of the Agreements
In
its deliberations regarding renewal of each Agreement, the Board, including the Independent Trustees, considered various factors, including
those set forth below.
Nature,
Extent and Quality of the Services Provided to the Funds under the Agreements
The
Board received and considered Contract Renewal Information regarding the nature, extent and quality of services the Adviser provided
to the Funds under the Agreements. Specifically, the Board took into account the fact that the Adviser has a large and knowledgeable
investment team, with one of the largest credit teams in the US and globally, and has expanded its team and resources to further develop
its coverage in credit asset classes. The Adviser also explained to the Board its investment process, as well as its infrastructure and
operational teams serving the Funds.
The
Board also reviewed Contract Renewal Information regarding the Adviser’s compliance policies and procedures established pursuant
to the 1940 Act and considered compliance record for the Adviser and each Fund during the previous year and since its inception.
The
Board reviewed the qualifications, backgrounds and responsibilities of the Funds’ senior personnel and the portfolio management
team primarily responsible for the day-to-day portfolio management of each Fund. The Board also considered, based on its knowledge of
the Adviser and its affiliates, the Contract Renewal Information and the Board’s discussions with the Adviser at the Contract Renewal
Meeting, the general reputation and investment performance records of the Adviser and certain of its affiliates and the financial resources
of the corporate parent of the Adviser, Blackstone Inc., available to support the Adviser’s activities in respect of the Funds.
The
Board considered the responsibilities of the Adviser under each Fund’s Agreement, including the Adviser’s coordination and
oversight of the services provided to the Fund by other unaffiliated parties.
In
reaching its determinations regarding continuation of each Fund’s Agreement, the Board took into account that such Fund’s
shareholders, in pursuing their investment goals and objectives, likely considered the reputation and the investment style, philosophy
and strategy of the Adviser, as well as the resources available to the Adviser, in purchasing their shares.
Fund
Performance
Among
other things, the Board received and considered information and analyses (the “Broadridge Performance Information”) comparing
the performance of each Fund with a group of funds (the “Peer Group”) selected by Broadridge Financial Solutions (“Broadridge”),
an independent provider of investment company data, primarily from the Morningstar CEF Classification of US Senior Loan Funds Leveraged
classification (the “Morningstar Senior Loan Leveraged Classification”), which consists of 32 closed-end funds. Broadridge
selected the Peer Group funds primarily from the Morningstar Senior Loan Leveraged Classification to be as comparable as possible to
the Funds based upon its consideration of the constituent funds’ investment style, share class characterization, and assets. The
Board was provided with a description of the methodology Broadridge used to select each Fund’s Peer Group. On May 20, 2021, each
of the members of the Board participated in a conference call and webinar with Broadridge regarding the Broadridge Performance Information,
including its peer grouping methodology and reporting format. Representatives of the Adviser also participated on that conference call
and webinar. The Board noted Broadridge’s view that the relatively limited number of closed-end funds compared to the open-end
fund universe creates limitations on peer grouping as compared to certain open-end funds.
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Funds
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Approval
of Investment Advisory Agreement
|
|
|
June
30, 2021 (Unaudited)
|
The
Peer Group for BSL consisted of ten funds for each of the 1-, 3- and 5- year periods and nine funds for the 10-year period ended March
31, 2021 (such periods being hereinafter called the “1- year period”, the “3- year period”, the “5- year
period” and the “10- year period,” respectively) with an emphasis on strategies that have high net historical portfolio
allocations to bank loans. The Peer Groups for BGX and BGB were the same, which consisted of ten funds, including both BGX and BGB, for
each of the 1-, 3- and 5- year periods, and, for BGX, three funds, including BGX, for the 10- year period. The Peer Group for BGX and
BGB included funds with historical portfolio allocations to bank loans greater than 20% and allocations to high-yield bonds. Most Peer
Group funds, similar to BGX and BGB, had a majority of their assets allocated to bank loans, while three Peer Group funds had less than
50% of their assets allocated to bank loans. Broadridge included funds from outside the Morningstar Senior Loan Leveraged Classification
with portfolio allocations to bank loans higher than 20% in the Peer Group for BGX and BGB. The Board noted that it had received and
discussed with the Adviser information at periodic intervals since each Fund’s inception comparing such Fund’s performance
against its benchmarks and its Peer Group funds at that time. The Board also noted that it also had received the return volatility and
Sharpe ratio (a measure of risk-weighted return) of each Fund relative to its Peer Group funds. The performance discussion below focuses
on the comparison of the Funds’ performance relative to the respective Peer Group, rather than to the broader Morningstar Senior
Loan Leveraged Classification.
