BlackRock North American Income Trust six-month NAV returned 28.0%, outperforming benchmark


BlackRock North American Income Trust plc (LON:BRNA) has announced its half yearly Financial Report 30 April 2021.

Discover more about the BlackRock North American Income Trust plc at


As at 
30 April 
As at 
31 October 
Net assets (£’000)1158,870 126,410 
Net asset value per ordinary share (pence)198.02 158.06 
Ordinary share price (mid-market) (pence)198.00 145.50 
Discount to cum income net asset value20.0% 7.9% 
Russell 1000 Value Index1546.85 1215.24 
======== ======== 
Performance (with dividends reinvested)
Net asset value per share228.0% (8.9%)
Ordinary share price239.2% (17.9%)
Russell 1000 Value Index27.3% (7.5%)
======== ======== 

For the six 
months ended 
30 April 
For the six 
months ended 
30 April 
Net profit after taxation (£’000)2,042 2,502 
Revenue earnings per ordinary share (pence)32.56 3.10 
Interim dividends (pence)
1st interim2.00 2.00 
2nd interim2.00 2.00 
————– ————– 
Total dividends paid4.00 4.00 
======== ======== 

1     The change in net assets reflects market movements, shares issued, buy backs and dividends paid during the period.

2     Alternative Performance Measures, see Glossary in the half yearly report and financial statements.

3     Further details are given in the Glossary in the half yearly report and financial statements.


The past six months have seen a recovery in the Company’s performance and markets in general. In November 2020 markets rose significantly, primarily driven by the results of the U.S. election and positive data on the effectiveness of vaccines against the COVID-19 infection. At the same time, investors started to take advantage of heavily discounted stocks, the attractive dividend yields on offer and the shift away from growth stocks to value stocks. This has reversed a long period of underperformance by value stocks relative to their faster-growing peers.

Against this backdrop over the six months to 30 April 2021, the Company’s net asset value per share (NAV) returned 28.0% compared with a return of 27.3% in the Russell 1000 Value Index. The Company’s share price returned 39.2% over the same period (all figures in sterling terms with dividends reinvested). Further information on investment performance is given in the Investment Manager’s Report.

Since the period end and up to close of business on 25 June 2021, the Company’s NAV has increased by 0.3% and the share price has fallen by 5.3% (both percentages in sterling with dividends reinvested).

The Company’s earnings per share for the six months ended 30 April 2021 amounted to 2.56p compared with 3.10p for the corresponding period in 2020. On 23 March 2021, the Board declared the first quarterly dividend of 2.00p per share which was paid on 29 April 2021. A second quarterly dividend of 2.00p per share has been declared and will be paid on 2 July 2021 to shareholders on the register on 21 May 2021. These are in line with payments made in 2020.

As we move through the earnings season, consensus expectations for stronger earnings reports will go hand in hand with an expectation for recovering dividend levels. Dividend projections for the year are already moving slightly higher in the U.S. as companies begin to reinstate dividends following COVID-19 related cuts and suspensions.

During the six months to 30 April 2021, the Company’s share price to NAV ranged between a discount of 10.8% and a premium of 2.8%. At the end of 2020, the Company bought back and transferred 190,000 shares into treasury. Since March 2021, the Company has reissued 445,000 ordinary shares from treasury at a premium to NAV. Since the period end and up to the date of this report, no further ordinary shares have been reissued or bought back.

On 5 March 2021, the Board announced that it had taken the decision to implement a review of the Company’s investment objective and policy, as the Board believes it should remain both relevant and attractive to existing and new investors. Accordingly, following consultations with shareholders and in conjunction with the Company’s brokers Cenkos Securities, the Board is proposing, subject to shareholder approval, that the Company’s investment objective and policy be changed.

Underlying these changes is the Board’s belief that evolving the mandate and investing in companies which show a commitment to achieving sustainable business models will deliver improved performance over the longer term. Over time it is hoped this should attract new investors and help increase the size of the Company. It has been agreed that Melanie Roberts will be appointed the non-executive Director with responsibility for sustainability following the General Meeting, working alongside the Board and the Portfolio Managers. Shareholders will be provided with an annual update on our portfolio companies’ progress and contribution towards positive social and environmental change.

More details on the changes to the investment objective and policy are set out in the accompanying Circular and Notice of General Meeting with the main proposals being to: incorporate sustainable investing principles; maintain the Company’s North American equity exposure; preserve the focus on value and dividend paying stocks; invest across the spectrum of mid and large capitalisation companies; have a high conviction portfolio of between 30 and 60 stocks; maintain the current dividend approach by using a mix of equity dividends and reserves; remove the systematic covered call writing policy but retain flexibility to use options on a selective basis; and commit to gearing to take advantage of the Company’s investment trust structure.

