BLACKROCK FRONTIERS INVESTMENT TRUST PLC: Portfolio Update

 BLACKROCK FRONTIERS INVESTMENT TRUST PLC  All information is at 30 June 2014 and unaudited.  Performance at month end with net income reinvested                              One     Three      Six      One   Three   Since                            month    months   months     year   years   launch* Sterling:  Share price                   -0.5%      2.1%     5.2%    16.4%   43.1%   31.1% Net asset value               -0.8%      7.9%     9.3%    18.6%   44.2%   34.8% MSCI Frontiers Index (NR)     -2.0%      9.1%    16.5%    20.8%   33.4%   24.2% MSCI EM Markets (NR)           0.7%      3.9%     2.8%     1.4%   -7.2%   -5.8% US Dollars: Share Price                    1.5%      4.7%     8.6%    31.2%   52.5%   44.1% Net asset value                1.2%     10.6%    13.0%    33.7%   53.7%   48.0% MSCI Frontiers Index (NR)     -0.1%     11.9%    20.2%    36.2%   42.1%   36.2% MSCI EM Markets (NR)           2.7%      6.6%     6.1%    14.3%   -1.2%    3.3%  Sources: BlackRock and Standard & Poor's Micropal * 17 December 2010.  At month end US Dollar: Net asset value - capital only:               202.02c Net asset value - cum income:                 205.80c Sterling: Net asset value - capital only:               118.14p Net asset value - cum income:                 120.35p Share price:                                  119.13p Total assets (including income):              £181.3m Discount to cum-income NAV:                      1.0% Gearing:                                          nil Gearing range (as a % of gross assets):         0-20% Net yield:                                       1.1% Ordinary shares in issue:                 150,621,621  *The Company's yield based on dividends announced in the last 12 months as at the date of the release of this announcement is 1.1% and includes the 2014 interim dividend of 2.25 cents per share announced on 20 May 2014 and payable to shareholders on 4 July 2014. However, as previously announced, a special dividend of 3.40c per share (representing the Company's earnings for the period from 1 April 2013 to 30 September 2013) was paid early in 2013 to avoid revenue dilution as a result of the Company's C-Share issue which was completed on 29 September 2013.  If this dividend had been paid as a final dividend for 2013, the Company's yield would be 2.8%.  Benchmark Sector Analysis   Gross assets(%)*         Country Analysis  Gross assets(%)*  Financials              31.2               Nigeria                    12.2 Energy                  18.2               Kuwait                     11.8 Telecommunications      14.5               Pakistan                    8.4 Consumer Staples        12.6               Bangladesh                  7.7 Consumer Discretionary   7.8               Saudi Arabia                7.0 Industrials              7.2               Iraq                        6.1 Health Care              6.9               Romania                     6.1 Materials                3.6               Kazakhstan                  6.0 Utilities                2.4               Sri Lanka                   5.7 Information Technology   2.2               Oman                        5.5                     -----               Argentina                   7.3 Total                  106.6               Ukraine                     4.8                     -----               Vietnam                     3.7 Short positions         -1.7               Turkmenistan                3.1                           =====               Morocco                     2.5                                            Slovenia                    2.4                                            Other                       6.3                                                                      -----                                                                      106.6                                                                      =====                                            Short positions            -1.7                                                                    ===== *reflects gross market exposure from contracts for difference (CFDs)  Market Exposure           31.07 31.08 30.09 31.10 30.11 31.12 31.01 28.02 31.03 30.04 31.05 30.06             2013  2013  2013  2013  2013  2013  2014  2014  2014  2014  2014  2014               %     %     %     %     %     %     %     %     %     %     %     % Long   103.2  98.9  98.8 100.4 100.5 103.3  96.6 101.8 101.6 101.6  98.0 106.6    Short    3.0   3.3   1.4   1.6   1.6   1.5   1.7   1.8   1.7   2.0   1.7   1.7    Gross  106.2 102.2 100.2 102.0 102.1 104.8  98.3 103.6 103.3 103.6  99.7 108.3    Net    100.2  95.6  97.4  98.8  98.9 101.8  94.9 100.0  99.9  99.6  96.3 104.9    Ten Largest Equity Investments  Company                           Country of Risk              % of Gross  Assets  Kuwait Food                        Kuwait                       5.1% Zenith Bank                        Nigeria                      4.8% Mobile Telecommunications          Kuwait                       4.7% Halyk Bank                         Kazakhstan                   3.9% BRD                                Romania                      3.7% MHP                                Ukraine                      3.6% Genel Energy                       Iraq                         3.4% Banco Macro                        Argentina                    3.2% Dragon Oil                         Turkmenistan                 3.1% Bank Muscat                        Oman                         3.0%  Commenting on the markets, Sam Vecht, representing the Investment Manager noted:  Markets  In June, the MSCI Frontier Market Index fell 0.1%. The benchmark return obscures a wide dispersion of return between individual constituent countries. (All calculations in US dollars with net income reinvested.)  