BSL
The
Broadridge Performance Information comparing BSL’s performance to that of its Peer Group based on net asset value (“NAV”)
per share showed, among other things, that BSL’s returns, measured on a gross return basis, ranked first among its Peer Group funds
for each of the 1-, 3-, and 5-year periods; and ranked second among its Peer Group funds for the 10-year period. BSL’s returns,
measured on a net return basis ranked first among its Peer Group funds for each of the 1-, 3-, and 5-year periods; and ranked sixth among
its Peer Group funds for the 10-year period.1 Whether measured on a gross or net return basis, BSL’s returns were higher
than the Peer Group median performance for each of the 1-, 3- and 5- year periods, and BSL’s gross returns were higher than the
Peer Group median performance for the 10-year period, but were lower than the Peer Group median performance with respect to net returns
for the 10-year period. The Board also considered BSL’s performance relative to its benchmark and in absolute terms. The Broadridge
Performance Information showed that, measured on a gross and net return basis, BSL outperformed its benchmark for each of the 1-, 3-,
5-, and 10-year periods. The Broadridge Performance Information noted that BSL’s Sharpe ratio (a measure of risk-weighted return)
outperformed the Peer Group median over the 1-, 3-, and 5-year periods. On a gross return basis, BSL’s Sharpe ratio ranked fifth,
second, second and sixth among its Peer Group funds, respectively, for the 1-, 3-, 5- and 10-year periods. On a net return basis, BSL’s
Sharpe ratio ranked fifth, first, first and seventh, respectively, among its Peer Group funds for the 1-, 3-, 5- and 10-year periods.
BGX
The
Broadridge Performance Information comparing BGX’s performance to that of the Peer Group based on NAV per share showed, among other
things, that BGX’s returns, measured on a gross return basis, ranked third among its Peer Group funds for the 1-year period; ranked
fourth among its Peer Group funds for the 3- year period; ranked fifth among its Peer Group funds for the 5-year period; and ranked second
among its Peer Group Funds for the 10-year period. BGX’s returns, measured on a net return basis, ranked third among its Peer Group
funds for the 1-year period; ranked fourth among its Peer Group funds for the 3-year period; ranked fifth among its Peer Group funds
for the 5-year period; and ranked last among its Peer Group funds for the 10-year period. The Fund’s gross and net returns were
better than the Peer Group median return in the 1-, 3-, and 5- year periods, and the Fund’s gross returns were better than the
Peer Group median return in the 10-year period, but the Fund’s net returns were slightly below the Peer Group median return for
the 10-year period. The Board also considered BGX’s performance relative to its benchmark and in absolute terms. The Broadridge
Performance Information noted that BGX on a gross return basis outperformed its Peer Group medians and benchmark for each of the 3-,
5-, and 10-year periods. On a gross return basis, BGX’s Sharpe ratio (a measure of risk-weighted return) ranked sixth, sixth, fifth
and last among its Peer Group funds, respectively, for the 1-, 3-, 5- and 10- year periods. On a net return basis, BGX’s Sharpe
ratio ranked sixth, fifth, fifth and last, respectively, among its Peer Group funds for the 1-, 3-, 5- and 10- year periods.
BGB
The
Broadridge Performance Information comparing BGB’s performance to that of the Peer Group based on NAV per share showed, among other
things, that BGB’s returns, measured on a gross return basis, ranked sixth among its Peer Group funds for the 1-year period; ranked
eighth among its Peer Group funds for the 3- year period; and ranked seventh among its Peer Group funds for the 5-year period. BGB’s
returns, measured on a net return basis, ranked seventh among its Peer Group funds for each of the 1- and 5-year periods and ranked ninth
among its Peer Group funds for the 3-year period. The Fund’s returns on both a gross and net return basis were lower than the Peer
Group median performance for each of the 1-, 3- and 5-year periods. The Board also considered BGB’s performance relative to its
benchmark and in absolute terms. The Broadridge Performance Information noted that BGB outperformed its benchmark on a gross return basis
for the 1- and 5- year periods, while slightly underperforming its benchmark for the 3-year period. The Broadridge Performance Information
showed that BGB’s Sharpe ratio, on a gross return basis, was ranked fifth among its Peer Group funds for the 1- year period; ninth
among the Peer Group funds for the 3- year period; and sixth among the Peer Group funds for the 5- year period. BGB’s Sharpe ratio
on a net return basis was ranked fifth among the Peer Group funds for the 1- year period; ninth among the Peer Group funds for the 3-year
period; and eighth among the Peer Group funds for the 5-year period.
