BLACKROCK NORTH AMERICAN INCOME TRUST PLC

LEI: 549300WWOCXSC241W468

Annual results announcement for the year ended 31 October 2017

HIGHLIGHTS

• New dividend policy from 1 November 2017 with quarterly dividends of 2.00p per share (increase of 60% on quarterly dividends of 1.25p per share), a 5% prospective yield on the current share price.

• Net asset value total return of 11.4%, outperforming the benchmark by 3.1%.

• Share price total return of 6.3%.

PERFORMANCE RECORD

Attributable to ordinary shareholders	31 October 2017	31 October 2016
Net assets (£’000)¹	118,295	109,479
Net asset value per ordinary share	171.76p	158.78p
Ordinary share price (mid-market)	160.50p	155.75p
Discount to cum income net asset value²	6.6%	1.9%
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Performance
	--------	--------
Net asset value per share (total return)³	+11.4%	+34.2%
Russell 1000 Value Index (total return)	+8.3%	+34.6%
Share price (total return)³	+6.3%	+43.0%
	--------	--------

1. The change in net assets reflects market movements and share buybacks during the year.

2. 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.

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

	Year ended  31 October 2017	Year ended  31 October 2016	Change  %
Revenue
Net revenue profit after taxation (£’000)	3,731	3,730	0.0
Revenue return per ordinary share	5.41p	5.17p	+4.6
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Interim dividends
1st interim	1.20p	1.10p	+9.1
2nd interim	1.25p	1.20p	+4.2
3rd interim	1.25p	1.20p	+4.2
4th interim	1.25p	1.20p	+4.2
	--------	--------	--------
Total dividends paid	4.95p	4.70p	+5.3
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ANNUAL PERFORMANCE SINCE LAUNCH ON 24 OCTOBER 2012 TO 31 OCTOBER 2017

	NAV Total Return	Russell 1000 Value Index Total Return	Share Price Total Return
2013	17.1	27.4	16.5
2014	11.8	16.9	2.4
2015	4.9	4.1	4.7
2016	34.2	34.6	43.0
2017	11.4	8.3	6.3

Source: BlackRock.
Performance figures have been calculated in sterling terms on a total return basis.

CHAIRMAN’S STATEMENT

PERFORMANCE
Over the twelve months to 31 October 2017, the Company’s net asset value per share (NAV) increased by 11.4%* compared with a rise of 8.3%* in the Russell 1000 Value Index. The share price rose by 6.3%*. Further information is set out in the Investment Manager’s Report.

At the close of business on 11 December 2017, the Company’s NAV had increased by 2.4% since the year end.

MARKET REVIEW
Sustained global economic expansion provided a positive backdrop for earnings momentum from the middle of 2016. In the U.S., despite political uncertainty over the administration’s ability to push through tax reform, better-than-expected economic data and stronger corporate earnings results have helped the market advance. The jobless rate has touched levels rarely seen since the 1950s and, with the strong growth in household incomes, official consumer data has remained resilient. Corporate earnings have generally beaten estimates with many companies benefiting from a weakening U.S. dollar.

EARNINGS AND DIVIDENDS
The Company’s revenue earnings per share for the year amounted to 5.41p (2016: 5.17p), an increase of 4.6%. The first quarterly dividend of 1.20p per share was paid on 4 April 2017 and two further dividends of 1.25p per share were paid on 30 June 2017 and 6 October 2017. A fourth interim dividend of 1.25p per share has been declared and will be paid on 5 January 2018. This represents an increase of 5.3% on the payments made in the previous financial year.

The Board is conscious that, although the quarterly dividend has increased by 25% from 1.00p per share to 1.25p per share since the Company’s launch in 2012, the strong capital growth of the portfolio during this period (74.8%) has also resulted in a lower dividend yield for new investors. In line with the commitment to a progressive dividend policy, the Board has resolved to pay a quarterly dividend of 2.00p per share in the current financial year, a full year distribution of 8.00p per share, which would represent a dividend yield of approximately 5% at the current share price, paying out a small amount of the Company’s capital profits to achieve this. The investment approach of the Portfolio Managers will not alter as a consequence of this policy, and the Board do not envisage that the proportion of the portfolio over which options are written will increase. The Board believes that this dividend policy will benefit existing shareholders, whilst also making the Company’s shares attractive to new buyers, appealing to retail investors in particular. It is also consistent with the underlying investment objective of the Company and utilises an attractive and distinctive option now open to investment companies, but not available to many open-ended funds.

DISCOUNT CONTROL
The Directors recognise the importance to investors that the share price should not trade at a significant discount to the underlying NAV. Accordingly, the Board monitors this closely and will consider the repurchase of shares when appropriate.

During the year and up to the date of this report, the Company has repurchased 75,000 ordinary shares. These shares have been placed in treasury to be subsequently reissued to satisfy market demand. Shares will only be reissued at a premium to the estimated NAV at the time of issue.

The Directors have authority from shareholders to reissue up to 10% of the Company’s issued ordinary share capital and to buy back up to 14.99% of the Company’s issued ordinary share capital (excluding any shares held in treasury). The authorities to reissue and buy back shares expire at the conclusion of the 2018 Annual General Meeting and resolutions will be put to shareholders seeking a renewal of these powers.

ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will be held at BlackRock’s offices at 12 Throgmorton Avenue, London EC2N 2DL on Tuesday, 6 March 2018 at 12.00 noon. Details of the business of the meeting are set out in the Notice of Meeting on pages 74 to 77 of the Annual Report. The Portfolio Managers will make a presentation to shareholders on the Company’s performance and the outlook for U.S. markets in the year ahead.

OUTLOOK
The economic background remains supportive and moderate growth is anticipated to continue in 2018. As a consequence, we are likely to see further increases in interest rates next year and the requirement for higher interest rates has also been well telegraphed. Although the administration has struggled to carry through its planned tax reforms, on 1 December the U.S. Senate passed its bill for a much-awaited overhaul of the U.S. tax code. If the legislation continues to progress as planned, this should provide additional support to earnings.

Whilst there are a number of short term factors likely to continue to influence market sentiment, our Portfolio Managers take a longer term view and have not shifted the portfolio significantly following the presidential election outcome. The Portfolio Managers will therefore continue to focus on companies which show promise in terms of delivering both immediate income and have attractive dividend growth prospects.

SIMON MILLER
13 December 2017

*  All percentages calculated in sterling terms with income reinvested.

STRATEGIC REPORT

The Directors present the Strategic Report of the Company for the year ended 31 October 2017. 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.

PRINCIPAL ACTIVITY
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.

OBJECTIVE
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 U.S. dollars and non-U.S. dollar currencies.

STRATEGY, BUSINESS MODEL AND INVESTMENT POLICY

Strategy

To achieve the Company’s investment objective, the 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 2017, there were 90 holdings in the Company’s portfolio.

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 BlackRock Fund Managers Limited (the Manager or BFM) who is the principal service provider. The management of the investment portfolio and the administration of the Company have been contractually delegated to BlackRock Fund Managers Limited (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.

Other service providers include the Depositary, The Bank of New York Mellon (International) Limited. The Manager delegates fund accounting services to the Investment Manager, which in turn sub-delegates these services to The Bank of New York Mellon (International) Limited. The Company delegates registration services to the Registrar, Computershare Investor Services PLC.

Investment policy

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 outside of the U.S. of companies exercising the predominant part of their economic activity in the U.S. will be excluded from this 20 per cent limit.)

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 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 on pages 16 to 19 of the Annual Report. 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.

INVESTMENT PHILOSOPHY AND PROCESS
An overview of the Investment Manager’s investment philosophy and process follows. The Manager seeks to offer a stable foundation for investors to protect and grow their asset through disciplined application of value investment principles. The 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.

Philosophy and Core Beliefs

• Companies that pay dividends are generally better managed

• Management quality is a key driver of long term business success

• Companies with quality franchises, strong free cash flow, and conservative balance sheets are best able to grow their dividends

• Dividend growth compounds returns and reduces volatility

The 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 its quantitative screens. The Manager’s research analysts derive investment ideas from their existing knowledge of industry and company trends and developments. The 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 Manager’s Directors of Research collaborate with the research analysts to prioritise research ideas and ensure research best practices. Below is a summary of the research screen.

