Interim report€¦ · R A R Hayes A M Lawrence L E Watkins (appointed 16 May 2018) M T Zemek* *...

For the six months ended 30 September 2018

Interim reportArmed Forces Common Investment Fund

1 Armed Forces Common Investment Fund Armed Forces Common Investment Fund 2

General Information

Directors of the Armed Forces Charities Advisory Company Limited (“AFCAC”)MGCT Baines, Esq., ChairmanMajor General SA Burley, CB, MBE Major General MJ Rutledge, CB, OBEMajor General AEG Truluck, CB, CBEMajor General RMB Nitsch, CBEMajor General AW Lyons, CBEAir Vice Marshal The Hon D Murray, CVO, OBELieutenant General Sir A Gregory, KBE, CBAM Bark, Esq. (retired 10 September 2018)GC Davies, Esq.Colonel PG MitchellAM Scott, Esq.Mrs S Wall Baade

Trustee* & CustodianThe 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.

* On 18 June 2018 the Trustee changed from BNY Mellon Trust & Depositary (UK) Limited to The Bank of New York Mellon (International) Limited.

Investment ManagerBlackRock Investment Management (UK) Limited12 Throgmorton AvenueLondon EC2N 2DL

Authorised and regulated by the FCA.

Manager, Registrar and Alternative Investment Fund ManagerBlackRock Fund Managers Limited12 Throgmorton AvenueLondon EC2N 2DLDealing/Administration Enquiries(Freephone): 0800 44 55 22AFCIF Helpline (Freephone): 0800 44 55 22

Member of The Investment Association and authorised and regulated by the FCA pursuant to the requirements of The Alternative Investment Fund Managers Regulations 2013.

Directors of the ManagerG D Bamping* C L Carter M B Cook (appointed 2 May 2018)W I Cullen* R A Damm R A R Hayes A M Lawrence L E Watkins (appointed 16 May 2018) M T Zemek*

* Non-executive Director.

AuditorErnst & Young LLP1 More London PlaceLondon SE1 2AF

Company Secretary (AFCAC)MFH Adler TDThe Independent Services Agency LimitedPO Box 314Woking GU24 9FA

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 Limited12 Throgmorton Avenue, London EC2N 2DLTelephone: 020 7743 3000blackrock.co.uk

For your protection, telephone calls are usually recorded.

General Information 2

About the Fund 3

Trustee 3

Corporate Governance 3

The Advisory Board 4

Common Investment Fund 4

Charity Trustees’ Investment Responsibilities 4

Investment Objective & Policy 5

Fund Managers 5

Significant Events 5

Report of the Advisory Board 7

Performance Table 9

Investment Report 10

Performance Record 13

Portfolio Statement 15

Statement of Total Return 25

Statement of Change in Net Assets Attributable to Unitholders 25

Balance Sheet 26

Notes to Financial Statements 27

Armed Forces Common Investment Fund Helpline 28

Contents


The AFCAC (formerly known as the Army Charities Advisory Company Limited), is a company limited by guarantee with registered number 04520858. The principal objective of AFCAC is to act as the Advisory Board of the Fund. The current members of AFCAC are:

The Lord Hodgson of Astley Abbotts, CBE, Chairman of the MembersVice Admiral PJ Wilkinson, CB, CVO, BALieutenant General Sir Mark Mans, KCB, CBEAir Chief Marshal Sir Peter Squire, GCB, DFC, AFC (deceased 19 February 2018)Major General David Burden, CBE, CB, CVOVice Admiral Sir David Steel, KBE, DL

The members of the AFCAC are charged with the strategic oversight of the AFCAC while the Directors of the AFCAC (listed on page 6) serve as the Advisory Board to the 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 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.

The Fund is available only to such charities that are wholly or mainly concerned with either the promotion of the efficiency of any of the armed forces of the Crown or the welfare of former serving members of the armed forces of the Crown.

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.

The Advisory BoardAbout the Fund

The Armed Forces 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 launched on 2 September 2002 and its registered charity number is 1093529. The Fund is administered for the benefit of unitholders under a scheme of the Commission dated 22 August 2002 (the “Scheme”), as subsequently varied or amended.

The Alternative Investment Fund Managers Regulations 2013BlackRock Fund Managers Limited (the “Manager”) is authorised and regulated by the FCA 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.

In this document the term “AIFMD” means, collectively, Alternative Investment Fund Managers Directive(Directive2011/61/EU) as transposed in the UK by UK SI 2013/1773 entitled ‘Financial Services and Markets;The Alternative Investment Fund Managers Regulations 2013’ and supplemented by the Commission Delegated Regulation (EU) No. 231/2013 and any other applicable national implementing measures, including (without limitation) the rules contained in the FCA Handbook, 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 and the Advisory Board.

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”).

The Manager and Investment Manager meet quarterly with the Advisory Board 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.


The investment objective of the Fund is to seek to achieve real growth in capital and income over the long term, by investment mainly in equities and fixed income securities. The investment objective of the Fund is to be treated as a target only: there is no guarantee that the Fund will achieve its investment objective.

Fund Managers

As at 30 September 2018, the Fund Managers of the Fund are Adam Ryan and Conan McKenzie.

Significant Events

Changes in the Directors of the ManagerM B Cook was appointed as a Director effective 2 May 2018. L E Watkins was appointed as a Director effective 16 May 2018.

