northamericanincome.co.uk

The North American

Income Trust plc

Annual Report 31 January 2022

Leading North American companies picked for their higher income potential

The Company invests in TC Energy, a company

that is exploring low-carbon projects with its

partners and recently signed agreements to

explore the co-development of hydrogen hubs

in North America.

The North American Income Trust plc 1

“Most of the Company’s equity holdings continued

their established record of dividend growth. Over

84% of the equity holdings raised their dividends

over the past twelve months, with a weighted

average increase of approximately 7.1%.”

Dame Susan Rice, Chair

“The Company returned 25.7% on a net asset value

total return basis in sterling terms for year ended

31 January 2022, close to the total return of its

reference index, the Russell 1000 Value Index”

Fran Radano, abrdn Inc.

2 The North American Income Trust plc

Net asset value total return

Share price total return

+25.7% +25.6%

2021 -5.7% 2021 -16.5%

Revenue return per share Dividends per share

10.28

10.30

2021 11.79p 2021 10.00p

Net asset value per Ordinary share Total assets

318.79

£485.65m

2021

262.48p

2021 £411.75m

Dividend yield

Ongoing charges

3.6% 0.95%

2021 4.3% 2021 1.01%

Considered to be an Alternative Performance Measure. See pages 88 to 90 for more information.

Includes dividends reinvested.

Calculated as the dividend for the year divided by the year end share price.

Net asset value per share Mid-market price per share Dividends per share

At 31 January – pence At 31 January – pence Year ended 31 January – pence

275.5

280.4

288.9

262.5

318.8

18 19 20 21 22

260.0

268.0

290.0

234.0

283.0

18 19 20 21 22

7.80

8.50

9.50

10.00

10.30

18 19 20 21 22

Performance Hi

hli

hts

The North American Income Trust plc 3

“The Board is pleased to note the improvement in

relative performance that has developed and

expects that market conditions are liable to

remain favourable for the Company for the

immediate future.”

Dame Susan Rice, Chair

Overview

Performance Highlights 2

Contents 3

Financial Calendar, Dividends and Highlights 4

Strategic Report

Chair’s Statement 8

Overview of Strategy 11

Results 18

Performance 19

Discount 20

Investment Manager’s Review 21

Manager's Approach to ESG Engagement 25

Portfolio

Ten Largest Investments 32

List of Investments 33

Geographical/ Sector Analysis 35

Currency/ Market Performance 36

Investment Case Studies 37

Governance

Board of Directors 40

Directors’ Report 42

Statement of Corporate Governance 45

Report of the Audit Committee 48

Directors’ Remuneration Report 51

Statement of Directors’ Responsibilities 55

Independent Auditor’s Report to the Members of

The North American Income Trust plc 56

Financial Statements

Statement of Comprehensive Income 66

Statement of Financial Position 67

Statement of Changes in Equity 68

Statement of Cash Flows 69

Notes to the Financial Statements 70

Alternative Performance Measures 88

Corporate Information

Information about the Investment Manager 92

Investor Information 94

Alternative Investment Fund Managers Directive

Disclosures (unaudited) 97

Glossary of Terms 98

Notice of Annual General Meeting 100

Contact Addresses 105

Important Information 106

Contents

4 The North American Income Trust plc

Annual General Meeting (Edinburgh)

8 June 2022

Payment dates of quarterly dividends for financial year

ending 31 January 2023

August 2022

October 2022

February 2023

June 2023

Financial year end

31 January 2023

Dividends

Rate xd date Record date Payment date

1st Interim dividend 2022 1.90p 22 July 2021 23 July 2021 6 August 2021

2nd Interim dividend 2022 1.90p 7 October 2021 8 October 2021 29 October 2021

3rd Interim dividend 2022 2.50p 3 February 2022 4 February 2022 25 February 2022

Proposed final dividend 2022 4.00p 5 May 2022 6 May 2022 13 June 2022

Total dividends 2022 10.30p

1st Interim dividend 2021 1.80p 16 July 2020 17 July 2020 7 August 2020

2nd Interim dividend 2021 1.80p 1 October 2020 2 October 2020 30 October 2020

3rd Interim dividend 2021 1.90p 4 February 2021 5 February 2021 26 February 2021

Proposed final dividend 2021 4.50p 6 May 2021 7 May 2021 4 June 2021

Total dividends 2021 10.00p

Financial Calendar,

Dividends and Hi

hli

hts

The North American Income Trust plc 5

Highlights

31 January 2022 31 January 2021 % change

Total assets (as defined on page 99) £485.65m £411.75m +17.9

Equity shareholders’ funds £448.46m £375.42m +19.5

Share price (mid market) 283.00p 234.00p +20.9

Net asset value per Ordinary share 318.79p 262.48p +21.5

Discount (difference between share price and net asset value)

(11.2%) (10.9)%

Net gearing

(4.9%) (7.4)%

Dividends and earnings

Revenue return per share 10.28p 11.79p -12.8

Dividends per share 10.30p 10.00p +3.0

Dividend yield (based on year end share price)

3.6% 4.3%

Dividend cover

1.00 1.18

Revenue reserves per share

Prior to payment of third interim and final dividends 16.81p 16.49p

After payment of third interim and final dividends 10.31p 10.09p

Operating costs

Ongoing charges

0.95% 1.01%

Considered to be an Alternative Performance Measure. See pages 88 and 89 for further information.

Including undistributed revenue.

6 The North American Income Trust plc

Strategic

Report

Gilead Sciences, Inc is a research-based

biopharmaceutical company focused on the

discovery, development, and commercialisation of

innovative medicines.

The North American Income Trust plc 7

The North American Income Trust plc

was launched in 1902.

The 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.

8 The North American Income Trust plc

It gives me great pleasure to present the results of the

Company for the first time as Chair, succeeding former

Chairman, James Ferguson, who retired on 31 December

2021, after nearly 20 years on the Board. I would like to pay

a large tribute to all that James has accomplished for the

Company during his long tenure.

Performance

Over the year ended 31 January 2022, the Company’s net

asset value (“NAV”) total return per share was 25.7% in

sterling terms. This slightly underperformed the 26.3% total

return for the Russell 1000 Value Index, the Company’s

reference index. The underperformance was attributable

mainly to overall positioning in the technology sector and

stock selection in consumer staples. The Company’s

performance relative to the reference index was

hampered by stock selection in the energy, real estate

and financial sectors. Further details on the performance

of the portfolio can be found in the Investment Manager’s

Review on pages 21 to 24.

Revenue Account

Total revenue from portfolio equity holdings over the

period under review was £15.0 million (2021 - £15.6

million). While revenue in Sterling was down by 3.8%, this

was largely driven by the weakening of the average US

Dollar/GB Sterling foreign exchange rate, by nearly 7%, in

the current year as compared to the prior year, reducing

the Sterling equivalent value of the US Dollar dividend

receipts. This was against the background which saw that

most of the Company’s equity holdings continued their

established record of dividend growth. Over 84% of the

equity holdings raised their dividends over the past twelve

months, with a weighted average increase of

approximately 7.1%.

During the year ended 31 January 2022, the Company

received premiums totalling £3.9m million (2021 - £5.4

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 19.8% of total income

(2021 – 25.0%). As the Company’s exposure to corporate

bonds has decreased over recent years, interest income

from investments was lower and represented 0.6% of total

income (2021 – 2.5%). 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 on pages 32 to 35.

Dividend

The revenue return per Ordinary share fell by 12.8% to

10.28p from 11.79p at 31 January 2022. This comprised a

decrease in the dividend income of 2.7% and a decrease

in option income of over 27%, partly as a result of the

exceptional level of option income received in 2020.

Option premiums received in 2021 are closer to the levels

received in 2019.

In light of the above, the Board has declared a final

dividend of 4.0p per share, resulting in total dividends for

the year to 31 January 2022 of 10.3p (2021 – 10.0p) —

a 3.0%% increase. The proposed final dividend is payable

on 13 June 2022 to shareholders on the register on

6 May 2022.

Management of Premium and Discount

The Company’s share price rose by 25.6% to 283p and

ended the year at a 11.2% discount to total NAV,

compared with a 10.9% discount at the end of the 2021

financial year. The Board continues to work with the

Manager in both promoting the Company’s benefits to a

wider audience and providing liquidity to the market

through the use of share buybacks.

Over the course of the year, the Company’s shares mainly

traded at discounts ranging between 7.0% and 11.0%.

During the year, 2,353,212 shares were bought back and

cancelled at a weighted average price of 266.91p and a

weighted average discount of 9.6%. The total cost was

£6.3 million. Since 31 January 2022, the Company has

bought back a further 440,036 Ordinary shares, at a

weighted average discount to the underlying NAV

of 11.7%.

Gearing

The Board believes that sensible use of gearing should

enhance returns to our shareholders over the longer term.

In December 2020, the Company entered into a long-

term financing agreement for US$50 million with MetLife

comprising two loans of US$25 million with terms of 10 and

15 years. As a result, net gearing at 31 January 2022 stood

at 4.9% (2021: 7.4%).

Chair’s Statement

The North American Income Trust plc 9

Board

James Ferguson retired from the Board on 31 December

2021, after almost 20 years of service. During his tenure, he

successfully steered the Board through a merger and a

change of mandate and on behalf of the Board, I wish him

well in his other ventures. In view of his retirement, the

Board reviewed its succession planning and has

undertaken a search for an additional independent Non-

Executive Director and an announcement will be made in

due course. On 1 January 2022, I stepped up to the role of

Chair and relinquished the role of Senior Independent

Director; I am delighted to report that Charles Park has

agreed to take on this responsibility.

Outlook

Russia’s invasion of Ukraine has dominated the headlines

in recent months and caused widespread concern on

personal, economic and environmental levels. The

Company has no material exposure to Russia or Ukraine,

although the conflict indirectly has the potential to fuel

global inflation through commodity-flow disruptions.

Ramifications from the conflict have only exacerbated

existing concerns of rising inflation, a key issue for the

Board and the Manager. Inflation has been at the heart of

many investors’ concerns due to its anticipated impact on

the US Federal Reserve’s (the “Fed”) policy and corporate

outlooks, which has further increased market angst. At the

same time, coming out of the pandemic lockdowns,

demand for most goods and services surged thanks to the

general reopening of economies globally, supplemented

by healthy consumer spending following multiple rounds

of stimulus. However, supplies of key raw materials remain

limited because of COVID-19-induced supply-chain

disruptions and/or capacity retirements implemented

during the pandemic. This combination of strong

consumer demand, restricted supply, and congested

supply chains has pushed inflation to its highest level in

over 40 years. As a result, the Fed will have to tighten

monetary policy through interest-rate hikes and balance-

sheet reduction more quickly than originally expected.

Investors historically have experienced anxiety during the

early stages of a rate-hike cycle because of the potential

for a policy mistake.

The US equity market got off to a rocky start in 2022 as

investors became more concerned about inflation,

looming interest-rate hikes by the Fed, corporate

profitability headwinds, and geopolitical tensions. At the

same time, there was a significant rotation out of growth

stocks into more value-orientated companies. The

investment approach of the Company focuses on

delivering an above-average income. It is reassuring to

note that the majority of its investee companies continue

to announce significant increases in the rates of dividend

they will pay as this permits the Board to have a high

degree of confidence in its ability to target dividend

increases to the Company’s shareholders. We have

experienced a prolonged period where investors have

focused on capital growth and income investing has taken

a back seat. Our focus on value-orientated companies

that are likely to be better able to cope against such a

macro-economic backdrop is coming back into favour

and the Board is pleased to note the improvement in

relative performance that has developed and expects

that market conditions are liable to remain favourable for

the Company for the immediate future.

Annual General Meeting (“AGM”) and

Online Shareholder Presentation

AGM

The AGM will be held on 8 June 2022 at the offices of

abrdn at 1 George Street, Edinburgh, EH2 2LL. We

encourage all shareholders to complete and return the

form of proxy enclosed with the Annual Report to ensure

that your votes are represented at the meeting (whether

or not you intend to attend in person). If you hold your

shares in the Company via a share plan or a platform, and

would like to attend and/or vote at the AGM, then you will

need to make arrangements with the administrator of

your share plan or platform. For this purpose, investors

who hold their shares in the Company via the abrdn

Investment Plan for Children, Share Plan or ISA will find a

Letter of Direction enclosed. abrdn Planholders are

encouraged to complete and return the Letter of

Direction in accordance with the instructions.

The Notice of the Meeting is contained on pages

100 to 104.

10 The North American Income Trust plc

Online Shareholder Presentation

In order to encourage as much interaction as possible with

our shareholders, there will also be an Online Shareholder

Presentation, which will be held at 4:30 pm on 23 May

2022. At this event, you will receive a presentation from the

Investment Manager and have the opportunity to ask

questions of the Chair and the Investment Manager. The

online presentation is being held ahead of the AGM to

allow shareholders to submit their proxy votes prior to

the meeting.

Full details on how to register for the online event will be

available on the Company’s website. Shareholders are

also encouraged to submit questions in advance of the

Online Shareholder Presentation and the AGM at the

following email address:

northamericanincome@abrdn.com.

If you are unable to attend the online event, the

Investment Manager’s presentation will be available on

the Company’s website shortly after the presentation.

In the interim, the Board strongly encourages all

shareholders to exercise their votes in respect of the AGM

in advance of the meeting, and to appoint the Chair of the

meeting as their proxy, by completing the enclosed Form

of Proxy (or Letter of Direction for those who hold shares

through the abrdn savings plans).

Dame Susan Rice

Chair

6 April 2022

Chair’s Statement

Continued

The North American Income Trust plc 11

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 Board does 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”) to act as the alternative

investment fund manager (“AIFM” or the “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 abrdn Inc. (the “Investment Manager”) by

way of a delegation agreement in place between ASFML

and abrdn Inc.

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.

Overview of Strate

12 The North American Income Trust plc

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 18 to 20. 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 19.

Share price 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 20.

Ongoing charges ratio (“OCR”)

The Board reviews the Company’s operating costs carefully against its peer group of

investment trusts with similar investment objectives. The Company’s OCR is provided

on page 5.

Considered to be an Alternative Performance Measure. See pages 88 to 90 for more information

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,

such as climate change and geopolitical developments. This process is supported by 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 following table, 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.

Overview of Strate

Continued

The North American Income Trust plc 13

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, geopolitical developments or similar.

The resulting impact of disruption on the operations of

the Company and its service providers, temporarily

or for prolonged duration.

The Board is cognisant of the risks arising from the pandemic and

geopolitical developments (such as Russia’s invasion of Ukraine),

including stockmarket instability and longer term economic effects

and the potential impact on the operations of the third-party suppliers,

including the Manager.

The Manager assesses and reviews the investment risks arising from

the pandemic or geopolitical developments on the companies in the

portfolio, including but not limited to: employee absence, reduced

demand, supply chain breakdown, balance sheet strength, ability to

pay dividends, and takes the necessary investment decisions. The

Manager has regular communications with the underlying investee

companies in order to navigate and guide the company through the

current challenges.

The Manager has business continuity procedures and contingency

arrangements in place to ensure that they are able to continue to

service their clients, including investment trusts. The services from

third parties, including the Manager, have continued to be supplied

effectively during the current market environment and the Board

will continue to monitor services through regular updates from

the Manager.

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.

The Company has built up its revenue reserves over recent years

which provides flexibility in future years, should the dividend

environment become challenging.

14 The North American Income Trust plc

Description Mitigating Action

Operational

The 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 relevant 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 Company’s net gearing levels and its

compliance with loan covenants. As at 31 January 2022 the Company

had £37.2 million of borrowings and net gearing was 4.9% 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 share buybacks.

Derivatives

The Company uses derivatives primarily to enhance the

income generation of the Company. Derivatives are

difficult to value and exposed to counterparty risk.

The risks associated with derivatives contracts are managed within

guidelines and limits set by the Board.

Overview of Strate

Continued

The North American Income Trust plc 15

Potential Impact of Environmental, Social and Governance

(“ESG”) Investment Principles

Applying ESG and sustainability criteria in the investment

process may result in the exclusion of assets in which the

Company might otherwise invest. The Manager also

monitors and responds to ESG and sustainability risks at

portfolio companies as they evolve over time. This may

have a positive or negative impact on performance.

The Board supports and encourages the ESG analysis incorporated by

the Manager as part of its investment decision making process and

understands that over the short-term companies with weak ESG

compliance may appear to perform strongly. Over the long term the

board believes companies that carefully understand and proactively

manage the ESG issues relevant to their businesses will prove more

resilient and capture emerging opportunities for growth. The Manager

also actively engages with investee companies in relation to ESG and

sustainability issues that it deems material.

In addition to these risks, the Company is exposed to the

effects of recent geopolitical instability or changes which

could have an adverse impact on stockmarkets and the

Company’s portfolio. The Board is also mindful of the

continuance of the global pandemic and any longer term

impact arising from the uncertainty it creates.

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 four Directors at the time of

writing this report 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 and 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. The Board encourages 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 the normal format of the 2021 AGM was not

able to take place due to the government restrictions in

place as a result of COVID-19, a number of podcasts by

the Investment Manager were made available on the

Company’s website for shareholders to access.

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.

16 The North American Income Trust plc

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 Investment Manager on behalf of the Company can

be found on page 22 to 23 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.

Key decisions and actions during the year to 31 January

2022, which required the Directors to have greater focus

on stakeholders included:

Directorate

The Board’s succession and refreshment policies were

reviewed during the year. The stability of a Board during

one of the most challenging periods was considered an

important factor and, as such, no changes were made to

the Board composition during the financial year. The

Board is, however, mindful of the importance of having a

suitable succession plan. James Ferguson retired from the

Board on 31 December 2021 and was succeeded by

Dame Susan Rice, who has served on the Board since

2015. Charles Park was appointed the Senior Independent

Director in January 2022. The search for a new

independent Non-Executive Director has progressed well

and an announcement will be released in due course.

Dividends paid to shareholders

During the year, the Board reviewed the dividend

payment policy. It concluded that, as the primary

objective of the Company is to deliver income to

shareholders, it should focus on matching payments to

shareholders more closely with the income received by

the portfolio. Consequently, the Board moved to a

payment structure whereby the first three interim

dividends in the year represent a greater proportion of the

expected annual dividend than had been the case in the

past. Subject to shareholder approval of the proposed

final dividend, the Company paid a total dividend of 10.3p

for the financial year, representing an increase of 3.0%

compared to the previous year (2021: 10.0p). The Board

recognises the importance of dividends to shareholders

and after careful review of the Company’s revenue

forecasts and the investment outlook with the Manager,

the dividend was increased in line with the Company’s

objective of above average income growth as well as

reflecting the Company’s financial position.

Management of the portfolio

As in previous years, the Board focused on the

performance of the Manager in achieving the Company’s

investment objective within an appropriate risk

framework. Since the outbreak of the COVID-19

pandemic in 2020, with many people working from home,

the Board has liaised closely with the Manager to receive

assurances (including portfolio activity, risks and

opportunities, gearing, revenue forecasts and the

operations of third party providers) that the Company had

sufficient resilience in its portfolio and operational

structure to meet the challenged circumstances.

As explained in more detail on page 47, during the year,

the Management Engagement Committee decided that

the continuing appointment of the Manager was in the

best interests of shareholders

Duration

The Company does not have a fixed winding-up date;

however, shareholders are given the opportunity to vote

on the continuation of the Company every three years at

the AGM. The Company’s continuation vote held in 2021

was supported by shareholders and the next continuation

vote is scheduled at the AGM in June 2024.

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 2022 the Board consisted of one

man and three women with diverse and relevant

expertise and perspectives.

Environmental, Social and Human

Rights Issues

The Company has no employees as the Board has

delegated day to day management and administrative

functions to ASFML. There are therefore no disclosures to

be made in respect of employees. Further information on

socially responsible investment can be found on pages 25

to 29.

Overview of Strate

Continued

The North American Income Trust plc 17

Global Greenhouse Gas Emissions

and Streamlined Energy and Carbon

Reporting (“SECR”)

All of the Company’s activities are outsourced to third

parties. The Company therefore 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. For the same reasons as set out above, the

Company considers itself to be a low energy user under

the SECR regulations and therefore is not required to

disclose energy and carbon information.

The Manager has access to a range of ESG tools, two of

which are climate-related. These tools allow fund

managers to look at the overall carbon footprint of their

portfolios and compare with the benchmark. It also allows

them to identify the highest carbon emissions stocks

across portfolios. Furthermore, the carbon footprint tool

has been used to help further guide the Manager’s

engagement with companies (for example, including the

top three carbon-emitting stocks in the priority

engagement process).

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 the Company’s brokers and

shareholders, where available;

· A resolution for the continuation of the Company was

passed at the AGM in June 2021 showing ongoing

support from shareholders for the Company’s mandate;

· The principal risks detailed in the strategic report on

pages 12 to 15 and the steps taken to mitigate these

risks. In particular, the Board has considered the

operational ability of the Company to continue in the

current environment, which has been impacted by the

global pandemic and geopolitical developments, and

the ability of the key third party suppliers to continue to

provide essential services to the Company. Third party

services have continued to be provided effectively;

· The Company is invested in readily realisable listed

securities; recent stress testing has confirmed that

shares can be easily liquidated, despite the more

uncertain and volatile economic environment;

· 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 pages 2 and 4)

which can be used to top up the dividend in tougher

times;

· The level of gearing is closely monitored by the Board

and the Manager. Covenants are actively reviewed and

there is adequate headroom in place; and

· The availability of long-term gearing facilities. The

Company’s gearing comprises $25 million of 10 year

loan notes (until December 2030) and $25 million of 15

year loan notes (until December 2035).

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

COVID-19, its variants and the re-introduction of

government restrictions), 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.

