Half-year Report

BLACKROCK COMMODITIES INCOME INVESTMENT TRUST PLC

The Company’s objectives are to achieve an annual dividend target and, over the long term, capital growth by investing primarily in securities of companies operating in the mining and energy sectors.

Details about the Company are available at blackrock.co.uk/brci

PERFORMANCE RECORD

FINANCIAL HIGHLIGHTS

Attributable to ordinary shareholders	31 May  2017  (unaudited)	30 November  2016  (audited)	Change  %
Assets
Net assets (£’000)*	87,895	98,833	-11.1
Net asset value per ordinary share	74.01p	83.57p	-11.4
– with income reinvested			-9.3
Ordinary share price (mid-market)	72.75p	82.75p	-12.1
– with income reinvested			-9.9
	========	========	========

	For the six  months  ended  31 May  2017  (unaudited)	For the six  months  ended  31 May  2016  (unaudited)	Change  %
Revenue
Net revenue after taxation (£’000)	3,224	2,478	30.1
Revenue return per ordinary share	2.72p	2.12p	28.3
	--------	--------	--------
Interim dividends
1st interim	1.00p	1.50p	-33.3
2nd interim**	1.00p	1.50p	-33.3
	========	========	========

*   The change in net assets reflects market movements and the issue of 500,000 shares during the period.

**  Paid on 21 July 2017.

PERFORMANCE TO 31 MAY 2017

	Six months	One year	Five years (actual)	Five years (annualised)
Net asset value per ordinary share	-9.3%	26.6%	-7.7%	-1.6%
Ordinary share price (mid-market)	-9.9%	24.9%	-11.6%	-2.4%

All performance calculations in the above table are on the basis that any dividends are reinvested on the ex-dividend date.  The net asset value performance ("NAV") calculations are based on a cum income NAV In sterling terms. Share price performance figures are calculated on a mid-market price in sterling terms.

CHAIRMAN’S STATEMENT

MARKET OVERVIEW

The first half of the year has seen price falls both in mining and energy equities, with the latter experiencing a period of oil price decline towards the end of the period under review as supply continued to be plentiful.  While there are few indications at present that the oil price will revive, there are some signs of improvement in other commodity prices with recoveries from 2016 lows, and many mining companies generating strong levels of free cash flow. Globally, the economic backdrop is starting to look more promising with indicators of concurrent growth throughout the world’s developed economies for the first time since 2008.

PERFORMANCE
During the six months ended 31 May 2017 the Company’s net asset value (“NAV”) per share fell by 9.3% and the share price fell by 9.9% (both percentages in sterling terms with income reinvested). Although the Company does not have a formal benchmark, to set this in the context of the market backdrop, the Euromoney Global Mining Index fell by 0.6% and the MSCI World Energy index fell by 8.1% over the same period (on a total return basis and in sterling terms). Further information on investment performance is given in the Investment Manager’s Report.

Since the period end and up until close of business on 26 July 2017 the Company’s NAV has increased by 4.3% and the share price has fallen by 1.7% (with income reinvested).

REVENUE RETURN AND DIVIDENDS
Revenue return per share for the six-month period was 2.72 pence (six months to 31 May 2016: 2.12 pence).  The Board’s current target is to declare quarterly dividends of at least 1.00 pence per share in the year to November 2017, making a total of at least 4.00 pence for the year as a whole. This target represents a yield of 5.5% based on the share price as at the close of business on 31 May 2017.

The first quarterly dividend of 1.00 pence per share was paid on 21 April 2017 and the second quarterly dividend of 1.00 pence per share was paid on 21 July 2017 to shareholders on the register on 23 June 2017 (2016: two quarterly interim dividends each of 1.50 pence per share and a further two quarterly interim dividends of 1.00 pence per share were paid).

TENDER OFFER
The Directors of the Company have the discretion to make semi-annual tender offers in February and August of each year at the prevailing NAV, less 2%, for up to 20% of the Company’s issued share capital.

The Directors announced on 13 June 2017 that over the twelve-month period to 31 May 2017 the Company’s shares had traded at an average discount to NAV of 2.8% (on a cum-income basis). Although this discount was slightly wider than 2.0% to NAV per share, the level at which any tender offer would be made, the Board concluded that it was not in the interests of shareholders to implement the tender offer in August 2017. In reaching this conclusion the Board was mindful of the size of the Company and did not believe that reducing this through a tender offer would be in the best interests of shareholders in the current circumstances.

GEARING
The Company operates a flexible gearing policy which depends on prevailing market conditions. It is not intended that gearing will exceed 20% of the gross assets of the Company. The maximum gearing used during the period, and the level of gearing at 31 May 2017 was 8.7%.

SHARE CAPITAL
The Company has continued to issue shares in response to investor demand and, during the period, issued 500,000 ordinary shares at a price of 87.60 pence per share for a total consideration of £438,000, before the deduction of issue costs. The shares were issued at an average premium of 2.04% to the cum income NAV at the close of business on the business day prior to each issue and at a premium to the estimated cum income NAV at the time of each transaction.

Since 31 May 2017, no further shares have been issued.

OUTLOOK

After a challenging period, the natural resources sector remains out of favour with investors. However, an improvement in mined commodity prices has allowed the mining companies to repair balance sheets and reinstate dividends, and the Investment Manager remains positive on the outlook for capital returns over the near to medium term. It has been more challenging in the energy sector but, given recent share price falls, a number of the energy companies are trading at more attractive valuations which have the potential to deliver significant upside over the next 1-2 years with the likelihood of higher oil prices over the medium term. While conditions are likely to remain volatile in the short term, should markets begin to acknowledge the relatively low valuations in the sector and anticipate a recovery in commodity prices, a re-rating of share prices over the medium to long term is to be expected.  The Company is well positioned to benefit from any such pick-up, providing balanced, diversified exposure to the sector with a defensively positioned, high quality portfolio. Further, following the dividend cuts seen across the Company’s investable universe in recent years, it is encouraging to note improved cash-flows for many mining companies, which are likely to feed through into an increase in dividend income received from the Company’s portfolio.

Ed Warner
28 July 2017

INTERIM MANAGEMENT REPORT AND RESPONSIBILITY STATEMENT

The Chairman’s Statement and the Investment Manager’s Report give details of the important events which have occurred during the period and their impact on the financial statements.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks faced by the Company can be divided into various areas as follows:

• Performance;

• Income/dividend;

• Gearing;

• Legal and regulatory compliance;

• Operational;

• Market; and

• Financial.

