BlackRock Sustainable American Income Trust plc

About this investment trust

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

The Company's investment objective is to provide an attractive level of income return together with capital appreciation over the long term, in a manner consistent with the principles of sustainable investing adopted by the Company.

Why choose it?

Persistent low interest rates have made it a challenge for investors to find consistent sources of income. The Trust’s managers aim to select high quality, income generative companies from across North America, with sustainability at the heart of its investment approach. In a lower growth world, the Trust aims to uncover dynamic companies with the power to compound growth over many years.

Suited to…

Investors looking for a carefully selected, sustainable, actively managed portfolio of high-quality North American businesses, designed to deliver long-term income and capital growth.

What are the risks?

• Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
• Overseas investment will be affected by movements in currency exchange rates.
• Net Asset Value (NAV) performance is not the same as share price performance, and shareholders may realise returns that are lower or higher than NAV performance.
• Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.
• The Trust may use derivatives to aim to generate more income. This may reduce the potential for capital growth.
• Investors in this Trust should understand that capital growth is not a priority and values may fluctuate and the level of income may vary from time to time and is not guaranteed.
• The Trust uses derivatives as part of its investment strategy. Compared to a fund which only invests in traditional instruments such as stocks and bonds, derivatives are potentially subject to a higher level of risk.

Useful information

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Fees & Charges

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The Board’s approach to ESG

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Responsible investment is considered to be integral to the longer-term delivery of the Company’s success. The Board works closely with the Investment Manager to review the Company’s performance, investment objective and underlying policies to ensure that the Company’s investment objective continues to be met in an effective, responsible and sustainable way in the interests of shareholders and future investors.

The Board has been mindful of the increase in demand for investment products that place a sustainable investment philosophy at their core, a trend that has accelerated in recent years. Accordingly, the Company’s investment objective and investment policy incorporates a sustainable investment approach into the investment policy so that the Company is managed in a way which is compatible with the principles of sustainable investment adopted by the Company.*

Investment approach

The Investment Manager, in addition to other investment criteria, takes into account the environmental, social and governance (ESG) characteristics of the portfolio and prospective investments and seeks to deliver a superior ESG outcome versus the reference index (the Russell 1000 Value Index) as measured by a leading external ratings agency, by aiming for the Company’s portfolio to achieve: (i) a better ESG score than the reference index; and (ii) a lower carbon emissions intensity score than the Reference Index.

The Investment Manager applies a screening policy (the BlackRock EMEA baseline screens policy) at the time of investment through which it seeks to limit and/or exclude direct investment (as applicable) in companies which, in the opinion of the Investment Manager, have exposure to, or ties with, certain sectors (in some cases subject to specific revenue thresholds).

The BlackRock EMEA baseline screens policy will evolve over time as improved data and more research on this subject becomes available. A full list of the current limits and/or exclusions (including any specific threshold criteria) is available at https://www.blackrock.com/corporate/literature/publication/blackrock-baseline-screens-in-europe-middleeast-and-africa.pdf

Following application of the screening policy, those companies which have not yet been excluded from investment will then be evaluated by the Investment Manager based on their ability to manage the risks and opportunities associated with ESG-consistent business practices and their ESG risk and opportunity credentials, such as their leadership and governance framework, which is considered essential for sustainable growth, their ability to strategically manage longer-term issues surrounding ESG and the potential impact that this may have on a company’s financials. To undertake the required analyses, the Investment Manager may use data provided by external ESG data providers, proprietary models and local intelligence and may undertake site visits.