Changes to the TrusteeOn 18 June 2018 the Trustee changed from BNY Mellon Trust & Depositary (UK) Limited to The Bank of New York Mellon (International) Limited.

Changes to the BenchmarkThe Advisory Board and the Fund Managers have recently conducted a strategic review of the benchmark. The Board and Fund’s Managers are conscious that we have enjoyed a very accommodative investment environment since the 2015 benchmark change, and are potentially approaching the end of the current economic cycle. Indeed, the BlackRock Investment Institute forecasts an increase in market volatility and reduced returns from major asset classes as two of the main risks ahead for markets.

The benchmark changes came into effect on 30 September 2018. The aim of the revised benchmark is to enable the Fund to be better placed for potentially more volatile markets, while still seeking to deliver the dual objectives of growth and income over the long term. The intention is to offer sufficient flexibility around the benchmark, to allow the portfolio managers to implement their shorter-term tactical views. The benchmark is specifically designed to be simple, with the intention that the actual portfolio may diverge from the benchmark.

Investment Objective & Policy Significant Events continued

Changes to the Benchmark

Previous Benchmark New Benchmark

Equities 70% 60%

UK Equities 40% 30%

Global Equities 20% 30%

Emerging Market Equities 10% –

Fixed Income 20% 20%

UK Gilts – 20%

GBP Corporate Bonds 10% –

Global High Yield Bonds 5% –

Emerging Market Debt 5% –

Property 10% 10%

Alternatives – 10%

Total 100% 100%


To the participants in the Fund

The Advisory Board of the Fund has pleasure in reporting on the discharge of its responsibilities for the six months ended 30 September 2018.

The Directors of the AFCAC who form the Advisory Board and who served during the period were:

MGCT Baines, Esq., Chairman* Major General RMB Nitsch, CBE

GC Davies, Esq.* Major General AEG Truluck, CB, CBE

Major General SA Burley, CB, MBE Major General AW Lyons, CBE

Major General MJ Rutledge, CB, OBE Lieutenant General Sir Andrew Gregory, KBE, CB

Air Vice Marshal The Hon D Murray, OBE AM Scott, Esq.*

Colonel PG Mitchell Mrs S Wall Baade

AM Bark, Esq.* (retired 10 September 2018)

The performance table for the Fund is detailed on page 8.

At 30 September 2018 the Fund was valued at £367 million. 70% of the total assets under management were attributable to income unit investors and 30% were attributable to accumulation unit investors.

The Fund has a diversified multi-asset portfolio comprising segregated and pooled exposure to equities, bonds and alternative investments (non-traditional equity and fixed income investment).

Daily prices can be accessed via the website www.blackrock.co.uk/charities.

Investors in the Fund receive quarterly commentaries as well as Interim and Annual reports. Investors also have the opportunity to attend six-monthly unitholder meetings. Factsheets for the Fund are now produced on a monthly basis and are available on the BlackRock charities website: www.blackrock.co.uk/charities. Investors can subscribe via the website to receive updated documents when they are published.

The Advisory Board has an Investment Sub-Committee which meets regularly with the Investment Manager to discuss investment matters. In addition, the Chairman of the Advisory Board and the Chairman of the Investment Sub-Committee are in regular contact with the Investment Manager. There have been four full meetings of the Advisory Board and two meetings of the Investment Sub-Committee during the year.

During the period, the Advisory Board were supportive of a strategic change to the benchmark following a review and extensive analysis with the Fund Managers. Details of the changes are listed under “Significant Events” and we believe this enables the Fund to be better placed for potentially more volatile markets, while still seeking to deliver the dual objectives of growth and income over the long term.

The quarterly distribution payable for income units on 30 November 2018 is 1.9000p per unit, making 7.6000p per unit over the last 12 months, a 2.0% increase on the prior year.

The quarterly distribution for accumulation units on 30 November 2018 is 3.1306p per unit, making 12.3498p per unit over the last 12 months, a 5.6% increase on the prior year.1

The Advisory Board has fixed the remuneration of the Trustee and the Manager at the levels published in the Scheme Particulars dated 18 June 2018.

Report of the Advisory Board

* Investment Sub-Committee. 1 The accumulation rate is higher than the distribution rate due to the value including all of the income that has accrued through the lifetime of the unit class.

The Advisory Board and Trustee have monitored the Manager’s compliance with the Scheme and can report that the Manager has operated within the parameters of the Scheme.

No member of the Advisory Board has offered investment advice or conducted investment business in relation to the Fund.

I am pleased that, as a result of BlackRock’s management and the constructively critical oversight of the Advisory Board, unitholders have seen their investment in AFCIF grow by 6.6% (net of fees) on a total return basis during this period. As a result, the Fund continues to attract new investors and as at 30 September 2018 was valued at £367 million.

Michael Baines Chairman of the Advisory Board 29 November 2018


For the six months to 30.9.2018

For the three years to 30.9.2018

For the five years to 30.9.2018

TOTAL RETURN (with gross income reinvested)

Accumulation Units

Armed Forces Common Investment Fund +6.6% +36.8% +53.4%

Composite Index*† +6.5% +42.0% +54.9%

All Fund figures quoted are based on closing offer-to-offer prices and are calculated net of fees. Performance returns are cumulative. All returns are in Sterling.* Figures from BlackRock.† The composite benchmark is currently comprised of the FTSE All-Share TR Index 40%, MSCI World Ex UK in Gross GBP 20%, IPD All Balanced Funds Index

- No Exposures 10%, BofA ML Sterling Corporates Index - in GBP 10%, MSCI Emerging Markets Net TR in GBP 10%, JPM EMBIG Div Core Index 100% GBP Hedged 5%, BofA ML Global High Yield, 100% GBP Hedged 5%.