The proposals are subject to shareholder approval and the Board will be putting a resolution to shareholders at a General Meeting to be held on Thursday, 29 July 2021. Subject to the proposals being approved by shareholders at the General Meeting, the Company’s annual management fee, which is payable quarterly in arrears, will reduce from 0.75% to 0.70% per annum of net asset value. The Board believes that the proposals are in the best interests of the Company and its shareholders as a whole.

The Board intends to change the name of the Company to ‘BlackRock Sustainable American Income Trust plc’ following the General Meeting, as it believes that it better reflects the proposed investment objective and policy of the Company. The change of name is subject to the new investment objective and policy being approved by shareholders.


Your Board believes that BlackRock’s portfolio management team is well qualified to manage the Company under the proposed new investment objective and policy. Having developed a sustainable investment philosophy and approach which will apply to a range of funds, Co-Portfolio Manager Tony DeSpirito is an acknowledged expert in the field of sustainable business practices and has guest-lectured on the topic at Cornell University’s (SC Johnson College of Business) Finance and Sustainability Colloquium in recent years. 

Earlier this month, Franco Tapia informed BlackRock of his desire to pursue a new opportunity and consequently he ceased to be a Co-Portfolio Manager of the Company on 8 June. The Board would like to thank Franco for his contribution to the Company since 2017. We are confident that, in Tony DeSpirito and David Zhao who remain Co-Portfolio Managers, and who will now be joined by Lisa Yang from BlackRock’s Equity Income and Value team, that the Company remains well served by a strong and well-resourced team.

We expect the rotation into value stocks to continue as the U.S. economy picks up and the easing of lockdown continues. The broad distribution of vaccines, pent-up consumer demand and excess savings should help drive a normalisation of activity and spending. Continued monetary and fiscal support is also important and an additional US$1.9 trillion economic stimulus bill was signed into law by Congress in March to speed up the United States’ recovery from the pandemic.

The Portfolio Managers are positive on the outlook for U.S. stocks given the above policy support, vaccine progress and pent-up demand. The wide valuation spreads between growth and value stocks creates opportunities for active managers. It is key for the delivery of attractive investment returns over the long term. We encourage shareholders actively to support the proposed changes to the Company’s investment objective and policy and are confident that they will enhance further the Company’s appeal in the years to come.

29 June 2021


For the six-month period ended 30 April 2021, U.S. large cap stocks, as represented by the S&P 500® Index, advanced by 20.3% in sterling terms. Cyclical value stocks, those most beaten down in the COVID-19 crisis, assumed market leadership during the period with the Russell 1000 Value Index returning +27.3% and the Russell 1000 Growth Index returning +16.1% (both in sterling terms with dividends reinvested). Positive market returns were persistent as the S&P 500® Index rose in five out of six months, with January 2021 being the lone exception. Performance was especially strong in November 2020, as clarity from the U.S. election results and the realisation of viable COVID-19 vaccines boosted expectations for economic growth.

During the reporting period the U.S. economy was fuelled on multiple fronts, including continued monetary policy support, where investors were encouraged by prospects for the Federal Reserve’s liquidity tailwind to remain in place. Investor sentiment was also boosted by the signing into law of the American Rescue Plan, a US$1.9 trillion fiscal stimulus package which included circa US$410 billion in new direct payments to Americans and an allocation of circa US$246 billion to extend existing federal unemployment programmes. Finally, further progress on vaccine supply and distribution was a positive development.

The largest contributor to relative performance was stock selection and allocation decisions in the financials sector. Notably, stock selection and an overweight to the banks industry proved beneficial, as did stock selection in capital markets and insurance. In health care, stock selection in the health care equipment & supplies and pharmaceuticals industries boosted relative results, as did an underweight to the life sciences tools & services and biotechnology industries. Other contributors during the period included an underweight to utilities and stock selection in the consumer staples sector.

At the sector level, the largest detractor from relative performance was stock selection in communication services. Notably, selection decisions in diversified telecom services and a lack of exposure to the entertainment and interactive media & services industries weighed on relative returns. In industrials, stock selection in aerospace and defence, professional services and road and rail proved costly, as did a lack of exposure to the airlines and machinery industries. At the industry level, other detractors during the period included stock selection in personal products and information technology services. The portfolio’s cash position also meaningfully weighed on relative returns amid sharply rising U.S. stock prices.

The portfolio’s option overwriting strategy boosted portfolio income during the semi-annual period. However, it weighed on relative returns as writing and selling call options limited the portfolio’s upside capture.

