BlackRock North American Income Trust NAV increased by 12.2% since the year end

BlackRock North American Income Trust plc (LON:BRNA) has announced its final results for the year ended 31 October 2020.

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As at 
31 October 
As at 
31 October 
Net assets (£’000)1126,410 142,786 
Net asset value per ordinary share (pence)158.06 182.13 
Ordinary share price (mid-market) (pence)145.50 186.50 
(Discount)/premium to cum income net asset value2(7.9%)2.4% 
Russell 1000 Value Index1215.24 1313.68 
Net asset value per share (with dividends reinvested)2(8.9%)+8.5% 
Russell 1000 Value Index (with dividends reinvested)(7.5%)+9.8% 
Ordinary share price (with dividends reinvested)2(17.9%)+15.0% 
======== ======== 

1       The change in net assets reflects market movements, shares issued/bought back and dividends paid during the year.

2       Alternative Performance Measures, see Glossary in the Company’s Annual Report for the year ended 31 October 2020.

Year ended 
31 October 
Year ended 
31 October 
Net revenue profit after taxation (£’000)5,367 4,338 +23.7 
Revenue earnings per ordinary share (pence)6.65 5.96 +11.6 
Interim dividends (pence)
1st interim2.00 2.00 +0.0 
2nd interim2.00 2.00 +0.0 
3rd interim2.00 2.00 +0.0 
4th interim2.00 2.00 +0.0 
———- ———- ———- 
Total dividends paid/payable8.00 8.00 +0.0 
======== ======== ======== 


NAV %Russell 1000 Value Index %Share Price %

#      Since launch on 24 October 2012 to 31 October 2013.

Sources: BlackRock and Datastream.

Performance figures have been calculated in sterling terms with dividends reinvested.


Despite a promising start to the Company’s financial year, with all-time highs in global equities reached in February 2020, the subsequent COVID-19 pandemic has since clearly had an enormous impact on the global economy. The initial lockdown measures severely curtailed economic activity in most countries and, although economies slowly restarted over the summer, sharply rising infection rates prompted further restrictions in many countries over the autumn. In addition, concerns over renewed U.S.-China trade tensions, the risk of fading fiscal stimulus and the increasingly divisive election campaign weighed on U.S. equities as we approached our October year-end.

Throughout the COVID-19 outbreak the Board has had to adjust its mode of operation and, although it has continued to meet regularly, since March all scheduled meetings have been held by video conference. The Board has also worked closely with its Manager to ensure that the Company’s operations have not been adversely impacted, that BlackRock and key service providers have established business continuity plans, and a good level of service has and will be maintained.

Over the year to 31 October 2020, the Company’s net asset value per share (NAV) returned -8.9%1 and the share price -17.9%1. This compares with a fall of -7.5%1 in the Russell 1000 Value Index. Value stocks in general lagged the broader U.S. indices, as technology stocks soared. Our underperformance of the Russell 1000 Value Index in the year was a reflection of stock selection and a negative contribution from option writing.

At the close of business on 1 February 2021, the Company’s NAV had increased by 12.2% (with dividends reinvested) since the year end.

The Company’s revenue earnings per share (EPS), based on the weighted average number of shares in issue for the year, amounted to 6.65p (2019: 5.96p), an increase of 11.6%. Based on the final number of shares in issue at the year end, the EPS was 6.71p, an increase of 21.3% versus the previous year. Four quarterly interim dividends of 2.00p per share were paid on 29 April 2020, 3 July 2020, 1 October 2020 and 4 January 2021. This is in line with the payments made in the previous financial year.

Your Board considers that it remains appropriate to continue with the current dividend policy for the new financial year. The dividend paid represents a yield of 5.5% on the share price at the year end. The Board continues to believe that this dividend policy provides an attractive option for current and prospective shareholders who wish to achieve exposure to the U.S. equity market whilst at the same time receiving a competitive dividend.

Prior to the COVID-19 pandemic, the Company’s shares had traded at a premium to the underlying NAV. From the beginning of November 2019 to the end of January 2020 the Company reissued 2,805,000 shares from treasury at an average price of 189.84p per share and an average premium to the estimated NAV of 1.5% for a total gross consideration of £5,325,000.

As the COVID-19 pandemic took hold and market conditions deteriorated in March 2020, the Company’s share price fell and the shares began trading at a discount. Consequently, 1,230,000 shares were purchased at an average price of 155.45p per share for a total consideration (including expenses) of £1,912,000. Subsequent to the year end and up to the date of this report, a further 190,000 shares have been purchased for a total consideration of £294,000. All shares purchased have been placed in treasury.

The Board will continue to use its authorities to issue and buy back shares when it considers it is in shareholders’ interests to do so. Resolutions to renew the authorities to issue and buy back shares will be put to shareholders at the forthcoming Annual General Meeting.

As a Board we are conscious that Environmental, Social and Governance (ESG) criteria have come to the forefront for a growing number of investors in the investment decision-making process. However, for your Company, they are a component of the investment process rather than the sole driver of decision making. Our Portfolio Managers do not look to exclude entire sectors from the portfolio on ESG grounds but engage with investee companies to encourage best practice within the sectors in which they operate. Your Board believes that it is important that our Company’s investee companies operate in a responsible and sustainable way having regard to the interests of all their stakeholders, as this will most likely lead to higher relative valuations and better returns for shareholders.

Our Manager, BlackRock, takes a rigorous approach to corporate governance, with the BlackRock Investment Stewardship team responsible for protecting and enhancing the value of clients’ assets through engagement with companies to encourage business and management practices that support sustainable financial performance over the long term. Further information on ESG and Socially Responsible Investment can be found in the Strategic Report and in the Corporate Governance Statement in the Company’s Annual Report.

World equities appear to be on a firmer footing. There is increased optimism with the uncertainty of the U.S. election now over and with the distribution of COVID-19 vaccines. The current economic recovery in the U.S. could be faster than the one after the global financial crisis, as the upbeat news on the vaccine gives greater confidence that the economic re-start can accelerate further in 2021. There is a strong case that value stocks should now be well placed to outperform growth stocks as the economic picture brightens. The Portfolio Managers consider well capitalised companies with strong management teams and good cash generation are well placed in the current environment.

The AGM of the Company will be held at the offices of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL on Tuesday, 23 March 2021 at 12 noon. Details of the business of the meeting are set out in the Directors’ Report in the Company’s Annual Report.

At the time of writing, various guidances have been issued by the UK, Scottish and Welsh governments, respectively, regarding measures to reduce the transmission of COVID-19 in the UK. These measures are, and will continue to be, subject to periodic amendment and currently impose rules on social distancing and limitations on, among other things, public gatherings.

Accordingly, in view of this guidance, the Board is changing the format of the AGM this year to follow the minimum legal requirements for an AGM. Only the formal business set out in the Notice will be considered, with no live presentation by the Portfolio Managers. A presentation from the Portfolio Managers will be made available on the Company’s website following the conclusion of the AGM. In line with this guidance, shareholders are strongly discouraged from attending the meeting and indeed entry will be refused if current UK Government guidance is unchanged. Shareholders are encouraged to check the Company’s website at for updates to the AGM arrangements as changes may well be required to comply with new guidance and/or government measures.

The Board of course welcomes questions from shareholders and, given the format and prevailing circumstances, I would ask that shareholders submit any questions they may have to the Board in advance of the AGM. The Board or the Investment Manager will respond to all questions received. Shareholders may submit questions to the Board before 23 March 2021 by email at:

Notwithstanding these difficult circumstances, the Board looks forward to offering opportunities for shareholders to meet the Portfolio Managers at some safer stage in the future.

5 February 2021

1       All percentages calculated in sterling terms with dividends reinvested.


For the year ended 31 October 2020, U.S. large cap stocks, as represented by the S&P 500® Index, advanced by 9.7% in US dollar terms. In sterling terms, they appreciated by 9.7% for the performance period. Value stocks, as represented by the Russell 1000 Value Index, fell by 7.5% in sterling terms, illustrating the extreme divergence between ‘growth’ and ‘value’ stocks last year. The S&P 500® Index rallied strongly in the fourth quarter of 2019, as risk appetite was boosted by expectations for a U.S. and China trade deal, solid economic growth and easy monetary policy. U.S. stock prices continued to climb higher through early February 2020 following encouraging earnings results, better business sentiment and the first phase of a U.S.-China trade deal. U.S. equity markets reached a peak on 19 February 2020 before beginning a sharp correction as COVID-19 began to spread globally. The pandemic prompted countries to adopt varying degrees of social distancing, self-quarantine and lockdown measures. The global economy shrank at a historically high rate as non-essential businesses were forced to close in many countries. Concern over the human and economic toll also fuelled measures from governments and central bankers across the globe. This combination brought the longest enduring U.S. bull market to an abrupt end.

A combination of aggressive monetary and fiscal policy measures helped to stabilise U.S. financial markets in the final two weeks of March 2020. The Federal Reserve cut its benchmark interest rate twice to a current range of 0.00% – 0.25% for overnight bank lending and declared an unlimited balance sheet expansion for the foreseeable future. These steps helped to improve market liquidity across credit markets. An unprecedented U.S.$2 trillion stimulus package, roughly 10% of annual U.S. gross domestic product, to support individuals and businesses hardest hit by lockdown measures boosted sentiment. These coordinated policy efforts helped U.S. stocks to rebound swiftly from their March lows.