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.

Performance Table

Summary of Performance over the Period The Fund returned 6.6%* over the six-month period to 30 September 2018, outperforming its composite index**, which returned 6.5%.

Market ReviewOver the period, developed market equities (led by the US) outperformed emerging market equities amidst a backdrop of rising geopolitical risks, most notably trade tensions, Brexit uncertainty and the political situation in Italy.

The outperformance of US equities was led predominantly by the healthcare and IT sectors as fiscal stimulus in the US underpinned growth and the economy continued to expand. In continental Europe, equities underperformed other developed markets amid rising investor worries over economic growth prospects and the longer-term stability of the Eurozone given the rise in populist policies. In the UK equities rose in value, helped by a weaker pound and a rally in energy related equities, trended downwards towards the end of the period in response to mounting uncertainty over Brexit. Japanese equities are becoming an increasingly positive story and rallied towards the end of September driven by the shares of major exporters given the weak yen and optimism around Japanese corporate earnings growth.

Emerging market equities underperformed developed market equities over the period, as assets declined sharply led by Chinese equities which were down due to growth concerns following the release of weak economic data. In addition to this, the backdrop of escalating trade tensions with the US impacted sentiment. Weakness elsewhere within the emerging market complex was driven by idiosyncratic risk, which was evident by heightened volatility (market ups and downs) in both the Argentinian peso and the Turkish lira, rising headwinds from global trade, and continued US dollar strength.

Within fixed income, bond yields rose sharply across the curve in peripheral European markets with Italian government bond (BTP) yields rising sharply due to rising political uncertainty from the Italian elections and subsequent budget negotiations with the European Commission. Low yields in German bunds increased the pressure on BTP’s as spreads widened further. The European Central Bank (ECB) met in September and left their medium-term inflation forecast unchanged, as well as confirming it was to end its bond buying programme at the end of the year. Given the strong economic backdrop in the US, US Treasuries were down as the Federal Open Market Committee hiked the interest rate by 0.25% twice, in June and September, and indicated that a further increase was likely in December. Gilts yields rose as the Bank of England unanimously voted to increase interest rates by 0.25% and signalled that further gradual tightening would continue. Corporate bonds generated negative returns over the period with the exception of US high yield, which was the relative outperformer.

Elsewhere, commodities broadly sold off with concerns over China’s growth prospects and continued trade tensions leading to industrial metals falling in value, in particular, copper. Precious metals also fell over the period, partly reflecting the continued US dollar strength. Oil prices rose to their highest level since November 2014 as shipments from Iran declined ahead of the imposition of US sanctions which are due to come into effect in November.

Investment Report

* Performance figures quoted are based on closing offer-to-offer prices, calculated net of fees and reported for the Fund’s Accumulation Units. Performance figures are cumulative. All returns are in Sterling.

** The composite index is currently comprised of the FTSE All-Share TR Index 40%, MSCI World Ex UK in Gross GBP 20%, IPD All Balanced Funds Index – No Exposures 10%, BofA ML Sterling Corporates Index – in GBP 10%, MSCI Emerging Markets Net TR in GBP 10%, JPM EMBIG Div Core Index 100% GBP Hedged 5%, BofA ML Global High Yield, 100% GBP Hedged 5%.


OutlookThe theme of resilient global growth lead by US outperformance has largely persisted, despite pockets of regional weaknesses in emerging markets, most notably in Turkey and Argentina. US consumer spending continues to be upbeat on the back of a strong job market and tax cut effects. Aside from wages picking up in the US, inflationary pressures finally seem to be coming through in other regions too with a pickup in underlying European economic area inflation, whilst Japanese inflation seems to be relatively sticky and could near inflation targets next year. Going ahead, higher US rates are likely to continue to support US dollar strength while creating competition for capital as investors will demand higher risk premia across asset classes. From a portfolio perspective, we continue to favour areas of robust growth such as quality US stocks that are likely to provide some resilience and perform well in later stages of the economic cycle. We remain tactical around our emerging market exposure in both equity and fixed income markets, periodically hedging and selectively seeking attractive valuations. Looking ahead, the stronger US dollar is likely to continue to weigh on economies with higher external vulnerabilities as US dollar funding costs rise. Despite recent sell-offs though, higher grade debt in emerging markets still remains expensive and we wait to see an attractive proposition.

The key threats to the current cycle would be a monetary policy mistake that would trigger a change in interest rate expectations or a large external shock hitting global demand. In terms of external shocks, the main concern is an escalating trade war weighing on market sentiment and denting growth. While at this stage, we don’t anticipate any major changes to our portfolio, we believe that select exposure to alternative investments can generate value in this environment. Within alternatives, we focus on strategies that we believe are immune to global economic shifts such as private equity investments based on innovation or energy investments supported by government subsidies.

October 2018

Performance and ActivityThe Fund delivered a positive return over the period, outperforming its composite benchmark. This outperformance was mainly driven by developed market equities and, to a lesser extent, fixed income exposure. The overall asset allocation slightly detracted from returns over the period.