Dame Susan Rice

Chair

6 April 2022

18 The North American Income Trust plc

Performance (total return)

1 year return 3 year return

5 year return

Total return (Capital return plus dividends reinvested) % % %

Share price

+25.6 +17.0 +35.3

Net asset value per share

+25.7 +25.1 +40.4

Russell 1000 Value Index (in sterling terms) +26.3 +44.7 +54.4

S&P 500 Index (in sterling terms) +26.2 +72.5 +103.7

Cumulative return

Considered to be an Alternative Performance Measure. See page 90 for more information.

Ten Year Financial Record

Year to 31 January 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Per share (p)

Net revenue return

3.94 5.96 6.54 7.15 7.98 8.42 10.04 11.42 11.79 10.28

Dividends

3.90 5.40 6.00 6.60 7.20 7.80 8.50 9.50 10.00 10.30

As at 31 January

Net asset value per share

(p) 153.8 163.1 187.8 187.1 264.7 275.5 280.4 288.9 262.5 318.8

Shareholders’ funds (£’000) 242,069 271,952 309,273 280,644 379,101 391,649 398,657 413,948 375,416 448,463

Comparative figures 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.

Results

The North American Income Trust plc 19

Dividend (p) and Company and Russell 1000 Value Index and the S&P 500 Index Yields (%)

7.8

8.5

9.5

10.0

10.3

10p

12p

2018 2019 2020 2021 2022

NAIT - annual dividend (p) NAIT yield (%) Russell 1000 Value yield (%) S&P 500 yield (%)

Total Return of NAV and Share Price vs Russell 1000 Value Index and the S&P 500 Index

(reference indices in sterling terms)

Five years to 31 January 2022 (rebased to 100 at 31 January 2017)

100

120

140

160

180

200

220

31/01/17 31/01/ 18 31/01/ 19 31/01/ 20 31/01/ 21 31/01/22

Source: abrdn, Morningstar & Lipper

Share price NAV Russell 1000 Value Index S&P 500 Index

Performance

Invest

20 The North American Income Trust plc

Share Price Premium/ (Discount) to NAV

Five years to 31 January 2022

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

31/01/17 31/01/18 31/01/19 31/01/20 31/01/21 31/01/22

Source: Morningstar

Discount

The North American Income Trust plc 21

Market review

North American equity market indices moved sharply

higher during the year ended 31 January 2022, despite

weathering numerous periods of volatility. Markets had a

strong start in 2021, following the rollout of COVID-19

vaccines and optimism over additional US government

stimulus spending under President Joe Biden. The markets

extended gains as economies re-opened globally and

commodity prices rallied. However, investors’ risk aversion

resurfaced in the second half of the year as the

emergence of two COVID-19 variants, Delta and

Omicron, prompted renewed lockdowns and travel

restrictions. This increased concerns about further supply-

chain disruptions. Subsequently, geopolitical tensions

combined with talk of accelerated monetary tightening

amid rising inflation resulted in a sharp and swift rotation

towards value-centric areas of the market and

commodities towards the end of the year. The energy,

financials and real estate sectors were the strongest

performers within the Russell 1000 Value Index (the

Company’s reference index), while the communication

services, the information technology and utilities sectors

were the primary market laggards for the period.

The Fed became more “hawkish” following its meeting in

mid-December 2021. The market is now pricing in at least

six interest-rate hikes in 2022. Jerome Powell, Chairman of

the Federal Reserve, signalled that its focus has shifted

from supporting the economy to tackling inflation,

particularly given the low US unemployment rate

and hourly earnings rising to 5.7% year-over-year in

January 2022.

In economic news, US gross domestic product (“GDP”)

grew at an annualised rate of 5.7% over 2021, compared

to a 3.4% decrease in the previous calendar year. The

increase in GDP for 2021 was attributable mainly to

upturns in consumer spending, non-residential fixed

investment and exports. The Department of Labor

reported that US payrolls expanded by a total of 6.6 million

over the year ended 31 January 2022, and the

unemployment rate declined by 2.4 percentage points to

4.0%. The leisure and hospitality industry led the job gains

for the period; however, employment in the sector was still

down more than 10% from its pre-pandemic level in

February 2020. Inflation surged over the review period as

the US Consumer Price Index was up 7.5% year-over-year

in January 2022 — the largest annual increase in 40 years.

Performance

The Company returned 25.7% on a NAV total return basis

in sterling terms for year ended 31 January 2022, modestly

underperforming the 26.3% total return of its reference

index, the Russell 1000 Value Index. The revenue account

remained in a healthy position, building upon the record

established in prior years. The decline in the revenue

account was largely attributable to the exceptional level

of option income received in 2020. Furthermore, while

many holdings raised their dividend payments in 2021,

they did it on a delayed basis instead of annually. The

result was flat dividend payments for several holdings for

five, six or seven quarters. Fortunately, most holdings that

deferred raising their dividend payments did so by the end

of 2021 such that dividend income growth should improve

in 2022.

The Company’s performance relative to the reference

index for the period benefited from overall positioning in

the technology sector and stock selection in consumer

staples. The main individual stock contributors to

performance included holdings in alternative asset

manager Blackstone and pharmaceutical firm Abbvie.

Blackstone saw healthy revenue and earnings growth

with notable strength in its Private Equity and Real Estate

segments. Abbvie saw healthy year-over-year revenue

and EPS growth as it benefited from healthy revenue

growth in its Global Botox Therapeutic business.

Investment performance was hampered by stock

selection in the energy, real estate and financials sectors.

The largest individual stock detractors from performance

were Omega Healthcare Investors, a REIT with exposure to

nursing homes and assisted living facilities, and medical

device maker Medtronic.

The share price of Omega Healthcare Investors fell as

demand for skilled nursing facilities waned, given the

decline in elective procedures that help drive demand in

this industry. Shares of Medtronic declined late in the

period as the surge in COVID-19 variants dampened the

outlook for performed medical procedures in addition to

lost sales related to the discontinuation of the company’s

older diabetes pump model. The Company’s lack of a

holding in Exxon Mobil weighed on performance as the

stock price rose sharply as crude oil prices rose.

Investment Mana

er’s Review

22 The North American Income Trust plc

Portfolio activity

The Company’s investments remained consistent with our

high-quality, cash-generative stock selection process,

however, market volatility created opportunities to add

quality companies into the portfolio at attractive prices.

During the review period, we initiated an equity position in

Hannon Armstrong Sustainable Infrastructure Capital, a

provider of financing solutions to companies in the

renewable energy space. We believe that the company

will benefit from an acceleration in climate-change-

related projects, by leveraging its expertise and

relationships within the industry. This will result in better

than anticipated balance sheet and earnings growth. The

management of Broadcom, a supplier of semiconductor

and infrastructure software solutions, has a strong history

of creating value. We are comfortable with the company’s

approach to mergers and acquisitions given a proven

history of high returns on equity (“ROE”), best-in-class

margins, and free cash flow (“FCF”)/dividend growth.

MetLife, a provider of insurance, employee benefits, and

other financial services, currently has a collection of

businesses (International Life, Group Insurance, and

Institutional) that generate higher growth and superior

returns relative to most US peers following the divestiture

of lower-value segments and the spin-off of

Brighthouse Financial.

Shares in Baker Hughes, one of the world’s largest

providers of equipment and services to the energy sector,

were purchased. The company is in a unique position

within the energy complex because beyond its exposure

to traditional oil field services markets, it has a near-

monopolistic position within liquefied natural gas

equipment, and a diverse set of solutions that will help to

accelerate the energy transition. This combination of an

attractive fundamental backdrop, healthy financial profile,

and strong dividend yield creates an opportunity which we

believe the market isn’t fully appreciating.

VF Corp. is a global footwear and apparel company

focused on outdoor and lifestyle activities with popular

brands, including The North Face, Vans, Timberland,

Dickies and Supreme. The management team has

repositioned and reshaped the company’s portfolio of

brands which in our view will yield faster and more

profitable growth coming out of the global pandemic. We

are confident in management’s ability to execute on this

improving growth strategy, while the market appears

more sceptical.

CI Financial is a wealth management firm that has an

investment management arm and a fledgling Registered

Investment Advisor (RIA) business. The company has

experienced continued organic and inorganic growth as it

expands into US wealth management, and the launch of

new products in asset management is driving revenue

growth and improved profitability. It is believed that the

market is not currently pricing in this future growth and

improved mix to the RIA business, and further multiple

expansion is warranted as the quality of the earnings

stream improves.

A position in OneMain Financial, which provides credit to

near-prime consumers, was initiated. Apollo Group (which

the Company does not hold) took a majority control

position within OneMain Financial and helped to improve

the company’s balance sheet, cost of funding, and risk

profile by focusing more on secured lending and

optimised pricing. In our view, these changes have

resulted in a much higher-quality company with scope for

both earnings growth and sizable return of capital in the

coming years via dividends (a yield in excess of 5%),

special dividends, and share buybacks.

Other initiated holdings during the review period included

Emerson Electric (EMR), a provider of engineering services

for industrial, commercial, and consumer markets. We

believe that its leading position in automation for certain

end markets such as energy and chemicals should benefit

from the economic recovery and from longer-term

tailwinds related to clean energy. Furthermore, it is

believed that EMR’s more consumer-oriented businesses

are positioned well within the strong residential and

housing environment, with cost reductions supporting

margins over the medium term.

Analog Devices (ADI) is an analog semiconductor vendor

that sells into a wide range of global end-markets, most

notably industrial, automotive and communications. The

company has gained significant scale through organic

growth and acquisitions and is now the second-largest

analog semiconductor supplier globally. The ADI

management team has a strong execution track record

and company financials have improved significantly over

time. ADI generates high margins and strong free cash

flow, and a 100% return policy supports ongoing dividend

growth making it an attractive growth and income story, in

our view.

Investment Mana

er’s Review

Continued

The North American Income Trust plc 23

Positions that the Company sold during the period

included healthcare services provider UnitedHealth Group,

following the announcement of a sudden change in the

company’s Chief Executive Officer (“CEO”). We believe

that the new CEO is highly qualified; however, investors

may need to see a period of consistent execution before

gaining confidence in the strategy of UnitedHealth

Group’s management.

The Company’s shares of telecommunications company

Verizon Communications were sold as wireless carriers are

heading into an increasingly capital expenditure-intensive

and competitive period as the US adopts 5G technology.

The Company’s shares in ConocoPhillips were also sold in

order to initiate a position in Baker Hughes. ConocoPhillips

has benefited from the rally in oil prices, however, the

risk/reward in the stock was considered much more

balanced than it had been previously. Additionally, the

position in Blackstone was sold following a period of strong

share-price performance coming out of the pandemic,

which resulted in nearly 100% multiple expansion on a

peak earnings stream. The position in data centre REIT

Digital Realty Trust after the stock price staged a rally and

reached what was believed to be fair value relative to the

near-term growth prospects for the business. Despite our

belief that demand for data centre space remains quite

high, new supply entering the market, particularly for

commodity hyperscale space, is putting downward

pressure on rental rates and development yields, which

could slow the pace of value creation in the near term.

The position in Regions Financial was sold when the stock’s

upside was considered to be limited, with the valuation

reflecting the level of returns that we expected the bank

to generate over the next few years. Similarly, the

Company’s shares in Lockheed Martin, a leading prime

defence contractor for countries around the globe, were

also sold. While the company has achieved success with

its latest generation of aircraft, missile defence, and other

platforms, its earnings have become increasingly

concentrated in a small number of programs. Additionally,

these programs are decreasing in priority in terms of

defence budget spending as broader fiscal constraints

and the current general peacetime create a greater

focus on military modernisation. With more attractively

positioned defence companies, we decided to exit

the position.

We also sold the Company’s shares in home improvement

retailer The Home Depot, which we had initiated in the

depths of the COVID-19 uncertainty in March 2020. The

company, which was deemed an essential retailer,

benefited from the pandemic lockdowns, which confined

consumers to their homes, leaving them with significant

time on their hands to initiate numerous home-related

upgrades. Demand remained strong for at least the

following 20 months, which most investors generally had

not expected; secular demand drivers supported the

shares through 2021. The Company’s position in The

Home Depot was sold as we considered forward earnings

expectations for the company to be appropriately

captured in the share price.

The position in industrial conglomerate Honeywell

International was sold as the highly diversified nature of

this business has led to a relatively lower earnings growth

outlook in the current macro-economic environment. The

Honeywell International businesses that were most

challenged by the pandemic continue to recover;

however, this is offset by the slowdown in those businesses

that performed relatively well over the last two years.

Furthermore, we think that the company’s hesitance to

deploy capital towards new and existing businesses has

eroded its potential earnings upside related to use of its

balance sheet. Consequently, we decided to exit the

position in the stock in favour of better investment

opportunities elsewhere.

Finally, the Company’s shares in the world’s largest

consumer products company Procter & Gamble (P&G)

were sold after the strong run-up in the stock price. P&G

benefited as consumers increasingly relied on the

company’s products during the COVID-19 pandemic,

however, many of these tailwinds are fading while the

world “normalises.” In our view, P&G’s management has

done well investing to extend the company’s earnings

growth, while also remaining committed to returning cash

to shareholders; however, these factors are already

appropriately priced into the stock.

A sector analysis chart of the portfolio can be found on

page 35.

24 The North American Income Trust plc

Within the Company’s corporate bond portfolio over the

review period, we initiated a position in Goodyear Tire &

Rubber 5% 2029. Given the dramatic spread-tightening

that the US high-yield corporate bond market

experienced in the first three months of the period, the

positions in the Company’s corporate bond portfolio were

exited where valuations were trading through their fair

values. We preferred to re-invest the sales proceeds into

what we believed to be more attractive opportunities in

the equity market. Consequently, the Company’s positions

in Diamond 1 Fin Diamond 2 6.02% 2026; CCO Holdings 5.5%

2026; HCA 5.875% 2026; NRG Energy 5.25% 2029;

Six Flags 7% 2025; and Rattler Midstream 5.625% 2025

were all exited. We continue to work closely with abrdn’s

fixed income specialists to monitor credits and

market conditions.

Dividend growth

The Company’s holdings continued to build upon an

established track record of dividend growth during the

review period, with several companies announcing

double-digit increases. Aerospace and defence

contractor L3Harris Technologies boosted its payout by

20%, resulting in a 1.9% annualised yield. Broadcom, a

provider of semi-conductor and infrastructure software

services, increased its dividend by 14%, representing a

2.8% annualised yield. Semi-conductor manufacturer

Texas Instruments boosted its quarterly payout by 12.7%,

equivalent to a 2.6% yield. Diversified financial services

company JPMorgan raised its quarterly payout by 11%,

representing a yield of 2.7%. Pharmaceutical firm Bristol-

Myers raised its quarterly dividend by 10.2%, equivalent to

an annualised yield of 3.3%. Railroad operator Union Pacific

boosted its quarterly payout by 10%, representing a 1.9%

annualised yield.

Additionally, two holdings announced special payments to

shareholders during the review period. Derivatives

exchange operator CME Group declared an annual

variable dividend of US$3.25 per share in December 2021.

The company uses this approach to facilitate paying out

all cash that it generates over the year beyond a minimum

threshold. Gaming-focused REIT, Gaming and Leisure

Properties Inc. declared a special earnings and profits

cash dividend of $0.24 per share.

Outlook

Russia’s invasion of Ukraine has introduced greater

uncertainty to global markets in recent months. We

believe that the conflict presents risks of higher global

inflation and the potential for downside economic

forecasts. Nonetheless, the baseline view remains that US

economic growth will remain healthy and the Fed will

focus on raising interest rates, albeit potentially less swiftly

than prior to the outbreak of hostilities in Eastern Europe.

As such, we are paying close attention to the oil and gas

markets and the ability of the US to increase production to

ease potential supply constraints that the US market

may experience.

Fran Radano

abrdn Inc.

6 April 2022

Investment Mana

er’s Review

Continued

The North American Income Trust plc 25

Introduction

Whilst ESG factors alone are not the over-riding criteria in relation to the investment decisions taken by the Manager for

the Company, ESG is fully integrated across the Manager’s investment process. The following pages highlight the way

that ESG factors are considered by the Manager. These processes are reviewed regularly and are liable to change and

the latest information will be available on the Company’s website.

Responsible investing – integration of ESG into the Manager's investment process

“By embedding ESG factors into our active equity investment process we aim to reduce risk, enhance potential value for

our investors and foster companies that can contribute positively to the world.”

abrdn

Core beliefs: assessing risk, enhancing value

Whilst the management of the Company’s investments is not undertaken with any specific instructions to exclude

certain asset types or classes, the consideration of material ESG factors is a fundamental part of the Manager’s

investment process and has been for over 30 years. It is one of the key dimensions on which the Manager assesses the

investment case for any company in which it invests for three key reasons:

Financial returns ESG factors can be financially material – the level of consideration they are given in a company will

ultimately have an impact on corporate performance, either positively or negatively. Those

companies that take their ESG responsibilities seriously tend to outperform those that do not.

Fuller insight Systematically assessing a company’s ESG risks and opportunities alongside other financial

metrics allows the Manager to make far better investment decisions.

Corporate advancement Informed and constructive engagement helps foster better companies, protecting and enhancing

the value of the Company’s investments.

“We believe that the market systematically undervalues the importance of ESG factors. We believe that in-depth ESG

analysis is part of both fundamental company research and portfolio construction and will lead to better client

outcomes”

abrdn

Researching companies: deeper company insights for better investor outcomes

The Manager conducts extensive and high-quality fundamental and first-hand research to fully understand the

investment case for every company in its global universe. A key part of the Manager’s research involves focusing its

extensive resources on analysis of key ESG issues. The Manager’s investment managers, on-desk ESG Equity Analysts

and central ESG Investment Team collaborate to generate a deep understanding of the ESG risks and opportunities

associated with each company. Stewardship and active engagement with every company are also fundamental to the

investment process helping to produce positive outcomes that lead to better risk-adjusted returns.

Mana

er’s Approach to ESG En

ement

26 The North American Income Trust plc

abrdn’s Global ESG Infrastructure

abrdn has around 140 equity professionals globally. Each systematically analyses ESG risks and opportunities as part of

the Manager’s research output for each company. The central ESG team and over 50 on-desk ESG equity analysts

support the investment managers’ first-hand company analysis, producing research into specific themes (e.g. labour

relations or climate change), sectors (e.g. forestry) and ESG topics to understand and highlight best practice. Examples

of thematic and sector research can be found on abrdn.com/en/uk/investor/responsible-investing

Investment Managers All abrdn equity investment managers seek to engage actively with companies to gain insight into

their specific risks and opportunities and provide a positive ongoing influence on their corporate

strategy for governance and environmental and social impact.

ESG Equity Analysts abrdn has over 50 dedicated and highly experienced ESG equity analysts located across the UK,

US, Asia and Australia. Working as part of individual investment desks – rather than as a separate

department – these specialists are integral to pre-investment due diligence and post-investment

ongoing company engagement. They are also responsible for taking thematic research produced

by the central ESG Investment Team (see below), interpreting and translating it into actionable

insights and engagement programmes for our regional investment strategies.

ESG Investment Team This central team of more than 20 experienced specialists based in Edinburgh and London

provides ESG consultancy and insight for all asset classes. Taking a global approach both identifies

regions, industries and sectors that are most vulnerable to ESG risks and identifies those that can

take advantage of the opportunities presented. Working with investment managers, the team is

key to the Manager’s active stewardship approach of using shareholder voting and corporate

engagement to drive positive change.

From laggards to best in class: rating company ESG credentials

A systematic and globally-applied approach to evaluating stocks allows the Manager to compare companies

consistently on their ESG credentials – both regionally and against their peer group. The Manager captures the findings

from its research and company engagement meetings in formal research notes. Some of the key questions include:

· Which ESG issues are relevant for this company, how material are they, and how are they being addressed?

· What is abrdn’s assessment of the quality of this company’s governance, ownership structure and management?

· Are incentives and key performance indicators aligned with the company’s strategy and the interests of shareholders?

Having considered the regional universe and peer group in which the company operates, the Manager’s equity team

then allocates it an ESG Quality score (ESG Q Score) between one and five (see below) which will be applied across

every stock that the Manager covers globally.

Mana

er’s Approach to ESG En

ement

Continued

The North American Income Trust plc 27

1. Best in class 2. Leader 3. Average 4. Below average 5. Laggard

ESG considerations are

material part of the

company’s core

business strategy

Excellent disclosure

Makes opportunities

from strong ESG risk

management

ESG considerations

not market leading

Disclosure is good, but

not best in class

Governance is

generally very good

ESG risks are considered

as a part of principal

business

Disclosure in line with

regulatory requirements

Governance is generally

good but some minor

concerns

Evidence of some

financially material

controversies

Poor governance or

limited oversight of key

ESG issues

Some issues in treating

minority shareholders

poorly

Many financially

material controversies

Severe governance

concerns

Poor treatment of

minority shareholders

The Manager also uses a combination of external and proprietary in-house quantitative scoring techniques to

complement and cross-check analyst-driven ESG assessments. ESG analysis is peer-reviewed within the equities team,

and ESG factors impacting both sectors and stocks are discussed as part of the formal sector reviews. To be considered

‘best in class’, the management of ESG factors must be a material part of the company’s core business strategy. It must

provide excellent disclosure of data on key risks. It must also have clear policies and strong governance structures,

among other criteria.

Working with companies: staying engaged, driving change

Once abrdn invests in a company, it is committed to helping that company maintain or raise their ESG standards further,

using the Manager’s position as a shareholder to press for action as needed. abrdn actively engages with the companies

in which it invests to help them improve and become even better businesses.