A decline in U.S. COVID-19 cases in April and May, subsequent easing of lockdown measures and improving economic data in the second and third quarters also boosted investor sentiment. These factors culminated in an extended U.S. stock market rally from April 2020 through August 2020. Market leadership was carried by high growth companies which tapped into secular growth trends supercharged by the pandemic, including trends towards e-commerce, digitisation and enterprise spending on cloud infrastructure. Finally, U.S. stocks retraced lower in September and October as investors weighed the upcoming U.S. election cycle, stalled negotiations for a new fiscal stimulus package and ongoing COVID-19 uncertainties. Overall levels of economic activity continued to normalise higher through the end of the reporting period, while investors took a ‘wait and see’ approach to the upcoming election results and potential readouts on COVID-19 vaccine trials.

The primary detractor from relative performance was stock selection and allocation decisions in utilities. Stock selection in the electric utilities industry accounted for the majority of underperformance within the sector, although underweight exposure to the industry proved costly as well. In financials, an overweight exposure and stock selection among banks weighed on relative returns. Stock selection in the pharmaceuticals and health care equipment and supplies industries within health care proved detrimental, although our overweight exposure to the sector was beneficial. Lastly, stock selection and allocation decisions in consumer staples, industrials, materials and energy hampered relative performance.

The largest positive contributor to relative performance was allocation decisions in information technology. Within the sector, an overweight exposure to software and stock selection in technology hardware, storage and peripherals and IT services accounted for the majority of relative outperformance. A lack of exposure to real estate, most notably equity real estate investment trusts (REITs), also benefited relative performance during the year. Further, stock selection and allocation decisions in consumer discretionary boosted relative returns. Most notably, selection decisions in the household durables industry and a combination of overweight exposure and stock selection in multi-line retail positively impacted relative performance. Lastly, an elevated cash balance, which we have maintained as our preferred method of defensive exposure, contributed to relative performance during the year.

Writing covered call options benefited the portfolio amid dramatically declining U.S. stock prices during February and March of 2020. However, in aggregate, the covered call options detracted from absolute performance for the year. As designed, the Company’s option overwrite component enhanced the portfolio’s income during the year.

Distribution of investments as at 31 October 2020

Total %Benchmark %
Communication Services7.19.5
Consumer Discretionary4.97.7
Consumer Staples9.28.2
Health Care16.914.2
Information Technology11.79.3
Real Estate0.04.5

Sources: BlackRock and Datastream.

Below is a comprehensive overview of our allocations (in pound sterling) at the end of the year.

Financials: 6.3% overweight (24.7% of the portfolio)
Financials represent the Company’s largest sector allocation and we remain particularly bullish on the U.S. banks, insurers and insurance brokers. We believe the U.S. banks are safer and sounder investments today than before the financial crisis. They have stronger balance sheets (i.e. higher capital levels), revamped company cost structures, and disciplined loan underwriting has contributed to benign credit trends. Bank valuations are compelling relative to other cyclical sectors (i.e. industrials) and potential tailwinds from investor-friendly capital return policies also bode well for investors, in our view. A low interest rate environment is harmful to net interest income, but with lower exposure to regional banks, the Company is relatively less exposed to changes in interest rates. In regard to insurers and insurance brokers, we like these companies for their attractive valuations and relatively stable business models.

Energy: 2.7% overweight (6.6% of the portfolio)
The portfolio maintains an overweight to the energy sector. We are overweight to quality in the sector and three points of focus for the investment team pertain to balance sheet, asset quality and capital allocation decisions. Strong balance sheets are critical to managing a business in the energy sector through commodity cycles. In terms of asset quality, companies with low operating costs per barrel of oil produced (i.e. operate with the lowest possible breakeven oil price) are much more attractive to us in this environment. Lastly, we target companies with positive free cash flow generation that have a clear asset allocation strategy. We tend to avoid companies that ‘chase growth’ by overinvesting during stronger commodity price environments. In summary, we believe companies with strong balance sheets and cash flows, production growth visibility, operating specialisation and pricing power at the industry level remain most desirable from an investment perspective.

Health Care: 2.7% overweight (16.9% of the portfolio)
Secular growth opportunities in health care are a by-product of demographic trends. Older populations spend more on health care than younger populations. In the United States, a combination of greater demand for health care services and rising costs drive a need for increased efficiency within the health care ecosystem. We believe innovation and strong cost control can work hand-in-hand to address this need and companies that can contribute in this regard may be poised to benefit.

On the innovation front, there is a need for newer and more effective medicines and therapies. The Food and Drug Administration has made this a priority by increasing the volume and speed of drug approvals, which bodes well for pharmaceutical manufacturers that can deliver new drugs to the market. From an investment standpoint, we prefer pharmaceutical companies with a proven ability to generate high research and development productivity versus those that focus on one or two key drugs and rely upon raising their prices to drive growth.

From a cost perspective, health maintenance organisations (HMOs) have an economic incentive to drive down costs as they provide health insurance coverage to constituents. The HMOs have demonstrated a strong ability to manage costs by leveraging their scale and technology to drive efficiencies. Governments, in turn, are increasingly outsourcing to HMOs as a way to lower costs and balance their budgets. We prefer HMOs with diversified business units, exposure to faster-growing areas of government including Medicare and Medicaid and opportunities to enhance their profitability through controlling costs.

Information Technology: 2.4% overweight (11.7% of the portfolio)
In the information technology (IT) sector, buzzwords such as ‘artificial intelligence’, ‘big data’ and ‘disruption’ are increasingly utilised to describe growth opportunities and the overall operating environment. Of course, a portion of IT still incubates companies similar to the nascent, high-flying and cash-poor innovators that ushered the U.S. equity market into the sharp rise and eventual tumble that is known as the dot-com bubble. However, the fundamental identity of the typical technology company is also changing. An increasing number of constituents in the IT sector are what we refer to as ‘industrial tech’. These firms are competitively insulated from disruptors, well-positioned to take advantage of long-term secular tailwinds and exhibit growth in earnings and free cash flow. A swelling number of companies in the sector have also adopted dividend payments to shareholders as a viable use of cash, rejecting the notion that IT firms can only add value to investors via their growth potential. We believe this trend is poised to continue, as many mature IT companies are flush with cash and shareholders are increasingly willing to reward management teams for return of capital.

Consumer Staples: 1.0% overweight (9.2% of the portfolio)
The consumer staples sector is a common destination for the conservative equity income investor. Historically, many of these companies have offered investors recognisable brands, diverse revenue streams, exposure to growing end markets and the ability to garner pricing power. These characteristics, in turn, have translated into strong and often stable free cash flow and growing dividends for shareholders. In recent years some of these secular advantages have become challenged, in our view, due to changing consumer preferences, greater end market competition from local brands and disruption from the rapid adoption of online shopping. These challenges, combined with higher than historical valuations, have facilitated our more neutral stance in the sector. However, over the last year, the portfolio management team has increased exposure to the sector through niche opportunities, some of which are poised to benefit from a ‘return to normal’ post-pandemic. Notably, we prefer ownership of companies with underappreciated growth profiles (i.e. buy growth), sticky customer bases and the ability to cut costs and/or improve profit margins.

Utilities: 2.3% underweight (4.0% of the portfolio)
Strong investor demand for equity income in recent years has resulted in elevated valuations for many high dividend yielding stocks, including utilities companies. Despite rich valuations at the sector level, we are finding pockets of opportunity in U.S. regulated utilities. These companies add a level of stability and defensiveness to the portfolio through their durable dividend profiles and healthy earnings growth potential. 2020 has provided the portfolio management team with a unique opportunity in the sector, as utilities have underperformed the broader market year-to-date in an environment where the opposite is expected. Thus, we have increased our exposure over the last year given attractive valuations.

Communication Services: 2.4% underweight (7.1% of the portfolio)
We are underweight to communication services and our allocation remains concentrated in diversified telecommunication bellwether Verizon Communications (4.0% of the portfolio) and media provider Comcast (2.4% of the portfolio). Our stock-specific exposure in the sector is to companies that offer healthy dividend yields and opportunity for steady, longer-term growth.

Consumer Discretionary: 2.8% underweight (4.9% of the portfolio)
We continue to maintain a degree of caution in consumer discretionary as investors are sensitive to disruption and how new business models and technology can displace incumbent operators. We believe these disruptive forces are best avoided through identifying stock-specific investment opportunities that are (1) trading at discounted valuations or (2) somewhat insulated from these disruptive pressures. For example, we believe companies such as General Motors (autos) (2.0% of the portfolio) and Newell Brands (household durables) (0.7% of the portfolio) offer investors exposure to underappreciated franchises at discounted valuations. Further, retailers such as Ross Stores (discount department stores) (1.0% of the portfolio), TJX Companies (discount retailers) (0.6% of the portfolio), and Lowe’s Companies (home improvement) (0.8% of the portfolio) provide us with exposure to companies that can compound earnings and are more immune to disruptive forces.

Materials: 2.7% underweight (2.1% of the portfolio)
Broadly speaking, we have found more attractive opportunities from which to source our portfolio’s cyclical exposure. Our exposure to the materials sector consists of three chemicals stocks – Corteva (0.7% of the portfolio), DuPont de Nemours (0.9% of the portfolio) and PPG Industries (0.8% of the portfolio). Longer-term secular trends in global population growth can potentially benefit well-positioned companies in the agricultural chemical space.

