BlackRock American Income Trust plc

Sustainability Disclosure Requirements

This Company does not have a UK sustainable investment label. Sustainable investment labels help investors find products that have a specific sustainability goal. The Company does not use a sustainability label because whilst the Company applies environmental, social or governance ("ESG") commitments within its investment process, the Company does not have a specific sustainability goal and the investment strategy of the Company means it is not able to meet the criteria of any sustainability label.

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 together with capital appreciation over the long term, whilst incorporating the ESG commitments described in the Company’s investment policy.

Why choose it?

The Trust’s managers aim to select high quality, income generative companies from across North America. 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 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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Investment approach

In managing the Company's portfolio, the Investment Manager, in addition to other investment criteria, takes into account the environmental, social and governance (ESG) characteristics of the relevant issuers of securities and seeks to deliver a superior ESG outcome versus the Reference Index 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 "Reference Index" is the Russell 1000 Value Index or such other index as may be agreed by the Company and the Investment Manager to be appropriate from time to time. However, there can be no guarantee that these aims will be achieved and the ESG rating of the Company's portfolio and its carbon emission intensity score may vary.

The Company will apply the BlackRock EMEA Baseline Screens, as follows:

The Investment Manager will limit and/or exclude (as applicable) direct investment in corporate issuers which, at the time of purchase, in the opinion of the Investment Manager, have exposure to, or ties with, the following sectors:

• the production of certain types of controversial weapons or nuclear weapons;
• the production or, subject to specific revenue thresholds, distribution of firearms or small arms ammunition intended for retail to civilians;
• subject to specific revenue thresholds, the extraction of certain types of fossil fuel and/or the generation of power from them;
• the production of tobacco products or, subject to specific revenue thresholds, certain activities in relation to tobacco-related products; and
• issuers which have been deemed to have failed to comply with United Nations Global Compact Principles.

Should existing holdings, compliant with the above limits and/or exclusions at the time of investment subsequently become ineligible, they will be divested within a reasonable period of time.

The BlackRock EMEA Baseline Screens described above are only applied by the Investment Manager to direct investments made by the Company in corporate issuers and accordingly the Company may have exposure to other investments (including, but not limited to, derivatives, money market instruments, units or shares in collective investment schemes, cash and assets that can be turned into cash quickly) which are inconsistent with the BlackRock EMEA Baseline Screens and other exclusionary screens.

Following application of the screening policy outlined above, those companies which have not yet been excluded from investment are then 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 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

BlackRock has defined ESG Integration as the practice of incorporating material environmental, social and governance (ESG) information 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. The Investment Manager may incorporate ESG considerations in its investment processes across all investment platforms. ESG information is included as a consideration in investment research, portfolio construction, portfolio review, and investment stewardship processes.

The Investment Manager considers ESG insights and data 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 factors are not the sole consideration when making investment decisions and the extent to which ESG insights are considered during investment decision making will also be determined by the ESG characteristics or objectives of the Company. The Investment Manager’s evaluation of ESG data may be subjective and could change over time. 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, in partnership with the portfolio managers, to ensure that exposures to ESG risk are considered regularly alongside traditional financial risks.

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 ESG risks on the Company’s investments. The Investment Manager assesses a variety of economic and financial indicators, which may include ESG considerations, 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 the BlackRock Investment Stewardship team.

Investment stewardship

BlackRock seeks to advance the financial interests of investors through its investment stewardship efforts, consistent with the investment strategy in which they are invested. It does this by engaging with public companies, proxy voting on the Company’s behalf, contributing to industry dialogue on stewardship, and reporting on its stewardship activities.

BlackRock’s stewardship approach is comprised of the following core elements (as further described below):

• global principles;
• engagement; and
• proxy voting.

Global principles

A key focus of the stewardship program is the promotion of sound corporate governance practices and financial resilience. While accepted standards and norms of corporate governance can differ between markets, there are certain globally applicable fundamental principles of corporate governance that, in BlackRock’s experience, contribute to a company’s ability to create long-term financial value for shareholders. Some of the focus areas in these global principles include boards and directors (including their effectiveness and composition), shareholder proposals (in particular, their implications for financial value) and material sustainability-related risks and opportunities. More information on BlackRock's global principles can be found here: https://www.blackrock.com/corporate/literature/fact-sheet/blk-responsible-investment-engprinciples-global.pdf.