The Manager sees this programme of regular engagement as a necessary fulfilment of its duty as a responsible steward

of clients’ assets. It is also an opportunity to share examples of best practice seen in other companies and to use the

Manager’s influence to effect positive change. The Manager’s engagement is not limited to the company’s

management team. It can include many other stakeholders such as non-government agencies, industry and regulatory

bodies, as well as activists and the company’s clients. What gets measured gets managed – so the Manager strongly

encourages companies to set clear targets or key performance indicators on all material ESG risks where appropriate.

The investment process consists of four interconnected and equally important stages.

Monitor Contact Engage Act

Ongoing due diligence

· Business performance

· Company financials

· Corporate governance

· Company’s key risks and

opportunities

Frequent dialogue

· Senior executives

· Board members

· Heads of departments and

specialists

· Site visits

Using our voice

· Attend AGM/EGMs

· Always vote

· Explain voting decisions

· Maximise influence to drive

positive outcomes

Consider all options

· Increase or decrease our

shareholding

· Collaborate with other

investors

· Take legal action if

necessary

28 The North American Income Trust plc

The Manager’s engagement with any company is tailored as appropriate for each business. ESG matters are prioritised

as applicable to the individual circumstances and are aligned to the company’s ESG Q Score.

Examples of areas that abrdn actively engage with companies on include but are not limited to:

Environmental Social Governance

· deforestation

· waste and water management

· climate risks

· carbon emissions

· energy management

· air quality

· employee safety

· human rights

· diversity issues

· labour management

· cyber-security

· customer privacy

· succession planning

· remuneration

· capital allocation

· corporate strategy

· board diversity

· ESG disclosures

Climate Change

Managers have a duty to consider all factors that may

have a financially material impact on returns. Climate

change is such a key factor. The related physical and

transition risks are vast and are becoming increasingly

financially material for many investments. Not only in the

obvious high-emitting sectors, such as energy, utilities and

transportation, but also along the supply chain, providers

of finance and in those reliant on agricultural outputs and

water.

In the Manager’s view, companies that successfully

manage climate-change risks will perform better in the

long-term. It is important that the financial implications of

material climate-change risks are assessed across all

asset classes, including real assets, and make portfolios

more resilient to climate risk.

Adaptation measures are essential to help limit damages

from the physical impacts of climate change. This is a

particularly important consideration for the real assets in

which abrdn invests, such as real estate and infrastructure.

Comparable climate-related data is necessary to enable

effective decision making, and is something the Manager

actively sources and incorporates into its process. The

Manager is supportive of the Task Force on Climate-

related Financial Disclosures (TCFD) framework to

strengthen climate reporting globally.

Regular engagement with high-emitting investee

companies allows the Manager to better understand its

exposure and management of climate change risks and

opportunities. In the actively managed investments,

ownership provides the Manager with a strong ability to

challenge companies where appropriate. The Manager

can also influence corporate behaviour positively in

relation to climate-risk management.

The Manager believes that this is more powerful for an

effective energy transition than a generic fossil fuel

divestment approach. Through active engagement the

Manager can steer investee companies towards

ambitious targets and more sustainable low-carbon

solutions. If the Manager finds that that there is limited

progress in response to engagement, and believes that

the climate-related risks of a company are not being

adequately addressed, the ultimate option of selling the

Company’s holdings will be considered.

The Manager influences management of climate-related

risks through engagement and voting. abrdn is part of

Climate Action 100+ and has signed the 2018 Just

Transition statement.

Continued

Mana

er’s Approach to ESG En

ement

The North American Income Trust plc 29

The Manager strongly encourages companies to consider

the social dimension of the energy transition to ensure it is

inclusive and ‘Just’. This means worker and community

needs are considered on the path to a low-carbon

economy so they are not left stranded. Other social

aspects, such as affordability and reliability of energy

supply are also important. Influencing through

engagement has worked particularly well in collaboration

with other asset managers and asset owners as part of

the Manager’s involvement in Climate Action 100+. This is a

five-year initiative to engage and influence high-emitting

companies collaboratively.

To achieve desired outcomes for clients, consideration of

climate-change risks and opportunities is an integral part

of the Manager’s investment process.

Corporate engagement is essential to ensure investee

companies manage climate-related risks and support a

‘Just' energy transition. This is an important part of abrdn’s

role as an active investor.

The Manager provides climate change insights through

research and data to investment decision makers. This

helps assess the financial materiality of climate change

risks and opportunities.

30 The North American Income Trust plc

Portfolio

The Company invests in Comcast, a media and

television broadcasting services corporation,

creating incredible technology and entertainment

that connects millions of people to the moments

and experiences that matter most.

The North American Income Trust plc 31

The Company’s portfolio is consistent

with the Manager’s focus on high

quality cash generative companies

with good financial return profiles

and well-regarded, experienced

management. At 31 January 2022,

the Company’s portfolio consisted of

39 equity and 2 bond holdings.

32 The North American Income Trust plc

As at 31 January 2022

Abbvie

Bristol-Myers Squibb

AbbVie Inc. researches and develops

pharmaceutical products. The

company produces pharmaceutical

drugs for speciality therapeutic areas

such as immunology, chronic kidney

disease, hepatitis C, woman’s health,

oncology and neuroscience.

Bristol-Myers Squibb Company is a

global biopharmaceutical company.

The Company develops, licenses,

manufactures, markets, and

sells pharmaceutical and

nutritional products.

Comcast

Citigroup

Comcast Corporation provides

media and television broadcasting

services. The company offers video

streaming, television programming,

high-speed Internet, cable television

and communication services.

Comcast serves customers

worldwide.

Citigroup Inc. is a diversified

financial services holding company

that provides a broad range of

financial services to consumer and

corporate customers.

Philip Morris

Gaming & Leisure Properties

Philip Morris International Inc.,

through its subsidiaries,

manufactures and sells cigarettes

and other tobacco products.

Gaming and Leisure Properties, Inc.

owns and leases casinos and other

entertainment facilities.

Phillips 66

Medtronic

Phillips 66 is a downstream energy

company. The Company’s

operations include oil refining,

marketing, and transportation.

Medtronic, plc develops therapeutic

and diagnostic medical products for

a wide range of conditions, diseases

and disorders.

TC Energy

MetLife

TC Energy Corp is the parent

company of TransCanada PipeLines

Limited. The Company is focused

on natural gas transmission and

power services.

MetLife, Inc. provides individual

insurance, employee benefits, and

financial services with operations

throughout the United States and the

regions of Latin America, Europe, and

Asia Pacific.

Ten Lar

est Investments

The North American Income Trust plc 33

As at 31 January 2022

Valuation Total Valuation

2022 assets 2021

Company Industry classification £’000 % £’000

Abbvie Biotechnology 25,508 5.2 22,389

Bristol-Myers Squib Pharmaceuticals 20,797 4.3 17,894

Comcast Media 19,561 4.0 10,107

Citigroup Banks 19,415 4.0 16,892

Philip Morris Tobacco 19,165 3.9 17,401

Gaming & Leisure Properties Equity Real Estate Investment Trusts (REITs) 16,837 3.5 7,978

Phillips 66 Oil, Gas & Consumable Fuels 15,800 3.3 8,887

Medtronic Health Care Equipment & Supplies 15,427 3.2 14,593

TC Energy Oil, Gas & Consumable Fuels 15,388 3.2 14,060

MetLife Insurance 14,995 3.1 -

Ten largest investments 182,893 37.7

Huntington Bancshares Banks 14,592 3.0 6,742

Cisco Systems Communications Equipment 14,523 3.0 12,986

Omega Healthcare Investors Equity Real Estate Investment Trusts (REITs) 14,078 2.9 13,188

Gilead Sciences Biotechnology 13,822 2.9 13,376

Hanesbrands Textiles, Apparel & Luxury Goods 13,800 2.8 8,908

Emerson Electric Electrical Equipment 13,707 2.8 -

Baker Hughes Energy Equipment & Services 13,294 2.7 -

American International Insurance 12,913 2.7 8,179

L3 Harris Technologies Aerospace & Defense 12,480 2.6 8,118

FMC Chemicals 12,340 2.5 5,914

Twenty largest investments 318,442 65.6

CMS Energy Multi-Utilities 11,996 2.5 16,569

Cogent Communications Diversified Telecommunication 11,853 2.4 8,295

Union Pacific Road and Rail 11,848 2.4 5,752

VF Textiles, Apparel & Luxury Goods 11,665 2.4 -

Air Products & Chemicals Chemicals 10,514 2.2 7,770

OneMain Consumer Finance 9,626 2.0 -

JPMorgan Chase & Co. Banks 8,861 1.8 14,992

Restaurant Brands International Hotels, Restaurants & Leisure 8,344 1.7 8,404

CI Financial USD Capital Markets 8,318 1.7 -

Coca-Cola Beverages 8,185 1.7 7,013

Thirty largest investments 419,652 86.4

List of Investments

34 The North American Income Trust plc

Continued

As at 31 January 2022

Valuation Total Valuation

2022 assets 2021

Company Industry classification £’000 % £’000

Royal Bank of Canada Banks 7,645 1.6 5,900

CME Group Capital Markets 6,842 1.4 7,279

Broadcom Semiconductors & Semiconductor Equipment 6,550 1.3 -

Hannon Armstrong Sustainable Mortgage Real Estate Investment Trusts (REITs) 6,183 1.3 -

Texas Instruments Semiconductors & Semiconductor Equipment 6,020 1.2 4,826

Nutrien Chemicals 5,203 1.1 5,371

Genuine Parts Distributors 4,965 1.0 6,837

Analog Devices Semiconductors & Semiconductor Equipment 4,889 1.0 -

CI Financial CAD Capital Markets 1,383 0.3 -

Qwest Cap Funding 7.75% 15/02/31 Telecommunications 897 0.2 905

Forty largest investments 470,229 96.8

Goodyear Tire & Rubber 5%

15/07/29

Consumer Durables 745 0.2 -

Total investments 470,974 97.0

Net current assets 14,680 3.0

Total assets 485,654 100.0

List of Investments

The North American Income Trust plc 35

Geographic Analysis

As at 31 January

2022 2021

Equity Fixed interest Total Equity Fixed interest Total

Country % % % % % %

Canada 9.8 – 9.8 8.3 – 8.3

USA 89.8 0.4 90.2 90.0 1.7 91.7

99.6 0.4 100.0 98.3 1.7 100.0

Sector Analysis for Equity Portfolio

As at 31 January 2022

0% 5% 10% 15% 20% 25% 30%

Utilities

Information Technology

Industrials

Consumer Staples

Materials

Real Estate

Consumer Discretionary

Energy

Communication Services

Health Care

Financials

% of investments % of Russell 1000 Value Index % of S&P 500 Index

Geo

raphical/Sector Analysis

36 The North American Income Trust plc

Currency Graph (exchange rate US$ to £)

For the period 31 January 2020 to 31 January 2022

1.10

1.15

1.20

1.25

1.30

1.35

1.40

1.45

31/01/ 20 30/0 4/20 31 /07/ 20 31/10/ 20 31/0 1/21 30/0 4/21 31 /07/ 21 31/10/ 21 31 /01/ 22

Currency/Market Performance

Invest

The North American Income Trust plc 37

Union Pacific Railroad (“Union Pacific”)

Union Pacific is a Class I railroad operator that transports a

variety of goods, including industrial products,

commodities and premium shipments that include

consumer products in intermodal containers as well as

automobiles. The company’s footprint covers all major

West Coast and Gulf Coast ports to eastern gateways as

well as connecting with both Canada's rail systems and

the major gateways to Mexico.

We believe that Union Pacific will continue to benefit from

rising prices and expanding operating profit margins

longer than the market discounts. The industry’s pricing

power is benefiting from long-term drivers including tight

trucking conditions (led by a shortage of drivers), greater

fuel efficiency per ton of freight moved per mile, and

simply that the railroad industry is an oligopoly market.

The trucking market within which they compete is

providing an “umbrella” toward higher prices over time, as

is the case currently. It is believed that, if the rail industry

leaders continue to invest in the network via capital

expenditures and at the same time see rising margins, the

shares should continue to outperform. Executive pay is

driven by operating profits, operating ratio and return on

invested capital, well aligned with shareholder interests.

Additionally, it is believed that the railroads will benefit

from market share gains from truck due to the ESG

benefits of moving goods over the rails relative to the

highway. The sustainability and environmental benefits of

moving goods over intermodal networks should drive the

long-term growth of the industry.

Overall, we believe that Union Pacific will see accelerating

eps growth, strong free cash flow and dividend growth as

the comapny has reorganised the cost structure and

optimized the capital structure. Based on these factors,

it is believed Union Pacific shares should continue

to appreciate as well as paying a progressive,

covered dividend.

Investment Case Studies

Hanesbrands (“HBI”)

Hanesbrands is a leading manufacturer of everyday basic

underwear and activewear offered under the brand

nameplates of Hanes, Bali, Bonds, Maidenform, and

Champion. The company has significant scale, cementing

its low cost positioning.

We believe that the market has been dismissive of

significant operational improvements and management

actions at HBI as the business has driven change in an

organization that historically has been a bit complacent

given its structural advantages. The company is now

under the leadership of a new Chief Executive Officer,

who was the former Walmart Chief Merchant, and brings

the skills and knowledge gained as a former customer.

The company is now setting the foundation for consistent

growth as well as financial discipline by making difficult

decisions to exit certain lower growth categories and

markets that do not have a clear path to improved

profitability. The turnaround strategy is best summarized

as simplify, go faster, and better utilize a very strong

existing asset base. HBI is investing increased resources in

brand building and marketing, while implementing proven

growth strategies for Innerwear and Champion. Execution

of this strategy will result in profitable growth that will lead

higher earnings and ultimately a higher multiple.

Specifically the structure of the turnaround strategy is built

upon four pillars namely: grow Champion, accelerate

Innerwear with a focused effort on younger customers,

infuse the culture with a consumer-centered mindset, and

simplify the portfolio. Critical features of the plan:

· Reduce SKU count: saves expense, improves customer

display and consumer experience

· Leverage low cost manufacturing position: retain price

leadership in inflationary backdrop

· New marketing campaign “Be Your Own Champion”:

will resonate well in today’s support of however one

self-identifies

· Grow innerwear above category growth rates:

introduce more innovation; appeal to a

younger customer

· Increase exposure to e-commerce channel:

augmented with digital marketing to support

· Expand Champion: reverse under investment and

leverage strong brand affinity within the sport &

lifestyle categories

· Reduce leverage and grow the dividend with earnings

Collectively these actions will generate consistent revenue

growth and slowly expand operating margins as earnings

exceed $2 per share.

Investment Case Studies

Continued

The North American Income Trust plc 39

Governance

The Company is committed to high

standards of corporate governance

and applies the principles identified

in the UK Corporate Governance

Code and the AIC Code of

Corporate Governance.

All Directors are considered by the

Board to be independent of the

Company and the Manager and

free of any material relationship

with the Manager.

The Company invests in Cisco Systems, a worldwide

leader in IT, networking and cyber security solutions.

40 The North American Income Trust plc

Dame Susan Rice

Independent Non-Executive Chair

Length of service:

7 years, appointed a Director on 17 March 2015 and

appointed Chair on 1 January 2022

Experience:

A chartered banker with extensive experience as a non-

executive director, as well as in financial services, retail,

utilities, leadership and sustainability. Her previous roles

include managing director of Lloyds Banking Group

Scotland, chair and chief executive of Lloyds TSB Scotland,

President of the Scottish Council for Development and

Industry and a member of the Scottish First Minister’s

Council of Economic Advisors. She has also held a range of

non-executive directorships, including at the Bank of

England and SSE plc. She is currently chair of the Financial

Services Culture Board, The Scottish Fiscal Commission,

Scottish Water and Business Stream and senior

independent director of J Sainsbury plc. She also chairs

the advisory board of the Global Ethical Finance Initiative

and sits on the advisory group P-CAN, the UK Place-Based

Climate Action network. Originally from the United States,

her early career was at Yale and Colgate universities and

then at NatWest Bancorp.

Last re-elected:

1 June 2021

Committee membership:

Management Engagement Committee (Chair)

Contribution

The Board reviewed the contribution of Dame Susan Rice

in light of her proposed re-election at the forthcoming

AGM and concluded that she fosters a collaborative spirit

between the Board and Manager, while encouraging

open contributions from all.

Karyn Lamont

Independent Non-Executive Director and

Chair of the Audit Committee

Length of service:

3 years, appointed a Director on 18 September 2018

Experience:

A chartered accountant and former audit partner at

PricewaterhouseCoopers until December 2016. She has

over 25 years’ experience and provided audit and other

services to a range of clients, including a number of

investment trusts, across the UK's financial services sector,

including outsourcing providers. She is the audit

committee chair of The Scottish Investment Trust plc,

Scottish Building Society, iomart Group plc and Scottish

American Investment Company plc.

Last re-elected:

1 June 2021

Committee membership:

Management Engagement Committee and Audit

Committee (Chair)

Contribution

The Board reviewed the contribution of Karyn Lamont in

light of her proposed re-election at the forthcoming AGM

and concluded that she continues to chair the Audit

Committee effectively as well as bringing to the Board her

extensive experience in accounting and investment

companies.

Board of Directors

The North American Income Trust plc 41

Susannah Nicklin

Independent Non-Executive Director

Length of service:

3 years, appointed a Director on 18 September 2018

Experience:

An investment and financial services professional with

over 25 years of experience in executive roles at Goldman

Sachs and Alliance Bernstein in the US, Australia and the

UK. She has also worked in the private equity sector as

former Senior Independent Director at Pantheon

International plc and with Bridges Ventures, the Global

Impact Investing Network and Impact Ventures UK. She is

Chair of Schroder BSC Social Impact Trust plc and a non-

executive director of Amati AIM VCT plc, Baronsmead

Venture Trust plc and Ecofin Global Utilities and

Infrastructure Trust plc. She is a CFA® charterholder.

Last re-elected:

1 June 2021

Committee membership:

Management Engagement Committee and Audit

Committee

Contribution

The Board reviewed the contribution of Susannah Nicklin

in light of her proposed re-election at the forthcoming

AGM and concluded that she continues to provide insight

and challenge to the investment process, through her

experience of investment companies, with a particular

interest in ESG reporting.

Charles Park

Senior Independent Non-Executive Director

Length of service:

3 years, appointed a Director on 13 June 2017

Experience:

Over 25 years of investment management experience.

He was a co-founder of Findlay Park Investment

Management, a US boutique asset management house

established in 1997, and deputy chief investment officer

with joint responsibility for managing Findlay Park

American Fund until his retirement from the firm in 2016.

Prior to co-founding Findlay Park, Charles was an

investment manager at Hill Samuel Asset Management

and an analyst at Framlington Investment Management.

He is a non-executive director of Polar Capital Technology

Trust plc.

Last re-elected:

1 June 2021

Committee membership:

Management Engagement Committee and Audit

Committee

Contribution

The Board reviewed the contribution of Charles Park in

light of his proposed re-election at the forthcoming AGM

and concluded that he brings a wealth of investment

management experience to the Board and expert

knowledge of investment companies and governance

matters in his role as Senior Independent Director.

42 The North American Income Trust plc

The Company, which was incorporated in 1902, is

registered as a public limited company and is an

investment company within the meaning of Section 833

of the Companies Act 2006. The Company’s registration

number is SC005218.

The Company has been accepted by HM Revenue &

Customs as an investment trust subject to the Company

continuing to meet the relevant eligibility conditions of

Section 1158 of the Corporation Tax Act 2010 and the

ongoing requirements of Part 2 Chapter 3 Statutory

Instrument 2011/2999 for all financial years commencing

on or after 1 February 2012. The Directors are of the

opinion that the Company has conducted its affairs for the

year ended 31 January 2022 so as to enable it to comply

with the ongoing requirements for investment trust status.

The Company has conducted its affairs so as to satisfy the

requirements as a qualifying security for Individual Savings

Accounts. The Directors intend that the Company will

continue to conduct its affairs in this manner.

Results and Dividends

The audited financial statements for the year ended 31

January 2022 are contained on pages 66 to 87. Details of

dividends for the year to 31 January 2022 can be found on

page 2.

Share Capital and Rights attaching to the

Company’s Shares

At 31 January 2022, the Company’s capital structure

consisted of 140,675,934 Ordinary shares of 5p each

(2021 – 143,029,146 Ordinary shares of 5p each). During

the year to 31 January 2022, the Company bought back

2,353,212 Ordinary shares for cancellation. Subsequent to

the year end, a further 440,036 Ordinary shares were

repurchased for cancellation.

The Ordinary shares carry a right to receive dividends

which are declared from time to time by an ordinary

resolution of the Company (up to the amount

recommended by the Board) and to receive any interim

dividends which the Company may resolve to pay. On a

winding-up, after meeting the liabilities of the Company,

the surplus assets will be paid to Ordinary shareholders in

proportion to their shareholdings. On a show of hands,

every shareholder present in person, or by proxy, has one

vote and, on a poll, every Ordinary shareholder present in

person has one vote for each share held and a proxy has

one vote for every share represented.

There are no restrictions concerning the holding or

transfer of the Company's shares and there are no special

rights attached to any of the shares. The Company is not

aware of any agreements between shareholders which

may result in restriction on the transfer of shares or the

voting rights. The rules concerning amendments to the

Articles of Association and powers to issue or buyback the

Company's shares are contained in the Articles of

Association of the Company and the Companies

Act 2006.

Significant Agreements

The Company is not aware of any significant agreements

to which it is a party that take effect, alter or terminate

upon a change of control of the Company following a

takeover and there are no agreements between the

Company and its Directors concerning compensation for

loss of office. Other than the management agreement

with the Manager and the depositary agreement, further

details of which are set out below, the Company is not

aware of any contractual or other agreements which are

essential to its business which ought to be disclosed in the

Directors' Report.