The asset allocation decision to overweight (more exposure than the index) developed market equities contributed positively, largely supported by the exposure to US equities. We cautiously added equity exposure over the period as equity markets rebounded from their previous lows recovering from losses experienced earlier in the year. We added additional passive equity exposure to the US as well as an allocation to US technology having previously tactically reduced exposure to the sector. We closed several thematic equity baskets that had exposure to developed market equities following strong performance. We used the proceeds to implement new bespoke equity baskets, including a strategy with exposure to specific companies within the US technology sector that have strong secular growth prospects, a new EU-China basket which focuses on being underweight European companies that have high revenue exposure to China, and new quality factor strategies in the US and Europe that aim to identify companies with high earnings quality and low leverage amongst other criteria.

Both the UK Equity portfolio and the Global Equity Income portfolio underperformed their respective benchmarks over the period despite recording positive performance in absolute terms. Within the UK equity portfolio, underperformance was driven by the energy sector underweight (less exposure than the index) as oil and oil services stocks rallied given the strong rise in oil prices over the period. Within the Global Equity Income portfolio, security selection within consumer staples and the overweight exposure to the sector were the largest detractors from performance. British American Tobacco and Philip Morris International were among the top detractors as the tobacco industry generally continued to suffer weakness around fears about potential disruption from regulation and next generation products. Contributing positively was the portfolio’s exposure to healthcare as the sector benefited from strong earnings throughout the period.

Within emerging markets, stock selection decisions in the active emerging market equity exposures contributed positively. In addition, having more targeted exposures implemented via pair trades (where we have matched a long position in one stock with a short position in another stock from the same sector) proved effective as the dispersion of returns across individual countries expanded. Our position in Indonesian stocks vs Turkish stocks proved particularly beneficial as the position benefitted from the rising policy risk associated with Turkish stocks. We continued to monitor our broad emerging market exposure and in July closed our emerging market hedging position which had provided protection during the selloff in emerging market equities. This allowed us to benefit from a brief rally in emerging markets before we reinitiated the hedging position in August as risks around global trade intensified. As those tensions dissipated we closed the position later that month.

Over the period, fixed income exposures added to returns, outperforming relative to the benchmark. Positive returns were mainly driven by the allocation to an income oriented holding, which more than offset negative returns coming from the allocation to local currency emerging market debt. We added to US Treasuries in order to increase the duration of the portfolio and protect the portfolio from a potential increase in market volatility. Elsewhere, alternative exposures added to returns over the period with positive returns coming from European property debt and renewable energy holdings.

Investment Report continued


Net Asset Value

Units in IssueNet Asset Value

£000’s

Net Asset Value per Unit

p

Income

30 September 2018 121,995,673 256,553 210.3

31 March 2018 119,890,086 241,039 201.1

31 March 2017 115,582,512 233,129 201.7

31 March 2016 100,324,700 177,294 176.7

Accumulation

30 September 2018 30,726,099 110,668 360.2

31 March 2018 27,471,144 92,890 338.1

31 March 2017 25,871,114 84,613 327.1

31 March 2016 27,072,572 74,697 275.9

Income (Net Distributions/Net Accumulations)

Income Units Accumulation Units

Accounting Year Pence per Unit Pence per Unit

30 September 2018* 3.8000 6.2368

31 March 2018 7.5500 12.0549

31 March 2017 7.3000 11.2517

31 March 2016 7.1500 10.6259

* For the period from 1 April 2018 to 30 September 2018.

Capital (Unit Prices)

Income Units Accumulation Units

Accounting Year

Highest Offer Price

p

LowestBid Price

p

Highest Offer Price

p

LowestBid Price

p

30 September 2018* 214.9 199.2 364.7 335.0

31 March 2018 215.3 199.0 358.6 322.6

31 March 2017 205.4 174.5 330.0 272.5

31 March 2016 190.2 163.4 285.2 252.5

* For the period from 1 April 2018 to 30 September 2018.

Performance Record

Unit Prices

At 30 September 2018Bid Price

pOffer Price

p

Income Units 212.2 212.8

Accumulation Units 360.1 361.2

Distribution Paid/Payable for the Period to 30 September 2018

Unit Class

Distribution paid on

31.8.2018

Distribution payable on 30.11.2018 Total

Pence per Unit Pence per Unit Pence per Unit

Income 1.9000 1.9000 3.8000

Accumulation 3.1062 3.1306 6.2368

Performance Record continued

Holding or Market % of Nominal Value Total Net Value Investment £000’s Assets

Armed Forces Common Investment Fund 1615 Armed Forces Common Investment Fund

EQUITIES – 50.20%; 31.3.2018 47.45%

UNITED KINGDOM – 28.48%; 31.3.2018 28.85%

Automobiles & Parts – 0.03%; 31.3.2018 0.00% 7,326 Fiat Chrysler Automobiles 99 0.03

Banks – 3.43%; 31.3.2018 3.45% 693,500 Barclays 1,191 0.32 606,273 HSBC 4,061 1.11 7,975,118 Lloyds Banking 4,727 1.29 408,430 Standard Chartered 2,599 0.71