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

Financials represent the Company’s largest sector allocation and we are overweight to the banks, insurance and capital markets industries. We believe the U.S. banks are safer and sounder investments today than before the financial crisis. We prefer large-cap diversified banks over regional banks, as they have a better revenue mix (i.e. higher fees as a percentage of revenues), have higher reserves against potential credit losses and have stronger balance sheets (i.e. higher capital levels). Additionally, their scale allows them to continue to invest in technology, which could lead to additional revenue and efficiency opportunities over time. In our view, bank valuations are compelling relative to other cyclical sectors (i.e. industrials) and investor-friendly capital return policies (i.e. attractive dividends) should be restored as economic activity continues to improve.

Regarding insurers and insurance brokers, we like these companies for their attractive valuations and relatively stable business models. Over the last year, property and casualty insurers and brokers have benefited from strong pricing power, which has resulted in expanding profit margins. Pricing power is reflective of low U.S. interest rates, three straight years of larger than expected catastrophe losses and large institutions (i.e. AIG) taking capacity out of the market. Meanwhile, our exposure to life insurers is concentrated in stocks with attractive valuations that stand to benefit from business model shifts or large capital return plans.

Lastly, our investments in financials also diversify into areas such as wealth management and consumer finance. We are particularly bullish on wealth management, as this segment is a growing pie within financial services. It offers us exposure to firms with differentiated platforms that are closely aligned with end customers and capable of delivering attractive organic growth and market share gains over time.

Secular growth opportunities in health care are a byproduct of demographic trends, as 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 together to address this need and companies that can contribute in this regard are poised to benefit.

On the innovation front there is a need for newer and more effective medicines and therapies. While many biotechnology companies offer cutting edge potential in this regard, we prefer to invest in large-cap pharmaceuticals due to their dividend profiles and better earnings stability. Within pharma we seek to invest in firms with attractive drug pipelines, opportunities for self-help (i.e. cost cutting), or proven track records in generating high research and development productivity. On the other hand, we generally avoid companies with one or two key drugs that rely on raising prices to drive growth. Outside of pharma, the portfolio also has an overweight allocation to the health care equipment & supplies industry. Our positioning is stock specific, but thematically we believe these companies could benefit as people go back to hospitals for ailments that they delayed seeking treatment for during the pandemic (i.e. hip and knee replacements, etc.).

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 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.

The portfolio has been overweight to the energy sector. From a quality standpoint we seek to own companies with experienced management teams, disciplined capital expenditure spending plans and exposure to lower cost resource assets. From a valuation standpoint we seek to own companies with free cash flow generation and margin capture stories that are underappreciated by the market. These views tend to steer us towards attractively priced producers with low operating costs and clearly defined capital return frameworks. During periods of higher commodity prices, we prefer to see excess cash flows paid out via dividends and/or buybacks with companies keeping their capital expenditure plans flat (i.e. sticking to their long-term plans and not chasing growth). We also prefer companies with low financial leverage (i.e. strong balance sheets), as they are better positioned to endure down cycles and avoid dilutive actions that permanently impair shareholder equity.

An increasing number of companies in the technology 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. Strong earnings growth and free cash flow generation is also translating to an increasing number of companies paying growing dividends to shareholders. This is in stark contrast to the dot-com era where growth was often prioritised over shareholder return. We believe this trend is poised to continue. Our preferred exposures in the sector include IT services operators and equipment providers with sticky revenue streams (i.e. Cognizant Technology Solutions, Visa, Cisco Systems and Motorola Solutions). We also continue to invest in software companies with capital-light business models (i.e. Microsoft and SS&C Technologies).

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 modest overweight positioning in the sector. Notably, we prefer ownership of companies with underappreciated growth profiles (i.e. Unilever and Constellation Brands), sticky customer bases (i.e. Coca-Cola), or trade at overly pessimistic valuations (i.e. Altria).

Relative valuations for utilities have become more attractive over the last year and this shift has contributed to our reduced underweight in the sector. We are finding pockets of investment opportunity in U.S. regulated utilities such as Ameren, American Electric Power, Edison International, Exelon, NiSource, Public Service Enterprise Group and Southern Company. These utilities add a level of stability and defensiveness to the portfolio through their predictable earnings and attractive dividend yields.

The portfolio has an underweight to consumer discretionary. We remain cautious in the space due to potential disruption risks and we seek to insulate the portfolio from competitive threats by investing in stocks that either trade at discounted valuations or have advantaged business models. Exposure to the sector is driven by bottom-up, company specific investment opportunities in areas such as autos and retail. For example, we believe companies such as General Motors (autos) and Lear (auto components) offer investors exposure to underappreciated franchises at discounted valuations. Furthermore, discount retailers such as Ross Stores and TJX Companies provide us with exposure to companies that are more immune to e-commerce and its disruptive forces.