The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended 30 November 2016. These risks were expanded to include within the market risk section the risk that companies operating within the sectors in which the Company invests may be impacted by new legislation governing climate change and environmental issues, which may have a negative impact on their valuation and share price.  A detailed explanation can be found in the Strategic Report on pages 7 to 10 and in note 17 on pages 58 to 68 of the Annual Report and Financial Statements which are available on the website at blackrock.co.uk/brci.

In the view of the Board, there have not been any other changes to the fundamental nature of these risks since the previous report and these principal risks and uncertainties are equally applicable to the remaining six months of the financial year as they were to the six months under review.

GOING CONCERN
The Directors, having considered the nature and liquidity of the portfolio, the Company’s investment objective and the Company’s projected income and expenditure, are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future and is financially sound. For this reason, they continue to adopt the going concern basis in preparing the financial statements. The Company has a portfolio of investments which are considered to be readily realisable and is able to meet all of its liabilities from its assets and income generated from these assets. Ongoing charges (excluding interest costs and taxation) for the year ended 30 November 2016 were approximately 1.4% of net assets.

RELATED PARTY DISCLOSURE TRANSACTIONS WITH THE INVESTMENT MANAGER
BlackRock Fund Managers Limited (BFM) was appointed as the Company’s Alternative Investment Fund Manager (AIFM) with effect from 2 July 2014. BFM has, with the Company’s consent, delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Both BFM and BIM (UK) are regarded as related parties under the Listing Rules. Details of the management fee payable are set out in note 4 and note 11. The related party transactions with the Directors are set out in note 12.

DIRECTORS’ RESPONSIBILITY STATEMENT
The Disclosure and Transparency Rules (DTR) of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements.

The Directors confirm to the best of their knowledge that:

• the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting”; and

• the Interim Management Report together with the Chairman’s Statement and Investment Manager’s Report include a fair review of the information required by 4.2.7R and 4.2.8R of the FCA’s Disclosure and Transparency Rules.

This half yearly report has not been audited or reviewed by the Company’s Auditor. The half yearly financial report was approved by the Board on 28 July 2017 and the above responsibility statement was signed on its behalf by the Chairman.

Ed Warner
For and on behalf of the Board
28 July 2017

INVESTMENT MANAGER’S REPORT

MARKET OVERVIEW
The first half of 2017 was another turbulent time for the shares of mining companies and especially energy companies with both sectors delivering negative returns over the period. For the first time since the global financial crisis, the beginning of 2017 saw synchronised acceleration of economic growth across developed and emerging economies, with better than expected growth in the US and Europe and economic activity in China (as measured by the Purchasing Manager's Index ("PMI") building on the positive momentum from 2016, peaking in the first quarter of 2017. This saw the mining equities begin the year strongly +17% in mid-February, however, tightening measures put in place by the Chinese government at the end of the period to cool the economy saw the mining companies give up their gains.  Despite the spot price of most commodities falling over the half year period, as seen in the table below, it is important to note that the first half 2017 average prices were higher than the average prices in the second half of 2016. This has continued to improve the financial strength of the mining sector and build the foundation for an improvement in returns to shareholders, which we will discuss in further detail later. 

Oil prices declined by 2.2% to finish at US$48/bbl during the first half but were volatile, trading as low as US$45/bbl and as high as US$54/bbl. OPEC’s agreement at the end of November 2016 to cut production by 1.2 million barrels per day (mbpd) combined with non-OPEC producers agreeing to cut ~ 0.5mbpd, saw oil prices surge at the beginning of the year with WTI hitting US$54/bbl in January. However, this proved short lived as the US shale producers increased production, which caused the oil price to decline as the market was concerned that this would offset both the OPEC cuts and relatively robust demand for oil. The energy equities, especially the E&P sector, performed unusually poorly relative to the modest move down in the oil price and as detailed later in the report we see this as a significant investment opportunity on a one to two year view with the portfolio positioned increasingly towards oil price sensitive companies. 

	31 May	30 November	Change
Commodity	2017	2016	%
Base Metals (US$/tonne)
Aluminium	1,926	1,731	11.2%
Copper	5,658	5,813	-2.7%
Lead	2,099	2,351	-10.7%
Nickel	8,922	11,196	-20.3%
Tin	20,435	21,320	-4.2%
Zinc	2,587	2,688	-3.8%
Precious Metals (US$/oz)
Gold	1,268	1,174	8.0%
Silver	17.4	16.5	5.1%
Platinum	947.0	920	2.9%
Palladium	814.0	770	5.7%
Energy
Oil (WTI) (US$/bbl)	48	49	-2.3%
Oil (Brent) (US$/bbl)	50	50	-0.3%
Natural Gas (US$/MMBTU)	3.0	3.3	-9.1%
Uranium (US$/lb)	19	18	5.5%
Bulk Commodities (US$/tonne)
Iron ore	57	74	-22.4%
Coking coal	149	309	-51.7%
Thermal coal	73	87	-16.0%
Potash (US$/st)	216	215	0.5%
Equity Indices (Total Return)
Euromoney Global Mining Index (US$)	635	619	2.7%
Euromoney Global Mining Index (£)	890	895	-0.6%
MSCI World Energy Index (US$)	298	313	-5.1%
MSCI World Energy Index (£)	383	417	-8.1%

Sources: Datastream, Citi Research and Macquarie

INCOME
During the interim period the Company generated £4.0m in gross income. This enabled a dividend payment of 1.0 pence per share for the first and second quarters, a total of 2.0 pence per share for the interim period. After a tough period for the mining and energy sectors in 2015 that led to dividend cuts across the board, 2016 saw a dramatic positive change in the dividend outlook and the positive momentum continued in the first half of 2017.

During the last six months, the diversified miners have shown an ability and willingness to increase dividends to shareholders, for example, Rio Tinto announced a higher than expected dividend as well as a US$500m share buyback scheme. The energy companies have not been able to increase dividends given the ongoing weakness in the oil price.  However, they did not cut their dividends as aggressively as the mining companies did in 2014-15. In our view, even if the oil price rebounds to US$60/bbl over the remainder of the year, it is unlikely we would see widespread dividend increases from the energy companies in the short to medium term.

The environment for option writing was very attractive in the first quarter of the year so we modestly increased the level of option writing over the portfolio. In the second quarter the levels of volatility in the sector fell, meaning the amount of option premium received for selling options also fell therefore the level of option writing was reduced. Given the decline in the energy sector share prices towards the end of the period, the split of option selling between calls and puts was tilted towards puts to express our positive view on the market following the pullback.

