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Interim Report and Unaudited Financial Statements

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Interim Report and Unaudited Financial Statements Interim report and unaudited financial statements BlackRock Common Contractual Funds For the financial period ended 31 October 2019 BlackRock Common Contractual Funds CONTENTS Page Overview General information 1 Background 2 Performance Investment manager’s report 3 Financial statements Income statement 5 Statement of changes in net assets attributable to redeemable unitholders 6 Balance sheet 7 Notes to the financial statements 8 Schedule of investments 14 Additional information and regulatory disclosures Schedules of material purchases and sales 53 Transaction with connected persons 54 Soft commissions 54 Efficient portfolio management and securities financing transactions 55 Disclaimers 57 BlackRock Common Contractual Funds GENERAL INFORMATION Directors of the Manager1 Investment Manager and Securities Lending Agent William Roberts (Chairman) (British but Irish resident) BlackRock Advisors (UK) Limited Patrick Boylan (Irish) 12 Throgmorton Avenue Paul Freeman (British) London, EC2N 2DL Justin Mealy (Irish) United Kingdom Barry O’Dywer (Irish) Adele Spillane (Irish) Promoter and Principal Distributor Catherine Woods (Irish) BlackRock Investment Management (UK) Limited 12 Throgmorton Avenue 1All Directors are non-executive London, EC2N 2DL United Kingdom Manager BlackRock Asset Management Ireland Limited Independent Auditor 1st floor Ernst & Young Chartered Accountants 2 Ballsbridge Park EY Building Dublin 4, D04 YW83 Harcourt Centre Ireland 2 Harcourt Street Saint Kevin’s Currency Hedging Manager2 Dublin 2, D02 YA40 State Street Europe Limited Ireland 20 Churchill Place London, E14 5HJ Irish Legal Advisers United Kingdom Matheson 70 Sir John Rogerson’s Quay Administrator, Registrar and Transfer Agent Dublin 2, D02 R296 Northern Trust International Fund Administration Ireland Services (Ireland) Limited Georges Court 54-62 Townsend Street Dublin 2, D02 R156 Ireland Depositary Northern Trust Fiduciary Services (Ireland) Limited Georges Court 54-62 Townsend Street Dublin 2, D02 R156 Ireland Tax Services Provider The Northern Trust Company, London Branch 50 Bank Street Canary Wharf London, E14 5NT United Kingdom Secretary of the Manager Sanne Corporate Administration Services (Ireland) Limited 4th Floor, 76 Baggot Street Lower Dublin 2, D02 EK81 Ireland 2In respect of the currency hedged share classes only. 1 BlackRock Common Contractual Funds BACKGROUND BlackRock Common Contractual Funds (the “Entity”) is an open-ended common contractual fund (the “CCF”) established on 6 November 2018 as an umbrella fund under the laws of Ireland. The Entity was constituted by the Deed of Constitution dated 6 November 2018 between BlackRock Asset Management Ireland Limited (the “Manager”) and Northern Trust Fiduciary Services (Ireland) Limited (the “Depositary”). The Entity is authorised as a CCF with segregated liability between the funds pursuant to the laws of Ireland. The Entity is authorised and supervised by the Central Bank of Ireland (“CBI”) pursuant to the provisions of the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2011 (as amended) (the “UCITS Regulations”). The Entity is constituted as an umbrella fund and comprises of one fund (“Fund”). The units of the Fund may be grouped into different classes of units (each a “unit class”). The Fund will represent a separate portfolio of assets and may consist of one or more unit classes. Each unit class may apply different subscription and redemption provisions, charges, fees or brokerage arrangements. The creation of an additional class of units will be notified to the CBI in advance. The portfolio of assets maintained for the Fund will be invested in accordance with the investment objectives and policies applicable to the Fund as set out in the prospectus. The assets of each Fund shall belong exclusively to the Fund and shall not be used to discharge directly or indirectly the liabilities of or claims against any other Fund. The term “Fund” shall be deemed to mean the Fund of the Entity, or if the context so requires, the Manager or its delegate acting for the accounts of the relevant Fund. The term “BlackRock” and “Investment Manager” are used to represent BlackRock Advisors (UK) Limited. All references to “redeemable units” shall be deemed to mean redeemable participating units when Fund units are classified as financial liabilities. The term “Directors” means the directors of the Manager. Further details, including the investment objectives and minimum subscription requirements, are set out in the Entity’s prospectus. Changes to the Entity during the financial period On 19 June 2019, Graham Bamping resigned as a non-executive Director. United Kingdom Exit from European Union Following the June 2016 vote to exit the European Union (“EU”), the United Kingdom (“UK”) served notice under Article 50 of the Treaty on European Union on 29 March 2017 to initiate the process of exiting from the EU, commonly referred to as "Brexit". At the Emergency EU Summit held on 10 April 2019, an agreement was reached to extend