12,578 3.43

Beverages – 0.15%; 31.3.2018 0.16% 19,899 Diageo 541 0.15

Chemicals – 0.46%; 31.3.2018 0.43% 629,154 Elementis 1,687 0.46

Construction & Materials – 0.00%; 31.3.2018 0.28%

Financial Services – 2.56%; 31.3.2018 2.14% 229,470 3i 2,160 0.59 1,330,010 John Laing 4,155 1.13 67,420 London Stock Exchange 3,091 0.84

9,406 2.56

Food & Drug Retailers – 1.03%; 31.3.2018 1.01% 1,578,317 Tesco 3,785 1.03

Food Producers – 2.46%; 31.3.2018 1.79% 86,100 Associated British Foods 1,971 0.54 184,550 Rightmove 869 0.24 146,827 Unilever 6,190 1.68

9,030 2.46

Fixed Line Telecommunications – 0.00%; 31.3.2018 0.61%

Gas, Water & Multi-utilities – 0.43%; 31.3.2018 0.37% 225,700 United Utilities 1,589 0.43

General Industrials – 0.00%; 31.3.2018 0.83%

General Retailers – 0.59%; 31.3.2018 1.26% 326,229 Inchcape 2,181 0.59

Portfolio Statement (unaudited)at 30 September 2018


Household Goods & Home Construction – 1.11%; 31.3.2018 0.69% 36,727 Reckitt Benckiser 2,577 0.70 862,500 Taylor Wimpey 1,482 0.41

4,059 1.11

Industrial Engineering – 1.41%; 31.3.2018 0.97% 284,217 Bodycote 2,574 0.70 146,800 Weir 2,588 0.71

5,162 1.41

Life Insurance – 1.11%; 31.3.2018 0.70% 232,680 Prudential 4,094 1.11

Media – 1.94%; 31.3.2018 2.22% 375,110 Ascential 1,568 0.43 343,552 RELX 5,547 1.51

7,115 1.94

Mining – 1.69%; 31.3.2018 1.12% 159,960 Rio Tinto 6,206 1.69

Mobile Telecommunications – 0.24%; 31.3.2018 0.31% 539,220 Vodafone 887 0.24

Non-Life Insurance – 1.28%; 31.3.2018 1.72% 96,450 Admiral 2,006 0.55 164,277 Hiscox 2,701 0.73

4,707 1.28

Oil & Gas Producers – 1.43%; 31.3.2018 1.16% 887,920 BP 5,233 1.43

Oil Equipment, Services & Distribution – 0.04%; 31.3.2018 0.00% 6,296 Technip 152 0.04

Pharmaceuticals & Biotechnology – 2.78%; 31.3.2018 2.34% 85,712 AstraZeneca 5,110 1.39 331,472 GlaxoSmithKline 5,094 1.39

10,204 2.78

Real Estate Investment Trusts – 0.00%; 31.3.2018 0.40%

Support Services – 1.72%; 31.3.2018 1.89% 54,762 Ferguson 3,567 0.97 857,890 Rentokil Initial 2,729 0.75

6,296 1.72

Portfolio Statement (unaudited) continued




Tobacco – 2.59%; 31.3.2018 3.00% 214,723 British American Tobacco 7,697 2.09 68,262 Imperial Brands 1,823 0.50

9,520 2.59

ASIA PACIFIC – 1.23%; 31.3.2018 1.32%

Australia – 0.46%; 31.3.2018 0.47% 127,033 Amcor 964 0.26 21,004 Ansell 294 0.08 31,256 Sonic Healthcare 432 0.12

1,690 0.46

Hong Kong – 0.08%; 31.3.2018 0.14% 78,000 Anta Sports Products 287 0.08

India – 0.09%; 31.3.2018 0.09% 10,321 Hero Moto 318 0.09

Japan – 0.09%; 31.3.2018 0.23% 16,100 Japan Tobacco 322 0.09

Singapore – 0.29%; 31.3.2018 0.14% 36,600 DBS 536 0.15 33,800 United Overseas Bank 513 0.14

1,049 0.29

Taiwan – 0.22%; 31.3.2018 0.25% 8,051 Far Eastone Telecom GDR (each representing

15 ordinary shares) 221 0.06 17,791 Taiwan Semiconductor Manufacturing ADS

(each representing 5 ordinary shares) 602 0.16

823 0.22

EUROPE – 8.05%; 31.3.2018 6.07%

Belgium – 0.11%; 31.3.2018 0.21% 23,297 Bpost 286 0.08 1,372 Galapagos 118 0.03

404 0.11

Denmark – 0.10%; 31.3.2018 0.10% 9,825 Novo Nordisk class ‘B’ shares 356 0.10

Finland – 0.31%; 31.3.2018 0.19% 25,170 KONE class ‘B’ shares 1,032 0.28 23,674 Outokumpu 107 0.03

1,139 0.31

France – 0.89%; 31.3.2018 0.30% 1,176 Arkema 111 0.03 1,329 Atos 121 0.03 5,882 AXA 119 0.03 1,057 Capgemini 101 0.03 1,258 Dassault Systemes 143 0.04 9,228 ENGIE 102 0.03 1,005 Essilor International 114 0.03 2,594 Faurecia 120 0.03 227 Hermes International 115 0.03 1,134 Michelin 104 0.03 895 Pernod Ricard 112 0.03 5,812 Peugeot 120 0.03 2,315 Publicis 105 0.03 1,661 Renault 110 0.03 1,147 Safran 123 0.03 14,034 Sanofi 955 0.26 6,285 Schneider Electric 385 0.11 1,088 Thales 118 0.03 1,455 Vinci 105 0.03

