Interim report ChariTrak Common Investment Fund For the six months ended 12 October 2017 Contents General Information Manager, Registrar and Alternative Investment Fund Manager General Information 2 BlackRock Fund Managers Limited About the Fund 3 12 Throgmorton Avenue, London EC2N 2DL Switchboard: 020 7743 3000 Trustee 3 Charities Helpline (Freephone): 0800 44 55 22 Corporate Governance 4 Member of The Investment Association and authorised and regulated by the Financial Conduct Authority Common Investment Funds 4 pursuant to the requirements of The Alternative Investment Fund Managers Regulations 2013. Charity Trustees’ Investment Responsibilities 4 Directors of the Manager Fund Manager 4 G D Bamping* C L Carter (appointed 7 September 2017) R A Damm N C D Hall* (resigned 31 May 2017) R A R Hayes A M Lawrence E E Tracey M T Zemek* Significant Events 5 * Non-executive Director. Investment Objective & Policy 6 Trustee Performance Table 7 BNY Mellon Trust & Depositary (UK) Limited 160 Queen Victoria Street, London EC4V 4LA Investment Report 8 Authorised and regulated by the Financial Conduct Authority. Performance Record 9 Portfolio Statement 11 Investment Manager BlackRock Advisors (UK) Limited Statement of Total Return 28 12 Throgmorton Avenue, London EC2N 2DL Statement of Change in Net Assets Attributable to Unitholders 28 Authorised and regulated by the Financial Conduct Authority. Balance Sheet 29 Auditor Notes to Financial Statements 30 Ernst & Young LLP 1 More London Place, London SE1 2AF Custodian The Bank of New York Mellon (International) Limited 1 Canada Square, London E14 5AL Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. BlackRock’s proxy voting agent is ISS (Institutional Shareholder Services). This Report relates to the packaged products of and is issued by: BlackRock Fund Managers Limited 12 Throgmorton Avenue, London EC2N 2DL Telephone: 020 7743 3000 Dealing and Investor Services: 0800 44 55 22 blackrock.co.uk For your protection, telephone calls are usually recorded. 1 ChariTrak Common Investment Fund ChariTrak Common Investment Fund 2 About the Fund Corporate Governance ChariTrak Common Investment Fund (the “Fund”) is established by The Charity Commission for England The Manager is responsible for the management and administration of the Fund (as further detailed in the and Wales (the “Commission”) under section 24 of The Charities Act 1993. The Charities Act 1993 was Scheme Particulars) except to the extent that such responsibilities are those of the Trustee. The Manager superseded by The Charities Act 2011 on 14 March 2012. has delegated certain functions with respect to the portfolio management of the assets of the Fund, the performance of certain risk management functions, and the distribution of units to BlackRock Advisors (UK) The Fund was established on 11 August 1999 and its registered charity number is 1077125. The Fund is Limited (the “Investment Manager”). administered for the benefit of unitholders under a scheme order of the Commission dated 22 June 2000 (the “Scheme”), as subsequently varied or amended. The Manager and Investment Manager meet quarterly to review the performance of the Fund and to discuss the investment policy and objectives. The Trustee attends these meetings at least annually and submits The Alternative Investment Fund Managers Regulations 2013 reports on a quarterly basis. Any matters for decision which are outside the powers delegated to the Manager BlackRock Fund Managers Limited (the “Manager”) is authorised and regulated by the Financial Conduct are discussed by the Manager and the Trustee. Authority with permission to carry on the activity of ‘managing an AIF’ in the United Kingdom. As such, the Manager has been appointed to be the alternative investment fund manager of the Fund, which is an alternative investment fund, or ‘AIF’, for the purposes of the AIFMD. Common Investment Funds In this document the term “AIFMD” means, collectively, Alternative Investment Fund Managers Directive (Directive 2011/61/EU) as implemented by the Commission Delegated Regulation (EU) No. 231/2013, and as The Fund is a Common Investment Fund established and registered with the Commission. Pursuant to the transposed in the UK by UK SI 2013/1773 entitled ‘Financial Services and Markets; The Alternative Investment Charities Act 2011 and the Fund’s governing document, the Scheme, charities established in England and Fund Managers Regulations 2013’ and any other applicable national implementing measures, including Wales, and charities established in Scotland and Northern Ireland pursuant to the Charities Act 2006 (as (without limitation) the rules contained in the FCA Handbook, each as may be amended or updated from amended from time to time) may invest in the Fund. Subject to any restrictions in the terms of the Scheme, time to time. or that may apply to an eligible charity, the trustees of any charity, large or small, may contribute the whole or any part of their investment property to it at any time. The Fund should not be regarded as a