ESG: integration into BlackRock’s investment management process

Environmental, Social and Governance (ESG) investing is often used interchangeably with the term “sustainable investing.” BlackRock has identified sustainable investing as being the overall framework and ESG as a data toolkit for identifying and informing our solutions. BlackRock has defined ESG Integration as the practice of incorporating material ESG information and consideration of sustainability risks into investment decisions in order to enhance risk-adjusted returns. BlackRock recognises the relevance of material ESG information across all asset classes and styles of portfolio management. ESG information and sustainability risks are included as a consideration in investment research, portfolio construction, portfolio review and investment stewardship processes. The Investment Manager considers ESG insights and data, including sustainability risks, within the total set of information in its research process and makes a determination as to the materiality of such information in its investment process. ESG insights are not the sole consideration when making investment decisions. The Investment Manager’s evaluation of ESG data may be subjective and could change over time in light of emerging sustainability risks or changing market conditions. This approach is consistent with the Investment Manager’s regulatory duty to manage the Company in accordance with its investment objective and policy and in the best interests of the Company’s investors. The Investment Manager’s Risk and Quantitative Analysis group will review portfolios to ensure that sustainability risks are considered regularly alongside traditional financial risks, that investment decisions are taken in light of relevant sustainability risks and that decisions exposing portfolios to sustainability risks are deliberate, and the risks diversified and scaled according to the investment objectives of the Company.

BlackRock’s approach to ESG integration is to broaden the total amount of information the Investment Manager considers with the aim of improving investment analysis and understanding the likely impact of sustainability risks on the Company’s investments. The Investment Manager assesses a variety of economic and financial indicators, which may include ESG data and insights, to make investment decisions appropriate for the Company objectives. This can include relevant third-party insights or data, internal research or engagement commentary and input from BlackRock Investment Stewardship.

Investment stewardship

BlackRock undertakes investment stewardship engagements and proxy voting with the goal of protecting and enhancing the long-term value of clients’ investments for relevant asset classes. In our experience, sustainable financial performance and value creation are enhanced by sound governance practices, including risk management oversight, board accountability and compliance with regulations. We focus on board composition, effectiveness and accountability as a top priority. In our experience, high standards of corporate governance are the foundations of board leadership and oversight. We engage to better understand how boards assess their effectiveness and performance, as well as their position on director responsibilities and commitments, turnover and succession planning, crisis management and diversity. For further details regarding BlackRock’s work on investment stewardship please refer to the website at https://www.blackrock.com/corporate/about-us/investment-stewardship#ourresponsibility.

*Investment Manager's current process, which is subject to change without notice.

Fund manager commentary

30 September 2024

Comments from the Portfolio Managers

Please note that the commentary below includes historic information on the Company’s NAV performance data, index and share price performance, and also the portfolio’s options exposure and the delta of the options.

The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results.

For the one-month period ended 30 September 2024, the Company’s NAV decreased by 2.5% and the share price by 1.9% (all in sterling). The Company’s reference index, the Russell 1000 Value Index, returned -0.7% for the period.¹

At the sector level, the largest contributor to relative performance stemmed from stock selection in materials, with selection decisions in containers and packaging boosting relative performance. Relative performance was also boosted by the underweight allocation to financials, specifically in financial services. Other modest contributors during the period at the sector level included selection decisions in real estate and industrials.

The largest detractor from relative performance stemmed from stock selection in health care, most notably in life sciences tools and services.

Selection decisions in consumer discretionary also detracted from relative performance, with stock selection in automobiles dragging on relative performance. Other modest detractors at the sector level included selection decisions in information technology and consumer staples.

Transactions

During the month, the Company’s largest purchases included Amazon and Nasdaq. The Company exited its positions in Citizens Financial Group and UBS Group.

Positioning

As of the period end, the Company’s largest overweight positions relative to the reference index were in the information technology, consumer discretionary and health care sectors. The Company’s largest underweight positions relative to the reference index were in the industrials, financials and real estate sectors.

Source: Unless otherwise stated all data is sourced from BlackRock as at 30 September 2024.

Source: ¹ Datastream as at 30 September 2024.

Any opinions or forecasts represent an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results.

