Annual report - BlackRock...of home-collected credit (“doorstep lending”), unsecured short-term...

For the year ended 30 November 2018

Annual reportCharinco, Charishare and Charishare Restricted Common Investment Funds

1 Charinco, Charishare and Charishare Restricted Common Investment Funds Charinco, Charishare and Charishare Restricted Common Investment Funds 2

Contents

Advisory Committee Members:

John Heskett Former Group Head of Sales, Baring Asset Management

Andrew Brettell The Money MOTco

David LoughFormer Chairman, Heartwood Wealth Management

Robert PopeFormer Chief Financial Officer of Mercers Company

Julian SmithPartner of Farrer & Co.

Jeremy ThompsonFormer Managing Director, Hoare Govett

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 Financial Conduct Authority (“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 2DL

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* (appointed 14 December 2017)R A Damm (resigned 31 December 2018)R A R Hayes A M Lawrence E E Tracey (resigned 28 February 2018)L E Watkins (appointed 16 May 2018) M T Zemek*

* Non-executive Director.

AuditorErnst & Young LLP1 More London PlaceLondon SE1 2AF

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 2DLTelephone: 020 7743 3000Charities helpline: 0800 44 55 22blackrock.co.uk

For your protection, telephone calls are usually recorded.

General Information

General Information 2About the Funds 3Trustee 3Corporate Governance 3The Advisory Committee 4Common Investment Funds 4Charity Trustees’ Investment Responsibilities 4Fund Managers 4Significant Events 5Report of the Advisory Committee 6Report on Remuneration 7

CharincoInvestment Objective and Policy 13Performance Table 14Investment Report 15Performance Record 17Distribution Tables 18Portfolio Statement 19Statement of Total Return 26Statement of Change in Net Assets Attributable to Unitholders 26Balance Sheet 27Notes to Financial Statements 28Independent Auditor’s Report 47

CharishareInvestment Objective and Policy 50Performance Table 51Investment Report 52Performance Record 54Distribution Tables 55Portfolio Statement 56Statement of Total Return 59Statement of Change in Net Assets Attributable to Unitholders 59Balance Sheet 60Notes to Financial Statements 61Independent Auditor’s Report 77

Charishare RestrictedInvestment Objective and Policy 80Performance Table 81Investment Report 82Performance Record 84Distribution Tables 85Portfolio Statement 86Statement of Total Return 89Statement of Change in Net Assets Attributable to Unitholders 89Balance Sheet 90Notes to Financial Statements 91Independent Auditor’s Report 106

Statement of Manager’s and Trustee’s Responsibilities 109Report of the Trustee 110


About the Funds

Charinco, Charishare and Charishare Restricted Common Investment Funds (each, a “Fund” and together, the “Funds”) are constituted with a manager, an independent trustee and an advisory committee, as 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.

Each Fund is administered for the benefit of unitholders under a Scheme of the Commission dated 25 February 2000 (in the case of Charinco and Charishare) and 2 October 2000 (in the case of Charishare Restricted Fund) each as subsequently varied or amended, (each, a “Scheme” and together, the “Schemes”).

The Alternative Investment Fund Managers Regulations 2013BlackRock Fund Managers Limited (the “Manager”) is authorised to manage and market the Funds, which are alternative investment funds, in accordance with the “AIFMD”.

In this document, (other than in the section entitled ‘Report on Remuneration’), 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 Funds 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 Funds and their property (as further detailed in the Scheme) except to the extent that such responsibilities are those of the Manager and the Advisory Committee.

The Trustee acts as the depositary of each Fund and, in doing so, shall comply with the terms of each Scheme and the provisions of the AIFMD.

Corporate Governance

The Manager is responsible for the management and administration of the Funds and their property (as further detailed in the Scheme Particulars) except to the extent that such responsibilities are those of the Trustee or Advisory Committee (the “Advisory Committee” or “Committee”). The Manager has delegated certain functions with respect to the portfolio management of the assets of the Funds, 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 twice a year with the Advisory Committee to review the performance of the Funds and to discuss the investment policy and objective. 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.

Charinco, Charishare and Charishare Restricted Common Investment Funds

The Advisory Committee

The duties and powers of the Advisory Committee are set out in the Scheme Particulars. To the extent of those duties and powers, the Advisory Committee members are charity trustees of the Funds within the meaning of the Charities Act 2011.

The Advisory Committee reports on the discharge of its responsibilities in the Annual Report. The Advisory Committee provides extra protection for investors as they monitor, amongst other things, the investment performance of the Manager and its compliance with the Scheme Particulars.

Common Investment Funds

The Funds are Common Investment Funds established and registered with the Commission. Pursuant to the Charities Act 2011 and each 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 each of the Funds. Subject to any restrictions in the terms of a 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 the Funds at any time. These Funds should not be regarded as short-term investments.

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 Managers

As at 30 November 2018, the Fund Managers of Charishare and Charishare Restricted are Adam Avigdori and David Goldman. The Fund Managers of Charinco are Simon Blundell, David Curtin and Ben Edwards.

Charinco, Charishare and Charishare Restricted Common Investment Funds continued


Significant Events

Charities TeamWe would like to inform you that we have made a reduction to the Annual Charge of Charinco Common Investment Fund. The Annual Charge levied by the Manager to the Fund was 0.40% per annum. As of the Effective Date, 31 January 2018, the Annual Charge was reduced to 0.35% per annum.

Also on 31 January 2018, Charishare Restricted Common Investment Fund’s investment objective was updated, adjusting for the following amended and additional exclusionary restrictions:

Amended exclusionary restrictions:

Military restrictions was amended such that the Fund will not invest in any company which is engaged in military related activity and/or conventional armaments where the company’s annual turnover in relation to such activities exceeds 5% of the company’s latest annual turnover, or, if the company is part of a group, 5% of the group’s latest annual turnover. The Fund may not invest in any company that generates any of its revenue from controversial armaments, such as cluster munitions.

Additional exclusionary restrictions:

The Fund will not invest in any company that earns 10% or more of its latest annual turnover, or, if the company is part of a group, 10% of the group’s latest annual turnover, from alcohol or alcohol-related products; from gambling-related products; or from tar sands and/or thermal coal.

The Fund will not invest in any company which provides adult entertainment services, providers of adult entertainment via mobile telecommunication networks and publishers and/or wholesalers of pornographic magazines, where the company’s annual turnover in relation to such products and services exceeds 5% of the company’s latest annual turnover, or, if the company is part of a group, 5% of the group’s latest annual turnover.

The Fund will not invest in any company where the company’s annual turnover in relation to the provision of home-collected credit (“doorstep lending”), unsecured short-term loans (“payday loans”) or pawnbroker loans exceeds 10% of the company’s latest annual turnover, or, if the company is part of a group, 10% of the group’s latest annual turnover, either directly or through owned-subsidiaries.

Changes in the Directors of the ManagerW I Cullen was appointed as a Director effective 14 December 2017. E E Tracy resigned as a Director effective 28 February 2018. M B Cook was appointed as a Director effective 2 May 2018. L E Watkins was appointed as a Director effective 16 May 2018. R A Damm resigned as a Director effective 31 December 2018.

Changes in Fund Structure from CIF to CAIFThe Manager is exploring the possibility of launching a new range of Charity Authorised Investment Funds (“CAIFs”) in 2019. The intention is for these Funds to be transitioned into one of these new CAIFs in 2019 subject to regulatory and investor approval. The intention is that the Funds would be renamed at that point but the investment objective and policy and fee structure of the Funds would remain unchanged.

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.

Charinco, Charishare and Charishare Restricted Common Investment Funds continued

Report of the Advisory Committee

To the Participants of Charinco, Charishare and Charishare Restricted Common Investment Funds

The Advisory Committee (“the Committee”) of Charinco, Charishare and Charishare Restricted Common Investment Funds (the “Funds”) has pleasure in reporting on the discharge of its responsibilities for the year ended 30 November 2018.

Two ordinary meetings were held during the year to review Charinco, Charishare and Charishare Restricted. Mr John Heskett was reappointed as Chairman on 25 October 2018. Under the Schemes of the Funds, the Committee elects/re-elects its Chairman at its first ordinary meeting of each year.

The Committee reviewed the criteria and methods for evaluating the performance of each of the Funds and their investment objectives. It also conducted a detailed review of the investment performance of the Funds and the manner in which the Committee represents the interests of the investing charities.

Since its appointment to each of the Funds, the Committee has monitored the Manager’s compliance with the Schemes of the Funds and can report that the Manager has operated within the parameters of each of the Schemes.

No member of the Committee has offered investment advice or conducted investment business in relation to the Funds.

John HeskettFor and on behalf of the Advisory Committee of Charinco, Charishare and Charishare RestrictedCommon Investment Funds25 January 2019


(b) The Manager’s Board The Manager’s Board has the task of supervising and providing oversight of the AIFM Remuneration Policy as it applies to the Manager and its Identified Staff.

Decision-making process Remuneration decisions for employees are made once annually in January following the end of the performance year. This timing allows full-year financial results to be considered along with other non-financial goals and objectives. Although the framework for remuneration decision-making is tied to financial performance, significant discretion is used to determine individual variable remuneration based on achievement of strategic and operating results and other considerations such as management and leadership capabilities.

No set formulas are established and no fixed benchmarks are used in determining annual incentive awards. In determining specific individual remuneration amounts, a number of factors are considered including non-financial goals and objectives and overall financial and investment performance. These results are viewed in the aggregate without any specific weighting, and there is no direct correlation between any particular performance measure and the resulting annual incentive award. The variable remuneration awarded to any individual(s) for a particular performance year may also be zero.

Annual incentive awards are paid from a bonus pool.

The size of the projected bonus pool, including cash and equity awards, is reviewed throughout the year by the MDCC and the final total bonus pool is approved after year-end. As part of this review, the MDCC receives actual and projected financial information over the course of the year as well as final year-end information. The financial information that the MDCC receives and considers includes the current year projected income statement and other financial measures compared with prior year results and the current year budget. The MDCC additionally reviews other metrics of BlackRock’s financial performance (e.g., net inflows of AUM and investment performance) as well as information regarding market conditions and competitive compensation levels.

The MDCC regularly considers management’s recommendation as to the percentage of preincentive operating income that will be accrued and reflected as a compensation expense throughout the year for the cash portion of the total annual bonus pool (the “accrual rate”). The accrual rate of the cash portion of the total annual bonus pool may be modified by the MDCC during the year based on its review of the financial information described above. The MDCC does not apply any particular weighting or formula to the information it considers when determining the size of the total bonus pool or the accruals made for the cash portion of the total bonus pool.

Following the end of the performance year, the MDCC approves the final bonus pool amount.

As part of the year-end review process the Enterprise Risk and Regulatory Compliance departments report to the MDCC on any activities, incidents or events that warrant consideration in making compensation decisions.

Individuals are not involved in setting their own remuneration.

Report on Remuneration

The below disclosures are made in respect of the remuneration policies of the BlackRock group (“BlackRock”), as they apply to BlackRock Fund Managers Limited (the “Manager”). The disclosures are made in accordance with the Alternative Investment Fund Managers Directive (the “AIFMD”), the European Commission Delegated Regulation supplementing the AIFMD (the “Delegated Regulation”) and the “Guidelines on sound remuneration policies under the AIFMD” issued by the European Securities and Markets Authority (“ESMA”).

The BlackRock AIFM Remuneration Policy (the “AIFM Remuneration Policy”) will apply to the EEA entities within the BlackRock group authorised as a manager of alternative investment funds in accordance with the AIFMD, and will ensure compliance with the requirements of Annex II of the AIFMD.

The Manager has adopted the AIFM Remuneration Policy, a summary of which is set out below.

Remuneration Governance BlackRock’s remuneration governance in EMEA operates as a tiered structure which includes: (a) the Management Development and Compensation Committee (“MDCC”) (which is the global, independent remuneration committee for BlackRock, Inc. and all of its subsidiaries, including the Manager); and (b) the Manager’s board of directors (the “Manager’s Board”). The MDCC is responsible for the determination of BlackRock’s remuneration policies.

(a) MDCC The MDCC’s purposes include:

• providing oversight of:

– BlackRock’s executive compensation programmes;

– BlackRock’s employee benefit plans; and

– such other compensation plans as may be established by BlackRock from time to time for which the MDCC is deemed as administrator;

• reviewing and discussing the compensation discussion and analysis included in the BlackRock, Inc. annual proxy statement with management and approving the MDCC’s report for inclusion in the proxy statement;

• reviewing, assessing and making reports and recommendations to the BlackRock, Inc. board of directors (the “BlackRock, Inc. Board”) as appropriate on BlackRock’s talent development and succession planning, with the emphasis on performance and succession at the highest management levels; and

• in accordance with applicable UK and European regulations and guidance, to act as the Remuneration Committee for BlackRock’s EMEA regulated entities.

The MDCC directly retains an independent compensation consultant, Semler Brossy Consulting Group LLC, which has no relationship with BlackRock Inc. or the BlackRock, Inc. Board that would interfere with its ability to provide independent advice to the MDCC on compensation matters.

The BlackRock, Inc. Board has determined that all of the members of the MDCC are “independent” within the meaning of the listing standards of the New York Stock Exchange (NYSE), which requires each meet a “non-employee director” standard.

The MDCC held 10 meetings during 2017. The MDCC charter is available on BlackRock, Inc.’s website (www.blackrock.com).


When setting remuneration levels other factors are considered, as well as individual performance, which may include:

• the performance of the Manager, the funds managed by the Manager and/or the relevant functional department;

• factors relevant to an employee individually; relationships with clients and colleagues; teamwork; skills; any conduct issues; and, subject to any applicable policy, the impact that any relevant leave of absence may have on contribution to the business);

• the management of risk within the risk profiles appropriate for BlackRock’s clients;

• strategic business needs, including intentions regarding retention;

• market intelligence; and

• criticality to business.

A primary product tool is risk management and, while employees are compensated for strong performance in their management of client assets, they are required to manage risk within the risk profiles appropriate for their clients. Therefore, employees are not rewarded for engaging in high-risk transactions outside of established parameters. Remuneration practices do not provide undue incentives for short-term planning or short-term financial rewards, do not reward unreasonable risk and provide a reasonable balance between the many and substantial risks inherent within the business of investment management, risk management and advisory services.

BlackRock operates a total compensation model for remuneration which includes a base salary, which is contractual, and a discretionary bonus scheme.

BlackRock operates an annual discretionary bonus scheme. Although all employees are eligible to be considered for a discretionary bonus, there is no contractual obligation to make any award to an employee under its discretionary bonus scheme. In exercising discretion to award a discretionary bonus, the factors listed above (under the heading “Link between pay and performance”) may be taken into account in addition to any other matters which become relevant to the exercise of discretion in the course of the performance year.

Discretionary bonus awards for all employees, including executive officers, are subject to a guideline that determines the portion paid in cash and the portion paid in BlackRock, Inc. stock and subject to additional vesting/clawback conditions. Stock awards are subject to further performance adjustment through variation in BlackRock, Inc.’s share price over the vesting period. As total annual compensation increases, a greater portion is deferred into stock. The MDCC adopted this approach in 2006 to substantially increase the retention value and shareholder alignment of the compensation package for eligible employees, including the executive officers. The portion deferred into stock vests in three equal instalments over the three years following grant.

Supplementary to the annual discretionary bonus as described above, equity awards from the “Partner Plan” and “Targeted Equity Award Plan” are made to select senior leaders to provide greater linkage with future business results. The long-term incentive awards have been established individually to provide meaningful incentive for continued performance over a multi-year period recognising the scope of the individual’s role, business expertise and leadership skills.

Control functionsEach of the control functions (Enterprise Risk, Legal & Compliance, and Internal Audit) has its own organisational structure which is independent of the business units. The head of each control function is either a member of the Global Executive Committee (“GEC”), the global management committee, or has a reporting obligation to the board of directors of BlackRock Group Limited, the parent company of all of BlackRock’s EMEA regulated entities, including the Manager.

Functional bonus pools are determined with reference to the performance of each individual function. The remuneration of the senior members of control functions is directly overseen by the MDCC.

Link between pay and performance There is a clear and well-defined pay-for-performance philosophy and compensation programmes which are designed to meet the following key objectives as detailed below:

• appropriately balance BlackRock’s financial results between shareholders and employees;

• attract, retain and motivate employees capable of making significant contributions to the long-term success of the business;

• align the interests of senior employees with those of shareholders by awarding BlackRock Inc.’s stock as a significant part of both annual and long-term incentive awards;

• control fixed costs by ensuring that compensation expense varies with profitability;

• link a significant portion of an employee’s total compensation to the financial and operational performance of the business as well as its common stock performance;

• discourage excessive risk-taking; and

• ensure that client interests are not negatively impacted by remuneration awarded on a short-term, mid-term and/or long-term basis.