The portfolio is underweight to materials and our positioning in the sector consists of three chemicals stocks: Corteva, PPG Industries and DuPont De Nemours. Longer-term secular trends in global population growth can potentially benefit well-positioned companies in the agricultural chemical space. Furthermore, we view PPG Industries, a coatings company, as a quality business that can compound earnings over a full business cycle.

The portfolio has an underweight to communication services. Our underweight is driven by expensive valuations and a lack of dividend payers in the entertainment and interactive media & services industries. Meanwhile, the portfolio is modestly overweight to the diversified telecom services and media industries. Notable portfolio holdings include Verizon Communications (telecoms), Comcast (media) and Fox Corp. (media). Both Verizon and Comcast are long-term portfolio holdings. Verizon operates a stable, defensive business and offers us an attractive dividend yield. We view Comcast as a steady earnings compounder driven by a strong competitive position and structural growth in broadband internet.

The portfolio has no exposure to real estate and the sector represents a significant underweight relative to the benchmark index. The underweight is due to our view that valuations are unattractive at current prices. While we continue to evaluate companies in the sector for potential investment, we currently remain on the sidelines.

The portfolio is meaningfully underweight to the industrials sector. Our selectivity is driven by relative valuations, which we view as expensive in many cases, versus other cyclical segments of the U.S. equity market. Our positioning in the sector is stock specific, with core holdings in industrial conglomerates (i.e. General Electric and Siemens) and in aerospace & defence (i.e. BAE Systems).

Our constructive view on U.S. stocks is underpinned by several factors. These include continued monetary and fiscal policy support, vaccine progress, our belief that pent-up demand could drive a vigorous spending cycle, and the potential for strong consumer balance sheets to drive deployment of excess cash via spending (i.e. good for the economy) or investment (i.e. good for financial assets). This market perspective is largely consensus, yet we believe investors may be underappreciating the magnitude of the budding economic restart. The unprecedented nature of the global pandemic plays a role in this respect, as it has resulted in an equally unique recovery so far, one which throws a twist into the traditional post-recession playbook.

As we have discussed previously, COVID-19’s impact on employment and activity levels is more akin to a large-scale natural disaster than a credit crisis or normal business cycle recession. For example, initial pandemic lockdowns cratered economic activity, but activity levels rebounded sharply as lockdown measures were lifted. This distinction is important because we believe the economic restart is about turning the lights back on and not about healing deep economic scars or rebuilding confidence, as it was following the global financial crisis (GFC). To this point, consumer balance sheets are meaningfully stronger today than when compared to similar stages in past economic recoveries. Consumer savings, home prices and household net worth have all increased during the trailing twelve months as lockdown measures limited spending, government stimulus helped to offset lost income and many asset classes (i.e. U.S. stocks, residential real estate, etc.) appreciated in value. Additionally, there is an intense desire to return to normal, especially for consumer spending on services. Also unique to the COVID-19 economic shock is the size of fiscal policy support. BlackRock’s Investment Institute (BII) estimates the annual impact to U.S. gross domestic product from COVID-19 is roughly one-fourth the size of the impact suffered during the GFC. Yet, BII estimates the fiscal policy response during COVID-19 is six times larger. For these reasons, we believe a strong acceleration in economic growth is possible and that it could ultimately surprise to the upside, as the vaccine is rolled out more broadly in the months ahead.

As always, the strategy invests primarily in dividend paying companies and seeks to deliver capital appreciation and current income over time. We are excited about the proposed changes to the Company’s investment objective and policy. We strongly believe in the long-term benefits of a sustainable investment approach and welcome the opportunity to broaden the market capitalisation range to include more mid-cap opportunities. We hope that shareholders will share this enthusiasm and vote in favour of the proposed changes.


29 June 2021


1 + Wells Fargo (2020: 9th)
Sector: Financials
Market value: £5,690,000
Share of investments: 3.9%
 (2020: 2.3%)

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. Wells Fargo’s expense growth has been a large problem since the company’s cross-selling scandal in 2016 and, under new management, we are encouraged by organisational changes and the firm’s large cost-cutting opportunity. The investment thesis requires patience, but we view shares of the company as offering an attractive margin of safety relative to its capital base and valuation.