3,283 0.89

Germany – 0.88%; 31.3.2018 0.28% 866 Adidas 163 0.04 1,239 Beiersdorf 107 0.03 824 Continental 110 0.03 1,522 Covestro 95 0.02 5,774 Deutsche Lufthansa 109 0.03 34,800 Deutsche Post 950 0.26 12,699 E.ON 99 0.03 1,777 Fresenius 100 0.03 1,436 Fresenius Medical Care 113 0.03 1,729 HeidelbergCement 104 0.03 1,116 Henkel non-voting preference shares 100 0.03 5,325 Infineon Technologies 93 0.02 1,940 Kion 91 0.02 1,788 Lanxess 100 0.03 1,433 Merck 114 0.03 11,786 METRO 142 0.04 7,505 RWE 142 0.04 1,219 SAP 115 0.03 5,462 ThyssenKrupp 106 0.03 6,224 Uniper 147 0.04 800 Wirecard 133 0.04

3,233 0.88





Ireland – 1.77%; 31.3.2018 1.83% 128,469 CRH 3,227 0.88 10,352 Ryanair 122 0.03 68,000 Shire 3,144 0.86

6,493 1.77

Italy – 0.12%; 31.3.2018 0.00% 1,003 Ferrari 106 0.03 3,165 Moncler 105 0.03 5,681 Prysmian 102 0.02 30,254 Saipem 143 0.04

456 0.12

Luxembourg – 0.03%; 31.3.2018 0.00% 4,792 ArcelorMittal 114 0.03

Netherlands – 2.81%; 31.3.2018 2.16% 1,591 Akzo Nobel 114 0.03 882 ASML 126 0.03 2,477 Gemalto 110 0.03 6,475 Heineken 465 0.13 1,355 Koninklijke DSM 110 0.03 13,307 Koninklijke Philips 463 0.13 324,213 Royal Dutch Shell class ‘B’ shares 8,718 2.37 3,062 Vopak 113 0.03 2,376 Wolters Kluwer 110 0.03

10,329 2.81

Spain – 0.19%; 31.3.2018 0.00% 3,383 ACS Actividades 111 0.03 786 Aena 105 0.03 2,206 Amadeus IT 157 0.04 7,067 Ferrovial 112 0.03 4,206 Inditex 98 0.03 7,263 Repsol 111 0.03

694 0.19

Sweden – 0.14%; 31.3.2018 0.14% 53,681 Svenska Handelsbanken series ‘A’ shares 521 0.14

Switzerland – 0.70%; 31.3.2018 0.86% 16,451 Nestlé 1,056 0.29 18,052 Novartis 1,196 0.32 163 SGS (Registered) 331 0.09

2,583 0.70

NORTH AMERICA – 12.44%; 31.3.2018 11.21%

Canada – 0.60%; 31.3.2018 0.59% 27,016 Rogers Communications class ‘B’ shares 1,065 0.29 40,823 TELUS 1,153 0.31

2,218 0.60

United States – 11.84%; 31.3.2018 10.62% 3,915 3M 633 0.17 5,736 AbbVie 416 0.11 1,268 Abiomed 437 0.12 3,103 Accenture 405 0.11 917 Adobe Systems 190 0.05 38,226 Advanced Micro Devices 905 0.25 292 Alphabet class ‘A’ shares 270 0.07 34,248 Altria 1,584 0.43 114 Amazon 175 0.05 2,783 Amgen 442 0.12 2,306 Analog Devices 163 0.05 1,080 Ansys 155 0.04 7,557 AO Smith 309 0.08 1,548 Apple 268 0.07 754 Arista Networks 154 0.04 1,657 Aspen Technology 145 0.04 3,513 Autodesk 421 0.12 7,324 Baxter International 433 0.12 3,741 Booz Allen Hamilton class ‘A’ shares 142 0.04 986 Broadcom 187 0.05 8,211 Brown-Forman class ‘B’ shares 318 0.09 4,397 Cadence Design Systems 153 0.04 39,270 Carnival 1,871 0.51 4,402 CBOE 324 0.09 8,745 CBS class ‘B’ shares 385 0.11 36,163 Cisco Systems 1,349 0.37 8,614 Citizens Financial 255 0.07 31,568 Coca-Cola 1,118 0.30 6,297 CommScope 148 0.04 8,393 Conduent 145 0.04 3,250 Cummins 364 0.10 7,179 DaVita 394 0.11 4,427 Eastman Chemical 325 0.09 3,488 Edwards Lifesciences 466 0.13 5,055 Eli Lilly 416 0.11