Driving a high-performance culture is dependent on the ability to measure performance against objectives, values and behaviours in a clear and consistent way. Line managers use a 5-point rating scale to provide an overall assessment of an employee’s performance, and employees also provide a self-evaluation. The overall, final rating is reconciled during each employee’s performance appraisal. Employees are assessed on the manner in which performance is attained as well as the absolute performance itself.

In keeping with the pay-for-performance philosophy, ratings are used to differentiate and reward individual performance – but do not pre-determine compensation outcomes. Compensation decisions remain discretionary and are made as part of the year-end compensation process.

Report on Remuneration continued


Quantitative Remuneration DisclosureThe Manager is required under the AIFMD to make quantitative disclosures of remuneration. These disclosures are made in line with BlackRock’s interpretation of currently available regulatory guidance on quantitative remuneration disclosures. As market or regulatory practice develops BlackRock may consider it appropriate to make changes to the way in which quantitative remuneration disclosures are calculated. Where such changes are made, this may result in disclosures in relation to a fund not being comparable to the disclosures made in the prior year, or in relation to other BlackRock fund disclosures in that same year.

Disclosures are provided in relation to (a) the staff of the Manager; (b) staff who are senior management; and (c) staff who have the ability to materially affect the risk profile of the Fund.

All individuals included in the aggregated figures disclosed are rewarded in line with BlackRock’s remuneration policy for their responsibilities across the relevant BlackRock business area. As all individuals have a number of areas of responsibilities, only the portion of remuneration for those individuals’ services attributable to the Fund is included in the aggregate figures disclosed.

Members of staff and senior management of the Manager typically provide both AIFMD and non-AIFMD related services in respect of multiple funds, clients and functions of the Manager and across the broader BlackRock group. Therefore, the figures disclosed are a sum of each individual’s portion of remuneration attributable to the Manager according to an objective apportionment methodology which acknowledges the multiple-service nature of the Manager. Accordingly the figures are not representative of any individual’s actual remuneration or their remuneration structure.

The amount of the total remuneration awarded by the Manager to its staff which has been attributed to the Manager’s AIFMD-related business in respect of the Manager’s financial year ending 31 December 2017 is USD 12.8m. This figure is comprised of fixed remuneration of USD 1.4m and variable remuneration USD 11.4m. There were a total of 59 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration awarded by the Manager, which has been attributed to the Manager’s AIFMD-related business in respect of the Manager’s financial year ending 31 December 2017, to its senior management was USD 0.3m, and to members of its staff whose actions have a material impact on the risk profile of the Manager’s AIFMD-related business was USD 12.5m.

Selected senior leaders are eligible to receive performance-adjusted equity-based awards from the “BlackRock Performance Incentive Plan” (“BPIP”). Awards made from the BPIP have a three-year performance period based on a measurement of As Adjusted Operating Margin1 and Organic Revenue Growth2. Determination of pay-out will be made based on the firm’s achievement relative to target financial results at the conclusion of the performance period. The maximum number of shares that can be earned is 165% of the award in those situations where both metrics achieve pre-determined financial targets. No shares will be earned where the firm’s financial performance in both of the above metrics is below a pre-determined performance threshold. These metrics have been selected as key measures of shareholder value which endure across market cycles.

A limited number of investment professionals have a portion of their annual discretionary bonus (as described above) awarded as deferred cash that notionally tracks investment in selected products managed by the employee. The intention of these awards is to align investment professionals with the investment returns of the products they manage through the deferral of compensation into those products. Clients and external evaluators have increasingly viewed more favourably those products where key investors have “skin in the game” through significant personal investments.

Identified StaffThe AIFM Remuneration Policy sets out the process that will be applied to identify staff as Identified Staff, being categories of staff of the Manager, including senior management, risk takers, control functions and any employee receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers, whose professional activities have a material impact on the risk profiles of the Manager or of the funds it manages.

The list of Identified Staff will be subject to regular review, being formally reviewed in the event of, but not limited to:

• organisational changes;

• new business initiatives;

• changes in significant influence function lists;

• changes in role responsibilities; and

• revised regulatory direction.

1 As Adjusted Operating Margin: As reported in BlackRock’s external filings, reflects adjusted Operating Income divided by Total Revenue net of distribution and servicing expenses and amortisation of deferred sales commissions.

2 Organic Revenue Growth: Equal to net new base fees plus net new Aladdin revenue generated in the year (in dollars).

Report on Remuneration continued


Performance Table

For the year to 30.11.2018

For the three years to 30.11.2018

For the five years to 30.11.2018

TOTAL RETURN (with gross income reinvested)

Accumulation Units

Charinco Common Investment Fund -0.7% +8.4% +22.8%

50% FTSE All-Stocks Gilt Index / 50% iBoxx Sterling Non-Gilt 1-10 Year Index# -0.1% +9.1% +25.5%

Fund figures quoted are based on closing bid-to-bid prices. Figures are calculated net of fees. Performance returns are cumulative. All returns are in Sterling.# Figures from Index Vendor and BlackRock.

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.

Charinco Common Investment Fund

Charinco Investment Objective and Policy

The investment objective of Charinco (the “Fund”) is to provide charities with a high level of income from a professionally managed portfolio of fixed interest securities.

The Fund was registered on 9 March 1976 as a charity (number 270540).

The Scheme Particulars set out investment restrictions that apply to this Fund.

Charinco Common Investment Fund (“Charinco”)


Investment Report

Performance Summary The Fund returned -0.7%* over the year to 30 November 2018, underperforming its composite benchmark†, which returned -0.1%. Over the six-month period to 30 November 2018, the Fund returned -1.8%, underperforming its composite benchmark, which returned -1.5%.

Market ReviewGilt yields ended the period little changed at 1.36%, although they traded in a broader range of 1.15 - 1.73 per cent. A number of events, including the deteriorating credit quality of Italian banks, global trade wars and domestic ructions over Brexit created broad swings in sentiment. Credit markets started the period with a positive tone, outperforming gilts in December and January as credit spreads tightened. From then on, however, market sentiment turned more negative with issues in emerging markets, Italy and trade tensions all contributing to risk aversion that saw credit spreads widen to the end of the period.

Non-government bonds (credit) underperformed gilts over the period with 1-10 year credit deteriorating by 8 basis points against their government counterparts. Within Credit, relative underperformance tended to be worse in lower rated credit, with A and BBB-rated underperforming compared to AAA and AA-rated credit.From a sectoral point of view, financials saw the worst of the underperformance. Government-related bonds outperformed other sectors, but still posted negative returns.

UK economic data releases were mixed. GDP growth, having fallen to 0.1% (quarter-on-quarter) in the first quarter of 2018, improved to 0.6% in Q3 2018. The Purchasing Managers’ Index (PMI) is a monthly survey of business activity in the manufacturing, construction and services sectors, and is an important indicator for economic growth. Construction activity increased but both the manufacturing and service sectors experienced decline to leave the PMI for November 2018 at 50.7, down from 54.8 in 2017. The PMI is a monthly survey of business activity in the manufacturing, construction and services sectors, and is an important indicator for economic growth.

The UK inflation rate as measured by the Consumer Prices Index, fell during the period from 3.1% down to 2.4% in October. This is the lowest observed since March 2017. Unemployment of around 4% is at its lowest level since 1975, which suggests that spare capacity in the economy may have been used up.

During the period, the Bank of England voted unanimously to increase the Bank Rate by 25 basis points to 0.75% in August and this was fully anticipated by the market.

The 10-year US Treasury yield nudged above 3.0% in late April as the Federal Reserve (Fed) continued along its tightening path. This would see it raise US rates steadily in the period and reduce its balance sheet against the backdrop of a positive global economic outlook. Despite a trade war breaking out between the US and China, optimism persisted through the summer and peaked in early October when Fed chairman, Jerome Powell, said: “We may go past neutral, but we’re a long way from neutral.” Those comments led investors to expect a continued course of tightening by the Fed. From that point, however, sentiment swung dramatically as softer corporate earnings, escalating trade tensions, political uncertainties (most notably over Italy’s budget and Brexit) and increasing signs that global growth was slowing drove a strong rally in benchmark yields that persisted for the rest of the period.


* Performance figures quoted are based on closing bid-to-bid prices and are not the same as the net asset value reported in the financial statements which are close of business. Performance is calculated net of fees and reported for the Fund’s Accumulation Units.

† The composite benchmark currently comprises of 50% FTSE All-Stocks Gilt Index and 50% iBoxx Sterling Non-Gilt 1-10 Year Index.

Investment Report continued

Europe’s economy slowed, even as the European Central Bank prepared to stop net bond purchases at the end of 2018. Germany was a key concern as manufacturing output slowed to near-stagnation and the if business climate index fell for three consecutive months to November. More encouragingly, that month also saw Germany record its lowest ever unemployment rate of 5.0%. Italy also caused concerns in the second half of the period after the country’s populist government came under threat of disciplinary action over its spending plans and budget deficit for 2019.

Performance and ActivityThe Fund’s underperformance relative to the benchmark was driven by negative contributions from our overweight positioning (holds more exposure than the benchmark) in non-government bonds and overseas relative-value exposure. Non-government bonds detracted from performance as credit underperformed government bonds.

The Fund’s underweight exposure (hold less exposure than the benchmark) to interest rates added value in the early part of 2018 as yields increased. In the third quarter of 2018 the Fund shifted to an overweight position in interest rates, expressed through the US, which outperformed as US yields decreased. An off-benchmark holding in inflation-linked bonds in the US added value during the period. Overseas relative value positions detracted, particularly in May and October as peripheral spreads, which the portfolio was exposed to, widened.

OutlookThe Fund has a moderate overweight duration (interest rate exposure) position, expressed through the United States. We believe that growth will continue and the central banks, led by the US Federal Reserve, will continue to tighten policy or reduce accommodation. However, we also believe that the markets are close to fully pricing the likely path of interest rates in the US and that there is less scope for the Fed to overdeliver than to underdeliver. As a result, we have a long position in US duration. We see greater value in the US than the UK and are running a relative value position that favours the US over the UK.

The Fund is positioned for long-dated French government bonds to outperform the intermediate part of the curve. In the US, we are positioned for short-dated bonds, which provide attractive carry for local investors, to outperform long-dated bonds.

We remain overweight long-dated inflation-linked bonds relative to conventional bonds, although have reduced the size of the position into relative strength of inflation-linked markets. We have retained a relative value overweight to US inflation-linked versus UK equivalents.

We remain constructive on the outlook for credit returns relative to government bonds largely driven by the attractive valuation levels now available. Spreads on sterling credit are at the highest levels seen in more than two years. Spreads as a percentage of yield are also at historically attractive levels, with the sterling market looking relatively attractive relative to both the dollar and euro markets in our view. The fundamental and technical backdrop is more nuanced, with some concerns over the potential for broad asset class outflows and a weaker earnings outlook. The balance of valuations, fundamentals and technical factors is positive in our judgement and we expect to see credit outperform government bonds in coming months.

December 2018




Performance Record

Comparative Table

Income Units Accumulation Units







Pence per unit Pence per unit Pence per unit Pence per unit Pence per unit Pence per unit

Change in net assets per unit

Opening net asset value per unit 193.0 194.9 191.6 4,795 4,651 4,392

Return before operating charges (0.67) 6.93 12.06 (17.27) 164.1 277.4

Operating charges (0.70) (0.83) (0.79) (17.78) (20.06) (18.40)

Return after operating charges (1.37) 6.10 11.27 (35.05) 144.0 259.0

Distributions (8.00) (8.00) (8.00) (202.0) (193.8) (186.2)

Retained distributions onaccumulation units N/A N/A N/A 202.0 193.8 186.2

Closing net asset value per unit 183.6 193.0 194.9 4,760 4,795 4,651

After direct transaction costs of (0.00) (0.00) (0.02) (0.00) (0.04) (0.02)

Performance

Return after charges1 (0.71%) 3.13% 5.88% (0.73%) 3.10% 5.90%

Other information

Closing net asset value (£000’s) 158,311 150,698 184,839 10,044 10,018 9,908

Closing number of units 86,211,642 78,094,511 94,853,706 211,017 208,901 213,021

Operating charges2 0.37% 0.42% 0.40% 0.37% 0.42% 0.40%

Direct transaction costs3 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Prices Pence per unit Pence per unit Pence per unit Pence per unit Pence per unit Pence per unit

Highest offer unit price 196.0 203.5 211.7 4,870 4,944 4,953

Lowest bid unit price 184.6 193.5 190.1 4,726 4,629 4,358

1 The return after charges figures are based on the net asset value reported for financial statements purposes and are not the same as the performance returns figures quoted in the Performance Table and the Investment Report which are based on bid-to-bid dealing prices (the price at which units are sold).

2 Operating charges are annualised and exclude portfolio trade-related costs, except costs paid to the custodian/depositary and entry/exit charges paid to an underlying collective investment scheme (if any).

3 Direct transaction costs are annualised and principally comprise commissions and taxes, attributable to the Fund’s purchase and sale of debt instruments. See note 15 for further details.

Distribution Tables for the year ended 30 November 2018

Final Distribution in Pence per Unit

For the period from 1 September 2018 to 30 November 2018


Distribution paid 20.12.2018 2.0000 51.2843


Third Interim Distribution in Pence per Unit

For the period from 1 June 2018 to 31 August 2018




Second Interim Distribution in Pence per Unit

For the period from 1 March 2018 to 31 May 2018




First Interim Distribution in Pence per Unit

For the period from 1 December 2017 to 28 February 2018





Portfolio Statement continued

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

Charinco, Charishare and Charishare Restricted Common Investment Funds 2019 Charinco, Charishare and Charishare Restricted Common Investment Funds


Portfolio Statement at 30 November 2018

UNITED KINGDOM – 93.91%; 30.11.2017 96.64%

UK Sterling Denominated Fixed Rate Corporate Bonds – 43.44%; 30.11.2017 51.74% £425,000 AA Bond 2.75% Bonds 31/7/2043 382 0.23 £337,000 AA Bond 4.2487% Senior European Medium Term Notes 31/7/2043 344 0.20 £740,000 Anglian Water Services Financing 2.75% European Medium

Term Notes 26/10/2029 742 0.44 £850,000 Anheuser-Busch InBev 9.75% Guaranteed European Medium

Term Bonds 30/7/2024 1,168 0.69 £165,000 Annington Funding 2.646% European Medium Term Notes

12/7/2025 160 0.10 £1,625,000 AXA 7.125% Guaranteed Subordinated Bonds 15/12/2020 1,789 1.06 £800,000 Bank Nederlandse Gemeenten 1% European Medium Term

Notes 17/6/2022 791 0.47 £1,850,000 Bank of America 6.125% Guaranteed Senior European

Medium Term Bonds 15/9/2021 2,057 1.22 £250,000 Bank of America 7% Guaranteed Senior European Medium

Term Bonds 31/7/2028 334 0.20 £1,390,000 Bank of Scotland 9.375% Guaranteed Subordinated Bonds

15/5/2021 1,604 0.95 £800,000 Barclays 3.125% European Medium Term Notes 17/1/2024 784 0.47 £630,000 Barclays 3.25% European Medium Term Notes 17/1/2033 532 0.32 £1,495,000 Barclays Bank 10% Guaranteed Subordinated European

Medium Term Bonds 21/5/2021 1,730 1.03 £530,000 BAT 2.125% Bonds 15/8/2025 503 0.30 £470,000 BAT International Finance 4% Guaranteed European Medium

Term Notes 4/9/2026 497 0.30 £1,400,000 BAT International Finance 6.375% Guaranteed European

Medium Term Bonds 12/12/2019 1,464 0.87 £995,000 BHP Billiton Finance 6.5% Bonds 22/10/2077 1,090 0.65 £55,000 British Telecommunications 5.75% Guaranteed Senior

Bonds 7/12/2028 67 0.04 £365,000 British Telecommunications 8.625% Bonds 26/3/2020 398 0.24 £565,000 BUPA Finance 5% Bonds 8/12/2026 596 0.35 £330,000 BUPA Finance 5% Subordinated Notes 25/4/2023 353 0.21 £100,000 Cadent Finance 2.125% European Medium Term Notes 22/9/2028 93 0.06 £240,000 Centrica 5.25% Subordinated European Medium Term

Notes 10/4/2075 237 0.14 £756,000 Centrica 6.375% Guaranteed Senior European Medium Term

Bonds 10/3/2022 867 0.51 £150,000 Centrica 7% Guaranteed Senior European Medium Term Bonds

19/9/2033 208 0.12


£765,000 Chancellor Masters and Scholars of the University of Oxford 2.544% Bonds 8/12/2117 626 0.37

£250,000 Citigroup 5.875% Guaranteed Subordinated European Medium Term Bonds 1/7/2024 287 0.17