Investment Process: Research Screen

Quality Factors (60%):

• Dividend Growth

• Balance Sheet Strength

• Profitability

• Free Cash Flow

• Improving Trends

Value Factors (40%):

• Dividend Yield

• Earnings

• Cash Flow

• Book Value

The 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. The Manager’s bottom-up fundamental research process is outlined below:

Company Reporting Research:

• Financial Statement analysis

• Examine ratios and multiples

• Focus on balance sheet strength

• Model cash flows and earning

• Develop scenario and sensitivity analysis

Industry Research:

• Analyse industry supply & demand and pricing trends

• Investigate competitive advantages and potential threats

• Consider regulatory environment and local markets

• Expand research in attractive industries to related companies

Field Research:

• Meet with managements, customers, suppliers and competitors

• Evaluate strength of company management team & franchise

• Seek to identify business drivers & industry trends prior to consensus

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

PERFORMANCE
Over the year ended 31 October 2017, the Company’s net asset value returned 11.4% compared with a return of 8.3% in the Russell 1000 Value Index. The ordinary share price returned 6.3% (all percentages are calculated in sterling terms with income 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.

RESULTS AND DIVIDENDS
The results for the Company are set out in the Statement of Comprehensive Income. The total return for the year, after taxation, was £12,313,000 (2016: £27,701,000) of which the revenue return amounted to £3,731,000 (2016: £3,730,000) and the capital return amounted to £8,582,000 (2016: £23,971,000).

The Company pays dividends quarterly. One quarterly interim dividend of 1.20p per share was paid on 4 April 2017, two quarterly dividends of 1.25p per share were paid on 30 June 2017 and 6 October 2017 and a further dividend of 1.25p per share will be paid on 5 January 2018. Total dividends of 4.95p per share were paid or declared in the year ended 31 October 2017 (2016: 4.70p).

KEY PERFORMANCE INDICATORS
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 those reported by other investment trusts, are set out in the following table.

	Year ended  31 October 2017	Year ended  31 October 2016
Net asset value per ordinary share	171.76p	158.78p
Ordinary share price (mid-market)	160.50p	155.75p
Net asset value total return1	11.4%	34.2%
Benchmark index2	8.3%	34.6%
Share price total return1	6.3%	43.0%
Dividends per share	4.95p	4.70p
Discount to cum income net asset value3	6.6%	1.9%
Revenue return per share	5.41p	5.17p
Ongoing charges4	1.07%	1.04%

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.
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 interest as a % of average shareholders’ funds.

Performance is assessed on a total return basis for the NAV, share price and the benchmark.

The Board monitors the above KPIs on a regular basis. Additionally, it regularly reviews a number of indices and ratios to understand the impact on the Company’s relative performance of the various components such as asset allocation and stock selection. The Board also assesses the performance of the Company against its peer group of investment trusts with similar investment objectives.

SHARE RATING
The Directors recognise the importance to investors that shares should not trade at a significant discount to their prevailing net asset value. Accordingly, the Board has concluded that the Company’s share buy back and share issuance powers will, in normal market conditions, be used to ensure that the share price does not trade at a significant discount or premium to the underlying net asset value per share. In the year under review, the Company’s shares have traded from a premium of 1.6% to a discount of 8.9% on a cum income basis and were trading at a discount of 8.2% as at close of business on 11 December 2017.

PRINCIPAL RISKS
The key risks faced by the Company are set out on the following pages. The Board has put in place a robust process to assess and monitor these risks. A core element of this is the Company’s risk register. This identifies the risks facing the Company and assesses the likelihood and potential impact of each risk and the quality of the controls operating to mitigate it. A residual risk rating is then calculated for each risk based on the outcome of this assessment. This approach allows the effect of any mitigating procedures to be reflected in the final assessment.

The risk register, its method of preparation and the operation of key controls in the Manager’s and other 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 the Manager’s and other third-party service providers’ risk management processes and how these apply to the Company’s business, the Audit and Management Engagement Committee periodically receives internal control reports from the Company’s service providers.

In relation to the 2016 update to the UK Corporate Governance 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 Board will continue to assess the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity, on an ongoing basis.

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

Principal Risk	Mitigation/Control
Counterparty 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 now 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. An inappropriate investment policy may lead to underperformance compared to the benchmark index, a loss of capital and dissatisfied shareholders.	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  •   ensures 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 & Compliance The Company has been accepted 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. 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. 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 and Transparency Rules, the Market Abuse Regulation, the Bribery Act 2010 and the Criminal Finances Act 2017.	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 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 U.K. leaving the EU and the results of the U.S. presidential election, can also substantially and adversely affect the securities and, as a consequence, the Company’s prospects and share price.	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.
Operational 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 and The Bank of New York Mellon (International) Limited, who also maintain 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 third-party service providers. 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 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. Third party service providers, BlackRock and The Bank of New York Mellon, 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. 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.
Financial 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 on pages 56 to 66 of the Annual Report, together with a summary of the policies for managing these risks.
Marketing 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.

VIABILITY STATEMENT
In accordance with provision C.2.2 of the UK Corporate Governance Code, the Directors have assessed the prospects of the Company over a longer period than the 12 months referred to by the ‘Going Concern’ guidelines. The Board conducted this review for a period of three years. 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 is not exposed to any one investment or sector because it sets parameters for its investments;

• the Company has limited gearing and no concerns around facilities, headroom or covenants; and

• the business model should remain attractive for much longer than three years, unless there is significant economic or regulatory change.

The Company will undertake a continuation vote at the Annual General Meeting in 2019 and the Board has reviewed the potential impact that this may have on the Company’s viability. The Board is confident that the continuation vote will be passed and has prepared the viability statement under this assumption.

The Directors have also reviewed:

• the Company’s principal risks and uncertainties as set out on the previous pages;

• the impact of a significant fall in U.S. equity markets on the value of the Company’s investment portfolio;

• 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 Directors have also considered the Company’s revenue and expense forecasts and the fact that expenses and liabilities are relatively stable. The Directors reviewed the assumptions and considerations underpinning the Company’s existing going concern assertion which are based on:

• processes for monitoring costs;

• key financial ratios;

• evaluation of risk management and controls;

• compliance with the investment objective;

• portfolio risk profile;

• share price discount;

• gearing; and

• counterparty exposure and liquidity risk.

These were extended forward for three years and based on the results of this analysis the Directors have concluded that there is a reasonable expectation that the Company will continue in operation and be able to meet its liabilities as they fall due over the period of their assessment.

FUTURE PROSPECTS
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.

SOCIAL, COMMUNITY AND HUMAN RIGHTS ISSUES
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 on page 33 of the Annual Report.

MODERN SLAVERY ACT
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.

DIRECTORS, GENDER REPRESENTATION AND EMPLOYEES
The Directors of the Company on 31 October 2017, all of whom held office throughout the year, are set out in the Governance Structure and Directors’ biographies on page 20 of the Annual Report. The Board consists of three male Directors and one female Director. The Company does not have any employees; therefore there are no disclosures to be made in that respect.

The Strategic Report was approved by the Board at its meeting on 13 December 2017.

BY ORDER OF THE BOARD
CAROLINE DRISCOLL
FOR AND ON BEHALF OF
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED
Company Secretary

13 December 2017

RELATED PARTY TRANSACTIONS

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 on pages 21 and 22 of the Annual Report.

The investment management fee due for the year ended 31 October 2017 amounted to £868,000 (2016: £747,000). At the year end, £868,000 was outstanding in respect of the management fee (2016: £400,000).

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 2017 amounted to £29,000 excluding VAT (2016: £35,000) before prior year over accrual adjustments of £8,000 (2016: write back of over accrual of £59,000). Marketing fees of £22,000 excluding VAT (2016: £20,000) were outstanding as at the year end.

The Board consists of four 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. For the year ended 31 October 2017, the Chairman received an annual fee of £36,000, the Chairman of the Audit and Management Engagement Committee received an annual fee of £30,000 and each of the other Directors received an annual fee of £25,000.

The related party transactions with the Directors are set out in the Directors’ Remuneration Report on pages 28 and 29 of the Annual Report. At 31 October 2017 £10,000 (2016: £8,000) was outstanding in respect of Directors’ fees.

