INTERIM report BlackRock UK Fund For the six months ended 31 August 2015
About the Fund Manager BlackRock UK Fund Nick Little, CFA, Director and portfolio manager, is a member of the UK Equity team within BlackRock s Fundamental Equity division of BlackRock s Alpha Strategies Group. He covers the Oil & Gas sector. Mr. Little s service with the firm dates back to 2001, including his years with Merrill Lynch Investment Managers ( MLIM ), which merged with BlackRock in 2006. At MLIM, Mr. Little was a research analyst on the UK equity team. Prior to joining MLIM in 2001, Mr. Little worked in Arthur Andersen s corporate tax department. Mr. Little earned an MA degree, with first class honours, in economics from Pembroke College, Cambridge in 2001. Investment Objective & Policy The aim of the BlackRock UK Fund (the Fund ) is to achieve long-term capital growth for investors. The Fund invests primarily in the shares of larger companies incorporated or listed in the UK. The Fund may also invest in collective investment schemes. The Fund was established on 11 November 1993. On 1 May 2003 the Fund changed its name to Merrill Lynch UK Fund. The Fund changed its investment objective on 1 October 2006. The Fund adopted its present name with effect from 28 April 2008. Authorised Status BlackRock UK Fund is an authorised unit trust Scheme under Section 243 of the Financial Services and Markets Act 2000 and is established as a UCITS retail Scheme under the Financial Conduct Authority s Collective Investment Schemes Sourcebook (the COLL Sourcebook ). This Interim Report covers the six months ended 31 August 2015. Performance Table Period of Report Six Months to 31.8.2015 Five Years to 31.8.2015 Since Launch 22.11.1993 to 31.8.2015 CAPITAL Return Class A Income Units BlackRock UK Fund -3.1% +36.1% +233.9% FTSE All-Share Index # -8.3% +27.4% +126.4% TOTAL Return (with net income reinvested) Class A Accumulation Units BlackRock UK Fund -2.7% +46.0% +355.3% FTSE All-Share Index # -6.2% +51.4% +371.4% All Fund figures quoted are based on bid-to-bid dealing prices (the price at which units are sold) and are calculated net of fees. Performance returns are cumulative. All returns are in Sterling. # Figures from Datastream. 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. Annual performance to most recent quarter end 30.6.2014 to 30.6.2015 30.6.2013 to 30.6.2014 30.6.2012 to 30.6.2013 30.6.2011 to 30.6.2012 30.6.2010 to 30.6.2011 A Accumulation +6.8% +10.0% +16.5% -4.7% +18.5% All figures quoted are based on bid-to-bid dealing prices (the price at which units are sold), with net income reinvested. Performance is calculated net of fees. Performance is shown for complete 12 month periods only. Copies of Manager s Reports and Prospectus are available on request. Dealing and Investor Services: 0800 44 55 22 blackrock.co.uk 1 BlackRock UK Fund 2
Performance Record Net Asset Value At 31 August 2015 Units in Issue Net Asset Value Net Asset Value per Unit p A Income 23,439,957 72,816 310.6 A Accumulation 98,305,566 421,197 428.5 D Income 6,434,347 20,069 311.9 D Accumulation 9,604,379 42,866 446.3 S Income 1,952,468 1,943 99.52 S Accumulation 38,561,188 39,934 103.6 Distributions Payable A Income The interim distribution payable on 31 October 2015 is 3.5440p net per income unit. A Accumulation The interim accumulation distribution payable on 31 October 2015 is 4.8325p net per accumulation unit. D Income The interim distribution payable on 31 October 2015 is 4.7970p net per income unit. D Accumulation The interim accumulation distribution payable on 31 October 2015 is 6.7536p net per accumulation unit. S Income The interim distribution payable on 31 October 2015 is 1.6254p net per income unit. S Accumulation The interim accumulation distribution payable on 31 October 2015 is 1.6625p net per accumulation unit. Risk and Reward Profile Lower risk Typically lower rewards Higher risk Typically higher rewards Unit Class A Income 1 2 3 4 5 6 7 A Accumulation 1 2 3 4 5 6 7 D Income 1 2 3 4 5 6 7 D Accumulation 1 2 3 4 5 6 7 S Income 1 2 3 4 5 6 7 S Accumulation 1 2 3 4 5 6 7 `` The risk indicator was calculated incorporating historical or