Real Estate: 4.5% underweight (0.0% of the portfolio)
The real estate sector is our largest underweight position in the strategy. We maintain a 0% weighting in the space due to our view that valuations are unattractive at current levels.

Industrials: 6.8% underweight (6.4% of the portfolio)
We are underweight to the industrials sector. Our selection is driven by relative valuations, which we view as expensive, in many cases, versus other cyclical segments of the U.S. equity market. While we continue to maintain exposure to the industrial conglomerates and aerospace & defence industries, the portfolio’s exposure in the sector is comprised of select bottom-up opportunities as opposed to large scale themes.

We believe the long-term opportunity in U.S. stocks remains compelling. The U.S. offers us exposure to best-in-class businesses that are positioned to benefit from durable megatrends and investments in R&D and technology. In the short term, our views are more balanced. A look at the macro regime and valuations all point to trade-offs investors must weigh in the months ahead. For the reasons we lay out below, we advocate for a barbell approach to portfolio construction. This stance can align portfolios with sectors tapping into secular growth trends while also targeting high alpha opportunities in cyclical value sectors that have been temporarily hurt by COVID-19.

Macro Regime: The COVID-19 pandemic, through mass social distancing and the transition to working from home, has supercharged secular growth trends towards e-commerce, digitisation and enterprise spending on cloud infrastructure. A narrow subset of U.S. stocks has reaped the lion’s share of financial gains from this sudden shift. Many of these high growth companies have also benefited from a world characterised by lower nominal growth, lower interest rates and low inflation. First, a scarcity of growth has increased demand, and valuation multiples, for stocks that can potentially deliver high growth to investors. A collapse in interest rates has also pushed valuations higher, to the benefit of longer duration growth companies. A case in point, in financial models the net present value of future cash flows increases when the cost of debt financing (i.e. the discount rate) decreases. Finally, low inflation gives policymakers flexibility to keep the current macro regime intact (i.e. lower interest rates for longer). These factors have culminated in vastly different year-to-date investment returns across sectors, industries and investment styles. The bifurcation between COVID-19 winners and losers has also resulted in wide valuation spreads, which suggests there are ample stock-picking opportunities for investors.

Valuations: A glance at traditional valuation metrics, such as the price/ earnings (P/E) ratio, suggests U.S. stocks are richly priced versus history. However, U.S. stocks appear to be cheaply valued versus bonds in a low interest rate world, as measured by the equity risk premium. Further, as businesses are increasingly asset-light today, a company’s value is less determined by its tangible assets and more determined by its cash flows. This can make traditional valuation metrics less relevant. So, are stocks expensively valued or cheap today? We argue stock valuations can be both high and attractive, with the caveat that high valuations offer less of a buffer versus downside risks. With interest rates at historic lows and poised to stay there for some time, equities are a relative bargain and can be a compelling option for growth, value and income seekers.

As always, the strategy invests primarily in dividend paying companies and seeks to deliver capital appreciation and current income over time.

5 February 2021

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1 = Verizon Communications (2019: 1st)
Communication Services
Market value: £4,797,000
Share of investments: 4.0% (2019: 4.5%)

One of the largest providers of wireline and wireless communications in the U.S., where 48 million access lines represent approximately one-third of market share. The company’s wireless customer base is very sizable and continues to grow. The company remains in a strong financial position and exhibits a sustainable dividend yield above 4%. Going forward, we expect continued expansion in wireless, long distance and high-speed services to drive company growth.

2 + Bank of America (2019: 5th)
Market value: £3,783,000
Share of investments: 3.2% (2019: 3.0%)

One of the largest financial institutions in the U.S. with lending operations in the consumer, small-business and corporate markets, in addition to asset management and investment banking divisions. Bank of America has delivered consistent results over the last year, with particular strength within their consumer bank division.

3 + Citigroup (2019: 4th)
Market value: £3,354,000
Share of investments: 2.8% (2019: 3.6%)

A U.S. based money center bank with a global footprint. We believe the group is attractively valued on both a price-to-earnings and book value basis, has self-help opportunities within its consumer banking segment and offers the potential for dividend growth.

4 + Cognizant Technology Solutions (2019: 14th)
Information Technology
Market value: £2,960,000
Share of investments: 2.5% (2019: 1.9%)

After a period of share loss and earnings guide-downs, we do not believe Cognizant is structurally impaired and we see attractive turnaround opportunities under a new CEO. While there are certainly execution risks and near-term uncertainties, these are likely already priced in with the stock trading at a historical low valuation relative to the market and peers.

5 + Anthem (2019: 11th)
Health Care
Market value: £2,928,000
Share of investments: 2.5% (2019: 2.0%)

A leading company in a high quality, stable U.S. managed care space whose relatively new CEO is taking initiatives to leverage the company’s market position and accelerate top and bottom line growth. These initiatives include insourcing their Pharmacy Benefits Manager, expanding their Medicare offerings and leveraging their brand to offer ancillary products (dental benefits, administrative services only arrangements, etc.).

6 + American International (2019: 12th)
Market value: £2,913,000
Share of investments: 2.4% (2019: 2.0%)

American International has been a challenged company in recent years due to significant insurance reserve charges, poor prior management and a bad property and casualty insurance business. Management has spent the past three years fixing these issues by expanding margins, fixing the reserves, lowering expenses and managing catastrophe losses. Despite all this, the stock trades close to 10-year lows. Now management plans to IPO its life insurance business, which could also be very value additive.

7 + Comcast (2019: 10th)
Communication Services
Market value: £2,896,000
Share of investments: 2.4% (2019: 2.0%)

An American media conglomerate that provides video streaming, television programming, high-speed internet, cable television and communication services to its worldwide customer base. The company is a steady compounder, driven by a strong competitive position and structural growth in broadband internet. In our view, market fears around cord-cutting and capital allocation are overdone, providing an attractive opportunity.

8 + Samsung Electronics (2019: 18th)
Information Technology
Market value: £2,883,000
Share of investments: 2.4% (2019: 1.8%)

Samsung Electronics is returning to its roots as a component manufacturing powerhouse by aggressively pushing its technical lead in key emerging technologies: Organic Light Emitting Diode (OLED) displays and 3D NAND (the next generation flash storage technology). We believe that a combination of consistent earnings growth and increasing capital return will drive a re?rating of the company’s shares.

9 – Wells Fargo (2019: 3rd)
Market value: £2,750,000
Share of investments: 2.3% (2019: 3.9%)

A U.S. bank which operates in three segments including community banking, wholesale banking and wealth & investment management. Wells Fargo has a strong deposit franchise and we are encouraged by the company’s history of strong investment returns and prudent credit risk management. In our view, shares of the company are underappreciated today in an environment characterised by low credit losses and ample access to liquidity.

10 – Medtronic (2019: 6th)
Health Care
Market value: £2,731,000
Share of investments: 2.3% (2019: 2.7%)

The company trades at a deep discount to its medical technology peers despite offering better growth. The company is transforming into a pure-play health care company that, in our view, deserves a higher multiple. Medtronic is also meaningfully under-earning, with current margins that are well below management’s targets and those of its peers, indicating upside to profitability.

Market value amounts include the liability for written covered call options.

All percentages reflect the value of the holding as a percentage of total investments.

Percentages in brackets represent the value of the holding as at 31 October 2019.

Together, the ten largest investments represent 26.8% of the Company’s portfolio (31 October 2019: 30.5%).