INVESTMENT MANAGER’S REPORT

MARKET OVERVIEW
For the year ended 31 October 2017, U.S. large cap stocks, as represented by the S&P 500 Index, advanced by 23.6% (in U.S. dollar terms). Stocks ended 2016 on a high note, as Donald Trump’s U.S. presidential election victory, with expectations for tax reform, increased infrastructure spending and reduced government regulation, provided a lift to consumer sentiment and U.S. growth expectations. Valuation multiples expanded during the period, reflecting investor expectations for potentially rising interest rates, in addition to an acceleration in U.S. nominal GDP growth. Performance was strongest in the financials sector, as expectations for President Trump’s administration to enact pro-business policies and potentially reduce existing regulatory burdens improved the outlook for banks in particular.

U.S. stocks have continued their rally in 2017, as the S&P 500 Index has posted a positive return in each month of the year thus far. In our view supportive economic data, stronger corporate earnings results and investor optimism are the primary drivers of year-to-date U.S. equity market returns. Despite headline risks including legislative gridlock in Washington D.C. and geopolitical tensions with North Korea, the underlying fundamentals of the U.S. economy remain firm. Steady job growth in recent years has restored the labour force to near full employment, wage growth is trending higher, albeit slowly, and traditional measures of inflation are moderate. High levels of consumer and business confidence, as well as robust consumer spending, also point toward healthy economic conditions. Further, the aforementioned prospect for reduced regulation is a potentially underappreciated tailwind for the U.S. economy.

PORTFOLIO OVERVIEW
The portfolio generated relative outperformance in eight out of eleven GICS (Global Industry Classification Standard) sectors during the period. The largest contributor to relative performance was stock selection in the health care sector, led by selection decisions in the health care providers & services industry. In financials, a combination of stock selection and an overweight to the banks industry contributed to relative performance. A combination of stock selection and allocation decisions in the energy sector also boosted relative returns. Notably, our underweight to the U.S. integrated oil & gas operators and our overweight to their non-U.S. domiciled peers proved to be beneficial. Further, our underweight to the energy equipment & services industry also added to relative results. Stock selection within the information technology and consumer staples sectors contributed to relative performance, as did our underweight positioning in consumer staples and real estate.

At the sector level, the primary detractor from relative performance was a combination of stock selection and allocation decisions in industrials. Notably, our underweight to the machinery and road & rail industries proved to be costly, as was stock selection in the professional services industry. Stock selection in the utilities sector also detracted from relative returns, albeit modestly. At the industry level, other notable detractors included stock selection in the food & staples retailing industry as well as our decision to underweight the diversified financial services and consumer finance industries. Lastly, the portfolio’s cash position dampened relative performance during the period.

As expected, writing covered call options in a rising equity environment capped upside returns during the period and therefore detracted modestly from absolute performance. As designed, the Company’s option overwrite component enhanced the portfolio’s income during the period.

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

DISTRIBUTION OF INVESTMENTS
AS AT 31 OCTOBER 2017

	Total %	Benchmark %
Consumer Discretionary	3.7	6.7
Consumer Staples	6.1	8.4
Energy	11.3	10.7
Financials	28.2	26.6
Real Estate	0.0	4.8
Health Care	18.0	13.7
Industrials	10.1	8.3
Information Technology	10.7	8.6
Materials	3.7	3.0
Telecommunication Services	2.4	2.8
Utilities	5.8	6.4

Source: BlackRock.

Health Care – 4.3% overweight (18.0% of portfolio)
Our overweight to the health care sector is concentrated in the health care providers & services and pharmaceuticals industries. These companies exhibit many of the quality and stability characteristics that we target, along with solid earnings and dividend growth prospects. Relative to consumer staples, another defensive sector, we believe the health care space offers investors healthier balance sheets, cheaper valuations and stronger revenue growth potential. Further, the sector has lower payout ratios, which we believe can translate into more robust future dividend growth as well.

Information Technology – 2.1% overweight (10.7% of portfolio)
Our preference in the sector is to own large-cap mature tech companies that, in our view, are competitively insulated from disruptors and well-positioned to take advantage of long term secular tailwinds. We believe valuations remain attractive and companies such as Oracle (3.2% of the portfolio), Microsoft (2.2% of the portfolio), and Taiwan Semiconductor Manufacturing (1.3% of the portfolio) offer a compelling mix of healthy balance sheets, strong free cash flow generation and growing dividend streams. Additionally, we believe the sector should continue to benefit from an increase in capital spending.

Industrials – 1.8% overweight (10.1% of portfolio)
We have reduced our exposure to the industrials sector over the past year and the Company now holds an allocation that is modestly underweight to its benchmark. Despite reducing our overall exposure, we remain optimistic within specific pockets of the sector. In particular, we are bullish on the large-cap aerospace & defence operators. These firms have strong balance sheets, good visibility into sales and earnings, and historically have demonstrated shareholder friendly capital return policies. Further, we believe there is a potential for an upward inflection, globally, in defence spending. We also maintain exposure to industrial conglomerates such as General Electric (0.9% of the portfolio), Honeywell International (1.4% of the portfolio) and 3M (0.8% of the portfolio).

Financials – 1.6% overweight (28.2% of portfolio)
Financials represent the Company’s largest absolute sector allocation. In particular, we remain bullish on the U.S. banks and capital markets stocks. Our bullishness is predicated on our belief that the U.S. banks are safer and sounder investments today than before the financial crisis. The U.S. banks have improved balance sheets, low credit losses, high capital levels and attractive valuations. Further, their growing dividends are attractive from a capital return perspective. We believe earnings growth will be the primary driver of stock returns going forward, with deregulation in the U.S. a potentially underappreciated tailwind. To the extent that earnings exceed consensus expectations, the U.S. banks may benefit from incremental margin expansion as well.

Materials – 0.7% overweight (3.7% of portfolio)
Our exposure to the materials sector is primarily based in the chemicals industry. In particular, we believe longer term secular trends in global population growth will benefit well positioned companies in the agricultural chemical space. We believe companies with scale and high-quality assets will be able to deliver stronger earnings and dividend growth. Our largest portfolio holding in the chemicals industry is DowDuPont (2.4% of the portfolio).

Energy – 0.6% overweight (11.3% of portfolio)
In energy, we favour oil-weighted companies over those levered to natural gas and prefer exposure to large-cap integrated oil and independent oil & gas producers. From a quality standpoint, we seek to own companies with experienced management teams 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 in our view are underappreciated by the market.

Telecommunication Services – 0.4% underweight (2.4% of portfolio)
We are underweight to telecoms and our allocation remains concentrated in diversified telecommunication bellwether Verizon Communications (1.5% 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.

Utilities – 0.6% underweight (5.8% of portfolio)
With fixed income yields at the lower end of their historical ranges, strong investor demand for income in recent years has resulted in elevated valuations for many high dividend yielding stocks, including utilities companies. Despite rich valuations, we are finding pockets of opportunity in U.S. regulated utilities such as NextEra Energy (1.6% of the portfolio) and PG&E (1.2% of the portfolio). These companies add a level of stability and defensiveness to the portfolio through their durable dividend profiles and healthy earnings growth potential. We also favour these companies due to the stable regulatory environments in which they operate.

Consumer Staples – 2.3% underweight (6.1% of 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 underweight to the sector. Notably, we prefer ownership of companies with underappreciated growth profiles, sticky customer bases, and the ability to grow market share and/or improve profit margins.

Consumer Discretionary – 3.0% underweight (3.7% of portfolio)
The balance sheet for U.S. consumers has improved in recent years, aided by a recovering domestic housing market, strong jobs growth and accelerating wages. These factors have also contributed to an increase in consumer confidence. However, these positive tailwinds have failed to translate into stronger retail sales for many brick & mortar stores as changing consumer preferences, technological innovation and new competitors threaten traditional business models. We remain cautious within the sector given these disruptive forces. Our positioning in the sector reflects stock-specific opportunities that, in our view, are (1) trading at discounted valuations or (2) somewhat insulated from these disruptive pressures. For example, we are positive on Lowe’s Companies (0.5% of the portfolio) a home improvement retailer, and Comcast (1.5% of the portfolio), a low-cost provider of high speed data service.