£285,000 Compass 2% European Medium Term Notes 5/9/2025 284 0.17 £745,000 Credit Suisse 2.125% Bonds 12/9/2025 704 0.42 £714,000 Credit Suisse Finance 7% Guaranteed Bonds 5/10/2020 781 0.46 £120,000 CYBG 5% Bonds 9/2/2026 117 0.07 £1,000,000 Daimler International Finance 2% Bonds 4/9/2023 981 0.58 £1,400,000 Deutsche Bank 1.75% Bonds 16/12/2021 1,335 0.79 £440,000 Deutsche Telekom International Finance 6.5% Guaranteed

European Medium Term Bonds 8/4/2022 506 0.30 £650,000 Électricité de France 6.25% Guaranteed Senior European

Medium Term Bonds 30/5/2028 831 0.49 £970,000 Enel Finance International 5.625% Guaranteed European

Medium Term Bonds 14/8/2024 1,098 0.65 £982,000 Enel Società per Azioni 6.25% Guaranteed Senior European

Medium Term Bonds 20/6/2019 1,006 0.60 £785,000 ESB Finance 6.5% Guaranteed European Medium Term

Bonds 5/3/2020 831 0.49 £480,000 Eversholt Funding 6.359% Guaranteed Senior European

Medium Term Bonds 2/12/2025 582 0.35 £835,000 FCE Bank 2.727% European Medium Term Notes 3/6/2022 819 0.49 £900,000 Friends Life 12% Guaranteed Subordinated European

Medium Term Bonds 21/5/2021 1,100 0.65 £1,010,000 Friends Life 8.25% Guaranteed Bonds 21/4/2022 1,185 0.70 £164,000 Gatwick Funding 6.125% Guaranteed Senior European

Medium Term Bonds 2/3/2028 200 0.12 £725,000 GE Capital UK Funding 4.125% Guaranteed European

Medium Term Notes 13/9/2023 722 0.43 £175,000 GKN 5.375% Bonds 19/9/2022 184 0.11 £685,000 Goldman Sachs 3.13% Bonds 25/7/2029 657 0.39 £740,000 Goldman Sachs 7.125% Guaranteed Senior Bonds 7/8/2025 923 0.55 £905,000 Great Rolling Stock 6.25% Guaranteed Senior European

Medium Term Bonds 27/7/2020 969 0.58 £700,000 Heathrow Funding 6.75% Guaranteed Senior European

Medium Term Bonds 3/12/2028 904 0.54 £1,600,000 Heathrow Funding 9.2% Guaranteed Senior European

Medium Term Bonds 29/3/2023 1,869 1.11 £235,000 Hiscox 6.125% Bonds 24/11/2045 241 0.14 £1,225,000 HSBC 2.175% Bonds 27/6/2023 1,206 0.72 £335,000 HSBC 2.256% European Medium Term Notes 13/11/2026 316 0.19


Portfolio Statement continued Portfolio Statement continued




£1,235,000 HSBC 6.5% Guaranteed Subordinated European Medium Term Bonds 7/7/2023 1,445 0.86

£300,000 Iberdrola Finanzas 7.375% Guaranteed European Medium Term Bonds 29/1/2024 373 0.22

£250,000 Imperial Brands Finance 5.5% Guaranteed Senior European Medium Term Notes 28/9/2026 285 0.17

£500,000 Imperial Brands Finance 7.75% European Medium Term Notes 24/6/2019 516 0.31

£110,000 Imperial Brands Finance 8.125% Guaranteed European Medium Term Bonds 15/3/2024 138 0.08

£760,000 Imperial Brands Finance 9% Guaranteed European Medium Term Bonds 17/2/2022 912 0.54

£374,000 Innogy Finance 6.25% Guaranteed European Medium Term Bonds 3/6/2030 479 0.28

£1,310,000 Innogy Finance 6.5% Guaranteed European Medium Term Bonds 20/4/2021 1,450 0.86

£895,000 John Lewis 8.375% Bonds 8/4/2019 913 0.54 £345,000 Leeds Building Society 3.75% European Medium Term

Notes 25/4/2029 309 0.18 £515,000 Legal & General 5.125% Bonds 14/11/2048 508 0.30 £295,000 Lloyds Bank 5.125% Guaranteed Subordinated European

Medium Term Bonds 7/3/2025 352 0.21 £1,000,000 Lloyds Bank 7.5% Guaranteed Senior European Medium

Term Bonds 15/4/2024 1,245 0.74 £563,000 Lloyds Bank 7.625% Guaranteed Subordinated European

Medium Term Bonds 22/4/2025 700 0.42 £555,000 Lloyds Bank 9.625% Subordinated Bonds 6/4/2023 703 0.42 £765,000 London Power Networks 5.125% Guaranteed Senior European

Medium Term Bonds 31/3/2023 865 0.51 £800,000 National Westminster Bank 6.5% Guaranteed Subordinated

Bonds 7/9/2021 880 0.52 £856,000 Oesterreichische Kontrollbank 0.75% European Medium

Term Notes 7/3/2022 842 0.50 £480,000 Orange 5.75% Perpetual European Medium Term Notes 504 0.30 £875,000 Orange 7.25% Guaranteed Senior European Medium Term

Bonds 10/11/2020 968 0.58 £345,000 Orange 8.125% Guaranteed Senior European Medium Term

Bonds 20/11/2028 500 0.30 £275,000 Pension Insurance 6.5% Subordinated Notes 3/7/2024 294 0.17 £560,000 Phoenix 5.75% Perpetual Bonds 460 0.27 £615,000 Porterbrook Rail Finance 6.5% Guaranteed European Medium

Term Bonds 20/10/2020 666 0.40 £435,000 Prudential 5.625% Bonds 20/10/2051 434 0.26


£225,000 Rabobank 4.625% Subordinated European Medium Term Notes 23/5/2029 239 0.14

£695,000 Rabobank Nederland 4% Guaranteed European Medium Term Notes 19/9/2022 749 0.44

£1,300,000 Santander UK 2.92% European Medium Term Notes 8/5/2026 1,247 0.74 £910,000 Scottish Widows 5.5% Bonds 16/6/2023 988 0.59 £500,000 Society of Lloyd’s 4.75% Subordinated Bonds 30/10/2024 521 0.31 £340,000 SP Manweb 4.875% Senior Medium Term Notes 20/9/2027 398 0.24 £310,000 SSE 3.625% Bonds 16/9/2077 300 0.18 £50,000 SSE 8.375% Guaranteed Senior Bonds 20/11/2028 73 0.04 £175,000 Stagecoach 4% Bonds 29/9/2025 179 0.11 £400,000 Telecom Italia 5.875% European Medium Term Notes 19/5/2023 416 0.25 £300,000 Telefónica Emisiones 5.597% Guaranteed European Medium

Term Notes 12/3/2020 314 0.19 £191,615 Telereal Securitisation 5.3887% Guaranteed Asset Backed

Bonds 10/12/2033 227 0.13 £740,000 Thames Water Utilities Cayman Finance 2.375% European

Medium Term Notes 3/5/2023 719 0.43 £410,000 Thames Water Utilities Cayman Finance 3.5% Bonds 25/2/2028 427 0.25 £176,979 Trafford Centre Finance 6.5% Guaranteed Asset Backed

Bonds 28/7/2033 235 0.14 £315,000 Tritax Big Box REIT 2.625% European Medium Term Notes

14/12/2026 307 0.18 £270,000 UBS Jersey 8.75% Guaranteed Subordinated European

Medium Term Bonds 18/12/2025 373 0.22 £500,000 Volkswagen Financial Services 1.875% European Medium

Term Notes 7/9/2021 494 0.29 £500,000 Volkswagen International Finance 3.375% Bonds 16/11/2026 498 0.30 £360,000 Wales & West Utilities Finance 3% European Medium Term

Notes 3/8/2038 344 0.20 £410,000 Walgreens Boots Alliance 3.6% Bonds 20/11/2025 424 0.25 £335,000 Wellcome Trust 2.517% Bonds 7/2/2118 273 0.16 £950,000 Wells Fargo 5.25% Guaranteed Subordinated European

Medium Term Bonds 1/8/2023 1,061 0.63 £845,000 Western Power 9.25% Bonds 9/11/2020 964 0.57 £780,000 Western Power Distribution 3.5% Bonds 16/10/2026 781 0.46 £1,450,000 Western Power Distribution 3.625% Bonds 6/11/2023 1,507 0.90 £190,000 Xstrata Canada Financial 7.375% Guaranteed European

Medium Term Bonds 27/5/2020 204 0.12 £1,200,000 Yorkshire Water 6% European Medium Term Notes 21/8/2019 1,238 0.74 £810,000 Yorkshire Water Services Bradford Finance 3.75% European

Medium Term Notes 22/3/2046 836 0.50

73,131 43.44






UK Sterling Denominated Fixed Rate Government Bonds – 48.79%; 30.11.2017 42.09% £2,860,000 Treasury 1% Bonds 22/4/2024 2,857 1.70 £1,888,000 Treasury 1.625% Gilts 22/10/2071 1,671 0.99 £313,000 Treasury 1.75% 22/1/2049 291 0.17 £721,000 Treasury 3.25% Stock 22/1/2044 888 0.53 £1,146,000 Treasury 3.5% Bonds 22/7/2068 1,697 1.01 £2,368,000 Treasury 3.5% Notes 22/1/2045 3,046 1.81 £504,000 Treasury 3.75% Gilts 22/7/2052 716 0.43 £9,906,000 Treasury 4% Gilts 7/3/2022 10,917 6.48 £1,594,000 Treasury 4% Stock 22/1/2060 2,497 1.48 £550,000 Treasury 4.25% Bonds 7/12/2040 771 0.46 £4,091,431 Treasury 4.25% Gilts 7/12/2049 6,151 3.65 £1,907,000 Treasury 4.25% Loan Stock 7/12/2055 3,021 1.79 £1,364,000 Treasury 4.25% Stock 7/12/2027 1,717 1.02 £2,945,000 Treasury 4.25% Stock 7/6/2032 3,880 2.30 £2,499,000 Treasury 4.25% Stock 7/3/2036 3,383 2.01 £1,495,000 Treasury 4.25% Stock 7/9/2039 2,076 1.23 £1,518,000 Treasury 4.25% Stock 7/12/2046 2,220 1.32 £2,359,000 Treasury 4.5% Bonds 7/9/2034 3,243 1.93 £2,834,000 Treasury 4.5% Stock 7/12/2042 4,167 2.48 £5,048,000 Treasury 4.75% Stock 7/12/2030 6,863 4.08 £1,260,000 Treasury 4.75% Stock 7/12/2038 1,851 1.10 £5,580,000 Treasury 5% Stock 7/3/2025 6,919 4.11 £3,349,869 Treasury 6% Stock 7/12/2028 4,825 2.87 £5,485,559 Treasury 8% Stock 7/6/2021 6,473 3.84

82,140 48.79

UK Sterling Denominated Variable Rate Corporate Bonds – 1.68%; 30.11.2017 2.81% £420,000 Aviva 6.125% Floating Rate Bonds 14/11/2036 452 0.27 £270,000 AXA 5.453% Subordinated Perpetual Floating Rate Notes 273 0.16 £390,000 Clerical Medical 7.375% Perpetual Floating Rate Bonds 399 0.24 £800,000 Électricité de France 5.875% Perpetual Subordinated Floating

Rate European Medium Term Notes 755 0.45 £575,000 NGG Finance 5.625% Floating Rate Notes 18/6/2073 609 0.36 £222,000 Orange 5.875% Perpetual Subordinated Floating Rate Notes 234 0.14 £100,000 Zurich Finance (UK) Variable Rate 6.625% Guaranteed

Perpetual Notes 109 0.06

2,831 1.68


EURO – 1.75%; 30.11.2017 1.58%

Euro Denominated Fixed Rate Corporate Bonds – 0.65%; 30.11.2017 0.00% €770,000 British Telecommunications 1.5% European Medium Term

Notes 23/6/2027 650 0.39 €315,000 British Telecommunications 2.125% European Medium Term

Notes 26/9/2028 274 0.16 €200,000 Deutsche Bank 1.5% European Medium Term Notes 20/1/2022 172 0.10

1,096 0.65

Euro Denominated Fixed Rate Government Bonds – 1.10%; 30.11.2017 1.58% €770,000 France (Government) 2% Government OAT Bonds 25/5/2048 741 0.44 €1,267,000 Ireland (Republic) 1.3% Bonds 15/5/2033 1,108 0.66

1,849 1.10

US DOLLAR – 3.81%; 30.11.2017 1.34%

US Dollar Denominated Fixed Rate Corporate Bonds – 0.53%; 30.11.2017 0.28% $1,270,000 Ford Motor Credit 4.389% Bonds 1/8/2026 897 0.53

US Dollar Denominated Fixed Rate Government Bonds – 3.28%; 30.11.2017 1.06% $1,730,000 US Treasury 0.375% Bonds 15/7/2027 1,324 0.79 $5,401,000 US Treasury 2.875% Bonds 15/5/2028 4,193 2.49

5,517 3.28

DERIVATIVES – (0.13)%; 30.11.2017 0.00%

Forward Currency Contracts – (0.04)%; 30.11.2017 0.01% €4,000,000 Euro vs UK sterling 31 0.02 £6,375,709 UK sterling vs Euro 73 0.04 £7,041,260 UK sterling vs US dollar (205) (0.12) $1,190,000 US dollar vs UK sterling 28 0.02

(73) (0.04)

Futures – (0.06)%; 30.11.2017 (0.01)% (1) Euro-BOBL December 2018^ – 0.00 (26) Euro-Bund December 2018 (62) (0.04) (28) Euro-OAT December 2018 (14) (0.01) (50) Long Gilt March 2019 (24) (0.01) 30 US 10 Year Note (CBT) March 2019 8 0.00 47 US 5 Year Note (CBT) March 2019 8 0.00 (9) US Ultra Bond (CBT) March 2019 1 0.00

(83) (0.06)


Charinco, Charishare and Charishare Restricted Common Investment Funds 26

Portfolio Statement continued


25 Charinco, Charishare and Charishare Restricted Common Investment Funds

Inflation Swaps – (0.03)%; 30.11.2017 0.00% 2,303,000 Bank of America (UK sterling) 3.427% vs Variable 16/10/2023 (32) (0.02) 995,000 Bank of America (UK sterling) 3.455% vs Variable 16/10/2023 (1) 0.00 1,889,000 Bank of America (UK sterling) 3.475% vs Variable 16/10/2028 (16) (0.01) 743,000 Bank of America (UK sterling) 3.501% vs Variable 16/10/2028 (4) 0.00 162,000 Bank of America (UK sterling) 3.5525% vs Variable 16/10/2048 (2) 0.00 2,062,000 Bank of America (UK sterling) 3.56125% vs Variable 16/11/2023 5 0.00 407,000 Bank of America (UK sterling) 3.55% vs Variable 16/10/2048 (6) 0.00

(56) (0.03)

Portfolio of investments 167,249 99.34Net other assets 1,106 0.66

Total net assets 168,355 100.00

Unless otherwise stated, all securities are either listed on a recognised exchange or traded on an eligible securities market.The counterparties for forward currency contracts are Bank of America Merrill Lynch, Barclays Bank Plc, BNP Paribas Arbitrage SNC, CitiGroup Global Markets Limited, Goldman Sachs International, HSBC Bank Plc, Royal bank of Canada, Royal Bank of Scotland Plc, Société Générale SA and Toronto-Dominion Bank^ Investments which are less than £500 are rounded to zero.


Statement of Total Return for the year ended 30 November 2018

Notes £000’s


£000’s £000’s


£000’s

Income

Net capital (losses)/gains 3 (3,958) 2,839

Revenue 4 3,563 3,977

Expenses 5 (760) (888)

Interest payable and similar charges 6 (94) (106)

Net revenue 2,709 2,983

Total return before distributions (1,249) 5,822

Distributions 7 (6,958) (7,191)

Change in net assets attributable to unitholders from investment activities (8,207) (1,369)

Statement of Change in Net Assets Attributable to Unitholdersfor the year ended 30 November 2018

Notes £000’s


£000’s £000’s


£000’s

Opening net assets attributable to unitholders 160,716 194,747

Amounts receivable on issue of units 46,017 8,976

Amounts payable on cancellation of units (30,440) (42,027)

15,577 (33,051)Change in net assets attributable

to unitholders from investment activities (8,207) (1,369)

Retained distribution on accumulation units 425 406

Change in Distribution Equalisation Reserve 14 (156) (17)

Closing net assets attributable to unitholders 168,355 160,716



Balance Sheetat 30 November 2018

Notes30.11.2018

£000’s30.11.2017

£000’s

Assets:

Fixed assets

– Investment assets 167,615 160,104

Current assets

– Debtors 8 3,937 3,018

– Cash and bank balances 9 528 1,664

Total assets 172,080 164,786

Liabilities:

Investment liabilities (366) (102)

Creditors

– Amounts held at futures clearing houses and brokers (14) (15)

– Distributions payable (1,724) (1,562)

– Other creditors 11 (1,621) (2,391)

Total liabilities (3,725) (4,070)

Net assets attributable to unitholders 168,355 160,716

C L Carter (Director)A M Lawrence (Director)BlackRock Fund Managers Limited25 January 2019


1. Accounting and Distribution Policies

Accounting Policies

(a) 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 (now known as the Investment Association) in May 2014, as applicable to charity common investment funds and Charities (Accounts & Reports) Regulations 2008.

