Interim Report Charitrak Common Investment Fund
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Interim report ChariTrak Common Investment Fund For the six months ended 12 October 2019 Contents General Information 2 About the Fund 3 Trustee 3 Corporate Governance 3 Common Investment Fund 4 Charity Trustees’ Investment Responsibilities 4 Fund Manager 4 Significant Events 4 Investment Report 5 Performance Record 8 Portfolio Statement 10 Statement of Total Return 28 Statement of Change in Net Assets Attributable to Unitholders 28 Balance Sheet 29 Notes to Financial Statements 30 1 ChariTrak Common Investment Fund General Information Manager, Registrar & Alternative Investment Fund Manager BlackRock Fund Managers Limited 12 Throgmorton Avenue, London EC2N 2DL Member of The Investment Association and authorised and regulated by the Financial Conduct Authority (“FCA”) pursuant to the requirements of The Alternative Investment Fund Managers Regulations 2013. Directors of the Manager G D Bamping* C L Carter (Resigned 17 May 2019) M B Cook W I Cullen* R A R Hayes A M Lawrence M T Zemek* Trustee & Custodian The Bank of New York Mellon (International) Limited One Canada Square, London E14 5AL Authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority. Investment Manager BlackRock Investment Management (UK) Limited 12 Throgmorton Avenue, London EC2N 2DL Authorised and regulated by the FCA. Auditor Ernst & Young LLP 25 Churchill Place, Canary Wharf, London E14 5EY 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. * Non-executive Director. ChariTrak Common Investment Fund 2 About the Fund ChariTrak Common Investment Fund (the “Fund”) is established by The Charity Commission for England and Wales (the “Commission”) under section 24 of The Charities Act 1993. The Charities Act 1993 was superseded by The Charities Act 2011 on 14 March 2012. The Fund was established on 11 August 1999 and its registered charity number is 1077125. The Fund is 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 Alternative Investment Fund Managers Regulations 2013 BlackRock Fund Managers Limited (the “Manager”) is authorised to manage and market the Fund, which is an alternative investment fund, in accordance with the “AIFMD”. In this document, the term “AIFMD” means, collectively, Directive 2011/61/EU, as supplemented by Commission Delegated Regulation (EU) No. 231/2013, and as transposed by UK SI 2013/1773 and any other applicable national implementing measures in the United Kingdom including, without limitation, the rules contained in the FCA handbook of rules and guidance, each as may be amended or updated from time to time. Trustee The Trustee of the Fund is The Bank of New York Mellon (International) 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 responsibilities are those of the Manager. 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. Corporate Governance The Manager is responsible for the management and administration of the Fund (as further detailed in the Scheme Particulars) except to the extent that such responsibilities are those of the Trustee or Advisory Board. The Manager 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 Investment Management (UK) Limited (the “Investment Manager”) pursuant to an investment management agreement. 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 reports on a quarterly basis. Any matters for decision which are outside the powers delegated to the Manager are discussed by the Manager and the Trustee. 3 ChariTrak Common Investment Fund Common Investment Fund The Fund is a Common Investment Fund established and registered with the Commission. Pursuant to the Charities Act 2011 and the Fund’s governing document, the Scheme, charities established in England and Wales, and charities established in Scotland and Northern Ireland pursuant to the Charities Act 2006 (as amended from time to time) may invest in the Fund. Subject to any restrictions in the terms of the Scheme, 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. Charity Trustees’ Investment Responsibilities The Commission requires trustees of charities to invest their assets only in investments authorised under the 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. Fund Manager As at 12 October 2019, the Fund Manager of the Fund is Kieran Doyle. Significant Events Changes in the Directors of the Manager C L Carter resigned as a Director effective 17 May 2019. Conversion of the Fund’s legal structure from CIF to CAIF As set out in the letter to unitholders dated 30 September 2019, BlackRock is proposing a change to the legal structure of the Fund, from a Common Investment Fund to a Charity Authorised Investment Fund (CAIF) with effect from 6 December 2019. Unitholder approval was confirmed at the EGM on 21 November 2019. A CAIF is a new charity investment fund vehicle. The CAIF structure was launched in October 2016, designed to build on the beneficial features of the existing Common Investment Fund (CIF) structure. The CAIF regime affords the same benefits of a CIF,but it also provides two further benefits. Firstly, the CAIF is dual-regulated by the Charity Commission and Financial Conduct Authority (FCA), unlike the CIF which is regulated by the Charity Commission only. Secondly, the CAIF structure removes the charging of VAT on management fees, which is currently applied in a CIF. As the vote was successful, all holdings will be transferred to the CAIF on the 6 December 2019. ChariTrak Common Investment Fund 4 Investment Report for the year ended 12 October 2019 Investment Objective The investment objective of the Fund is to provide tax-exempt charity investors in England, Wales, Scotland and Northern Ireland with returns (income and capital growth) of the UK equity market in line with a fixed benchmark, namely the FTSE All-Share Index (the “Benchmark Index”). Benchmark index Investment management approach FTSE All-Share Index Replicating Performance Summary The following table compares the realised Fund performance against the performance of the relevant performance measure during the financial period ended 12 October 2019. The returns disclosed are the performance returns for the primary unit class of the Fund, net of fees, which has been selected as a representative unit class. The primary unit class represents the class of unit which is the highest charging unit class, free of any commissions or rebates, and is freely available. Performance returns for any other unit class can be made available on request. Benchmark Fund return index % % Class A Accumulation Units -0.3 -0.3 All financial investments involve an element of risk. Therefore, the value of your investment and the income from it will vary and the return of your initial investment amount cannot be guaranteed. Changes in exchange rates may cause the value of an investment to fluctuate. Past performance is not a guide to future performance and should not be the sole factor of consideration when selecting a product. Global Economic Overview Global equities, as represented by the MSCI All Country World Index (“ACWI”), posted a return of approximately 3.5% for the six months ended 12 October 2019. During the reporting period, stocks oscillated between rising prices and low volatility to periodic bouts of declining prices and elevated volatility. Hopes that the decade-long U.S. economic expansion would continue ultimately drove equities higher, as the chief uncertainties—strained trade relations in many parts of the world and slowing economic growth—were quelled by the resumption of U.S./China trade talks and signs of accommodative monetary policy from the world’s most influential central banks. Intermittent volatility meant developed markets led emerging markets for the reporting period as investors sought out less risky assets. For example, the MSCI Europe ex-UK returned approximately 10%, as expectations of further stimulus by the European Central Bank (“ECB”) buoyed equity performance in Continental Europe. In the global bond markets, low inflation, risk aversion, and demand for yield led to higher bond prices despite yields near historic lows. Long-term interest rates declined sharply due to low inflation in most developed countries, while short-term interest rates decreased due to expectations of additional stimulus by central banks. As a result, a portion of the U.S. yield curve (a graphic representation of bond yields at different maturities) inverted for the first time since 2005. Investors took this as a sign that recession could be imminent, exacerbating concerns about the economy and corporate profits. 5 ChariTrak Common Investment Fund Investment Report continued Government bonds generally outperformed corporate bonds across the globe, as modest corporate profits and slowing growth drove demand for less volatile investments.