Real Estate – 4.8% underweight (0.0% of portfolio)
Our largest underweight position in the Company is in the real estate sector. We maintain a zero weighting in the space due to our view that valuations are unattractive at current levels. Further, the returns of real estate stocks relative to the returns of Long Treasury Bonds are highly correlated today. Therefore, we believe the prospects for higher interest rates in the U.S. are a potential headwind for the sector as well.

POSITIONING AND OUTLOOK
In our view, the opportunity for investors lies in the persistence of today’s positive economic backdrop being a catalyst for additional corporate earnings growth. To the extent that investor expectations can be realised through stronger corporate earnings, we believe stocks have a reasonable path forward to achieve further gains in this business cycle.

We believe more moderate return expectations are prudent, however, given elevated U.S. equity market valuations. Political gridlock in Washington D.C. and a lack of clarity in regards to fiscal policy (i.e. potential health care/tax reform) and foreign policy are key risks to monitor in the months ahead. As such, we continue to emphasise the core tenets of our investment philosophy: disciplined application of value investment principles, an emphasis on owning quality and sustainable businesses, dividend growth and a long term investment horizon. We believe attractively-priced, dividend growth stocks with sound balance sheets are particularly well positioned for today’s environment. Many of these companies still offer competitive yields relative to 10-year and 30-year U.S. Treasuries and offer the potential for future capital appreciation and income growth.

Our largest exposures are in the financials, health care and energy sectors. In recent months, notable portfolio changes included increasing our allocation to the health care and consumer staples sectors and reducing our exposure to the consumer discretionary, financials and real estate sectors. As always, the strategy continues to emphasise investment in quality dividend paying companies with consideration toward balancing capital appreciation and current income over time.

TONY DESPIRITO, FRANCO TAPIA AND DAVID ZHAO
BLACKROCK INVESTMENT MANAGEMENT LLC
13 December 2017

TEN LARGEST INVESTMENTS
as at 31 October 2017

JPMorgan Chase: 4.1% (2016: 3.5%) is a U.S. based diversified financial company. JPMorgan’s capital base is one of the strongest in the banks industry and it provides a measure of safety and financial flexibility. Overall, JPMorgan is a well-managed, quality global franchise with above average organic growth and returns relative to industry peers.

Bank of America: 4.0% (2016: 3.4%) is 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.

Citigroup: 3.9% (2016: 2.5%) is a U.S. based money center bank with a global footprint. We believe Citigroup 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.

Pfizer: 3.9% (2016: 3.4%) is a diversified pharmaceutical firm based in the U.S. In our view, Pfizer trades at an attractive valuation, offers investors a healthy drug pipeline and has the balance sheet flexibility to deliver long term shareholder value through a variety of avenues.

Oracle: 3.2% (2016: 1.8%) is a vertically integrated software company that offers both applications and underlying database software. Oracle’s database and enterprise markets are sticky in terms of customer retention, which we like. Further, we are positive on Oracle’s ability to successfully convert customers from an on premise licencing model (i.e. customers pay for an upfront licence and ongoing maintenance) to a higher margin, cloud based subscription model (i.e. delivery of software and services over the internet).

Wells Fargo: 3.0% (2016: 2.7%) is 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.

Anthem: 2.6% (2016: 1.5%) is one of the largest health maintenance organisations in the U.S. with offerings in the commercial (large and small employer), Medicare, Medicaid and individual markets. We believe Anthem has an undervalued competitive position given their overall scale and investment in technology. These structural advantages have the potential to drive down costs and improve the company’s profitability.

DowDuPont: 2.4% (2016: Du Pont: 1.5% and Dow Chemical: 1.3%) was officially formed on 31 August 2017 after the merger between E.I. du Pont de Nemours & Company and The Dow Chemical Company was finalised. The combined company is more vertically integrated and it is one of the largest chemical producers in the world. We are encouraged by the potential synergies and productivity improvements at the combined company and believe this merger has the potential to drive additional profit growth for the company going forward.

Microsoft: 2.2% (2016: 2.4%) is a global technology leader that is engaged in developing and licencing both software and hardware products & services. We view Microsoft as an attractive long term investment given the firm’s overall ‘ecosystem’, which historically has resulted in pricing power and efficient free cash flow generation over time. We are bullish on the stock given the firm’s dominant position in business and enterprise software and the opportunity for greater client engagement and usage by shifting from on premise to a cloud distribution model.

Suncor Energy: 2.0% (2016: 1.5%) is an integrated energy company focused on developing the Athabasca oil sands basin in Canada. We believe the company has underappreciated oil assets, strong downstream assets and a lower breakeven cost than many of its integrated oil and gas peers.

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 2016. Together, the ten largest investments represent 31.3% of the Company’s portfolio (31 October 2016: 27.4%).