simulated historical data and may not be a reliable indication of the future risk profile of each unit class. `` The risk category shown is not guaranteed and may change over time. `` The lowest category does not mean risk free. `` The use of derivatives will impact the value of the Fund and may expose the Fund to a higher degree of risk. Derivatives are highly sensitive to changes in the value of the asset on which they are based and can increase the size of losses and gains, resulting in greater fluctuations in the value of the Fund. For more information on this, please see the Fund s Key Investor Information Documents (KIIDs), which are available at www.blackrock.com. Operating Charges Detailed in the following table are the charges used to meet the costs of running the Fund, which include the costs of marketing and distribution. These charges reduce the potential growth of your investments. The charges may vary from year to year. The charges exclude portfolio trade-related costs, except costs paid to the custodian/trustee and entry/exit charges paid to an underlying collective investment scheme (if any). Unit Class 1.3.2015 to 31.8.2015 # 1.3.2014 to 28.2.2015 A Income 1.66% 1.67% A Accumulation 1.66% 1.67% D Income 0.91% 0.92% D Accumulation 0.91% 0.92% S Income 0.83% 0.69% # S Accumulation 0.83% 0.69% # # Operating charges figures have been annualised. S Income and S Accumulation classes commenced March 2014. Please note that the annual registrar fee for the S Income and S Accumulation classes was increased from 0.00% to 0.15% during the period. 3 BlackRock UK Fund 4
Investment Report Summary of Performance over the Period The Fund returned -2.7%* over the six month period from 1 March 2015 to 31 August 2015, outperforming its benchmark, the FTSE All-Share Index, which returned -6.2%. Fund Manager s Commentary A surprisingly conclusive general election result provided a boost to UK share prices in May 2015. However, the market ended the period lower as a deterioration in the outlook for Chinese growth induced fears of a wider global economic slowdown. Over the period, the biggest contributor to performance was the long-term core holding in property company Capital & Counties Properties, which further improved the value of its central London properties. Clothing retailer Next reported accelerated growth from its online directory business, with revenue and profit growth beating expectations. Distributor Wolseley benefited from positive economic growth in its key regions (the US, UK and Nordics) while Auto Trader was a strong contributor after the company delivered a robust start to trading following its initial public offering. Detractors from performance over the period were our holdings in equipment rental company Ashtead, plastic and fibre manufacturer Essentra and sustainable technology developer Johnson Matthey, after they all fell back on the wider fears of economic slowdown. However, we do not think these holdings are significantly exposed. Rio Tinto, our sole holding in mining, fell back on continued commodity price weakness. Our transactions during the period included purchasing new positions in Just Eat, Booker and Fever- Tree Drinks. Meanwhile, we sold our holdings in Diageo, GlaxoSmithKline and Paragon. US economic activity remains strong, in contrast to Europe, where it is yet to improve. The launch of a spending programme in support of the eurozone s economy (a process known as quantitative easing) in Europe has improved investor sentiment, but evidence of its real economic impact is not yet visible. Elsewhere, emerging market growth remains weaker than recent years. The effect of this is visible in weaker currencies and lower commodity prices, notably oil and iron-ore, which have weakened materially as demand has failed to match supply growth. The portfolio is positioned away from companies that rely on high commodity prices. September 2015 * Performance figures quoted are based on bid-to-bid dealing prices (the price at which units are sold) and are not the same as the net asset value reported in the financial statements which is at close of business. Performance is calculated net of fees