2 + Citigroup (2020: 3rd)
Sector: Financials
Market value: £5,485,000
Share of investments: 3.7%
 (2020: 2.8%)

Citigroup is a U.S. based money center bank with a global footprint. The company offers investors an attractive relative valuation versus financials peers and the broader market, as measured by forward price-to-earnings and price-to-tangible-book-value. Citigroup’s low valuation, combined with the company’s strong capital base (i.e. ample reserves and excess capital), create an attractive risk versus reward setup for the stock.

3 + American International Group (2020: 6th)
Sector: Financials
Market value: £4,289,000
Share of investments: 2.9%
 (2020: 2.4%)

New management at American International Group (AIG) has spent the past three years fixing a variety of operational issues at the firm. Notably, AIG has expanded margins, increased reserves, lowered expenses and better managed catastrophe losses via improved use of reinsurance. Despite these developments, the stock still trades meaningfully below price-to-tangible-book value. We continue to like the stock and are also constructive on management’s ability to unlock value via a planned IPO of the firm’s life insurance business.

4  Verizon Communications (2020: 1st)
Sector: Communication Services
Market value: £4,034,000
Share of investments: 2.7%
 (2020: 4.0%)

Verizon is one of the largest providers of wireline and wireless communications in the U.S. The company’s wireless customer base is very sizable and continues to grow. Verizon 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.

5 + Cisco Systems (2020: 41st)
Sector: Information Technology
Market value: £4,019,000
Share of investments: 2.7%
 (2020: 1.0%)

Cisco Systems is a global leader in networking equipment with key businesses in technology infrastructure (i.e. switching, routing, data center and wireless), applications (i.e. software), security, and services (i.e. maintenance and advisory). Cisco is a strong cash flow generator with sustainable growth potential given its diversified portfolio and large installed base. We believe there is also potential for a further rerating of the company’s valuation as it pivots to more software/recurring revenue content over time.

6  Anthem (2020: 5th)
Sector: Health Care
Market value: £3,679,000
Share of investments: 2.5%
 (2020: 2.5%)

Anthem is a leading company in the stable, high quality U.S. managed care industry (i.e. health insurance). We believe the HMOs are positioned to benefit from new membership growth, continued downward pressures on cost trend and consolidation. This can potentially result in both accelerating earnings growth and higher valuation multiples for the peer group over time. Anthem has a discounted valuation versus peers, which we find attractive, and offers potential upside from its pharmacy benefits manager contract and from utilisation of its balance sheet for share buybacks.

7  Bank of America (2020: 2nd)
Sector: Financials
Market value: £3,453,000
Share of investments: 2.3%
 (2020: 3.2%)

Bank of America is one of the largest financial institutions in the U.S. with consumer, small-business and corporate lending operations, as well as divisions in asset management and investment banking. The company is focused on managing expenses and returning excess capital back to shareholders, which we like, and has a history of delivering consistent and responsible growth over time.

8 + General Motors (2020: 16th)
Sector: Consumer Discretionary
Market value: £3,223,000
Share of investments: 2.2%
 (2020: 2.0%)

General Motors (GM) went through bankruptcy during the global financial crisis and over the past decade the company has radically transformed its business model and cost structure. Some investors still think of GM as a sprawling global car manufacturer, but this is no longer the case. At its core, today’s GM is a North American truck manufacturer, a Chinese auto company and an electric vehicle/autonomous vehicle (EV/AV) business. All three of these units are growth businesses and, in our view, their EV/AV franchise is underappreciated by the broader market.

9  Comcast (2020: 7th)
Sector: Communication Services
Market value: £3,220,000
Share of investments: 2.2%
 (2020: 2.4%)

Comcast is an American media conglomerate that provides video streaming, television programming, highspeed 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.

10 + Sanofi (2020: 13th)
Sector: Health Care
Market value: £3,201,000
Share of investments: 2.2%
 (2020: 2.2%)

Sanofi checks a lot of boxes that we look for in a pharmaceutical investment. The company has a strong commercial business and an under-appreciated pipeline that we believe is not fully reflected in the stock’s valuation. Sanofi recently hired a new CEO who holds a wealth of turn-around experience and the new hire has already begun to demonstrate a path to margin improvement. Additionally, we view the firm’s relatively low U.S. revenue exposure as attractive given potential risks related to U.S. drug pricing changes. Lastly, on a sum-of-the-parts basis, we believe the company’s vaccine and consumer health segments are undervalued by the broader market.

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 2020.

Together, the ten largest investments represent 27.3% of the Company’s portfolio (31 October 2020: 26.8%).