INVESTMENTS
as at 31 October 2017

Company	Country	Sector	Securities	Market value  £’000	% of total  portfolio
JPMorgan Chase	United States	Financials	Ordinary shares Options	4,708 (28)	}               4.1
Bank of America	United States	Financials	Ordinary shares Options	4,642 (52)	}               4.0
Citigroup	United States	Financials	Ordinary shares Options	4,467 (32)	}               3.9
Pfizer	United States	Health Care	Ordinary shares Options	4,389 (2)	}               3.9
Oracle	United States	Information Technology	Ordinary shares Options	3,646 (13)	}               3.2
Wells Fargo	United States	Financials	Ordinary shares Options	3,444 (30)	}               3.0
Anthem	United States	Health Care	Ordinary shares	2,977	2.6
DowDuPont	United States	Materials	Ordinary shares Options	2,726 (16)	}               2.4
Microsoft	United States	Information Technology	Ordinary shares Options	2,518 (53)	}               2.2
Suncor Energy	Canada	Energy	Ordinary shares Options	2,256 (3)	}               2.0
AstraZeneca	United Kingdom	Health Care	Ordinary shares	2,244	2.0
American International Group	United States	Financials	Ordinary shares	2,231	2.0
Royal Dutch Shell	Netherlands	Energy	Ordinary shares Options	2,197 (10)	}               1.9
Morgan Stanley	United States	Financials	Ordinary shares Options	2,117 (12)	}               1.9
Chevron	United States	Energy	Ordinary shares Options	2,052 (3)	}               1.8
Merck	United States	Health Care	Ordinary shares Options	2,036 *–	}               1.8
Koninklijke Philips	Netherlands	Industrials	Ordinary shares	1,904	1.7
Northrop Grumman	United States	Industrials	Ordinary shares Options	1,880 (5)	}               1.6
Total	France	Energy	Ordinary shares Options	1,868 (6)	}               1.6
MetLife	United States	Financials	Ordinary shares Options	1,858 (5)	}               1.6
NextEra Energy	United States	Utilities	Ordinary shares Options	1,855 (9)	}               1.6
Aetna	United States	Health Care	Ordinary shares	1,843	1.6
Comcast	United States	Consumer Discretionary	Ordinary shares Options	1,758 (2)	}               1.5
Verizon Communications	United States	Telecommunication Services	Ordinary shares Options	1,748 (3)	}               1.5
US Bancorp	United States	Financials	Ordinary shares Options	1,712 (6)	}               1.5
Honeywell International	United States	Industrials	Ordinary shares Options	1,607 (1)	}               1.4
Diageo	United Kingdom	Consumer Staples	Ordinary shares Options	1,552 (6)	}               1.4
Goldman Sachs	United States	Financials	Ordinary shares Options	1,536 (5)	}               1.3
Taiwan Semiconductor Manufacturing	United States	Information Technology	Ordinary shares Options	1,489 (66)	}               1.3
First Energy	United States	Utilities	Ordinary shares Options	1,376 (6)	}               1.2
PG&E	United States	Utilities	Ordinary shares Options	1,314 *–	}               1.2
Public Service Enterprise	United States	Utilities	Ordinary shares Options	1,313 (1)	}               1.2
Lockheed Martin	United States	Industrials	Ordinary shares Options	1,300 (2)	}               1.1
Medtronic	Ireland	Health Care	Ordinary shares Options	1,273 (1)	}               1.1
SunTrust Banks	United States	Financials	Ordinary shares Options	1,195 (11)	}               1.0
Qualcomm	United States	Information Technology	Ordinary shares Options	1,145 (4)	}               1.0
Samsung Electronics	United States	Information Technology	Ordinary shares	1,133	1.0
Travelers Companies	United States	Financials	Ordinary shares Options	1,139 (14)	}               1.0
UnitedHealth Group	United States	Health Care	Ordinary shares Options	1,118 (10)	}               1.0
Hess	United States	Energy	Ordinary shares Options	1,104 (4)	}               1.0
Procter & Gamble	United States	Consumer Staples	Ordinary shares Options	1,069 *–	}               0.9
General Electric	United States	Industrials	Ordinary shares Options	1,045 (1)	}               0.9
Unilever	Netherlands	Consumer Staples	Ordinary shares Options	1,008 *–	}               0.9
Novo–Nordisk	Denmark	Health Care	Ordinary shares Options	904 (1)	}               0.8
Marsh & McLennan	United States	Financials	Ordinary shares Options	903 (3)	}               0.8
Motorola Solutions	United States	Information Technology	Ordinary shares Options	904 (4)	}               0.8
3M	United States	Industrials	Ordinary shares Options	912 (15)	}               0.8
Marathon Oil	United States	Energy	Ordinary shares Options	855 (6)	}               0.7
Mckesson	United States	Health Care	Ordinary shares Options	824 *–	}               0.7
Kroger	United States	Consumer Staples	Ordinary shares Options	789 (1)	}               0.7
Publicis	France	Consumer Discretionary	Ordinary shares Options	780 (1)	}               0.7
Marathon Petroleum	United States	Energy	Ordinary shares Options	767 (3)	}               0.7
Humana	United States	Health Care	Ordinary shares Options	760 (5)	}               0.7
Dr Pepper Snapple	United States	Consumer Staples	Ordinary shares Options	748 (1)	}               0.7
Nielsen	United States	Industrials	Ordinary shares Options	706 *–	}               0.6
Exelon	United States	Utilities	Ordinary shares Options	665 (2)	}               0.6
Quest Diagnostics	United States	Health Care	Ordinary shares Options	660 (5)	}               0.6
SK Telecom	South Korea	Telecommunication Services	Ordinary shares Options	646 (6)	}               0.6
Keycorp	United States	Financials	Ordinary shares Options	641 (1)	}               0.6
Union Pacific	United States	Industrials	Ordinary shares Options	625 (1)	}               0.5
CRH	Ireland	Materials	Ordinary shares Options	624 (1)	}               0.5
Johnson & Johnson	United States	Health Care	Ordinary shares Options	620 (8)	}               0.5
Experian	Ireland	Industrials	Ordinary shares Options	601 (2)	}               0.5
Schwab (Charles)	United States	Financials	Ordinary shares Options	591 (1)	}               0.5
Lowe’s Companies	United States	Consumer Discretionary	Ordinary shares Options	590 (2)	}               0.5
Invesco	United States	Financials	Ordinary shares Options	568 (3)	}               0.5
Dollar General	United States	Consumer Discretionary	Ordinary shares Options	557 (2)	}               0.5
Constellation Software	Canada	Information Technology	Ordinary shares Options	559 (7)	}               0.5
International Paper	United States	Materials	Ordinary shares Options	541 (3)	}               0.5
Mattel	United States	Consumer Discretionary	Ordinary shares Options	530 (2)	}               0.5
Pentair	United Kingdom	Industrials	Ordinary shares Options	516 (1)	}               0.5
Kellogg Co	United States	Consumer Staples	Ordinary shares Options	494 (1)	}               0.4
Smith & Nephew	United Kingdom	Health Care	Ordinary shares Options	492 (5)	}               0.4
Occidental Petroleum	United States	Energy	Ordinary shares	487	0.4
Altria Group	United States	Consumer Staples	Ordinary shares Options	457 (1)	}               0.4
Lenovo	China	Information Technology	Ordinary shares Options	457 (5)	}               0.4
Pioneer Natural Resources	United States	Energy	Ordinary shares Options	451 (3)	}               0.4
Prudential Financial	United States	Financials	Ordinary shares Options	445 (1)	}               0.4
Halliburton	United States	Energy	Ordinary shares Options	444 *–	}               0.4
Enbridge	Canada	Energy	Ordinary shares Options	444 *–	}               0.4
United Parcel Service	United States	Industrials	Ordinary shares Options	443 (1)	}               0.4
Philip Morris International	United States	Consumer Staples	Ordinary shares Options	432 *–	}               0.4
CDW	United States	Information Technology	Ordinary shares Options	391 (2)	}               0.3
Praxair	United States	Materials	Ordinary shares Options	352 (3)	}               0.3
BCE	Canada	Telecommunication Services	Ordinary shares Options	340 *–	}               0.3
General Mills	United States	Consumer Staples	Ordinary shares Options	331 *–	}               0.3
Cardinal Health	United States	Health Care	Ordinary shares Options	194 (1)	}               0.2
Brighthouse Financial	United States	Financials	Ordinary shares Options	166 *–	}               0.1
Equifax	United States	Industrials	Ordinary shares	151	0.1
Becton Dickinson	United States	Health Care	Ordinary shares	85	0.1
				--------	--------
Portfolio				113,702	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 2017 was 90 (31 October 2016: 89). The total number of individual open options as at 31 October 2017 was 175 (31 October 2016: 186).

The negative valuation of £532,000 in respect of options held represents the notional cost of repurchasing the contracts at market prices as at 31 October 2017 (31 October 2016: £311,000).

At 31 October 2017, the Company did not hold any equity interests comprising more than 3% of any company’s share capital.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS

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 IFRS as adopted by the European Union.

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 IFRS as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements;

• provide additional disclosures when compliance with the specific requirements in IFRS as adopted by the European Union 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 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 on page 20 of the Annual Report, confirm to the best of their knowledge that:

• the financial statements, which have been prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and net return 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 2016 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 on pages 34 to 37 of the Annual Report. As a result, the Board has concluded that the Annual Report and Financial Statements for the year ended 31 October 2017, 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.

FOR AND ON BEHALF OF THE BOARD
SIMON MILLER
Chairman

13 December 2017

STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 October 2017

	Notes	Revenue  2017  £’000	Revenue  2016  £’000	Capital  2017  £’000	Capital  2016  £’000	Total  2017  £’000	Total  2016  £’000
Income from investments held at fair value through profit or loss	3	3,017	2,772	–	–	3,017	2,772
Other income	3	1,990	2,144	–	–	1,990	2,144
		--------	--------	--------	--------	--------	--------
Total revenue		5,007	4,916	–	–	5,007	4,916
		--------	--------	--------	--------	--------	--------
Net profit on investments and options held at fair value through profit or loss		–	–	9,664	24,078	9,664	24,078
Net (loss)/profit on foreign exchange		–	–	(541)	378	(541)	378
		--------	--------	--------	--------	--------	--------
Total		5,007	4,916	9,123	24,456	14,130	29,372
		--------	--------	--------	--------	--------	--------
Expenses
Investment management fees	4	(217)	(187)	(651)	(560)	(868)	(747)
Other operating expenses	5	(378)	(267)	(16)	(37)	(394)	(304)
		--------	--------	--------	--------	--------	--------
Total operating expenses		(595)	(454)	(667)	(597)	(1,262)	(1,051)
		--------	--------	--------	--------	--------	--------
Net profit on ordinary activities before taxation		4,412	4,462	8,456	23,859	12,868	28,321
Taxation		(681)	(732)	126	112	(555)	(620)
		========	========	========	========	========	========
Profit for the year		3,731	3,730	8,582	23,971	12,313	27,701
		========	========	========	========	========	========
Earnings per ordinary share (pence)	7	5.41	5.17	12.46	33.20	17.87	38.37
		========	========	========	========	========	========

The total column of this statement represents the Company’s Statement of Comprehensive Income, prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies (AIC). All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year. All income is attributable to the equity holders of the Company.

The Company does not have any other comprehensive income. The net profit for the year disclosed above represents the Company’s total comprehensive income.