(b) Revenue from fixed interest securities is recognised on an effective interest rate basis.

Accrued interest purchased and sold on interest bearing securities is excluded from the capital cost of these securities and dealt with as part of the revenue of the Fund.

All distributions from Collective Investment Schemes (“CIS”) are recognised when the securities are quoted ex-dividend. All distributions from CIS are treated as revenue with the exception of the equalisation element, which is treated as capital.

All revenue is recognised as a gross amount that takes account of any withholding taxes but excludes any other taxes such as attributable tax credits.

Bank interest is recognised on an accruals basis.

Returns from bond futures are streamed into revenue and capital components.

(c) All expenses, except those relating to the purchase and sale of investments are charged against revenue. All expenses are recognised on an accruals basis.

(d) The investments of the Fund have been valued at market value, defined as fair value, which is usually bid value at close of business on the last business day of the accounting period. In the case of an investment which is not quoted, listed or dealt in on a recognised market, or in respect of which a listed, traded or dealt price or quotation is not available at the time of valuation, the fair value of such investment shall be estimated with care and in good faith by a competent professional person, body, firm or corporation including the Manager’s pricing committee, and such fair value shall be determined on the basis of the probable realisation value of the investment. The Manager shall be entitled to adopt an alternative method of valuing any particular asset or liability if it considers that the methods of valuation set out above do not provide a fair valuation of a particular asset or liability.

For derivatives (e.g. forward currency contracts, futures and inflation swaps), market value is determined based on valuation pricing models which take into account relevant market inputs as well as the time values, liquidity and volatility factors underlying the positions. Amounts due to and from an individual counterparty which falls under a legally enforceable master netting agreement are netted.

(e) Any transactions in foreign currencies are translated into Sterling at the rates of exchange ruling on the date of any such transaction. Assets and liabilities in foreign currencies are translated into Sterling at the exchange rates ruling at the close of business on the last business day of the accounting period. Revenue items in foreign currencies are translated into Sterling at the exchange rate when the revenue is received.

(f) Where appropriate, certain permitted financial instruments such as derivatives are used for efficient portfolio management. Where such financial instruments are used to protect or enhance revenue, the revenue and expenses derived therefrom are included in ‘Revenue’ in the Statement of Total Return. Where such financial instruments are used to protect or enhance capital, the gains and losses derived therefrom are included in ‘Net capital gains’ in the Statement of Total Return.


Notes to Financial Statements for the year ended 30 November 2018

TAKEN FROM LAST ANNUAL


Notes to Financial Statements continued Notes to Financial Statements continued

(g) Cash and bank balances consist of deposits held on call with banks and cash held with clearing brokers and counterparties. Cash equivalents are investments in non-variable net asset value money market funds that are readily convertible to known amounts of cash.

Distribution Policies

(h) Returns from bond futures recognised as revenue from long positions form part of the distribution. Amounts recognised as revenue from short positions reduce the amounts available for distribution.

(i) For the purpose of maximising the distribution to investors, the effective yield adjustment on revenue from fixed interest securities may be reimbursed by capital. The increase to net revenue after taxation available for distribution as a result of this adjustment as at 30 November 2018 was £3,519,000 (30 November 2017: £3,351,000).

(j) The Fund makes a distribution on a quarterly basis. In order to conduct a controlled dividend flow to unitholders, the Manager can operate a Distribution Equalisation Reserve Account in accordance with the terms of the Fund. This allows for a sum of up to 50% of the distribution available to be credited to the Distribution Equalisation Reserve for future distributions.

(k) Some or all of the Management charges are reimbursed by capital for distribution purposes. The amount reimbursed may vary between accounting periods.

2. Financial Instruments and RisksThe Fund’s investment activities expose it to the various types of risk which are associated with the financial instruments and markets in which it invests. The following information is not intended to be a comprehensive summary of all risks and investors should refer to the Scheme Particulars for a more detailed discussion of the risks inherent in investing in the Fund.

Risk management framework

The Manager has delegated the day-to-day administration of the investment programme to the Investment Manager. The Investment Manager is also responsible for ensuring that the Fund is managed within the terms of its investment guidelines and limits set out in the Scheme Particulars. The Manager reserves to itself the investment performance, product risk monitoring and oversight and the responsibility for the monitoring and oversight of regulatory and operational risk for the Fund.

The Manager has appointed a risk manager who has responsibility for the daily risk management process with assistance from key risk management personnel of the Investment Manager, including members of the BlackRock Risk and Quantitative Analysis Group (“RQA Group”) which is a centralised group which performs an independent risk management function. The RQA Group independently identifies, measures and monitors investment risk. The RQA Group tracks the actual risk management practices being deployed across the different funds. By breaking down the components of the process, the RQA Group has the ability to determine if the appropriate risk management processes are in place for the Fund. This captures the risk management tools employed, how the levels of risk are controlled, ensuring risk/return is considered in portfolio construction and reviewing outcomes.

The principal risk exposure of the Fund is set out as follows:

Charinco Common Investment Fund Charinco Common Investment Fund

a) Market riskMarket risk arises mainly from uncertainty about future values of financial instruments influenced by other price, currency and interest rate movements. It represents the potential loss the Fund may suffer through holding market positions in the face of market movements. The Fund is exposed to market risk by virtue of its investments in corporate bonds, government bonds, inflation swaps, futures contracts and forward currency contracts.

A key metric the RQA Group uses to measure market risk is Value-at-Risk (“VaR”) which encompasses price, currency and interest rate risk. VaR is a statistical risk measure that estimates the potential portfolio loss from adverse market movements in an ordinary market environment. VaR analysis reflects the interdependencies between risk variables, unlike a traditional sensitivity analysis.

The VaR calculations are based on an adjusted historical simulation model with a confidence level of 99%, a holding period of one day and a historical observation period of not less than one year (250 days). A VaR number is defined at a specified probability and a specified time horizon. A 99% one day VaR means that the expectation is that 99% of the time over a one day period the Fund will lose less than this number in percentage terms. Therefore, higher VaR numbers indicate higher risk.

It is noted that the use of the VaR methodology has limitations, namely that the use of historical market data as a basis for estimating future events does not encompass all possible scenarios, particularly those that are of an extreme nature and that the use of a specified confidence level (e.g. 99%) does not take into account losses that occur beyond this level. There is some probability that the loss could be greater than the VaR amounts. These limitations and the nature of the VaR measure mean that the Fund can neither guarantee that losses will not exceed the VaR amounts indicated, nor that losses in excess of the VaR amounts, will not occur more frequently.

The one day VaR as at 30 November 2018 and 30 November 2017 based on a 99% confidence level was 0.56% and 0.56% respectively.



The interest rate risk profile of the Fund’s investments as at 30 November 2018 was as follows:

Floating Rate Investments

£000’s

Fixed Rate Investments

£000’s

Non-interest Bearing Investments

£000’sTotal

£000’s

2,831 164,630 (212) 167,249

The interest rate risk profile of the Fund’s investments as at 30 November 2017 was as follows:

Floating Rate Investments

£000’s

Fixed Rate Investments

£000’s

Non-interest Bearing Investments

£000’sTotal

£000’s

4,507 155,492 3 160,002

Management of interest rate risk

Interest rate risk exposure is managed by constantly monitoring the position for deviations outside a pre-determined tolerance level and, when necessary, rebalancing back to the original desired parameters.

b) Counterparty credit riskExposure to counterparty credit risk

Counterparty credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

The Fund is exposed to counterparty credit risk from the parties with which they trade and will bear the risk of settlement default.

Management of counterparty credit risk

Counterparty credit risk is monitored and managed by BlackRock’s RQA Counterparty & Concentration Risk Team. The team is headed by BlackRock’s Chief Counterparty Credit Officer who reports directly to the Global Head of RQA. Credit authority resides with the Chief Counterparty Credit Officer and selected team members to whom specific credit authority has been delegated. As such, counterparty approvals may be granted by the Chief Counterparty Credit Officer or by identified RQA Credit Risk Officers who have been formally delegated authority by the Chief Counterparty Credit Officer as deemed appropriate.

BlackRock’s RQA Counterparty & Concentration Risk Team completes a formal review of each new counterparty, monitors and reviews all approved counterparties on an ongoing basis and maintains an active oversight of counterparty exposures.

The Manager maintains a list of approved counterparties. This list is regularly monitored and revised for changes based on the counterparty’s creditworthiness, market reputation and expectations of future financial performance. Transactions will only be opened with financial intermediaries on the approved counterparties list.

i) Market risk arising from foreign currency risk

Exposure to foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

Management of foreign currency risk

Foreign currency exposures are managed within parameters utilising forward currency contracts. The details of the contracts in place at the year-end are disclosed in the portfolio statement.

The net assets of the Fund are denominated mainly in Sterling, therefore the Balance Sheet and Statement of Total Return are unlikely to be directly affected by currency movements.

ii) Market risk arising from other price risk

Exposure to other price risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting similar financial instruments traded in the market.

The Fund is exposed to other price risk arising from its investments. The exposure of the Fund to other price risk is the market value of the investments held as shown in the portfolio statement of the Fund.

Management of other price risk

The Investment Manager manages the Fund’s other price risk on a daily basis in accordance with the Fund’s investment objective.

By diversifying the portfolio, where this is appropriate and consistent with the Fund’s objectives, the risk that a price change of a particular investment will have a material impact on the net asset of the Fund is minimised. The investment concentrations within the portfolio are disclosed in the portfolio statement by investment type.

iii) Market risk arising from interest rate risk

Exposure to interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Fund is exposed to interest rate risk on its cash and bank balances held at The Bank of New York Mellon (International) Limited, amounts held at futures clearing houses and brokers and its investments in fixed and floating rate interest bearing securities where the value of these securities may fluctuate as a result of a change in interest rates. Cash held on deposit at The Bank of New York Mellon (International) Limited receives/incurs interest at the prevailing daily rate which may be negative depending on the currency in which the cash is held.

The Fund also has indirect exposure to interest rate risk through its investments in futures contracts, whereby the value of an underlying asset may fluctuate as a result of a change in interest rates through its investments in interest-bearing securities.




The following table details the number of counterparties the Fund is exposed to by OTC FDIs and the maximum exposure (which is calculated on a net basis) to any one counterparty.

30 November 2018

CounterpartyForwards

£000’s

Inflation Swaps£000’s

Total Exposure

£000’s

Bank of America Merrill Lynch 27 (56) (29)

Barclays Bank Plc 38 – 38

BNP Paribas Arbitrage SNC (50) – (50)

Goldman Sachs International 5 – 5

HSBC Bank Plc 4 – 4

Royal bank of Canada 7 – 7

Société Genéralé SA (5) – (5)

Toronto-Dominion Bank (99) – (99)

30 November 2017

CounterpartyForwards

£000’s

Inflation Swaps£000’s

Total Exposure

£000’s

Bank of America Merrill Lynch 14 – 14

Barclays Bank Plc (10) – (10)

Morgan Stanley & Co. International Plc 17 – 17

Toronto-Dominion Bank 1 – 1

Counterparties to open OTC FDIs with a value less than £500 are not shown in the above tables.

iii) Trustee and Custodian

The Fund’s Trustee and Custodian is The Bank of New York Mellon (International) Limited (the “Trustee” and “Custodian”).

The Trustee is liable to the Fund for the loss of financial instruments of the Fund which are held in custody as part of the Trustee’s safekeeping function. The liability of the Trustee will not be affected by the fact that it has entrusted the safekeeping function to the Custodian save where this liability is lawfully discharged to a delegate (any such discharge will be notified to unitholders) or where the loss of financial instruments arises as a result of an external event beyond reasonable control as provided for under AIFMD. The Trustee will not be indemnified out of the assets of the Fund for the loss of financial instruments where it is so liable. Substantially all of the investments other than FDIs of the Fund are held by the Custodian at year end.

i) Exchange Traded Financial Derivative Instruments

The Fund’s holdings in futures contracts expose the Fund to counterparty credit risk.

Management of counterparty credit risk related to futures contracts

The exposure is limited by trading the contracts through a clearing house. The Fund’s exposure to counterparty credit risk on contracts in which they currently have a gain position is reduced by such gains received in cash from the counterparty under the daily mark-to-market mechanism on exchange traded futures contracts (variation margin). The Fund’s exposure to credit risk in contracts in which they currently have a loss position is equal to the amount of margin posted to the counterparty which has not been transferred to the exchange under the daily mark-to-market mechanism. The counterparty for futures contracts is Goldman Sachs.

Margin is paid or received on futures to cover any exposure by the counterparty or the Fund to each other. Margin receivable from the Fund’s clearing brokers and various counterparties is included in “Cash and bank balances” on the Balance Sheet. Margin payable to the Fund’s clearing brokers and various counterparties is included in “Amounts held at futures clearing houses and brokers” on the Balance Sheet.

ii) Over-the-Counter (“OTC”) Financial Derivative Instruments (“FDIs”)

The Fund’s holdings in OTC FDIs also expose the Fund to counterparty credit risk.

Counterparty credit risk arises from the failure of the counterparty to perform according to the terms of the contract. The Fund’s exposure to counterparty credit risk is limited to the contracts in which it currently has a gain position reduced by the cash collateral received from the counterparty or to counterparties who have received collateral from the Fund.

Cash held as security by the counterparty to derivative contracts is subject to the credit risk of the counterparty.

The carrying value of financial assets together with cash best represents the Fund’s gross maximum exposure to counterparty credit risk at the reporting date, before including the effect of ISDA master agreements and close-out netting, which would reduce the overall counterparty credit risk exposure.

The Fund’s maximum exposure to counterparty credit risk from holding forward currency contracts will be equal to the notional amount of the currency and any net unrealised gains or losses as disclosed in the portfolio statement.

Management of counterparty credit risk related to OTC FDIs

Forward currency contracts do not require variation margins and thus the counterparty credit risk is monitored through the BlackRock RQA Counterparty & Concentration Risk Team who monitor the creditworthiness of the counterparty. The counterparties for forward currency contracts are disclosed in the portfolio statement.

The lowest credit rating of any one counterparty as at 30 November 2018 was BBB+ (30 November 2017: BBB+) (Standard & Poor’s rating).




Management Group.

The following tables detail the credit rating profile of the debt securities held by the Fund as a percentage of the NAV as at the Balance Sheet date:

30 November 2018

Investment grade%

Non-investment grade%

Not rated%

Total%

97.20 1.29 0.98 99.47

30 November 2017

Investment grade%

Non-investment grade%

Not rated%

Total%

97.40 1.55 0.61 99.56

c) Liquidity riskExposure to liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulties in meeting obligations associated with financial liabilities.

Liquidity risk to the Fund arises from the redemption requests of investors and the liquidity of the underlying investments the Fund is invested in. The Fund’s unitholders may redeem their units on the close of any daily dealing deadline for cash equal to a proportionate share of the Fund’s Net Asset Value. The Fund is therefore potentially exposed to the liquidity risk of meeting the unitholders’ redemptions and may need to sell assets at prevailing market prices to meet liquidity demands.

The Fund is also exposed to the liquidity risk of daily margin calls on derivatives.

All non-derivative financial liabilities including distributions payable held by the Fund as at 30 November 2018 and 30 November 2017, based on contractual maturities, fall due within one to three months.

Management of liquidity risk

Liquidity risk is minimised by holding sufficient liquid investments which can be readily realised to meet liquidity demands.

At times of excessive redemptions the Manager may decide to defer redemptions at any valuation point to the next valuation point where the requested aggregate redemptions exceed 10 per cent of the Fund’s value. This will therefore allow the Manager to protect the interests of continuing unitholders by allowing the Manager to match the sale of scheme property to the level of redemptions. This should reduce the impact of dilution on the Fund. All unitholders who have sought to redeem units at any valuation point at which redemptions are deferred will be treated consistently and any redemption requested received in the meantime will not be processed until the redemption requests that have been deferred to the subsequent valuation points have been processed.

Investments are segregated from the assets of the Custodian, with ownership rights remaining with the Fund. Bankruptcy or insolvency of the Custodian may cause the Fund’s rights with respect to its investments held by the Custodian to be delayed or limited. The maximum exposure to this risk is the amount of long investments disclosed in the portfolio statement.

The Fund will be exposed to the credit risk of the Custodian, or any depositary used by the Trustee regarding cash balances held in accounts with same. In the event of insolvency or bankruptcy of the Custodian or any depositary used by the Trustee, the Fund will be treated as a general creditor of the Trustee.

