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BLACKROCK HEDGE SELECTOR LTD: Interim Management Statement

BLACKROCK HEDGE SELECTOR LTD 
Interim Management Statement - period from 1 July 2012 to 30 September 2012 
To the members of BlackRock Hedge Selector Ltd 
This interim management statement has been produced solely to provide
additional information to shareholders as a body to meet the relevant
requirements of the UK Listing Authority's Disclosure & Transparency Rules. It
should not be relied on by any other party for any other reason. 
This interim management statement relates to the period from 1 July 2012 to 30
September 2012 and contains information that covers this period, and up to the
date of publication of this interim management statement. 
BlackRock Hedge Selector Ltd is a closed-ended investment company structured to
issue a range of classes of Feeder Fund Shares, each of which will provide
investors with exposure to the performance of an investment fund managed by
BlackRock. The Company had total assets of £60.9m at 30 September 2012. 
At present the Company only has one class of Feeder Fund Shares in issue, the
UK Emerging Companies Shares, which provides investors with exposure to the
performance of BlackRock UK Emerging Companies Hedge Fund Limited, a Cayman
Islands domiciled fund managed by BlackRock which was launched in May 2004 and
has a net asset value of $1.350 billion as at 30 September 2012 (source: 
BlackRock,
unaudited). 
In addition, the Company has in issue a class of Cash Fund Shares which
provide, via investment in the BlackRock Institutional Sterling Liquidity Fund
(a sub-fund of the Institutional Cash Series plc), exposure to a portfolio of
short-term money market instruments. At 30 September 2012, the Institutional
Sterling Liquidity Fund had a net asset value of £24.7 billion (source:
BlackRock, unaudited). The Cash Fund Shares are designed partly as a conversion
option for holders of Feeder Fund Shares who may wish, from time to time, to
reduce their exposure to the BlackRock UK Emerging Companies Hedge Fund. 
Stock Performance 
                            31 July     31 August 30 September      28 
September 
                               2012         2012          2012        2009 
to 30 
                                                                 September 
2012* 
                                                                          
                                                                           
UK Emerging Companies                                                          
Shares                                                                          
                                                                           
Share Price                      £1.195       £1.195      £1.2375             
n/a
Net Asset Value per share      £1.25305     £1.26439     £1.27584             
n/a 
Discount                           4.6%         5.5%         3.0%               
n/a
Share price performance          (0.4%)         0.0%         3.6%             
23.8%
NAV performance                    0.9%         0.9%         0.9%             
27.6%
NAV performance excluding          0.9%         0.9%         0.9%             
28.6%
launch costs                                                                   
Underlying hedge fund -           0.96%        0.90%        0.93%           
30.5%**
NAV performance                                                                
Cash Fund Shares                                                               
Share Price                    £0.99375     £1.00625     £1.00625             
n/a
Net Asset Value per share      £1.01802     £1.01805     £1.01806             
n/a
Discount                           2.4%         1.2%         1.2%               
n/a
Share price performance          (0.1)%         1.3%         0.0%              
0.6%
NAV performance                    0.0%         0.0%         0.0%              
1.8%
Underlying cash fund -            0.72%        0.66%        0.62%           
0.75%**
monthly gross annualised                                                       
yield                                                                           
*launch 28 September 2009
** based on published performance data from 30 September 2009 to 30 September 
2012 
Manager's Review 
UK Emerging Companies Shares 
The UK Emerging Companies NAV returned 2.7% over the three month period to 30
September 2012 in comparison to the underlying hedge fund, which returned 2.8%.
The share price increased by 3.2% over the same period and the share rating
stood at a discount of 3.0% at 30 September. 
The BlackRock UK Emerging Companies Hedge Fund is an equity long short fund
that focuses primarily on UK Small and Mid Cap Stocks but also invests up to
20% in FTSE 100 stocks. The Fund Managers use a bottom up fundamental approach
to build the portfolio and leverage off the wider UK Equity research platform
to drive investment decisions. The strategy seeks to identify companies with
strong management expertise that will generate superior growth rates over time.
The flexibility of smaller companies to adapt to changing market conditions is
a place to add value when researched and positioned appropriately. The Fund
seeks to 
maximize total returns while limiting correlation to the broad UK equity
market. We believe that the small and mid-cap UK market provides above-average
long term growth and our objective is achieved through a research-intensive
investment process and a risk-controlled, diversified portfolio. 
Portfolio characteristics 
Long Positions 86
Short Positions 89
Total Positions 175 
Top 10 Long Holdings 
Company Sector 
Aveva Group            Technology                 2.6%          
Oxford Instruments     Industrials                2.4%       
Senior Plc             Industrials                2.3%       
Booker Group           Consumer Services          2.0%       
Rathbone Brothers      Financials                 2.0%       
Ashtead Group          Industrials                1.9%       
Victrex                Basic Materials            1.9%       
SDL                    Technology                 1.9%       
Brammer                Industrials                1.8%       
Rotork Plc             Industrials                1.7%       
Total                                            20.6%             
Sector Breakdown 
Sector                        Long       Short       Net       Gross 
                             %           %         %           % 
                                                                