STATEMENT OF CHANGES IN EQUITY
for the year ended 31 October 2017

	Notes	Called up  share  capital  £’000	Share  premium  account  £’000	Capital  redemption  reserve  £’000	Special  reserve  £’000	Capital  reserves  £’000	Revenue  reserve  £’000	Total  £’000
For the year ended 31 October 2017
At 31 October 2016		1,004	36,774	1,460	25,029	43,161	2,051	109,479
Total Comprehensive Income:
Net profit for the year		–	–	–	–	8,582	3,731	12,313
Transactions with owners, recorded directly to equity:
Ordinary shares purchased into treasury	8 & 9	–	–	–	(118)	–	–	(118)
Share purchase costs	8 & 9	–	–	–	(1)	–	–	(1)
Dividends paid*	6	–	–	–	–	–	(3,378)	(3,378)
		--------	--------	--------	--------	--------	--------	--------
At 31 October 2017		1,004	36,774	1,460	24,910	51,743	2,404	118,295
		--------	--------	--------	--------	--------	--------	--------
For the year ended 31 October 2016
At 31 October 2015		1,004	36,774	1,460	37,956	19,190	1,662	98,046
Total Comprehensive Income:
Net profit for the year		–	–	–	–	23,971	3,730	27,701
Transactions with owners, recorded directly to equity:
Ordinary shares purchased into treasury		–	–	–	(12,922)	–	–	(12,922)
Share purchase costs		–	–	–	(65)	–	–	(65)
Share purchase costs written back		–	–	–	60	–	–	60
Dividends paid**	6	–	–	–	–	–	(3,341)	(3,341)
		--------	--------	--------	--------	--------	--------	--------
At 31 October 2016		1,004	36,774	1,460	25,029	43,161	2,051	109,479
		--------	--------	--------	--------	--------	--------	--------

*  4th interim dividend of 1.20p per share for the year ended 31 October 2016, declared on 3 November 2016 and paid on 5 January 2017; 1st interim dividend of 1.20p per share for the year ended 31 October 2017, declared on 21 February 2017 and paid on 4 April 2017; 2nd interim dividend of 1.25p per share for the year ended 31 October 2017, declared on 3 May 2017 and paid on 30 June 2017; and 3rd interim dividend of 1.25p per share for the year ended 31 October 2017, declared on 8 August 2017 and paid on 6 October 2017.

** 4th interim dividend of 1.10p per share for the year ended 31 October 2015, declared on 4 November 2015 and paid on 5 January 2016; 1st interim dividend of 1.10p per share for the year ended 31 October 2016, declared on 18 February 2016 and paid on 4 April 2016; 2nd interim dividend of 1.20p per share for the year ended 31 October 2016, declared on 4 May 2016 and paid on 1 July 2016; and 3rd interim dividend of 1.20p per share for the year ended 31 October 2016, declared on 3 August 2016 and paid on 7 October 2016.

STATEMENT OF FINANCIAL POSITION
as at 31 October 2017

	Notes	31 October 2017  £’000	31 October 2016  £’000
Non current assets
Investments held at fair value through profit or loss		114,234	105,726
		--------	--------
Current assets
Other receivables		466	154
Cash collateral held with brokers		–	125
Cash and cash equivalents		7,509	4,686
		--------	--------
		7,975	4,965
		--------	--------
Total assets		122,209	110,691
		--------	--------
Current liabilities
Other payables		(3,382)	(901)
Derivative financial liabilities held at fair value through profit or loss		(532)	(311)
		--------	--------
		(3,914)	(1,212)
		----------	----------
Net assets		118,295	109,479
		======	======
Equity attributable to equity holders
Called up share capital	8	1,004	1,004
Share premium account	9	36,774	36,774
Capital redemption reserve	9	1,460	1,460
Special reserve	9	24,910	25,029
Capital reserves	9	51,743	43,161
Revenue reserve	9	2,404	2,051
		--------	--------
Total equity		118,295	109,479
		======	======
Net asset value per ordinary share (pence)	7	171.76	158.78
		======	======

CASH FLOW STATEMENT
for the year ended 31 October 2017

	31 October 2017  £’000	31 October 2016  £’000
Operating activities
Net profit on ordinary activities before taxation	12,868	28,321
Net profit on investments and options held at fair value through profit or loss (including transaction costs)	(9,664)	(24,078)
Net loss/(profit) on foreign exchange	541	(378)
Sales of investments held at fair value through profit or loss	95,600	78,286
Purchases of investments held at fair value through profit or loss	(94,223)	(64,305)
Decrease/(increase) in other receivables	34	(4)
Increase/(decrease) in other payables	338	(21)
(Increase)/decrease in amounts due from brokers	(356)	2,619
Increase/(decrease) in amounts due to brokers	2,125	(1,017)
Net movement in cash collateral held with brokers	125	(125)
	--------	--------
Net cash inflow from operating activities before taxation	7,388	19,298
	--------	--------
Taxation on investment income included within gross income	(532)	(689)
	--------	--------
Net cash inflow from operating activities	6,856	18,609
	--------	--------
Financing activities
Ordinary shares purchased into treasury	(118)	(12,922)
Share issue and share purchase costs paid	(1)	(101)
Share issue costs rebate received	5	60
Dividends paid	(3,378)	(3,341)
	--------	--------
Net cash outflow from financing activities	(3,492)	(16,304)
	--------	--------
Increase in cash and cash equivalents	3,364	2,305
Effect of foreign exchange rate changes	(541)	378
	--------	--------
Change in cash and cash equivalents	2,823	2,683
Cash and cash equivalents at start of year	4,686	2,003
	--------	--------
Cash and cash equivalents at end of year	7,509	4,686
	--------	--------
Comprised of:
Cash at bank	7,509	4,686
	--------	--------
	7,509	4,686
	=====	=====

NOTES TO THE FINANCIAL STATEMENTS

1. PRINCIPAL ACTIVITY
The principal activity of the Company is that of an investment trust company within the meaning of section 1158 of the Corporation Tax Act 2010. The Company was incorporated on 30 August 2012, and this is the fifth Annual Report.

2. ACCOUNTING POLICIES
The principal accounting policies adopted by the Company are set out below.

(a) Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. All of the Company’s operations are of a continuing nature.

Insofar as the Statement of Recommended Practice (SORP) for investment trust companies and venture capital trusts issued by the Association of Investment Companies (AIC), revised in November 2014, is compatible with IFRS, the financial statements have been prepared in accordance with the guidance set out in the SORP.

Substantially, all of the assets of the Company consist of securities that are readily realisable and, accordingly, the Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future. Consequently, the Directors have determined that it is appropriate for the financial statements to be prepared on a going concern basis.

The Company’s financial statements are presented in sterling, which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates. All values are rounded to the nearest thousand pounds (£’000) except where otherwise indicated.

A number of new standards, amendments to standards and interpretations that became effective during the year, had no significant impact on the amounts reported in these financial statements but may impact accounting for future transactions and arrangements.

At the date of authorising these financial statements the following standards and interpretations which had not been applied in these financial statements were in issue but not yet effective.

IFRS 9 Financial Instruments (2014) replaces IAS 39 and deals with a package of improvements including principally a revised model for classification and measurement of financial instruments, a forward looking expected loss impairment model and a revised framework for hedge accounting. In terms of classification and measurement, the revised standard is principles based depending on the business model and nature of cash flows. Under this approach, instruments are measured at either amortised cost or fair value. Under IFRS 9 equity and derivative investments will be held at fair value because they fail the ‘solely payments of principal and interest’ test and debt investments will be held at fair value because the business model is to manage them on a fair value basis. The standard is effective from 1 January 2018 with earlier application permitted. The Company does not plan to early adopt this standard. The standard is not expected to have any impact on the Company as all its investments are held at fair value through profit or loss.

Amendments to IAS 7 – Disclosure Initiative Statement of Cash Flows (effective 1 January 2017). The amendments are not expected to have a significant effect on the presentation of the Cash Flow Statement within the financial statements of the Company as the Company does not have any debt.

Amendments to IAS 12 – Recognition of deferred tax assets for unrealised losses (effective 1 January 2017). The amendment is not expected to have a significant effect on the measurement of amounts recognised in the financial statements of the Company.