Directors

Details of the Directors of the Company who were in

office during the year and up to the date of this report

are shown on pages 40 to 41. James Ferguson retired on

31 December 2021.

No contract or arrangement existed during the period in

which any of the Directors was materially interested. No

Director has a service contract with the Company.

Directors’ & Officers’ Liability Insurance

The Company maintains insurance in respect of Directors’

and Officers’ liabilities in relation to their acts on behalf of

the Company for the year to 31 January 2022 and up to

the date of this report. Each Director of the Company shall

be entitled to be indemnified out of the assets of the

Company to the extent permitted by law against any loss

or liability incurred by him in the execution of his duties in

relation to the affairs of the Company. These rights are

included in the Articles of Association of the Company.

Corporate Governance

The Statement of Corporate Governance, which forms

part of the Directors’ Report, is shown on pages 45 to 46.

Directors’ Report

The North American Income Trust plc 43

Principal Agreements

Management Agreement

The Company has appointed Aberdeen Standard Fund

Managers Limited ("ASFML" or the “Manager”), a wholly

owned subsidiary of abrdn plc, as its alternative

investment fund manager (“AIFM”). ASFML has been

appointed to provide the Company with investment

management, risk management, administration and

company secretarial services as well as promotional

activities. The Company's portfolio is managed by abrdn

Inc. (the “Investment Manager”) by way of a group

delegation agreement in place between ASFML and

abrdn Inc. In addition, ASFML has sub-delegated

promotional activities to Aberdeen Asset Managers

Limited and administrative and secretarial services to

Aberdeen Asset Management PLC. Details of the

management agreement, including notice period and

fees paid during the year ended 31 January 2022 are

shown in note 5 to the financial statements.

Depositary Agreement

The Company has appointed BNP Paribas Securities

Services, London Branch as its depositary.

Loan Note Agreement

In December 2020, the Company entered into a long-

term financing agreement for US$50 million with MetLife

comprising two loans of US$25 million with terms of 10 and

15 years at an all in cost of 2.70% and 2.96% respectively,

giving a blended rate for 10 years of 2.83% (the “Long-

Term Financing Agreement”).

Substantial Interests

As at 31 January 2022 the Company had received

notification or was aware of the following interests in its

Ordinary shares:

Shareholder

Number of

held % held

Rathbone Brothers 15,996,550 11.4

Brewin Dolphin 12,882,538 9.2

abrdn Retail Plans 10,337,396 7.3

1607 Capital Partners 7,262,484 5.2

Interactive Investor 6,461,166 4.6

Hargreaves Lansdown 6,019,914 4.3

Charles Stanley 5,155,241 3.7

Canaccord Genuity Wealth Management 4,637,222 3.3

EFG Harris Allday 4,347,969 3.1

As at the date of this Report, no changes to the above

interests had been notified to the Company.

Accountability and Audit

The Directors who held office at the date of approval of

this Directors’ Report confirm that, so far as they are each

aware, there is no relevant audit information of which the

Company’s auditor is unaware; and each Director has

taken all the steps that he/she could reasonably be

expected to have taken as a Director in order to make

himself/herself aware of any relevant audit information

and to establish that the Company’s auditor is aware of

that information.

The Audit Committee has reviewed the services provided

by the auditor during the year, together with the auditor’s

fees and procedures in connection with the provision of

non-audit services. There were no non-audit service fees

paid during the year. The Board remains satisfied that

PricewaterhouseCoopers LLP’s objectivity and

independence is being safeguarded.

Going Concern

The Company’s assets consist substantially of securities in

companies listed on recognised stock exchanges and in

normal circumstances are realisable within a short

timescale and which can be sold to meet funding

commitments if necessary.

The Board has set gearing limits and regularly reviews

actual exposures, cash flow projections and compliance

with banking covenants. The Company replaced its Long-

Term Financing Agreement in December 2020.

The Company undertakes a continuation vote every three

years. The last continuation vote was passed at the AGM

held in June 2021 with 98.6% of votes in favour.

The Board has considered the impact of COVID-19 and

recent geopolitical developments and believes that there

will be a limited resulting financial impact on the

Company's operational resources and existence. Given

that the Company’s portfolio comprises primarily “Level

One” assets (listed on a recognisable exchange and

realisable within a short timescale), and the Company’s

relatively low level of gearing, the Company has the ability

to raise sufficient funds so as to remain within its debt

covenants and pay expenses.

Taking the above factors into consideration, the Directors

have a reasonable expectation that the Company has

adequate financial resources to continue in operational

existence for the foreseeable future and for at least

twelve months from the date of this Report. Accordingly,

the Board continues to adopt the going concern basis in

preparing the financial statements.

44 The North American Income Trust plc

Annual General Meeting

Among the resolutions being put at the Annual General

Meeting (“AGM”) of the Company to be held on 8 June

2022, the following resolutions will be proposed as

special business:

(i) Section 551 Authority to Allot Shares

Resolution 10, which is an ordinary resolution, seeks to

renew the Directors’ authority under section 551 of the

Companies Act to allot shares (excluding treasury shares)

up to an aggregate nominal amount of £2,337,031 or, if

less, the number representing 33.33% of the issued

Ordinary share capital of the Company as at the date of

the passing of the resolution. This authority will expire on

31 July 2023 or, if earlier, at the conclusion of the AGM to

be held in 2023 (unless previously revoked, varied or

extended). The Directors will only exercise this authority if

they believe it is advantageous and in the best interests of

shareholders. There are no treasury shares in issue.

(ii) Dis-application of Pre-emption Provisions

Resolution 11, which is a special resolution, seeks to renew

the dis-application of statutory pre-emption rights in

relation to the issue of shares (or sale of shares out of

treasury) up to an aggregate nominal amount of £701,179

or, if less, the number representing 10% of the issued

Ordinary share capital of the Company as at the date of

the passing of the resolution. This authority will expire on

31 July 2023 or, if earlier, at the conclusion of the AGM to

be held in 2023. The Directors will only exercise this

authority if they believe it is advantageous and in the best

interests of shareholders.

(iii) Share Repurchases

Resolution 12, which is a special resolution, seeks to renew

the Company’s authority for the Company to make

market purchases of its own Ordinary shares, up to a

maximum of 14.99% of the issued Ordinary share capital

of the Company as at the date of the passing of the

resolution. Shares so repurchased will be cancelled or held

in treasury. The principal reasons for share buybacks are:

· to enhance net asset value for continuing shareholders

by purchasing shares at a discount to the prevailing net

asset value; and

· to address any imbalance between the supply of and

demand for the Company’s shares that results in a

discount of the quoted market price to the published net

asset value per share.

Recommendation

The Directors believe that the resolutions to be proposed

at the AGM are in the best interests of the Company and

its shareholders as a whole, and recommend that

shareholders vote in favour of the resolutions, as the

Directors intend to do in respect of their own beneficial

shareholdings totalling, in aggregate, 14,718 Ordinary

shares, and representing 0.01% of the existing issued

Ordinary share capital of the Company.

By order of the Board

Aberdeen Asset Management PLC

Secretary, Edinburgh

6 April 2022

Directors’ Report

Continued

The North American Income Trust plc 45

This Statement of Corporate Governance forms part of

the Directors’ Report which is shown on pages 42 to 44.

Compliance

The Company is committed to high standards of

corporate governance. The Board is responsible for good

governance and, as required by the Listing Rules of the UK

Listing Authority, this statement describes how the

Company applied the principles set out in the UK

Corporate Governance Code published in July 2018 (the

“UK Code”), which is available on the Financial Reporting

Council’s website: frc.org.uk.

The Company is also a member of the Association of

Investment Companies (‘AIC’), which has published its

own Code of Corporate Governance (the ‘AIC Code’),

published in 2019, that seeks to codify best practice of

particular relevance to investment trusts. The AIC Code is

available on the AIC’s website: theaic.co.uk.

The Board confirms that, during the year to 31 January

2022, the Company complied with the recommendations

of the AIC Code and the relevant principles and provisions

of the UK Code.

The UK Code includes provisions relating to:

1. interaction with the workforce (provisions 2, 5 and 6)

2. the role of the chief executive (provision 14);

3. executive Directors’ remuneration

(provisions 33, 36 and 40);

The Board considers that these provisions are not relevant

to the position of the Company, being an externally

managed investment company. In particular, all of the

Company’s day-to-day management and administrative

functions are outsourced to third parties. As a result, the

Company has no executive directors, employees or

internal operations. The Company has therefore not

reported further in respect of these provisions.

Further details of the Company’s compliance with

Corporate Governance can be found on its website.

The Board

The Board currently consists of four non-executive

Directors, and is chaired by Dame Susan Rice. Charles

Park is the Senior Independent Director. All Directors are

considered by the Board to be independent of the

Company and the Manager, and free of any material

relationship with the Manager which could interfere with

the exercise of their independent judgment.

The Board takes the view that independence is not

necessarily compromised by length of tenure on the

Board, and this is consistent with the AIC Code. The

Company benefits from a balance of Directors with

different tenures, different backgrounds and a wide

variety of experience, which the Board believes

contributes significantly to its strength as a whole. The

Board is mindful of the importance of having a suitable

Board renewal process and succession plan. The Board

has a succession plan and actively evaluates Director’s’

performance annually to ensure up to date skills

and capacity.

The Board considers that the post of chief executive

officer is not relevant for an investment trust company as

this role has effectively been delegated to the Manager

under the terms of the Management Agreement.

Biographies of the Board members, including their

relevant experience, appear on pages 40 to 41. These

demonstrate that each Director has the requisite high

level and range of business, investment and financial

experience, and enables the Board to provide clear

and effective leadership and proper stewardship of

the Company.

The Board has a schedule of matters reserved to it for

decision, and the requirement for Board approval on these

matters is communicated directly to the senior staff of the

Manager. Such matters include strategy, performance,

dividend policy, gearing policy, promotional, Board

composition, communication with shareholders and

corporate governance matters.

Meetings

The Board normally meets at least four times a year, and

more frequently where business needs require. Full and

timely information is provided to the Board in order to

enable the Board to function effectively and to allow

Directors to discharge their responsibilities. At each

meeting the Board reviews the following:

· Reports from the Manager covering stockmarket

environment, portfolio activities, performance and

investment outlook;

· Company financial information including revenue

forecasts, balance sheet and gearing position;

· Shareholder analysis and relations;

· Regulatory issues and industry matters;

· Reports from other service providers such as brokers

and depositary.

Statement of Corporate Governance

46 The North American Income Trust plc

The table below sets out the number of routine Board and

Committee meetings attended by each Director during

the year compared to the total number of meetings that

each Director was entitled to attend.

The Board adopts a zero tolerance approach to bribery

and corruption and has implemented appropriate

procedures designed to prevent bribery. It is the

Company’s policy to conduct all of its business in an

honest and ethical manner.

The Board monitors on a regular basis the direct and

indirect interests of each Director and has concluded

that there were no situations which gave rise to an

interest of a Director which conflicted with the interests

of the Company.

Board

Audit

Committee

Management

Engagement

Committee

James Ferguson¹ 4/4 2/2 1/1

Karyn Lamont 4/4 2/2 1/1

Susannah Nicklin 4/4 2/2 1/1

Charles Park 4/4 2/2 1/1

Susan Rice

4/4 2/2 1/1

Retired on 31 Dec 2021. Attended Audit Committee meetings as observer

Appointed Chairman on 1 Jan 2022.

Performance Evaluation

An appraisal of each Director, including the Chair, and of

the operation of the Board and its Committees is

undertaken on an annual basis. The process is based upon

individual discussions between each Director and the

Chair; the Chair’s performance appraisal is led by the

Senior Independent Director. Following these appraisals,

the Board confirms that all Directors contribute to the

effective running of the Company. The Board has also

reviewed the Chair’s and Directors’ other commitments

and is satisfied that the Chair and Directors are capable of

devoting sufficient time to the Company. The Directors

assessed the collective performance of the Board as a

whole against the requirements of the Company’s

business and the need to have a balanced Board and

concluded that their aggregate balance of abilities,

perspective and experience is appropriate and secures

the right measure of continuity for the Board as a whole.

The Company is not required to do an external evaluation

of the effectiveness of the Board as it is not a constituent

of the FTSE 350. No external evaluation was conducted

during the year as the Board concluded that it would

not add value at this time. This approach will be kept

under review.

The Board is mindful of the importance of having a

suitable mapped board succession and renewal process

and has established a succession plan. James Ferguson

retired on 31 December 2021 and Dame Susan Rice

agreed to be appointed Chair of the Company. At the

time of writing an external search for the appointment of

an additional independent Non-Executive Director is

nearing a conclusion and an announcement will be

released in due course. An independent search agent,

Trust Associates, was used for this search.

There are no separate Nominations or Remuneration

Committees. In view of the size of the Board, Director

appraisals, succession planning, new appointments,

training and remuneration are considered by the Board as

a whole.

In line with the Company’s strong commitment to its

corporate governance responsibilities, the Board regularly

reviews its performance and structure to ensure it has the

correct mix of relevant skills, diversity and experience for

the effective conduct of the Company’s business to

complement the existing composition of the Board whilst

having due regard for the benefits of diversity, including

gender, on the Board.

New Board appointments are identified against the

requirements of the Company’s business and the need to

have a balanced Board. A description of the required role

for a new appointment is prepared and nominations of

Directors are sought in the financial and investment

sectors. External search consultants are used to ensure

that a wide range of candidates can be considered.

Appointments are made on merit, taking into account the

benefits of diversity, including gender. However, the over-

riding priority is to appoint the person with the best mix of

experience and skills to complement the existing

composition of the Board.

New Directors are given an appropriate induction from

the Manager covering legal responsibilities, the Manager’s

operations and investment trust matters. All Directors are

entitled to receive appropriate training as deemed

necessary. Details of remuneration are contained within

the Directors’ Remuneration Report.

Statement of Corporate Governance

Continued

The North American Income Trust plc 47

The Board has implemented the provisions of the UK Code

whereby all Directors of the Company will stand for re-

election on an annual basis. The Board has reviewed the

skills and experience of each Director, and unanimously

supports their re-election.

There is an agreed procedure for Directors to take

independent professional advice, if necessary, at the

Company’s expense. This is in addition to the access which

every Director has to the advice and services of the

company secretary, Aberdeen Asset Management PLC,

which is responsible to the Board for ensuring that Board

procedures are followed, and that applicable rules and

regulations are complied with.

Audit Committee

The Audit Committee Report is contained on pages

48 to 50.

Management Engagement Committee

The Board has a good and constructive working

relationship with the Manager and continually reviews the

policies and performance of the Manager. The

Management Engagement Committee comprises all of

the Directors and is chaired by the Company Chair. The

Committee reviews the performance of the Manager, the

investment process and risk controls and its compliance

with the terms of the management and secretarial

agreement. The terms of reference of the Management

Engagement Committee, which are available on request

and on the Company’s website, are reviewed on an

annual basis. The terms and conditions of the Manager’s

appointment, including an evaluation of performance and

fees, are reviewed by the Committee on an annual basis.

The Committee considers that the Manager, whose team

is well-qualified and experienced, has fully met the terms

of its agreement with the Company. Following a review of

management fees and ongoing charges, the Committee

believes these are reasonable and competitive. Taking

these factors into account, the Committee and the Board

believes that the continuing appointment of the Manager

on the terms agreed is in the interests of shareholders as a

whole. The Company benefits from the expertise of the

Manager’s team of investment professionals. The Board

continues to keep this matter under review.

Relations with Shareholders

The Directors believe in good communication with

shareholders. The annual and half yearly reports are

widely distributed to other parties who have an interest in

the Company’s performance. Shareholders and investors

may obtain up to date information on the Company

through the Manager’s freephone information service.

The Board welcomes correspondence from shareholders

addressed to the Company’s registered office and

responds to letters on an individual basis. The Manager

maintains contact with institutional shareholders and

feeds back shareholder views to the Board. The

Company’s annual and half yearly reports and other

publications can be downloaded from the Company’s

website, northamericanincome.co.uk.

The Board’s policy is to communicate directly with

shareholders and their representative bodies without the

involvement of the management group (either the

Company Secretary or the Manager) in situations where

direct communication is required.

The notice of the AGM, included within this Annual Report

and accounts, is normally sent out at least 20 working days

in advance of the meeting. Investors in the Manager’s

savings plans are encouraged to vote by means of a

Letter of Direction enclosed with the Annual Report. All

shareholders have the opportunity to put questions at the

Company’s AGM. Proxy voting figures for each resolution

are announced to the meeting after voting on a show

of hands.

ESG Investing

Details of the Manager’s approach to ESG engagement is

provided on pages 25 to 29.

The UK Stewardship Code and Proxy Voting

The Company supports the UK’s Stewardship Code, and

seeks to play its role in supporting good stewardship of the

companies in which it invests. Responsibility for actively

monitoring the activities of portfolio companies has been

delegated by the Board to the Manager which has sub-

delegated that authority to the Investment Manager.

The full text of the Company’s response to the

Stewardship Code may be found on its website.

The Board has also given discretionary powers to the

Manager to exercise voting rights on resolutions proposed

by the investee companies within the Company’s portfolio.

The Manager reports on a quarterly basis on stewardship

(including voting) issues.

48 The North American Income Trust plc

Membership and Responsibilities

The Audit Committee is chaired by Karyn Lamont, who is a

chartered accountant, and comprises all Directors, with

the exception of the Company Chair, who attends

meetings but is a non-voting member. The Committee is

satisfied that it has the necessary recent and relevant

financial experience and competence relevant to the

investment trust sector in order to fulfil its responsibilities.

The Audit Committee meets at least twice a year and

considers reports from the auditor and the Manager’s

internal audit, risk and compliance functions. The terms of

reference of the Audit Committee, which are available on

request and on the Company’s website, are reviewed on

an annual basis. The main responsibilities of the Audit

Committee are:

· to review the half yearly and annual financial

statements of the Company, the accounting policies

applied therein and to ensure compliance with financial

and regulatory reporting requirements.

· to assess whether the Annual Report, including the

financial statements, 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.

· to review and monitor the internal control systems and

risk management systems on which the Company is

reliant.

· to consider annually whether there is a need for the

Company to have its own internal audit function.

· to develop and implement policy on the engagement of

the auditor to supply non-audit services.

· to review the arrangements in place within the Manager

whereby staff may, in confidence, escalate concerns

about possible improprieties in matters of financial

reporting or other matters (‘whistleblowing’).

· to make recommendations to the Board in relation to

the appointment of the auditor and to approve the

remuneration and terms of engagement of the auditor.

· to consider the auditor’s reports, including the audit

strategy and findings.

· to review annually the auditor’s independence,

objectivity, effectiveness, resources and qualification.

The respective responsibilities of the Directors and the

auditor in connection with the financial statements

appear on pages 55 and 63.

Internal Control

The Board is responsible for the Company’s system of

internal control and for reviewing its effectiveness. The

Board confirms that there is an ongoing process for

identifying, evaluating and managing the significant risks

faced by the Company. This process has been in place

for the year under review and up to the date of approval

of this Annual Report. It is regularly reviewed by the

Board and accords with the Financial Reporting

Council’s Guidance.

The Directors have delegated the investment

management of the Company’s assets to the Manager

within overall guidelines, and this embraces

implementation of the system of internal control, including

financial, operational and compliance controls and risk

management. Internal control systems are monitored and

supported by the Manager’s internal audit function which

undertakes periodic examination of business processes,

including compliance with the terms of the management

agreement, and ensures that recommendations to

improve controls are implemented.

The Board has reviewed, through management reports,

the effectiveness of the Company’s risk management and

internal control systems. In particular, it has reviewed and

updated the process for identifying and evaluating the

significant risks affecting the Company and policies by

which these risks are managed. The significant risks faced

by the Company are set on pages 12 to 15.

Risks are identified and documented through a risk

management framework by each function within the

Manager’s activities. Risk is considered in the context of the

Financial Reporting Council Guidance, and includes

financial, regulatory, market, operational and reputational

risk. This helps the internal audit risk assessment model

identify those functions for review. Any weaknesses

identified are reported to the Board, and timetables are

agreed for implementing improvements to systems. The

implementation of any remedial action required is

monitored and feedback provided to the Board.

In addition, the Board has adopted its own risk matrix

which identifies the key risks for the Company and covers

strategy, investment management, operations, regulatory

and financial obligations and third party service providers

(see pages 12 to 15). A monitoring system is undertaken

whereby the controls to mitigate these risks, and the

impact of the residual risks, are assessed on a regular

basis. The risk matrix is formally reviewed on at least a six

monthly basis in order to identify emerging risks which

may arise.

Report of the Audit Committee

The North American Income Trust plc 49

Note 18 to the financial statements provides further

information on risks. The key components designed to

provide effective internal control are outlined below:

· the Manager prepares forecasts and management

accounts which allow the Board to assess the

Company’s activities and review its performance; the

emphasis is on obtaining the relevant degree of

assurance and not merely reporting by exception;

· the Board and Manager have agreed clearly-defined

investment criteria, specified levels of authority and

exposure limits. Reports on these, including

performance statistics and investment valuations, are

regularly submitted to the Board and there are

meetings with the Manager as appropriate;

· the Manager’s internal audit, risk and compliance

departments continually review the Manager’s

operations and reports to the Audit Committee on a six

monthly basis. The Manager’s internal audit team has

direct access to the Audit Committee at any time;

· written agreements are in place which specifically

define the roles and responsibilities of the Manager and

other third party service providers;

· an independent depositary, BNP Paribas Securities

Services, London Branch is appointed to safeguard the

Company’s investments, which are registered in the

name of the depositary’s nominee company: and

· at its March 2022 meeting, the Audit Committee carried

out an annual assessment of internal controls for the

year ended 31 January 2022 by considering

documentation from the Manager, including the internal

audit, risk and compliance functions, and taking account

of events since 31 January 2022.