Basic materials                4.3       (2.2)       2.1         6.5
Consumer goods                 3.3       (2.4)       0.9         5.7
Consumer services             11.6       (9.1)       2.5        20.7
Financials                     7.0       (3.7)       3.3        10.7
Health Care                    2.8       (1.5)       1.3         4.3
Index                          0.0       (0.0)       0.0         0.0
Industrials                   25.1      (17.5)       7.6        42.6
Oil & Gas                      3.5       (1.0)       2.5         4.5
Technology                    10.5       (1.1)       9.4        11.6
Telecommunications             0.0       (0.5)     (0.5)         0.5
Utilities                      0.0       (0.4)     (0.4)         0.4
Total                         68.1      (39.4)      28.7       107.5 
Market Cap Breakdown 
Market cap                    Long       Short       Net       Gross 
                             %           %         %           % 
                                                                
Index                          0.0       (0.0)       0.0         0.0
0-0.1bn                        7.6       (0.0)       7.6         7.6
0.1-0.25bn                     8.0       (1.8)       6.2         9.8
0.25-0.5bn                     8.1       (6.5)       1.6        14.6
0.5-1bn                       18.2       (8.2)      10.0        26.4
1-2.5bn                       22.6      (11.0)      11.6        33.6
2.5bn +                        3.6      (11.9)     (8.3)        15.5
Total                         68.1      (39.4)      28.7       107.5 
Cash Fund Shares 
The Cash Fund NAV performance was flat over the three month period to 30
September 2012 and the share price had increased by 1.2%. 
The underlying Institutional Sterling Liquidity Fund seeks to maximise current
income consistent with the preservation of principal and liquidity through the
maintenance of a portfolio of high quality short-term "money market"
instruments, and returned an annualised yield of 0.67% over the three months to
30 September 2012. 
The portfolio invests exclusively in first-tier securities, which include
commercial paper, certificates of deposit, floating rate notes, time deposits
and fully collateralised repurchase agreements. The fund must maintain 50% of 
its 
holdings with a short term rating of A1+/P1 with the remainder in A1/P1. 
Portfolio characteristics 
Portfolio composition                     %        S&P Rating           % 
                                                                     