Management of counterparty credit risk related to the Trustee and Custodian

To mitigate the Fund’s credit risk with respect to the Trustee, the Investment Manager of the Fund employs specific procedures to ensure that the Trustee employed is a reputable institution and that the associated credit risk is acceptable to the Fund. The Fund only transacts with counterparties that are regulated entities subject to prudential supervision, or with high credit-ratings assigned by international credit-rating agencies.

The long term credit rating of the parent company of the Trustee and Custodian, The Bank of New York Mellon Corporation as at 30 November 2018 was A (30 November 2017: A) (Standard & Poor’s rating).

iv) Counterparties

All transactions in listed securities are settled/paid for upon delivery using approved brokers. The risk of default is considered minimal, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the securities have been received by the broker. The trade will fail if either party fails to meet its obligation.

Counterparty credit risk arising on transactions with brokers relates to transactions awaiting settlement. Risk relating to unsettled transactions is considered small due to the short settlement period involved and the high credit quality of the brokers used.

Management of counterparty credit risk related to Counterparties

The manager monitors the credit rating and financial position of the brokers used to further mitigate this risk.

v) Debt securities

Issuer credit risk is the default risk of one of the issuers of any securities held by the Fund.

Bonds or other debt securities involve credit risk to the issuer which may be evidenced by the issuer’s credit rating. Securities which are subordinated and/or have a higher credit risk have a greater possibility of default than more highly rated. The Fund invests into sovereign and corporate debt. This exposes the Fund to the risk that the issuer of the bonds may default on interest or principal payments.

Management of counterparty credit risk related to debt securities

To manage this risk the Investment Manager invests in a wide range of securities, subject to the investment objective of the Fund and monitors the credit ratings of the investments as disclosed in the portfolio statement. The ratings of the debt securities are continually monitored by the BlackRock Portfolio




The table below is an analysis of the Fund’s investment assets and investment liabilities measured at fair value at the Balance Sheet date.

Level 1£000’s

Level 2£000’s

Level 3£000’s

Total£000’s

30 November 2018

Investment assets 82,157 85,458 – 167,615

Investment liabilities (100) (266) – (366)

30 November 2017


Investment liabilities (72) (30) – (102)

Securities with a value less than £500 are not disclosed in the table above. These securities are identified on the portfolio statement.

e) LeverageThe Fund may employ leverage and borrow cash in accordance with their stated investment policy or investment strategy. The Fund may employ leverage in their investment programmes through various means including the use of FDIs.

The use of borrowings and leverage has associated risks and can, in certain circumstances, substantially increase the adverse impact to which the Fund’s investment portfolio may be subject.

For the purposes of this disclosure, leverage is any method by which the Fund’s exposure is increased, whether through borrowing of cash or securities, or leverage embedded in derivative positions, or by any other means. The AIFMD requires that each leverage ratio be expressed as the ratio between a Fund’s exposure and its net asset value (“NAV”) and prescribes two required methodologies, the gross methodology and the commitment methodology, for calculating such exposure using the methodologies prescribed under the AIFMD. The leverage ratios of the Fund are disclosed in the table below.

Gross exposure Commitment exposure

Maximum limitLeverage as

at 30.11.2018Leverage as

at 30.11.2017 Maximum limitLeverage as


at 30.11.2017

4.5:1 1.26:1 1.12:1 4.0:1 1.16:1 1.12:1

The maximum level of leverage which the Fund, or the Manager on the Fund’s behalf, is permitted to use as part of the Fund’s investment strategies is set out in the Scheme Particulars and in the above table.

The Fund’s liquidity risk is managed on a daily basis by the Investment Manager in accordance with established policies and procedures in place. The portfolio managers review daily forward looking cash reports which project cash obligations. These reports allow them to manage their cash obligations.

d) Valuation of financial instrumentsThe Fund classifies financial instruments measured at fair value using a fair value hierarchy. The fair value hierarchy has the following categories:

Level 1 – Quoted prices for identical instruments in active markets

A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The Fund does not adjust the quoted price for these instruments.

Level 2 – Valuation techniques using observable inputs

This category includes instruments valued using quoted prices in active markets for similar instruments; quoted prices for similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

Valuation techniques used for non-standardised financial instruments such as OTC derivatives, include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs and relying as little as possible on entity determined inputs.

Level 3 – Valuation techniques using significant unobservable inputs

This category includes all instruments where the valuation techniques used include inputs not based on market data and these inputs could have a significant impact on the instrument’s valuation.

This category also includes instruments that are valued based on quoted prices for similar instruments where significant entity determined adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market.

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement.

Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability. The determination of what constitutes ‘observable’ inputs requires significant judgement by the Investment Manager. The Investment Manager considers observable inputs to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.




5. Expenses


£000’s


£000’s

Payable to the Manager or associates of the Manager:

– Manager’s charge 730 857

730 857

Other expenses:

– Audit fee 3 3

– Legal and other professional fees 4 4

– Trustee’s fees 23 24

30 31

Total expenses 760 888

6. Interest Payable and Similar Charges


£000’s


£000’s

Interest on bank overdrafts 1 2

Interest paid on margin deposits – 2

Return from short position bond futures 93 102

Total interest payable and similar charges 94 106

3 Net Capital (Losses)/Gains


£000’s


£000’s

The net capital (losses)/gains comprise:

(Losses)/ gains on non derivative securities (3,437) 2,775

(Losses)/ gains on derivative securities (542) 84

Currency gains/(losses) 21 (20)

Net capital (losses)/gains (3,958) 2,839

Net losses (excluding transaction costs) listed above of £(3,958,000) comprise net realised gains of £432,000 and net unrealised losses of £(4,390,000) (30 November 2017: net gains of £2,839,000 comprising net realised gains of £5,591,000 and net unrealised losses of £(2,752,000)).

4. Revenue


£000’s


£000’s

Interest from Overseas fixed interest securities 1,024 1,297

Interest from UK bank deposits 2 1

Interest from UK fixed interest securities 2,482 2,596

Returns from bond futures 51 77

Revenue from short-term money market funds 4 6

Total revenue 3,563 3,977




8. Debtors

30.11.2018 £000’s

30.11.2017£000’s

Accrued revenue 2,818 2,885

Amounts receivable for issue of units 80 1

Currency sales awaiting settlement 27 –

Sales awaiting settlement 1,012 132

Total debtors 3,937 3,018

9. Cash and Bank Balances

30.11.2018 £000’s

30.11.2017£000’s

Amounts held at futures clearing houses and brokers 295 257

Cash and bank balances 233 1,407

Total cash and bank balances 528 1,664

10. Other Creditors

30.11.2018 £000’s

30.11.2017£000’s

Accrued Audit fee 3 3

Accrued Trustee's fee 4 4

Accrued Manager's charge 122 130

Amounts payable for cancellation of units 2 17

Currency purchases awaiting settlement 27 –

Purchases awaiting settlement 1,463 2,237

Total other creditors 1,621 2,391

11. Contingent Assets and LiabilitiesThere were no contingent assets or liabilities at the Balance Sheet date (30 November 2017: £Nil).

12. Efficient Portfolio Management TechniquesThe Fund engaged in derivative transactions for the purpose of both hedging and for the purpose of achieving the investment objective and policy of the Fund.

The Fund may, subject to the conditions and within the limits laid down by the FCA and the Scheme Particulars, engage in securities lending and employ techniques and instruments relating to transferable securities for efficient portfolio management purposes.

7. Distributions


£000’s


£000’s

Income Units

Distributions paid in respect of periods (pence per unit)

1.12.2017 – 28.2.2018 (2.00p) (2017, 2.00p) 1,713 1,815

1.3.2018 – 31.5.2018 (2.00p) (2017, 2.00p) 1,659 1,629

1.6.2018 – 31.8.2018 (2.00p) (2017, 2.00p) 1,681 1,625

1.9.2018 – 30.11.2018 (2.00p) (2017, 2.00p) 1,724 1,562

6,777 6,631

Accumulation Units

Income transferred to capital account in respect of periods (pence per unit)

1.12.2017 – 28.2.2018 (49.70p) (2017, 47.74p) 105 101

1.3.2018 – 31.5.2018 (50.22p) (2017, 48.22p) 105 100

1.6.2018 – 31.8.2018 (50.75p) (2017, 48.70p) 107 102

1.9.2018 – 30.11.2018 (51.28p) (2017, 49.19p) 108 103

425 406

7,202 7,037

Unapportioned:

Distribution Equalisation Reserve (Note 14) (156) (17)

7,046 7,020

Add: Amounts deducted on cancellation of units 184 227

Less: Amounts receivable on issue of units (272) (56)

Distributions 6,958 7,191

The distributable amount has been calculated as follows:


Add: Effective interest rate adjustment 3,519 3,351

Add: Manager's charge reimbursed by capital* 730 857


Details of the all distributions per unit are set out in the tables on page 18.* For distribution purposes 100% of the Manager’s charges are reimbursed by capital.




14. Distribution Equalisation Reserve

30.11.2018 £000’s

30.11.2017£000’s

Revenue brought forward 266 283

Net increase/ (decrease) in respect of units created and cancelled 88 (171)

(Decrease)/ increase in Revenue (244) 154

Revenue carried forward 110 266

The figure disclosed in the Statement of Change in Net Assets Attributable to Unitholders on page 26 represents the movement in the Revenue Carried Forward from prior year to the current year.

15. Portfolio Transaction CostsFor the year ended 30 November 2018

Direct Transaction Costs

Purchases (excluding derivatives)Transaction Value

£000’s Commissions

£000’s %Taxes

£000’s %

Debt instruments 291,151 – – – –

Total purchases 291,151 – –

Total purchases including transaction costs 291,151


Sales (excluding derivatives)Transaction Value


£000’s %Taxes

£000’s %


Total sales 276,788 – –

Total sales net of transaction costs 276,788

Derivative transaction costs 3 –

Total transaction costs 3 –

Total transaction costsas a % of average net assets 0.00% 0.00%

13. Related PartiesParties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions.

The following entities were related parties of the Fund during the year ended 30 November 2018:

Manager/Registrar: BlackRock Fund Managers Limited Investment Manager: BlackRock Investment Management (UK) Limited

The ultimate holding company of the Manager and Investment Manager is BlackRock Inc. (“BlackRock”), a company incorporated in Delaware, USA. PNC Financial Services Group Inc. (“PNC”) is a substantial shareholder in BlackRock. PNC did not provide any services to the Fund during the years ended 30 November 2018 and 30 November 2017.

The Manager acts as either principal or agent for the Trustee in respect of all transactions of units of the Fund. The aggregate monies received through creation and paid through cancellation of units are disclosed in the Statement of Change in Net Assets Attributable to Unitholders and note 7. Any amounts due to or from the Manager at the year end are disclosed in notes 8 and 10. Management fees paid to BlackRock Fund Managers Limited are shown in note 5. The balances due at the year end in respect of these fees are shown in note 10.

The Fund may invest in CIS, which may or may not be operated and/or managed by an affiliate of the Manager. As an investor in such CIS, in addition to the fees, costs and expenses payable by a unitholder in the Funds, each unitholder may also indirectly bear a portion of the fees, costs and expenses of the underlying CIS, including management, investment management and administration and other expenses. However, in respect of investments made in any investment fund whose manager is an affiliate of the Manager, the Fund will invest, where possible, in classes of the underlying funds which are not subject to any management charges. Alternatively, where this is not possible, the Manager will rebate management charges to the Fund. The Fund will not be subject to any preliminary/initial sales fee in respect of investments made in any investment fund whose manager is an affiliate of the Manager, although it may be subject to duties and charges in respect of subscriptions and redemptions in such investment funds.

The Fund’s investments in other BlackRock related products are detailed on the portfolio statement.

As at 30 November 2018 and 30 November 2017, none of the unitholders:

(i) are funds managed by the BlackRock Group or are affiliates of BlackRock Inc. or

(ii) are investors, other than those included in (i) above, who held 51% or more of the voting units in issue in the Fund and are as a result, considered to be related parties to the Fund.




16. Units in IssueThe movement in units in issue for the year ended 30 November 2018 is as follows:

Income Units

Accumulation Units

Balance at the beginning of the year 78,094,511 208,901

Issued during the year 24,142,445 7,254

Cancelled during the year (16,025,314) (5,138)

Balance at the end of the year 86,211,642 211,017

Revenue is allocated each day pro rata to the capital value of assets attributable to each class and taxation is computed by reference to the net revenue after expenses attributable to each class. The distribution per unit class is given in the distribution table. All unit classes have the same rights on winding up.

17. Post Balance Sheet EventsThere have been no significant events subsequent to the year end, which, in the opinion of the Manager, may have had an impact on the financial statements for the year ended 30 November 2018.

15. Portfolio Transaction Costs continued





£000’s %Taxes

£000’s %


Total purchases 236,205 – –





£000’s %Taxes

£000’s %

Debt instruments 263,186 1 – – –

Total sales 263,186 1 –


Derivative transaction costs 4 –

Total transaction costs 5 –


The above analysis covers direct transaction costs incurred by the Fund during the year. However it is important to understand the nature of other transaction costs associated with different investment asset classes and instruments types.

During the period the Fund utilised FDIs including forward currency contracts and futures. The settlement values for opening and closing derivative positions are not comparable to principal values for transactions in direct holding investments and therefore purchase and sale amounts for derivative transactions are not quantified in the analysis above. Transaction costs for derivatives positions will be either suffered as direct costs or form part of the dealing spread for the instruments. Any direct costs are identified in the analysis above.

Dealing spread costs suffered by the Fund vary considerably for the different asset / instrument types depending on a number of factors including transaction value and market sentiment.

At the balance sheet date the average portfolio dealing spread (difference between bid and offer prices of all investments expressed as a percentage of the offer price value) was 0.26% (30 November 2017: 0.24%).



Independent Auditor’s Report to the charity trustees of the Charinco Common Investment Fund

We have audited the financial statements of Charinco Common Investment Fund (“the Fund”) for the year ended 30 November 2018 which comprise the Statement of Total Return, the Statement of Change in Net Assets Attributable to Unitholders, Balance Sheet, Distribution Tables and the related notes 1 to 17, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 102 “The Financial Reporting standard applicable in the UK and Republic of Ireland”.

In our opinion the financial statements:

• give a true and fair view of the state of the financial position of the Fund as at 30 November 2018 and of the net revenue and the net capital losses on the scheme property of the Fund for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Charities Act 2011.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report below. We are independent of the Fund in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:• the manager’s use of the going concern basis of accounting in the preparation of the

financial statements is not appropriate; or

• the manager has not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Fund’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The manager is responsible for the other information.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Charities Act 2011 requires us to report to you if, in our opinion:

• the information given in the annual report is inconsistent in any material respect with the financial statements; or

• sufficient accounting records have not been kept; or

• the financial statements are not in agreement with the accounting records and returns; or

• we have not received all the information and explanations we require for our audit.

Responsibilities of the Manager

As explained more fully in the manager’s responsibilities statement set out on page 109, the manager is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the manager determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the manager is responsible for assessing the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Fund or to cease operations, or has no realistic alternative but to do so.


Auditor’s responsibilities for the audit of the financial statements

We have been appointed as auditor under section 144 of the Charities Act 2011 and report in accordance with the Act and relevant regulations made or having effect thereunder.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of Our Report

This report is made solely to the charity’s Trustees, as a body, in accordance with Part 4 of the Charities (Accounts and Reports) Regulations 2008. Our audit work has been undertaken so that we might state to the charity’s trustees those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Fund and the charity’s trustees as a body, for our audit work, for this report, or for the opinions we have formed.

Ernst & Young LLP LondonStatutory Auditor 25 January 2019

Ernst & Young LLP is eligible to act as an auditor in terms of section 1212 of the Companies Act 2006.

Charishare Investment Objective and Policy

The aim of Charishare (the “Fund”) is to achieve long term capital growth by investment predominantly in UK equities while at the same time providing an increasing income over the medium to long term to combat the effects of inflation.

The Fund was registered on 2 December 1986 as a charity (number 295634).

The Scheme Particulars set out investment restrictions that apply to this Fund.

Charishare Common Investment Fund (“Charishare”)


Performance Table





Accumulation Units

Charishare Common Investment Fund -1.9% +23.9% +38.3%

FTSE All-Share Index# -1.5% +22.6% +29.2%

Fund figures quoted are based on closing bid-to-bid prices. Figures are calculated net of fees. Performance returns are cumulative. All returns are in Sterling.# Figures from Index Vendor.


Charishare Common Investment Fund

Investment Report

Performance Summary The Fund returned -1.9%* over the year to 30 November 2018, underperforming the FTSE All-Share Index, which returned -1.5%. Over the six-month period to 30 November 2018, the Fund returned -8.4%, underperforming the FTSE All-Share Index, which returned -7.7%.