PORTFOLIO POSITIONING
At the start of the year, the portfolio had a modest positive tilt to the energy sector as we wanted to increase our exposure following the OPEC production cuts announced at the end of 2016. Following the initial market optimism on the deal, the energy sector fell over 5% to the end of February (MSCI World Energy Total Return Index, US$) whereas the mining sector closed up 10% (having been up 19% at one point) over the same period. Following the strong performance of the miners we rotated some of the mining holdings into energy stocks and modestly increased the level of gearing in the last few months as we saw an increasingly broad array of attractive investment opportunities in the energy sector.

The focus of the energy holdings that we added to during the period were North American listed E&P companies. Although they do not have the same level of dividend appeal of the European listed integrated oil companies (e.g. Royal Dutch Shell), they hold a number of characteristics that on a two-year investment horizon are appealing. Firstly, they have a greater sensitivity (in terms of valuation) to the oil price – given we have a positive outlook on a two year view for the oil price, it is desirable for the portfolio to have a bias towards more oil price sensitive holdings. Secondly, the valuation of this subsector is attractive on a number of key metrics that we use to assess companies in the energy universe. Finally, a number of these companies are actively growing in the US shale sector – this gives, in our view, an opportunity for material growth over the next two years, which should help drive market-beating returns for companies that are successful in executing this strategy.

On the mining side the portfolio has retained its bias to the major diversified companies such as Rio Tinto, given their attractive free cash flow yield and desire to translate this into higher returns of capital to shareholders. Broadly speaking, free cash flow is rising across the sector; however it is not universal and this has resulted in a reduction or exit from holdings less exposed to this trend. For example, Norilsk Nickel (a position exited during the period) has faced a declining nickel price and strengthening rouble, which has impacted the company’s ability to reduce debt and there is a risk that future dividends will disappoint the market’s expectations. This is in stark contrast to most other major miners who have been reducing debt levels over the last twelve months and are positioned to positively surprise on returns to shareholders.

ENERGY

Although macroeconomic data and underlying oil demand was supportive at the beginning of the year, energy equities came under pressure as the oil price fell during the half. This weakness in the oil price was driven by a number of factors including lower than expected supply disruptions (with stronger production from Libya and Nigeria) and higher production from the US shale producers. This resulted in global inventories remaining stubbornly high, despite production cuts from some OPEC members and robust oil demand.  

We saw several transactions occur across the sector during the period that highlighted the industry’s focus on assets at the lower end of the cost curve. This is supportive of our portfolio’s positioning in the lower cost E&P and integrated producers. We remain confident in our view that the current oil price is unsustainably low and that higher prices will be needed to incentivise production necessary to meet medium term oil demand.

During the first half, energy equities performed poorly relative to the move in the underlying oil price with a number of US E&Ps falling by 20-40%. In our view, these companies are now trading well below medium-term fair value and therefore offer an attractive investment opportunity over the next 1-2 years as the fundamentals for the oil price improve and the market recognises the long term value in companies with high quality assets. In the short term there could still be further volatility in the share prices of these companies but unless our fundamentally positive outlook on the oil price changes, we would take any additional share price weakness as an opportunity to add selectively to the portfolio's holdings in these companies.   

MINING

Mining shares and underlying commodities began the year strongly with Chinese economic data surprising to the upside. However, tighter credit conditions in China that were imposed in March saw some profit taking with the mining shares and commodities giving back their earlier gains. While Chinese economic activity has been resilient, the market has been concerned that tighter credit could lead to a slowdown in economic activity in the second half of 2017. In our view, this negative sentiment is unwarranted with economic data and underlying trends from the key commodity consuming sectors in China, property and infrastructure, remaining positive.

The key theme from the mining sector’s 2016 year-end reports was the improvement in free cash flow from higher commodity prices and reduced spending on new projects. This has allowed companies to significantly strengthen balance sheets and begin returning cash to shareholders. Importantly, management teams have remained disciplined with limited increases in capital expenditure announced. We see the mining sector remaining in capital return mode for the next couple of years, which bodes well for dividends across the sector and should also underpin limited growth in the supply of most mined commodities in the near future.

In the precious metals space, the gold price increased by 8.0% to finish at US$1,268/oz. The macro environment has been mixed for gold with rising geopolitical tensions in North Korea and the Middle East supportive of the gold price, while rising US interest rates and reduced political risk in Europe following the French elections have been a headwind for the price of gold. The outlook for gold remains range bound into the second half of the year in the absence of a major global equity market correction or geopolitical event that might cause investors to meaningfully increase their demand for safe haven assets.

All returns are in US$ unless otherwise stated.

OUTLOOK
The rise in commodity prices over the last year has allowed the mining sector to repair balance sheets and reinstate dividends. We expect the mining sector’s performance to remain somewhat volatile in the near-term and linked to short-term changes in sentiment towards China.  In the medium to long-term, we expect positive company fundamentals of improved free cash flow and strong balance sheets to drive a re-rating of share prices.  The impact of the mining sector slashing capital expenditure and underinvesting in new projects over the past five years is beginning to be seen in the stagnation and even decline in the production of some mined commodities, which has helped tighten the balance between supply and demand, which is supportive for prices. We would expect this encouraging commodity backdrop to remain in the near future as there is a lack of development activity currently underway and very few projects that can be quickly brought online.  

Rebalancing in the oil market is taking longer than initially expected and oil prices are likely to remain range bound through to the end of 2017. However, on a two year view, we believe that oil prices are unsustainably low and will need to move higher to incentivise the investment required to offset the declines in non-OPEC, ex-US oil production. OPEC’s production cut is helpful in accelerating the rebalancing of the oil market, but the rebound in shale production has put a near-term cap on the oil price. We expect the trigger for an improvement in oil prices and energy equities to be meaningful declines in non-OPEC, ex-US production and subsequent declines in global inventories. The latter has already begun (albeit at a slower pace than we anticipated) and should accelerate through the second half of 2017. We believe the recent share price falls have left many energy companies trading below fair value and we have looked selectively to increase the energy exposure in the Company.

Olivia Markham and Tom Holl
BlackRock Investment Management (UK) Limited
28 July 2017

TEN LARGEST INVESTMENTS
as at 31 May 2017

First Quantum Minerals: 8.6%* (2016: 7.3%) is an established and rapidly growing mining company operating seven mines and developing five projects worldwide. The company is a significant copper producer and also produces nickel, gold, zinc and platinum group elements.

