Replacement Annual Financial Report

RNS Number : 7042K

North American Income Trust (The)

23 April 2020

 

AMENDMENT

Please note the announcement released on 23 April 2020 at 07:00hrs (RNS No: 5524K), noted the following within the Chairman's Statement:-

A fourth interim dividend of 4.3p, which will take the total for dividends for the year to 9.5p, an increase of 11.8% from last year, will be payable on 5 June 2020, to shareholders on the register on 8 May 2020. The quarterly dividends are paid in August, November, February and June each year.

The shareholder register date should read 11 May 2020.

A fourth interim dividend of 4.3p, which will take the total for dividends for the year to 9.5p, an increase of 11.8% from last year, will be payable on 5 June 2020, to shareholders on the register on 11 May 2020. The quarterly dividends are paid in August, November, February and June each year.

Please see below the updated announcement.  All other information remains unchanged.

THE NORTH AMERICAN INCOME TRUST PLC

 

ANNUAL FINANCIAL REPORT ANNOUNCEMENT FOR THE YEAR ENDED 31 JANUARY 2020

 

 

INVESTMENT OBJECTIVE

To provide investors with above average dividend income and long term capital growth through active management of a portfolio consisting predominately of S&P 500 US equities. 

FINANCIAL RESULTS AND PERFORMANCE

Financial Highlights

Net asset value total return{A}		Share price total return{A}		Revenue return per share{B}
2020	+6.2%	2020	+11.5%	2020	11.42p
2019	+4.8%	2019	+6.3%	2019	10.04p
Dividends per share{B}		Dividend yield{AC}		Ongoing charges{A}
2020	9.50p	2020	3.3%	2020	0.91%
2019	8.50p	2019	3.2%	2019	0.95%
{A}   Considered to be an Alternative Performance Measure. See below for more information.
{B}   Comparative figures for 2019 have been restated due to the sub-division of each existing Ordinary share of 25p into five Ordinary shares of 5p each on 10 June 2019.
{C}   Calculated as the dividend for the year divided by the year end share price.

Results Summary

	31 January 2020	31 January 2019	% change
Total assets	£432,913,000	£436,667,000	-0.9
Equity shareholders' funds	£413,948,000	£398,657,000	+3.8
Share price (mid market){A}	290.00p	268.00p	+8.2
Net asset value per share{AB}	288.91p	280.44p	+3.0
Premium/(discount) (difference between share price and net asset value){C}	0.4%	(4.4)%
Net cash/(gearing){C}	0.9%	(5.7)%
Dividends and earnings
Revenue return per share{A}	11.42p	10.04p	+13.8
Dividends per share{A}	9.50p	8.50p	+11.8
Dividend yield (based on year end share price){C}	3.3%	3.2%
Dividend cover{C}	1.20	1.18
Revenue reserves per share
Prior to payment of third and fourth interim dividends{A}	14.38p	11.75p
After payment of third and fourth interim dividends{A}	8.28p	6.45p
Operating costs
Ongoing charges{C}	0.91%	0.95%
{A}   Comparative figures for the year ended 31 January 2019 have been restated due to the sub-division of each existing Ordinary share of 25p into five Ordinary shares of 5p each on 10 June 2019.
{B}   Including undistributed revenue.
{C}   Considered to be an Alternative Performance Measure. See below for further information.

	Performance
		1 year return	3 year return{A}	5 year return{A}
Total return (Capital return plus dividends reinvested)		%	%	%
Share price{B}		+11.5	+29.0	+97.6
Net asset value per share{B}		+6.2	+19.1	+79.2
Russell 1000 Value Index (in sterling terms)		+14.6	+22.3	+72.9
S&P 500 Index (in sterling terms)		+21.4	+43.4	+104.1
{A}   Cumulative return
{B}   Considered to be an Alternative Performance Measure. See below for more information.

Dividends

	Rate	xd date	Record date	Payment date
1st Interim dividend 2020	1.70p	18 July 2019	19 July 2019	2 August 2019
2nd Interim dividend 2020	1.70p	3 October 2019	04 October 2019	25 October 2019
3rd Interim dividend 2020	1.80p	30 January 2020	31 January 2020	21 February 2020
4th interim dividend 2020	4.30p	7 May 2020	11 May 2020	5 June 2020
	_______
Total dividends 2020	9.50p
	_______
1st Interim dividend 2019*	1.60p	19 July 2018	20 July 2018	3 August 2018
2nd Interim dividend 2019*	1.60p	4 October 2018	05 October 2018	26 October 2018
3rd Interim dividend 2019*	1.70p	24 January 2019	25 January 2019	15 February 2019
Proposed final dividend 2019*	3.60p	9 May 2019	10 May 2019	7 June 2019
	_______
Total dividends 2019*	8.50p
	_______
* Comparative figures for the year ended 31 January 2019 have been restated due to the sub-division of each existing Ordinary share of 25p into five Ordinary shares of 5p each on 10 June 2019.

CHAIRMAN'S STATEMENT

As this is written both the news and stockmarkets are dominated by the development of the COVID-19 pandemic. The net asset value per share of NAIT, which was  288.91p at our year end has fallen to 241.65p at 21 April 2020 and the outlook for dividends from our investments is uncertain. However, our Managers have examined the portfolio with great care and are as confident as they can be that we are invested in companies with the strength to survive.

 

Performance

Over the year to 31 January 2020, the Company's net asset value per share rose by 6.2% on a total return basis in sterling terms. This underperformed the 14.6% return in sterling terms from the Russell 1000 Value Index, the Company's primary reference index. The Company's relative underperformance for the year was attributable mainly to stock selection in the materials, communication services and consumer discretionary sectors.  Conversely, strong stock selection in the energy, industrials and healthcare sectors bolstered the Company's performance.

The longer-term performance of the Company had been stronger.  Over the three- and five-year periods to 31 January 2020 , the Company's NAV return was 19.1% and 79.2%, respectively, compared to the corresponding 22.3% and 72.9% returns from the Russell 1000 Value Index. 

Dividend

For the year ended 31 January 2020, the revenue return per Ordinary share rose by 13.7% from 10.04p to 11.42p. In contrast to previous years, the Board has announced the payment of a fourth interim dividend, rather than recommending a final dividend for approval by shareholders. Announcing this fourth dividend as an interim, instead of a final dividend, means that the payment of the dividend will not be delayed by any postponement of the AGM.

A fourth interim dividend of 4.3p, which will take the total for dividends for the year to 9.5p, an increase of 11.8% from last year, will be payable on 5 June 2020, to shareholders on the register on 11 May 2020. The quarterly dividends are paid in August, November, February and June each year.

The total dividend represented a yield of 3.3%, using the share price of 290.0p at the year-end on 31 January, compared to the 2.6% yield from the Russell 1000 Value I ndex at that date.  The Trust continues to provide a stream of income that exceeds the level of the reference index and has not compromised the capital account over the long-run. 

After payment of the fourth interim dividend, the undistributed balance of the revenue account will be added to the Company's revenue reserves, which will represent approximately 8.28p per share.  This will provide the Company with added flexibility for future years and some cushion against adverse economic circumstances and a more challenging dividend environment. 

Portfolio

As of 31 January 2020, the portfolio consisted of 39 equity holdings and 8 corporate bonds, with equities representing 95% of total assets. 

Total revenue from equity holdings in the portfolio over the financial year was £16.3 million (2019 - £14.3 million).  Most of the Trust's equity holdings continued their established record of dividend growth. Over 84% of the equity holdings raised their dividends over the past 12 months, with a weighted average increase of approximately 8.4%.

During the financial year, the Company received premiums totalling £4.0 million (2019 - £3.9 million) in exchange for entering into stock option transactions. This option income, the generation of which remains consistent with the Manager's company-focused investment process, represented 19.1% of total income (2019 - 20.5%). As the Company's exposure to corporate bonds has decreased over recent years, interest income from investments was lower and represented 2.7 % of total income (2019 - 3.3%). Bond coupons and option premiums will remain secondary sources of income in the belief that dividends must remain the overwhelming source of income available for distribution. Further details of the portfolio are shown below.

Market & Economic Review

Major North American equity indices posted notable gains for the year ended January 2020, which was marked by increasing US-China trade tensions and a subsequent "phase one" deal, monetary policy conditions and, towards the end of the period, investors' fears surrounding the potential negative impact of the coronavirus (COVID-19) on the US economy and corporate earnings.

China and the US signed an agreement on a phase one trade deal in January 2020. The pact included a partial backtrack on Chinese export tariffs in exchange for an increase in purchases of US farm, energy and manufactured goods, as well as greater openness in its financial sector and stronger intellectual property protection.

Politics took centre stage in the last months of the period and culminated in the acquittal of President Donald Trump at the impeachment inquiry which alleged that he had illegally sought help from Ukraine to boost his chances of re-election in November 2020. The financial markets' reaction was relatively muted throughout the impeachment inquiry and trial.

The economic ramifications of the measures taken to contain the spread of the coronavirus, including substantial travel restrictions, extended holidays and workplace shutdowns, have resulted in significant downward revisions in global first-quarter 2020 economic growth forecasts. Commodity prices have fallen as a result of weaker growth expectations and sharp reductions in demand. Governments and central banks are taking steps to prevent the global economy from seizing up, although the magnitude and duration of the coronavirus is still unknown.

Management of Premium and Discount

The Company's share price rose by 8.2% to 290.0p and ended the year at a 0.4% premium to total net asset value, compared with a 4.4% discount at the end of the 2019 financial year. During the year under review, the shares mainly traded between a 1% premium and a 2% discount. At the AGM in June 2019, approval was obtained to renew the annual authorities to issue up to 10% of the Company's issued share capital for cash at a premium and to buy-back up to 14.99% of the issued share capital at a discount.  The Board monitors the rating of the Company's shares and, taking account of prevailing market conditions, will exercise discretion in buying back shares at a discount or issuing shares at a premium.  The Board believes that this is in shareholders' interests as it seeks to reduce volatility in the premium or discount to underlying NAV whilst also making a small positive contribution to the NAV. 

During the year, 1,125,000 shares were issued at a premium to NAV and no Ordinary shares were purchased for cancellation.  At 21 April 2020, the NAV was 241.65p and the share price was 232.0p equating to a discount of 4.0% per Ordinary share. 

The Board will be seeking approval from shareholders to renew both authorities at the 2020 AGM. As in previous years, new shares will only be issued at a premium to NAV and shares will only be bought back at a discount to NAV. Resolutions to this effect will be proposed at the AGM and the Directors strongly encourage shareholders to support these proposals.

Gearing

The Board believes that sensible use of modest financial gearing should enhance returns to our shareholders over the longer term. The total amount available under the Company's loan facility agreement with Scotiabank (Ireland) Designated Activity Company is $75 million, of which $50 million was drawn down initially. During the year under review, $25 million of the loan facility was repaid and so at the end of the period $25 million was drawn down. At the same time, cash held as collateral against open option positions had increased. As a result, net gearing at 31 January 2020 was effectively reduced to nil (31 January 2019: 5.7%).

Promotional Activity

The Board continues to promote the Company through the Manager's initiatives, which include investor meetings, targeted press coverage, online marketing, direct mail advertising, and providing  a series of savings schemes through which savers can invest in the Company in a low-cost and convenient manner
(see pages 72 to 74 of the published 2020 Annual Report ).

Up-to-date information about the Company, including monthly factsheets, interviews with the Manager and the latest net asset value and price of the Ordinary shares, may be found on the Company's website at www.northamericanincome.co.uk .