United Kingdom 

United States 

% Total 
% Total 
Financials– – – – – – – – 27.5 – 27.5 24.7 
Health Care– 2.0 1.6 1.8 1.5 – 0.9 1.2 7.5 – 16.5 16.9 
Information Technology0.5 – – – 0.1 – – – 9.9 – 10.5 11.7 
Energy– – – – – 0.8 – 0.9 5.2 – 6.9 6.6 
Consumer Staples– 0.9 1.2 – 1.9 – – 0.1 3.6 – 7.7 9.2 
Industrials– – 1.3 – – – – 1.9 3.3 – 6.5 6.4 
Communication Services– – – – – – – – 5.9 – 5.9 7.1 
Consumer Discretionary– – – – – – – – 5.9 – 5.9 4.9 
Utilities– – – – – – – – 4.2 – 4.2 4.0 
Materials– – – – – – – – 1.6 – 1.6 2.1 
Cash– – – – – – – – – 6.8 6.8 6.4 
———- ———- ———- ———- ———- ———- ———- ———- ———- ———- ———- ———- 
% Portfolio 2.9 4.1 1.8 3.5 0.8 0.9 4.1 74.6 6.8 100.0 
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% Portfolio 2.3 3.7 2.2 4.9 0.8 1.7 4.2 73.4 6.4 100.0 
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% of 
total portfolio 
Wells FargoUnited States Financials Ordinary shares 5,690 3.9 
CitigroupUnited States Financials Ordinary shares 5,485 3.7 
American International GroupUnited States Financials Ordinary shares 4,325 }2.9 
Options (36)
Verizon CommunicationsUnited States Communication Services Ordinary shares 4,041 }2.7 
Options (7)
Cisco SystemsUnited States Information Technology Ordinary shares 4,024 }2.7 
Options (5)
AnthemUnited States Health Care Ordinary shares 3,679 2.5 
Bank of AmericaUnited States Financials Ordinary shares 3,482 }2.3 
Options (29)
General MotorsUnited States Consumer Discretionary Ordinary shares 3,234 }2.2 
Options (11)
ComcastUnited States Communication Services Ordinary shares 3,239 }2.2 
Options (19)
SanofiFrance Health Care Ordinary shares 3,213 }2.2 
Options (12)
Morgan StanleyUnited States Financials Ordinary shares 3,151 }2.1 
Options (22)
BAE SystemsUnited Kingdom Industrials Ordinary shares 3,079 2.1 
UnileverNetherlands Consumer Staples Ordinary shares 3,008 }2.0 
Options (27)
MedtronicIreland Health Care Ordinary shares 2,946 }2.0 
Options (31)
Berkshire HathawayUnited States Financials Ordinary shares 2,658 }1.8 
Options (22)
AltriaUnited States Consumer Staples Ordinary shares 2,586 }1.7 
Options (13)
General ElectricUnited States Industrials Ordinary shares 2,579 }1.7 
Options (7)
BayerGermany Health Care Ordinary shares 2,456 1.7 
Koninklijke PhilipsNetherlands Health Care Ordinary shares 2,452 1.7 
Marathon PetroleumUnited States Energy Ordinary shares 2,464 }1.7 
Options (17)
Arthur J. Gallagher & CoUnited States Financials Ordinary shares 2,405 }1.6 
Options (52)
Cognizant Technology SolutionsUnited States Information Technology Ordinary shares 2,336 }1.6 
Options (16)
Schwab (Charles)United States Financials Ordinary shares 2,310 }1.6 
Options (21)
Zimmer BiometUnited States Health Care Ordinary shares 2,158 }1.4 
Options (27)
Fox Corp.United States Communication Services Ordinary shares 2,093 }1.4 
Options (15)
Raymond JamesUnited States Financials Ordinary shares 2,094 }1.4 
Options (25)
JPMorgan ChaseUnited States Financials Ordinary shares 2,044 }1.4 
Options (9)
Public Service EnterpriseUnited States Utilities Ordinary shares 2,002 }1.4 
GroupOptions (9)
MetLifeUnited States Financials Ordinary shares 2,004 }1.3 
Options (15)
SiemensGermany Industrials Ordinary shares 1,940 }1.3 
Options (8)
HenkelGermany Consumer Staples Ordinary shares 1,855 }1.3 
Options (4)
AstraZenecaUnited Kingdom Health Care Ordinary shares 1,866 }1.3 
Options (17)
WilliamsUnited States Energy Ordinary shares 1,829 }1.2 
Options (24)
Ross StoresUnited States Consumer DiscretionaryOrdinary shares 1,804 }1.2 
Options (22)
CVS HealthUnited States Health Care Ordinary shares 1,780 }1.2 
Options (10)
Constellation BrandsUnited States Consumer Staples Ordinary shares 1,692 }1.1 
Options (13)
ConocoPhillipsUnited States Energy Ordinary shares 1,634 }1.1 
Options (5)
VisaUnited States Information Technology Ordinary shares 1,615 }1.1 
Options (16)
CignaUnited States Health Care Ordinary shares 1,532 }1.0 
Options (11)
DanoneFrance Consumer Staples Ordinary shares 1,480 }1.0 
Options (1)