Market ReviewDespite a strong run up into the start of 2018, this year has brought a return of volatility to markets. UK equities have lagged global markets with headwinds including Brexit negotiations, which have brought a historic period of political chaos within the UK. A withdrawal agreement was agreed between the UK and the European Union but despite Prime Minister May surviving a vote of no confidence, there remains considerable skepticism about the Prime Minister’s ability to pass the deal through the House of Commons. Brexit related concerns have put pressure on sterling, which weakened against the US dollar and helped the FTSE 100 touch a new intra-day high in May. More recently, a sharp market sell-off from October affected equity markets globally and took the UK market into negative territory. There were many factors at play which have triggered the recent correction; rising bond yields, concerns around the pace of US interest rate rises, uncertainty over trade disputes and late-cycle concerns. The recent meeting between President Xi and President Trump at the G20 showed some inclination to de-escalate trade tensions and kept the US dollar from rising, but medium-term pessimism remains. Rising economic uncertainty, coinciding with near-term political risks and tightening financial conditions mean we expect volatility to remain a key feature in markets.

Performance and ActivityOver the past year, British American Tobacco detracted from performance as it was impacted by wider industry issues as investors assess the likely impact on companies of the move from combustible cigarettes to Next Generation Products and the increased regulation within the industry. The company will also be impacted by tax hikes on its products and is considering raising prices to help offset the profit effect and we reduced our holding during the period. TP ICAP also was a detractor as shares fell significantly over the period. The recent market volatility we have been seeing has failed to come through to revenue growth for TP ICAP as was expected but the real issues are on the cost side. The expectations for cost saving synergies have been revised downwards and interest and broker compensation costs are increasing, we sold our position in this holding during the period. BT has had a turbulent year with CEO Gavin Patterson stepping down. The company has faced profit warnings as the business is coming under pressure from multiple angles: increased competition in broadbrand reducing prices; large working capital outflows required including payments on provisions and the pension; and a historically poor relationship with the regulator. Overall cash flow is a problem for the business and with a fundamental change to the investment thesis, we sold our position in this holding during the period.


* Performance figures quoted are based on closing bid-to-bid prices and are not the same as the net asset value reported in the financial statements which is close of business. Performance is calculated net of fees and reported for the Fund’s Accumulation Units.



Performance and Activity continued

Infrastructure investor, John Laing, has seen strong share price rises over the period. Earlier in the period the company announced a rights issue to raise £210m for future investment and more recently they have confirmed that the pipeline for new investments continues to look encouraging for the rest of the year. The latest results demonstrated an increase to net asset value after a large gain on the disposal of one of their assets. Hiscox has been a strong performer over the 12-month period. They have benefited from strong growth in the US retail business and from an improving outlook for the London market business as prices have been gently rising in a sustainable way. More recently, this is starting to slow slightly, but underlying demand from partners and the direct channel remains strong and management continue to take sensible action in managing the business. Rio Tinto was a large positive contributor to performance over the period as both the company and the mining sector significantly outperformed the benchmark. The company is primarily a low-cost producer of iron ore where its balance sheet is in a much stronger position than many of its peers and has supported a good dividend and share buyback.

Over the course of the period we purchased emerging market exposed financial, Prudential, which we see as being set to benefit from financial deregulation in emerging markets as well as from the global rate environment. We purchased new positions in Whitbread, Associated British Foods and UK housebuilder Taylor Wimpey, and added to positions including in Reckitt Benckiser, Weir and GlaxoSmithKline. Competition for capital in the Fund remains high and these trades were therefore funded through reductions to Rio Tinto, British American Tobacco, Carnival and John Laing, where we have been taking profits. Additionally, we have sold positions in CRH, BT, Next, Compass and DS Smith.

OutlookThe outlook for the UK economy is more uncertain given ongoing Brexit negotiations in contrast to the acceleration in growth seen elsewhere. However, we believe these Brexit fears have provided us with the opportunity to own high quality franchises at attractive valuations. The UK is a hugely international market that is supported by very strong corporate governance, shareholder interaction, regulation, tax and accounting laws and transparency. This renders the UK market a fantastic hunting ground for some high quality international (and domestic) franchises listed on the UK market.

We continue to like cash generative consumer staple companies, especially those exposed to the emerging market consumer given the improvement in the trading backdrop in key markets such as India and Brazil. These companies often generate substantial cash flow which allows them to invest in innovation, marketing and distribution to ensure the longevity of their brands while also paying attractive and growing dividends to shareholders. We have also sought exposure to infrastructure and construction spend, both in the UK and overseas. US and European construction and infrastructure spend remains well below long-term averages and initiatives to boost this spend feature prominently in politicians’ manifestos. However, as the last few months have demonstrated, it is crucial to be selective when investing in these industries and to focus on the strong operators that provide a differentiated service and that boast a strong balance sheet.

December 2018

Charishare Common Investment Fund Charishare Common Investment Fund

Performance Record

Comparative Table










Opening net asset value per unit 629.4 561.3 523.3 1,840 1,597 1,448

Return before operating charges (7.62) 88.42 56.18 (24.78) 252.3 156.7


Return after operating charges (10.96) 85.18 53.42 (34.64) 243.0 149.0

Distributions (18.40) (17.08) (15.42) (54.35) (49.08) (43.11)


Closing net asset value per unit 600.0 629.4 561.3 1,805 1,840 1,597


Performance

Return after charges1 (1.74%) 15.18% 10.21% (1.88%) 15.22% 10.29%

Other information


Closing number of units 42,044,151 44,402,480 51,034,162 3,322,066 3,437,734 3,373,319




Highest offer unit price 683.9 661.0 595.9 2,011 1,914 1,682

Lowest bid unit price 598.5 552.5 456.7 1,766 1,572 1,263



3 Direct transaction costs are annualised and principally comprise commissions and taxes, attributable to the Fund’s purchase and sale of equity instruments. See note 14 for further details.

























UNITED KINGDOM – 99.31%; 30.11.2017 100.26%

EQUITIES – 90.70%; 30.11.2017 90.80%

Banks – 10.13%; 30.11.2017 8.61% 1,951,500 Barclays 3,177 1.02 1,258,010 HSBC 8,353 2.68 22,150,759 Lloyds Banking 12,260 3.93 1,282,038 Standard Chartered 7,809 2.50

31,599 10.13

Beverages – 0.00%; 30.11.2017 1.39%

Chemicals – 0.70%; 30.11.2017 0.98% 1,105,851 Elementis 2,170 0.70

Construction & Materials – 0.00%; 30.11.2017 2.35%

Financial Services – 8.00%; 30.11.2017 6.42% 728,633 3i 6,068 1.95 3,390,612 John Laing 11,087 3.55 193,811 London Stock Exchange 7,816 2.50

24,971 8.00

Fixed Line Telecommunications – 0.00%; 30.11.2017 2.46%

Food & Drug Retailers – 3.02%; 30.11.2017 2.53% 4,768,715 Tesco 9,418 3.02

Food Producers – 6.56%; 30.11.2017 4.11% 265,600 Associated British Foods 6,435 2.06 331,144 Unilever 14,052 4.50

20,487 6.56

Gas, Water & Multiutilities – 1.54%; 30.11.2017 1.17% 633,835 United Utilities 4,817 1.54

General Industrials – 0.00%; 30.11.2017 1.05%

General Retailers – 1.48%; 30.11.2017 3.45% 796,991 Inchcape 4,635 1.48

Household Goods & Home Construction – 4.55%; 30.11.2017 1.53% 167,752 Reckitt Benckiser 10,924 3.50 2,465,910 Taylor Wimpey 3,293 1.05

14,217 4.55







Industrial Engineering – 3.82%; 30.11.2017 2.47% 778,728 Bodycote 5,724 1.83 420,343 Weir 6,194 1.99

11,918 3.82

Life Insurance – 2.95%; 30.11.2017 0.00% 597,522 Prudential 9,202 2.95

Media – 7.19%; 30.11.2017 7.29% 1,008,443 Ascential 3,816 1.22 951,039 RELX 15,526 4.97 715,820 Rightmove 3,132 1.00

22,474 7.19

Mining – 4.16%; 30.11.2017 4.66% 365,315 Rio Tinto 13,000 4.16

Mobile Telecommunications – 1.72%; 30.11.2017 2.02% 3,182,088 Vodafone 5,376 1.72

Non-Life Insurance – 2.71%; 30.11.2017 4.73% 503,045 Hiscox 8,476 2.71

Oil & Gas Producers – 10.51%; 30.11.2017 9.34% 2,513,452 BP 13,070 4.19 824,167 Royal Dutch Shell class ‘B’ shares 19,743 6.32

32,813 10.51

Pharmaceuticals & Biotechnology – 9.22%; 30.11.2017 6.32% 154,768 AstraZeneca 9,467 3.03 768,161 GlaxoSmithKline 12,452 3.99 150,744 Shire 6,857 2.20

28,776 9.22

Real Estate Investment Trusts – 0.00%; 30.11.2017 1.18%

Support Services – 4.97%; 30.11.2017 4.98% 156,204 Ferguson 7,840 2.51 2,328,089 Rentokil Initial 7,680 2.46

15,520 4.97

Tobacco – 4.18%; 30.11.2017 7.39% 391,311 British American Tobacco 10,761 3.45 94,857 Imperial Brands 2,286 0.73

13,047 4.18


Travel & Leisure – 3.29%; 30.11.2017 4.37% 70,454 Carnival 3,208 1.03 153,600 Whitbread 7,062 2.26

10,270 3.29

COLLECTIVE INVESTMENT SCHEMES – 8.61%; 30.11.2017 9.46%

Equity Funds – 8.61%; 30.11.2017 9.46% 3,857,925 BlackRock Growth and Recovery Fund* 26,894 8.61

Portfolio of investments 310,080 99.31

CASH EQUIVALENTS

Short-term Money Market Funds – 0.87%; 30.11.2017 0.00% 2,726,804 Institutional Cash Series plc – Institutional Sterling

Liquidity Fund* 2,727 0.87

Net other liabilities (551) (0.18)


Unless otherwise stated, all securities are either listed on a recognised exchange or traded on an eligible securities market.* Managed by a related party.




Notes £000’s


£000’s £000’s


£000’s

Income


Revenue 4 12,670 13,145

Expenses 5 (2,098) (2,123)


Total return before distributions (4,238) 50,254

Distributions 6 (12,412) (12,880)

Change in net assets attributable to unitholders from investment activities (16,650) 37,374


Notes £000’s


£000’s £000’s


£000’s




(17,593) (39,253)

Stamp duty reserve tax (2) –


Retained distribution on accumulation units 1,819 1,697

Change in Distribution Equalisation Reserve 13 1,981 2,583



Balance Sheet at 30 November 2018

Notes

30.11.2018 £000’s

30.11.2017£000’s

Assets:

Fixed assets


Current assets

– Debtors 7 1,308 1,226

– Cash and bank balances 953 878

– Cash equivalents 8 2,727 17

Total assets 315,068 345,707

Liabilities:

Creditors

– Distributions payable (2,439) (2,553)

– Other creditors 9 (373) (453)

Total liabilities (2,812) (3,006)





Notes to Financial Statements continued




Accounting Policies


(b) Dividends on quoted ordinary shares and preference shares are recognised when the securities are quoted ex-dividend. Where such securities are not quoted, dividends are recognised when the right to receive payment is established.




The Fund receives Manager’s charge rebates from BlackRock related investments in the normal course of business. These are recognised on an accruals basis and are treated as revenue, unless it is the policy of the underlying fund to charge its fees to capital, in which case these rebates will be recognised as capital.

(c) Ordinary stock dividends are recognised wholly as revenue and are based on the market value of the shares on the date they are quoted ex-dividend. Where an enhancement is offered, the amount by which the market value of the shares (on the date they are quoted ex-dividend) exceeds the cash dividend is taken to capital.

(d) The underlying circumstances behind both special dividends and share buy backs are reviewed on a case by case basis in determining whether the amount is revenue or capital in nature. Any tax treatment will follow the accounting treatment of the principal amount.

(e) All expenses, except those relating to the purchase and sale of investments are charged against revenue. All expenses are recognised on an accruals basis.

(f) The investments of the Fund have been valued at market values, defined as fair value, which is usually bid value at close of business on the last business day of the accounting period. In the case of an investment which is not quoted, listed or dealt in on a recognised market, or in respect of which a listed, traded or dealt price or quotation is not available at the time of valuation, the fair value of such investment shall be estimated with care and in good faith by a competent professional person, body, firm or corporation including the Manager’s pricing committee and such fair value shall be determined on the basis of the probable realisation value of the investment. The Manager shall be entitled to adopt an alternative method of valuing any particular asset or liability if it considers that the methods of valuation set out above do not provide a fair valuation of a particular asset or liability.

Investments in dual priced CIS have been valued at market values, defined as fair value, which is usually bid value at the closing valuation point of the underlying fund on the last business day of the accounting period. Investments in single priced CIS have been valued at market values, defined as fair value, which is usually the quoted price at close of business on the last business day of the accounting period.


(g) Any transactions in foreign currencies are translated into Sterling at the rates of exchange ruling on the date of any such transaction. Assets and liabilities in foreign currencies are translated into Sterling at the exchange rates ruling at the close of business on the last business day of the accounting period. Revenue items in foreign currencies are translated into Sterling at the exchange rate when the revenue is received.

(h) Where appropriate, certain permitted financial instruments such as derivatives are used for efficient portfolio management. Where such financial instruments are used to protect or enhance revenue, the revenue and expenses derived therefrom are included in ‘Revenue’ in the Statement of Total Return. Where such financial instruments are used to protect or enhance capital, the gains and losses derived therefrom are included in ‘Net capital gains’ in the Statement of Total Return.

(i) Cash and bank balances consist of deposits held on call with banks and cash held with clearing brokers and counterparties. Cash equivalents are investments in non-variable net asset value money market funds that are readily convertible to known amounts of cash.


(j) The ordinary element of stock dividends is treated as revenue and forms part of the distribution.

(k) Special dividends and share buy backs recognised as revenue form part of the distribution.

(l) The Fund makes a distribution on a quarterly basis. In order to conduct a controlled dividend flow to unitholders, the Manager can operate a Distribution Equalisation Reserve Account in accordance with the terms of the Fund. This allows for a sum of up to 50% of the distribution available to be credited to the Distribution Equalisation Reserve for future distributions.

(m) Some or all the Management Charges are reimbursed by capital for distribution purposes. The amount reimbursed may vary between accounting periods.









a) Market riskMarket risk arises mainly from uncertainty about future values of financial instruments influenced by other price, currency and interest rate movements. It represents the potential loss the Fund may suffer through holding market positions in the face of market movements. The Fund is exposed to market risk by virtue of its investments in equities and investment funds.


















The other price risk inherent in holdings in CIS is monitored by the Investment Manager by understanding the investment objectives of the underlying funds as well as their internal control policies and regular risk and performance reporting.




The Fund is exposed to interest rate risk on its cash and bank balances held at The Bank of New York Mellon (International) Limited and its cash equivalent holdings. Cash held on deposit at The Bank of New York Mellon (International) Limited receives/incurs interest at the prevailing daily rate which may be negative depending on the currency in which the cash is held.

The Fund also has indirect exposure to interest rate risk through its investments into CIS, whereby the value of the underlying asset may fluctuate as a result of a change in interest rates.

At 30 November 2018 and 30 November 2017 no interest bearing investments were held by the Fund, hence no interest rate risk exposure table has been presented.













i) Trustee and Custodian


The Trustee is liable to the Fund for the loss of financial instruments of the Fund which are held in custody as part of the Trustee’s safekeeping function. The liability of the Trustee will not be affected by the fact that it has entrusted the safekeeping function to the Custodian save where this liability is lawfully discharged to a delegate (any such discharge will be notified to unitholders) or where the loss of financial instruments arises as a result of an external event beyond reasonable control as provided for under AIFMD. The Trustee will not be indemnified out of the assets of the Fund for the loss of financial instruments where it is so liable. All of the investments of the Fund are held by the Custodian at year end.







ii) Counterparties








All financial liabilities including distributions payable held by the Fund as at 30 November 2018 and 30 November 2017, based on contractual maturities, fall due within one to three months.





















Level 1£000’s

Level 2£000’s

Level 3£000’s

Total£000’s

30 November 2018


Investment liabilities – – – –

30 November 2017











at 30.11.2017

2.0:1 0.99:1 1.00:1 1.3:1 1.00:1 1.00:1





3. Net Capital (Losses)/Gains


£000’s


£000’s


(Losses)/ gains on non derivative securities (14,800) 39,232

Currency losses (10) –


Net losses listed above of £(14,810,000) comprise net realised gains of £7,324,000 and net unrealised losses of £(22,134,000) (30 November 2017: net gains of £39,232,000 comprising net realised gains of £26,181,000 and net unrealised gains of £13,051,000).