Outlook

As expected, the US Federal Reserve's monetary policy was unchanged in January but subsequently the Fed Funds rate was lowered to zero following the spreading of the coronavirus in March. This move came in tandem with quantitative easing as a mechanism to keep the financial markets from seizing up. Central banks immediately followed the Federal Reserve's lead despite having far less scope to boost their local economies. The US government has also deployed multiple measures to help the recently unemployed, cash payments to nearly all lower and middle class families, forgivable loans for small business and a myriad of policy changes that will allow corporates a better change to manage through this nearly complete stop to the economy at large.

While the US consumer had remained a bright spot in the US economy, the potential for mass unemployment causing a recession now exists. Many stores are being forced to close, and without knowing the duration of these closures, employers are essentially being forced to make their employees redundant during this period of uncertainty. The same can be said for the housing market, which had been strengthening towards the end of 2019, as interest rates became more favourable. When combined with the positive employment backdrop, this led to record levels of housing affordability. It appears that this position has been altered entirely as the economy is approaching a standstill until the virus can be contained.

It would seem that the impact on the global economy and markets is going to be severe. The magnitude of the effect will depend largely upon the spread, scale (number of individuals infected), the duration of the outbreak and governmental actions taken. The total number of coronavirus infections has already exceeded the number of severe acute respiratory syndrome (SARS) cases reported in 2003, suggesting that the total impact on the global economy will be greater. Given that China is a much larger share of the global economy and is also more integrated than it was in 2003, we believe that the spillover to the rest of the world will also be larger.

We are keeping in close communication with all of the companies under coverage given these unprecedented times. We have not had any dividend cuts or suspensions up to this point, but that is likely a matter of time since certain end markets are effectively closed for business with no certain time for re-opening. Furthermore, there has been some rhetoric from government officials about the suspension of dividends of those companies furloughing employees which may impact dividend payments in subsequent months.

The Trust has built reserves which will help to maintain its dividend payments should the dividend environment become more difficult in the near term.

 

Annual General Meeting ("AGM")

The Board have been monitoring closely the impact of the COVID-19 pandemic upon the arrangements for the Company's upcoming AGM.  The intention is to hold the AGM at 11.00 am on 2 June 2020 at the offices of Dickson Minto WS at 17 Charlotte Square, Edinburgh EH2 4DF .

In the light of the developing Government guidance and measures, including the restrictions on public gatherings and maintaining social distancing, and the possibility that these measures will remain in place until June, this year's AGM will follow the minimum legal requirements for an AGM.  Arrangements will be made by the Company to ensure that the minimum number of shareholders required to form a quorum will attend the meeting in order that the meeting may proceed and the business concluded. The Board considers these arrangements to be in the best interests of shareholders in the current circumstances.

The Board strongly advises that all shareholders should not attend the AGM in person and instead exercise their votes in respect of the meeting in advance. Any questions which shareholders may have should be submitted to the company secretary at [e-mail] .

James Ferguson,

Chairman

22 April 2020

INVESTMENT MANAGER'S REVIEW

At the time of the writing of this report, the whole world is in the grips of the COVID-19 pandemic, which looks set to have a more far-reaching impact on for all global economies than anything experienced in peacetime. Consequently, the following is a statement of historical record, but it should be noted that governments and central banks globally are taking unprecedented measures in order to try to prevent their economies from seizing up during this period of restrictive movement and social distancing. There is no precedent for this in the modern day economy, and thus we are being conservative with our portfolio management decisions whilst still maintaining a diversified fully invested portfolio.

Market review

Despite numerous bouts of volatility, major North American equity market indices posted sizeable gains  over the 12-month period ended 31 January 2020. Markets were buoyed for much of the review period by generally positive economic data reports and news of a phase one agreement in the US-China trade dispute. However, towards the end of the period stock prices fell sharply on investors' fears surrounding the potential negative impact of the coronavirus (COVID-19) on the US economy and corporate earnings. These fears proved to be justified following the end of the financial year, with the stockmarket declining sharply in February and March. The depth and duration of the impact of the coronavirus remains unknown, and investors broadly have taken down market exposure in the near term.

The North American Income Trust's reference index, the Russell 1000 Value Index, gained 14.6% in sterling terms, with 10 of the 11 sectors delivering positive returns for the period. The more cyclical technology sector led the upturn amid the risk-on market environment for much of the period, while the relatively higher dividend-paying utilities and communication services stocks performed well as US Treasury yields moved lower across the curve. Conversely, energy was the lone sector to record a negative return, hampered by declines in crude oil and natural gas prices during the period.

Regarding monetary policy, the US Federal Reserve (Fed) left its benchmark interest rate unchanged for the first five months of the review period, but subsequently trimmed the rate by a cumulative total of 75 basis points to a range of 1.50% to 1.75% following its meetings in July, September and October 2019. The Fed then paused monetary policy easing for the remainder of the period and following the January meeting, noting continued weakness in business investment and exports and that inflation remained benign. More recently, in March the Fed reduced interest rates to a range of 0.0% to 0.25% due to a near-shutdown of the economy driven by the coronavirus. This was followed by other quantitative easing (QE) measures and government support to those parties most affected.

On 11 March, the World Health Organization (WHO) declared a global pandemic for COVID-19. Governments globally have been working to slow the spread of the disease, implementing strict travel restrictions, closing schools and universities, and encouraging social distancing. These events, and the uncertainty about how things will continue to develop, have led to significant market volatility and forced central banks to take unprecedented action. However, as of early April, this had done little to calm market fears. 

In economic news, US GDP grew at annualised rates of 3.1% in the first quarter and just over 2.0% in the final three quarters of the year as consumer spending continued to drive the US economy while corporate spending was hampered by trade policy negotiations globally. US payrolls expanded by an average of 171,000 per month during the financial year, and the unemployment rate declined 0.4 percentage points to 3.6%.

Average hourly earnings rose 3.1% year on year in January 2020, up from the 2.9% annualised rate in December 2019. This strength in employment is already being tested as many consumer-facing companies selling non-essential goods and services are being forced to close until health officials deem the threat of the virus to have subsided, and there is limited visibility as to when that might occur.

Performance

The North American Income Trust underperformed the Russell 1000 Value Index over the 12-month period ended 31 January 2020. The net asset value in sterling total return terms gained 6.2% versus the 14.6% from the Russell 1000 Value.  The portfolio gained 7.1% in sterling terms on a gross basis before expenses. The revenue account remained in good shape, building upon the record established in prior years.

The Trust's underperformance relative to the reference index for the review period was attributable mainly to stock selection in the materials, communication services and consumer discretionary sectors. The primary detractors from performance amid individual holdings included diversified media company Meredith Corp., specialty carbon products maker Orion Engineered Carbons, and luxury goods retailer Tapestry Inc.

Meredith Corp.'s stock price fell after management provided earnings guidance for its 2020 fiscal year that was well below expectations. The company has experienced generally faster-than-expected declines in advertising revenue and subscribers in its Time Inc. business, which the company acquired in January 2018. Orion Engineered Carbons saw year-on-year decreases in revenue and earnings over the12-month review period due to lower total volumes of carbon black, a fine carbon powder used as a colour pigment. In addition, early in the period, the company issued a tempered business outlook for its 2019 fiscal year. Tapestry reported generally positive results for its 2019 fiscal year. However, management issued a tempered business outlook for 2020.

In contrast, strong stock selection in the energy, industrials and healthcare sectors bolstered the Trust's performance for the review period. The largest individual stock contributors were holdings in defence contractor Lockheed Martin and pharmaceutical firm Bristol-Myers Squibb, along with the lack of exposure to integrated oil and gas company Exxon Mobil.

Lockheed Martin saw healthy revenue and earnings growth given strength in all four of its business segments: Aeronautics, Missiles & Fire Control, Rotary & Mission Systems, and Space. Shares of Bristol-Myers Squibb moved higher following its announcement that the company and its proposed merger partner, Celgene, reached an agreement to sell a psoriasis drug to Amgen for US$13.4 billion (£10.3 billion) that satisfied regulators competition concerns and at a price that exceeded the market's expectations. The merger was completed in November 2019.

Portfolio activity

The Trust's equity investments remained consistent with our high-quality, cash-generative stock selection process during the review period. We initiated equity positions in financial services company Citigroup; quick-service restaurant chain operator Restaurant Brands International; transportation and logistics company United Parcel Service; healthcare services provider UnitedHealth Group; asset manager Blackstone Group; semi-conductor manufacturer Maxim Integrated Products; biopharmaceutical firm Abbvie; and healthcare-focused REIT Omega Healthcare.

At the same time, we exited the Company's equity positions in both Corteva Agriscience and specialty chemicals producer DuPont de Nemours, which we had received from the spin-off from the former holding in DowDuPont; Canadian Western Bank; beverage and snack foods maker PepsiCo; luxury goods retailer Tapestry; Canadian telecommunications company Telus Corp.; pharmaceutical firm Pfizer; data storage and information management company Iron Mountain, diversified healthcare company Johnson & Johnson; and New Jersey-based commercial bank Provident Financial Services.

A sector analysis chart of the portfolio can be found on page 25 of the published 2020 Annual Report .

Within the Trust's corporate bond portfolio over the review period, we initiated positions in Qwest Capital Funding and NRG Energy. Conversely, we exited the positions in Exela Intermediate, Harland Clarke Holdings, Centene Corp., and Graham Holdings. We continue to work closely with Aberdeen Standard Investments' fixed income specialists to monitor credits and market conditions.

Dividend growth

The Trust's holdings continue to build upon an established track record of dividend growth. Molson Coors Beverage Co. boosted its quarterly payout by 39%, which management indicated is in line with its target of distributing 20%-25% of their earnings before interest, tax, depreciation and amortization (EBITDA) for the trailing 12 months. Semiconductor manufacturer Texas Instruments raised its dividend by nearly 17% which reflects the company's strong free cash flow generation and its commitment to return excess cash to stockholders.

Other company holdings announcing double-digit dividend increases during the review period included alternative asset management firm The Blackstone Group (24%); financial services companies Citigroup and BB&T Corp. (13% and 11%, respectively); commercial bank Regions Financial, biopharmaceutical firm Gilead Sciences (11% each); and freight railroad operator Union Pacific (10%).

The potential risks posed by the Covid-19 virus will likely result in the suspension or cutting of dividends of some holdings in the Trust. We continue to be careful stewards of the Trust and, since the end of the financial year, have adjusted the portfolio so that it is better placed to provide the proper balance of diversification, preservation of capital, growth and income in these extraordinary times.

Outlook

As expected, Fed monetary policy remained on hold in January, but the subsequent easing of its benchmark interest rate to near 0% in March was clearly unexpected at the start of this year as the coronavirus essentially led to an economic shutdown. The Fed has also embarked on additional QE as a means to prevent the monetary system from seizing up. The fourth-quarter 2019 earnings season in the US was largely "better than feared."  The pace and the severity of the reversal, driven by the market's reaction to the spread of COVID-19, is more marked than anything seen in developed markets for generations. The situation is developing so fast that it is hard for anyone to make any predictions about when a meaningful recovery will take hold.

We are undertaking a thorough review and stress test of the portfolio as the situation has developed and we have incrementally become more defensive and increased the weightings of the highest-quality companies in the portfolio. We have been raising cash selectively and reinvesting into new positions in more high-quality companies with sales visibility. We have initiated several positions in what we feel are best-in-class companies that had been on our watchlist due their relatively attractive valuations. We also have been extremely selective in writing options. Consequently, we are confident that we have further upgraded the overall quality of the Trust's portfolio.