4,174 Equifax 418 0.11 1,034 F5 Networks 158 0.04 4,604 Facebook 581 0.16 817 Fair Isaac 143 0.04 1,924 FedEx 355 0.10 7,542 First Data 141 0.04 8,656 FLIR Systems 408 0.11 9,817 Fluor 437 0.12 2,159 Fortinet 153 0.04 2,360 General Dynamics 370 0.10 11,995 Genuine Parts 914 0.25 18,475 Goodyear Tire & Rubber 331 0.09 17,119 H&R Block 338 0.09 3,073 Harris 399 0.11 5,137 Hershey Foods 402 0.11 2,180 Huntington Ingalls Industries 428 0.12 1,653 IBM 192 0.05 6,338 Intel 230 0.06 16,554 International Paper 624 0.17 3,464 Intuit 604 0.16 2,861 IPG Photonics 342 0.09 11,823 Johnson & Johnson 1,253 0.34 2,478 L3 Technologies 404 0.11 2,739 Leidos 145 0.04 1,488 Lockheed Martin 395 0.11 4,243 Lyondellbasell Industries class ‘A’ shares 334 0.09 3,559 M&T Bank 449 0.12 7,917 Marvell Technology 117 0.03 3,743 MasterCard class ‘A’ shares 639 0.17 6,478 Medtronic 489 0.13 9,602 Microsoft 843 0.23 4,407 Motorola Solutions 440 0.12 5,706 Nektar Therapeutics 267 0.07 2,381 NetApp 157 0.04 1,487 Northrop Grumman 362 0.10 7,554 Nucor 367 0.10 977 Nvidia 211 0.06 5,319 Occidental Petroleum 335 0.09 4,611 ON Semiconductor 65 0.02 5,222 Oracle 206 0.06 822 Palo Alto Networks 142 0.04 6,233 Paychex 352 0.10

10,746 PepsiCo 921 0.25 21,788 Pfizer 736 0.20 17,919 Philip Morris International 1,120 0.31 11,329 Procter & Gamble 723 0.20 1,835 PTC 149 0.04 1,419 Red Hat 148 0.04 2,410 S&P Global 361 0.10 7,498 Sabre 150 0.04 1,527 Salesforce.com 186 0.05 4,223 Seagate Technology 153 0.04 643 Splunk 60 0.02 6,143 Symantec 100 0.03 7,278 Textron 399 0.11 5,515 Total System Services 418 0.11 9,546 TripAdvisor 374 0.10 8,675 United Parcel Service class ‘B’ shares 777 0.21 6,977 United Technologies 748 0.20 12,819 US Bancorp 519 0.14 4,060 Varian Medical Systems 348 0.10 5,013 VeriSign 615 0.17 3,060 Vertex Pharmaceuticals 452 0.12 16,869 Viacom class ‘B’ non-voting shares 437 0.12 2,053 Visa 236 0.06 1,256 VMware 150 0.04 12,360 Wells Fargo 498 0.14 23,760 Western Union 347 0.09 5,710 Yum! Brands 398 0.11 1,101 Zebra Technologies class ‘A’ shares 149 0.04

43,477 11.84

COLLECTIVE INVESTMENT SCHEMES – 33.91%; 31.3.2018 35.01%

Equity Funds – 8.76%; 31.3.2018 11.26% 1,263,628 BlackRock Global Funds – European Equity Income Fund* 15,517 4.23 864,512 BlackRock UK Smaller Companies Fund* 9,371 2.55 3,540,877 Blackstone 2,697 0.73 3,779,810 Bluefield Solar Income Fund 4,574 1.25

32,159 8.76

Fixed Income Funds – 2.72%; 31.3.2018 10.11% 11,371,961 Carador Income Fund 5,712 1.56 4,233,203 Funding Circle SME Income Fund 4,276 1.16

9,988 2.72





Investment Trusts – 11.65%; 31.3.2018 4.02% 10,150,000 Baillie Gifford US Growth Trust 13,540 3.69 728,183 BlackRock Frontiers Investment Trust* 1,012 0.27 118,099 SPDR S&P 500 ETF Trust 26,318 7.17 2,242,028 Woodford Patient Capital Trust 1,917 0.52

42,787 11.65

Property Funds – 10.78%; 31.3.2018 9.62% 631,649 BlackRock UK Property Fund* 28,636 7.80 9,993,508 Starwood European Real Estate Finance 10,943 2.98

39,579 10.78

DERIVATIVES – 0.19%; 31.3.2018 (0.10)%

Forward Currency Contracts – 0.05%; 31.3.2018 (0.07)% INR 491,535,000 Indian rupee vs US dollar (269) (0.07) ¥127,713,250 Japanese yen vs US dollar (18) 0.00 ZAR 103,826,689 South African rand vs US dollar 164 0.04 £5,782,496 UK sterling vs Euro 33 0.01 £6,550,000 UK sterling vs Swiss franc (130) (0.04) £12,280,000 UK sterling vs US dollar (134) (0.04) $9,460,945 US dollar vs Euro 94 0.03 $7,100,000 US dollar vs Indian rupee 163 0.04 $7,100,000 US dollar vs South African rand 285 0.08 $7,200,000 US dollar vs Taiwan dollar 2 0.00

190 0.05

Futures – 0.07%; 31.3.2018 (0.15)% (444) Euro Stoxx 50 December 2018 (378) (0.10) (246) FTSE 100 December 2018 17 0.00 65 TOPIX December 2018 630 0.17

269 0.07

Options – 0.06%; 31.3.2018 (0.08)% 10,900,000 Société Générale (GBP Call US dollar 14/6/2019 Put @ 1.35) 235 0.06

Total Return Swaps – 0.01%; 31.3.2018 0.20% 9,405,813 Bank of America (ML Vortex Alpha Index) 0% 17/9/2021^ – 0.00 8,144,369 Goldman Sachs International (EU China Exposure Basket)

0% 18/9/2019 (203) (0.06) 6,945 Morgan Stanley International (Emerging Lifestyle Trend