The Audit Committee continues to believe that the

Company does not require an internal audit function of its

own as the Company delegates its day-to-day operations

and risk controls to the Manager which operates an

internal audit function. The Committee receives

appropriate reporting on internal controls and risk

management from the Manager.

Internal control systems are designed to meet the

Company’s particular needs and the risks to which it is

exposed. Accordingly, the internal control systems are

designed to manage, rather than eliminate, the risk of

failure to achieve business objectives and, by their nature,

can only provide reasonable and not absolute assurance,

against material misstatement or loss.

Significant Accounting Issues

The Committee specifically considered a number of

matters related to the Company’s financial statements

during the year:

· Valuation, existence and ownership of investments: The

valuation of investments is undertaken in accordance

with the stated accounting policies. All investments are

in quoted securities in active markets, are considered to

be liquid and have been largely categorised as Level 1

within FRS 102 fair value hierarchy. The portfolio holdings

and their pricing is reviewed and verified by the

Manager on a regular basis and management

accounts, including a full portfolio listing, are prepared

for each Board meeting. The Company used the

services of an independent depositary (BNP Paribas

Securities Services, London Branch) during the year

under review to hold the assets of the Company. The

investment portfolio is reconciled regularly by the

Manager and the external audit includes independent

verification of the valuation and existence of all

investments.

· Recognition of Investment Income: The recognition of

investment income is undertaken in accordance with

accounting policy note 2(b) to the financial statements

on page 70. The Directors regularly review the

Company’s income, including income received, revenue

forecasts and dividend comparisons.

· Compliance with Sections 1158 and 1159 of the

Corporation Tax Act 2010: Approval for the Company as

an investment trust under Sections 1158 and 1159 for

financial years commencing on or after 1 February 2012

has been obtained and ongoing compliance with the

eligibility criteria is monitored on a regular basis.

· Consideration of the ongoing and longer-term impact

of the global pandemic and geopolitical developments

on the financial statements.

· Consideration of the Company to continue as a going

concern: In addition to the usual considerations and

the principal and emerging risks, relevant factors such

as the Company’s performance, discount history,

current feedback and views from shareholders as

well as historic experience of continuation vote

were considered.

50 The North American Income Trust plc

Review of Auditor

The Audit Committee has reviewed the independence

and the effectiveness of the auditor,

PricewaterhouseCoopers LLP, as follows:

· The auditor’s report on an annual basis the steps it takes

to ensure its independence and objectivity and confirms

that it has complied with the relevant UK independence

guidelines. The level of non-audit services provided by

the auditors is assessed and for the year ended

31 January 2022 there were no non-audit

services provided.

· The Committee considers the experience, continuity

and tenure of the audit team, including the audit

partner. The audit team consists of suitably experienced

staff with knowledge of the investment trust sector and

there is a process in place for the rotation of the audit

partner. PricewaterhouseCoopers LLP was appointed

as the Company’s auditor in June 2020 and therefore

the year to 31 January 2022 was the second year

served by PricewaterhouseCoopers LLP’s senior

statutory auditor, Shujaat Khan.

· The Committee assesses the level of audit service

annually. The audit plan is reviewed well in advance and

subsequent audit findings are reported

comprehensively in a timely manner and are resolved

satisfactorily. The auditor has a constructive working

relationship with both the Board and the Manager.

The Committee was satisfied with the effectiveness and

independence of PricewaterhouseCoopers LLP as auditor

for the year ended 31 January 2022.

Shareholders will have the opportunity to vote on the re-

appointment of PricewaterhouseCoopers LLP as auditor

at the forthcoming AGM on 8 June 2022.

Karyn Lamont

Audit Committee Chair

6 April 2022

Report of the Audit Committee

Continued

The North American Income Trust plc 51

The Board has prepared this Remuneration Report in

accordance with the regulations governing the disclosure

and approval of Directors’ remuneration. This

Remuneration Report comprises three parts:

i. A Remuneration Policy, which is subject to a binding

shareholder vote every three years (or sooner if varied

during this interval) – most recently voted on at the

Annual General Meeting on 2 June 2020;

ii. An annual Implementation Report which provides

information on how the Remuneration Policy has been

applied during the year and which will be subject to an

advisory vote;

iii. An Annual Statement.

The law requires the Company’s auditor to audit certain of

the disclosures provided in the Remuneration Report.

Where disclosures have been audited, they are indicated

as such. The auditor’s opinion is included in the report on

pages 56 to 63.

The principles remain the same as for previous years.

There have been no changes to the Directors’

Remuneration Policy during the period of this Report nor

are there any proposals for the foreseeable future, except

for the level of Directors’ fees, as set out in the

Implementation Report below.

Remuneration Policy

This part of the Remuneration Report provides details of

the Company’s Remuneration Policy for Directors of the

Company. This policy takes into consideration the

principles of the UK Corporate Governance Code and the

AIC’s recommendations regarding the application of

those principles to investment companies. No shareholder

views were sought in setting the Remuneration Policy

although any comments received from shareholders

would be considered on an ongoing basis. As the

Company has no employees and the Board is comprised

wholly of non-executive Directors and given the size and

nature of the Company, the Board has not established a

separate Remuneration Committee. Directors’

remuneration is determined by the Board as a whole.

Directors’ Fees

The Directors’ fees are set within the limits of the

Company’s Articles of Association which limit the

aggregate fees payable to the Board of Directors per

annum, currently £175,000.

Subject to this overall limit, the Board’s policy is that the

remuneration of non-executive Directors should reflect

the nature of their duties, responsibilities and the value of

their time spent and be fair and comparable to that of

other investment trusts that are similar in size, have

a similar capital structure and have a similar

investment objective.

Fee rates are established by taking advice from external

sources as to current market levels.

1 February

2022

1 February

2021

Chair 35,500 33,000

Chair of Audit Committee 28,500 26,500

Director 26,000 24,000

Appointment

· The Company only appoints non-executive Directors.

· All the Directors are non-executive appointed under the

terms of Letters of Appointment.

· Directors must retire and be subject to election at the

first AGM after their appointment and at least every

three years thereafter.

· New appointments to the Board will be placed on the

fee applicable at the time of appointment.

· No incentive or introductory fees will be paid to

encourage a Directorship.

· The Directors are not eligible for bonuses, pension

benefits, share options, long-term incentive schemes or

other benefits.

· The Company indemnifies its Directors for all costs,

charges, losses, expenses and liabilities which may be

incurred in the discharge of duties, as a Director of

the Company.

· The Directors are entitled to be re-imbursed for out-of-

pocket expenses incurred in connection with performing

their duties including travel expenses.

Directors’ Remuneration Report

52 The North American Income Trust plc

Performance, Service Contracts,

Compensation and Loss of Office

· The Directors’ remuneration is not subject to any

performance related fee.

· No Director has a service contract.

· No Director was interested in contracts with the

Company during the period or subsequently.

· The terms of appointment provide that a Director may

be removed without notice.

· Compensation will not be due upon leaving office.

· No Director is entitled to any other monetary payment

or any assets of the Company.

· Directors’ & Officers’ liability insurance cover is

maintained by the Company on behalf of the Directors.

The Directors’ Remuneration Policy was last approved by

shareholders on 2 June 2020.

Implementation Report

Directors’ Fees

The Board carried out a review of the level of Directors’

fees during the year, with reference to external sources on

market rates, and concluded that they should be

increased, as shown in the table on page 53. The Board

considered the increase necessary in order to attract and

retain directors of a suitable calibre for the non-executive

director role. It is also considered commensurate with

inflation as well as the time commitment required of

Directors to adequately discharge their responsibilities,

taking into account increasingly complex and onerous

legal and regulatory requirements. The last increase in

fees was effective from 1 February 2021. There are no

further fees to disclose as the Company has no

employees or executive directors.

Company Performance

During the year the Board carried out a review of

investment performance. The following graph shows the

share price and NAV total return (assuming all dividends

are reinvested) to Ordinary shareholders compared to the

total return from the Russell 1000 Value and S&P 500

indices (in sterling terms) for the ten year period to 31

January 2022 (rebased to 100 at 31 January 2012). These

indices were chosen for comparison purposes, as they are

the reference indices used for investment performance

measurement purposes.

100

150

200

250

300

350

400

450

500

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Share price NAV

Russell 1000 Value Index S&P 500 Index

Statement of Voting at General Meeting

At the Company’s last AGM, held on 1 June 2021,

shareholders approved the Directors’ Remuneration

Report (excluding the Directors’ Remuneration Policy) in

respect of the year ended 31 January 2021: 99.1% of proxy

votes were in favour of the resolution, 0.8% were against,

and 0.1% abstained.

At the AGM held on 2 June 2020, shareholders approved

the Directors’ Remuneration Policy with 99.0% of proxy

votes in favour of the resolution, 0.7% against and

0.3% abstained.

Continued

Directors’ Remuneration Report

The North American Income Trust plc 53

Spend on Pay

As the Company has no employees, the Directors do not

consider it appropriate to present a table comparing

remuneration paid to employees with distributions to

shareholders. The total fees paid to Directors are shown in

the table below.

Audited Information

Fees Payable

The Directors who served in the year received the

following fees which exclude employers’ NI and any

VAT payable:

Director

2022

2021

James Ferguson

30,250 31,000

Karyn Lamont 26,500 25,000

Susannah Nicklin 24,000 22,500

Charles Park 24,000 22,500

Susan Rice

24,750 22,500

Total 129,500 123,500

Retired on 31 December 2021

Appointed Chair on 1 January 2022

Fees are pro-rated where a change takes place during a

financial year. All fees are at a fixed rate and there is no

variable remuneration. There were no payments to third

parties from the fees referred to in the table above and

none of the Directors received taxable benefits.

Annual Percentage Change in

Directors’ Remuneration

The following table sets out the annual percentage

change in Directors’ fees over the last two years.

Director 31 Jan 2022 31 Jan 2021

James Ferguson

-2.4% 0.0%

Karyn Lamont 6.0% 0.0%

Susannah Nicklin 6.7% 0.0%

Charles Park 6.7% 0.0%

Susan Rice

10.0% 0.0%

Retired on 31 December 2021

Appointed Chair on 1 January 2022

Relative Importance of Spend on Pay

The table below shows the actual expenditure during the

year in relation to Directors’ remuneration and

distributions to shareholders.

2022

£’000

2021

£’000

Remuneration paid to all Directors 129 123

Distribution to shareholders - by

way of dividend¹

8,886 14,285

Share buybacks 117 13

¹ See note 9 on page 76 for further details

A resolution to receive and adopt the Directors’

Remuneration Report (excluding the Directors’

Remuneration Policy) in respect of the year ended 31

January 2022 will be proposed at the AGM.

54 The North American Income Trust plc

Directors’ Interests in the Company

The Directors are not required to have a shareholding in

the Company. The Directors (including connected

persons) at 31 January 2022 and 31 January 2021 had no

interest in the share capital of the Company other than

those interests, all of which are beneficial interests, shown

in the table below.

31 Jan 2022

Ord 5p

31 Jan 2021

Ord 5p

James Ferguson¹ n/a 78,850

Karyn Lamont - -

Susannah Nicklin 3,043 2,345

Charles Park 11,000 11,000

Susan Rice 675 675

Retired on 31 December 2021

There have been no changes to the Directors’ share

interests since the year end.

Annual Statement

In accordance with Part 2 of Schedule 8 of the Large and

Medium-sized Companies and Groups (Accounts and

Reports) (Amendment) Regulations 2013, the Board

confirms that the above Directors’ Remuneration Report

summarises, as applicable, for the year ended

31 January 2022:

· the major decisions on Directors’ remuneration;

· any substantial changes relating to Directors’

remuneration made during the year; and

· the context in which the changes occurred and

decisions have been taken

The Directors’ Remuneration Report was approved by the

Board of Directors and signed on its behalf by:

Dame Susan Rice

Chair

6 April 2022

Directors’ Remuneration Report

Continued

The North American Income Trust plc 55

The Directors are responsible for preparing the Annual

Report 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 this Annual Report, 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

Dame Susan Rice

Chair

6 April 2022

Statement of Directors’ Responsibilities

56 The North American Income Trust plc

Report on the audit of the financial statements

Opinion

In our opinion, The North American Income Trust plc’s financial statements:

· give a true and fair view of the state of the Company’s affairs as at 31 January 2022 and of its return and cash flows for

the year then ended;

· have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United

Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and

Republic of Ireland”, and applicable law); and

· have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements, included within the Annual Report, which comprise: the Statement of Financial

Position as at 31 January 2022, the Statement of Comprehensive Income, the Statement of Changes in Equity and the

Statement of Cash Flows for the year then ended; and the notes to the financial statements, which include a description

of the significant accounting policies.

Our opinion is consistent with our reporting to the Audit Committee.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.

Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial

statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our opinion.

Independence

We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of

the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest

entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard

were not provided.

We have provided no non-audit services to the Company in the period under audit.

Independent Auditor’s Report to the Members of The

North American Income Trust plc

The North American Income Trust plc 57

Our audit approach

Context

The North American Income Trust plc is an Investment Trust Company listed on the London Stock Exchange and invests

predominantly in US equities. The operations of the Company are located in the UK. We focus our audit work primarily on

the valuation and existence of investments and income from investments.

Overview

Audit scope

· The Company is a standalone Investment Trust Company and engages Aberdeen Standard Fund Managers Limited

(the “AIFM”) to manage its assets.

· We conducted our audit of the financial statements using information from the AIFM and BNP Paribas Securities

Services (the “Administrator”) to whom the AIFM has engaged to provide certain administrative services.

· We tailored the scope of our audit taking into account the types of investments within the Company, the involvement

of the third parties referred to above, the accounting processes and controls, and the industry in which the Company

operates.

· We obtained an understanding of the control environment in place at both the AIFM and the Administrator and

adopted a fully substantive testing approach using reports obtained from the AIFM.

Key audit matters

· Valuation and existence of listed investments

· Income from investments

Materiality

· Overall materiality: £4,484,000 (2021: £3,750,000) based on 1% of Net Assets.

· Performance materiality: £3,363,000 (2021: £2,812,500).

The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the

financial statements. In particular, we looked at where the directors made subjective judgements, for example in

respect of significant accounting estimates that involved making assumptions and considering future events that are

inherently uncertain.

Key audit matters

Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit

of the financial statements of the current period and include the most significant assessed risks of material misstatement

(whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall

audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters,

and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the

financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on

these matters.

This is not a complete list of all risks identified by our audit.

Consideration of impact of COVID-19 and ability to continue as a going concern (continuation vote), which were key

audit matters last year, are no longer included because of the reduced uncertainty of the impact of COVID-19 and the

absence of a continuation vote during the next 12 months. The next continuation vote will take place in 2024. Otherwise,

the key audit matters below are consistent with last year.

58 The North American Income Trust plc

Key audit matter How our audit addressed the key audit matter

Valuation and existence of listed investments

Refer to page 49 (Audit Committee Report), page 70

(Accounting Policies) and page 71 (Notes to the Accounts).

The investment portfolio at 31 January 2022 comprised of listed

investments of £471 million.

We focused on the valuation and existence of investments

because investments represent the principal element of the net

asset value as disclosed in the Balance Sheet in the financial

statements.

We tested the valuation of all listed investments by agreeing the

prices used in the valuation to independent third-party sources.

No material misstatements were identified from this testing.

We tested the existence of all investments by agreeing the

holdings of all investments to an independent confirmation from

the Depositary, BNP Paribas Securities Services as at 31 January

2022. No differences were identified.

Income from investment

Refer to page 49 (Audit Committee’s Report), page 70

(Accounting Policies) and pages 71 (Notes to the Financial

Statements).

ISAs (UK) presume there is a risk of fraud in income recognition

because of the pressure management may feel to achieve a

certain objective.

In this instance, we consider that ‘income’ refers to all the

Company’s income streams, both revenue and capital

(including gains and losses on investments). As the Company

has an Income objective, there might be an incentive to

overstate revenue. As such, we focussed this risk on the

existence/occurrence of revenue from investments,

completeness of gains/losses from investments and its

presentation in the Income Statement as set out in the

requirements of The Association of Investment Companies’

Statement of Recommended Practice (the “AIC SORP”).

We assessed the accounting policy for dividend income

recognition for compliance with accounting standards and the

AIC SORP and performed testing to check that income had been

accounted for in accordance with this stated accounting policy.

We found that the accounting policies implemented were in

accordance with accounting standards and the AIC SORP, and

that income has been accounted for in accordance with the

stated accounting policy.

The gains/losses on investments held at fair value comprise

realised and unrealised gains/losses. For unrealised gains and

losses, we tested the valuation of the portfolio at the year-end

(see above), together with testing the opening to closing

reconciliation of investments. For realised gains/losses, we tested

a sample of disposal proceeds by agreeing the proceeds to bank

statements and we re-performed the calculation of a sample of

realised gains/losses. No material misstatements were identified

from this testing.

In addition, we tested the accuracy of dividend receipts by

agreeing the dividend rates from investments to independent

market data. No material misstatements were identified from

this testing.

We tested occurrence by testing that all dividends recorded in

the year had been declared in the market and we traced a

sample of dividends received to bank statements. No material

misstatements were identified from this testing.

We also tested the allocation and presentation of dividend

income between the revenue and capital return columns of the

Income Statement in line with the requirements set out in the AIC

SORP by assessing the treatment applied in the context of the

underlying facts and circumstance of the dividend. No material

misstatements were identified from this testing.

Independent Auditor’s Report to the Members of The

North American Income Trust plc

Continued

The North American Income Trust plc 59

How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the

financial statements as a whole, taking into account the structure of the company, the accounting processes and

controls, and the industry in which it operates.

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial

statements. In particular, we looked at where subjective judgements are made, for example in respect of classification of

special dividends as revenue or capital.

Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for

materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the

nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in

evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Overall Company materiality £4,484,000 (2021: £3,750,000).

How we determined it 1% of Net Assets

Rationale for benchmark applied We have applied this benchmark, a generally accepted auditing practice for

investment trust audits, in the absence of indicators that an alternative benchmark

would be appropriate and because we believe this provides an appropriate and

consistent year-on-year basis for our audit.

We use performance materiality to reduce to an appropriately low level the probability that the aggregate of

uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in

determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions

and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2020: 75%%) of overall

materiality, amounting to £3,363,000 (2021: £2,812,500) for the company financial statements.

In determining the performance materiality, we considered a number of factors - the history of misstatements, risk

assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of

our normal range was appropriate.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above

£224,000 (2021: £187,500) as well as misstatements below that amount that, in our view, warranted reporting for

qualitative reasons.

60 The North American Income Trust plc

Conclusions relating to going concern

Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of

accounting included:

· Obtaining evidence to support the key assumptions and forecasts driving the Directors’ assessment. This included

reviewing the Directors’ assessment of the Company’s financial position and forecasts, their assessment of liquidity

and loan covenant compliance as well as their review of the operational resilience of the Company and oversight of

key third party service providers.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions

that, individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a

period of at least twelve months from when the financial statements are authorised for issue.

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting

in the preparation of the financial statements is appropriate.

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the

Company's ability to continue as a going concern.

In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing

material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the

directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant

sections of this report.

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial statements and our

auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements

does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent

otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,

consider whether the other information is materially inconsistent with the financial statements or our knowledge

obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency

or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement

of the financial statements or a material misstatement of the other information. If, based on the work we have

performed, we conclude that there is a material misstatement of this other information, we are required to report that

fact. We have nothing to report based on these responsibilities.

With respect to the Strategic report and Directors' Report, we also considered whether the disclosures required by the

UK Companies Act 2006 have been included.

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain

opinions and matters as described below.

Strategic report and Directors’ Report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and

Directors' Report for the year ended 31 January 2022 is consistent with the financial statements and has been prepared

in accordance with applicable legal requirements.

In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we

did not identify any material misstatements in the Strategic report and Directors' Report.

Independent Auditor’s Report to the Members of The

North American Income Trust plc

Continued

The North American Income Trust plc 61

Directors’ Remuneration

In our opinion, the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance

with the Companies Act 2006.

Corporate governance statement

The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that

part of the corporate governance statement relating to the company’s compliance with the provisions of the UK

Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate

governance statement as other information are described in the Reporting on other information section of this report.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the

corporate governance statement is materially consistent with the financial statements and our knowledge obtained

during the audit, and we have nothing material to add or draw attention to in relation to:

· The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;

· The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify

emerging risks and an explanation of how these are being managed or mitigated;

· The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going

concern basis of accounting in preparing them, and their identification of any material uncertainties to the Company’s

ability to continue to do so over a period of at least twelve months from the date of approval of the financial

statements;

· The directors’ explanation as to their assessment of the company’s prospects, the period this assessment covers and

why the period is appropriate; and

· The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue

in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures

drawing attention to any necessary qualifications or assumptions.

Our review of the directors’ statement regarding the longer-term viability of the group was substantially less in scope

than an audit and only consisted of making inquiries and considering the directors’ process supporting their statement;

checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and

considering whether the statement is consistent with the financial statements and our knowledge and understanding of

the company and its environment obtained in the course of the audit.

In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of

the corporate governance statement is materially consistent with the financial statements and our knowledge obtained

during the audit:

· The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable,

and provides the information necessary for the members to assess the company's position, performance, business

model and strategy;

· The section of the Annual Report that describes the review of effectiveness of risk management and internal control

systems; and

· The section of the Annual Report describing the work of the Audit Committee.