Royal Dutch Shell ‘B’: 6.8% (2016: 6.5%) is one of the world’s leading energy companies. The Anglo-Dutch company is active in every area of the oil and gas industry within exploration and production, refining and marketing, power generation and energy trading. The company also has renewable energy interests in biofuels.

Exxon Mobil: 4.7% (2016: 6.4%) is the world’s largest publicly traded international oil and gas company and the largest refiner and marketer of petroleum products.

Rio Tinto: 4.7% (2016: 5.1%) is one of the world’s leading mining companies. The company’s primary production is iron ore, but it also produces aluminium, copper, diamonds, gold, industrial minerals and energy products.

Glencore: 4.6% (2016: 2.4%) is a diversified miner with activities in mining, smelting, refining, processing and marketing of metals and minerals, energy products and agricultural products globally. In addition, the company provides financing, logistics, marketing and purchasing services to producers and consumers of commodities.

BP (formerly British Petroleum): 4.2% (2016: 3.6%) is one of the world’s leading international oil and gas companies. The company explores for and produces oil and natural gas, refines, markets and supplies petroleum products. It also generates solar energy and manufactures chemicals.

BHP Billiton: 3.7% (2016: 4.7%) is the world’s largest diversified natural resources company. The company is a major producer of aluminium, iron ore, copper, thermal and metallurgical coal, manganese, uranium, nickel, silver, titanium minerals and diamonds. The company also has significant interests in oil, gas and liquefied natural gas.

Newcrest Mining: 2.9% (2016: 2.4%) is an Australian-based corporation which engages in the exploration, development, mining and sale of gold and gold-copper concentrate. It is Australia’s leading gold mining company with international operations in locations including Indonesia and South America.

Enbridge Income Fund Trust: 2.8% (2016: 2.8%) is a Canadian listed company that is focused on energy infrastructure assets in North America. It has a strong commitment to paying cash flow out to shareholders, with a long term target of paying out approximately 80% of cash generated and available for distribution on a monthly basis.

Anadarko Petroleum: 2.8% (2016: 3.0%) is one of the world’s largest independent oil and natural gas exploration and production companies. Anadarko currently has production assets in the gulf of Mexico, US onshore, West and North Africa. The exploration portfolio includes assets in the production regions as well as East Africa and Colombia.

All percentages reflect the value of the holding as a percentage of total investments. For this purpose where more than one class of securities is held, these have been aggregated. The percentages in brackets represent the value of the holding as at 30 November 2016. Together, the ten largest investments represent 45.8% of total investments (ten largest investments as at 30 November 2016: 45.9%).

* 5.8% relates to fixed interest holdings in First Quantum Minerals.

DISTRIBUTION OF INVESTMENTS
as at 31 May 2017

ASSET ALLOCATION – GEOGRAPHY

Global                                               51.9%
USA                                                  19.5%
Canada                                             11.8%
Australia                                              5.1%
Latin America                                      4.6%
Europe                                                 2.7%
Africa                                                   2.5%
Mali                                                      1.5%
Asia                                                      0.4%

Source: BlackRock

ASSET ALLOCATION – COMMODITY

Energy                                             50.9%
Mining                                              49.1%

MINING

Diversified Mining                             19.7%
Gold                                                  11.0%
Copper                                               9.7%
Silver                                                  3.5%
Iron Ore                                              2.2%
Steel                                                   1.2%
Coal & Uranium                                  0.8%
Diamonds                                           0.6%
Fertilizers                                            0.4%

ENERGY

Integrated Oil                                  22.0%
Exploration & Production                19.5%
Distribution                                      3.9%
Oil Services                                     3.3%
Agricultural Science                        2.2%

Source: BlackRock.

INVESTMENTS
as at 31 May 2017

	Main geographic  exposure	Market  value  £’000	% of  investments
Integrated Oil
Royal Dutch Shell ‘B’	Global	6,454	6.8
Exxon Mobil	Global	4,527	4.7
BP	Global	4,011	4.2
ConocoPhillips	USA	2,440	2.6
ConocoPhillips Put Option 16/06/17	USA	(48)	(0.1)
Occidental Petroleum	USA	1,699	1.8
Statoil	Europe	1,107	1.2
Chevron	Global	802	0.8
		--------	--------
		20,992	22.0
		--------	--------
Diversified Mining
Rio Tinto	Global	4,491	4.7
Glencore	Global	4,398	4.6
BHP Billiton	Global	3,510	3.7
Vale	Latin America	2,341	2.4
South32	Global	1,517	1.6
Teck Resources	Canada	1,200	1.3
Teck Resources Put Option 16/06/17	Canada	(59)	(0.1)
Lundin Petroleum	Europe	902	0.9
Lundin Mining	Europe	602	0.6
Lundin Mining Put Option 16/06/17	Europe	(14)	–
		--------	--------
		18,888	19.7
		--------	--------
Exploration & Production
Anadarko Petroleum	USA	2,745	2.9
Anadarko Petroleum Put Option 16/06/17	USA	(76)	(0.1)
EOG Resources	USA	2,006	2.1
Hess	Global	1,721	1.8
Cimarex Energy	USA	1,721	1.8
Pioneer Natural Resources	USA	1,719	1.8
Noble Energy	Global	1,487	1.6
Devon Energy	USA	1,487	1.6
Encana	Canada	1,405	1.5
Marathon Oil	Global	1,374	1.4
Marathon Oil Put Option 16/06/17	Global	(119)	(0.1)
Laredo Petroleum	USA	1,023	1.1
Cabot Oil & Gas	USA	790	0.7
Cabot Oil & Gas Call Option 16/06/17	USA	(21)	–
Painted Pony Energy	Canada	681	0.7
Crescent Point Energy	Canada	587	0.6
International Petroleum	Global	53	0.1
		--------	--------
		18,583	19.5
		--------	--------
Gold
Newcrest Mining	Australia	2,817	2.9
Nevsun Resources	Africa	1,430	1.6
Randgold Resources	Mali	1,395	1.5
Agnico Eagle Mines	Canada	1,367	1.4
Newmont Mining	Global	1,039	1.1
Franco-Nevada	Global	949	1.0
Goldcorp	Canada	790	0.8
Eldorado Gold	Asia	422	0.4
Gold Fields	Africa	286	0.3
Gold Fields Call Option 16/06/17	Africa	(3)	–
AngloGold Ashanti	Global	7	–
Detour Gold	Canada	2	–
		--------	--------
		10,501	11.0
		--------	--------
Copper
First Quantum Minerals 7.25% 15 May 2022	Global	4,787	5.0
First Quantum Minerals	Global	2,743	2.8
First Quantum Minerals 7.5% 1 Apr 2025	Global	360	0.4
First Quantum Minerals 7.25% 1 Apr 2023	Global	349	0.4
First Quantum Minerals Call Option 16/06/17	Global	(15)	–
Avanco Resources	Latin America	1,085	1.1
		--------	--------
		9,309	9.7
		--------	--------
Distribution
Enbridge Income Fund Trust	Canada	2,678	2.8
TransCanada	Canada	1,017	1.1
		--------	--------
		3,695	3.9
		--------	--------
Silver
Wheaton Precious Metals	Global	1,779	1.9
Fresnillo	Latin America	1,046	1.1
Tahoe Resources	USA	515	0.5
Tahoe Resources Call Option 16/06/17	USA	(15)	–
		--------	--------
		3,325	3.5
		--------	--------
Oil Services
Baker Hughes	USA	1,405	1.5
Baker Hughes Call Option 16/06/17	USA	(7)	–
Superior Energy Services	USA	906	0.9
Precision Drilling	Canada	856	0.9
		--------	--------
		3,160	3.3
		--------	--------
Agriculture Science
Monsanto	Global	2,091	2.2
		--------	--------
		2,091	2.2
		--------	--------
Iron Ore
Fortescue Metals	Australia	2,060	2.2
		--------	--------
		2,060	2.2
		--------	--------
Steel
Arcelormittal	Global	1,160	1.2
		--------	--------
		1,160	1.2
		--------	--------
Coal & Uranium
Cameco	Canada	763	0.8
Cameco Call Option 16/06/17	Canada	(10)	–
		--------	--------
		753	0.8
		--------	--------
Diamonds
Petra Diamonds 7.25% 1 May 2022	Africa	610	0.6
		--------	--------
		610	0.6
		--------	--------
Fertilizers
CF Industries Holdings	USA	424	0.4
		--------	--------
		424	0.4
		--------	--------
Oil Sands
Suncor Energy Put Option 16/06/17	Canada	(3)	–
		--------	--------
		(3)	–
		--------	--------
Industrial Resources
Iluka Resources OTC Put Option 29/06/17	Australia	(38)	–
		--------	--------
		(38)	–
		--------	--------
Portfolio		95,510	100.0
		========	========
Comprising:
Equity and debt investments		95,938	100.4
Derivative financial instruments – written options		(428)	(0.4)
		--------	--------
		95,510	100.0
		========	========