Series 4 Basket Index) 0% 3/9/2019 (9) 0.00 280,000 Morgan Stanley International (iShares iboxx High yield

Corporate Bond ETF) 0% 15/5/2019 37 0.01 30,117 Morgan Stanley International (MSCI Japan Small Cap

Net Total Return USD Index) 0% 4/6/2019 208 0.06

33 0.01

Portfolio of investments 309,560 84.30

CASH EQUIVALENTS

Short-term Money Market Funds – 1.26%; 31.3.2018 7.57% 4,626,058 Institutional Cash Series plc – Institutional Sterling

Liquidity Fund* 4,626 1.26

Net other assets 53,035 14.44

Total net assets 367,221 100.00

Unless otherwise stated, all securities are either listed on a recognised exchange or traded on an eligible securities market. * Managed by a related party to the Fund.^ Investments which are less than £500 are rounded to zero.The counterparties for the forward currency contracts are ANZ Bank, Bank of America Merrill Lynch, Barclays Bank Plc, CitiGroup Global Markets Limited, Deutsche Bank AG, Goldman Sachs International, HSBC Bank Plc, Morgan Stanley & Co. International Plc, Nomura International Plc, Royal Bank of Canada, Société Générale SA, Standard Chartered and Toronto-Dominion Bank.


£000’s

30.9.2018 £000’s £000’s

30.9.2017 £000’s

Income

Net capital gains 15,639 6,470

Revenue 7,389 7,080

Expenses (807) (657)

Interest payable and similar charges (273) (60)

Net revenue before taxation 6,309 6,363

Taxation (23) (284)

Net revenue after taxation 6,286 6,079

Total return before distributions 21,925 12,549

Distributions (6,966) (6,626)

Change in net assets attributable to unitholders from investment activities 14,959 5,923

Statement of Change in Net Assets Attributable to Unitholders (unaudited) for the six months ended 30 September 2018

£000’s

30.9.2018 £000’s £000’s

30.9.2017 £000’s

Opening net assets attributable to unitholders 333,929 317,742

Amounts receivable on issue of units 31,517 5,680

Amounts payable on cancellation of units (16,062) (5,581)

15,455 99

Change in net assets attributable to unitholders from investment activities 14,959 5,923

Retained distribution on accumulation units 1,850 1,530

Change in Distribution Equalisation Reserve 1,028 766

Closing net assets attributable to unitholders 367,221 326,060

The above statement shows the comparative closing net assets at 30 September 2017 whereas the current accounting period commenced 1 April 2018.

Statement of Total Return (unaudited) for the six months ended 30 September 2018

30.9.2018

£000’s31.3.2018

£000’s

Assets:

Fixed assets

– Investment assets 310,701 277,248

Current assets

– Debtors 53,753 1,177

– Cash and bank balances 18,216 35,589

– Cash equivalents 4,626 25,292

– Cash collateral posted 330 –

Total assets 387,626 339,306

Liabilities:

Investment liabilities (1,141) (2,231)

Creditors

– Amounts held at futures clearing houses and brokers (671) (294)

– Cash collateral payable (500) –

– Distribution payable (2,318) (2,278)

– Other creditors (15,775) (574)

Total liabilities (20,405) (5,377)

Net assets attributable to unitholders 367,221 333,929

R A R Hayes (Director)A M Lawrence (Director)BlackRock Fund Managers Limited29 November 2018

Balance Sheet (unaudited) at 30 September 2018


Notes to Financial Statements (unaudited)for the six months ended 30 September 2018

Accounting PoliciesThe financial statements have been prepared in accordance with the Statement of Recommended Practice for Authorised Funds (the “SORP”) issued by the Investment Management Association (now known as the Investment Association) in May 2014 and amended in June 2017, as applicable to charity common investment funds and Charities (Accounts & Reports) Regulations 2008. The accounting policies applied are consistent with those of the financial statements for the year ended 31 March 2018 and are described in those annual financial statements.

The Manager runs a Helpline for charity trustees and administrators interested in the Fund.

Should you need any advice with regard to your holding in the Fund or require any information on our charities services in general, please call free on 0800 44 55 22.

For your protection, telephone calls are usually recorded.

Armed Forces Common Investment Fund Helpline

About us

Want to know more?

blackrock.co.uk [email protected] 0800 44 55 22

BlackRock is a premier provider of asset management, risk management, and advisory services to institutional, intermediary, and individual clients worldwide. As of 30 September 2018, the fi rm manages £4.94 trillion across asset classes in separate accounts, mutual funds, other pooled investment vehicles, and the industry-leading iShares® exchange-traded funds.

Through BlackRock Solutions®, the fi rm offers risk management and advisory services that combine capital markets expertise with proprietarily-developed analytics, systems, and technology. Through BlackRock Solutions, the Firm provides risk management and enterprise investment services for over 200 clients.

BlackRock serves clients in North and South America, Europe, Asia, Australia, Africa, and the Middle East. Headquartered in New York, the fi rm maintains offi ces in over 30 countries around the world.

Interim report€¦ · R A R Hayes A M Lawrence L E Watkins (appointed 16 May 2018) M T Zemek* *...

Documents

Transcript of Interim report€¦ · R A R Hayes A M Lawrence L E Watkins (appointed 16 May 2018) M T Zemek* *...