Samsung ElectronicsUnited States Information Technology Ordinary shares 1,479 }1.0 
Options (6)
Coca-ColaUnited States Consumer Staples Ordinary shares 1,439 }1.0 
Options (8)
AlconSwitzerland Health Care Ordinary shares 1,439 }1.0 
Options (9)
BPUnited Kingdom Energy Ordinary shares 1,415 }1.0 
Options (3)
Equitable HoldingsUnited States Financials Ordinary shares 1,384 0.9 
Pioneer Natural ResourcesUnited States Energy Ordinary shares 1,390 }0.9 
Options (9)
Fidelity NationalUnited States Financials Ordinary shares 1,394 }0.9 
Options (15)
Union PacificUnited States Industrials Ordinary shares 1,377 }0.9 
Options (6)
SS&C Technologies HoldingsUnited States Information Technology Ordinary shares 1,353 }0.9 
Options (14)
Equinor ASANorway Energy Ordinary shares 1,221 }0.8 
Options (8)
UnitedHealth GroupUnited States Health Care Ordinary shares 1,202 }0.8 
Options (5)
Edison InternationalUnited States Utilities Ordinary shares 1,182 }0.8 
Options (2)
McKessonUnited States Health Care Ordinary shares 1,151 0.8 
Motorola SolutionsUnited States Information Technology Ordinary shares 1,155 }0.8 
Options (7)
MicrosoftUnited States Information Technology Ordinary shares 1,140 }0.8 
Options (1)
Kinder MorganUnited States Energy Ordinary shares 1,123 }0.8 
Options (8)
Blackstone GroupUnited States Financials Ordinary shares 1,109 }0.8 
Options (8)
LearUnited States Consumer Discretionary Ordinary shares 1,095 }0.7 
Options (9)
Capital One FinancialUnited States Financials Ordinary shares 1,098 }0.7 
Options (20)
PPG IndustriesUnited States Materials Ordinary shares 1,090 }0.7 
Options (32)
AllstateUnited States Financials Ordinary shares 1,019 }0.7 
Options (17)
Newell BrandsUnited States Consumer Discretionary Ordinary shares 951 }0.6 
Options (6)
CortevaUnited States Materials Ordinary shares 948 }0.6 
Options (15)
American ExpressUnited States Financials Ordinary shares 942 }0.6 
Options (11)
AmerenUnited States Utilities Ordinary shares 902 }0.6 
Options (8)
Dollar GeneralUnited States Consumer Discretionary Ordinary shares 900 }0.6 
Options (6)
CDK GlobalUnited States Information Ordinary shares 889 }0.6 
Options (4)
NiSourceUnited States Utilities Ordinary shares 884 }0.6 
Options (6)
Huntington Ingalls IndustriesUnited States Industrials Ordinary shares 865 }0.6 
Options (10)
Open TextCanada Information Technology Ordinary shares 822 }0.6 
Options (2)
TJX CompaniesUnited States Consumer Discretionary Ordinary shares 744 }0.5 
Options (3)
ExelonUnited States Utilities Ordinary shares 683 }0.5 
Options (2)
Lowe’s CompaniesUnited States Consumer DiscretionaryOrdinary shares 626 }0.4 
Options (2)
CDWUnited States Information Technology Ordinary shares 570 }0.4 
Options (14)
American Electric PowerUnited States Utilities Ordinary shares 497 }0.3 
Options (3)
SouthernUnited States Utilities Ordinary shares 497 }0.3 
Options (3)
Fidelity National Information ServicesUnited States Information Technology Ordinary shares 492 }0.3 
Options (3)
Intercontinental ExchangeUnited States Financials Ordinary shares 485 }0.3 
Options (2)
Leidos HoldingsUnited States Information Technology Ordinary shares 484 }0.3 
Options (4)
DuPont De NemoursUnited States Materials Ordinary shares 458 }0.3 
Options (2)
Raytheon TechnologiesUnited States Industrials Ordinary shares 439 }0.3 
Options (3)
HumanaUnited States Health Care Ordinary shares 425 }0.3 
Options (1)
Applied MaterialsUnited States Information Technology Ordinary shares 346 }0.2 
Options (2)
First Citizens BancSharesUnited States Financials Ordinary shares 250 0.2 
NXP SemiconductorsNetherlands Information Technology Ordinary shares 239 }0.2 
Options (2)
First AmericanUnited States Financials Ordinary shares 240 }0.2 
Options (5)
Siemens EnergyGermany Industrials Ordinary shares 194 }0.1 
Options (1)
British American TobaccoUnited Kingdom Consumer Staples Ordinary shares 141 0.1 
———— ———— 
Portfolio147,547 100.0 
======= ======= 
Equity investments148,432 100.6 
Derivative financial instruments – written options(885)(0.6)
———— ———— 
147,547 100.0 
======= ======= 