We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the

company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code

specified under the Listing Rules for review by the auditors.

62 The North American Income Trust plc

Responsibilities for the financial statements and the audit

Responsibilities of the directors for the financial statements

As explained more fully in the Statement of Directors' Responsibilities, the directors are responsible for the preparation of

the financial statements in accordance with the applicable framework and for being satisfied that they give a true and

fair view. The directors are also 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.

In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a

going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of

accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic

alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with

ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic

decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line

with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The

extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with

laws and regulations related to breaches of section 1158 of the Corporation Tax Act 2010, and we considered the extent

to which non-compliance might have a material effect on the financial statements. We also considered those laws and

regulations that have a direct impact on the financial statements such as the Companies Act 2006. We evaluated

management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of

override of controls), and determined that the principal risks were related to posting inappropriate journal entries to

increase revenue or to overstate the value of investments and increase the net asset value of the Company. Audit

procedures performed by the engagement team included:

· discussions with the directors, the AIFM and Company Secretary including consideration of known or suspected

instances of non-compliance with laws and regulations and fraud, and review of the reports made by management;

· reviewing relevant meeting minutes, including those of the Audit Committee and Board of Directors;

· assessment of the Company’s compliance with the requirements of section 1158 of the Corporation Tax Act 2010,

including recalculation of numerical aspects of the eligibility conditions;

· identifying and testing higher risk manual journal entries posted by the Administrator during the preparation of the

financial statements; and

· designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing

of expenses.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances

of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the

financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not

detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional

misrepresentations, or through collusion.

Independent Auditor’s Report to the Members of The

North American Income Trust plc

Continued

The North American Income Trust plc 63

Our audit testing might include testing complete populations of certain transactions and balances, possibly using data

auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing

complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In

other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is

selected.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:

www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report

Use of this report

This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance

with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions,

accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose

hands it may come save where expressly agreed by our prior consent in writing.

Other required reporting

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion:

· we have not obtained all the information and explanations we require for our audit; or

· adequate accounting records have not been kept by the company, or returns adequate for our audit have not been

received from branches not visited by us; or

· certain disclosures of directors’ remuneration specified by law are not made; or

· the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with

the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Appointment

Following the recommendation of the Audit Committee, we were appointed by the Directors on 2 June 2020 to audit the

financial statements for the year ended 31 January 2021 and subsequent financial periods. The period of total

uninterrupted engagement is two years, covering the years ended 31 January 2021 to 31 January 2022.

Shujaat Khan (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

London

6 April 2022

64 The North American Income Trust plc

Financial

Statements

The Board has declared a final

dividend of 4.0p per share, resulting in

a total dividend for the year to

31 January 2022 of 10.3p which is

covered by revenue earnings and

represents a 3.0% increase.

The North American Income Trust plc 65

Citigroup’s distinct global network of people, data

and relationships creates a mindset that allows it to

spot opportunities, manage risks and connect dots

for its clients in ways that others simply cannot.

66 The North American Income Trust plc

Year ended 31 January 2022 Year ended 31 January 2021

Revenue Capital Total Revenue Capital Total

Note £’000 £’000 £’000 £’000 £’000 £’000

Net gains/(losses) on investments 11 - 81,766 81,766 - (40,080) (40,080)

Net currency (losses)/gains 3 - (558) (558) - 825 825

Income 4 19,040 604 19,644 21,469 101 21,570

Investment management fee 5 (910) (2,123) (3,033) (804) (1,877) (2,681)

Administrative expenses 7 (735) - (735) (753) - (753)

Return before finance costs and taxation 17,395 79,689 97,084 19,912 (41,031) (21,119)

Finance costs 6 (316) (737) (1,053) (145) (337) (482)

Return before taxation 17,079 78,952 96,031 19,767 (41,368) (21,601)

Taxation 8 (2,522) 363 (2,159) (2,882) 408 (2,474)

Return after taxation 14,557 79,315 93,872 16,885 (40,960) (24,075)

Return per Ordinary share (pence) 10 10.28 56.00 66.28 11.79 (28.60) (16.81)

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 on pages 70 to 87 are an integral part of the financial statements.

Proposed final dividend. The Board is proposing a final dividend of 4.00p per share (£5,609,000), making a total dividend of 10.30p per

share (£14,495,000) for the year to 31 January 2022 which, if approved, will be payable on 1 June 2022 (see note 9). For the year

ended 31 January 2021, a final dividend of 4.50p per share was paid (£6,408,000) making a total dividend of 10.0p per share

(£14,283,000).

Statement of Comprehensive Income

The North American Income Trust plc 67

As at As at

31 January 2022 31 January 2021

Note £’000 £’000

Non-current assets

Investments at fair value through profit or loss 11 470,974 404,261

Current assets

Debtors and prepayments 12 5,712 2,575

Cash and short term deposits 13,875 9,239

19,587 11,814

Creditors: amounts falling due within one year

Other creditors 13 (4,907) (4,323)

(4,907) (4,323)

Net current assets 14,680 7,491

Total assets less current liabilities 485,654 411,752

Creditors: amounts falling due after more than one year

Senior Loan Notes 14 (37,191) (36,336)

Net assets 448,463 375,416

Capital and reserves

Called-up share capital 15 7,034 7,151

Share premium account 51,806 51,806

Capital redemption reserve 15,582 15,465

Capital reserve 350,388 277,403

Revenue reserve 23,653 23,591

Total shareholders’ funds 448,463 375,416

Net asset value per Ordinary share (pence) 16 318.79 262.48

The financial statements on pages 66 to 87 were approved and authorised for issue by the Board on 6 April 2022 and were signed on

its behalf by:

Dame Susan Rice

Director

The accompanying notes on pages 70 to 87 are an integral part of the financial statements.

Statement of Financial Position

68 The North American Income Trust plc

For the year ended 31 January 2022

Share Capital

Share premium redemption Capital Revenue

capital account reserve reserve reserve Total

£’000 £’000 £’000 £’000 £’000 £’000

Balance at 1 February 2021 7,151 51,806 15,465 277,403 23,591 375,416

Buyback of Ordinary shares (117) - 117 (6,330) - (6,330)

Return after taxation - - - 79,315 14,557 93,872

Dividends paid (see note 9) - - - - (14,495) (14,495)

Balance at 31 January 2022 7,034 51,806 15,582 350,388 23,653 448,463

For the year ended 31 January 2021

Share Capital

Share premium redemption Capital Revenue

capital account reserve reserve reserve Total

£’000 £’000 £’000 £’000 £’000 £’000

Balance at 1 February 2020 7,164 51,806 15,452 318,923 20,603 413,948

Buyback of Ordinary shares (13) - 13 (560) - (560)

Return after taxation - - - (40,960) 16,885 (24,075)

Dividends paid (see note 9) - - - - (13,897) (13,897)

Balance at 31 January 2021 7,151 51,806 15,465 277,403 23,591 375,416

The accompanying notes on pages 70 to 87 are an integral part of the financial statements.

Statement of Chan

es in Equity

The North American Income Trust plc 69

Year ended Year ended

31 January 2022 31 January 2021

Note £’000 £’000

Operating activities

Net return before taxation 96,031 (21,601)

Adjustments for:

Net (gains)/losses on investments 11 (81,710) 40,373

Net losses/(gains) on foreign exchange transactions 558 (825)

Decrease/(increase) in dividend income receivable 12 265 (35)

Decrease in fixed interest income receivable 12 66 33

Decrease in derivatives 13 (120) (524)

Decrease/(increase) in other debtors 12 1 (33)

(Decrease)/increase in other creditors 13 (828) 810

Corporation tax paid - (286)

Tax on overseas income 8 (2,159) (2,048)

(Accretion)/amortisation of senior loan note expenses 6 (1) 3

Amortisation of fixed income book cost 11 (2) 9

Stock dividends included in investment income 4 - (290)

Net cash inflow from operating activities 12,101 15,586

Investing activities

Purchases of investments (193,847) (243,480)

Sales of investments 206,909 211,499

Net cash generated from/(used in) investing activities 13,062 (31,981)

Financing activities

Equity dividends paid 9 (14,495) (13,897)

Buyback of Ordinary shares (6,330) (560)

Drawdown of loan notes - 37,461

Drawdown of loan - 23,416

Repayment of loan - (41,365)

Net cash generated from/(used in) financing activities (20,825) 5,055

Increase/(decrease) in cash and cash equivalents 4,338 (11,340)

Analysis of changes in cash and cash equivalents during the year

Opening balance 9,239 21,898

Effect of exchange rate fluctuation on cash held 3 298 (1,319)

Increase/(decrease) in cash as above 4,338 (11,340)

Closing balance 13,875 9,239

The accompanying notes on pages 70 to 87 are an integral part of the financial statements.

Statement of Cash Flows

70 The North American Income Trust plc

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, the Companies Act 2006 and with the Statement of Recommended Practice ‘Financial

Statements of Investment Trust Companies and Venture Capital Trusts’ issued in April 2021. 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 Company’s assets consist substantially of securities in companies listed on recognised stock exchanges and in

normal circumstances are realisable within a short timescale and which can be sold to meet funding commitments if

necessary. The Board has set gearing limits and regularly reviews actual exposures, cash flow projections and

compliance with banking covenants. The Company replaced its Long-Term Financing Agreement in December 2020.

The Board has considered the impact of COVID-19 and recent geopolitical developments and believes that there will

be a limited resulting financial impact on the Company’s operational resources and existence. Given that the

Company’s portfolio comprises primarily “Level One” assets (listed on a recognisable exchange and realisable within a

short timescale), and the Company’s relatively low level of gearing, the Company has the ability to raise sufficient

funds so as to remain within its debt covenants and pay expenses. Taking the above factors into consideration, the

Directors have a reasonable expectation that the Company has adequate financial resources to continue in

operational existence for the foreseeable future and for at least twelve months from the date of this Report.

Accordingly, the Board continues to adopt the going concern basis in preparing the financial statements.

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. The Company undertakes a continuation vote

every three years. The last continuation vote was passed at the AGM held in June 2021 with 98.7% of votes in favour.

(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. The fixed returns on debt instruments are recognised using the time apportioned accruals basis and

the discount or premium on acquisition is amortised or accreted on a straight line basis.

Interest receivable from cash and short-term deposits is recognised the time apportioned accruals basis.

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.

Notes to the Financial Statements

For the year ended 31 January 2022

The North American Income Trust plc 71

(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. The Company has chosen to apply the recognition and measurement provisions of IAS 39 Financial

Instruments: Recognition and Measurement and investments have been designated upon initial recognition at fair

value through profit or loss. Investments are recognised and de–recognised at trade date where a purchase or sale is

under a contract whose terms require delivery within the time frame established by the market concerned, and are

initially measured at fair value. Subsequent to initial recognition, investments are measured at fair value. For listed

investments, this is deemed to be bid market prices. Gains and losses arising from changes in fair value and disposals

are included as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the capital

reserve.

(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. This reserve is not distributable.

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. This

reserve is not distributable.

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 for treasury are also deducted from this reserve. This reserve is distributable although the

amount that is distributable is complex to determine and is not necessarily the full amount of the reserve as disclosed

within these financial statements.

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. The amount of the revenue reserve as at 31 January 2022 may not be available at the

time of any future distribution due to movements between 31 January 2022 and the date of distribution.

72 The North American Income Trust plc

(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. writing traded 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.

3. Net currency (losses)/gains

2022 2021

£’000 £’000

Gains/(losses) on cash held 298 (1,319)

Gains on bank loans - 1,016

(Losses)/gains on senior loan notes (856) 1,128

(558) 825

4. Income

2022 2021

£’000 £’000

Income from overseas listed investments

Dividend income 13,424 14,168

REIT income 2,218 1,199

Interest income from investments 112 533

Stock dividends - 290

15,754 16,190

Other income from investment activity

Traded option premiums 3,890 5,355

Deposit interest - 25

3,890 5,380

Total income 19,644 21,570

Notes to the Financial Statements

Continued

The North American Income Trust plc 73

During the year, the Company was entitled to premiums totalling £3,890,000 (2021 - £5,355,000) in exchange for entering

into option contracts. At the year end there were 2 (2021 - 2) open positions, valued at a liability of £24,000 (2021 - liability of

£144,000) as disclosed in note 13. Losses realised on the exercise of derivative transactions are disclosed in note 11.

5. Investment management fee

2022 2021

Revenue Capital Total Revenue Capital Total

£’000 £’000 £’000 £’000 £’000 £’000

Investment management fee 910 2,123 3,033 804 1,877 2,681

Management services are provided by Aberdeen Standard Fund Managers Limited (“ASFML”). With effect from 1 May 2021

the management fee is charged at 0.75% of net assets up to £250 million, 0.6% between £250 million and £500 million, and

0.5% over £500 million, payable quarterly. Prior to this the management fee was 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. 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 £773,000 (2021 – £1,351,000). The fee is allocated 30% to revenue and 70% to capital

(2021 – 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

2022 2021

Revenue Capital Total Revenue Capital Total

£’000 £’000 £’000 £’000 £’000 £’000

Interest on bank loans - - - 109 253 362

Bank interest paid 2 5 7 - - -

Senior Loan Notes 313 730 1,043 35 82 117

Amortised Senior Loan Note issue expenses 1 2 3 1 2 3

316 737 1,053 145 337 482

74 The North American Income Trust plc

7. Administrative ex

enses

2022 2021

£’000 £’000

Directors’ fees 129 123

Registrar’s fees 51 46

Custody and bank charges 27 24

Secretarial fees 120 118

Auditor’s remuneration:

– fees payable to the Company’s auditor for the audit of the annual report 31 29

Promotional activities 177 212

Printing, postage and stationery 31 30

Fees, subscriptions and publications 51 55

Professional fees 55 51

Depositary charges 43 45

Other expenses 20 20

735 753

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 £120,000 (2021 - £118,000). The balance due at the year end was £20,000 (2021 - £59,000).

During the year £177,000 (2021 – £212,000) was paid to ASFML in respect of promotional activities for the Company and the

balance due at the year end was £18,000 (2021 – £68,000).

With the exception of Auditor’s remuneration for the statutory audit, all of the expenses above include irrecoverable VAT

where applicable. The Auditor’s remuneration for the statutory audit excludes VAT amounting to £6,000 (2021 – £6,000).

8. Taxation

2022 2021

Revenue Capital Total Revenue Capital Total

£’000 £’000 £’000 £’000 £’000 £’000

(a) Analysis of charge for the year

UK corporation tax 152 - 152 615 - 615

Double tax relief (152) - (152) (189) - (189)

Overseas tax suffered 2,067 91 2,158 2,039 12 2,051

Tax relief to capital 454 (454) - 420 (420) -

Corporation tax prior year adjustment 1 - 1 - - -

Deferred tax - - - (26) - (26)

Double tax relief on deferred tax items - - - 23 - 23

Total tax charge for the year 2,522 (363) 2,159 2,882 (408) 2,474

Notes to the Financial Statements

Continued

The North American Income Trust plc 75

(b) Factors affecting the tax charge for the year. The UK corporation tax rate is 19% (2021 - 19%). The tax charge for the

year is lower (2021 - higher) than the corporation tax rate. The differences are explained in the following table.

2022 2021

Revenue Capital Total Revenue Capital Total

£’000 £’000 £’000 £’000 £’000 £’000

Net return before taxation 17,079 78,952 96,031 19,767 (41,368) (21,601)

Corporation tax at 19% (2021 - 19%) 3,245 15,001 18,246 3,755 (7,860) (4,105)

Effects of:

Non-taxable overseas dividends (2,550) (115) (2,665) (2,749) (19) (2,768)

Irrecoverable overseas withholding tax 2,067 91 2,158 2,039 12 2,051

Expenses not deductible for tax

purposes

1 - 1 - - -

Double tax relief (152) - (152) (166) - (166)

Corporation tax prior year adjustment 1 - 1 - - -

Tax rate differentials - - - 3 - 3

Excess management expenses (90) 90 - - - -

Non-taxable (gains)/losses on

investments

- (15,536) (15,536) - 7,615 7,615

Non-taxable currency losses/(gains) - 106 106 - (156) (156)

Total tax charge 2,522 (363) 2,159 2,882 (408) 2,474

2022 2021

Revenue Capital Total Revenue Capital Total

£’000 £’000 £’000 £’000 £’000 £’000

Opening balance - - - 4 - 4

Deferred tax credit for the year - - - (4) - (4)

Provision at end of the year - - - - - -

At the period end there is no unrecognised deferred tax asset (2021 – £nil) in relation to surplus management

expenses.

76 The North American Income Trust plc

9. Dividends

2022 2021

£’000 £’000

Amounts recognised as distributions to equity holders in the year:

3rd interim dividend for 2021 of 1.9p per share (2020 - 1.8p) 2,718 2,579

4th interim dividend for 2021 of 4.5p per share (2020 - 4.3p) 6,408 6,161

1st interim dividend for 2022 of 1.9p per share (2021 - 1.8p) 2,693 2,579

2nd interim dividend for 2022 of 1.9p per share (2021 - 1.8p) 2,676 2,578

14,495 13,897

The third interim dividend and proposed final dividend 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 £14,557,000 (2021 - £16,885,000).

2022 2021

£’000 £’000

1st interim dividend for 2022 of 1.9p per share (2021 - 1.8p) 2,693 2,579

2nd interim dividend for 2022 of 1.9p per share (2021 - 1.8p) 2,676 2,578

3rd interim dividend for 2022 of 2.5p per share (2021 - 1.9p) 3,517 2,718

Proposed final dividend for 2022 of 4.0p per share (2021 – 4.5p) 5,609 6,408

14,495 14,283

The cost of the proposed final dividend for 2022 is based on 140,235,898 Ordinary shares in issue, being the number of

Ordinary shares in issue at the date of this report.

10. Return per Ordinary share

2022 2021

£’000 p £’000 p

Based on the following figures:

Revenue return 14,557 10.28 16,885 11.79

Capital return 79,315 56.00 (40,960) (28.60)

Total return 93,872 66.28 (24,075) (16.81)

Weighted average number of Ordinary shares in issue 141,625,873 143,206,658

Notes to the Financial Statements

Continued

The North American Income Trust plc 77

11. Investments at fair value through profit or loss

2022 2021

£’000 £’000

Investments at fair value through profit or los

Opening book cost 395,289 388,574

Opening investment holdings gains 8,972 22,226

Opening fair value 404,261 410,800

Analysis of transactions made during the year

Purchases at cost 195,379 246,078

Sales proceeds received (210,378) (212,235)

Gains/(losses) on investments

81,710 (40,373)

Accretion/(amortisation) of fixed income book cost 2 (9)

Closing fair value 470,974 404,261

Closing book cost 425,863 395,289

Closing investment holdings gains 45,111 8,972

Closing fair value 470,974 404,261

Listed on overseas stock exchanges 470,974 404,261

Net gains/(losses) on investments

Gains/(losses) on investments

81,710 (40,373)

Investment holding gains on traded options

56 293

81,766 (40,080)

Includes losses realised on the exercise of traded options of £3,250,000 (2021 - £3,706,000) 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 £3,890,000 (2021 - £5,355,000) per note 4.

Options associated are derivative liabilities at the year end.

The Company received £210,378,000 (2021 - £212,235,000) from investments sold in the year. The book cost of these

investments when they were purchased was £164,807,000 (2021 - £239,354,000). 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:

78 The North American Income Trust plc

2022 2021

£’000 £’000

Purchases 81 105

Sales 142 194

223 299

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

2022 2021

£’000 £’000

Dividends receivable 549 814

Interest receivable 32 98

Other debtors 100 101

Amount due from brokers 5,031 1,562

5,712 2,575

13. Creditors: amounts falling due within one year

2022 2021

£’000 £’000

Amounts due to brokers 3,840 2,308

Investment management fee payable 773 1,351

Traded option contracts 24 144

Interest payable 120 117

Corporation tax payable - 140

Other creditors 150 263

4,907 4,323

Continued

Notes to the Financial Statements

The North American Income Trust plc 79

14. Bank loan

Creditors: amounts falling due after more than one year

2022 2021

£’000 £’000

2.70% Senior Loan Notes - 10 years 18,634 18,206

2.96% Senior Loan Notes - 15 years 18,634 18,206

Unamortised Loan Note issue expenses (77) (76)

37,191 36,336

On 21 December 2020 the Company issued a US$25 million 10 years Senior Loan Note at an annualised interest rate of

2.70% and a US$25 million 15 years Senior Loan Note at an annualised interest rate of 2.96%. The Loan Notes are unsecured

and unlisted. Interest is payable in half yearly instalments in June and December and the Loan Notes are due to be

redeemed at par on 21 December 2030 and 21 December 2035. The Company has complied with the Senior Loan Note

Purchase Agreement covenant throughout the period since issue that the ratio of net assets to gross borrowings must be

greater than 3.5:1, that net assets will not be less than £200,000,000, and that the total number of Listed Assets is to be more

than 35.

The total fair value of the Senior Loan Notes at 31 January 2022 was £41,348,000 (2021 - £43,334,000) comprising

£20,065,000 (2021 - £21,034,000) in respect of the 10 years 2.70% Senior Loan Note and £21,283,000 (2021 - £22,300,000) in

respect of the 15 years 2.96% Senior Loan Note. The fair value of the Senior Loan Notes has been determined by aggregating

the expected future cash flows for that loan discounted at a rate comprising the borrower’s margin plus an average of

market rates applicable to loans of a similar period of time.

15. Called-up share capital

2022 2021

£’000 £’000

Allotted, called-up and fully paid:

Opening balance 7,151 7,164

Ordinary shares bought back in the year (117) (13)

140,675,934 (2021 - 143,029,146) Ordinary shares of 5p each 7,034 7,151

During the year 2,353,212 (2021 - 248,374) Ordinary shares of 5p each were repurchased by the Company at a total cost,

including transaction costs, of £6,330,000 (2021 - £560,000).