Aberdeen Asset Management Inc.**

22 April 2020

**  on behalf of Aberdeen Standard Fund Managers Limited. 

Both companies are subsidiaries of Standard Life Aberdeen plc.

OVERVIEW OF STRATEGY

Introduction

The Company is an investment trust and its Ordinary shares are listed on the premium segment of the London Stock Exchange. The Company aims to attract long term private and institutional investors wanting to benefit from the income and growth prospects of North American companies. The Directors do not envisage any change in the Company's activity in the foreseeable future. 

 

Investment Objective and Purpose

To provide investors with above average dividend income and long term capital growth through active management of a portfolio consisting predominately of S&P 500 US equities.

 

Reference Index

The Board reviews performance against relevant factors, including the Russell Value Index 1000 (in sterling terms) and the S&P 500 Index (in sterling terms) as well as peer group comparisons. The aim is to provide investors with above average dividend income from predominantly US equities which means that investment performance can diverge, possibly quite materially in either direction, from these indices.

 

Investment Policy

The Company invests in a portfolio predominantly comprised of S&P 500 constituents. The Company may also invest in Canadian stocks and US mid and small capitalisation companies to provide for diversified sources of income. The Company may invest up to 20% of its gross assets in fixed income investments, which may include non-investment grade debt.  The Company's investment policy is flexible, enabling it to invest in all types of securities, including (but not limited to) equities, preference shares, debt, convertible securities, warrants, depositary receipts and other equity-related securities.

The maximum single investment will not exceed 10% of gross assets at the time of investment and it is expected that the portfolio will contain around 50 holdings (including fixed income investments), with an absolute minimum of 35 holdings.  The composition of the Company's portfolio is not restricted by minimum or maximum market capitalisation, sector or country weightings.

The Company may borrow up to an amount equal to 20% of its net assets.

Subject to the prior approval of the Board, the Company may also use derivative instruments for efficient portfolio management, hedging and investment purposes. The Company's aggregate exposure to such instruments for investment purposes (excluding collateral held in respect of any such derivatives) will not exceed 20% of the Company's net assets at the time of the relevant acquisition, trade or borrowing.

The Company does not generally intend to hedge its exposure to foreign currency. The Company will not acquire securities that are unlisted or unquoted at the time of investment (with the exception of securities which are about to be listed or traded on a stock exchange). However, the Company may continue to hold securities that cease to be listed or quoted, if appropriate.

The Company may participate in the underwriting or sub-underwriting of investments where appropriate to do so.

The Company may invest in open-ended collective investment schemes and closed-ended funds that invest in the North American region. However, the Company will not invest more than 10%, in aggregate, of the value of its gross assets in other listed investment companies (including listed investment trusts), provided that this restriction does not apply to investments in any such investment companies which themselves have stated investment policies to invest no more than 15% of their gross assets in other listed investment companies.

The Company will normally be substantially fully invested in accordance with its investment objective but, during periods in which changes in economic conditions or other factors so warrant, the Company may reduce its exposure to securities and increase its position in cash and money market instruments.

Management

The Board has appointed Aberdeen Standard Fund Managers Limited ("ASFML" or "Manager") to act as the alternative investment fund manager ("AIFM" or "Manager").

The Directors are responsible for determining the investment policy and the investment objective of the Company.  The Company's portfolio is managed on a day-to-day basis by Aberdeen Asset Management Inc. ("AAMI" or "Investment Manager") by way of a delegation agreement in place between ASFML and AAMI.

The Investment Manager invests in a range of North American companies, following a bottom-up investment process based on a disciplined evaluation of companies through direct visits by its fund managers. Stock selection is the major source of added value, concentrating on quality first, then price. Top-down investment factors are secondary in the Investment Manager's portfolio construction, with diversification rather than formal controls guiding stock and sector weights.

Key Performance Indicators ("KPIs")

The Board uses a number of financial performance measures to assess the Company's success in achieving its objective and determining the progress of the Company in pursuing its investment policy.  The main KPIs identified by the Board in relation to the Company which are considered at each Board meeting are as follows:

KPI	Description
Net asset value and share price performance against the reference indices	The Board reviews the Company's NAV and share price total return performance against the reference indices, the Russell 1000 Value and the S&P 500 (both in sterling terms).  Performance graphs and tables are provided on pages 16 to 17 of the published 2020 Annual Report . The Board also reviews the performance of the Company against its peer group of investment trusts with similar investment objectives.
Revenue return and dividend yield	The Board monitors the Company's net revenue return and dividend yield through the receipt of detailed income forecasts. A graph showing the dividends and yields over 5 years is provided on page 17 of the published 2020 Annual Report .
Discount/premium to net asset value	The discount/premium relative to the net asset value per share is closely monitored by the Board. A graph showing the share price discount/premium relative to the net asset value is shown on page 16 of the published 2020 Annual Report .
Ongoing charges	The Company's ongoing charges ratio (OCR) is provided above.  The Board reviews the OCR against its peer group of investment trusts with similar investment objectives.

Principal Risks and Uncertainties

There are a number of risks which, if realised, could have a material adverse effect on the Company and its business model, financial position, performance and prospects. The Board has in place a robust process to identify, assess and monitor the principal risks and uncertainties facing the Company and to identify and evaluate newly emerging risks.  This process is supported by the adoption of a risk matrix which identifies the key risks for the Company, including emerging risks, and covers strategy, investment management, operations, shareholders, regulatory and financial obligations and third party service providers.  This risk matrix is reviewed on a regular basis.  A summary of the principal risks and uncertainties facing the Company, which have been identified by the Board, is set out in the table below, together with a description of the mitigating actions it has taken.

The principal risks associated with an investment in the Company's shares are published monthly in the Company's factsheet or they can be found in the pre-investment disclosure document ("PIDD") published by the Manager, both of which are on the Company's website.

Description	Mitigating Action
Market Risk The risks facing the Company relate to the Company's investment activities and include market risk (comprising interest rate risk and other price risk), liquidity risk and credit risk. The Company is exposed to the effect of variations in share prices and movements in the US$/£ exchange rate due to the nature of its business.  A fall in the market value of its portfolio would have an adverse effect on shareholders' funds. Any debt securities that may be held by the Company will be affected by general changes in interest rates that will in turn result in increases or decreases in the market value of those instruments.	The day-to-day management of the Company's assets has been delegated to the Manager under investment guidelines determined by the Board. The Board monitors these guidelines and receives regular reports from the Manager which include performance reporting.  The Board regularly reviews these guidelines to ensure they remain appropriate. Details on financial risks, including market price, liquidity and foreign currency risks and the controls in place to manage these risks are provided in note 18 to the financial statements.
Pandemic or Systemic shock The Company is exposed to stockmarket volatility or illiquidity as a result of major market shock due to a national or global crisis such as a pandemic, war, natural disaster or similar.  The resulting impact of disruption on the operations of the Company and its service providers, temporarily or for prolonged duration. The current global coronavirus pandemic, and its consequences both in the short term and longer term, is very relevant to us at the moment.	The Manager assesses and reviews the investment risks arising from a market shock on the companies in the portfolio such as employee absence, reduced demand, reduced turnover, balance sheet strength and supply chain breakdowns and takes the necessary investment decisions. The Manager has extensive business continuity procedures and contingency arrangements to ensure that they are able to continue to service their clients, including investment trusts.  The Board monitors these arrangements via regular updates from the Manager and third parties.
Income and Dividend Risk The ability of the Company to pay dividends and any future dividend growth will depend primarily on the level of income received from its investments (which may be affected by currency movements, exchange controls or withholding taxes imposed by jurisdictions in which the Company invests) and the timing of receipt of such income by the Company. Accordingly, there is no guarantee that the Company's dividend income objective will continue to be met and the amount of the dividends paid to Ordinary shareholders may fluctuate and may go down as well as up.	The Board monitors this risk through the regular review of detailed revenue forecasts and considers the level of income at each meeting.
Operational Th e Company is reliant on services provided by third parties (in particular those of the Manager). Failure by any service provider to carry out its contractual obligations could expose the Company to loss or damage and have a detrimental impact on the Company operations.	Written agreements are in place defining the roles and responsibilities of all third party service providers.  The Board reviews reports on the operation and efficacy of the Manager's risk management and control systems, including those relating to cyber crime, and its internal audit and compliance functions. The Manager monitors the control environment and quality of services provided by other third party service providers through due diligence reviews, service level agreements, regular meetings and key performance indicators.  The Board review reports on the Manager's monitoring of third party service providers on a periodic basis.
Regulatory Risk Changes to, or failure to comply with, relevant regulations (including the Companies Act, The Financial Services and Markets Act, The Alternative Investment Fund Managers Directive, accounting standards, investment trust regulations, the Listing Rules, Disclosure Guidance and Transparency Rules and Prospectus Rules) could result in fines, loss of reputation, reduced demand for the Company's shares and potentially loss of an advantageous tax regime.	The Directors have an awareness of the more important regulations and are provided with information on changes by the Association of Investment Companies, as well as the Manager. The Manager provides six-monthly reports to the Audit Committee on its internal control systems, which monitors compliance with relevant regulations.  In addition, the Board, when necessary will use the services of its professional advisers to monitor compliance with regulatory requirements. The Manager and depositary provide reports to the Audit Committee on their operations to ensure that the regulations under the AIFM are complied with. The Manager has implemented procedures to ensure that the provisions of the Corporation Tax Act 2010 are not breached and the results are reported to the Board.
Gearing Risk Gearing is used to leverage the Company's portfolio in order to enhance returns where and to the extent this is considered appropriate to do so. Gearing has the effect of accentuating market falls and market gains. The ability of the Company to meet its financial obligations, or an increase in the level of gearing, could result in the Company becoming over-geared or unable to take advantage of potential opportunities and result in a loss of value to the Company's shares.	In order to manage the level of gearing, the Board has set a maximum gearing ratio of 20% of net assets.  The Board receives regular updates from the Manager on the actual gearing levels the Company has reached together with the assets and liabilities of the Company, and reviews these as well as compliance with the principal loan covenants at each Board meeting.  As at 31 January 2020 the Company had £19.0 million of borrowings and net gearing was nil at the year end.
Discount volatility Investment company shares can trade at discounts to their underlying net asset values, although they can also trade at premia.	In order to seek to minimise the impact of share price volatility, where the shares are trading at a significant discount, the Company has operated a share buyback programme for a number of years. The Board monitors the discount level of the Company's shares and will exercise discretion to undertake shares buybacks.
Derivatives The Company uses derivatives primarily to enhance the income generation of the Company.	The risks associated with derivatives contracts are managed within guidelines set by the Board.

In addition to these risks, the Company is exposed to the effects of geopolitical instability or change which could have an adverse impact on stockmarkets and the Company's portfolio.  The Board is cognisant of the risks arising from the outbreak and worsening spread of the Coronavirus around the world, including economic and stockmarket instability and the impact on the operations of the third party suppliers, including the Manager. The Manager has undertaken an assessment of the Company's portfolio and is in close communication with the underlying investee companies in order to navigate and guide the Company through the current challenges . The services from third parties have continued to be supplied effectively and the Board will continue to monitor arrangements through regular updates from the Manager.