Market  value 
% of 
total portfolio 
Verizon CommunicationsUnited States Communication Services Ordinary shares 4,799 }4.0 
Options (2)
Bank of AmericaUnited States Financials Ordinary shares 3,794 }3.2 
Options (11)
CitigroupUnited States Financials Ordinary shares 3,354 2.8 
Cognizant Technology SolutionsUnited States Information Technology Ordinary shares 2,980 }2.5 
Options (20)
AnthemUnited States Health Care Ordinary shares 2,928 2.5 
American InternationalUnited States Financials Ordinary shares 2,952 }2.4 
Options (39)
ComcastUnited States Communication Services Ordinary shares 2,898 }2.4 
Options (2)
Samsung ElectronicsUnited States Information Technology Ordinary shares 2,892 }2.4 
Options (9)
Wells FargoUnited States Financials Ordinary shares 2,750 2.3 
MedtronicIreland Health Care Ordinary shares 2,736 }2.3 
Options (5)
AltriaUnited States Consumer Staples Ordinary shares 2,714 }2.3 
Options (13)
UnileverNetherlands Consumer Staples Ordinary shares 2,692 }2.3 
Options (2)
SanofiFranceHealth Care Ordinary shares 2,681 2.2 
Koninklijke PhilipsNetherlandsHealth Care Ordinary shares 2,519 2.1 
Arthur J. Gallagher & CoUnited States Financials Ordinary shares 2,514 }2.1 
Options (3)
General MotorsUnited States Consumer Discretionary Ordinary shares 2,332 2.0 
BAE SystemsUnited Kingdom Industrials Ordinary shares 2,293 1.9 
Raymond JamesUnited States Financials Ordinary shares 2,217 }1.8 
Options (13)
Berkshire HathawayUnited States Financials Ordinary shares 2,194 }1.8 
Options (1)
Public Service Enterprise GroupUnited States Utilities Ordinary shares 2,022 }1.7 
Options (17)
WilliamsUnited States Energy Ordinary shares 2,014 }1.7 
Options (15)
Constellation BrandsUnited States Consumer Staples Ordinary shares 1,975 }1.7 
Options (1)
Schwab (Charles)United States Financials Ordinary shares 1,995 }1.7 
Options (28)
Coca-ColaUnited States Consumer Staples Ordinary shares 1,915 }1.6 
Options (3)
VisaUnited States Information Technology Ordinary shares 1,895 }1.6 
Options (1)
Marathon PetroleumUnited States Energy Ordinary shares 1,785 1.5 
CVS HealthUnited States Health Care Ordinary shares 1,722 1.4 
UnitedHealth GroupUnited States Health Care Ordinary shares 1,713 }1.4 
Options (8)
AstraZenecaUnited Kingdom Health Care Ordinary shares 1,672 }1.4 
BayerGermany Health Care Ordinary shares 1,658 1.4 
JPMorgan ChaseUnited States Financials Ordinary shares 1,626 }1.4 
Options (8)
General ElectricUnited States Industrials Ordinary shares 1,592 }1.3 
Options (23)
Morgan StanleyUnited States Financials Ordinary shares 1,559 }1.3 
Options (5)
SiemensGermany Industrials Ordinary shares 1,544 1.3 
Motorola SolutionsUnited States Information Technology Ordinary shares 1,547 }1.3 
Options (5)
MetLifeUnited States Financials Ordinary shares 1,537 }1.3 
Options (6)
MicrosoftUnited States Information Technology Ordinary shares 1,515 }1.3 
Options (1)
HenkelGermany Consumer Staples Ordinary shares 1,396 }1.2 
Options (3)
AlconSwitzerland Health Care Ordinary shares 1,348 }1.1 
Options (2)
Fox CorpUnited States Communication Services Ordinary shares 1,325 }1.1 
Options (8)
Cisco SystemsUnited States Information Technology Ordinary shares 1,239 }1.0 
Options (6)
Union PacificUnited States Industrials Ordinary shares 1,232 }1.0 
Edison InternationalUnited States Utilities Ordinary shares 1,215 }1.0 
Options (13)
Ross StoresUnited States Consumer Discretionary Ordinary shares 1,183 }1.0 
Options (4)
Pioneer NaturalUnited States Energy Ordinary shares 1,177 1.0 
Fidelity NationalUnited States Financials Ordinary shares 1,053 }0.9 
Options (3)
McKessonUnited States Health Care Ordinary shares 1,044 0.9 
CMEUnited States Financials Ordinary shares 1,042 }0.9 
Options (1)
American ExpressUnited States Financials Ordinary shares 1,019 }0.9 
DuPont De NemoursUnited States Materials Ordinary shares 1,018 }0.9 
Options (3)
Equitable HoldingsUnited States Financials Ordinary shares 998 0.8 
Lowe’s CompaniesUnited States Consumer Discretionary Ordinary shares 995 }0.8 
Options (2)
NXP SemiconductorsNetherlands Information Technology Ordinary shares 995 }0.8 
Options (7)
Equinor ASANorway Energy Ordinary shares 975 }0.8 
PPG IndustriesUnited States Materials Ordinary shares 928 0.8 
Zimmer BiometUnited States Health Care Ordinary shares 866 0.7 
FergusonUnited Kingdom Industrials Ordinary shares 844 }0.7 
Options (4)
ConocoPhillipsUnited States Energy Ordinary shares 830 }0.7 
Options (4)
AllstateUnited States Financials Ordinary shares 825 }0.7 
Options (1)
NiSourceUnited States Utilities Ordinary shares 821 }0.7 
Options (2)
Newell BrandsUnited States Consumer Discretionary Ordinary shares 824 }0.7 
Options (7)
CortevaUnited States Materials Ordinary shares 811 }0.7 
Options (8)
NestléSwitzerland Consumer Staples Ordinary shares 782 }0.7 
Options (1)
PPLUnited States Utilities Ordinary shares 777 }0.6 
Options (3)
TJX CompaniesUnited States Consumer Discretionary Ordinary shares 681 }0.6 
Options (2)
Applied MaterialsUnited States Information Technology Ordinary shares 645 }0.5 
Options (5)
CDK GlobalUnited States Information Technology Ordinary shares 623 }0.5 
Options (4)
Kinder MorganUnited States Energy Ordinary shares 602 }0.5 
Options (1)
BPUnited Kingdom Energy Ordinary shares 556 }0.5 
Open TextCanada Information Technology Ordinary shares 539 }0.5 
Options (1)
HumanaUnited States Health Care Ordinary shares 538 }0.5 
Options (1)
FedExUnited States Industrials Ordinary shares 451 }0.4 
Options (1)
Dollar GeneralUnited States Consumer Discretionary Ordinary shares 427 }0.4 
Options (1)
OneokUnited States Energy Ordinary shares 415 }0.3 
Options (4)
ExelonUnited States Utilities Ordinary shares 389 }0.3 
Options (1)
DanoneFrance Consumer Staples Ordinary shares 282 }0.2 
Siemens EnergyGermany Industrials Ordinary shares 143 }0.1 
Options (4)
First AmericanUnited States Financials Ordinary shares 56 – 
————– ————– 
Portfolio119,086 100.0 
======== ======== 
Equity investments119,434 100.3 
Derivative financial instruments – written options(348)(0.3)
————– ————– 
119,086 100.0 
======== ======== 

*      Market value less than £1,000.

All investments are in ordinary shares unless otherwise stated. The number of holdings as at 31 October 2020 was 78 (31 October 2019: 89). The total number of individual open options as at 31 October 2020 was 171 (31 October 2019: 224).

The negative valuation of £348,000 in respect of options held represents the notional cost of repurchasing the contracts at market prices as at 31 October 2020 (31 October 2019: £482,000).

At 31 October 2020, the Company did not hold any equity interests comprising more than 3% of any company’s share capital.


The Directors present the Strategic Report of the Company for the year ended 31 October 2020. The aim of the Strategic Report is to provide shareholders with the information to assess how the Directors have performed their duty to promote the success of the Company for the collective benefit of shareholders.

The Chairman’s Statement together with the Investment Manager’s Report form part of this Strategic Report. The Strategic Report was approved by the Board at its meeting on 5 February 2021.

The Company carries on business as an investment trust and its principal activity is portfolio investment. Investment trusts are pooled investment vehicles which allow exposure to a diversified range of assets through a single investment, thus spreading investment risk.

The Company’s objective is to provide an attractive and growing level of income return with capital appreciation over the long term, predominantly through investment in a diversified portfolio of primarily large-cap U.S. quoted equities with a focus on companies that pay and grow their dividends. The Company may invest through an active options overlay strategy utilising predominantly covered call options and may also hold other securities from time-to-time including, inter alia, convertible securities, fixed interest securities, preference shares, non-convertible preferred stock and depositary receipts. The Company may also invest in listed large-cap equities quoted on exchanges outside the U.S., subject to the restrictions set out below, and in securities denominated in US dollars and non-US dollar currencies.


The Company invests in accordance with the objective given above. The Board is collectively responsible to shareholders for the long-term success of the Company and is its governing body. There is a clear division of responsibility between the Board and BlackRock Fund Managers Limited (the Manager), the Company’s Alternative Investment Fund Manager (AIFM). Matters reserved for the Board include setting the Company’s strategy, including its investment objective and policy, setting limits on gearing, capital structure, governance, and appointing and monitoring of performance of service providers, including the Manager.

Business model
The Company’s business model follows that of an externally managed investment trust. Therefore, the Company does not have any employees and outsources its activities to third-party service providers including the Manager who is the principal service provider. The management of the investment portfolio and the administration of the Company have been contractually delegated to the Manager who in turn (with the permission of the Company) has delegated certain investment management and other ancillary services to BlackRock Investment Management (UK) Limited (the Investment Manager or BIM (UK)). The Manager, operating under guidelines determined by the Board, has direct responsibility for the decisions relating to the day-to-day running of the Company and is accountable to the Board for the investment, financial and operating performance of the Company.

The Company delegates fund accounting services to the Investment Manager, which in turn sub-delegates these services to The Bank of New York Mellon (International) Limited (BNYM) and also sub-delegates registration services to the Registrar, Computershare Investor Services PLC. Other service providers include the Depositary (also BNYM). Details of the contractual terms with the Manager and the Depositary and more details of sub-delegation arrangements in place governing custody services are set out in the Directors’ Report in the Company’s Annual Report.

Investment policy
To achieve the Company’s investment objective, the Investment Manager adopts a stock specific approach in managing the Company’s portfolio, selecting investments that it believes will both increase in value over the long term and provide income. The Company does not invest in companies which are not listed, quoted or traded at the time of investment, although it may have exposure to such companies where, following investment, the relevant securities cease to be listed, quoted or traded. Typically, it is expected that the investment portfolio will comprise of between 80 and 120 securities (excluding its active options overlay strategy). As at 31 October 2020, there were 78 holdings in the Company’s portfolio.

The Company may invest through derivatives for efficient portfolio management and may, for investment purposes, employ an active options overlay strategy utilising predominantly covered call options. Any use of derivatives for efficient portfolio management and options for investment purposes is based on the same principles of risk spreading and diversification that apply to the Company’s direct investments. For the avoidance of doubt, the Company does not enter into physical or synthetic short positions or write any uncovered options.