and reported for the Fund s class A Accumulation Units. Portfolio Statement (unaudited) at 31 August 2015 Holding or Market % of Nominal Value Total Net Value Investment Assets EQUITIES 97.46%; 2015 99.08% UNITED KINGDOM 97.46%; 2015 99.08% Banks 7.20%; 2015 6.95% 3,232,332 Barclays 8,451 1.41 2,859,579 HSBC 14,833 2.48 25,579,210 Lloyds Banking 19,793 3.31 43,077 7.20 Beverages 0.79%; 2015 2.34% 1,103,563 Fever-Tree Drinks 4,715 0.79 Chemicals 1.30%; 2015 3.03% 145,793 Johnson Matthey 3,940 0.66 214,662 Victrex 3,842 0.64 7,782 1.30 Construction & Materials 0.73%; 2015 1.51% 227,475 CRH 4,372 0.73 Financial Services 5.54%; 2015 6.70% 3,170,651 3i 15,593 2.60 1,568,097 Hargreaves Lansdown 17,626 2.94 33,219 5.54 Food & Drug Retailers 3.37%; 2015 1.22% 6,376,800 Booker 10,758 1.80 3,185,845 SSP 9,385 1.57 20,143 3.37 Food Producers 1.19%; 2015 1.11% 272,900 Unilever 7,153 1.19 General Retailers 8.55%; 2015 7.83% 2,399,600 Dixons Carphone 10,342 1.73 2,827,600 Just Eat 11,135 1.86 374,113 Next 29,724 4.96 51,201 8.55 Household Goods & Home Construction 4.42%; 2015 4.52% 168,331 Berkeley 5,673 0.95 361,687 Reckitt Benckiser 20,793 3.47 26,466 4.42 5 BlackRock UK Fund 6
Portfolio Statement (unaudited) continued Holding or Market % of Nominal Value Total Net Value Investment Assets Industrial Engineering 0.00%; 2015 0.00% 437,932 Vitec Global* 0.00 Media 12.40%; 2015 9.06% 5,595,402 Auto Trader 19,108 3.19 3,829,700 ITV 9,582 1.60 2,257,100 RELX 23,564 3.94 590,121 Rightmove 21,958 3.67 74,212 12.40 Mining 1.70%; 2015 3.81% 426,278 Rio Tinto 10,175 1.70 Mobile Telecommunications 1.62%; 2015 1.00% 4,291,599 Vodafone 9,727 1.62 Non-Life Insurance 0.06%; 2015 0.11% 23,099 Admiral 358 0.06 Oil & Gas Producers 6.76%; 2015 8.30% 41,151 BG 409 0.07 2,319,356 BP 8,360 1.40 204,637 Hunting 1,060 0.18 1,795,121 Royal Dutch Shell class B shares 30,625 5.11 40,454 6.76 Pharmaceuticals & Biotechnology 8.13%; 2015 9.88% 369,400 AstraZeneca 15,203 2.54 667,369 Shire 33,502 5.59 48,705 8.13 Real Estate Investment & Services 7.60%; 2015 5.44% 7,583,457 Capital & Counties Properties 33,617 5.61 4,971,021 Foxtons 11,945 1.99 45,562 7.60 Support Services 5.90%; 2015 8.52% 607,315 Ashtead 5,742 0.96 784,709 Essentra 6,690 1.12 1,629,569 Howden Joinery 7,838 1.31 358,095 Wolseley 15,058 2.51 35,328 5.90 Holding or Market % of Nominal Value Total Net Value Investment Assets Tobacco 10.14%; 2015 9.66% 1,173,307 British American Tobacco 40,778 6.81 631,100 Imperial Tobacco 19,930 3.33 60,708 10.14 Travel & Leisure 10.06%; 2015 8.09% 466,767 Betfair 15,081 2.52 583,345 Carnival 19,367 3.23 1,781,312 Compass 18,419 3.08 2,346,670 Patisserie 7,392 1.23 INVESTMENT FUNDS 2.39%; 2015 0.37% 60,259 10.06 Short-Term Money Market Funds 2.39%; 2015 0.37% 14,328,812 Institutional Cash Series plc Sterling Liquidity Fund** 14,329 2.39 Portfolio of investments 597,945 99.85 Net other assets 880 0.15 Total net assets 598,825 100.00 Unless otherwise stated, all holdings are quoted in ordinary shares and listed on a recognised exchange. Note: comparative figures show percentages for each category of holding at 28 February 2015. * Unquoted. ** Managed by a related party. The Fund will not be subject to any initial subscription or redemption fees on its investment into an underlying fund managed by a related party. The Fund may indirectly incur management charges by investing in an underlying fund. The Fund invests, where possible, in a share class of an underlying fund that is not subject to management charges. Alternatively, where this is not possible, the Manager will rebate management charges to the Fund. 7 BlackRock UK Fund 8