All investments are ordinary shares unless otherwise stated. The total number of holdings (including options) at 31 May 2017 was 72 (30 November 2016: 70).

The total number of open options as at 31 May 2017 was 13 (30 November 2016:16).

The negative valuations of £428,000 in respect of options held represent the notional cost of repurchasing the contracts at market prices as at 31 May 2017.

As at 31 May 2017, the Company did not hold any equity interests comprising more than 3% of any company’s share capital.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 May 2017

	Notes	Revenue £’000			Capital £’000			Total £’000
		Six  months  ended  31.05.17  (unaudited)	Six  months  ended  31.05.16  (unaudited)	Year  ended  30.11.16  (audited)	Six  months  ended  31.05.17  (unaudited)	Six  months  ended  31.05.16  (unaudited)	Year  ended  30.11.16  (audited)	Six  months  ended  31.05.17  (unaudited)	Six  months  ended  31.05.16  (unaudited)	Year  ended  30.11.16  (audited)
Income from investments held at fair value through profit or loss	3	1,810	1,476	2,836	–	–	–	1,810	1,476	2,836
Other income	3	2,198	1,610	3,694	–	–	–	2,198	1,610	3,694
		--------	--------	--------	--------	--------	--------	--------	--------	--------
Total revenue		4,008	3,086	6,530	–	–	–	4,008	3,086	6,530
		--------	--------	--------	--------	--------	--------	--------	--------	--------
(Loss)/profit on investments held at fair value through profit or loss		–	–	–	(11,770)	3,709	29,133	(11,770)	3,709	29,133
(Loss)/profit on foreign exchange		–	–	–	(29)	92	723	(29)	92	723
		--------	--------	--------	--------	--------	--------	--------	--------	--------
Total		4,008	3,086	6,530	(11,799)	3,801	29,856	(7,791)	6,887	36,386
		--------	--------	--------	--------	--------	--------	--------	--------	--------
Expenses
Investment management fee	4	(126)	(84)	(201)	(377)	(252)	(602)	(503)	(336)	(803)
Other operating expenses	5	(169)	(137)	(279)	(2)	(2)	(6)	(171)	(139)	(285)
		--------	--------	--------	--------	--------	--------	--------	--------	--------
Total operating expenses		(295)	(221)	(480)	(379)	(254)	(608)	(674)	(475)	(1,088)
		--------	--------	--------	--------	--------	--------	--------	--------	--------
Net profit/(loss) before finance costs and taxation		3,713	2,865	6,050	(12,178)	3,547	29,248	(8,465)	6,412	35,298
Finance costs	6	(51)	(9)	(64)	(38)	(26)	(36)	(89)	(35)	(100)
		--------	--------	--------	--------	--------	--------	--------	--------	--------
Net profit/(loss) on ordinary activities before taxation		3,662	2,856	5,986	(12,216)	3,521	29,212	(8,554)	6,377	35,198
Taxation		(438)	(378)	(789)	–	(57)	(146)	(438)	(435)	(935)
		--------	--------	--------	--------	--------	--------	--------	--------	--------
Net profit/(loss) for the period	8	3,224	2,478	5,197	(12,216)	3,464	29,066	(8,992)	5,942	34,263
		========	========	========	========	========	========	========	========	========
Earnings/(loss) per ordinary share (pence)	8	2.72p	2.12p	4.43p	(10.29p)	2.96p	24.75p	(7.57p)	5.08p	29.18p
		========	========	========	========	========	========	========	========	========

The total column of this statement represents the Group’s Consolidated Statement of Comprehensive Income, prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies (AIC). All items in the above statement derive from continuing operations. No operations were acquired or disposed of during the period.

The Group does not have any other comprehensive income. The net profit/(loss) disclosed above represents the Group’s total comprehensive income/(loss).