4. Revenue


£000’s


£000’s

Equity distributions on CIS holdings 222 330

Interest from UK bank deposits 5 –

Manager's charge rebates 329 319

Overseas dividends 646 384

Revenue from short-term money market funds 7 3

Stock dividends 79 34

UK dividends 11,382 12,002

US REIT dividends – 73


5. Expenses


£000’s


£000’s


– Manager’s charge 2,044 2,065

2,044 2,065

Other expenses:

– Audit fee 3 3

– Legal and other professional fees 4 8


54 58

Total expenses 2,098 2,123


6. Distributions


£000’s


£000’s

Income Units


1.12.2017 – 28.2.2018 (3.70p) (2017, 2.48p) 1,624 1,237

1.3.2018 – 31.5.2018 (4.40p) (2017, 4.35p) 1,995 2,023

1.6.2018 – 31.8.2018 (4.50p) (2017, 4.50p) 1,967 2,026

1.9.2018 – 30.11.2018 (5.80p) (2017, 5.75p) 2,439 2,553

8,025 7,839

Accumulation Units


1.12.2017 – 28.2.2018 (10.81p) (2017, 7.06p) 364 246

1.3.2018 – 31.5.2018 (12.94p) (2017, 12.43p) 438 428

1.6.2018 – 31.8.2017 (13.32p) (2017, 12.94p) 443 450

1.9.2018 – 30.11.2018 (17.28p) (2017, 16.66p) 574 573

1,819 1,697

9,844 9,536

Unapportioned:

Distribution Equalisation Reserve (Note 13) 1,981 2,583

11,825 12,119






Add: Manager's charge reimbursed by capital* 1,840 1,858


Details of the all distributions per unit are set out in the tables on page 55.* For distribution purposes 90% of Manager’s charges are reimbursed by capital.




7. Debtors

30.11.2018 £000’s

30.11.2017£000’s

Accrued Manager’s charge rebates 80 58

Accrued revenue 1,223 1,168

Sales awaiting settlement 5 –

Total debtors 1,308 1,226

8. Cash Equivalents

30.11.2018 £000’s

30.11.2017£000’s

Investment in short-term money market funds 2,727 17

Total cash equivalents 2,727 17

9. Other Creditors

30.11.2018 £000’s

30.11.2017£000’s




Purchases awaiting settlement – 88

Total other creditors 373 453







The Manager acts as either principal or agent for the Trustee in respect of all transactions of units of the Fund. The aggregate monies received through creation and paid through cancellation of units are disclosed in the Statement of Change in Net Assets Attributable to Unitholders and note 6. Any amounts due to or from the Manager at the year end are disclosed in notes 7 and 9. Management fees paid to BlackRock Fund Managers Limited are shown in note 5. The balances due at the year end in respect of these fees are shown in note 9. Management fee rebates received from BlackRock Fund Managers Limited are shown in note 4 with the balances due at year end in respect of these rebates shown in note 7.

For holdings in Institutional Cash Series plc (“ICS”), there will be no initial charges or redemption charges payable on investments in the Fund, however, duties and charges may apply. ICS will be subject to fees and expenses which may include fixed management fees, performance fees, administration fees and custodial fees.

The Fund may invest in other CIS, which may or may not be operated and/or managed by an affiliate of the Manager. As an investor in such other CIS, in addition to the fees, costs and expenses payable by a unitholder in the Funds, each unitholder may also indirectly bear a portion of the fees, costs and expenses of the underlying CIS, including management, investment management and administration and other expenses. However, in respect of investments made in any other investment fund whose manager is an affiliate of the Manager, the Fund will invest, where possible, in classes of the underlying funds which are not subject to any management charges. Alternatively, where this is not possible, the Manager will rebate management charges to the Fund. The Fund will not be subject to any preliminary/initial sales fee in respect of investments made in any other investment fund whose manager is an affiliate of the Manager, although it may be subject to duties and charges in respect of subscriptions and redemptions in such investment funds.








12. Efficient Portfolio Management TechniquesThe Fund may engage in derivative transactions for the purposes of efficient portfolio management.



30.11.2018 £000’s

30.11.2017£000’s

Revenue brought forward 6,948 4,365

Net decrease in respect of units created and cancelled (588) (761)

Increase in Revenue 2,569 3,344

Revenue carried forward 8,929 6,948







£000’s %Taxes

£000’s %

Equity instruments 100,662 50 0.05 5 0.01

Collective investment schemes 865 – – – –

Total purchases 101,527 50 5





£000’s %Taxes

£000’s %

Equity instruments 114,843 66 0.06 – –

Collective investment schemes 5,013 – – – –



Total transaction costs 116 5







At the Balance Sheet date the average portfolio dealing spread (difference between bid and offer prices of all investments expressed as a percentage of the offer price value) was 0.24% (30 November 2017: 0.77%).


Income Units

Accumulation Units

Balance at the beginning of the year 44,402,480 3,437,734



Balance at the end of the year 42,044,151 3,322,066 Revenue is allocated each day pro rata to the capital value of assets attributable to each class and taxation is computed by reference to the net revenue after expenses attributable to each class. The distribution per unit class is given in the distribution table. All unit classes have the same rights on winding up.







£000’s %Taxes

£000’s %







£000’s %Taxes

£000’s %



Total sales 117,293 60 1




The above analysis covers any direct transaction costs suffered by the Fund during the year. However it is important to understand the nature of other transaction costs associated with different investment asset classes and instruments types.

Separately identifiable direct transaction costs (commissions & taxes etc) are attributable to the Fund’s purchase and sale of equity shares. Additionally for equity shares there is a dealing spread cost (the difference between the buying and selling prices) which will be suffered on purchase and sale transactions.

For the Fund’s investment in collective investment scheme holdings there will potentially be dealing spread costs applicable to purchases and sales. However additionally there are indirect transaction costs suffered in those underlying funds, throughout the holding period for the instruments, which are not separately identifiable and do not form part of the analysis above.

Charishare Common Investment Fund Charishare Common Investment Fund


Independent Auditor’s Report to the charity trustees of the Charishare Common Investment Fund

We have audited the financial statements of Charishare Common Investment Fund (“the Fund”) for the year ended 30 November 2018 which comprise the Statement of Total Return, the Statement of Change in Net Assets Attributable to Unitholders, Balance Sheet, Distribution Tables and the related notes 1 to 16, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 102 “The Financial Reporting standard applicable in the UK and Republic of Ireland”.





Basis for opinion







Other information



















Use of Our Report




Charishare Restricted Investment Objective and Policy

The objective of Charishare Restricted (the “Fund”) is to achieve long-term capital growth. The Fund aims to achieve its objective by investing predominantly in UK equities.

The Fund may not invest in any company (listed on any stock exchange) which is engaged in the ownership of tobacco plantations or the production, manufacture or distribution of tobacco, cigarettes, other tobacco products or tobacco processing machinery; where:

(i) in relation to a company engaged in ownership, production or manufacture, the company’s annual turnover in relation to such activities is more than £1,000,000 or exceeds 1% of the company’s latest annual turnover or, if the company is part of a group, 1% of the group’s latest annual turnover;

(ii) in relation to a company engaged in distribution, the company’s annual turnover in relation to such activities exceeds 10% of the company’s latest annual turnover or, if the company is part of a group, 10% of the group’s latest annual turnover. The Fund may not invest in any company (listed on any stock exchange) which generates more than 5% of turnover from military sales. Investment in other collective investment schemes may only be made in the BlackRock Growth and Recovery Fund and not more than 10% of the property of the Fund may be so invested. Further investment restrictions are set out in the Scheme Particulars.

Trustees of charities should consider carefully their general legal powers and duties of investment as well as all applicable policies or guidance issued by the Charity Commission which may impact on their eligibility to invest in Charishare Restricted.

Charishare Restricted was registered on 29 May 1997 as a charity (number 1062581).

Charishare Restricted Common Investment Fund (“Charishare Restricted”)


Performance Table





Accumulation Units

Charishare Restricted +1.0% +27.0% +41.4%

FTSE Custom All Share ex Tobacco, ex Defence, ex Aerospace, ex Beverages & Investment Trusts Index#* -0.1% +24.5% +29.5%

Fund figures quoted are based on closing bid-to-bid prices. Figures are calculated net of fees. Performance returns are cumulative. All returns are in Sterling.# Figures from Index Vendor. * On 31 January 2018 the benchmark changed from FTSE All Share ex Tobacco, ex Investment Trusts, ex Aerospace & Defence Index to FTSE Custom All Share ex Tobacco, ex

Defence, ex Aerospace, ex Beverages & Investment Trusts Index.


Charishare Restricted Common Investment Fund

Investment Report

Performance Summary The Fund returned 1.0%* over the year to 30 November 2018, outperforming the composite benchmark†, which returned -0.1%. Over the six-month period to 30 November 2018, the Fund returned -6.8%, outperforming the composite benchmark, which returned -7.6%.

Market ReviewDespite a strong run up into the start of 2018, this year has brought a return of volatility to markets. UK equities have lagged global markets with headwinds including Brexit negotiations, which have brought a historic period of political chaos within the UK. A withdrawal agreement was agreed between the UK and the European Union but despite Prime Minister May surviving a vote of no confidence, there remains considerable skepticism about the Prime Minister’s ability to pass the deal through the House of Commons. Brexit related concerns have put pressure on sterling, which weakened against the US dollar and helped the FTSE 100 touch a new intra-day high in May. More recently, a sharp market sell-off from October affected equity markets globally and took the UK market into negative territory. There were many factors at play which have triggered the recent correction; rising bond yields, concerns around the pace of US interest rate rises, uncertainty over trade disputes and late-cycle concerns. The recent meeting between President Xi and President Trump at the G20 showed some inclination to de-escalate trade tensions and kept the US dollar from rising, but medium-term pessimism remains. Rising economic uncertainty, coinciding with near-term political risks and tightening financial conditions mean we expect volatility to remain a key feature in markets.

Performance and ActivityInfrastructure investor, John Laing, has seen strong share price rises over the period. Earlier in the period the company announced a rights issue to raise £210m for future investment and more recently they have confirmed that the pipeline for new investments continues to look encouraging for the rest of the year. The latest results demonstrated an increase to net asset value after a large gain on the disposal of one of their assets. Hiscox has been a strong performer over the 12-month period. They have benefited from strong growth in the US retail business and from an improving outlook for the London market business as prices have been gently rising in a sustainable way. More recently, this is starting to slow slightly, but underlying demand from partners and the direct channel remains strong and management continue to take sensible action in managing the business. Rio Tinto was a large positive contributor to performance over the period as both the company and the mining sector significantly outperformed the benchmark. The company is primarily a low-cost producer of iron ore where its balance sheet is in a much stronger position than many of its peers and has supported a good dividend and share buyback.


* Performance figures quoted are based on closing bid-to-bid prices and are not the same as the net asset value reported in the financial statements which is close of business. Performance is calculated net of fees and reported for the Fund’s Accumulation Units.

† The composite benchmark currently comprises of FTSE Custom All Share ex Tobacco, ex Defence, ex Aerospace, ex Beverages & Investment Trusts Index.



Performance and Activity continued

TP ICAP also was a detractor as shares fell significantly over the period. The recent market volatility we have been seeing has failed to come through to revenue growth for TP ICAP as was expected but the real issues are on the cost side. The expectations for cost saving synergies have been revised downwards and interest and broker compensation costs are increasing, we sold our position in this holding during the period. BT has had a turbulent year with CEO Gavin Patterson stepping down. The company has faced profit warnings as the business is coming under pressure from multiple angles: increased competition in broadbrand reducing prices; large working capital outflows required including payments on provisions and the pension; and a historically poor relationship with the regulator. Overall cash flow is a problem for the business and with a fundamental change to the investment thesis, we sold our position in this holding during the period. Weir has seen share price declines this year following a profit warning and downgrades in their Oil & Gas division. The division is facing near-term uncertainty and temporary issues with activity in the Permian slowing and shifting to other basins more aggressively than had been expected. Despite issues and higher cyclicality in the Oil & Gas division, we see the longer term structural story of shale as unchanged. The Minerals division, which makes up three quarters of Weir’s business is performing well, and the outlook remains attractive.

Over the course of the period we purchased emerging market exposed financial, Prudential, which we see as being set to benefit from financial deregulation in emerging markets as well as from the global rate environment. We purchased new positions in Whitbread, Associated British Foods and UK housebuilder Taylor Wimpey, and added to positions including in Weir, Rentokil and GlaxoSmithKline. Competition for capital in the Fund remains high and these trades were therefore funded through reductions to Rio Tinto, Carnival, Compass and John Laing, where we have been taking profits. Additionally, we have sold positions |in BT, CRH, Next, DS Smith and Admiral.

OutlookThe outlook for the UK economy is more uncertain given ongoing Brexit negotiations in contrast to the acceleration in growth seen elsewhere. However, we believe these Brexit fears have provided us with the opportunity to own high quality franchises at attractive valuations. The UK is a hugely international market that is supported by very strong corporate governance, shareholder interaction, regulation, tax and accounting laws and transparency. This renders the UK market a fantastic hunting ground for some high quality international (and domestic) franchises listed on the UK market.

We continue to like cash generative consumer staple companies, especially those exposed to the emerging market consumer given the improvement in the trading backdrop in key markets such as India and Brazil. These companies often generate substantial cash flow which allows them to invest in innovation, marketing and distribution to ensure the longevity of their brands while also paying attractive and growing dividends to shareholders. We have also sought exposure to infrastructure and construction spend, both in the UK and overseas. US and European construction and infrastructure spend remains well below long-term averages and initiatives to boost this spend feature prominently in politicians’ manifestos. However, as the last few months have demonstrated, it is crucial to be selective when investing in these industries and to focus on the strong operators that provide a differentiated service and that boast a strong balance sheet.

December 2018

Charishare Restricted Common Investment Fund Charishare Restricted Common Investment Fund

Performance Record

Comparative Table










Opening net asset value per unit 194.7 173.5 163.9 368.0 319.1 292.7

Return before operating charges 3.31 27.57 15.29 5.93 50.75 27.93


Return after operating charges 2.25 26.57 14.44 3.90 48.90 26.40

Distributions (5.85) (5.37) (4.84) (11.18) (9.97) (8.74)


Closing net asset value per unit 191.1 194.7 173.5 371.9 368.0 319.1


Performance

Return after charges1 1.16% 15.31% 8.81% 1.06% 15.32% 9.02%

Other information


Closing number of units 25,611,242 25,451,077 30,370,475 2,194,416 2,060,969 1,935,568




Highest offer unit price 214.6 205.0 182.6 408.1 383.8 333.1

Lowest bid unit price 187.2 171.0 140.8 356.0 314.3 251.4



3 Direct transaction costs are annualised and principally comprise commissions and taxes, attributable to the Fund’s purchase and sale of equity instruments. See note 13 for further details.

























UNITED KINGDOM – 99.27%; 30.11.2017 100.36%

EQUITIES – 90.88%; 30.11.2017 90.88%

Banks – 10.11%; 30.11.2017 9.00% 344,800 Barclays 561 0.98 255,313 HSBC 1,695 2.97 3,887,608 Lloyds Banking 2,152 3.77 224,600 Standard Chartered 1,368 2.39

5,776 10.11

Chemicals – 0.69%; 30.11.2017 1.03% 201,755 Elementis 396 0.69

Construction & Materials – 0.00%; 30.11.2017 2.34%

Financial Services – 8.19%; 30.11.2017 6.52% 142,170 3i 1,184 2.07 602,152 John Laing 1,969 3.45 37,703 London Stock Exchange 1,521 2.67

4,674 8.19

Fixed Line Telecommunications – 0.00%; 30.11.2017 2.85%

Food & Drug Retailers – 3.01%; 30.11.2017 2.73% 869,417 Tesco 1,717 3.01

Food Producers – 6.37%; 30.11.2017 4.67% 48,600 Associated British Foods 1,178 2.06 57,988 Unilever 2,461 4.31

3,639 6.37

Gas , Water & Multiutilities – 1.66%; 30.11.2017 1.16% 124,880 United Utilities 949 1.66

General Industrials – 0.00%; 30.11.2017 1.04%

General Retailers – 1.41%; 30.11.2017 3.50% 138,169 Inchcape 804 1.41

Household Goods & Home Construction – 4.88%; 30.11.2017 3.42% 33,307 Reckitt Benckiser 2,169 3.80 462,340 Taylor Wimpey 617 1.08

2,786 4.88







Industrial Engineering – 3.72%; 30.11.2017 2.43% 135,140 Bodycote 993 1.74 76,882 Weir 1,133 1.98

2,126 3.72

Life Insurance – 3.13%; 30.11.2017 0.00% 116,220 Prudential 1,790 3.13

Media – 7.31%; 30.11.2017 7.92% 190,800 Ascential 722 1.26 176,560 RELX 2,882 5.05 130,270 Rightmove 570 1.00

4,174 7.31

Mining – 4.54%; 30.11.2017 4.98% 72,779 Rio Tinto 2,590 4.54

Mobile Telecommunications – 1.75%; 30.11.2017 2.40% 590,714 Vodafone 998 1.75

Non-Life Insurance – 2.39%; 30.11.2017 4.64% 81,008 Hiscox 1,365 2.39

Oil & Gas Producers – 11.41%; 30.11.2017 10.18% 429,342 BP 2,233 3.91 178,657 Royal Dutch Shell class ‘B’ shares 4,280 7.50

6,513 11.41

Pharmaceuticals & Biotechnology – 9.64%; 30.11.2017 7.90% 31,017 AstraZeneca 1,897 3.32 134,085 GlaxoSmithKline 2,174 3.81 31,535 Shire 1,434 2.51

5,505 9.64

Real Estate Investment Trusts – 0.00%; 30.11.2017 1.30%

Support Services – 5.05%; 30.11.2017 5.17% 27,960 Ferguson 1,403 2.46 448,106 Rentokil Initial 1,478 2.59

2,881 5.05

Travel & Leisure – 5.62%; 30.11.2017 5.70% 12,877 Carnival 586 1.03 79,716 Compass 1,338 2.34 28,000 Whitbread 1,287 2.25

3,211 5.62


COLLECTIVE INVESTMENT SCHEMES – 8.39%; 30.11.2017 9.48%

Equity Funds – 8.39%; 30.11.2017 9.48% 687,250 BlackRock Growth and Recovery Fund* 4,791 8.39

Portfolio of investments 56,685 99.27Net other assets 419 0.73


Unless otherwise stated, all securities are either listed on a recognised exchange or traded on an eligible securities market.* Managed by a related party.