Statement of Total Return (unaudited) for the six months ended 31 August 2015 Balance Sheet (unaudited) at 31 August 2015 31.8.2015 31.8.2014 Income Net capital losses (17,852) (37,025) Revenue 12,801 17,760 Expenses (5,049) (6,401) Net revenue before taxation 7,752 11,359 Taxation Net revenue after taxation 7,752 11,359 Total return before distributions (10,100) (25,666) Distributions (7,764) (11,258) Change in net assets attributable to unitholders from investment activities (17,864) (36,924) Statement of Change in Net Assets Attributable to Unitholders (unaudited) for the six months ended 31 August 2015 31.8.2015 31.8.2014 Opening net assets attributable to unitholders 704,190 896,374 Amounts received on creation of units 1,874 13,973 Amounts paid on cancellation of units (95,415) (98,101) (93,541) (84,128) Stamp duty reserve tax (82) Unclaimed distributions over 6 years old 4 Change in net assets attributable to unitholders from investment activities (17,864) (36,924) Retained distribution on accumulation units 6,040 9,241 Closing net assets attributable to unitholders 598,825 784,485 31.8.2015 28.2.2015 Assets: Fixed assets Investment assets 597,945 700,331 Current assets Debtors 3,120 11,088 Cash and bank balances 2,465 2,229 Total assets 603,530 713,648 Liabilities: Creditors Distribution payable (1,171) (474) Other creditors (3,534) (8,984) Total liabilities (4,705) (9,458) Net assets attributable to unitholders 598,825 704,190 N C D Hall (Director) M T Zemek (Director) BlackRock Fund Managers Limited 15 October 2015 The above statement shows the comparative closing net assets at 31 August 2014 whereas the current accounting period commenced 1 March 2015. 9 BlackRock UK Fund 10
Notes to Financial Statements (unaudited) for the six months ended 31 August 2015 Accounting Policies The financial statements have been prepared in accordance with the Statement of Recommended Practice for Authorised Funds (the SORP ) issued by the Investment Management Association ( IMA ) (now known as the Investment Association) in May 2014. The SORP was revised in May 2014 to concur with Financial Reporting Standard 102, the new financial reporting standard applicable in the UK and Republic of Ireland. Stamp Duty Reserve Tax ( SDRT ) Prior to 30 March 2014, SDRT was levied on the dealing of units in unit trust schemes under Schedule 19 of the Finance Act 1999 ( Schedule 19 ) at the rate of 0.5% on the value of units surrendered. In order to increase the competitiveness of the asset management industry in the UK, the charge to SDRT under Schedule 19 has been abolished since 30 March 2014 and there is no SDRT charge levied on the surrender of units in unit trust schemes after this date. The transition to the revised SORP on 1 March 2015 has not resulted in any restatement to the financial position or financial performance previously reported as at 28 February 2015. Certain presentational amendments have been required which have no impact on the total return or net asset value in either the current or prior accounting period. All other accounting policies used to prepare the interim financial statements are as per the audited financial statements for the year ended 28 February 2015. Subsequent Events The Prospectus was amended on 17 September 2015 to add MarketAxess Europe Limited as an eligible market. 11 BlackRock UK Fund 12
Notes General Information Manager & Registrar BlackRock Fund Managers Limited 12 Throgmorton Avenue, London EC2N 2DL Telephone: 020 7743 3000 Dealing and Investor Services: 0800 44 55 22 Member of The Investment Association (formerly the Investment Management Association) and authorised and regulated by the Financial Conduct Authority. Directors of the Manager G D Bamping R A Damm N C D Hall* R A R Hayes A M Lawrence A J Stenning E E Tracey M T Zemek* (appointed 2 June 2015) * Non-executive Director. Trustee BNY Mellon Trust & Depositary (UK) Limited 160 Queen Victoria Street, London EC4V 4LA Authorised and regulated by the Financial Conduct Authority. Investment Manager BlackRock Investment Management (UK) Limited 12 Throgmorton Avenue, London EC2N 2DL Authorised and regulated by the Financial Conduct Authority. Auditor 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. 13 BlackRock UK Fund 14
ABOUT US BlackRock is a premier provider of asset management, risk management, and advisory services to institutional, intermediary, and individual clients worldwide. As of 30 June 2015, the firm manages 3 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 firm 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 firm maintains offices in over 30 countries around the world. For more information 0800 44 55 22 blackrock.co.uk