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 May 2017

	Note	Called-up  share  capital	Share  premium  account	Special  reserve	Capital  reserves	Revenue  reserve	Total
		£’000	£’000	£’000	£’000	£’000	£’000
For the six months ended 31 May 2017 (unaudited)
At 30 November 2016		1,183	46,395	71,223	(22,479)	2,511	98,833
Total comprehensive income:
Net (loss)/profit for the period		–	–	–	(12,216)	3,224	(8,992)
Transactions with owners, recorded directly to equity:
Share issues	9	5	432	–	–	–	437
Share issue costs		–	(7)	–	–	–	(7)
Dividends paid (a)	7	–	–	–	–	(2,376)	(2,376)
		--------	--------	--------	--------	--------	--------
At 31 May 2017		1,188	46,820	71,223	(34,695)	3,359	87,895
		--------	--------	--------	--------	--------	--------
For the six months ended 31 May 2016 (unaudited)
At 30 November 2015		1,156	44,837	71,223	(51,545)	3,759	69,430
Total comprehensive income:
Net profit for the period		–	–	–	3,464	2,478	5,942
Transactions with owners, recorded directly to equity:
Share issues		24	1,314	–	–	–	1,338
Share issue costs		–	1	–	–	–	1
Dividends paid (b)	7	–	–	–	–	(3,496)	(3,496)
		--------	--------	--------	--------	--------	--------
At 31 May 2016		1,180	46,152	71,223	(48,081)	2,741	73,215
		--------	--------	--------	--------	--------	--------
For the year ended 30 November 2016 (audited)
At 30 November 2015		1,156	44,837	71,223	(51,545)	3,759	69,430
Total comprehensive income:
Net profit for the year		–	–	–	29,066	5,197	34,263
Transactions with owners, recorded directly to equity:
Share issues		27	1,559	–	–	–	1,586
Share issue costs		–	(8)	–	–	–	(8)
Tender issue costs rebated		–	7	–	–	–	7
Dividends paid (c)	7	–	–	–	–	(6,445)	(6,445)
		--------	--------	--------	--------	--------	--------
At 30 November 2016		1,183	46,395	71,223	(22,479)	2,511	98,833
		--------	--------	--------	--------	--------	--------

(a)   4th interim dividend of 1.00 pence per share for the year ended 30 November 2016, declared on 16 December 2016 and paid on 20 January 2017 and 1st interim dividend of 1.00 pence per share for the year ended 30 November 2017, declared on 14 March 2017 and paid on 21 April 2017.

(b)   4th interim dividend of 1.50 pence per share for the year ended 30 November 2015, declared on 17 December 2015 and paid on 22 January 2016 and 1st interim dividend of 1.50 pence per share for the year ended 30 November 2016, declared on 14 March 2016 and paid on 21 April 2016.

(c)   4th interim dividend of 1.50 pence per share for the year ended 30 November 2015, declared on 17 December 2015 and paid on 22 January 2016, 1st interim dividend of 1.50 pence per share for the year ended 30 November 2016, declared on 14 March 2016 and paid on 21 April 2016, 2nd interim dividend of 1.50 pence per share for the year ended 30 November 2016, declared on 14 June 2016 and paid on 22 July 2016 and 3rd interim dividend of 1.00 pence per share for the year ended 30 November 2016, declared on 12 September 2016 and paid on 21 October 2016.

Costs relating to the acquisition and disposal of investments amounted to £107,000 and £12,000 respectively for the six months ended 31 May 2017 (six months ended 31 May 2016: £67,000 and £28,000; year ended 30 November 2016: £162,000 and £81,000). All transaction costs have been included within the capital reserves.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 May 2017

	Notes	31 May  2017  £’000  (unaudited)	31 May  2016  £’000  (unaudited)	30 November  2016  £’000  (audited)
Non current assets
Investments held at fair value through profit or loss		95,938	75,578	103,127
		--------	--------	--------
Current assets
Other receivables		441	1,199	916
Cash and cash equivalents		8,627	4,125	7,208
Collateral held on margin deposit with brokers		1,906	1,556	2,990
		--------	--------	--------
		10,974	6,880	11,114
		--------	--------	--------
Total assets		106,912	82,458	114,241
		--------	--------	--------
Current liabilities
Other payables		(858)	(3,449)	(3,239)
Derivative financial instruments held at fair value through profit or loss		(428)	(292)	(482)
Bank overdraft		(17,731)	(5,502)	(11,687)
		--------	--------	--------
		(19,017)	(9,243)	(15,408)
		--------	--------	--------
Net current liabilities		(8,043)	(2,363)	(4,294)
		--------	--------	--------
Net assets		87,895	73,215	98,833
		--------	--------	--------
Equity attributable to equity holders
Called up share capital	9	1,188	1,180	1,183
Share premium account		46,820	46,152	46,395
Special reserve		71,223	71,223	71,223
Capital reserves		(34,695)	(48,081)	(22,479)
Revenue reserve		3,359	2,741	2,511
		--------	--------	--------
Total equity		87,895	73,215	98,833
		--------	--------	--------
Net asset value per ordinary share	8	74.01p	62.06p	83.57p
		========	========	========

CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 31 May 2017

	Six months  ended  31 May  2017  £’000  (unaudited)	Six months  ended  31 May  2016  £’000  (unaudited)	Year  ended  30 November  2016  £’000  (audited)
Net cash (outflow)/inflow from operating activities	(2,561)	877	(88)
	--------	--------	--------
Financing activities
Interest paid	(89)	(35)	(100)
Share issue costs paid	(7)	1	(8)
Tender issue costs rebated	–	–	7
Proceeds from share issues	437	1,338	1,586
Dividends paid	(2,376)	(3,496)	(6,445)
	--------	--------	--------
Net cash outflow from financing activities	(2,035)	(2,192)	(4,960)
	--------	--------	--------
Decrease in cash and cash equivalents	(4,596)	(1,315)	(5,048)
Effect of foreign exchange rate changes	(29)	92	723
	--------	--------	--------
Change in cash and cash equivalents	(4,625)	(1,223)	(4,325)
Cash and cash equivalents at start of period	(4,479)	(154)	(154)
	--------	--------	--------
Cash and cash equivalents at end of period	(9,104)	(1,377)	(4,479)
	--------	--------	--------
Comprised of:
Cash and cash equivalents	8,627	4,125	7,208
Bank overdraft	(17,731)	(5,502)	(11,687)
	--------	--------	--------
	(9,104)	(1,377)	(4,479)
	========	========	========

RECONCILIATION OF NET (LOSS)/PROFIT BEFORE TAXATION TO NET CASH FLOW FROM OPERATING ACTIVITIES
for the six months ended 31 May 2017