The potential impact of Brexit remains an economic risk for the Company, principally in relation to the potential impact of Brexit on currency volatility and the Manager's operations.  Aberdeen Standard Investments has a significant Brexit program in place aimed at ensuring that they can continue to satisfy their clients' investment needs post Brexit.

In all other respects, the Company's principal risks and uncertainties have not changed materially since the year end.

Promoting the Success of the Company

The Board is required to report on how it has discharged its duties and responsibilities under section 172 of the Companies Act 2006 (the "s172 Statement").  Under section 172, the Directors have a duty to promote the success of the Company for the benefit of its members as a whole, taking into account the likely long term consequences of decisions, the need to foster relationships with the Company's stakeholders and the impact of the Company's operations on the environment.

The Company consists of five Directors and has no employees or customers in the traditional sense. As the Company has no employees, the culture of the Company is embodied in the Board of Directors.  The Board seeks to promote a culture of strong governance and to challenge, in a constructive and respectful way, the Company's advisers and other stakeholders.

The Board's principal concern has been, and continues to be, the interests of the Company's shareholders and potential investors. The Manager undertakes an annual programme of meetings with the largest shareholders and investors reports back to the Board on issues raised at these meetings.  The Investment Manager, who is based in the Manager's Philadelphia office, will attend such meetings in person. The Board encourage all shareholders to attend and participate in the Company's AGM in normal circumstances and can contact the Directors via the Company Secretary.  Shareholders and investors can obtain up-to-date information on the Company through its website and the Manager's information services and have direct access to the Company through the Manager's customer services team or the Company Secretary. 

As an investment trust, a number of the Company's functions are outsourced to third parties.  The key outsourced function is the provision of investment management services to the Manager and other stakeholders support the Company by providing secretarial, administration, depositary, custodial, banking and audit services.

The Board undertakes a robust evaluation of the Manager, including investment performance and responsible ownership, to ensure that the Company's objective of providing sustainable income and capital growth for its investors is met.  The Board typically visits the Manager's offices in the US on a bi-annual basis.  This enables the Board to conduct due diligence of the fund management and research teams. The portfolio activities undertaken by the Manager on behalf of the Company can be found in the Manager's Review and details of the Board's relationship with the Manager and other third party providers, including oversight, is provided in the Statement of Corporate Governance. 

During the year, the Board focused on the performance of the Manager in achieving the Company's investment objective within an appropriate risk framework.  In the last year, the key decisions which affected stakeholders were: the declaration of four quarterly dividends which in total represented an increase of 11.8% versus the previous year; the decision by the Management Engagement committee to continue with the appointment of the Manager and the reappointment of the Company's service providers; the sub-division of the Company's share capital to improve the marketability of the Company's shares; and the issue of new ordinary shares to meet market demand. 

The Board is supportive of the Manager's philosophy that Environmental, Social and Governance (ESG) factors are fundamental components to evaluate when investing.  ESG considerations are embedded in the investment process undertaken by the Manager and the Manager dedicates a significant amount of time and resource on focusing on the ESG characteristics of the companies in which they invest.  Further details of how the Manager have sought to address ESG matters across the portfolio are disclosed in the Statement of Corporate Governance. 

The Manager is also a tier 1 signatory of the UK Stewardship Code which aims to enhance the quality of engagement by investors with investee companies in order to improve their socially responsible performance and the long term investment return to shareholders.

The Company is a long term investor and the Board has in place the necessary procedures and processes to continue to deliver the Company's investment proposition and to promote the long term success of the Company for the benefit of its shareholders and stakeholders. 

 

Duration

The Company does not have a fixed winding-up date, but shareholders are given the opportunity to vote on the continuation of the Company every three years at the Annual General Meeting.  The next continuation vote will be at the AGM in June 2021.

Board Diversity

The Board recognises the importance of having a range of skilled, experienced individuals with the appropriate knowledge in order to allow the Board to fulfil its obligations.  At 31 January 2020 the Board consisted of two men and three women. 

Environmental, Social and Human Rights Issues

The Company has no employees as the Board has delegated day to day management and administrative functions to Aberdeen Standard Fund Managers Limited. There are therefore no disclosures to be made in respect of employees. The Company's socially responsible investment policy is outlined below.

Socially Responsible Investment Policy

The Board acknowledges that there are risks associated with investment in companies which fail to conduct business in a socially responsible manner and has noted the Manager's policy on social responsibility. The Investment Manager considers social, environmental and ethical factors which may affect the performance or value of the Company's investments as part of its investment process.  In particular, the Investment Manager encourages companies in which investments are made to adhere to best practice in the area of corporate governance. It believes that this can best be achieved by entering into a dialogue with company management to encourage them, where necessary, to improve their policies in this area. The Company's ultimate objective, however, is to deliver long term growth on its investments for its shareholders. Accordingly, whilst the Investment Manager will seek to favour companies which pursue best practice in the above areas, this must not be to the detriment of the return on the investment portfolio.

Global Greenhouse Gas Emissions

The Company has no greenhouse gas emissions to report from the operations of its business, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.

Viability Statement

The Company does not have a formal fixed period strategic plan but the Board does formally consider risks and strategy on at least an annual basis. The Board considers the Company to be a long term investment vehicle but for the purposes of this Viability Statement has decided that a period of three years is an appropriate period over which to report. The Board considers that this period reflects a balance between looking out over a long term horizon and the inherent uncertainties of looking out further than three years.

In assessing the viability of the Company over the review period the Directors have focused upon the following factors:

-  The ongoing relevance of the Company's investment objective in the current environment and recent feedback from our brokers and shareholders, where available;

-  The Directors noted that there is a continuation vote due at the AGM in 2021 and confirm that it is their current intention to recommend approval to shareholders that the Company should continue in existence;

-  The principal risks detailed in the strategic report above and the steps taken to mitigate these risks;  in particular, we have considered the operational ability of the Company to continue in the current environment which has been impacted by the global COVID 19 pandemic and we have considered the ability of our key third party suppliers to continue to provide essential services to us;

-  The level of revenue surplus generated by the Company and its ability to achieve the dividend policy. The Company has continued to deliver dividend growth whilst building up revenue reserves (see above) which can be used to top up the dividend in tougher times:

-  The Company is invested in readily realisable listed securities; recent stress testing has confirmed this, despite the more uncertain and volatile economic environment;

-  The level of gearing is closely monitored; and

-  The availability of loan facilities. The Company has a loan facility of $75 million in place until December 2020; covenants are actively monitored and there is adequate headroom in place. Initial discussions with the bank have commenced with a view to renewing the facility.

Accordingly, taking into account the Company's current position and the potential impact of its principal risks and uncertainties, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for a period of three years from the date of this Report. In making this assessment, the Board has considered that matters such as significant economic or stockmarket volatility (including those as a result of a greater than anticipated economic impact of the spread of the coronavirus), a substantial reduction in the liquidity of the portfolio, or changes in investor sentiment could have an impact on its assessment of the Company's prospects and viability in the future.

James Ferguson,

Chairman

22 April 2020

PORTFOLIO INVESTMENTS

Ten Largest Investments

As at 31 January 2020

Citigroup		Bristol-Myers Squib
Citigroup Inc. is a diversified financial services holding company that provides a broad range of financial services to consumer and corporate customers.		Bristol-Myers Squibb Company is a global biopharmaceutical company. The Company develops, licenses, manufactures, markets, and sells pharmaceutical and nutritional products.
Philip Morris		Chevron
Philip Morris International Inc., through its subsidiaries, manufactures and sells cigarettes and other tobacco products.		Chevron is an integrated energy company. The company has operations drilling for crude oil and natural gas as well as refining and selling it.
Verizon Communication		Gaming & Leisure Properties
Verizon Communications Inc., through its subsidiaries, provides communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide.		Gaming and Leisure Properties, Inc. owns and leases casinos and other entertainment facilities.
Coca-Cola		CME Group
The Coca-Cola Company manufactures, markets, and distributes soft drink concentrates and syrups. The Company also distributes and markets juice and juice-drink products.		CME Group Inc. operates a derivatives exchange that trades futures contracts and options on futures, interest rates, stock indexes, foreign exchange and commodities.
Lockheed Martin		TC Energy
Lockheed Martin Corp. is a global security company that primarily researches, designs, manufactures and integrates advanced technology and defense products and services.		TC Energy Corp is the parent company of TransCanada PipeLines Limited. The Company is focused on natural gas transmission and power services.

Investment Portfolio
As at 31 January 2020
		Valuation	Total	Valuation
		2020	assets	2019
Company	Industry classification	£'000	%	£'000
Citigroup	Banks	22,579	5.2	-
Bristol-Myers Squib	Pharmaceuticals	19,102	4.4	9,946
Philip Morris	Tobacco	18,821	4.4	13,997
Chevron	Oil, Gas & Consumable Fuels	16,256	3.7	21,789
Verizon Communication	Diversified Telecommunication Services	15,331	3.5	12,557
Gaming & Leisure Properties	Equity Real Estate Investment Trust (REITs)	14,339	3.3	-
Coca-Cola	Beverages	13,291	3.1	9,147
CME Group	Capital Markets	13,176	3.0	11,086
Lockheed Martin	Aerospace & Defense	12,991	3.0	8,809
TC Energy	Oil, Gas & Consumable Fuels	12,488	2.9	-
Ten largest investments		158,374	36.5
Abbvie	Pharmaceuticals	12,293	2.8	-
Cisco Systems	Communications Equipment	12,206	2.8	17,975
Gilead Sciences	Biotechnology	11,986	2.8	9,580
Regions Financial	Banks	11,812	2.7	12,685
Truist Financial Corporation	Banks	11,736	2.7	-
Umpqua	Banks	11,538	2.7	11,424
Huntington Bancshares	Banks	11,324	2.6	10,065
Molson Coors Brewing	Beverages	10,541	2.4	10,127
Hanesbrands	Textiles, Apparel & Luxury Goods	10,438	2.4	-
Restaurant Brands International	Hotels, Restaurants & Leisure	10,414	2.4	-
Twenty largest investments		272,662	62.8
Schlumberger	Energy Equipment & Services	10,169	2.3	10,082
Omega Healthcare Investors	Equity Real Estate Investment Trust (REITs)	9,547	2.2	-
United Parcel Service	Air Freight & Logistics	9,424	2.2	-
Royal Bank of Canada	Banks	8,998	2.1	8,684
American International	Insurance	8,769	2.0	7,723
Medtronic	Health Care Equipment & Supplies	8,757	2.0	6,719
Nutrien	Chemicals	8,096	1.9	9,848
Intl Paper Co	Containers & Packaging	7,723	1.8	5,409
Tiffany & Co	Specialty Retail	7,318	1.7	6,745
Genuine Parts	Distributors	7,098	1.6	11,382
Thirty largest investments		358,561	82.6
Dow	Chemicals	6,990	1.6	-
Nucor	Metals and Mining	5,404	1.3	8,380
UnitedHealth	Health Care Providers & Services	5,167	1.2	-
Meredith	Media	5,057	1.2	8,251
Blackstone	Capital Markets	4,633	1.1	-
Maxim Integrated Products	Semiconductors & Semiconductor Equipment	4,561	1.1	-
Texas Instruments	Semiconductors & Semiconductor Equipment	4,119	1.0	11,481
Union Pacific	Road and Rail	4,083	0.9	10,883
Orion Engineered Carbons	Chemicals	3,573	0.8	8,390
HCA 5.875% 15/02/26	Healthcare Services	1,602	0.4	1,475
Forty largest investments		403,750	93.2
CCO Holdings Capital 5.5% 01/05/26	Media	1,581	0.4	1,513
Cheniere Corpus Christi 5.875%  31/03/25	Oil, Gas & Consumable Fuels	1,279	0.3	1,192
Parsley Energy Finance 5.375% 15/01/25	Exploration & Production	1,174	0.3	1,138
Lennar 4.5% 30/04/24	Construction	1,055	0.2	973
Qwest Cap Funding 7.75% 15/02/31	Telecommunications	898	0.2	-
Diamond 1 Fin Diamond 2 6.02% 15/06/26	Technology	678	0.2	776
NRG Energy 6.25% 01/05/24	Electric	384	0.1	908
Total investments		410,799	94.9
Net current assets{A}		22,113	5.1
Total assets{A}		432,912	100.0
{A} Excluding bank loans of £18,965,000.