Portfolio risk is mitigated by investing in a diversified spread of investments. In particular, the Company observes the following investment restrictions: no single investment (including for the avoidance of doubt, any single derivative instrument) will, at the time of investment, account for more than 10% of the gross assets; no more than 20% of the gross assets, at the time of investment, will be invested in securities issued outside of the U.S.*; no more than 35% of the gross assets, at the time of investment, will be exposed to any one sector; and no more than 20% of the Company’s portfolio will be under option at any given time. (*Securities issued by certain companies organised outside the United States may not be deemed to be foreign securities (but rather deemed to be U.S. securities) if: (i) the company’s principal operations are conducted from the U.S.; (ii) the company’s equity securities trade principally on a U.S. stock exchange; (iii) the company does a substantial amount of business in the U.S.; or (iv) the issuer of securities is included in the Company’s primary U.S. benchmark index.)

The Company’s foreign currency investments are not hedged to sterling as a matter of general policy. However, the investment team may employ currency hedging, either back to sterling or between currencies (i.e. cross-hedging of portfolio investments).

In order to comply with the current Listing Rules, the Company also complies with the following investment restrictions (which do not form part of the Company’s investment policy): the Company will not conduct any trading activity which is significant in the context of its group as a whole; and the Company will not invest more than 10% of its gross assets in other listed closed-ended investment funds, whether managed by the Manager or not, except that this restriction shall not apply to investments in listed closed-ended investment funds which themselves have stated investment policies to invest no more than 15% of their gross assets in other listed closed-ended investment funds.

The Company may borrow up to 20% of its net assets (calculated at the time of draw down), although the Board intends only to utilise borrowings representing up to 10% of net assets at the time of draw down. Borrowings may be used for investment purposes. The Company has entered into a multi-currency overdraft facility with its Custodian (BNYM) for this purpose. The Company may enter into interest rate hedging arrangements.

Information regarding the Company’s investment exposures is contained within the schedule of investments above. Further information regarding investment risk and activity throughout the year can be found in the Investment Manager’s Report.

No material change will be made to the investment policy without the approval of shareholders by ordinary resolution.

The direct impact of the Company’s activities is minimal as it has no employees, premises, physical assets or operations either as a producer or a provider of goods or services. Neither does it have customers. Its indirect impact occurs through the investments that it makes and this is mitigated through BlackRock’s environmental, social and governance policies.

The Investment Manager seeks to offer a stable foundation for investors to protect and grow their assets through disciplined application of value investment principles. The Investment Manager believes a portfolio of attractively valued, quality companies with histories of dividend growth can potentially deliver strong risk-adjusted returns over the long term.

The Investment Manager’s investment process has three main elements including idea generation, investment research and portfolio construction. The investment process is continuous and forms a virtuous circle that ensures the best investment ideas are reflected in the portfolio at all times.

The Investment Manager derives new investment ideas from the bottom-up fundamental research generated by its research analysts and from its quantitative screens. The Investment Manager’s research analysts derive investment ideas from their existing knowledge of industry and company trends and developments. The Investment Manager’s quantitative screens utilise both quality and value factors with the goal of highlighting potentially attractive opportunities that the analysts may have otherwise missed. The Investment Manager’s Directors of Research collaborate with the research analysts to prioritise research ideas and ensure research best practices. The Investment Manager’s research analyst team conducts fundamental research. This research includes traditional financial statement analysis, meetings with company managements, discussions with industry experts and collaboration with investors across BlackRock.

Final investment decisions result from the Investment Manager’s bottom-up, company specific research. Portfolio allocations are a reflection of the investment opportunities the Investment Manager is identifying in the current environment.

ESG is not the overriding consideration for investment decisions which are primarily based on an assessment of a stock’s future performance prospects. However, ESG factors can be very useful and relevant indicators for investment purposes and can help the Portfolio Managers with their decision making through identifying potentially negative events or corporate behaviour. The Portfolio Managers work closely with BlackRock’s Investment Stewardship team to assess the governance quality of companies and investigate any potential issues, risks or opportunities. The Portfolio Managers use ESG information when conducting research and due diligence on new investments and again when monitoring investments in the portfolio.

The Portfolio Managers assess a variety of economic and financial indicators, including ESG issues, to make investment decisions that align with clients’ objectives. To facilitate this analysis, they review information in their research templates using a tool (the Fundamental Active Equity Risk Window) which supplements investment decisions by identifying potential ESG risks associated with a given company. Further research and engagement with companies helps to assess each risk. Combining this additional insight with the Portfolio Managers’ in-depth fundamental approach broadens the total set of information available for use in decision-making processes and positions the investment team to evaluate ESG issues and the impact they could potentially have on an investment.

Over the year ended 31 October 2020, the Company’s net asset value returned -8.9% compared with a return of -7.5% in the Russell 1000 Value Index. The ordinary share price returned -17.9% (all percentages are calculated in sterling terms with dividends reinvested). The Investment Manager’s Report includes a review of the main developments during the year, together with information on investment activity within the Company’s portfolio.

The results for the Company are set out in the Statement of Comprehensive Income. The total return for the year, after taxation, was a loss of £13,315,000 (2019: a profit of £10,370,000) of which the revenue return amounted to a profit of £5,367,000 (2019: a profit of £4,338,000) and the capital return amounted to a loss of £18,682,000 (2019: a profit of £6,032,000).

The Company pays dividends quarterly. Four quarterly interim dividends of 2.00p per share were paid on 29 April 2020, 3 July 2020, 1 October 2020 and 4 January 2021. Total dividends of 8.00p per share were paid or declared in the year ended 31 October 2020 (2019: 8.00p).

The Board’s main focus is to provide an attractive and growing level of income return with capital appreciation over the long term and the future of the Company is dependent upon the success of the investment strategy. The outlook for the Company in the next twelve months is discussed in both the Chairman’s Statement and in the Investment Manager’s Report.

As an investment trust with no employees, the Company has no direct social or community responsibilities or impact on the environment. However, the Company believes that it is in shareholders’ interests to consider human rights issues and environmental, social and governance factors when selecting and retaining investments. Details of the Company’s policy on socially responsible investment are set out in the Corporate Governance Statement in the Company’s Annual Report.

As an investment vehicle the Company does not provide goods or services in the normal course of business and does not have customers. Accordingly, the Directors consider that the Company is not required to make any slavery or human trafficking statement under the Modern Slavery Act 2015. In any event, the Board considers the Company’s supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.

The Directors of the Company on 31 October 2020 are set out in the Directors’ Biographies in the Company’s Annual Report. The Board consists of three male Directors and two female Directors. The Company does not have any executive employees.

At each Board meeting, the Directors consider a number of performance measures to assess the Company’s success in achieving its objectives. The key performance indicators (KPIs) used to measure the progress and performance of the Company over time and which are comparable to other investment trusts are set out below. As indicated in the footnote to the table, some of these KPIs fall within the definition of ‘Alternative Performance Measures’ under guidance issued by the European Securities and Markets Authority (ESMA) and additional information explaining how these are calculated is set out in the Glossary in the Company’s Annual Report.

Additionally, the Board regularly reviews the performance of the portfolio, as well as the net asset value and share price of the Company and compares this against various companies and indices. The Board also reviews the performance of the portfolio against the Russell 1000 Value Index. Information on the Company’s performance is given in the Chairman’s Statement.

Year ended 
31 October 
Year ended 
31 October 
Net asset value per ordinary share158.06p 182.13p 
Ordinary share price (mid?market)145.50p 186.50p 
Net asset value total return1-8.9% 8.5% 
Benchmark index2-7.5% 9.8% 
Share price total return1-17.9% 15.0% 
Dividends per share8.00p 8.00p 
(Discount)/premium to cum income net asset value3(7.9%)2.4% 
Revenue return per share6.65p 5.96p 
Ongoing charges41.06% 1.09% 
======== ======== 

1       This measures the Company’s share price and NAV total return, which assumes dividends paid by the Company have been reinvested.

2       Russell 1000 Value Index, total return basis.

3       This is the difference between the share price and the NAV per share with debt at par. It is an indicator of the need for shares to be bought back or, in the event of a premium to NAV per share, issued.

4       Ongoing charges represent the management fee and all other operating expenses excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items as a % of average daily net assets.

The Company is exposed to a variety of risks and uncertainties. As required by the 2018 UK Corporate Governance Code (the UK Code), the Board has put in place a robust ongoing process to identify, assess and monitor the principal risks and emerging risks facing the Company.

A core element of this process is the Company’s risk register which identifies the risks facing the Company and assesses the likelihood and potential impact of each risk and the quality of controls operating to mitigate it. A residual risk rating is then calculated for each risk based on the outcome of the assessment.

The risk register, its method of preparation and the operation of key controls in BlackRock’s and third-party service providers’ systems of internal control, are reviewed on a regular basis by the Audit and Management Engagement Committee. In order to gain a more comprehensive understanding of BlackRock’s and other third-party service providers’ risk management processes and how these apply to the Company’s business, BlackRock’s internal audit department provides an annual presentation to the Audit Committee chairmen of the BlackRock investment trusts setting out the results of testing performed in relation to BlackRock’s internal control processes. The Audit and Management Engagement Committee also periodically receives and reviews internal control reports from BlackRock and the Company’s service providers.