	Six months  ended  31 May  2017  £’000  (unaudited)	Six months  ended  31 May  2016 £’000  (unaudited)	Year  ended  30 November  2016  £’000  (audited)
Operating activities:
(Loss)/profit before taxation	(8,554)	6,377	35,198
Add back interest paid	89	35	100
Losses/(profits) on investments held at fair value through profit or loss	11,770	(3,709)	(29,133)
Net losses/(profit) on foreign exchange	29	(92)	(723)
Sales of investments held at fair value through profit or loss	33,476	33,946	73,535
Purchases of investments held at fair value through profit or loss	(38,111)	(36,537)	(78,060)
Decrease/(increase) in other receivables	27	23	(13)
Decrease in other payables	(14)	(247)	(203)
Decrease/(increase) in amounts due from brokers	448	(767)	(448)
(Decrease)/increase in amounts due to brokers	(2,335)	2,589	2,335
Net movement in cash held on margin deposit with brokers	1,084	(244)	(1,678)
Taxation paid	(353)	(416)	(845)
Taxation on investment income included within gross income	(117)	(81)	(153)
	--------	--------	--------
Net cash (outflow)/inflow from operating activities	(2,561)	877	(88)
	========	========	========

NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 31 May 2017

1. PRINCIPAL ACTIVITY
The principal activity of the Company is that of an investment trust company within the meaning of sections 1158-1165 of the Corporation Tax Act 2010.

The principal activity of the subsidiary, BlackRock Commodities Securities Income Company Limited, is investment dealing and options writing.

2. BASIS OF PREPARATION
The half yearly financial statements have been prepared using the same accounting policies as set out in the Company’s Annual Report and Financial Statements for the year ended 30 November 2016 (which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and as applied in accordance with the provisions of the Companies Act 2006) and in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’.

Insofar as the Statement of Recommended Practice (SORP) for investment trust companies and venture capital trusts issued by the Association of Investment Companies (AIC), revised in November 2014 is compatible with IFRS, the financial statements have been prepared in accordance with guidance set out in the SORP.

The taxation charge has been calculated by applying an estimate of the annual effective tax rate to any profit for the period.

3. INCOME

	Six months  ended  31 May  2017  £’000  (unaudited)	Six months  ended  31 May  2016  £’000  (unaudited)	Year  ended  30 November  2016  £’000  (audited)
Investment income:
Overseas listed dividends	854	697	1,222
Overseas special dividends	34	–	–
UK listed dividends	661	482	1,028
Fixed interest income	261	297	586
	--------	--------	--------
	1,810	1,476	2,836
	--------	--------	--------
Other income:
Deposit interest	4	3	7
Option premium income	2,194	1,607	3,687
	--------	--------	--------
	2,198	1,610	3,694
	--------	--------	--------
Total Income	4,008	3,086	6,530
	========	========	========

Dividends and interest received in the period amounted to £1,568,000 and £214,000 (six months ended 31 May 2016: £1,213,000 and £3,000; year ended 30 November 2016: £2,226,000 and £525,000) respectively.

During the period, the Group received option premium income totalling £1,988,000 (six months ended 31 May 2016: £1,884,000; year ended 30 November 2016: £4,103,000) for writing put and covered call options for the purposes of revenue generation. Option premiums of £2,194,000 (six months ended 31 May 2016: £1,607,000; year ended 30 November 2016: £3,687,000) were amortised to income. At 31 May 2017, there were 13 open positions (31 May 2016: 12; 30 November 2016: 16) with an associated liability of £428,000 (31 May 2016: £292,000; 30 November 2016: £482,000).

4. INVESTMENT MANAGEMENT FEE

	Six months ended 31 May 2017 (unaudited)			Six months ended 31 May 2016 (unaudited)			Year ended 30 November 2016 (audited)
	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000
Investment management fee	126	377	503	84	252	336	201	602	803
	========	========	========	========	========	========	========	========	========

The management fee is levied at 0.95% of gross assets per annum on the first £250 million of the Company’s gross assets reducing to 0.90% thereafter. The fee is allocated 25% to the revenue column and 75% to the capital column of the Consolidated Statement of Comprehensive Income.

5. OTHER OPERATING EXPENSES

	Six months  ended  31 May  2017  £’000  (unaudited)	Six months  ended  31 May  2016  £’000  (unaudited)	Year  ended  30 November  2016  £’000  (audited)
Allocated to revenue:
Custody fee	3	2	12
Auditor’s remuneration - audit services	12	12	25
Directors’ emoluments	50	39	82
Registrar’s fee	12	11	26
Broker fees	12	13	25
Depositary fees	6	4	10
Marketing fees	13	2	69
Marketing fees written back	–	–	(59)
Other administrative costs	61	54	89
	--------	--------	--------
	169	137	279
	--------	--------	--------
Allocated to capital:
Transaction charges - capital	2	2	6
	--------	--------	--------
	171	139	285
	--------	--------	--------

6. FINANCE COSTS

	Six months ended 31 May 2017 (unaudited)			Six months ended 31 May 2016 (unaudited)			Year ended 30 November 2016 (audited)
	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000
Interest payable – bank overdraft	51	38	89	9	26	35	64	36	100
	--------	--------	--------	--------	--------	--------	--------	--------	--------
Total	51	38	89	9	26	35	64	36	100
	========	========	========	========	========	========	========	========	========

7. DIVIDENDS

The Board’s current dividend target is to declare quarterly dividends of 1.00 pence per share in the year to 30 November 2017, making a total of at least 4.00 pence for the year as a whole.  A first interim dividend for the period ending 28 February 2017 of £1,188,000 (1.00p per share) was paid on 21 April 2017 to shareholders on the register on 24 March 2017.

The Directors have declared a second interim dividend for the period ended 31 May 2017 of 1.00p per ordinary share. The total cost of the dividend was £1,188,000 and was paid on 21 July 2017 to shareholders on the Company’s register on 23 June 2017. This dividend has not been accrued in the financial statements for the six months ended 31 May 2017, as under IFRS, interim dividends are not recognised until paid. Dividends are debited directly to reserves.

The third and fourth interim dividends will be declared in September 2017 and December 2017 respectively.