Geographical Analysis

As at 31 January 2020

	Equity	Fixed interest	Total
Country	%	%	%
Canada	9.7	-	9.7
USA	88.2	2.1	90.3
	_______	_______	_______
	97.9	2.1	100.0
	_______	_______	_______

GOING CONCERN

The Company's assets comprise mainly readily realisable securities which can be sold to meet funding commitments if necessary. The Board has reviewed the results of stress testing prepared by the Manager in relation to the ability of the assets to be realised in the current market environment. The Company has a credit facility which is available until December 2020. It is the Board's intention to renew such a facility, as this supports the gearing of the Company, and initial discussions with the bank have been commenced.

The Board considers that the Company has adequate financial resources to continue in operational existence for the foreseeable future. Accordingly, the Directors believe that it is appropriate to prepare the financial statements on a going concern basis.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and financial statements in accordance with applicable law and regulations. 

Company law requires the Directors to prepare financial statements for each financial year.  Under that law they are required to prepare the financial statements in accordance with UK accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. 

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 and of its profit or loss for that period.  In preparing these financial statements, the Directors are required to: 

-  select suitable accounting policies and then apply them consistently; 

-  make judgements and estimates that are reasonable and prudent; 

-  state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; 

-  assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and 

-  use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. 

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 its financial statements comply with the Companies Act 2006.  They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. 

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations. 

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website.  Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

Responsibility statement of the Directors in respect of the annual financial report 

We confirm that to the best of our knowledge: 

-  the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and the Strategic report includes a fair review of the development and performance of the business and the position of the issuer, together with a description of the principal risks and uncertainties that they face. 

We consider the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

For and on behalf of The North American Income Trust plc

James Ferguson

Chairman
22 April 2020

FINANCIAL STATEMENTS

Statement of Comprehensive Income

		Year ended 31 January 2020			Year ended 31 January 2019
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Net gains on investments	11	-	10,708	10,708	-	7,901	7,901
Net currency losses	3	-	(616)	(616)	-	(1,603)	(1,603)
Income	4	20,957	225	21,182	19,033	-	19,033
Investment management fee	5	(918)	(2,142)	(3,060)	(875)	(2,038)	(2,913)
Administrative expenses	7	(757)	-	(757)	(852)	-	(852)
		______	______	_____	______	______	_____
Return before finance costs and taxation		19,282	8,175	27,457	17,306	4,260	21,566
Finance costs	6	(314)	(732)	(1,046)	(345)	(806)	(1,151)
		______	______	_____	______	______	_____
Return before taxation		18,968	7,443	26,411	16,961	3,454	20,415
Taxation	8	(2,703)	560	(2,143)	(2,692)	657	(2,035)
		______	______	_____	______	______	_____
Return after taxation		16,265	8,003	24,268	14,269	4,111	18,380
		______	______	_____	______	______	_____
Return per share (pence){A}	10	11.42	5.62	17.04	10.04	2.89	12.93
		______	______	_____	______	______	_____
{A}   Comparative figures for the year ended 31 January 2019 have been restated due to the sub-division of each existing Ordinary share of 25p into five Ordinary shares of 5p each on 10 June 2019.
The total column of this statement represents the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
The accompanying notes are an integral part of the financial statements.
Fourth interim dividend. The Board will be declaring a fourth interim dividend of 4.30p per share (£6,161,000), which will be payable on 5 June 2020, making a total dividend of 9.50p per share (£13,578,000) for the year to 31 January 2020.
For the year ended 31 January 2019, a final dividend was 3.60p per share was paid (£5,117,000) making a total dividend of 8.50p per share (£12,082,000).

Statement of Financial Position

		As at	As at
		31 January 2020	31 January 2019
	Notes	£'000	£'000
Non-current assets
Investments at fair value through profit or loss	11	410,800	421,469
		______	______
Current assets
Debtors and prepayments	12	1,804	2,772
Cash and short term deposits		21,898	18,593
		______	______
		23,702	21,365
		______	______
Creditors: amounts falling due within one year
Other creditors	13	(1,589)	(6,167)
Bank loan	14	(18,965)	(38,010)
		______	______
		(20,554)	(44,177)
		______	______
Net current assets/(liabilities)		3,148	(22,812)
		______	______
Net assets		413,948	398,657
		______	______
Capital and reserves
Called-up share capital	15	7,164	7,108
Share premium account		51,806	48,467
Capital redemption reserve		15,452	15,452
Capital reserve		318,923	310,920
Revenue reserve		20,603	16,710
		______	______
Equity shareholders' funds		413,948	398,657
		______	______
Net asset value per share (pence)	16	288.91	280.44
		______	______

Statement of Changes in Equity

For the year ended 31 January 2020
		Share	Capital
	Share	premium	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 January 2019	7,108	48,467	15,452	310,920	16,710	398,657
Issue of Ordinary shares	56	3,339	-	-	-	3,395
Return after taxation	-	-	-	8,003	16,265	24,268
Dividends paid (see note 9)	-	-	-	-	(12,372)	(12,372)
	_____	______	______	______	______	______
Balance at 31 January 2020	7,164	51,806	15,452	318,923	20,603	413,948
	_____	______	______	______	______	______
For the year ended 31 January 2019
		Share	Capital
	Share	premium	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 January 2018	7,108	48,467	15,452	306,809	13,813	391,649
Return after taxation	-	-	-	4,111	14,269	18,380
Dividends paid (see note 9)	-	-	-	-	(11,372)	(11,372)
	_____	______	______	______	______	______
Balance at 31 January 2019	7,108	48,467	15,452	310,920	16,710	398,657
	_____	______	______	______	______	______
The revenue reserve represents the amount of the Company's reserves distributable by way of dividend.
The accompanying notes are an integral part of the financial statements.

Statement of Cashflows

		Year ended	Year ended
		31 January 2020	31 January 2019
	Notes	£'000	£'000
Operating activities
Net return before taxation		26,411	20,415
Adjustments for:
Net gains on investments	11	(11,035)	(7,901)
Net losses on foreign exchange transactions		616	1,603
Increase in dividend income receivable	12	(174)	(214)
Decrease in fixed interest income receivable	12	41	11
Increase/(decrease) in derivatives	13	550	(443)
Increase in other debtors	12	(15)	(7)
Increase/(decrease) in other creditors	13	38	(65)
Tax on overseas income		(2,046)	(2,132)
Amortisation of fixed income book cost	11	9	26
		_______	______
Net cash inflow from operating activities		14,395	11,293
Investing activities
Purchases of investments		(170,263)	(164,763)
Sales of investments		187,811	159,036
		_______	______
Net cash flow from investing activities		17,548	(5,727)
Financing activities
Equity dividends paid	9	(12,372)	(11,372)
Issue of Ordinary shares		3,395	-
(Repayment)/drawdown of loan		(18,600)	3,510
		_______	______
Net cash used in financing activities		(27,577)	(7,862)
		_______	______
Increase/(decrease) in cash and cash equivalents		4,366	(2,296)
		_______	______
Analysis of changes in cash and cash equivalents during the year
Opening balance		18,593	19,636
Effect of exchange rate fluctuation on cash held	3	(1,061)	1,253
Increase/(decrease) in cash as above		4,366	(2,296)
		_______	______
Closing balance		21,898	18,593
		_______	______

Notes to the Financial Statements

For the year ended 31 January 2020

1.	Principal activity. The Company is a closed-end investment company, registered in Scotland No. SC005218, with its Ordinary shares being listed on the London Stock Exchange.

2.	Accounting policies. A summary of the principal accounting policies, all of which, unless otherwise stated, have been consistently applied throughout the year and the preceding year is set out below.
	(a)	Basis of preparation and going concern . The financial statements have been prepared in accordance with Financial Reporting Standard 102 and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in October 2019. The financial statements are prepared in sterling which is the functional currency of the Company and rounded to the nearest £'000. They have also been prepared on a going concern basis and on the assumption that approval as an investment trust will continue to be granted.
		The Directors have considered a detailed assessment of the Company's ability to meet its liabilities as they fall due, including considering a significant reduction in the liquidity, and, fair value, of the portfolio of investments would have on existing loan covenants due to the current economic conditions caused by the outbreak of the COVID-19 pandemic. In light of this analysis, the Company's cash position, the level of revenue reserves, the liquidity of the portfolio of investments and modest gearing level, the Directors are satisfied that at the time of approving the financial statements, there is a reasonable expectation that the Company have adequate resources to continue in operational existence for the foreseeable future (a period of at least twelve months after the date the financial statements are signed). Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. Further detail is included in the Directors' Report (unaudited) on page 30 of the published 2020 Annual Report.
	(b)	Income. Income from investments, including taxes deducted at source, is included in revenue by reference to the date on which the investment is quoted ex dividend. Special dividends are credited to capital or revenue, according to the circumstances. Fixed returns on debt securities are recognised on a time apportionment basis so as to reflect the effective yield on the debt securities.
		Interest receivable from cash and short-term deposits and interest payable is accrued to the end of the year.
	(c)	Expenses. All expenses are accounted for on an accruals basis and are charged to the Statement of Comprehensive Income. Expenses are charged against revenue except as follows:
		-   transaction costs on the acquisition or disposal of investments are charged to capital in the Statement of Comprehensive Income;
		-   expenses are charged to capital where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect, the investment management fee is allocated 30% to revenue and 70% to capital to reflect the Company's investment policy and prospective income and capital growth.
	(d)	Taxation. The tax 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 expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible (see note 8 for a more detailed explanation). The Company has no liability for current tax.
		Deferred taxation is provided on all timing differences, that have originated but not reversed at the Statement of Financial Position date, where transactions or events that result in an obligation to pay more or a right to pay less tax in future have occurred at the Statement of Financial Position date, measured on an undiscounted basis and based on enacted tax rates. 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 underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the financial statements which are capable of reversal in one or more subsequent periods.
		Owing to the Company's status as an investment trust company, and the intention to continue to meet the conditions required to obtain approval for the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.
	(e)	Investments. All purchases and sales of investments are recognised on the trade date, being the date the Company commits to purchase or sell the investment. Investments are initially recognised and subsequently re-measured at fair value in the Statement of Comprehensive Income.
	(f)	Borrowings. Monies borrowed to finance the investment objectives of the Company are stated at the amount of the net proceeds immediately after issue plus cumulative finance costs less cumulative payments made in respect of the debt. The finance costs of such borrowings are accounted for on an accruals basis using the effective interest rate method and are charged 30% to revenue and 70% to capital to reflect the Company's investment policy and prospective income and capital growth.
	(g)	Dividends payable. Interim and final dividends are recognised in the period in which they are paid.
	(h)	Nature and purpose of reserves
		Share premium account. The balance classified as share premium includes the premium above nominal value from the proceeds on issue of any equity capital comprising Ordinary shares of 5p.
		Capital redemption reserve. The capital redemption reserve is used to record the amount equivalent to the nominal value of any of the Company's own shares purchased and cancelled in order to maintain the Company's capital.
		Capital reserve. This reserve reflects any gains or losses on realisation of investments in the period along with any changes in fair values of investments held that have been recognised in the Statement of Comprehensive Income. The costs of share buybacks are also deducted from this reserve.
		Revenue reserve. This reserve reflects all income and costs which are recognised in the revenue column of the Statement of Comprehensive Income. The revenue reserve represents the amount of the Company's reserves distributable by way of dividend.
	(i)	Foreign currency. Assets and liabilities in foreign currencies are translated at the rates of exchange ruling on the Statement of Financial Position date. Transactions involving foreign currencies are converted at the rate ruling on the date of the transaction. Gains and losses on the realisation of foreign currencies are recognised in the Statement of Comprehensive Income and are then transferred to the capital reserve.
	(j)	Traded options. The Company may enter into certain derivative contracts (e.g. options). Option contracts are accounted for as separate derivative contracts and are therefore shown in other assets or other liabilities at their fair value. The initial fair value is based on the initial premium which is received/paid on inception. The premium is recognised in the revenue column over the life of the contract period. Losses on any movement in the fair value of open contracts at the year end realised  and on the exercise of the contracts are recorded in the capital column of the Statement of Comprehensive Income.
		In addition, the Company may enter into derivative contracts to manage market risk and gains or losses arising on such contracts are recorded in the capital column of the Statement of Comprehensive Income.
	(k)	Cash and cash equivalents. Cash and cash equivalents comprise cash at bank.
	(l)	Significant estimates and judgements. Disclosure is required of judgements and estimates made by management in applying the accounting policies that have a significant effect on the financial statements. There are no significant estimates or judgements which impact these financial statements.

