This means that the company outperformed the 17.6% return, in sterling terms, for the Russell 1000 Value Index, The North American Income Trust PLC primary reference index. This was mainly attributable to the positioning in the technology sector, as well as stock selection in communication services and consumer staples.

The company’s share price total return over the same period reached 19.1%, compared to 16.5% for the year ended 31 January 2021. uring the reporting period, major North American equity market indices moved sharply higher, buoyed largely by investors’ optimism regarding the distribution of COVID-19 vaccines and generally positive economic reports.

The market rally was tempered somewhat because of investors’ concerns regarding the Delta variant, which stalled the momentum of otherwise upbeat second-quarter results. The Russell 1000 Value Index return of 17.6% was led by energy, real estate and financial stocks. The utilities, consumer staples and healthcare sectors recorded more modest gains and were the most notable market laggards.

The US Federal Reserve (Fed) maintained its zero interest rate policy over the six months and, in June, signalled greater expectations of an increase in its benchmark interest rate in 2023.

The Fed also estimated that the core inflation rate will come in at roughly 3.0% for 2021, and will subsequently fall to 2.1% in both 2022 and 2023. In July, the Fed noted that it would continue its current level of quantitative easing until there is “substantial further progress” towards its unemployment and stable inflation targets.

US GDP grew at nearly 6.5% in the first half of 2021 as the economy emerged from its pandemic induced downturn. The increase was attributable mainly to upturns in consumer spending, non-residential fixed investment, and exports.

The US economy added over four million jobs during the six month period, and the unemployment rate fell from 6.7% to 5.4%. There were signs of inflation as the annual rate of the Consumer Price Index (CPI) rose by 5.4% year over year in July. However, core inflation, as measured by the CPI for all items less food and energy, rose by a more modest 4.3%.

The trust has also declared a second quarterly dividend of 1.9p per share, giving total dividends for the first half of the year to 31 January 2022 of 3.8p per share (2021 – 3.6p), a 5.6% increase. The second quarterly dividend is payable on 29 October 2021 to shareholders on the register on 8 October 2021.

It is expected that the third interim dividend, which will be paid in February 2022, will be 2.5p per share and the fourth interim dividend will continue to act as a balancing figure and will be determined once the income for the year has been determined.

Commenting on the outlook, James Ferguson, chairman of the Trust, said: “The rise in COVID-19 cases and higher transmission risk among those who have been vaccinated has prompted the US Center for Disease Control to reinstate face mask guidelines. With the vaccination rate at around at 59% of the eligible population (those aged 12 or over), infection rates are rising sharply.

“While we have not seen any lockdown by US states, there is the potential to aggravate global supply-chain disruptions. However, the company’s investment manager does not expect these to derail US economic growth. In the short term, labour shortages continue to pose a risk of inflation, which has surged due to disrupted supply chains and reopening pressure.

“The Fed continues to view these pressures as transitory. The Fed has also suggested that it wants to avoid any sharp changes in policy. Therefore, while the recent data has been more volatile than expected, it is not expected that the Fed will raise rates until 2022.

“Second-quarter earnings have indicated continued momentum as companies have largely delivered strong results and are raising forward guidance. While companies have noted higher input costs (especially in certain commodities), these have broadly been passed on to customers and many companies have an improved outlook for margins because of volume growth. The Manager thinks that this should provide sufficient support for earnings growth in 2021; beyond that, it is expected that the market’s focus will shift towards sustainability of growth.”