Engagement

Engagement is core to BlackRock’s stewardship efforts as it provides the opportunity to better understand a company’s business model and material risks and opportunities. When assessing material risks and opportunities, BlackRock focuses on the factors that could impact a company’s long-term financial performance, which are unique to its business model and/or operating environment.

Engagement may also inform BlackRock’s voting decisions, particularly on issues where company disclosures are not sufficiently clear or complete, or management’s approach seems misaligned with the financial interests of investors.

BlackRock’s engagement priorities reflect the themes on which it most frequently engages companies, where they are relevant and a source of material business risk or opportunity. These themes focus on:

• Board quality and effectiveness: consideration of board performance, which is critical to the long-term financial success of a company and the protection of shareholders’ economic interests.
• Strategy, purpose, and financial resilience: understanding how boards and management align their business decision-making with the company’s purpose and adjust strategy as necessary.
• Incentives aligned with financial value creation: evaluation of companies’ disclosures on the connection between compensation policies and outcomes and the financial interests of shareholders.
• Climate and natural capital: understanding companies’ approach to, and oversight of, material climate-related risks and opportunities as well as how they manage material natural-related risks and opportunities, in the context of their business model and sector.
• Company impacts on people: understanding companies’ approach to human capital management and their management of the human rights issues that are material to their businesses.

More information on BlackRock’s engagement priorities can be found here: https://www.blackrock.com/corporate/literature/publication/blk-stewardship-priorities-final.pdf.

Proxy voting

BlackRock uses proxy voting to communicate its support for, or concerns about, how companies are serving the long-term financial interests of investors. BlackRock’s regional voting guidelines set out guidance on its position on common voting matters. These guidelines are not prescriptive as BlackRock takes into consideration the context in which companies are operating their businesses.

More information on BlackRock’s regional voting guidelines can be found here: https://www.blackrock.com/corporate/literature/fact-sheet/blk-responsible-investment-guidelines-emea.pdf 

Climate and Decarbonization Stewardship Guidelines 

The Company has adopted additional climate and decarbonization stewardship guidelines (the Guidelines).

The Guidelines are focused on matters related to climate risks and the transition to a low-carbon economy at companies that are held by the Company. In respect of these matters, BlackRock will apply the Guidelines, and for all other matters, BlackRock’s core stewardship approach (described above) will continue to apply. The Guidelines differ from the core stewardship approach in that they consider, in addition to financial considerations and consistent with the investment objective of the Company, the alignment of companies’ business models and strategies with the financial opportunities presented by the transition to a low carbon economy and the more ambitious goal of the Paris Agreement¹, namely, to limit average temperature rise to 1.5°C above pre-industrial levels.

The Guidelines will apply to companies which produce goods and services that contribute to real world decarbonization or have a carbon intensive business model and face outsized impacts from the low carbon transition, based on reported and estimated Scope 1, 2, and 3 GHG emissions. Where the Guidelines apply, BlackRock looks for these companies to provide sufficient corporate disclosure to allow it to determine the extent to which decarbonization and the low-carbon transition are strategic priorities.

In implementing the Guidelines, BlackRock will generally support non-executive directors standing for election where, in BlackRock’s assessment based on company disclosures and engagement, a company is executing on its commitment to align with the transition to a low-carbon economy, as defined above. Where BlackRock determines this is not the case, it may vote against the election of one or more non-executive directors who have responsibility for the issue.

Shareholder proposals on a company’s approach to the low-carbon transition or climate risk will be considered on their merit. The BlackRock Group’s assessment will take into consideration the implications for, and the relevance to, the company’s stated low-carbon transition strategy and targets.

More information on the Guidelines can be found here: https://www.blackrock.com/corporate/literature/publication/climate-and-decarbonization-stewardship-guidelines.pdf.

Reporting

BlackRock provides periodic reporting of its stewardship activities, which can be accessed here, as part of a comprehensive library of materials on its stewardship policies and activities: https://www.blackrock.com/corporate/insights/investment-stewardship

¹The Paris Agreement to the United Nations Framework Convention on Climate Change, December 12, 2015.

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 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 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 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.