3.	Net currency losses
		2020	2019
		£'000	£'000
	(Losses)/gains on cash held	(1,061)	1,253
	Gains/(losses) on bank loans	445	(2,856)
		_______	______
		(616)	(1,603)
		_______	______

4.	Income
		2020	2019
		£'000	£'000
	Income from overseas listed investments
	Dividend income	14,974	13,374
	REIT income	1,286	895
	Interest income from investments	566	619
		_______	______
		16,826	14,888
		_______	______
	Other income from investment activity
	Traded option premiums	4,054	3,909
	Deposit interest	302	236
		_______	______
		4,356	4,145
		_______	______
	Total income	21,182	19,033
		_______	______
	During the year, the Company was entitled to premiums totalling £4,054,000 (2019 - £3,909,000) in exchange for entering into option contracts. At the year end there were 9 (2019 - 8) open positions, valued at a liability of £668,000 (2019 - liability of £118,000) as disclosed in note 13. Losses realised on the exercise of derivative transactions are disclosed in note 11.

5.	Investment management fee
		2020			2019
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	Investment management fee	918	2,142	3,060	875	2,038	2,913
		_______	______	_____	______	______	_____
	Management services are provided by Aberdeen Standard Fund Managers Limited ("ASFML"). With effect from 1 February 2018, the annual management fee has been charged at 0.75% of net assets up to £350 million, 0.6% between £350 million and £500 million, and 0.5% over £500 million, payable quarterly. Previously, the fee was calculated at an annual rate of 0.8% of gross assets after deducting current liabilities and borrowings and excluding commonly managed funds, payable quarterly. Net assets equals gross assets after deducting current liabilities and borrowings and excluding commonly managed funds. The balance due to ASFML at the year end was £758,000 (2019 - £735,000). The fee is allocated 30% to revenue and 70% to capital (2019 - same).
	The management agreement between the Company and the Manager is terminable by either party on three months' notice. In the event of a resolution being passed at the AGM to wind up the Company the Manager shall be entitled to three months' notice from the date the resolution was passed. In the event of termination on not less than the agreed notice period, compensation is payable in lieu of the unexpired notice period.

6.	Finance costs
		2020			2019
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	Interest on bank loans	314	732	1,046	345	806	1,151
		_______	______	______	______	_______	______

7.	Administrative expenses
		2020	2019
		£'000	£'000
	Directors' fees	123	113
	Registrar's fees	53	60
	Custody and bank charges	25	26
	Secretarial fees	115	112
	Auditor's remuneration (excluding irrecoverable VAT):
	- fees payable to the Company's auditor for the audit of the annual accounts	18	17
	Promotional activities	208	211
	Printing, postage and stationery	28	26
	Fees, subscriptions and publications	87	47
	Professional fees	31	127
	Depositary charges	51	50
	Other expenses	18	63
		_______	______
		757	852
		_______	______
	Secretarial and administration services are provided by Aberdeen Standard Fund Managers Limited ("ASFML") under an agreement which is terminable on three months' notice. The fee is payable monthly in advance and based on an index-linked annual amount of £115,000 (2019 - £112,000). The balance due at the year end was £38,000 (2019 - £28,000).
	During the year £208,000 (2019 - £211,000) was paid to ASFML in respect of promotional activities for the Company and the balance due at the year end was £18,000 (2019 - £18,000).

8.	Taxation
			2020			2019
			Revenue	Capital	Total	Revenue	Capital		Total
			£'000	£'000	£'000	£'000	£'000		£'000
	(a)	Analysis of charge for the year
		UK corporation tax	731	(618)	113	657	(657)		-
		Double tax relief	(136)	24	(112)	-	-		-
		Overseas tax suffered	2,105	34	2,139	2,035	-		2,035
		Deferred tax	26	-	26	-	-		-
		Double tax relief on deferred tax items	(23)	-	(23)	-	-		-
			_______	______	______	______	______		______
		Total tax charge for the year	2,703	(560)	2,143	2,692	(657)		2,035
			_______	______	______	______	______		______
	(b)	Factors affecting the tax charge for the year. The UK corporation tax rate is 19% (2019 - same). The tax charge for the year is lower than the corporation tax rate. The differences are explained in the following table.
			2020			2019
			Revenue	Capital	Total	Revenue		Capital		Total
			£'000	£'000	£'000	£'000		£'000		£'000
		Net profit before taxation	18,968	7,443	26,411	16,961		3,454		20,415
			_______	______	______	______		______		______
		Corporation tax at 19% (2019 - 19%)	3,604	1,414	5,018	3,223		656		3,879
		Effects of:
		Non-taxable overseas dividends	(2,845)	(43)	(2,888)	(2,541)		-		(2,541)
		Irrecoverable overseas withholding tax	2,105	34	2,139	2,035		-		2,035
		Other non-taxable income	-	-	-	-		(47)		(47)
		Expenses not deductible for tax purposes	1	-	1	1		-		1
		Double tax relief	(159)	24	(135)	-		-		-
		Tax rate differentials	(3)	-	(3)	-		-		-
		Utilisation of brought forward expenses	-	(71)	(71)	-		-		-
		Tax effect of expenses double taxation relief	-	-	-	(26)		-		(26)
		Excess management expenses	-	-	-	-		(116)		(116)
		Non-taxable gains on investments	-	(2,035)	(2,035)	-		(1,454)		(1,454)
		Non-taxable currency gains	-	117	117	-		304		304
			_______	______	______	______		______		______
		Total tax charge	2,703	(560)	2,143	2,692		(657)		2,035
			_______	______	______	______		______		______
	(c)	Provision for deferred taxation
			2020			2019
			Revenue	Capital	Total	Revenue		Capital		Total
			£'000	£'000	£'000	£'000		£'000		£'000
		Opening balance	-	-	-	-		-		-
		Deferred tax charge	4	-	4	-		-		-
			_______	______	______	______		______		______
		Provision at end of the year	4	-	4	-		-		-
			_______	______	______	______		______		______
		At the period end there is no unrecognised deferred tax asset (2019 - £65,000) in relation to surplus management expenses.

9.	Dividends
		2020	2019
		£'000	£'000
	Amounts recognised as distributions to equity holders in the year:
	3rd interim dividend for 2019 of 1.7p per share (2018 - 1.6p){A}	2,417	2,274
	Final dividend for 2019 of 3.6p per share (2018 - 3.2p){A}	5,117	4,550
	1st interim dividend for 2020 of 1.7p per share (2019 - 1.6p){A}	2,417	2,274
	2nd interim dividend for 2020 of 1.7p per share (2019 - 1.6p){A}	2,421	2,274
		_______	______
		12,372	11,372
		_______	______
	The third and fourth interim dividends were unpaid at the year end. Accordingly, neither have been included as a liability in these financial statements.
	The table below sets out the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Sections 1158-1159 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of dividend for the year is £16,265,000 (2019 - £14,269,000).
		2020	2019
		£'000	£'000
	1st interim dividend for 2020 of 1.7p per share (2019 - 1.6p){A}	2,417	2,274
	2nd interim dividend for 2020 of 1.7p per share (2019 - 1.6p){A}	2,421	2,274
	3rd interim dividend for 2020 of 1.8p per share (2019 - 1.7p){A}	2,579	2,417
	4th interim dividend for 2020 of 4.3p per share (2019 - nil){A}	6,161	-
	Final dividend for 2019 of 3.6p{A}	-	5,117
		_______	______
		13,578	12,082
		_______	______
	{A}   Comparative figures for the year ended 31 January 2019 have been restated due to the sub-division of each existing Ordinary share of 25p into five Ordinary shares of 5p each on 10 June 2019.
	The cost of the proposed final dividend for 2020 is based on 143,277,520 Ordinary shares in issue, being the number of Ordinary shares in issue at the date of this report.

10.	Return per Ordinary share
		2020		2019
		£'000	p	£'000	p
	Based on the following figures:
	Revenue return{A}	16,265	11.42	14,269	10.04
	Capital return{A}	8,003	5.62	4,111	2.89
		_______	______	______	______
	Total return{A}	24,268	17.04	18,380	12.93
		_______	______	______	______
	Weighted average number of Ordinary shares in issue{A}		142,446,904		142,152,520
			__________		__________
	{A} Comparative figures for the year ended 31 January 2019 have been restated due to the sub-division of each existing Ordinary share of 25p into five Ordinary shares of 5p each on 10 June 2019.

11.	Investments
		2020	2019
		£'000	£'000
	Investments at fair value through profit or loss
	Opening book cost	361,576	305,207
	Opening investment holdings gains	59,893	101,386
		_______	______
	Opening fair value	421,469	406,593
	Analysis of transactions made during the year
	Purchases at cost	165,097	167,882
	Sales proceeds received	(186,792)	(160,881)
	Gains on investments{A}	11,035	7,901
	Amortisation of fixed income book cost	(9)	(26)
		_______	______
	Closing fair value	410,800	421,469
		_______	______
	Closing book cost	388,574	361,576
	Closing investment holdings gains	22,226	59,893
		_______	______
	Closing fair value	410,800	421,469
		_______	______
	Listed on overseas stock exchanges	410,800	421,469
		_______	______
	Net gains on investments
	Gains on investments{A}	11,035	7,901
	Investment holding losses on traded options	(327)	-
		_______	______
		10,708	7,901
		_______	______
	{A}   Includes losses realised on the exercise of traded options of £3,105,000 (2019 - £2,518,000) which are reflected in the capital column of the Statement of Comprehensive Income in accordance with accounting policy 2(j). Premiums received from traded options totalled £4,054,000 (2019 - £3,909,000) per note 4.
	The Company received £186,792,000 (2019 - £160,881,000) from investments sold in the year. The book cost of these investments when they were purchased was £138,090,000 (2019 - £111,487,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
	Transaction costs. During the year expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains on investments in the Statement of Comprehensive Income. The total costs were as follows:
		2020	2019
		£'000	£'000
	Purchases	77	68
	Sales	163	122
		_______	______
		240	190
		_______	______
	The above transaction costs are calculated in line with the AIC SORP. The transaction costs in the Company's Key Information Document are calculated on a different basis and in line with the PRIIPs regulations.