Subsequent to the year end, the Company 440,036 Ordinary shares of 5p each were repurchased by the Company at a

total cost, including transaction costs of £1,248,000.

80 The North American Income Trust plc

16. Net asset value per Ordinary share

The net asset value per share and the net assets attributable to the Ordinary shareholders at the year end were as follows:

2022 2021

Net assets attributable £448,463,000 £375,416,000

Number of Ordinary shares in issue

140,675,934 143,029,146

Net asset value per share 318.79p 262.48p

Including 66,395 Ordinary shares bought back for treasury prior to the year end which had not yet settled.

17. Analysis of changes in net debt

At At

1 February Currency Non-cash Cash 31 January

2021 differences movement flows 2022

£’000 £’000 £’000 £’000 £’000

Cash and short term deposits 9,239 298 - 4,338 13,875

Debt due after more than one year (36,336) (856) 1 - (37,191)

(27,097) (558) 1 4,338 (23,316)

At At

1 February Currency Non-cash Cash 31 January

2020 differences movement flows 2021

£’000 £’000 £’000 £’000 £’000

Cash and short term deposits 21,898 (1,319) - (11,340) 9,239

Debt due within one year (18,965) 1,016 - 17,949 -

Debt due after more than one year - 1,128 (3) (37,461) (36,336)

2,933 825 (3) (30,852) (27,097)

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.

Continued

Notes to the Financial Statements

The North American Income Trust plc 81

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

£3,890,000 (2021 - £5,355,000). Positions closed during the year realised a loss of £3,250,000 (2021 - £3,706,000). The largest

position in derivative contracts held during the year at any given time was £613,000 (2021 - £601,000). The Company had 2

(2021 - 2) open positions in derivative contracts at 31 January 2022 valued at a liability of £24,000 (2021 - £144,000) 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 abrdn 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 abrdn

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.

82 The North American Income Trust plc

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 2022 are shown in note 14 on page 79.

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 2022 Years % £’000 £’000 £’000

Asset

Sterling – – – 4,982 –

US Dollar 8 7 1,642 8,711 423,051

Canadian Dollar – – – 182 46,281

Total assets 1,642 13,875 469,332

Liabilitie

Loan Notes- US$25,000,000 9 3 18,596 – –

Loan Notes- US$25,000,000 14 3 18,595 – –

Total liabilities 37,191 – –

Notes to the Financial Statements

Continued

The North American Income Trust plc 83

Weighted

average

period for Weighted Non–

which average Fixed Floating interest

rate is fixed interest rate rate rate bearing

At 31 January 2021 Years % £’000 £’000 £’000

Asset

Sterling – – – 4,782 –

US Dollar 6 6 6,667 4,280 363,859

Canadian Dollar – – – 177 33,735

Total assets 6,667 9,239 397,594

Liabilitie

Loan Notes- US$25,000,000 10 3 18,168 – –

Loan Notes- US$25,000,000 15 3 18,168 – –

Total liabilities 36,336 – –

The weighted average interest rate is based on the current yield of each asset, weighted by its market value.

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.

Financial Liabilities. The company has fixed rate borrowings by way of its senior loan notes, details of which can be

found in note 14.

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.

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 2022 would increase/decrease by £139,000 (2021 - decrease/increase by

£92,000). This is mainly attributable to the Company’s exposure to interest rates on its floating rate cash 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.

84 The North American Income Trust plc

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, as detailed on page 93, 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

2022 would have increased/decreased by £47,097,000 (2021 - increase/decrease of £40,426,000) and equity

reserves would have increased/decreased by the same amount.

(ii) 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.

(iii) 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.

Notes to the Financial Statements

Continued

The North American Income Trust plc 85

Credit risk exposure. In summary, compared to the amounts in the Statement of Financial Position, the exposure to

credit risk at 31 January 2022 was as follows:

2022 2021

Statement of Statement of

Financial Maximum Financial Maximum

Position exposure Position exposure

£’000 £’000 £’000 £’000

Non-current assets

Quoted bonds 1,642 1,642 6,667 6,667

Current assets

Amount due from brokers 5,031 5,031 1,562 1,562

Dividends receivable 549 549 814 814

Interest receivable 32 32 98 98

Other debtors and prepayments 100 100 101 101

Cash and short-term deposits 13,875 13,875 9,239 9,239

21,229 21,229 18,481 18,481

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 2022 and 31 January 2021:

2022 2021

£’000 £’000

B – 665

BB+ – 376

BB 897 2,408

BB– 745 1,530

BBB– – 1,688

1,642 6,667

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.

86 The North American Income Trust plc

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 2022 Note £’000 £’000 £’000 £’000

Financial assets at fair value through profit or loss

Quoted equities a) 469,332 - - 469,332

Quoted bonds b) - 1,642 - 1,642

469,332 1,642 - 470,974

Financial liabilities at fair value through profit or loss

Derivatives c) - (24) - (24)

Net fair value 469,332 1,618 - 470,950

Notes to the Financial Statements

Continued

The North American Income Trust plc 87

Level 1 Level 2 Level 3 Total

As at 31 January 2021 Note £’000 £’000 £’000 £’000

Financial assets at fair value through profit or loss

Quoted equities a) 397,594 - - 397,594

Quoted bonds b) - 6,667 - 6,667

397,594 6,667 - 404,261

Financial liabilities at fair value through profit or loss

Derivatives c) - (144) - (144)

Net fair value 397,594 6,523 - 404,117

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.

The fair value of the senior loan notes has been calculated as £41,348,000 (2021 – £43,334,000), determined by aggregating

the expected future cash flows for that loan discounted at a rate comprising the borrower’s margin plus an average of

market rates applicable to loans of a similar period of time, compared to carrying amortised cost of £37,191,000

(2021 – £36,336,000).

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 53 and 54.

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.

88 The North American Income Trust plc

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.

Discount to net asset value

The discount is the amount by which the share price is lower than the net asset value per share with debt at fair value, expressed as a

percentage of the net asset value with debt at fair value.

2022 2021

NAV per Ordinary share (p) a 318.79p 262.48p

Share price (p) b 283.00p 234.00p

Discount (a-b)/a 11.2% 10.9%

Dividend cover

Dividend cover measures the revenue return per share divided by total dividends per share, expressed as a ratio.

2022 2021

Revenue return per share a 10.28p 11.79p

Dividends per share b 10.30p 10.00p

Dividend cover a/b 1.00 1.18

Dividend yield

Dividend yield is calculated using the Company’s annual dividend per Ordinary share divided by the share price, expressed as

a percentage.

2022 2021

Annual dividend per Ordinary share (p) a 10.30p 10.00p

Share price (p) b 283.00p 234.00p

Dividend yield a/b 3.6% 4.3%

Alternative Performance Measures

The North American Income Trust plc 89

Net gearing

Net gearing measures total borrowings less cash and cash equivalents divided by shareholders’ funds, expressed as a percentage.

Under AIC reporting guidance cash and cash equivalents includes net amounts due to and from brokers at the period end as well as

cash and short-term deposits.

2022 2021

Borrowings (£’000) a 37,191 36,336

Cash (£’000) b 13,875 9,239

Amounts due to brokers (£’000) c 3,840 2,308

Amounts due from brokers (£’000) d 5,031 1,562

Shareholders’ funds (£’000) e 448,463 375,416

Net gearing (a-b+c-d)/e 4.9% 7.4%

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 daily net asset values with debt at fair value published throughout the year.

2022 2021

Investment management fees (£’000) 3,033 2,681

Administrative expenses (£’000) 735 753

Less: non recurring charges

(£’000) (10) –

Ongoing charges (£’000) 3,758 3,434

Average net assets (£’000) 429,283 371,338

Ongoing charges ratio (excluding look-through costs) 0.88% 0.92%

Look-through costs

0.07% 0.09%

Ongoing charges ratio (including look-through costs) 0.95% 1.01%

Professional services considered unlikely to recur.

Calculated in accordance with AIC guidance issued in October 2020 to include the Company’s share of costs of holdings in investment companies on a look-through basis.

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.

90 The North American Income Trust plc

Total return

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. Share price and NAV total returns are monitored against open-

ended and closed-ended competitors, and the Reference Index, respectively.

Year ended 31 January 2022 NAV Price

Opening at 1 February 2021 a 262.5p 234.0p

Closing at 31 January 2022 b 318.8p 283.0p

Price movements c=(b/a)-1 21.5% 20.9%

Dividend reinvestment

d 4.2% 4.7%

Total return c+d +25.7% +25.6%

Year ended 31 January 2021 NAV Price

Opening at 1 February 2020

a 287.1p 290.0p

Closing at 31 January 2021 b 262.5p 234.0p

Price movements c=(b/a)-1 –8.6% –19.3%

Dividend reinvestment

d 2.9% 2.8%

Total return c+d –5.7% –16.5%

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.

NAV per Statement of Financial Position of 288.91p reduced by 1.80p to take account of dividend going ex-div on 30 January 2020.

Alternative Performance Measures

Continued

The North American Income Trust plc 91

Corporate

Information

Gaming and Leisure Properties has a portfolio

consisting of 53 geographically diversified

gaming and related facilities and amenities

well-positioned across the nation.

The Company’s Investment Manager, abrdn Inc.

is a subsidiary of abrdn plc, whose group of

companies as at 31 December 2021 had

approximately £542 billion of assets under

management and administration.

92 The North American Income Trust plc

Aberdeen Standard Fund Managers Limited (“ASFML”),

authorised and regulated by the Financial Conduct

Authority, has been appointed as the alternative

investment fund manager to the Company. ASFML has in

turn delegated portfolio management to abrdn Inc.

ASFML and abrdn Inc. are both subsidiaries of abrdn plc.

The Investment Team Senior Managers

Ralph Bassett

Head of North American Equities

Graduated with a BS in Finance, with honors, from

Villanova University and is a CFA® Charterholder. Joined

abrdn in 2006 from Navigant Consulting and is abrdn’s

Head of North American Equity.

Fran Radano

Investment Director - North American Equities

Graduated with a BA in Economics from Dickinson College

and an MBA in Finance from Villanova University and is a

CFA® Charterholder. Joined abrdn in 2007 following the

acquisition of Nationwide Financial Services. Previously

worked at Salomon Smith Barney and SEI Investments.

Information about the Investment Mana

The North American Income Trust plc 93

The Investment Process

Philosophy and Style

The Manager’s investment philosophy is that markets are

not always efficient. The Manager believe that superior

investment returns are therefore attainable by identifying

good companies cheaply, defined in terms of the

fundamentals that in their opinion drive share prices over

the long-term. They undertake substantial due diligence

before initiating any investment including company visits

in order to assure themselves of the quality of the

prospective investment. They are then careful not to pay

too high a price when making the investment.

Subsequent to that investment they then keep in close

touch with the company, aiming to meet management at

least twice a year. Given their long-term fundamental

investment philosophy, one would not expect much

change in the companies in which the Manager invests.

They do, however, take opportunities offered to them by

what they see as anomalous price movements within

stockmarkets to either top up or top slice positions, which

accounts for the bulk of the activity within the portfolio

during the year under review.

Risk Controls

The Manager seeks to minimise risk by their in-depth

research. They do not view divergence from a benchmark

as risk – they view investment in poorly run expensive

companies that they do not understand as risk. In fact

where risk parameters are expressed in benchmark

relative terms, asset – including sector – allocation

constitutes a significant constraint on stock selection.

Hence diversification of stocks provides our main control.

The Manager’s performance and investment risk unit

independently monitors portfolio positions, and reports

monthly. As well as attributing performance it also

produces statistical analysis, which is used by the Manager

primarily to check the portfolio is behaving as expected,

not as a predictive tool.

94 The North American Income Trust plc

Investors can buy and sell shares in the Company directly

through a stockbroker or indirectly through a lawyer,

accountant or other professional adviser. Alternatively, for

retail clients, shares may be bought directly through abrdn

Trust Share Plan, Individual Savings Account (“ISA”) and

Investment Plan for Children.

Suitable for Retail/NMPI Status

The Company’s shares are designed for investors

primarily in the UK (including retail investors), professional-

advised private clients and institutional investors who seek

income and capital growth from investment in North

American markets and who understand and are willing to

accept the risks of exposure to equities. Investors should

consider consulting an independent financial adviser who

specialises in advising on the acquisition of shares and

other securities before acquiring shares. Investors should

be capable of evaluating the risks and merits of such an

investment and should have sufficient resources to bear

any loss that may result.

The Company currently conducts its affairs so that

securities issued by The North American Income Trust plc

can be recommended by a financial adviser to ordinary

retail investors in accordance with the Financial Conduct

Authority’s (FCA) rules in relation to non-mainstream

pooled investments (NMPIs) and intends to continue to do

so for the foreseeable future.

The Company’s securities are excluded from the

FCA’s restrictions which apply to non-mainstream

pooled investments because they are shares in an

investment trust.

abrdn Investment Plan for Children

abrdn runs an Investment Plan for Children (the “Children’s

Plan”) which covers a number of investment companies

under its management, including The North American

Income Trust plc. Anyone can invest in the Children’s Plan,

including parents, grandparents and family friends

(subject to the eligibility criteria as stated within the terms

and conditions). All investments are free of dealing

charges on the initial purchase of shares, although

investors will suffer the bid-offer spread which can, on

some occasions, be a significant amount. Lump sum

investments start at £150 per trust, while regular savers

may invest from £30 per month. Investors simply pay

Government Stamp Duty (currently 0.5%) on purchases.

Selling costs are £10 + VAT. There is no restriction on how

long an investor need invest in the Children’s Plan, and

regular savers can stop or suspend participation by

instructing abrdn in writing at any time.

abrdn Share Plan

abrdn runs a Share Plan (the “Plan”) through which shares

in The North American Income Trust plc can be

purchased. There are no dealing charges on the initial

purchase of shares, although investors will suffer the bid-

offer spread which can, on some occasions, be a

significant amount. Lump sum investments start at £250,

while regular savers may invest from £100 per month.

Investors simply pay Government Stamp Duty (currently

0.5%) on purchases. Selling costs are £10 + VAT. There is

no restriction on how long an investor need invest in a Plan,

and regular savers can stop or suspend participation by

instructing abrdn in writing at any time.

abrdn InvestmentTrusts ISA

An investment of up to £20,000 can be made in the tax

year 2021/22.

There are no brokerage or initial charges for the ISA,

although investors will suffer the bid-offer spread, which

can be a significant amount. Investors only pay

Government Stamp Duty (currently 0.5%) on purchases.

Selling costs are £15 + VAT. The annual ISA administration

charge is £24 + VAT, calculated annually and applied on 31

March (or the last business day in March) and collected

soon thereafter either by direct debit or, if there is no valid

direct debit mandate in place, from the available cash in

the Plan prior to the distribution or reinvestment of any

income, or, where there is insufficient cash in the Plan,

from the sale of investments held in the Plan. Under

current legislation, investments in ISAs can grow free of

capital gains tax.

Dividend Tax Allowance

The annual tax-free personal allowance on dividend

income is £2,000 for the 2022/23 tax year. Above this

amount, individuals will pay tax on their dividend income at

a rate dependent on their income tax bracket and

personal circumstances. The Company will continue to

provide registered shareholders with a confirmation of

dividends paid by the Company and this should be

included with any other dividend income received when

calculating and reporting to HMRC total dividend income

received. It is the shareholder’s responsibility to include all

dividend income when calculating any tax liability.

ISA Transfer

You can choose to transfer previous tax year investments

to us, which can be invested in The North American

Income Trust plc while retaining your ISA wrapper. The

minimum lump sum for an ISA transfer is £1,000 and is

subject to a minimum per trust of £250.

Investor Information

The North American Income Trust plc 95

Nominee Accounts and Voting Rights

All investments in abrdn trust products are held in nominee

accounts and investors have full voting and other rights of

share ownership.

Note

Please remember that past performance is not a guide to

the future. Stockmarket and currency movements may

cause the value of shares and the income from them to

fall as well as rise and investors may not get back the

amount they originally invested.

As with all equity investments, the value of investment

trusts purchased will immediately be reduced by the

difference between the buying and selling prices of the

shares, the market maker’s spread.

Investors should further bear in mind that the value of

any tax relief will depend on the individual circumstances

of the investor and that tax rates and reliefs, as well as

the tax treatment of ISAs, may be changed by

future legislation.

Keeping You Informed

The North American Income Trust plc’s share price

appears daily in the Financial Times.

For internet users, detailed data on The North American

Income Trust plc, including price, performance

information and a monthly factsheet, is available on the

Company’s website (northamericanincome.co.uk) and the

TrustNet website (trustnet.co.uk). Alternatively you can

call 0808 500 0040 for trust information.

Registrar

If you have an administrative query which relates to a

direct shareholding, please contact the Company’s

Registrar, as follows:

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol

BS99 6ZZ

Telephone: 0370 889 4084

Website: computershare.co.uk

Email: www-uk.computershare.com/investor/contactus

Customer Service

For literature and application forms for the Company and

the abrdn range of investment trust products, please

telephone 0808 500 4000 or request from the website

invtrusts.co.uk/en/fund-centre#literature

For information on the abrdn trust products

please contact:

abrdn Investment Trusts Administration

PO Box 11020

Chelmsford

Essex CM99 2DB

Tel: 0808 500 0040

E-mail: inv.trusts@abrdn-asset.com

Website: invtrusts.co.uk

Terms and conditions for the abrdn Investment Trust

products can be found under the literature section of the

above website.

Online Dealing providers and platforms

There are a number of online dealing platforms for private

investors that offer share dealing, ISAs and other means to

invest in the Company, such as self-invested personal

pension (SIPP). Real-time execution-only stockbroking

services allow you to trade online, manage your portfolio

and buy UK listed shares. These sites do not give advice.

Some comparison websites also look at dealing rates and

terms. Some well-known online providers, which can be

found through internet search engines, include:

AJ Bell You Invest; Barclays Smart Investor; Charles Stanley

Direct; Fidelity; Halifax; Hargreaves Lansdown; Interactive

Investor; Novia; Transact and Standard Life.

Discretionary Private Client Stockbrokers

If you have a large sum to invest, you may wish to contact

a discretionary private client stockbroker. They can

manage your entire portfolio of shares and will advise you

on your investments. To find a private client stockbroker

visit The Personal Investment Management & Financial

Advice Association at: pimfa.co.uk.

Financial Advisers

To find an adviser who recommends on investment trusts,

visit: unbiased.co.uk

Regulation of Stockbrokers

Before approaching a stockbroker, always check that

they are regulated by the Financial Conduct Authority:

Tel: 0800 111 6768 or

Website: fca.org.uk/firms/systems-reporting/register

Email: register@fca.org.uk

96 The North American Income Trust plc

PRIIPS (Packaged Retail and Insurance-

based Investment Products)

Investors should be aware that the PRIIPS Regulation

requires the Manager, as PRIIP manufacturer, to prepare a

key information document (“KID”) in respect of the

Company. This KID must be made available by the

Manager to retail investors prior to them making any

investment decision and is available on the Manager’s

website. The Company is not responsible for the

information contained in the KID and investors should note

that the procedures for calculating the risks, costs and

potential returns are prescribed by the law. The figures in

the KID may not reflect the expected returns for the

Company and anticipated performance returns cannot

be guaranteed.

Key Information Document

The KID relating to the Company and published by the

Manager can be found on the Manager’s website at

invtrusts.co.uk/en/fund-centre#literature

Investor Warning

The Board has been made aware by abrdn (“abrdn”) that

some investors have received telephone calls from people

purporting to work for abrdn, or third parties, who have

offered to buy their investment trust shares. These may be

scams which attempt to gain personal information with

which to commit identity fraud or could be ‘boiler room’

scams where a payment from an investor is required to

release the supposed payment for their shares. These

callers do not work for abrdn and any third party making

such offers has no link with abrdn. abrdn never makes

these types of offers and does not ‘cold-call’ investors in

this way. If investors have any doubt over the veracity of a

caller, they should not offer any personal information, end

the call and contact abrdn’s investor services centre using

the details provided below.

The Financial Conduct Authority provides advice with

respect to share fraud and boiler room scams:

fca.org.uk/consumers/scams.

The above information has been approved for the

purposes of Section 21 of the Financial Services and

Markets Act 2000 (as amended by the Financial Services

Act 2012) by Aberdeen Standard Fund Managers Limited,

which is authorised and regulated by the Financial

Conduct Authority in the United Kingdom

Investor Information

Continued

The North American Income Trust plc 97

Aberdeen Standard Fund Managers Limited (“ASFML”) and the Company are required to make certain disclosures

available to investors in accordance with the Alternative Investment Fund Managers Directive (“AIFMD”). Those

disclosures that are required to be made pre-investment are included within a pre-investment disclosure document

(“PIDD”) the latest version of which can be found on the Company’s website northamericanincome.co.uk.

There have been no material changes to the disclosures contained within the PIDD since its most recent update

in April 2021.

The periodic disclosures as required under the AIFMD to investors are made below:

· information on the investment strategy, geographic and sector investment focus and principal stock exposures is

included in the Strategic Report;

· none of the Company’s assets are subject to special arrangements arising from their illiquid nature;

· the Strategic Report on pages 8 to 17, Note 18 to the Financial Statements and the PIDD, together set out the risk profile

and risk management systems in place. There have been no changes to the risk management systems in place in the

period under review and no breaches of any of the risk limits set, with no breach expected;

· there are no new arrangements for managing the liquidity of the Company or any material changes to the liquidity

management systems and procedures employed by Aberdeen Standard Fund Managers Limited (“the AIFM”);

· authorised Alternative Investment Fund Managers are required to comply with the AIFMD Remuneration Code. In

accordance with the Remuneration Code, the AIFM’s remuneration policy is available from the Company Secretaries,

Aberdeen Asset Management PLC on request (see contact details on page 105) and the remuneration disclosures in

respect of the AIFM’s reporting period for the year ended 31 December 2021 are available on the Company’s website.