short–term investment. Trustee Charity Trustees’ Investment Responsibilities The Trustee of the Fund is BNY Mellon Trust & Depositary (UK) Limited (the “Trustee”) and is a subsidiary of The Bank of New York Mellon Corporation. It is responsible for certain aspects of the management and administration of the Fund and its property (as further detailed in the Scheme) except to the extent that such The Commission requires trustees of charities to invest their assets only in investments authorised under the responsibilities are those of the Manager. governing document of their charity or the Trustee Act 2000 if applicable. Trustees are required to invest prudently in order to achieve both income and/or capital growth. Furthermore, trustees are required to seek regular professional advice regarding their investments. The Trustee acts as the depositary of the Fund and, in doing so, shall comply with the terms of the Scheme and the provisions of the AIFMD. The Trustee has delegated certain safekeeping functions to The Bank of New York Mellon (International) Limited. Fund Manager As at 12 October 2017, the Fund Manager is Kieran Doyle. 3 ChariTrak Common Investment Fund ChariTrak Common Investment Fund 4 Significant Events Investment Objective & Policy Charities Team The investment objective of the Fund is to provide tax-exempt charity investors in England, Wales, Scotland We would like to advise you of a recent change to the management of the Charities Team. Mark Johnson has and Northern Ireland with returns (income and capital growth) of the UK equity market in line with a fixed now left BlackRock to pursue other opportunities and Nick McLeod-Clarke has become head of the EMEA benchmark, namely the FTSE All-Share Index (the “Benchmark Index”). Charities business. Nick took over Mark’s responsibilities effective 1 July. Nick, a Managing Director, was previously on the UK Equity team and has 16 years’ experience at the firm. The Manager may invest the property of the Fund at its discretion in any kind of investment which it could make if it were absolutely entitled to the property of the Fund. Nick will be supported by Candida de Silva, Relationship Manager and head of EMEA Charities Business Development, together with Relationship Managers Gemma Gooch and Luke Twyman. Our Charity clients The Fund aims to fully replicate the Benchmark Index, holding stocks in the same proportion as they appear in continue to be looked after by our Charities Client Services and Relationship Support team, many of whom the Benchmark Index. However, the Fund may employ optimisation techniques in order to assist it in tracking have worked with our Charities clients for over twenty years. its benchmark. Potential Implication of Brexit The Fund will follow a risk-sensitive, index equity investment strategy, requiring it to hold a broadly diversified range of stocks, in order to reduce the risk of poor stock selection. The Fund may also invest in collective In a referendum held on 23 June 2016, the electorate of the United Kingdom (“UK”) resolved to leave the investment schemes in accordance with the restrictions set out in the Scheme. European Union (“EU”). The result has led to political instability and economic uncertainty, volatility in the financial markets of the UK and more broadly across the EU and a decline in the value of Sterling. The Fund may invest in securities that are, or could be, subject to stabilisation. Stabilisation is the process by which the price of a security is temporarily supported during an issue to ensure that the introduction of the The longer term process to implement the political, economic and legal framework between the UK and the new security to the market occurs in an orderly fashion. EU is likely to lead to continuing uncertainty and periods of exacerbated volatility in both the UK and in wider European markets. In particular, the decision made in the British referendum may lead to a call for similar The Fund may invest in securities in which an issue or offer for sale was underwritten, managed or arranged referendums in other European jurisdictions which may also cause increased economic volatility in wider by an associate of the Manager during the preceding twelve months. European and global markets. The potential currency volatility resulting from this uncertainty may mean that the returns of a Fund and its investments are adversely affected by market movements. This may also make The Manager may enter into stock lending transactions on behalf of the Fund. it more difficult, or more expensive, for a Fund to execute prudent currency hedging policies. The Manager may enter into contracts in respect of FTSE 100 futures in the following circumstances: This mid to long term uncertainty may have an adverse effect on the economy generally and on the ability of a Fund and its investments to execute their respective strategies and to receive attractive returns, and may also • As a way of managing risk in respect of new money entering the Fund before it is invested in the market.