The Board has undertaken a robust assessment of both the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The COVID-19 pandemic has given rise to unprecedented challenges for businesses across the globe and the Board has taken into consideration the risks posed to the Company by the crisis and incorporated these into the Company’s risk register. The threat of climate change has also reinforced the importance of more sustainable practices and environmental responsibility. Emerging risks are considered by the Board as they come into view and are incorporated into the existing review of the Company’s risk register. Additionally, the Manager considers emerging risks in numerous forums and the Risk and Quantitative Analysis team produces an annual risk survey. Any material risks of relevance to the Company identified through the annual risk survey will be communicated to the Board.

The Board will continue to assess these risks on an ongoing basis. In relation to the UK Code, the Board is confident that the procedures that the Company has put in place are sufficient to ensure that the necessary monitoring of risks and controls has been carried out throughout the reporting period.

The principal risks and uncertainties faced by the Company during the financial year, together with the potential effects, controls and mitigating factors are set out in the following table.

Principal RiskMitigation/Control
The potential loss that the Company could incur if a counterparty is unable (or unwilling) to perform on its commitments.

Due diligence is undertaken before contracts are entered into and exposures are diversified across a number of counterparties.
The Depositary is liable for restitution for the loss of financial instruments held in custody unless able to demonstrate the loss was a result of an event beyond its reasonable control.
Investment performance
Returns achieved are reliant primarily upon the performance of the portfolio.
The Board is responsible for:
·        deciding the investment strategy to fulfil the Company’s objective; and
·        monitoring the performance of the Investment Manager and the implementation of the investment strategy.
An inappropriate investment policy may lead to:
·        underperformance compared to the benchmark index;
·        a reduction or permanent loss of capital; and
·        dissatisfied shareholders and reputational damage.

To manage this risk the Board:
·        regularly reviews the Company’s investment mandate and long-term strategy;
·        has set investment restrictions and guidelines which the Investment Manager monitors and regularly reports on;
·        receives from the Investment Manager a regular explanation of stock selection decisions, portfolio exposure, gearing and any changes in gearing and the rationale for the composition of the investment portfolio;
·        monitors and maintains an adequate spread of investments in order to minimise the risks associated with particular countries or factors specific to particular sectors, based on the diversification requirements inherent in the investment policy;
·        receives and reviews regular reports showing an analysis of the Company’s performance against the Russell 1000 Value Index and other similar indices; and
·        has been assured that the Investment Manager has training and development programmes in place for its employees and its recruitment and remuneration packages are developed in order to retain key staff.
Legal & Regulatory Compliance
The Company has been approved by HM Revenue & Customs as an investment trust, subject to continuing to meet the relevant eligibility conditions, and operates as an investment trust in accordance with Chapter 4 of Part 24 of the Corporation Tax Act 2010. As such, the Company is exempt from capital gains tax on the profits realised from the sale of its investments.
Any breach of the relevant eligibility conditions could lead to the Company losing investment trust status and being subject to corporation tax on capital gains realised within the Company’s portfolio. In such event, the investment returns of the Company may be adversely affected.
Any serious breach could result in the Company and/or the Directors being fined or the subject of criminal proceedings or the suspension of the Company’s shares which would in turn lead to a breach of the Corporation Tax Act 2010.
Amongst other relevant laws, the Company is required to comply with the provisions of the Companies Act 2006, the Alternative Investment Fund Managers’ Directive, the UK Listing Rules, Disclosure Guidance and Transparency Rules and the Market Abuse Regulation.

The Investment Manager monitors investment movements, the level of forecast income and expenditure and the amount of proposed dividends to ensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax Act 2010 are not breached. The results are reported to the Board at each meeting.
Compliance with the accounting rules affecting investment trusts is also carefully and regularly monitored.
The Company Secretary, Manager and the Company’s professional advisers provide regular reports to the Board in respect of compliance with all applicable rules and regulations. The Board and Manager also monitor changes in government policy and legislation which may have an impact on the Company.
Market risk arises from volatility in the prices of the Company’s investments. It represents the potential loss the Company might suffer through realising investments in the face of negative market movements.
Changes in general economic and market conditions, such as currency exchange rates, interest rates, rates of inflation, industry conditions, tax laws, political events and trends, including the impact of the UK leaving the European Union, can also substantially and adversely affect the securities and, as a consequence, the Company’s prospects and share price.
Market risk includes the potential impact of events which are outside the Company’s control, such as the COVID-19 pandemic and climate change.

The Board considers the diversification of the portfolio, asset allocation, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by the Investment Manager.
The Board monitors the implementation and results of the investment process with the Investment Manager.
The Board also recognises the benefits of a closed-end fund structure in extremely volatile markets such as those experienced with the COVID-19 pandemic. Unlike open-ended counterparts, closed-end funds are not obliged to sell-down portfolio holdings at low valuations to meet liquidity requirements for redemptions. During times of elevated volatility and market stress, the ability of a closed-end fund structure to remain invested for the long term enables the Portfolio Managers to adhere to disciplined fundamental analysis from a bottom-up perspective and be ready to respond to dislocations in the market as opportunities present themselves.
The Portfolio Managers spend time understanding the ESG risks and opportunities facing investee companies and conduct research and due diligence on new investments and when monitoring investments in the portfolio.
In common with most other investment trust companies, the Company has no employees. The Company therefore relies on the services provided by third parties and is dependent on the control systems of the Manager, the Depositary, Custodian and Fund Accountant, which maintains the Company’s assets, dealing procedures and accounting records.
The security of the Company’s assets, dealing procedures, accounting records and adherence to regulatory and legal requirements depend on the effective operation of the systems of these other third-party service providers. There is a risk that a major disaster, such as floods, fire, a global pandemic, or terrorist activity, renders the Company’s service providers unable to conduct business at normal operating effectiveness.
Failure by any service provider to carry out its obligations could have a material adverse effect on the Company’s performance. Disruption to the accounting, payment systems or custody records (including cyber security risk) could prevent the accurate reporting and monitoring of the Company’s financial position.

Due diligence is undertaken before contracts are entered into with third-party service providers. Thereafter, the performance of the provider is subject to regular review and reported to the Board.
The Board reviews on a regular basis an assessment of the fraud risks that the Company could potentially be exposed to and also a summary of the controls put in place by the Manager, Depositary, Custodian, Fund Accountant and Registrar specifically to mitigate these risks.
Most third-party service providers produce internal control reports to provide assurance regarding the effective operation of internal controls as reported on by their reporting accountants. These reports are provided to the Audit and Management Engagement Committee for review. The Committee would seek further representations from service providers if not satisfied with the effectiveness of their control environment.
The Company’s assets are subject to a strict liability regime and, in the event of a loss of assets, the Depositary must return assets of an identical type or the corresponding amount, unless able to demonstrate the loss was a result of an event beyond its reasonable control.
The Board reviews the overall performance of the Manager, Investment Manager and all other third-party service providers on a regular basis and compliance with the Investment Management Agreement annually.
The Board also considers the business continuity arrangements of the Company’s key service providers on an ongoing basis and reviews these as part of its review of the Company’s risk register. In respect of the unprecedented and emerging risks posed by the COVID-19 pandemic in terms of the ability of service providers to function effectively, the Board has received reports from key service providers setting out the measures that they have put in place to address the crisis, in addition to their existing business continuity framework. Having considered these arrangements and reviewed service levels since the crisis has evolved, the Board is confident that a good level of service has and will be maintained.
The Company’s investment activities expose it to a variety of financial risks which include market risk, counterparty credit risk, liquidity risk and the valuation of financial instruments.

Details of these risks are disclosed in note 14 to the Financial Statements in the Company’s Annual Report, together with a summary of the policies for managing these risks.
Marketing efforts are inadequate or do not comply with relevant regulatory requirements. There is a failure to communicate adequately with shareholders or reach out to potential new shareholders resulting in reduced demand for the Company’s shares and a widening of the discount.

The Board reviews marketing strategy and initiatives and the Manager is required to provide regular updates on progress. BlackRock has a dedicated investment trust sales team visiting both existing and potential clients on a regular basis. Data on client meetings and issues raised are provided to the Board on a regular basis.
All investment trust marketing documents are subject to appropriate review and authorisation.

In the view of the Board, there have not been any changes to the fundamental nature of these risks and these principal risks and uncertainties are equally applicable for the current financial year.

In accordance with provision 31 of the 2018 UK Corporate Governance Code, the Directors have assessed the prospects of the Company over a longer period than the twelve months referred to by the ‘Going Concern’ guidelines.

The Board is cognisant of the uncertainty surrounding the potential duration of the COVID-19 pandemic, its impact on the global economy and the prospects for many of the Company’s portfolio holdings. Notwithstanding this crisis, and given the factors stated below, the Board expects the Company to continue for the foreseeable future and has therefore conducted this review for a period of three years. This is generally the investment holding period investors consider while investing in the North American sector. The Company also undertakes a continuation vote every three years. The next continuation vote will take place at the Annual General Meeting in 2022.

In its assessment of the viability of the Company, the Directors have noted that:

  • the Company invests in highly liquid, large listed companies so its assets are readily realisable;
  • the Company has limited gearing and no concerns around facilities, headroom or covenants;
  • the Company’s forecasts for revenues, expenses and liabilities are relatively stable and it has largely fixed overheads which comprise a small percentage of net assets (1.06%); and
  • the business model should remain attractive for much longer than three years, unless there is significant economic or regulatory change.

The Directors have also reviewed:

  • the impact of a significant fall in U.S equity markets on the value of the Company’s investment portfolio, factoring in the impact of the recent volatility related to the COVID-19 pandemic;
  • the ongoing relevance of the Company’s investment objective, business model and investment policy in the current environment; and
  • the level of demand for the Company’s shares.