IFRS 15 Revenue from Contracts with Customers (effective 1 January 2017) specifies how and when an entity should recognise revenue and enhances the nature of revenue disclosures. Given the nature of the Company’s revenue streams from financial instruments, the provisions of this standard are not expected to have a material impact.

(b) Presentation of the Statement of Comprehensive Income
In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and a capital nature has been presented alongside the Statement of Comprehensive Income.

(c) Segmental reporting
The Directors are of the opinion that the Company is engaged in a single segment of business being investment business.

(d) Income
Dividends receivable on equity shares are recognised as revenue for the year on an ex-dividend basis. Where no ex-dividend date is available dividends receivable on or before the year end are treated as revenue for the year. Provision is made for any dividends not expected to be received. Special dividends, if any, are treated as a capital or a revenue receipt depending on the facts or circumstances of each particular case. The return on a debt security is recognised on a time apportionment basis so as to reflect the effective yield on the debt security.

Options may be purchased or written over securities held in the portfolio for generating or protecting capital returns, or for generating or maintaining revenue returns. Where the purpose of the option is the generation of income, the premium is treated as a revenue item. Where the purpose of the option is the maintenance of capital, the premium is treated as a capital item.

Option premium income is recognised as revenue evenly over the life of the option contract and included in the revenue column of the Statement of Comprehensive Income unless the option has been written for the maintenance and enhancement of the Company’s investment portfolio and represents an incidental part of a larger capital transaction, in which case any premia arising are allocated to the capital column of the Statement of Comprehensive Income.

Deposit interest receivable is accounted for on an accruals basis.

Where the Company has elected to receive its dividends in the form of additional shares rather than in cash, the cash equivalent of the dividend is recognised as income. Any excess in the value of the shares received over the amount of the cash dividend is recognised in capital.

(e) Expenses
All expenses, including finance costs, are accounted for on an accruals basis. Expenses have been charged wholly to the revenue column of the Statement of Comprehensive Income, except as follows:              

• expenses which are incidental to the acquisition or sale of an investment are charged to the capital column of the Statement of Comprehensive Income. Details of transaction costs on the purchases and sales of investments are disclosed within note 9 to the financial statements on page 55 of the Annual Report;

• expenses are treated as capital where a connection with the maintenance or enhancement of the value of the investments can be demonstrated;

• the investment management fee and finance costs have been allocated 75% to the capital column and 25% to the revenue column of the Statement of Comprehensive Income in line with the Board’s expectations of the long term split of returns, in the form of capital gains and income, respectively, from the investment portfolio.

(f) Taxation
The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that were applicable at the balance sheet date.

Where expenses are allocated between capital and revenue, any tax relief in respect of expenses is allocated between capital and revenue returns on the marginal basis using the Company’s effective rate of corporation tax for the accounting period.

Deferred taxation is recognised in respect of all temporary differences that have originated but not reversed at the financial reporting date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the financial reporting date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Deferred tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise.

(g) Investments held at fair value through profit or loss
The Company’s investments are designated upon initial recognition as held at fair value through profit or loss in accordance with IAS 39 – ‘Financial Instruments: Recognition and Measurement’ and are managed and evaluated on a fair value basis in accordance with its investment strategy.

All investments are measured initially and subsequently at fair value through profit or loss. Purchases of investments are recognised on a trade date basis. The sale of investments are recognised at the trade date of the disposal. Proceeds are measured at fair value, which is regarded as the proceeds of sale less any transaction costs.

The fair value of the equity investments is based on their quoted bid price at the financial reporting date, without deduction for the estimated selling costs. This policy applies to all current and non current asset investments held by the Company.

Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Statement of Comprehensive Income as ‘Net profits or losses on investments held at fair value through profit of loss’. Also included within the heading are transaction costs in relation to the purchase or sale of investments.

(h) Derivatives
Derivatives are held at fair value based on the bid/offer prices of the options written to which the Company is exposed. The value of the option is subsequently marked-to-market to reflect the fair value of the option based on traded prices. Where the premium is taken to revenue, an appropriate amount is shown as capital return such that the total return reflects the overall change in the fair value of the option. When an option is closed out or exercised the gain or loss is accounted for as a capital gain or loss.

(i) Other receivables and other payables
Other receivables and other payables do not carry any interest and are short term in nature and are accordingly stated at their nominal value.

(j) Dividends payable
Under IFRS, final dividends should not be accrued in the financial statements unless they have been approved by shareholders before the financial reporting date. Interim dividends should not be accrued in the financial statements unless they have been paid.

Dividends payable to equity shareholders are recognised in the Statement of Changes in Equity.

(k) Foreign currency translation
Transactions involving foreign currencies are converted at the rate ruling at the date of the transaction. Foreign currency monetary assets and liabilities and non monetary assets held at fair value are translated into sterling at the rate ruling on the financial reporting date. Foreign exchange differences arising on translation are recognised in the Statement of Comprehensive Income as a revenue or capital item depending on the income or expense to which they relate. For investment transactions and investments held at the year end, denominated in a foreign currency, the resulting gains or losses are included in the profit/(loss) on investments held at fair value through profit or loss in the Statement of Comprehensive Income.

(l) Cash and cash equivalents
Cash comprises cash in hand and on demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.

(m) Bank borrowings
Bank overdrafts are recorded as the proceeds received. Finance charges are accounted for on an accruals basis in the Statement of Comprehensive Income using the effective interest rate method and are added to the carrying amount of the instruments to the extent that they are not settled in the period in which they arise.

3. INCOME

	2017  £’000	2016  £’000
Investment income:
UK listed dividends	143	74
Overseas listed dividends	2,849	2,668
Overseas listed special dividends	25	30
	--------	--------
	3,017	2,772
	--------	--------
Other income:
Deposit interest	36	1
Option premium income	1,954	2,143
	--------	--------
	1,990	2,144
	--------	--------
Total income	5,007	4,916
	=====	=====

During the year, the Company received premiums totalling £1,947,000 (2016: £2,149,000) for writing covered call options for the purposes of revenue generation. Option premiums of £1,954,000 (2016: £2,143,000) were amortised to income. All derivative transactions were based on constituent stocks in the Russell 1000 Value Index. At 31 October 2017, there were 175 (2016: 186) open positions with an associated liability of £532,000 (2016: £311,000).

Dividends and interest received during the year amounted to £3,032,000 and £36,000 (2016: £2,786,000 and £1,000).

Special dividends of £13,000 have been recognised in capital (2016: nil).

4. INVESTMENT MANAGEMENT FEES

	2017			2016
	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000
Investment management fee	217	651	868	187	560	747
	-------	-------	-------	-------	-------	-------
Total	217	651	868	187	560	747
	====	====	====	====	===	====

The investment management fee is payable in quarterly arrears, calculated at the rate of 0.75% of the Company’s net assets (2016: 0.75%).

5. OTHER OPERATING EXPENSES

	2017  £’000	2016  £’000
Allocated to revenue:
Custody fee	5	3
Auditors’ remuneration:
– audit services	28	28
Registrar’s fee	26	27
Directors’ emoluments	123	105
Broker fees	37	40
Depositary fees	13	11
Marketing fees	29	35
Marketing fees prior year adjustment	8	(59)
Other administrative costs	109	77
	--------	--------
	378	267
	--------	--------
Allocated to capital:
Custody transaction charges	16	37
	--------	--------
	394	304
	--------	--------
The Company’s ongoing charges, calculated as a percentage of average net assets and using expenses, VAT refunded, finance costs and taxation were:	1.07%	1.04%
	=====	=====

For the year ended 31 October 2017, expenses of £16,000 (2016: £37,000) were charged to the capital column of the Statement of Comprehensive Income. These relate to transaction costs charged by the custodian on sale and purchase trades.