12.	Debtors: amounts falling due within one year
		2020	2019
		£'000	£'000
	Dividends receivable	779	605
	Interest receivable	131	172
	Other debtors and prepayments	68	53
	Amount due from brokers	826	1,845
	Taxation recoverable	-	97
		_______	______
		1,804	2,772
		_______	______

13.	Creditors: amounts falling due within one year
		2020	2019
		£'000	£'000
	Amounts due to brokers	-	5,166
	Investment management fee payable	758	735
	Traded option contracts	668	118
	Interest payable	17	33
	Other creditors	146	115
		_______	______
		1,589	6,167
		_______	______

14.	Bank loan
		2020	2019
		£'000	£'000
	Repayable within one year:
	Bank loan	18,965	38,010
		_______	______
	The Company agreed a US$75 million three year uncommitted multi-currency revolving loan facility with Scotiabank (Ireland) Designated Activity Company on 21 December 2017. US$25 million was drawn down at 31 January 2020 at an all-in interest rate of 2.6345% and matured on 24 February 2020. At the date of this Report the Company had drawn down US$25 million at an all-in interest rate of 1.9035%. At 31 January 2019, US$50 million was drawn down under this facility at an all-in interest rate of 3.4780% and matured on 22 February 2019.
	The terms of the loan facility contain covenants that gross borrowings should not exceed 35% of adjusted net assets and the net asset value shall not at any time be less than £200 million.

15.	Called-up share capital
		2020	2019
		£'000	£'000
	Allotted, called-up and fully paid:
	Opening balance	7,108	7,108
	Ordinary shares issued in the year	56	-
		_______	______
	143,277,520 (2019 - 142,152,520) Ordinary shares of 5p each{A}	7,164	7,108
		_______	______
	{A} Comparative figures for the year ended 31 January 2019 have been restated due to the sub-division of each existing Ordinary share of 25p into five Ordinary shares of 5p each on 10 June 2019.
	During the year the Company undertook a five-for-one sub-division of Ordinary shares. On 10 June 2019, the effective date of the share split, the Company's issued ordinary share capital comprised 142,152,520 new ordinary shares of 5p each.
	During the year no Ordinary shares were bought back (2019 - nil).
	During the year 1,125,000 Ordinary shares were issued with total proceeds of £3,396,000 (2019 - no Ordinary shares were issued). All these shares were issued at a premium to net asset value, enhancing net assets per share for existing shareholders. The issue prices ranged from 295.5p to 310.0p (2019 - no Ordinary shares were issued) and raised a total of £3,396,000 (2019 - £nil) net of expenses.

16.	Net asset value per equity share. The net asset value per share and the net assets attributable to the Ordinary shareholders at the year end were as follows:
		2020	2019
	Net assets attributable	£413,948,000	£398,657,000
	Number of Ordinary shares in issue{A}	143,277,520	142,152,520
	Net asset value per share{A}	288.91p	280.44p
	{A}   Comparative figures for the year ended 31 January 2019 have been restated due to the sub-division of each existing Ordinary share of 25p into five Ordinary shares of 5p each on 10 June 2019.

17.	Analysis of changes in net debt
		At			At
		31 January	Currency	Cash	31 January
		2019	differences	flows	2020
		£'000	£'000	£'000	£'000
	Cash and short term deposits	18,593	(1,061)	4,366	21,898
	Debt due within one year	(38,010)	445	18,600	(18,965)
		_______	______	______	______
		(19,417)	(616)	22,966	2,933
		_______	______	______	______
		At			At
		31 January	Currency	Cash	31 January
		2018	differences	flows	2019
		£'000	£'000	£'000	£'000
	Cash and short term deposits	19,636	1,253	(2,296)	18,593
	Debt due within one year	(31,644)	(2,856)	(3,510)	(38,010)
		_______	______	______	______
		(12,008)	(1,603)	(5,806)	(19,417)
		_______	______	______	______
	A statement reconciling the movement in net funds to the net cash flow has not been presented as there are no differences from the above analysis.

18.	Financial instruments and risk management. The Company's investment activities expose it to various types of financial risk associated with the financial instruments and markets in which it invests. The Company's financial instruments, other than derivatives, comprise securities and other investments, cash balances, loans and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income.
	Subject to Board approval, the Company also has the ability to enter into derivative transactions, in the form of traded options, for the purpose of enhancing income returns and portfolio management. During the year, the Company entered into certain derivative contracts. As disclosed in note 4, the premium received in respect of options written in the year was £3,727,000 (2019 - £3,909,000). Positions closed during the year realised a loss of £3,105,000 (2019 - £2,518,000). The largest position in derivative contracts held during the year at any given time was £668,000 (2019 - £440,000). The Company had 9 (2019 - 8) open positions in derivative contracts at 31 January 2020 valued at a liability of £668,000 (2019 - £118,000) as disclosed in note 13.
	The Board has delegated the risk management function to the Manager under the terms of its management agreement with ASFML (further details which are included under note 5). The Board regularly reviews and agrees policies for managing each of the key financial risks identified with the Manager. The types of risk and the Manager's approach to the management of each type of risk, are summarised below. Such an approach has been applied throughout the year and has not changed since the previous accounting period. The numerical disclosures exclude short-term debtors and creditors.
	Risk management framework. The directors of ASFML collectively assume responsibility for ASFML's obligations under the AIFMD including reviewing investment performance and monitoring the Company's risk profile during the year.
	ASFML is a fully integrated member of the Standard Life Aberdeen plc group of companies (referred to as "the Group"), which provides a variety of services and support to ASFML in the conduct of its business activities, including in the oversight of the risk management framework for the Company. The AIFM has delegated the day to day administration of the investment policy to Aberdeen Asset Managers Limited, which is responsible for ensuring that the Company is managed within the terms of its investment guidelines and the limits set out in FUND 3.2.2R (details of which can be found on the Company's website). The AIFM has retained responsibility for monitoring and oversight of investment performance, product risk and regulatory and operational risk for the Company.
	The AIFM conducts its risk oversight function through the operation of the Group's risk management processes and systems which are embedded within the Group's operations. The Group's Risk Division supports management in the identification and mitigation of risks and provides independent monitoring of the business. The Division includes Compliance, Business Risk, Market Risk, Risk Management and Legal. The team is headed up by the Group's Head of Risk, who reports to the Chief Executive Officer of the Group. The Risk Division achieves its objective through embedding the Risk Management Framework throughout the organisation using the Group's operational risk management system ("SHIELD").
	The Group's Internal Audit Department is independent of the Risk Division and reports directly to the Group's Chief Executive Officer and the Audit Committee of the Group's Board of Directors. The Internal Audit Department is responsible for providing an independent assessment of the Group's control environment.
	The Group's corporate governance structure is supported by several committees to assist the board of directors of Standard Life Aberdeen plc, its subsidiaries and the Company to fulfil their roles and responsibilities. The Group's Risk Division is represented on all committees, with the exception of those committees that deal with investment recommendations. The specific goals and guidelines on the functioning of those committees are described on the committees' terms of reference.
	Risk management. The main risks the Company faces from its financial instruments are (i) market risk (comprising interest rate risk, currency risk and price risk), (ii) liquidity risk and (iii) credit risk.
	The Board regularly reviews and agrees policies for managing each of these risks. The Manager's policies for managing these risks are summarised below and have been applied throughout the year. The numerical disclosures exclude short-term debtors and creditors, other than for currency disclosures.
	(i)	Market risk. The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements -   interest rate risk, currency risk and other price risk.
		Interest rate risk . Interest rate movements may affect:
		-  the fair value of the investments in fixed interest rate securities;
		-   the level of income receivable on cash deposits;
		-   interest payable on the Company's variable rate borrowings.
		Management of the risk. The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.
		The Board reviews on a regular basis the values of the fixed interest rate securities.
		The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Borrowings comprise fixed rate, revolving and uncommitted facilities. Details of borrowings at 31 January 2020 are shown in note 14.
		Interest risk profile. The interest rate risk profile of the portfolio of financial instruments at the Statement of Financial Position date was as follows:
			Weighted
			average
			period for		Weighted				Non-
			which		average		Fixed	Floating	interest
			rate is fixed		interest rate		rate	rate	bearing
		At 31 January 2020	Years		%		£'000	£'000	£'000
		Assets
		Sterling	-		-		-	8,136	-
		US Dollar	6.28		5.75		8,651	13,497	362,153
		Canadian Dollar	-		-		-	265	39,996
			_______		______		______	______	______
		Total assets					8,651	21,898	402,149
							_______	______	______
		Liabilities
		Bank loan - US$25,000,000	0.07		2.63		-	(18,965)	-
			_______		______		______	______	______
		Total liabilities					-	(18,965)	-
							_______	______	______
			Weighted
			average
			period for		Weighted				Non-
			which		average		Fixed	Floating	interest
			rate is fixed		interest rate		rate	rate	bearing
		At 31 January 2019	Years		%		£'000	£'000	£'000
		Assets
		Sterling	-		-		-	2,110	-
		US Dollar	5.87		6.07		11,217	13,863	376,951
		Canadian Dollar	-		-		-	2,620	33,301
			_______		______		______	______	______
		Total assets					11,217	18,593	410,252
							_______	______	______
		Liabilities
		Bank loan - US$50,000,000	0.06		3.48		-	(38,010)	-
			_______		______		______	______	______
		Total liabilities					-	(38,010)	-
							_______	______	______
		The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The weighted average interest rate on bank loans is based on the interest rate payable, weighted by the total value of the loans. The maturity date of the Company's loan is disclosed in note 14.
		The floating rate assets consist of cash deposits at prevailing market rates.
		The non-interest bearing assets represent the equity element of the portfolio.
		Short-term debtors and creditors have been excluded from the above tables.
		Interest rate sensitivity. The sensitivity analyses below have been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the Statement of Financial Position date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates.
		The rate of interest on the loan is the percentage rate per annum which is the aggregate of the applicable margin, adjusted LIBOR and mandatory cost if any.
		If interest rates had been 100 basis points higher or lower (based on current parameter used by Manager's Investment Risk Department on risk assessment) and all other variables were held constant, the Company's revenue return for the year ended 31 January 2020 would increase/decrease by £29,000 (2019 - decrease/increase by £194,000). This is mainly attributable to the Company's exposure to interest rates on its floating rate cash and loan balances.
		In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently as part of the interest rate risk management process used to meet the Company's objectives. The risk parameters used will also fluctuate depending on the current market perception.
		Foreign currency risk. The Company's portfolio is invested mainly in US quoted securities and the Statement of Financial Position can be significantly affected by movements in foreign exchange rates.
		Management of the risk. It is not the Company's policy to hedge this risk on a continuing basis but the Company may, from time to time, match specific overseas investment with foreign currency borrowings. A significant proportion of the Company's borrowings, as detailed in note 14, are denominated in foreign currency. Foreign currency risk exposure by currency denomination is detailed under Interest Risk Profile.
		The revenue account is subject to currency fluctuation arising on overseas income. The Company does not hedge this currency risk.
		Foreign currency sensitivity. There is no sensitivity analysis included as the Company's significant foreign currency financial instruments are in the form of equity investments, and they have been included within the other price risk sensitivity analysis so as to show the overall level of exposure.
		Price risk. Price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.
		Management of the risk. It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular country or sector. The allocation of assets to international markets and the stock selection process both act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on various stock exchanges.
		Price risk sensitivity. If market prices at the Statement of Financial Position date had been 10% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders for the year ended 31 January 2020 would have increased/decreased by £41,080,000 (2019 - increase/decrease of £42,147,000) and equity reserves would have increased/decreased by the same amount.
		Liquidity risk. This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.
		Management of the risk . Liquidity risk is not considered to be significant as the Company's assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of the loan facility (note 14).
		Credit risk. This is failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss.
		Management of the risk
		-   where the Manager makes an investment in a bond, corporate or otherwise, the credit ratings of the issuer are taken into account so as to manage the risk to the Company of default;
		-   investments in quoted bonds are made across a variety of industry sectors so as to avoid concentrations of credit risk;
		-   transactions involving derivatives are entered into only with investment banks, the credit rating of which is taken into account so as to minimise the risk to the Company of default;
		-   investment transactions are carried out with a number of brokers, whose credit-standing is reviewed periodically by the Manager, and limits are set on the amount that may be due from any one broker;
		-   the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the review of failed trade reports on a daily basis. In addition, both stock and cash reconciliations to the custodian's records are performed on a daily basis to ensure discrepancies are investigated on a timely basis. The Manager's Compliance department carries out periodic reviews of the custodian's operations and reports its finding to the Manager's Risk Management Committee;
		-   cash is held only with reputable banks with acceptable credit quality. It is the Manager's policy to trade only with A- and above (Long Term rated) and A-1/P-1 (Short Term rated) counterparties.
		Credit risk exposure. In summary, compared to the amounts in the Statement of Financial Position, the exposure to credit risk at 31 January 2020 was as follows:
				2020				2019
				Statement of				Statement of
				Financial		Maximum		Financial	Maximum
				Position		exposure		Position	exposure
				£'000		£'000		£'000	£'000
		Non-current assets
		Quoted bonds		8,651		8,651		11,217	11,217
		Current assets
		Amount due from brokers		826		826		1,845	1,845
		Dividends receivable		779		779		605	605
		Interest receivable		131		131		172	172
		Taxation recoverable		-		-		97	97
		Other debtors and prepayments		68		68		53	53
		Cash and short term deposits		21,898		21,898		18,593	18,593
				_______		______		______	______
				32,353		32,353		32,582	32,582
				_______		______		______	______
		None of the Company's financial assets are secured by collateral or other credit enhancements.
		Credit ratings. The table below provides a credit rating profile using Standard and Poors credit ratings for the quoted bonds at 31 January 2020 and 31 January 2019:
								2020	2019
								£'000	£'000
		B+						-	830
		B						-	763
		BB+						1,055	2,622
		BB						4,037	2,421
		BB-						1,602	3,805
		BBB-						1,957	776
								_______	______
								8,651	11,217
								_______	______
		Fair values of financial assets and financial liabilities . The book value of cash at bank and bank loans and overdrafts included in these financial statements approximate to fair value because of their short-term maturity. Investments held as dealing investments are valued at fair value. The carrying values of fixed asset investments are stated at their fair values, which have been determined with reference to quoted market prices. For all other short-term debtors and creditors, their book values approximate to fair values because of their short-term maturity.