Portfolio manager biographies

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Tony DeSpirito is Co-Manager of the BlackRock Sustainable American Income Trust plc. He is Head of the US Income & Value team and Director of Investments, US Equities within the Fundamental Active Equity business of BlackRock's Active Equity Group. Mr. DeSpirito is the lead Portfolio Manager for the BlackRock Equity Dividend portfolios. Prior to joining BlackRock in 2014, Mr. DeSpirito worked at Pzena Investment Management, where he served as Managing Principal, portfolio manager, and a member of the firm's Executive Committee. Mr.DeSpirito was responsible for a suite of large-cap value, all-cap value and two hedge fund portfolios. Having managed value equity assets since 1996, Mr. DeSpirito served as a portfolio manager for the John Hancock Classic Value, PACE Large Company Value, and Vanguard Windsor funds. Mr. DeSpirito earned a BS degree in economics with concentration in finance, summa cum laude, from the Wharton School of the University of Pennsylvania in 1990, and a JD degree, magna cum laude, from Harvard Law School in 1993.

David Zhao is Co-Manager of the BlackRock Sustainable American Income Trust plc. He is Co-Director of Research for the US Income & Value team within the Fundamental Active Equity business of BlackRock's Active Equities Group. Mr. Zhao is a Portfolio Manager for the BlackRock Equity Dividend portfolios.Prior to joining BlackRock, David was a Global Equity Senior Research Analyst and Principal at Pzena Investment Management covering technology, US banks/brokers, medical technology, non-life insurance, financial technology and select industrials. David began his career as an Analyst at Lehman Brothers covering technology M&A; and later within the Institutional Equities Corporate Strategy Group.David holds a BA of Arts with degrees in Economics and Computer Information Systems and graduated Cum Laude from Northwestern University.

Lisa Yang is Co-Manager of the BlackRock Sustainable American Income Trust plc. She is a member of the Fundamental Equities division of BlackRock’s Portfolio Management Group. Ms. Yang is a Research Analyst for the US Income & Value Pillar and she is responsible for coverage of the consumer staples sector. Prior to joining BlackRock, Lisa served as an Equity Research Associate at Wellington Management in Boston where she covered Utilities and Telecoms. Lisa earned a BA degree in Economics and Math from Wellesley College and an MBA degree from Wharton.

Board of directors

All the Directors are non-executive and independent of the Investment Manager. The Board as a whole constitutes the Audit and Management Engagement Committee.

Alice Ryder (Chair) (date of appointment 12 June 2013) is a Partner of Stanhope Capital LLP and has more than 28 years’ investment experience, comprising the last fourteen years as an investment consultant in the charity sector and as a fund manager from 1985 to 2002. She is responsible for advising substantial charity and not for profit clients at Stanhope Consulting, a division of Stanhope Capital LLP. She is also a Director of JPMorgan Smaller Companies Investment Trust plc.

David Barron (Chair of the Audit and Management Engagement Committee and Senior Independent Director) (date of appointment 22 March 2022) has spent 25 years working in the investment management sector and was until November 2019 Chief Executive Officer of Miton Group PLC. Prior to this he was Head of Investment Trusts at JP Morgan Asset Management. He is currently chairman of Dunedin Income Growth Investment Trust PLC, a non-executive director of Fidelity Japan Trust PLC and a non-executive Director of Premier Miton Group PLC. He is a Member of the Institute of Chartered Accountants of Scotland having qualified with Thomson McLintock (now KPMG).

Melanie Roberts (appointed 1 October 2019) has responsibility for sustainability, working alongside the rest of the Board and the Investment Manager. She is a partner at Sarasin & Partners LLP and has 27 years of investment experience. She joined Sarasin & Partners in 2011 and in January 2023 was appointed as head of charities, continuing to focus on strategy, stewardship and client service for charity portfolios. Prior to joining Sarasin & Partners, she spent 16 years at Newton Investment Management as a fund manager of charity, private client and pension fund portfolios.

Solomon Soquar (date of appointment 21 March 2023) has a long and deep experience of over 30 years across Investment Banking, Capital Markets, and Wealth Management. He has worked with several major financial institutions, including Goldman Sachs, Bankers Trust, Merrill Lynch, Citi and Barclays. His most recent executive role has been as CEO of Barclays Investments Solutions Limited. Over the last few years, Solomon has developed a portfolio of roles, including Non-Executive Director of Ruffer Investment Company Limited; Chair, Africa Research Excellence Fund; and Business Fellow of Oxford University, Smith School of Economics and Enterprise.