All investments are in ordinary shares unless otherwise stated. The number of holdings as at 30 April 2021 was 88 (31 October 2020: 78). The total number of individual open options as at 30 April 2021 was 174 (31 October 2020: 171).

The negative valuation of £885,000 in respect of options held represents the notional cost of repurchasing the contracts at market prices as at 30 April 2021 (31 October 2020: £348,000).

At 30 April 2021, the Company did not hold any equity interests comprising more than 3% of any company’s share capital.


The Chairman’s Statement and the Investment Manager’s Report above give details of the important events which have occurred during the period and their impact on the financial statements.

The principal risks faced by the Company can be divided into various areas as follows:

  • Counterparty;
  • Investment performance;
  • Legal & Compliance;
  • Market;
  • Operational;
  • Financial; and
  • Marketing.

The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended 31 October 2020. A detailed explanation can be found in the Strategic Report on pages 35 to 38 and in note 14 on pages 92 to 100 of the Annual Report and Financial Statements which are available on the website maintained by BlackRock at

An outbreak of an infectious respiratory illness caused by a novel coronavirus known as COVID-19 has developed into a global pandemic and has resulted in travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in health care service preparation and delivery, prolonged quarantines, cancellations, supply chain disruptions and lower consumer demand, as well as general concern and uncertainty. The impact of COVID-19 has adversely affected the economies of many nations across the entire global economy, individual issuers and capital markets, and could continue to an extent that cannot necessarily be foreseen. In addition, the impact of infectious illnesses in emerging market countries may be greater due to generally less established health care systems. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty.

The Board is mindful of the uncertainty surrounding the potential duration of the COVID-19 pandemic and its impact on the global economy, the Company’s assets and the potential for the level of revenue derived from the portfolio to reduce versus the prior year. The Portfolio Managers will continue to review the composition of the Company’s portfolio and to be pro-active in taking investment decisions.

The Directors, having considered the nature and liquidity of the portfolio, the Company’s investment objective and the Company’s projected income and expenditure, are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future and is financially sound. The Board believes that the Company and its key third party service providers have in place appropriate business continuity plans and these services have continued to be supplied without interruption throughout the COVID-19 pandemic.

The Company has a portfolio of investments which are predominantly readily realisable and is able to meet all its liabilities from its assets and income generated from these assets. Accounting revenue and expense forecasts are maintained and reported to the Board regularly and it is expected that the Company will be able to meet all its obligations. Borrowings under the overdraft facility shall at no time exceed 20% of the Company’s net assets (calculated at the time of draw down), although the Board intends only to utilise borrowings representing 10% of net assets at the time of draw down, and this covenant was complied with during the period.

Based on the above, the Board is satisfied that it is appropriate to continue to adopt the going concern basis in preparing the financial statements. Ongoing charges for the year ended 31 October 2020 were 1.06% of net assets and it is expected that this is unlikely to change significantly going forward.

BlackRock Fund Managers Limited (BFM) was appointed as the Company’s AIternative Investment Fund Manager (AIFM) with effect from 2 July 2014. 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)). Both BFM and BIM (UK) are regarded as related parties under the Listing Rules. Details of the fees payable are set out in note 4 and note 11 below.

The related party transactions with the Directors are set out in note 12 below.

The Disclosure Guidance and Transparency Rules (DTR) of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements.

The Directors confirm to the best of their knowledge that:

  • the condensed set of financial statements contained within the Half Yearly Financial Report has been prepared in accordance with applicable International Accounting Standard 34 – ‘Interim Financial Reporting’; and
  • the Interim Management Report, together with the Chairman’s Statement and Investment Manager’s Report, include a fair review of the information required by 4.2.7R and 4.2.8R of the FCA’s Disclosure Guidance and Transparency Rules.

This Half Yearly Financial Report has not been audited or reviewed by the Company’s auditors.

The Half Yearly Financial Report was approved by the Board on 29 June 2021 and the above responsibility statement was signed on its behalf by the Chairman.


29 June 2021

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