The Buenos Aires bourse was the strongest performer during the month, rallying by 10%. President Christina Fernandez announced that the government were willing to negotiate with a bond holder who refused to participate in the debt restructuring following the country's default in 2001. A resolution to the long-running dispute has the potential to allow Argentina access to international capital markets and facilitate much needed investment in the country.   Kazakhstan was also a strong performer during June as the market rose by 8%. In response to a deteriorating economic environment, the government has brought forward reforms which aim to increase investment, particularly into the energy sector.  The weakest market during July was Bulgaria, falling by 10%, which suffered a run on its fourth largest bank, KTB. The run appeared to be politically motivated. The Trust does not have any direct exposure to Bulgaria.  Portfolio  In June, the Company's NAV increased by 1.2%, outperforming the index by 1.3% (on a US dollar basis with net income reinvested).  The strongest individual contribution to performance was Iraqi E&P energy company, Gulf Keystone, which rallied by 20%. Investors were cheered by the news that CEO and chairman, Todd Kozel, had stepped down, raising the prospects that boardroom unrest would be nearing a resolution.   Kyrgyzstan gold miner Centerra was also a strong performer in June, returning 46%. After a period of uncertainty, the Canadian listed company received the appropriate licences for its Kumtor mines. The stock rallied on this news and the team took profits, selling the holding before the end of the month  Detracting from relative performance over the month was Pakistani holding company, Engro, which also owns fertilizer assets. The stock fell by 15% on the back of an increase in regulated gas price announced as part of 2014-2015 government budget.  Activity  The Company re-initiated a position in internet company, Mercadolibre which is headquartered in Argentina and is eBay's equivalent in Latin America. We had previously held the stock and profited from a 50% rise in the stock price before selling the position. Following recent price weakness, we bought the stock which enjoys considerable leverage to rising internet penetration and online retail.  We also invested in Nigerian Financial UBA. We had previously held UBA till early 2013, and sold out after the stock had risen nearly threefold from its initial purchase cost. Subsequently the stock has underperformed the Nigerian market and is valued at an attractive discount to Nigerian peers, despite considerable efforts to improve underwriting standards and asset quality. UBA is valued at just 5 times forward price to earnings.  The Company initiated a position in Pakistan financial, United Bank Ltd, by participating in the current government's privatization of its remaining 19% stake, which was valued at an attractive discount. The bank is well positioned to benefit from accelerating loan growth in Pakistan and has a strong fee franchise as the domestic leader in inward remittances.  Outlook  The S&P500 is now entering its sixth consecutive year of positive returns - a rare phenomenon over the past century.  Financial markets appear to be entrenched in the belief that interest rates will remain low, anchored by dovish central banks in the US and EU and benign inflation trends. Bond yields globally remain near or at record low levels, and consequently some of the best performing Emerging Markets this year have been those characterised as the 'fragile five' given the dependence of their bond markets on foreign investment   flows. This growing belief in the perpetuity of low interest rates may lead to  renewed financial imbalances, as capital flows continue to seek high yield, at  the expense of liquidity or quality. This may cause a sharp reversal of certain asset prices at some stage.  Frontier Markets are relatively well positioned in this environment, as they are somewhat insulated from global capital flows given their underdeveloped financial markets and are driven more by indigenous economic and political developments. However, the surge of many relatively illiquid stocks, especially in the consumer sector, is a growing cause for concern. We much prefer the opportunities in markets such as Bangladesh, Romania, Saudi Arabia and Sri Lanka, where valuations remain attractive and economic prospects are robust or improving.  16 July 2014  ENDS  Latest information is available by typing www.blackrock.co.uk/brfi on the internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal). Neither the contents of the Manager's website nor the contents of any website accessible from hyperlinks on BlackRock's website (or any other website) is incorporated into, or forms part of, this announcement.  END 
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