Interim Report and Unaudited Financial Statements Blackrock Funds I ICAV
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Interim report and unaudited financial statements BlackRock Funds I ICAV For the financial period ended 31 October 2019 BLACKROCK FUNDS I ICAV CONTENTS Page Overview General information 1 Background 3 Performance Investment manager’s report 5 Financial statements Condensed income statement 14 Condensed statement of changes in net assets attributable to shareholders 16 Condensed balance sheet 18 Notes to the financial statements 20 Schedule of investments 34 Additional information and regulatory disclosures Schedules of material purchases and sales 118 Ongoing charge 127 Transactions with connected persons 128 Soft commissions 128 Cross investments 128 Efficient portfolio management and securities financing transactions 129 This interim report and unaudited financial statements (the “Report and Accounts”) may be translated into other languages. Any such translation shall only contain the same information and have the same meaning as the English language Report and Accounts. To the extent that there is any inconsistency between the English language Report and Accounts and the Report and Accounts in another language, the English language Report and Accounts will prevail, except to the extent (and only to the extent) that it is required by law of any jurisdiction where the shares are sold, that in an action based upon disclosure in a Report and Accounts in a language other than English, the language of the Report and Accounts on which such action is based shall prevail. Any disputes as to the terms of the Report and Accounts, regardless of the language of the Report and Accounts, shall be governed by and construed in accordance with the laws of Ireland. BLACKROCK FUNDS I ICAV GENERAL INORMATION Board of Directors1 Investment Manager, Distributor and Securities Lending Paul McNaughton (Chairman) (Irish)2 Agent Jessica Irschick (British) BlackRock Investment Management (UK) Limited Paul McGowan (Irish)2 12 Throgmorton Avenue Barry O’Dwyer (Irish) London, EC2N 2DL Ros O’Shea (Irish) 2 United Kingdom Teresa O’Flynn (Irish) Deirdre Somers (Irish) 2 Sub-Investment Manager4 BlackRock Financial Management, Inc. 1 nd All Directors are non-executive 55 East 52 Street 2Independent Director New York NY 10055 Manager USA BlackRock Asset Management Ireland Limited 1st Floor Independent Auditor 2 Ballsbridge Park Ernst & Young Ballsbridge Block 1 Harcourt Centre Dublin 4, D04 YW83 Harcourt Street Ireland Dublin 2, D02 YA40 Ireland Currency Hedging Manager3 J.P. Morgan Chase Bank, N.A. Irish Legal Advisers 25 Bank Street Matheson Canary Wharf 70 Sir John Rogerson’s Quay London, E14 5JP Dublin 2, D02 R296 United Kingdom Ireland Administrator, Registrar and Transfer Agent Paying Agent in Switzerland J.P. Morgan Administration Services (Ireland) Limited State Street Bank International GmbH 200 Capital Dock Munich, Zürich Branch 79 Sir John Rogerson’s Quay Beethovenstrasse 19 Dublin 2, D02 RK57 8027 Zürich Ireland Switzerland Depositary Information Agent in Germany J.P. Morgan Bank (Ireland) plc BlackRock Asset Management Deutschland AG 200 Capital Dock Lenbachplatz 1 79 Sir John Rogerson’s Quay D-80333 Munich Dublin 2, D02 RK57 Germany Ireland Paying Agent in Austria Secretary UniCredit Bank Austria AG Sanne Corporate Administration Services (Ireland) Limited Rothschildplatz 1 Fourth Floor A-1020 Vienna 76 Baggot Street Lower Austria Dublin 2, D02 EK81 Ireland Representative in Switzerland BlackRock Asset Management Schweiz AG Bahnhofstrasse 39 8001 Zürich Switzerland 3In respect of the currency hedged share classes of certain Funds only. 4 In respect of certain Funds only. 1 BLACKROCK FUNDS I ICAV GENERAL INORMATION (continued) Entity’s registered office 200 Capital Dock 79 Sir John Rogerson’s Quay Dublin 2, D02 RK57 Ireland Entity registration number: C178885 For Swiss investors: The prospectus of the Entity, the Key Investor Information Documents (“KIID”), the latest published annual and interim Report and Accounts, as applicable and a detailed list of investments purchased and sold for each Fund during the financial period may be obtained on request and free of charge from the representative in Switzerland. For German investors: The prospectus and KIID are available, free of charge, from the Information Agent in Germany. The Fund is duly registered with the Comisión Nacional de Mercado de Valores in Spain under number 1742. 2 BLACKROCK FUNDS I ICAV BACKGROUND BlackRock Funds I ICAV (the “Entity”) is an Irish collective asset-management vehicle. The Entity was incorporated in Ireland on 8 March 2018 with segregated liability between its funds and is organised under the laws of Ireland and is regulated by the Central Bank of Ireland (“CBI”) pursuant to the Irish Collective Asset-Management Vehicles Act 2015 (the “ICAV Act 2015”) and the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2011 (as amended) (the “UCITS Regulations”). The Entity is structured as an umbrella fund and will comprise separate funds (“Fund”) of the Entity. The shares of each Fund may be grouped into different classes of shares (each a “share class”). Each Fund will represent a separate portfolio of assets and may consist of one or more share classes. Each share class may apply different subscription and redemption provisions, charges, fees or brokerage arrangements. The creation of an additional class of shares will be notified to the CBI in advance. The portfolio of assets maintained for each Fund will be invested in accordance with the investment objectives and policies applicable to each Fund as set out in the prospectus. While assets and liabilities that are specific to a share class within a Fund would be attributable to (and should be borne by) only that share class, there is no segregation of liabilities between share classes as a matter of Irish law. Due to the lack of segregation of liabilities as a matter of law, there is a risk that the creditors of a share class may bring a claim against the assets of the Fund notionally allocated to other share classes. As a matter of Irish law, the assets of one Fund will not be available to meet the liabilities of another. However, the Entity is a single legal entity that may operate or have assets held on its behalf or be subject to claims in other jurisdictions that may not necessarily recognise such segregation of liability. The term “Fund” shall be deemed to mean either a Fund or Funds 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 Investment Management (UK) Limited as appropriate. All references to “redeemable shares” shall be deemed to mean redeemable participating shares when Fund shares are classified as financial liabilities. The term “Directors” means the directors of the Entity. 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 3 May 2019, Ros O’Shea and Deirdre Somers were appointed as non-executive Directors. On 25 June 2019, Class X Shares GBP Accumulating was launched for BlackRock Advantage Emerging Markets Equity Fund. On 4 July 2019, an updated prospectus was issued for the Entity for the inclusion of BlackRock Tactical Opportunities Fund. On 25 July 2019, BlackRock Tactical Opportunities Fund commenced trading with the launch of the Class A Shares SGD Hedged Accumulating, Class A Shares USD Accumulating, Class D Shares CHF Hedged Accumulating, Class D Shares EUR Hedged Accumulating, Class D Shares GBP Hedged Accumulating, Class D Shares USD Accumulating, Class X Shares AUD Hedged Accumulating, Class X Shares EUR Hedged Accumulating, Class X Shares GBP Hedged Accumulating and Class X Shares USD Accumulating. On 25 July 2019, the sub-investment management agreement between BlackRock Investment Management (UK) Limited and BlackRock Financial Management Inc (“BFM”), has been updated to reflect the appointment of BFM as sub-investment manager of the BlackRock Tactical Opportunities Fund. On 4 October 2019, Teresa O’Flynn was appointed as a non-executive Director. 3 BLACKROCK FUNDS I ICAV BACKGROUND (continued) 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 Entity’s growth or impact its financial performance.