19.	Capital management policies and procedures. The investment objective of the Company is to provide investors with above average dividend income and long term capital growth through active management of a portfolio consisting predominately of S&P 500 US equities.
	The capital of the Company consists of bank borrowings and equity comprising issued capital, reserves and retained earnings. The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance.
	The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes:
	-   the planned level of gearing which takes into account the Investment Manager's views on the market;
	-   the level of equity shares in issue; and
	-   the extent to which revenue in excess of that which is required to be distributed should be retained.
	The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period.
	Details of the Company's gearing facilities and financial covenants are detailed in note 14 of the financial statements.

20.	Fair value hierarchy. FRS 102 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following classifications:
	Level 1: unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date.
	Level 2: inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability, either directly or indirectly.
	Level 3: inputs are unobservable (ie for which market data is unavailable) for the asset or liability.
	The financial assets and liabilities measured at fair value in the Statement of Financial Position are grouped into the fair value hierarchy at the reporting date as follows:
				Level 1	Level 2	Level 3	Total
	As at 31 January 2020		Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities		a)	402,149	-	-	402,149
	Quoted bonds		b)	-	8,651	-	8,651
				_______	______	______	______
				402,149	8,651	-	410,800
				_______	______	______	______
	Financial liabilities at fair value through profit or loss
	Derivatives		c)	-	(668)	-	(668)
				_______	______	______	______
	Net fair value			402,149	7,983	-	410,132
				_______	______	______	______
				Level 1	Level 2	Level 3	Total
	As at 31 January 2019		Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities		a)	410,252	-	-	410,252
	Quoted bonds		b)	-	11,217	-	11,217
				_______	______	______	______
				410,252	11,217	-	421,469
				_______	______	______	______
	Financial liabilities at fair value through profit or loss
	Derivatives		c)	-	(118)	-	(118)
				_______	______	______	______
	Net fair value			410,252	11,099	-	421,351
				_______	______	______	______
	a)	Quoted equities. The fair value of the Company's investments in quoted equities has been determined by reference to their quoted bid prices at the reporting date. Quoted equities included in Fair Value Level 1 are actively traded on recognised stock exchanges.
	b)	Quoted bonds. The fair value of the Company's investments in quoted bonds has been determined by reference to their quoted bid prices at the reporting date. Investments categorised as Level 2 are not considered to trade in active markets.
	c)	Derivatives. The Company's investment in exchange traded options have been fair valued using quoted prices and have been classified as Level 2 as they are not considered to trade in active markets.

21.	Related party transactions
	Directors' fees and interests. Fees payable during the year to the Directors and their interests in shares of the Company are disclosed within the Directors' Remuneration Report on pages 39 and 40 of the published 2020 Annual Report.
	Transactions with the Manager. The Company has an agreement with the Manager for the provision of investment management, secretarial, accounting and administration and promotional activity services.
	Details of transactions during the year and balances outstanding at the year end are disclosed in notes 5 and 7.

22.

Subsequent events

Subsequent to the year end, the Company's NAV has suffered as a result of a decline in stockmarket values, primarily due to the COVID-19 pandemic. This is considered to be a non-adjusting event for the financial statements. At the date of this Report the latest NAV per share was 241.65p as at the close of business on 21 April 2020, a decline of 16.4% compared to the NAV per share of 289.14p at the year end.

ALTERNATIVE PERFORMANCE MEASURES
Alternative performance measures are numerical measures of the Company's current, historical or future performance, financial position or cash flows, other than financial measures defined or specified in the applicable financial framework. The Company's applicable financial framework includes FRS 102 and the AIC SORP. The Directors assess the Company's performance against a range of criteria which are viewed as particularly relevant for closed-end investment companies.
Total return. Total return is considered to be an alternative performance measure. NAV and share price total returns show how the NAV and share price has performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to shareholders. NAV total return involves investing the net dividend in the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend. Share price total return involves reinvesting the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend.
The tables below provide information relating to the NAVs and share prices of the Company on the dividend reinvestment dates during the years ended 31 January 2020 and 31 January 2019 and total return for the years.
	Dividend		Share
2020	rate	NAV	price
31 January 2019	N/A	280.44p	268.00p
9 May 2019	3.60p	286.52p	282.00p
18 July 2019	1.70p	303.56p	304.00p
3 October 2019	1.70p	292.11p	294.50p
30 January 2020	1.80p	294.08p	290.00p
31 January 2020	N/A	288.91p	290.00p
		_______	______
Total return		+6.2%	+11.5%
		_______	______
	Dividend		Share
2019	rate	NAV	price
31 January 2018	N/A	275.51p	260.00p
10 May 2018	3.20p	270.27p	254.50p
19 July 2018	1.60p	286.13p	270.00p
4 October 2018	1.60p	293.23p	273.00p
24 January 2019	1.70p	276.08p	264.00p
31 January 2019	N/A	280.44p	268.00p
	_______	______	______
Total return		+4.8%	+6.3%
		_______	______
Dividend cover. Revenue return per share of 11.42p (31 January 2019 - 10.04p) divided by dividends per share of 9.50p (31 January 2019 - 8.50p) expressed as a ratio.
Dividend yield. The annual dividend of 9.50p per Ordinary share (31 January 2019 - 8.50p) divided by the share price of 290.00p (31 January 2019 - 268.00p), expressed as a percentage.
Net cash/gearing. Net cash/gearing measures cash and cash equivalents of £22,724,000 (31 January 2019 - £15,272,000) less total borrowings of £18,965,000 (31 January 2019 - £38,010,000) divided by shareholders' funds of £413,948,000 (31 January 2019 - £398,657,000), expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes net amounts due from brokers at the year end of £826,000 (31 January 2019 - due to brokers of £3,321,000) as well as cash and short term deposits of £21,898,000 (31 January 2019 - £18,593,000).
Premium/(discount). The difference between the share price of 290.00p (31 January 2019 - 268.00p) and the net asset value per Ordinary share of 288.91p (31 January 2019 - 280.44p) expressed as a percentage of the net asset value per Ordinary share.
Ongoing charges ratio. Ongoing charges ratio is considered to be an alternative performance measure. The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC which is defined as the total of investment management fees and administrative expenses and expressed as a percentage of the average net asset values with debt at fair value throughout the year.
		2020	2019
Investment management fees (£'000)		3,060	2,913
Administrative expenses (£'000)		757	852
		_______	______
Ongoing charges (£'000)		3,817	3,765
		_______	______
Average net assets{A} (£'000)		420,761	396,330
		_______	______
Ongoing charges ratio		0.91%	0.95%
		_______	______
{A}   During both years net asset values with debt at fair value equated to net asset value with debt at amortised cost due to the short-term nature of the bank loans.
The ongoing charges ratio provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations which includes finance costs and transaction charges.

ADDITIONAL NOTES TO THE ANNUAL FINANCIAL REPORT

This Annual Financial Report announcement is not the Company's statutory accounts for the year ended 31 January 2020. The statutory accounts for the year ended 31 January 2020 received an audit report which was unqualified.

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 January 2020 or 2019 but is derived from those accounts. Statutory accounts for 2019 have been delivered to the registrar of companies, and those for 2020 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The statutory accounts for the financial year ended 31 January 2020 were approved by the Directors on 22 April 2020 but will not be filed with the Registrar of Companies until after the Company's Annual General Meeting which is to be held at 11.00 am on 2 June 2020.

The Annual Report will be posted to shareholders in May 2020 and additional copies will be available from the Manager (Investor Helpline - Tel. [phone]) or by download from the Company's webpage

( www.northamericanincome.co.uk )

Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise. Investors may not get back the amount they originally invested.

For The North American Income Trust plc

Aberdeen Asset Management PLC, Secretaries

 

END

 

 

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