the deadline by which the UK is required to exit the EU to 31 October 2019. The deadline was further extended to 31 January 2020 at the European Council on 29 October 2019. Following the outcome of the 2019 General Election, which saw the Conservative Party return a clear majority, the uncertainty around a no- deal Brexit on 31 January 2020 has now been significantly reduced. Substantial uncertainty remains surrounding the terms upon which the UK will ultimately exit the EU. The impact of Brexit may depend in part on any arrangements that are put in place between the UK and the EU and, to the extent they are, whether the UK continues to apply laws that are based on EU legislation. As a result, the UK’s relationship with the EU remains unclear and the passage of time without a resolution in place has become a source of economic, political and regulatory instability. BlackRock is implementing a number of steps to prepare for various outcomes, including effecting organisational, governance and operational changes, applying for and receiving licenses and permissions in the EU, and engaging in client communications. These steps, many of which have been time-consuming and costly, are expected to add complexity to BlackRock’s European operations. In addition, depending on the terms of the future relationship between the UK and the EU, BlackRock may experience organisational and operational challenges and incur additional costs in connection with its European operations post-Brexit, which may impede the Company’s growth or impact its financial performance. Fund details The Entity had one Fund in operation as at 31 October 2019. Fund name Benchmark index Investment management approach1 CCF Developed World (ESG Screened) MSCI World ex Select Controversies Euro Non-replicating Index Fund Net Index 1Please refer to the Investment Manager’s Report for further information on the meaning of a non-replicating fund. 2 BlackRock Common Contractual Funds INVESTMENT MANAGER’S REPORT Investment objective The investment objective of the Fund is to provide investors with a total return, taking into account both capital and income returns, which reflects the total return of the MSCI World ex Select Controversies Euro Net Index. Fund performance and tracking error The Fund performance figures are based on the NAV calculated in accordance with the prospectus for the financial period under review with any dividends reinvested. Due to FRS 102 requirements which apply to the financial statements, there may be differences between the NAV per unit as recorded in the financial statements and the NAV per unit calculated in accordance with the prospectus. Realised tracking error is the annualised standard deviation of the difference in monthly returns between a fund and its benchmark index. Tracking error shows the consistency of the returns relative to the benchmark index over a defined period of time. Anticipated tracking error is based on the expected volatility of differences between the returns of a fund and the returns of its benchmark index. For a non-replicating fund, the investment management approach aims to match the main risk characteristics of the benchmark index by investing in a portfolio that is primarily made up of securities that represent the benchmark index. The objective is to generate a return which is as close as practicable to the total return of the index net of transaction costs and gross of fees and other costs. Cash management, efficient portfolio management techniques including securities lending, transaction costs from rebalancing and currency hedging can have an impact on tracking difference. Importantly, these impacts can be either positive or negative depending on the underlying circumstances. The Fund’s total expense ratio (“TER”) is accrued on a daily basis throughout the financial period, which can impact the measurement of a tracking error in a positive or negative manner depending on the performance in the market and the TER rate applied. The extent and magnitude of this effect on performance measurement is subject to the timing of the market performance relative to the performance period and can be greater than the headline TER in a positive market and lower than the TER in a negative market. In addition to the above, the Fund may also have a tracking error due to withholding tax suffered by the Fund on any income received from its investments. The level and quantum of tracking error arising due to withholding taxes depends on various factors such as any reclaims filed on behalf of the Fund with various tax authorities, any benefits obtained by the Fund under a tax treaty or any securities lending activities carried out by the Fund. The following table compares the realised Fund performance against the performance of the relevant benchmark index during the financial period ended 31 October 2019. It also discloses the anticipated tracking error of the Fund (disclosed in the prospectus on an ex-ante basis) against the actual realised tracking error of the Fund as at 31 October 2019. The realised tracking error is annualised and calculated using data from the preceding 36 month observation period.
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