The Board has also considered a number of other factors, including:

  • portfolio liquidity in light of the COVID-19 pandemic on global market liquidity. As at 1 February 2021, 100% of the portfolio was estimated as being capable of being liquidated within one day;
  • the Company’s revenue and expense forecasts in light of the COVID-19 pandemic and its anticipated impact on dividend income and market valuations. The Board is confident that the Company’s business model remains viable and that there are sufficient resources to meet all liabilities as they fall due for the period under review;
  • the Company’s borrowing facility and considers that the Company continues to meet its financial covenants in respect of this facility;
  • the principal risks and uncertainties as set out above and is confident that the Company has appropriate controls and processes in place to manage these and to maintain its operating model, even given the challenges posed by COVID-19;
  • the operational resilience of the Company and its key service providers and their ability to continue to provide a good level of service for the foreseeable future;
  • the effectiveness of business continuity plans in place for the Company and key service providers; and
  • the level of income generated by the Company and future income forecasts.

Based on the results of their analysis, the Directors have concluded that there is a reasonable expectation that the Company will continue in operation and meet its liabilities as they fall due over the period of their assessment.

New regulations (The Companies (Miscellaneous Reporting) Regulations 2018) require directors of large companies to explain more fully how they have discharged their duties under section 172(1) of the Companies Act 2006 in promoting the success of their companies for the benefit of members as a whole. This includes the likely consequences of their decisions in the longer term and how they have taken wider stakeholders’ needs into account.

The enhanced disclosure that follows covers how the Board has engaged with and understands the views of stakeholders and how stakeholders’ needs have been taken into account, the outcome of this engagement and the impact that it has had on the Board’s decisions. The Board considers the main stakeholders in the Company to be the Manager, Investment Manager and the shareholders. In addition to this, the Board considers investee companies and key service providers of the Company to be stakeholders; the latter comprise the Company’s Custodian, Depositary, Registrar and Broker.

ShareholdersManager and Investment ManagerOther key service providersInvestee companies
Continued shareholder support and engagement are critical to the continued existence of the Company and the successful delivery of its long-term strategy. The Board is focused on fostering good working relationships with shareholders and on understanding the views of shareholders in order to incorporate them into the Board’s strategy and objectives in delivering an attractive and growing level of capital appreciation over the long term.The Board’s main working relationship is with the Manager, who is responsible for the Company’s portfolio management (including asset allocation, stock and sector selection) and risk management, as well as ancillary functions such as administration, secretarial, accounting and marketing services. The Manager has sub-delegated portfolio management to the Investment Manager. Successful management of shareholders’ assets by the Investment Manager is critical for the Company to successfully deliver its investment strategy and meet its objective. The Company is also reliant on the Manager as AIFM to provide support in meeting relevant regulatory obligations under the AIFMD and other relevant legislation.In order for the Company to function as an investment trust with a listing on the premium segment of the official list of the Financial Conduct Authority and trade on the London Stock Exchange’s (LSE) main market for listed securities, the Board relies on a diverse range of advisors for support in meeting relevant obligations and safeguarding the Company’s assets. For this reason, the Board consider the Company’s Custodian, Depositary, Registrar and Broker to be stakeholders. The Board maintains regular contact with its key external service providers and receives regular reporting from them through the Board and Committee meetings, as well as outside of the regular meeting cycle.Portfolio holdings are ultimately shareholders’ assets and the Board recognise the importance of good stewardship and communication with investee companies in meeting the Company’s investment objective and strategy. The Board monitors the Manager’s stewardship arrangements and receives regular feedback from the Manager in respect of meetings with the management.
Areas of EngagementIssueEngagementImpact
Investment mandate and objectiveThe Board has responsibility to shareholders to ensure that the Company’s portfolio of assets is invested in line with the stated investment objective and in a way that ensures an appropriate balance between spread of risk and portfolio returns.The Board worked closely with the Investment Manager throughout the year in further developing investment strategy and underlying policies, not simply for the purpose of achieving the Company’s investment objective but in the interests of shareholders and future investors. The Company is not currently geared. However, the possibility of gearing remains under active consideration by the Board with the Investment Manager based on the market outlook.The Company’s objective is to provide an attractive and growing level of income return with capital appreciation over the long term. The Board has maintained or increased dividends since the Company’s launch and remains committed to delivering long-term total return performance on shareholder capital. Growth should reflect both the Investment Manager’s investment performance and the issuance of shares when sufficient demand exists to do this without diluting the value of existing shareholder capital.
ShareholdersContinued shareholder support and engagement are critical to the continued existence of the Company and the successful delivery of its long-term strategy.The Board is committed to maintaining open channels of communication and to engage with shareholders. The Company welcomes and encourages attendance and participation from shareholders at its Annual General Meetings. Shareholders will have the opportunity to meet the Directors and Investment Manager and to address questions to them directly. The Investment Manager will also provide a presentation on the Company’s performance and the outlook.
The Annual Report and Half Yearly Financial Report are available on the BlackRock website and are also circulated to shareholders either in printed copy or via electronic communications. In addition, regular updates on performance, monthly factsheets, the daily NAV and other information are also published on the Manager’s website at
Unlike trading companies, one-to-one shareholder meetings normally take the form of a meeting with the Investment Manager as opposed to members of the Board. The Company’s willingness to enter into discussions with institutional shareholders is also demonstrated by the programmes of institutional presentations by the Investment Manager. If shareholders wish to raise issues or concerns with the Board, they are welcome to do so at any time. The Chairman is available to meet directly with shareholders periodically to understand their views on governance and the Company’s performance where they wish to do so. He may be contacted via the Company Secretary whose details are given on page 109 of the Annual Report.
The Board values any feedback and questions from shareholders ahead of and during Annual General Meetings in order to gain an understanding of their views and will take action when and as appropriate. Feedback and questions will also help the Company evolve its reporting, aiming to make reports more transparent and understandable.
Feedback from all substantive meetings between the Investment Manager and shareholders will be shared with the Board. The Directors will also receive updates from the Company’s Broker on any feedback from shareholders, as well as share trading activity, share price performance and an update from the Investment Manager.
Portfolio holdings are ultimately shareholders’ assets and the Board recognise the importance of good stewardship and communication with investee companies in meeting the Company’s investment objective and strategy. The Board monitors the Manager’s stewardship arrangements and receives regular feedback from the Investment Manager in respect of meetings with the management of portfolio companies.
Responsible investingMore than ever, the importance of good governance and consideration of sustainable investment are key factors in making investment decisions. Climate change is becoming a defining factor in companies’ long-term prospects across the investment spectrum, with significant and lasting implications for economic growth and prosperity.The Board believes that responsible investment and sustainability are important to the longer-term delivery of the Company’s success. The Board works closely with the Investment Manager to regularly review the Company’s performance, investment strategy and underlying policies and to understand how Environmental, Social and Governance (ESG) considerations are integrated into the investment process. In conjunction with the BlackRock Stewardship team, the portfolio management team engage with companies on a wide range of issues and is committed to voting against management to the extent that they have not demonstrated sufficient progress or disclosed business plans for mitigating climate risk and environmental impacts.
A summary of BlackRock’s approach to ESG and sustainability is set out below. The Investment Manager’s engagement and voting policy is detailed in the Director’s Report in the Annual Report and on the BlackRock website.
The Investment Manager believes there is likely to be a positive correlation between strong ESG practices and investment performance over time.
Discount managementThe Board recognises that it is in the long-term interests of shareholders that shares do not trade at a significant discount (or premium) to their prevailing NAV. The Board believes this may be achieved by the use of share buy back powers.The Board monitors the Company’s share rating on an ongoing basis and receives regular updates from the Manager and the Company’s Broker regarding the level of discount. The Board believes that the best way of maintaining the share rating at an optimal level over the long term is to create demand for the shares in the secondary market. To this end, the Investment Manager is devoting considerable effort to broadening the awareness of the Company, particularly to wealth managers and to the wider retail market.
In addition, the Board has worked closely with the Manager to develop the Company’s marketing strategy, with the aim of ensuring effective communication with existing shareholders and to attract new shareholders to the Company in order to improve liquidity in the Company’s shares and to sustain the share rating of the Company.
The Board continues to monitor the Company’s discount to NAV and will look to buy back shares if it is deemed to be in the interests of shareholders as a whole.
The Company’s average discount for the year to 31 October 2020 was 3.3% and the discount at 1 February 2021 stood at 5.6%.
Service levels of third-party providersThe Board acknowledges the importance of ensuring that the Company’s principal suppliers are providing a suitable level of service, including the Manager in respect of investment performance and delivering on the Company’s investment mandate; the Custodian and Depositary in respect of their duties towards safeguarding the Company’s assets; the Registrar in its maintenance of the Company’s share register and dealing with investor queries; and the Company’s Broker in respect of the provision of advice and acting as a market maker for the Company’s shares.The Manager reports to the Board on the Company’s performance on a regular basis. The Board carries out a robust annual evaluation of the Manager’s performance, their commitment and available resources.
The Board performs an annual review of the service levels of all third-party service providers and concludes on their suitability to continue in their role. The Board receives regular updates from the AIFM, Depositary, Registrar and Broker on an ongoing basis.
In light of the challenges presented by the COVID-19 pandemic to the operation of businesses across the globe, the Board has worked closely with the Manager to gain comfort that relevant business continuity plans are operating effectively for all of the Company’s key service providers.
All performance evaluations were performed on a timely basis and the Board concluded that all key third-party service providers, including the Manager, were operating effectively and providing a good level of service. The Board has received updates in respect of business continuity planning from the Company’s Manager, Custodian, Depositary, Fund Accountant, Registrar and Printer and is confident that arrangements are in place to ensure a good level of service will continue to be provided despite the impact of the COVID-19 pandemic.
Board compositionThe Board is committed to ensuring that its own composition brings an appropriate balance of knowledge, experience and skills, and that it is compliant with best corporate governance practice under the UK Code, including guidance on tenure and the composition of the Board’s committees.All Directors are subject to a formal evaluation process on an annual basis (more details and the conclusions of the 2020 evaluation process are given in the Corporate Governance Statement in the Annual Report). All Directors stand for re-election by shareholders annually.
Shareholders may attend the Annual General Meeting and raise any queries in respect of Board composition or individual Directors in person, or may contact the Company Secretary or the Chairman using the details provided on page 109 of the Annual Report.
As at the date of this report, the Board was comprised of three men and two women. No Director has a tenure in excess of nine years.
Details of each Directors’ contribution to the success and promotion of the Company are set out in the Directors’ Report in the Annual Report and details of Directors’ biographies can be found in the Annual Report.
The Directors are not aware of any issues that have been raised directly by shareholders in respect of Board composition in the year under review. However, the Board noted the votes against two resolutions at the 2020 AGM by one significant shareholder, more details of which are provided in the Corporate Governance Statement in the Annual Report. Details of the proxy voting results in favour and against individual Directors’ re-election at the 2020 Annual General Meeting are given on the Manager’s website at