In
assessing Fund performance, the Adviser noted that the small number and varying investment strategies of funds in the Peer Groups for
BSL, BGX and BGB made meaningful performance comparisons challenging. Broadridge itself noted that the relatively limited number of closed-end
funds compared to open-end funds poses particular challenges for peer grouping. The Adviser discussed with the Board whether the Morningstar
Senior Loan Leveraged Classification provided relevant and appropriate performance comparisons in the case of BGX and BGB in light of
their broader investment strategies. The Adviser also noted the particular limitations of the BGX and BGB Peer Groups, highlighting the
wide range of investment strategies employed and returns achieved by funds in those Peer Groups (relative to the BSL Peer Group). In
addition to the Broadridge Performance Information, the Board considered information provided by the Adviser regarding the Funds and
the Morningstar Senior Loan Leveraged Classification and their respective Peer Groups as to differences in each Fund’s portfolio
composition by asset class, credit rating, investment size, and other relevant metrics.
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Approval
of Investment Advisory Agreement
|
|
|
June
30, 2021 (Unaudited)
|
The
Board also noted the credit review and other processes employed by the Adviser in managing the Funds’ investment portfolios, including
that the Adviser continues to utilize a disciplined investment approach with respect to the Funds. Based on its review and considering
other relevant factors, including those noted above, the Board concluded that the Funds’ performance was acceptable.
Management
Fees and Expenses
The
Board reviewed and considered the investment advisory fee (the “Advisory Fee”) payable by each Fund to the Adviser under
its respective Agreement in light of the nature, extent and overall quality of the investment advisory and other services provided by
the Adviser to that Fund.
Additionally,
the Board received and considered information and analyses (the “Broadridge Expense Information”) that Broadridge prepared,
comparing, among other things, the Advisory Fee for each Fund and each Fund’s overall expenses with corresponding information contained
in the Morningstar Senior Loan Leveraged Classification and each Fund’s Peer Group. The comparison was based upon the constituent
funds’ latest fiscal years. The discussion below focuses on the Funds’ expenses relative to their respective Peer Groups,
rather than to the broader Morningstar Senior Loan Leveraged Classification.
BSL
The
ten funds in BSL’s Peer Group had average common share net assets ranging from $112.91 million to $943.77 million. Eight of the
other funds in the Peer Group were larger than BSL and one was smaller. The Broadridge Expense Information - which compared BSL’s
actual total expenses to the Peer Group - showed, among other things, that the Fund’s actual Advisory Fee (i.e., giving effect
to any voluntary fee waivers implemented by the Adviser with respect to the Fund and by the managers of the other Peer Group funds) as
compared on the basis of common share net assets, ranked eighth among the ten funds in the Peer Group and was higher (i.e., worse) than
the Peer Group median for that expense component. The Board noted that BSL’s actual advisory fee was closer to the average for
managers with small fixed income retail platforms. The Fund’s actual total expenses, compared on the basis of common share net
assets, ranked fifth among the funds in the Peer Group and were lower than the Peer Group median for that expense component.
BGX
The
ten funds in BGX’s Peer Group (which was the same as BGB’s Peer Group and included BGB) had average common share net assets
ranging from $151.22 million to $1,018.46 million. Seven of the other funds in the Peer Group were larger than BGX and two were smaller.
The Broadridge Expense Information – which compared BGX’s actual total expenses to the Fund’s Peer Group - showed,
among other things, that the Fund’s actual Advisory Fee as compared on the basis of common share net assets, ranked second among
the funds in the Peer Group and was better (i.e., lower) than the Peer Group median for that expense component. The Fund’s actual
total expenses, compared on the basis of common share net assets, ranked fifth among the funds in the Peer Group and were lower than
the Peer Group median for that expense component.
BGB
The
ten funds in BGB’s Peer Group (which was the same as BGX’s Peer Group and included BGX) had average common share net assets
ranging from $151.22 million to $1,018.46 million. One of the other funds in the Peer Group was larger than BGB and eight were smaller.
The Broadridge Expense Information - which compared BGB’s actual total expenses to the Fund’s Peer Group - showed, among
other things, that the Fund’s actual Advisory Fee as compared on the basis of common share net assets, ranked eighth among the
funds in the Peer Group and was higher than the Peer Group median for that expense component. The Board noted that BGB’s actual
advisory fee was closer to the average for managers with small fixed income retail platforms. The Fund’s actual total expenses,
compared on the basis of common share net assets, ranked sixth among the funds in the Peer Group and were higher than the Peer Group
median for that expense component.