Leverage

The table below sets out the current maximum permitted limit and actual level of leverage for the Company:

Gross Method Commitment Method

Maximum level of leverage 2.50:1 2.00:1

Actual level at 31 January 2022 1.14:1 1.16:1

There have been no breaches of the maximum level during the period and no changes to the maximum level of

leverage employed by the Company. There is no right of re-use of collateral or any guarantees granted under the

leveraging arrangement. Changes to the information contained either within this Annual Report or the PIDD in relation to

any special arrangements in place, the maximum level of leverage which the AIFM may employ on behalf of the

Company; the right of use of collateral or any guarantee granted under any leveraging arrangement; or any change to

the position in relation to any discharge of liability by the Depositary will be notified via a regulatory news service without

undue delay in accordance with the AIFMD.

The information on this page has been approved for the purposes of Section 21 of the Financial Services and Markets Act

2000 (as amended by the Financial Services Act 2012) by Aberdeen Standard Fund Managers Limited which is

authorised and regulated by the Financial Conduct Authority in the United Kingdom.

Alternative Investment Fund Managers Directive

Disclosures

(

unaudited

)

98 The North American Income Trust plc

abrdn

abrdn (“abrdn”) is a brand of abrdn plc.

ASFML or AIFM or Manager

Aberdeen Standard Fund Managers Limited (ASFML) is a

wholly owned subsidiary of abrdn plc and acts as the

alternative investment fund manager (AIFM) for the

Company. It is authorised and regulated by the Financial

Conduct Authority.

AAMI or Investment Manager

abrdn Inc. (“AAMI” or “Investment Manager”) is a subsidiary

company of abrdn plc which has been delegated

responsibility for the Company’s day-to-day investment

management.

Alternative Performance Measures

An alternative performance measure is a financial

measure of historical or future financial performance,

financial position, or cash flows, other than a financial

measure defined or specified in the applicable financial

reporting framework.

AIC

The Association of Investment Companies.

AIFMD or the Directive

The Alternative Investment Fund Managers Directive

(AIFMD) is European legislation which created a

European-wide framework for regulating managers of

‘alternative investment funds’ (“AIFs”). It is designed to

regulate any fund which is not a UCITS fund and which is

managed and/or marketed in the EU. The Company has

been designated as an AIF.

Asset Cover

The value of a company’s net assets available to repay a

certain security. Asset cover is usually expressed as a

multiple and calculated by dividing the net assets

available by the amount required to repay the

specific security.

Closed-End Fund

A collective investment scheme which has a fixed number

of shares which are not redeemable from the fund itself.

Unlike open-ended funds, new shares/units are not

created by managers to meet demand from investors;

instead, shares are purchased (or sold) only in the market.

Closed-end funds are normally listed on a recognised

stock exchange, such as the London Stock Exchange, and

shares can be bought and sold on that exchange.

Discount

The amount by which the market price per share of an

investment trust is lower than the net asset value per

share. The discount is normally expressed as a

percentage of the net asset value per share.

Dividend Cover

Earnings per share divided by dividends per share

expressed as a ratio.

Dividend Yield

The annual dividend expressed as a percentage of the

share price.

ESG

Environmental, Social and Governance

FCA

Financial Conduct Authority

Investment Trust

A type of Closed-End Fund which invests in other

securities, allowing shareholders to share the risks, and

returns, of collective investment.

Key Information Document or KID

The Packaged Retail and Insurance-based Investment

Products (“PRIIPS”) Regulation requires the Manager, as

the Company’s PRIIP ‘manufacturer’, to prepare a Key

Information Document (“KID”) in respect of the Company.

This KID must be made available by the Manager to retail

investors prior to them making any investment decision

and is available via the Company’s website. The Company

is not responsible for the information contained in the KID

and investors should note that the procedures for

calculating the risks, costs and potential returns are

prescribed by law. The figures in the KID may not reflect

the expected returns for the Company and anticipated

performance returns cannot be guaranteed.

Glossary of Terms

The North American Income Trust plc 99

Leverage

For the purposes of the Alternative Investment Fund

Managers Directive, leverage is any method which

increases the Company’s exposure, including the

borrowing of cash and the use of derivatives. It is

expressed as a ratio between the Company’s exposure

and its net asset value and can be calculated on a gross

and a commitment method. Under the gross method,

exposure represents the sum of the Company’s positions

after the deduction of sterling cash balances, without

taking into account any hedging and netting

arrangements. Under the commitment method, exposure

is calculated without the deduction of sterling cash

balances and after certain hedging and netting positions

are offset against each other.

Net Asset Value (“NAV”)

The value of total assets less liabilities. Liabilities for this

purpose included current and long-term liabilities. The net

asset value divided by the number of shares in issue

produces the net asset value per share.

Net Gearing/Cash

Net gearing/cash is calculated by dividing total

borrowings less cash or cash equivalents, by shareholders’

funds expressed as a percentage.

Ongoing Charges

Ratio of expenses as percentage of average daily

shareholders’ funds calculated as per the AIC’s industry

standard method.

PIDD

The pre-investment disclosure document made available

by the AIFM in relation to the Company.

Premium

The amount by which the market price per share of an

investment trust exceeds the net asset value per share.

The premium is normally expressed as a percentage of

the net asset value per share.

Price/Earnings (P/E) Ratio

The ratio is calculated by dividing the middle-market price

per share by the earnings per share. The calculation

assumes no change in earnings but in practice the

multiple reflects the stockmarket’s view of a company’s

prospects and profit growth potential.

Prior Charges

The name given to all borrowings including debentures,

loan and short term loans and overdrafts that are to be

used for investment purposes, reciprocal foreign currency

loans, currency facilities to the extent that they are drawn

down, index-linked securities, and all types of preference

or preferred capital and the income shares of split capital

trusts, irrespective of the time until repayment.

Total Assets

Total Assets as per the balance sheet less current liabilities

(before deducting prior charges as defined above).

Total Return

Total Return involves reinvesting the net dividend in the

month that the share price goes ex-dividend. The NAV

Total Return involves investing the same net dividend in the

NAV of the Company on the date to which that dividend

was earned.

100 The North American Income Trust plc

Notice is hereby given that the one hundred and nineteenth Annual General Meeting (“AGM”) of The North American

Income Trust plc will be held at the offices of abrdn, 1 George Street, Edinburgh EH2 2LL on 8 June 2022 at 2.00 pm, for

the following purposes:

To consider and, if thought fit, pass the following resolutions, of which resolutions 1 to 10 inclusive will be proposed as

ordinary resolutions and resolutions 11 and 12 inclusive will be proposed as special resolutions.

Ordinary Business

1. To receive and adopt the reports of the Directors and the auditor and the audited financial statements for the year

ended 31 January 2022.

2. To receive and adopt the Directors’ Remuneration Report (other than the Directors’ Remuneration Policy) for the

year ended 31 January 2022.

3. To approve a final dividend of 4.0p per share for the year ended 31 January 2022

4. To re-elect Karyn Lamont as a Director of the Company.

5. To re-elect Susannah Nicklin as a Director of the Company.

6. To re-elect Charles Park as a Director of the Company.

7. To re-elect Susan Rice as a Director of the Company.

8. To re-appoint PricewaterhouseCoopers LLP as auditor of the Company.

9. To authorise the Directors to fix the remuneration of the auditor for the year ending 31 January 2023.

10. That, in substitution for any pre-existing power to allot or grant rights to subscribe for or to convert any security into

shares in the Company, but without prejudice to the exercise of any such authority prior to the date of the passing of

this resolution, the Directors be and are hereby generally and unconditionally authorised in accordance with Section

551 of the Companies Act 2006 to exercise all the powers of the Company to allot shares in the Company and to

grant rights to subscribe for or to convert any security into shares in the Company (“securities”) up to an aggregate

nominal amount of £2,337,031 or, if less, the number representing 33.33% of the issued Ordinary share capital of the

Company immediately following the conclusion of the AGM, such authority to expire on 31 July 2023 or, if earlier, at

the conclusion of the AGM of the Company to be held in 2023, unless previously revoked, varied or extended by the

Company in general meeting, save that the Company may, at any time prior to the expiry of such authority, make

an offer or enter into an agreement which would or might require relevant securities to be allotted after the expiry of

such authority and the Directors may allot relevant securities in pursuance of such an offer or agreement as if such

authority had not expired.

11. That, subject to the passing of the resolution numbered 10 set out in the notice of this meeting (“Section 551

Resolution”) and in substitution for any existing authority under sections 570 and 573 of the Companies Act 2006 (the

“Act”) but without prejudice to the exercise of any such authority prior to the date of the passing of this resolution, the

Directors of the Company be empowered pursuant to sections 570 and 573 of the Act to allot equity securities

(within the meaning of section 560 of the Act) either pursuant to the authorisation conferred by the Section 551

Resolution or by way of a sale of treasury shares, in each case for cash as if section 561(1) of the Act did not apply to

such allotment or sale, provided that this power shall be limited to the allotment or sale out of treasury of equity

securities up to an aggregate nominal amount of £701,179 or, if less, the number representing 10% of the issued

Ordinary share capital of the Company immediately following the conclusion of the AGM and such power shall

expire at the earlier of the conclusion of the AGM of the Company to be held in 2023 or on 31 July 2023, but so that

this power shall enable the Company to make offers, sales or agreements before such expiry which would or might

require equity securities to be allotted or sold after such expiry and the Directors of the Company may allot or sell

from treasury equity securities in pursuance of any such offer, sale or agreement as if such expiry had not occurred.

Notice of Annual General Meetin

The North American Income Trust plc 101

12. That, in substitution for any existing authority under Section 701 of the Companies Act 2006 (the “Act”), but without

prejudice to the exercise of any such authority prior to the date of passing of this resolution, the Company be

generally and unconditionally authorised, in accordance with Section 701 of the Act, to make market purchases

(within the meaning of Section 693(4) of the Act) of fully paid Ordinary shares in the capital of the Company

(“Ordinary shares”) and to cancel or to hold in treasury such shares, provided that:–

a) the maximum aggregate number of Ordinary shares hereby authorised to be purchased is 21,021,361 Ordinary

shares or, if less, the number representing approximately 14.99% of the issued Ordinary Share capital of the

Company as at the date of the passing of this resolution;

b) the minimum price which may be paid for an Ordinary share shall be 5 pence (exclusive of expenses);

c) the maximum price (exclusive of expenses) which may be paid for an Ordinary share shall be the higher of (i)

105% of the average of the middle market quotations (as derived from the Daily Official List of the London Stock

Exchange) for the Ordinary shares for the five business days immediately preceding the date of purchase and

(ii) the higher of the price of the last independent trade and the highest current independent bid relating to an

Ordinary share on the trading venue where the purchase is carried out; and

d) unless previously varied, revoked or renewed, the authority hereby conferred shall expire on 31 July 2023 or, if

earlier, at the conclusion of the AGM of the Company to be held in 2023, save that the Company may, at any

time prior to such expiry, enter into a contract or contracts to purchase Ordinary shares under such authority

which will or might be completed or executed wholly or partly after the expiration of such authority and may

make a purchase of Ordinary shares pursuant to any such contract or contracts as if such authority had not

expired.

By order of the Board

Aberdeen Asset Management PLC

Company Secretary

6 April 2022

Registered Office

1 George Street

Edinburgh EH2 2LL

102 The North American Income Trust plc

Notes

i. A member is entitled to appoint a proxy or proxies to exercise all or any of their rights to attend, speak and vote on

their behalf. A proxy need not be a member of the Company. A member may appoint more than one proxy

provided each proxy is appointed to exercise rights attached to different shares. A member may not appoint more

than one proxy to exercise rights attached to any one share. If you wish your proxy to speak on your behalf at the

Meeting you will need to appoint your own choice of proxy (not the Chairman of the meeting) and give your

instructions directly to them. Please note that, should restrictions on movement and in relation to public gatherings

put in place in response to the Coronavirus outbreak still remain in place by the time of the meeting, it is unlikely that

your vote will be counted where a proxy other than the Chairman of the Meeting is appointed as additional third

parties may not be permitted entry to the meeting. A proxy form which may be used to make such appointment

and give proxy instructions accompanies this notice. If you do not have a proxy form and believe that you should

have one, or if you require additional forms or would like to appoint more than one proxy, please contact the

Company's Registrars, Computershare Investor Services PLC on 0370 889 4084. In the case of joint holders, where

more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior

holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the

Company's Register of Members in respect of the joint holding (the first-named being the most senior). A member

present in person or by proxy shall have one vote on a show of hands and on a poll every member present in person

or by proxy shall have one vote for every Ordinary share of which he/she is the holder.

ii. A form of proxy for use by members is enclosed with this Notice of Meeting. Completion and return of the form of

proxy will not prevent any member from attending the Meeting and voting in person. To be valid, the form of proxy

should be lodged, together with any power of attorney or other authority (if any) under which it is signed or a

notarially certified copy of such power or authority with the Company’s Registrars, Computershare Investor Services

PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY, so as to be received not less than 48 hours (excluding non-

working days) before the time of the Meeting.

iii. In accordance with Regulation 41 of the Uncertificated Securities Regulations 2001, to have the right to attend and

vote at the Meeting a member must first have his or her name entered in the Company’s register of members by not

later than 6.00 pm on 6 June 2022 (or, in the event that the Meeting is adjourned, at 6.00pm on the day which is two

business days before the time of the adjourned Meeting). Changes to entries on that register after that time shall be

disregarded in determining the rights of any member to attend and vote at the Meeting.

iv. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service

may do so by using the procedures described in the CREST Manual and by logging on to the website

euroclear.com/CREST. CREST personal members or other CREST sponsored members, and those CREST members

who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s),

who will be able to take the appropriate action on their behalf.

v. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST

message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland

Limited’s specifications, and must contain the information required for such instruction, as described in the CREST

Manual. The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the

instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by

the Company’s Registrar (ID 3RA50) no later than 48 hours (excluding non-working days) before the time of the

Meeting or any adjournment. For this purpose, the time of receipt will be taken to be the time (as determined by the

timestamp applied to the message by the CREST Application Host) from which the Company’s Registrar is able to

retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of

instructions to proxies appointed through CREST should be communicated to the appointee through other means.

Notice of Annual General Meetin

Continued

The North American Income Trust plc 103

vi. CREST members and, where applicable, their CREST sponsors, or voting service providers should note that Euroclear

UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal

system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the

responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or

sponsored member, or has appointed a voting service provider(s), to procure that his CREST sponsor or voting

service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of

the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST

sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning

practical limitations of the CREST system and timings.

vii. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of

the Uncertificated Securities Regulations 2001.

viii. The "vote withheld" option on the proxy form is provided to enable a member to abstain on any particular resolution.

It should be noted that an abstention is not a vote in law and will not be counted in the calculation of the proportion

of votes "for" or "against" a particular resolution.

ix. The right to appoint a proxy does not apply to persons whose shares are held on their behalf by another person and

who have been nominated to receive communications from the Company in accordance with Section 146 of the

Companies Act 2006 (“nominated persons”). Nominated persons may have a right under an agreement with the

member who holds the shares on their behalf to be appointed (or to have someone else appointed) as a proxy.

Alternatively, if nominated persons do not have such a right, or do not wish to exercise it, they may have a right under

such an agreement to give instructions to the person holding the shares as to the exercise of voting rights. The

statement of the rights of members in relation to the appointment of proxies in notes i) and ii) above does not apply

to Nominated Persons. The rights described in these notes can only be exercised by members of the Company.

x. No Director has a service contract with the Company. Copies of the Directors’ letters of appointment are available

for inspection during usual business hours at the Company’s registered office. The documents will also be available

to view online at northamericanincome.co.uk from the date of this notice until close of the 2022 AGM.

xi. As at close of business on 6 April 2022 (being the latest practicable date prior to publication of this document), the

Company’s issued share capital comprised 140,235,898 Ordinary shares of 5p each. The total number of voting

rights in the Company as at 6 April 2022 was 140,235,898.

xii. Any person holding 3% or more of the total voting rights in the Company who appoints a person other than the

Chairman as his proxy will need to ensure that both he and such third party complies with their respective disclosure

obligations under the UK Disclosure Guidance and Transparency Rules.

xiii. Any corporation which is a shareholder can appoint one or more corporate representatives who may exercise on its

behalf all of its powers as a shareholder provided that they do not do so in relation to the same shares.

xiv. Under Section 527 of the Companies Act 2006 (the "Act"), shareholders meeting the threshold requirements set out

in that section have the right to require the Company to publish on a website a statement setting out any matter

relating to: (i) the audit of the Company’s financial statements (including the auditor’s report and the conduct of the

audit) that are to be laid before the AGM; or (ii) any circumstance connected with an auditor of the Company

ceasing to hold office since the previous meeting at which annual report and accounts and were laid in accordance

with Section 437 of the Act. The Company may not require the shareholders requesting any such website

publication to pay its expenses in complying with Sections 527 or 528 of the Act. Where the Company is required to

place a statement on a website under Section 527 of the Act, it must forward the statement to the Company’s

auditor not later than the time when it makes the statement available on the website. The business which may be

dealt with at the AGM includes any statement that the Company has been required under Section 527 of the Act to

publish on a website.

xv. Information regarding the AGM, including information required by Section 311A of the Companies Act 2006, is

available from the Company’s website, northamericanincome.co.uk.

104 The North American Income Trust plc

xvi. Under Section 319A of the Companies Act 2006, the Company must answer any question relating to the business

being dealt with at the Meeting put by a member attending the Meeting unless:

1. answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of

confidential information;

2. the answer has already been given on a website in the form of an answer to a question; or

3. it is undesirable in the interests of the Company or the good order of the Meeting that the question be answered.

xvii. Members who have general queries about the AGM should contact the Company Secretary in writing. Members

are advised that, unless otherwise stated, any telephone number, website or e-mail address which may be set out in

this notice of AGM or in any related documents (including the proxy form) is not to be used for the purposes of

serving information or documents on, or otherwise communicating with, the Company for any purposes other than

those expressly stated.

xviii. There are special arrangements for holders of shares through the abrdn trust products. These are explained in the

‘Letter of Direction’ which such holders will have received with this report.

xix. Given the evolving nature of the COVID-19 pandemic, should circumstances change significantly before the time of

the AGM, the Company will notify shareholders of any changes to the arrangements by updating the Company’s

website and through an RIS announcement, where appropriate, as early as is possible before the date of the

meeting. Shareholders should note that if law or Government guidance so requires at the time of the meeting, the

Chairman of the meeting will limit, in his or her sole discretion, the number of individuals in attendance at the

meeting and may be required to impose entry restrictions on certain persons wishing to attend the meeting in order

to ensure the safety of those attending.

Notice of Annual General Meetin

Continued

The North American Income Trust plc 105

Directors

Dame Susan Rice (Chair)

Karyn Lamont

Susannah Nicklin

Charles Park

Manager, Secretary and Registered Office

Alternative Investment Fund Manager

Aberdeen Standard Fund Managers Limited

Bow Bells House

1 Bread Street

London

EC4M 9HH

(Authorised and regulated by the Financial

Conduct Authority)

Manager - Customer Services Department

Telephone: 0808 500 0040

(Lines open 9.00 am to 5.00 pm, Monday to Friday)

Email: inv.trusts@abrdn.com

Investment Manager

abrdn Inc.

1900 Market Street

Floor

Philadelphia PA 19103

(Authorised and regulated by the US Securities and

Exchange Commission)

Secretary and Registered Office

Aberdeen Asset Management PLC

1 George Street

Edinburgh

EH2 2LL

Email: northamericanincome@abrdn.com

Website: northamericanincome.co.uk

Company Registration Number

Registered in Scotland with number SC005218

Registrar

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol

BS99 6ZZ

Telephone: 0370 889 4084*

Website: www-uk.computershare.com/investor

E-mail is available via the above website

*Lines are open Monday to Friday from 8.30am – 5.30pm,

excluding bank holidays. Charges for calling telephone

numbers starting with ‘03’ are determined by the caller’s

service provider. Calls may be recorded and monitored

randomly for security and training purposes.

Independent Auditor

PricewaterhouseCoopers LLP

144 Morrison St

Edinburgh

EH3 8EB

Company Broker

Winterflood Investment Trusts

The Atrium Building

Cannon Bridge House

25 Dowgate Hill

London, EC4R 2GA

Depositary

BNP Paribas Securities Services, London Branch

10 Harewood Avenue

London, NW1 6AA

United States Internal Revenue Service

FATCA Registration Number (GIIN)

XYAARK.99999.SL.826

Legal Entity Identifier

5493007GCUW7G2BKY360

Contact Addresses

For more information visit abrdn.com/investment

abrdn.com

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the action

you should take, you are recommended to seek your own financial advice from your stockbroker, bank manager,

solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act

2000 (as amended by the Financial Services Act 2012) if you are in the United Kingdom or, if not, from another

appropriately authorised financial adviser. If you have sold or otherwise transferred all your Ordinary shares in The North

American Income Trust plc, please forward this document, together with the accompanying documents immediately to

the purchaser or transferee, or to the stockbroker, bank or agent through whom the sale or transfer was effected for

transmission to the purchaser or transferee.

Visit our Website

To find out more about The North American Income Trust plc, please visit: northamericanincome.co.uk

Important Information