Environmental, social and governance (ESG) issues can present both opportunities and threats to long-term investment performance. These ethical and sustainability issues cannot be ignored, and BlackRock is committed to applying the highest standards of ESG practice. Effective engagement with management is, in most cases, the most constructive way of driving meaningful change in the behaviour of investee company management. This is particularly true given the extent of its shareholder engagement (BlackRock held 3,040 engagements with 2,020 companies based in 54 markets for the year to 30 June 2020). As well as the influence afforded by its sheer scale, BlackRock is well placed as Manager to fulfil these requirements due to the integration of ESG into its investment processes, the emphasis it places on sustainability, its collaborative approach in its investment stewardship activities and its position in the industry as one of the largest suppliers of sustainable investment products in the global market. More information on BlackRock’s approach to sustainability is set out below.

As a fiduciary to its clients, BlackRock has built its business to protect and grow the value of clients’ assets. From BlackRock’s perspective, business-relevant sustainability issues can contribute to a company’s long-term financial performance and thus further incorporating these considerations into the investment research, portfolio construction and stewardship process can enhance long-term risk adjusted returns. By expanding access to data, insights and learning on material ESG risks and opportunities in investment processes across BlackRock’s diverse platform, BlackRock believes that the investment process is greatly enhanced. The Company’s Portfolio Managers work closely with BlackRock’s Investment Stewardship team to assess the governance quality of companies and investigate any potential issues, risks or opportunities. The Portfolio Managers use ESG information when conducting research and due diligence on new investments and again when monitoring investments in the portfolio.

Considerations about sustainability have been at the centre of BlackRock’s investment approach for many years and the firm offers more than 200 sustainable products and solutions. BlackRock believes that climate change is now a defining factor in companies’ long-term prospects and that will have a significant and lasting impact on economic growth and prosperity. BlackRock believes that climate risk now equates to investment risk and this will drive a profound reassessment of risk and asset values as investors seek to react to the impact of climate policy changes. This in turn is likely to drive a significant reallocation of capital away from traditional carbon intensive industries over the next decade.

In January 2020, with this transition in mind, BlackRock announced that it would accelerate its sustainable investing efforts and make a number of enhancements to its investment management and risk processes, including the following:

  • heightening scrutiny on sectors and issuers with a high ESG risk, such as thermal coal producers, due to the investment risk they present to client portfolios;
  • putting ESG analysis at the heart of Aladdin (BlackRock’s proprietary trading platform) and using proprietary tools to help analyse ESG risk; and
  • placing oversight of ESG risk with BlackRock’s Risk and Quantitative Analysis group (RQA), to ensure that ESG risk is given increased weighting as a risk factor and is analysed with the same weight given to traditional measures such as credit or liquidity risk.

BlackRock also places a strong emphasis on sustainability in its stewardship activities and has engaged with companies on sustainability-related questions for a number of years. This year BlackRock made an explicit ask that companies align their disclosures to the Task Force on Climate-Related Financial Disclosures (TCFD) framework and the Sustainability Accounting Standards Board (SASB) standards. This includes each company’s plan for operating under a scenario where the Paris Agreement’s goal of limiting global warming to less than two degrees is fully realised, as expressed by the TCFD guidelines. To this end, BlackRock joined Climate Action 100+, a natural progression in its work to advance sustainable business practices aligned with TCFD. BlackRock has aligned its engagement and stewardship priorities to UN Sustainable Development Goals (including Gender Equality and Affordable and Clean Energy). BlackRock is committed to voting against management to the extent that they have not demonstrated sufficient progress on sustainability issues.

BlackRock is committed to transparency in terms of disclosure on its engagement with companies and voting rationales. Last year, BlackRock voted against or withheld votes from 5,130 directors at 2,809 different companies driven by concerns regarding director independence, executive compensation, insufficient progress on board diversity and overcommitted directors, reflecting its intensified focus on sustainability risks. More details about BlackRock’s investment stewardship process can be found on BlackRock’s website at In terms of its own reporting, BlackRock believes that the SASB provides a clear set of standards for reporting sustainability information across a wide range of issues, from labour practices to data privacy to business ethics. For evaluating and reporting climate-related risks, as well as the related governance issues that are essential to managing them, the TCFD provides a valuable framework.

BlackRock recognise that reporting to these standards requires significant time, analysis, and effort. BlackRock’s own SASB-aligned disclosure is available on its website at and BlackRock published a detailed TCFD-aligned report on its 2020 activities. More information on BlackRock’s policies on Corporate Sustainability can be found on BlackRock’s website at

Company Secretary

5 February 2021


BlackRock Fund Managers Limited (BFM) provides management and administration services to the Company under a contract which is terminable on six months’ notice. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services to BlackRock Investment Management (UK) Limited (BIM (UK)). Further details of the investment management contract are disclosed in the Directors’ Report of the Company’s Annual Report.

The investment management fee due for the year ended 31 October 2020 amounted to £1,001,000 (2019: £1,002,000). At the year end, £725,000 was outstanding in respect of the management fee (2019: £546,000).

In addition to the above services, BlackRock has provided marketing services. The total fees paid or payable for these services for the year ended 31 October 2020 amounted to £46,000 excluding VAT (2019: £26,000). Marketing fees of £31,000 excluding VAT (2019: £23,000) were outstanding as at the year end.

The Board consists of five non-executive Directors, all of whom are considered to be independent of the Manager by the Board. None of the Directors has a service contract with the Company. With effect from 1 April 2019, the Chairman received an annual fee of £42,000, the Chairman of the Audit and Management Engagement Committee received an annual fee of £35,000 and each of the other Directors received an annual fee of £29,000.

Disclosures of the Directors’ interests in the ordinary shares of the Company and fees and expenses payable to the Directors are set out in the Directors’ Remuneration Report of the Company’s Annual Report. At 31 October 2020 £14,000 (2019: £14,000) was outstanding in respect of Directors’ fees.


The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable United Kingdom law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have elected to prepare the financial statements under international accounting standards in conformity with the requirements of the Companies Act 2006.

Under Company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company as at the end of each financial year and of the profit or loss of the Company for that period.

In preparing those financial statements, the Directors are required to:

  • present fairly the financial position, financial performance and cash flows of the Company;
  • select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;
  • present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
  • make judgements and estimates that are reasonable and prudent;
  • state whether the financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006, subject to any material departures disclosed and explained in the financial statements;
  • provide additional disclosures when compliance with the specific requirements in international accounting standards in conformity with the requirements of the Companies Act 2006 is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company’s financial position and financial performance; and
  • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are also responsible for preparing the Strategic Report, Directors’ Report, the Directors’ Remuneration Report, the Corporate Governance Statement and the Report of the Audit and Management Engagement Committee in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure Guidance and Transparency Rules. The Directors have delegated responsibility to the Manager for the maintenance and integrity of the Company’s corporate and financial information included on the BlackRock website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names are listed in the Directors’ biographies on pages 27 to 29 of the Company’s Annual Report, confirm to the best of their knowledge that:

  • the financial statements, which have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006, give a true and fair view of the assets, liabilities, financial position and net profit of the Company; and
  • the Strategic Report contained in the Annual Report and Financial Statements includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

The 2018 UK Corporate Governance Code also requires Directors to ensure that the Annual Report and Financial Statements are fair, balanced and understandable. In order to reach a conclusion on this matter, the Board has requested that the Audit and Management Engagement Committee advise on whether it considers that the Annual Report and Financial Statements fulfil these requirements. The process by which the Committee has reached these conclusions is set out in the Audit and Management Engagement Committee’s report in the Annual Report. As a result, the Board has concluded that the Annual Report and Financial Statements for the year ended 31 October 2020, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company’s position, performance, business model and strategy.


5 February 2021

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