The
Board took into account that Broadridge Expense Information indicated that the gross expense ratios of BSL, BGX and BGB decreased significantly
and that most fee components remained flat year-over-year, while interest expense decreased.
In
its evaluation of the Advisory Fee and the Broadridge Expense Information for each Fund, the Board took into account the complexity of
each Fund’s investment program and the credit review and other processes the Adviser employed in managing the Funds’ investment
portfolios, including the Adviser’s standing and reputation in the leveraged finance market and the strength of its trading and
middle office and risk management support teams. The Board further noted that the relatively limited number of closed-end funds compared
to the open-end fund universe poses particular challenges for concise peer grouping. The Board considered the Adviser’s belief
that in making such peer comparisons, smaller funds, such as BSL and BGX, may be disadvantaged versus larger funds that have greater
opportunities for economies of scale. The Adviser provided, and the Board considered, expense information contained in the Broadridge
Expense Information in support of this belief.
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| June 30, 2021
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Blackstone Credit
Funds
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Approval
of Investment Advisory Agreement
|
|
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June
30, 2021 (Unaudited)
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The
Board also considered Contract Renewal Information regarding fees (including sub-advisory fees) charged by the Adviser to other U.S.
clients investing primarily in an asset class similar to that of the Funds, including, where applicable, institutional commingled funds
and exchange-traded funds. The Board was advised that the base fees paid by such institutional and other clients generally are lower,
and may be significantly lower, than the Advisory Fee for any one Fund. The Contract Renewal Information discussed the significant differences
in scope of services provided to the Funds and to these other clients, noting that the Funds were subject to heightened regulatory requirements
relative to institutional clients; that the Funds require additional resources for administration; and that the Adviser manages the leverage
arrangements of the Funds and coordinates and oversees the provision of services to the Funds by other fund service providers. The Board
considered the fee comparisons in light of the different services provided in managing these other types of clients and funds.
Taking
all of the above into consideration, the Board determined that the Advisory Fee for each Fund was reasonable in light of the nature,
extent and overall quality of the investment advisory and other services provided to such Fund under its Agreement.
Profitability
The
Board, as part of the Contract Renewal Information, received an analysis of the profitability to the Adviser and its affiliates in providing
services to each Fund for each of the past two fiscal years. In addition, the Board received Contract Renewal Information with respect
to the Adviser’s revenue and cost allocation methodologies it used in preparing such profitability data. The Board also noted that
the allocation of noncompensation expenses to the Funds, such as travel, entertainment and similar items, were generally lower in 2020,
but that there was an increase in expenses for personal protective equipment and cleaning, testing, and purification systems. The Board
agreed that the Adviser’s profitability in providing investment advisory and other services to each Fund was at a level which was
not considered excessive in light of the nature, extent and overall quality of such services.
Economies
of Scale
The
Board received Contract Renewal Information concerning whether the Adviser would realize economies of scale if the Funds’ assets
grow. The Board noted that neither BSL nor BGB have current plans to seek additional assets beyond maintaining its dividend reinvestment
plan, any significant growth in its assets generally will occur through appreciation in the value of each Fund’s investment portfolio,
rather than sales of additional shares in the Fund. The Board further noted that BGX was currently in the same circumstance, except that
it could engage in an at-the-market offering to raise additional capital. The Board determined that for each Fund, to the extent economies
of scale may be realized by the Adviser, the benefits of such economies of scale would be shared with the Fund and its shareholders as
the Fund grows.
Other
Benefits to the Adviser
The
Board considered other benefits the Adviser and its affiliates receive as a result of the Adviser’s relationship with each of the
Funds and did not regard such benefits as excessive.
* *
* * *
In
light of all of the foregoing and other relevant factors, the Board determined that, under the circumstances, continuation of each Fund’s
Agreement would be in the interests of the Fund and its shareholders and unanimously voted to continue the Agreement for a period of
one additional year.
The
Board did not identify any single factor it reviewed as being the principal factor in determining whether to approve continuation of
each Agreement for the next year, and each Board member attributed different weights to the various factors. The Independent Trustees
were advised by their Independent Counsel throughout the process. Prior to the Review Session and the Contract Renewal Meeting, the Independent
Trustees received a memorandum as to their responsibilities from their Independent Counsel. Prior to voting, the Independent Trustees
discussed the proposed continuation of the Agreements in a private session with their Independent Counsel at which no representatives
of the Adviser or Fund management were present.
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1
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First
in these performance rankings represents the fund with the best returns in the Peer Group,
and last in these performance rankings represents the fund with the worst returns in the
Peer Group, whether measured on a gross or net return basis.
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90
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