Notes £000’s


£000’s £000’s


£000’s

Income


Revenue 4 2,108 2,158

Expenses 5 (366) (349)


Total return before distributions 690 8,476

Distributions 6 (2,057) (2,113)



Notes £000’s


£000’s £000’s


£000’s




757 (8,714) Change in net assets attributable

to unitholders from investment activities (1,367) 6,363

Retained distribution on accumulation units 245 204

Change in Distribution Equalisation Reserve 12 326 408



Balance Sheet at 30 November 2018

Notes

30.11.2018 £000’s

30.11.2017£000’s

Assets:

Fixed assets


Current assets

– Debtors 7 234 211

– Cash and bank balances 728 119

Total assets 57,647 57,678

Liabilities:

Creditors

– Distributions payable (474) (458)

– Other creditors 8 (69) (77)

Total liabilities (543) (535)









Accounting Policies


(b) Dividends on quoted ordinary shares and preference shares are recognised when the securities are quoted ex-dividend. Where such securities are not quoted, dividends are recognised when the right to receive payment is established.




The Fund receives Manager’s charge rebates from BlackRock related investments in the normal course of business. These are recognised on an accruals basis and are treated as revenue, unless it is the policy of the underlying fund to charge its fees to capital, in which case these rebates will be recognised as capital.

(c) Ordinary stock dividends are recognised wholly as revenue and are based on the market value of the shares on the date they are quoted ex-dividend. Where an enhancement is offered, the amount by which the market value of the shares (on the date they are quoted ex-dividend) exceeds the cash dividend is taken to capital.

(d) The underlying circumstances behind both special dividends and share buy backs are reviewed on a case by case basis in determining whether the amount is revenue or capital in nature. Any tax treatment will follow the accounting treatment of the principal amount.

(e) All expenses, except those relating to the purchase and sale of investments are charged against revenue. All expenses are recognised on an accruals basis.

(f) The investments of the Fund have been valued at market values, defined as fair value, which is usually bid value at close of business on the last business day of the accounting period. In the case of an investment which is not quoted, listed or dealt in on a recognised market, or in respect of which a listed, traded or dealt price or quotation is not available at the time of valuation, the fair value of such investment shall be estimated with care and in good faith by a competent professional person, body, firm or corporation including the Manager’s pricing committee, and such fair value shall be determined on the basis of the probable realisation value of the investment. The Manager shall be entitled to adopt an alternative method of valuing any particular asset if it considers that the methods of valuation set out above do not provide a fair valuation of a particular asset or liability.

Investments in dual priced CIS have been valued at market values, defined as fair value, which is usually bid value at the closing valuation point of the underlying fund on the last business day of the accounting period.


(g) Any transactions in foreign currencies are translated into Sterling at the rates of exchange ruling on the date of any such transaction. Assets and liabilities in foreign currencies are translated into Sterling at the exchange rates ruling at the close of business on the last business day of the accounting period. Revenue items in foreign currencies are translated into Sterling at the exchange rate when the revenue is received.

(h) Where appropriate, certain permitted financial instruments such as derivatives are used for efficient portfolio management. Where such financial instruments are used to protect or enhance revenue, the revenue and expenses derived therefrom are included in ‘Revenue’ in the Statement of Total Return. Where such financial instruments are used to protect or enhance capital, the gains and losses derived therefrom are included in ‘Net capital gains’ in the Statement of Total Return.

(i) Cash and bank balances consist of deposits held on call with banks and cash held with clearing brokers and counterparties. Cash equivalents are investments in non-variable net asset value money market funds that are readily convertible to known amounts of cash.


(j) The ordinary element of stock dividends is treated as revenue and forms part of the distribution.

(k) Special dividends and share buy backs recognised as revenue form part of the distribution.

(l) The Fund makes a distribution on a quarterly basis. In order to conduct a controlled dividend flow to unitholders, the Manager can operate a Distribution Equalisation Reserve Account in accordance with the terms of the Fund. This allows for a sum of up to 50% of the distribution available to be credited to the Distribution Equalisation Reserve for future distributions.

(m) Some or all the Management charges are reimbursed by capital for distribution purposes. The amount reimbursed may vary between accounting periods.









a) Market riskMarket risk arises mainly from uncertainty about future values of financial instruments influenced by other price, currency and interest rate movements. It represents the potential loss the Fund may suffer through holding market positions in the face of market movements. The Fund is exposed to market risk by virtue of its investments in equities and collective investment schemes.


















The other price risk inherent in holdings in CIS is monitored by the Investment Manager by understanding the investment objectives of the underlying funds as well as their internal control policies and regular risk and performance reporting.




The Fund is exposed to interest rate risk on its cash and bank balances held at The Bank of New York Mellon (International) Limited. Cash held on deposit at The Bank of New York Mellon (International) Limited receives/incurs interest at the prevailing daily rate which may be negative depending on the currency in which the cash is held.

The Fund also has indirect exposure to interest rate risk through its investments into CIS, whereby the value of the underlying asset may fluctuate as a result of a change in interest rates.

At 30 November 2018 and 30 November 2017 no interest bearing investments were held by the Fund, hence no interest rate risk exposure table has been presented.













i) Trustee and Custodian


The Trustee is liable to the Fund for the loss of financial instruments of the Fund which are held in custody as part of the Trustee’s safekeeping function. The liability of the Trustee will not be affected by the fact that it has entrusted the safekeeping function to the Custodian save where this liability is lawfully discharged to a delegate (any such discharge will be notified to unitholders) or where the loss of financial instruments arises as a result of an external event beyond reasonable control as provided for under AIFMD. The Trustee will not be indemnified out of the assets of the Fund for the loss of financial instruments where it is so liable. All of the investments of the Fund are held by the Custodian at year end.







ii) Counterparties








All non-derivative financial liabilities including distributions payable held by the Fund as at 30 November 2018 and 30 November 2017, based on contractual maturities, fall due within one to three months.





















Level 1£000’s

Level 2£000’s

Level 3£000’s

Total£000’s

30 November 2018



30 November 2017











at 30.11.2017

2.0:1 0.99:1 1.00:1 1.3:1 1.00:1 1.00:1





3. Net Capital (Losses)/Gains


£000’s


£000’s


(Losses)/gains on non derivative securities (1,050) 6,667

Currency losses (2) –


Net losses listed above of £(1,052,000) comprise net realised losses of £(10,000) and net unrealised losses of £(1,042,000) (30 November 2017: net gains of £6,667,000 comprising net realised gains of £6,179,000 and net unrealised gains of £488,000).

4. Revenue


£000’s


£000’s

Equity distributions on CIS holdings 37 54

Interest from UK bank deposits 2 –

Manager's charge rebates 56 53

Overseas dividends 110 63

Stock dividends 13 6

UK dividends 1,890 1,982


5. Expenses


£000’s


£000’s


– Manager’s charge 351 338

351 338

Other expenses:

– Audit fee 3 3

– Legal & other Professional fees 4 –


15 11

Total expenses 366 349


6. Distributions


£000’s


£000’s

Income Units


1.12.2017 – 28.2.2018 (1.20p) (2017, 0.82p) 305 235

1.3.2018 – 31.5.2018 (1.40p) (2017, 1.37p) 367 355

1.6.2018 – 31.8.2018 (1.40p) (2017, 1.38p) 355 329

1.9.2018 – 30.11.2018 (1.85p) (2017, 1.80p) 474 458

1,501 1,377

Accumulation Units


1.12.2017 – 28.2.2018 (2.27p) (2017, 1.51p) 50 31

1.3.2018 – 31.5.2018 (2.66p) (2017, 2.53p) 58 52

1.6.2018 – 31.8.2018 (2.68p) (2017, 2.57p) 59 52

1.9.2018 – 30.11.2018 (3.57p) (2017, 3.37p) 78 69

245 204

1,746 1,581

Unapportioned:

Distribution Equalisation Reserve (Note 12) 326 408

2,072 1,989






Add: Manager's charge reimbursed by capital* 315 304


Details of the all distributions per unit are set out in the tables on page 85.* For distribution purposes 90% of Manager’s charges are reimbursed by capital.




7. Debtors

30.11.2018 £000’s

30.11.2017£000’s

Accrued Manager’s charge rebates 13 9

Accrued revenue 221 202

Total debtors 234 211

8. Other Creditors

30.11.2018 £000’s

30.11.2017£000’s




Purchases awaiting settlement – 14

Total other creditors 69 77


10. Efficient Portfolio Management TechniquesThe Fund may engage in derivative transactions for the purposes of efficient portfolio management.







The Manager acts as either principal or agent for the Trustee in respect of all transactions of units of the Fund. The aggregate monies received through creation and paid through cancellation of units are disclosed in the Statement of Change in Net Assets Attributable to Unitholders and note 6. Any amounts due to or from the Manager at the year end are disclosed in notes 7 and 8. Management fees paid to BlackRock Fund Managers Limited are shown in note 5. The balances due at the year end in respect of these fees are shown in note 8. Management fee rebates received from BlackRock Fund Managers Limited are shown in note 4 with the balances due at year end in respect of the rebates shown in note 7.

The Fund may invest in other CIS, which may or may not be operated and/or managed by an affiliate of the Manager. As an investor in such other CIS, in addition to the fees, costs and expenses payable by a unitholder in the Funds, each unitholder may also indirectly bear a portion of the fees, costs and expenses of the underlying CIS, including management, investment management and administration and other expenses. However, in respect of investments made in any other investment fund whose manager is an affiliate of the Manager, the Fund will invest, where possible, in classes of the underlying funds which are not subject to any management charges. Alternatively, where this is not possible, the Manager will rebate management charges to the Fund. The Fund will not be subject to any preliminary/initial sales fee in respect of investments made in any other investment fund whose manager is an affiliate of the Manager, although it may be subject to duties and charges in respect of subscriptions and redemptions in such investment funds.









30.11.2018 £000’s

30.11.2017£000’s

Revenue brought forward 1,028 620

Net increase/(decrease) in respect of units created and cancelled 15 (124)

Increase in Revenue 311 532

Revenue carried forward 1,354 1,028






£000’s %Taxes

£000’s %







£000’s %Taxes

£000’s %













£000’s %Taxes

£000’s %








£000’s %Taxes

£000’s %







The above analysis covers direct transaction costs incurred by the Fund during the year. However it is important to understand the nature of other transaction costs associated with different investment asset classes and instruments types.

Separately identifiable direct transaction costs (commissions & taxes etc) are attributable to the Fund’s purchase and sale of equity shares. Additionally for equity shares there is a dealing spread cost (the difference between the buying and selling prices) which will be suffered on purchase and sale transactions.

For the Fund’s investment in collective investment scheme holdings there will potentially be dealing spread costs applicable to purchases and sales. However additionally there are indirect transaction costs suffered in those underlying funds, throughout the holding period for the instruments, which are not separately identifiable and do not form part of the analysis above.


At the balance sheet date the average portfolio dealing spread (difference between bid and offer prices of all investments expressed as a percentage of the offer price value) was 0.24% (30 November 2017: 0.77%).


Charinco, Charishare and Charishare Restricted Common Investment Funds 106105 Charinco, Charishare and Charishare Restricted Common Investment Funds



Income Units

Accumulation Units

Balance at the beginning of the year 25,451,077 2,060,969



Balance at the end of the year 25,611,242 2,194,416

Revenue is allocated each day pro rata to the capital value of assets attributable to each class and taxation is computed by reference to the net revenue after expenses attributable to each class. The distribution per unit class is given in the distribution table. All unit classes have the same rights on winding up.



Independent Auditor’s Report to the charity trustees of the Charishare Restricted Common Investment Fund

We have audited the financial statements of Charishare Restricted Common Investment Fund (“the Fund”) for the year ended 30 November 2018 which comprise the Statement of Total Return, the Statement of Change in Net Assets Attributable to Unitholders, Balance Sheet, Distribution Tables and the related notes 1 to 15, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 102 “The Financial Reporting standard applicable in the UK and Republic of Ireland”.





Basis for opinion








Other information


















Use of Our Report





The Manager is responsible for keeping such accounting records as are necessary to enable it to prepare the financial statements for the Funds for each financial year. These financial statements must be prepared in accordance with generally accepted accounting principles to give a true and fair view of the state of affairs of the Funds at the year end and of the revenue for the year. The financial statements must comply with the Charities Act 2011, the Charities (Accounts and Reports) Regulations 2008 (“the Regulations”), the Scheme and, where relevant, should comply with the disclosure requirements of the current Statement of Recommended Practice for Authorised Funds issued by the Investment Management Association (subsequently The Investment Association).

The Manager’s duties and powers also include: instructing the Trustee on the cancellation of units; carrying out regular valuations of each Fund’s property and ensuring that units issued by each Fund are correctly priced; maintaining daily records of units purchased by the Manager or sold on behalf of the Trustee; and appointing the auditor of each Fund. The Manager is responsible for managing the investments of the Funds. The Manager has delegated certain functions with respect to the portfolio management of the assets of each Fund, the performance of certain risk management functions and the distribution of units to the Investment Manager, BlackRock Investment Management (UK) Limited. In addition, the Manager is required to make available all of the Manager’s records relating to the Funds for inspection by the Trustee.

Under the Scheme, the Trustee is responsible amongst other things for the custody and control of the property of the Funds, the collection of all income due to the Funds, and the claiming of any repayment of tax which may be due. The Trustee may create and cancel units in accordance with the instructions of the Manager (except where not permitted to by the Scheme Particulars). The Trustee will make distributions and allocations of income to unitholders as applicable.

The Trustee acts as the depositary of the Funds and, in doing so, shall comply with the terms of the Scheme and the provisions of the AIFMD (which means, collectively, Directive 2011/61/EU, as implemented 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 UK 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).

The Trustee also has the duty of supervision and oversight of the Manager’s compliance with the Scheme and the Scheme Particulars. In particular, the Trustee must be satisfied that the Manager is not exceeding his powers and that the Manager is maintaining adequate and proper records.

The Trustee is required to take all steps and execute all documents which are necessary to secure that purchases and sales of investments of the Funds are properly completed, and is required to exercise voting rights attaching to such investments as properly instructed by the Manager.

The Trustee is responsible for the appointment of the Registrar and for the supervision and oversight of the Registrar. The Trustee is responsible for supervision and oversight of any delegate which it appoints. The Trustee is responsible for the appointment and dismissal of persons engaged by the Trustee in connection with the Funds, for the making of an Annual Report on the discharge of its responsibilities for the management of the Funds, and is responsible for the authorisation of payments out of the property of the Funds of reasonable costs and expenses of the Advisory Committee. The Trustee is responsible for the winding up of the Funds.

Statement of Manager’s and Trustee’s Responsibilities

Under the Regulations, the Trustee has a duty to enquire into the conduct of the Manager in the management of the Funds in each accounting period and to report thereon to unitholders. A copy of the Trustee’s report is set out below.

The Funds require that annual reports, including audited financial statements, are sent to the Charity Commission and to all participants in the Funds.

Report of the Trustee

To the Unitholders of the Charinco, Charishare and Charishare Restricted Common Investment Funds

We confirm that in the Trustee’s opinion, the Manager has managed the Funds in all material respects in accordance with the limitations imposed on the investment and borrowing powers of the Manager and Trustee by the Schemes and by the Scheme Particulars, and otherwise in accordance with the provisions of the Schemes and the Scheme Particulars.

BNY Mellon Trust & Depositary London(UK) Limited 25 January 2019

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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.

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