6. DIVIDENDS
Dividends paid on equity shares:

	Record date	Payment date	2017  £’000	2016  £’000
4th interim dividend of 1.20p per share paid for the year ended 31 October 2016 (2015: 1.10p)	25 November 2016	5 January 2017	827	877
1st interim dividend of 1.20p per share paid for the year ended 31 October 2017 (2016: 1.10p)	3 March 2017	4 April 2017	828	802
2nd interim dividend of 1.25p per share paid for the year ended 31 October 2017 (2016: 1.20p)	19 May 2017	30 June 2017	862	835
3rd interim dividend of 1.25p per share paid for the year ended 31 October 2017 (2016: 1.20p)	18 August 2017	6 October 2017	861	827
			--------	--------
Accounted for in the financial statements			3,378	3,341
			=====	=====

The total dividends payable in respect of the year ended 31 October 2017 which form the basis of section 1158 of the Corporation Tax Act 2010 and section 833 of the Companies Act 2006, and the amounts declared, meet the relevant requirements as set out in this legislation.

Dividends paid or declared on equity shares:	2017  £’000	2016  £’000
1st interim dividend of 1.20p per share paid for the year ended 31 October 2017 (2016: 1.10p)	828	802
2nd interim dividend of 1.25p per share paid for the year ended 31 October 2017 (2016: 1.20p)	862	835
3rd interim dividend of 1.25p per share paid for the year ended 31 October 2017 (2016: 1.20p)	861	827
4th interim dividend of 1.25p per share payable on 5 January 2018 for the year ended 31 October 2017* (2016: 1.20p)	861	827
	--------	--------
	3,412	3,291
	=====	=====

* Based on 68,874,044 ordinary shares in issue on 24 November 2017.

7. EARNINGS AND NET ASSET VALUE PER ORDINARY SHARE
Total revenue and capital return per share and net asset value per share are shown below and have been calculated using the following:

	2017	2016
Net revenue profit attributable to ordinary shareholders (£’000)	3,731	3,730
Net capital profit attributable to ordinary shareholders (£’000)	8,582	23,971
	--------	--------
Total profit attributable to ordinary shareholders (£’000)	12,313	27,701
	--------	--------
Equity shareholders’ funds (£’000)	118,295	109,479
	--------------	--------------
The weighted average number of ordinary shares in issue during the year, on which the earnings per ordinary share was calculated was:	68,920,483	72,193,444
	--------------	--------------
The actual number of ordinary shares in issue at the year end, on which the net asset value per ordinary share was calculated was:	68,874,044	68,949,044
	--------------	--------------
Return per share
Revenue earnings per share – (pence)	5.41	5.17
Capital earnings per share – (pence)	12.46	33.20
	--------	--------
Total earnings per share – (pence)	17.87	38.37
	--------	--------
Net asset value per ordinary share – (pence)	171.76	158.78
	--------	--------
Ordinary share price – (pence)	160.50	155.75
	======	=====

There were no dilutive securities at the year end.

8. CALLED-UP SHARE CAPITAL

	Number of  ordinary  shares in  issue	Treasury  shares	Total  shares	Nominal  value  £’000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 1 pence each
At 31 October 2016	68,949,044	31,412,261	100,361,305	1,004
Purchase of ordinary shares	(75,000)	75,000	–	–
	-------------	--------------	---------------	--------
At 31 October 2017	68,874,044	31,487,261	100,361,305	1,004
	========	========	=========	=====

During the year ended 31 October 2017, the Company purchased 75,000 (2016: 11,090,000) shares for a total consideration of £119,000 (2016: £12,927,000) including costs.

9. RESERVES

	Share  premium  account  £’000	Capital  redemption  reserve  £’000	Special  reserve  £’000	Capital  reserve  arising on  investments  sold  £’000	Capital  reserve  arising on  revaluation  of investments  £’000	Revenue  reserve  £’000
At 31 October 2016	36,774	1,460	25,029	23,283	19,878	2,051
Movement during the year:
Total Comprehensive Income:
Net capital profit for the year	–	–	–	15,244	(6,662)	–
Net revenue profit for the year	–	–	–	–	–	3,731
Transactions with owners recorded directly to equity:
Ordinary shares purchased into treasury	–	–	(118)	–	–	–
Share purchase costs	–	–	(1)	–	–	–
Dividends paid	–	–	–	–	–	(3,378)
	--------	--------	--------	--------	--------	--------
At 31 October 2017	36,774	1,460	24,910	38,527	13,216	2,404
	======	=====	=====	=====	=====	=====

The share premium account and capital redemption reserve are not distributable profits under the Companies Act 2006. The special reserve may be used as distributable profits for all purposes and, in particular, for the repurchase by the Company of its ordinary shares and for payment as dividends.

10. VALUATION OF FINANCIAL INVESTMENTS
Financial assets and financial liabilities are either carried in the Statement of Financial Position at their fair value (investment and derivatives) or at an amount which is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash at bank and bank overdrafts). IFRS 13 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The valuation techniques used by the Company are explained in the accounting policies note 2(g).

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows.

The fair value hierarchy has the following levels:

Level 1 – Quoted market price in an active market for an identical instrument. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The Company does not adjust the quoted price for these instruments.

Level 2 – Valuation techniques used to price securities based on observable inputs. This category includes instruments valued using quoted market prices in active markets for similar instruments; quoted prices for similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data. Valuation techniques used for non-standardised financial instruments such as options, currency swaps and other over-the-counter derivatives include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs and relying as little as possible on entity specific inputs.

Level 3 – Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and these inputs could have a significant impact on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant entity determined adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market. The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety.

For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes ‘observable’ requires significant judgement by the Investment Manager. The Investment Manager considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

Over-the-counter derivative option contracts have been classified as Level 2 investments as their valuation has been based on market observable inputs represented by the underlying quoted securities to which these contracts expose the Company.

Fair values of financial assets and financial liabilities
The table below sets out fair value measurements using the IFRS 13 fair value hierarchy.

Financial assets at fair value through profit or loss at 31 October 2017	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity investments	114,234	–	–	114,234
Liabilities:
Derivative financial instruments – written options	–	(532)	–	(532)
	--------	--------	--------	--------
	114,234	(532)	–	113,702
	======	=====	=====	======

   

Financial assets at fair value through profit or loss at 31 October 2016	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity investments	105,726	–	–	105,726
Liabilities:
Derivative financial instruments – written options	(251)	(60)	–	(311)
	--------	--------	--------	--------
	105,475	(60)	–	105,415
	======	=====	=====	======

There were no transfers between levels for financial assets and financial liabilities during the year recorded at fair value as at 31 October 2017 and 31 October 2016. The Company did not hold any Level 3 securities throughout the financial year or as at 31 October 2017 (2016: nil).

11. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 October 2017 (2016: nil).

12. PUBLICATION OF NON-STATUTORY ACCOUNTS

The financial information contained in this announcement does not constitute statutory accounts as defined in the Companies Act 2006.  The Annual Report and Financial Statements for the year ended 31 October 2017 will be filed with the Registrar of Companies after the Annual General Meeting.

The figures set out above have been reported upon by the auditors, whose report for the year ended 31 October 2017 contains no qualification or statement under section 498(2) or (3) of the Companies Act 2006.

The comparative figures are extracts from the audited financial statements of BlackRock North American Income Trust plc for the year ended 31 October 2016, which have been filed with the Registrar of Companies.  The report of the auditor on those financial statements contained no qualification or statement under section 498 of the Companies Act.

13. ANNUAL REPORT

Copies of the Annual Report and Financial Statements will be published shortly and will be available from the registered office, c/o The Company Secretary, BlackRock North American Income Trust plc, 12 Throgmorton Avenue, London EC2N 2DL.

14. ANNUAL GENERAL MEETING

The Annual General Meeting of the Company will be held at the offices of BlackRock, 12 Throgmorton Avenue, London EC2N 2DL on Tuesday, 6 March 2018 at 12.00 noon.

ENDS

The Annual Report will also be available on the BlackRock website at blackrock.co.uk/brna.  Neither the contents of the Manager’s website nor the contents of any website accessible from hyperlinks on the Manager’s website (or any other website) is incorporated into, or forms part of, this announcement.

For further information please contact:

Simon White, Managing Director, Investment Trusts, BlackRock Investment Management (UK) Limited
Tel: 020 7743 5284

Press enquiries:

Lucy Horne, Lansons Communications – Tel:  020 7294 3689
E-mail:  lucyh@lansons.com

12 Throgmorton Avenue
London
EC2N 2DL

13 December 2017