Financial Company Commercial Paper       33              A-1+          60
Certificates of Deposit                  21               A-1          40
Fixed or floating medium term notes*     20                              
Government Agency                         8                              
Time Deposits                             5                                
Asset backed Commercial Paper             5
Treasury debt                             5                         
Commercial paper                          3                              
Total                                   100                           100 
* Issued by banks or corporates 
Maturity distribution 
Days 
1-7 17%
8-30 18%
31-90 46%
91-180 18%
180+ days 1%
Total 100% 
Share Conversion between Share Classes 
The Company's Articles of Association provide for holders of UK Emerging
Companies Shares to convert all or part of their holding into Cash Fund Shares
on a quarterly basis. Conversion requests in respect of 1,562,400 shares were
received in respect of the September 2012 Share Conversion Date for UK Emerging
Companies Shares to be converted into Cash Fund Shares. Based on a conversion
factor of 1.252405, a total of 1,956,758 Cash Fund shares were issued, and
admitted to trading on 10 October 2012. The deadline for receipt of the
December 2012 conversion elections for the UK Emerging Companies Share Class
was 18 October 2012, and as at this date conversion elections had been
received in respect 2,675,000 UK Emerging Companies Shares. 
The deadline for the next UK Emerging Companies Shares conversion date of 31
March 2013 would normally be 19 January 2013, but as announced on 
15 November 2012, this conversion facility is not currently available. Further 
information is given below. 
Cash Fund Shareholders also previously had the ability to switch into UK 
Emerging Companies
Shares once a year on the September Conversion date. The deadline for Cash Fund
Shareholders to elect to convert into UK Emerging Companies Shares was 19
September 2012 and no Cash Fund Shareholders elected to convert. This facility 
is also 
unavailable at present as announced on 15 November 2012 and as detailed below.  
Material Events & Transactions 
Cash Fund Share Class - Breach of Public Hands Test 
As previously announced, and further to a transaction in the Company's 
Cash Fund Shares, the Cash Fund Shares ceased to be compliant with the 
“Public Hands” requirement of the UK Listing Rules (which, broadly, 
stipulates 
that 25 percent of the shares of each class in a listed company should be held 
by shareholders who are neither Directors nor holders who own more than a 5 
percent 
holding each). This development has been notified to the UK Listing Authority 
(`UKLA') and the Jersey Financial Services Commission.   Shares in the UK 
Emerging 
Companies Share Class remain compliant with the UK Listing Rules and retain 
their 
listed status. 
On 6 November 2012 the Company received a written notice on behalf of BNP 
Paribas 
Arbitrage ("BNPPA") requiring the Company to offer a Cash Exit to the holders 
of 
Cash Fund Shares. BNP Paribas Arbitrage is the holder of 3,799,634 Cash Fund 
Shares 
(which is equal to 97.98 per cent. of the total number of Cash Fund Shares in 
issue 
as at the date of this announcement). This Cash Exit was requested under 
the provision within the Company’s Articles of Association that stipulates 
that 
holders of the issued shares of any class may, with the consent in writing of 
the 
holders of two-thirds of the issued shares of that class, require the Directors 
to 
provide holders of the shares of that class with the opportunity to dispose of 
such 
shares for a cash amount equal to the proceeds of realising the net assets of 
the 
Company attributable to such shares (less the costs of implementing such 
disposal 
and any other deductions that the Directors consider appropriate). 
However, to address the fact that the Cash Fund Share Class is no longer 
compliant   
with the “Public Hands” requirements  of the UK Listing Rules, the Board 
announced 
on 15 November 2012 that, subject to the requisite regulatory approvals and 
clearances 
being obtained, and pursuant to the Company's Articles of Association, it 
currently 
intends to compulsorily redeem all Cash Fund Shares in issue after the next 
share conversion 
between the UK Emerging Company Shares and the Cash Fund Shares has been 
implemented on 31 
December 2012. This compulsory redemption is expected to be completed in 
January 2013.
Consequently, it will not be possible for shareholders to elect to convert UK 
Emerging Company 
Shares in to Cash Fund Shares at the March 2013 conversion date (the deadline 
for which has 
previously been announced as 19 January 2013), or to make subsequent conversion 
elections.  
The Board recognises the importance that shareholders place on the liquidity 
and discount 
control mechanism provided by the Cash Fund switching facility.   Given the 
developments 
outlined above, the Board is  considering proposals for an enhanced discount 
control and 
liquidity mechanism and a further announcement will be made as soon as 
practicable. 
Share buy backs 
On 24 August, the Company bought back 300,000 UK Emerging Companies Shares of 
no par value 
to be held in treasury at a price of 118.50p. 
Interim Dividend - Cash Fund Share Class 
An interim dividend of 1.805 pence per Cash Fund Share was declared on 25
October 2012, payable on 28 November 2012 to shareholders on the register on 2
November 2012 (ex-dividend date: 31 October 2012). 
Net Asset Value 
The Company announces its NAV on a weekly basis, which can be accessed via the
London Stock Exchange website. 
The unaudited net asset value, share price and share rating  for BlackRock 
Hedge 
Selector Ltd's respective Share Classes at close of business on 9 November 2012 
were: 
UK Emerging Companies Shares: 
NAV:127.541p
Share price:126.25p
Discount:1.0% 
Cash Fund Shares: 
NAV:99.965p
Share price:100p
Premium:0.04% 
Annual General Meeting 
The Company's third Annual General Meeting was held on 3 July 2012. All
resolutions were passed. 
Interim Results 
The Company announced its interim results for the 6 months ended 30 June 2012
on 21 August 2012. 
There were no other material events or transactions, except as disclosed above,
during the three months to 30 September 2012, or up to the date of this
announcement, nor was the Company involved in any other material transactions
during the period except the purchase and sale of securities undertaken in the
normal course of its business. 
BlackRock (Channel Islands) Limited
Secretary 
16 November 2012 
END 
-0- Nov/16/2012 16:32 GMT
 
 
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