Dividends on equity shares paid during the period were:

	Six months  ended  31 May  2017  £’000  (unaudited)	Six months  ended  31 May  2016  £’000  (unaudited)	Year  ended  30 November  2016  £’000  (audited)
Second interim dividend for the year ended 30 November 2016 of 1.50p (2015: 1.50p)	–	–	1,769
Third interim dividend for the year ended 30 November 2016 of 1.00p (2015: 1.50p)	–	–	1,180
Fourth interim dividend for the year ended 30 November 2016 of 1.00p (2015: 1.50p)	1,188	1,734	1,734
First interim dividend for the year ending 30 November 2017 of 1.00p (2016: 1.50p)	1,188	1,762	1,762
	--------	--------	--------
	2,376	3,496	6,445
	========	========	========

8. CONSOLIDATED EARNINGS AND NET ASSET VALUE PER ORDINARY SHARE
Total revenue and capital returns per share are shown below and have been calculated using the following:

	Six months  ended  31 May  2017  (unaudited)	Six months  ended  31 May  2016  (unaudited)	Year  ended  30 November  2016  (audited)
Net revenue profit attributable to ordinary shareholders (£’000)	3,224	2,478	5,197
Net capital (loss)/profit attributable to ordinary shareholders (£’000)	(12,216)	3,464	29,066
	--------	--------	--------
Total (loss)/profit attributable to ordinary shareholders (£’000)	(8,992)	5,942	34,263
	--------	--------	--------
Total equity attributable to shareholders (£’000)	87,895	73,215	98,833
The weighted average number of ordinary shares in issue during each period on which the return per ordinary share was calculated was:	118,735,033	116,880,024	117,437,126
The actual number of ordinary shares in issue (excluding treasury shares) at the period end on which the net asset value was calculated was:	118,768,000	117,968,000	118,268,000
Return per share
Revenue earnings per share	2.72p	2.12p	4.43p
Capital (loss)/earnings per share	(10.29p)	2.96p	24.75p
	--------	--------	--------
Total (loss)/earnings per share	(7.57p)	5.08p	29.18p
	========	========	========

	At 31 May  2017  (unaudited)	At 31 May  2016  (unaudited)	At 30 November  2016  (audited)
Net asset value per share	74.01p	62.06p	83.57p
Share price	72.75p	62.00p	82.75p
	--------	--------	--------

Basic and diluted earnings per share and net asset value per share are the same as the Company does not have any dilutive securities outstanding. The Company did not have any treasury shares at the period end, or at the date of this report.

9. CALLED UP SHARE CAPITAL

	Ordinary  shares  number	Total  shares  number	Nominal  value  £’000
Allotted, issued and fully paid share capital comprised:
Ordinary shares of 1 pence each
At 30 November 2016	118,268,000	118,268,000	1,183
Shares issued	500,000	500,000	5
	--------	--------	--------
At 31 May 2017	118,768,000	118,768,000	1,188
	========	========	========

During the period 500,000 shares were issued (six months ended 31 May 2016: 2,400,000; year ended 30 November 2016: 2,700,000) for a total consideration of £437,000 (six months ended 31 May 2016: £1,338,000; year ended 30 November 2016: £1,586,000) after the deduction of brokers commission but  before the deduction of other issue costs. No additional shares have been issued since 31 May 2017.

10. VALUATION OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are either carried in the Consolidated Statement of Financial Position at their fair value (investments and derivatives) or at an amount which is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash at bank and bank overdrafts). IFRS 13 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The valuation techniques used by the Company are explained in the accounting policies note 2(h) as set out in the Company’s Annual Report and Financial Statements for the year ended 30 November 2016.

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset.

The fair value hierarchy has the following levels:

Level 1 – Quoted market price in an active market for an identical instrument. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

Level 2 – Valuation techniques used to price securities based on observable inputs. Valuation techniques used for non-standard instruments such as options 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.

Level 3 – Valuation techniques using significant unobservable inputs other than quoted prices within Level 1. This category includes all instruments where the valuation technique includes inputs not based on observable market data and unobservable inputs could have a significant impact on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market. The level in the hierarchy within the fair value measurement is determined on the basis of the lowest level input that is significant to 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 Investment Manager considers observable data 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.

There has been no change to the valuation techniques during the period under review or as at the date of this report.

The table below sets out fair value measurements using the IFRS 13 fair value hierarchy.

Financial assets/(liabilities) at fair value through profit or loss at 31 May 2017 (unaudited)	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity and debt investments	95,938	–	–	95,938
Liabilities:
Derivative financial instruments – written options	–	(428)	–	(428)
	--------	--------	--------	--------
	95,938	(428)	–	95,510
	========	========	========	========

Financial assets/(liabilities) at fair value through profit or loss at 31 May 2016 (unaudited)	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity and debt investments	75,578	–	–	75,578
Liabilities:
Derivative financial instruments – written options	–	(292)	–	(292)
	--------	--------	--------	--------
	75,578	(292)	–	75,286
	========	========	========	========

Financial assets/(liabilities) at fair value through  profit or loss at 30 November 2016 (audited)	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity and debt investments	103,127	–	–	103,127
Liabilities:
Derivative financial instruments – written options	–	(482)	–	(482)
	--------	--------	--------	--------
	103,127	(482)	–	102,645
	========	========	========	========

There were no transfers between levels for financial assets and financial liabilities during the period recorded at fair value as at 31 May 2017, 31 May 2016 and 30 November 2016. The Company did not hold any level 3 securities throughout the financial period under review or as at 31 May 2016 and 30 November 2016.

11. TRANSACTIONS WITH THE AIFM AND THE INVESTMENT MANAGER
BlackRock Fund Managers Limited (BFM) is the Company’s Alternative Investment Fund Manager (AIFM). BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)).

The investment management fee due to BFM for the six months ended 31 May 2017 amounted to £503,000 (six months ended 31 May 2016: £336,000; year ended 30 November 2016: £803,000). At the period end £401,000 was outstanding in respect of these fees (six months ended 31 May 2016: £283,000; year ended 30 November 2016: £382,000).

In addition to the above services, BlackRock has provided the Company with marketing services. The total fees paid or payable for these services for the period ended 31 May 2017 amounted to £13,000 excluding VAT (six months ended 31 May 2016: £2,000; year ended 30 November 2016: £69,000 before write back of prior year marketing expenses of £59,000). Marketing fees of £10,000 (31 May 2016: £27,000; 30 November 2016: £14,500) were outstanding at 31 May 2017.

12. RELATED PARTY DISCLOSURE
The Board consists of four non-executive Directors all of whom, with the exception of Mr Ruck Keene who was previously an employee of the Manager, are considered to be independent of the Manager by the Board. Mr Ruck Keene retired from his position at BlackRock on 7 April 2017 and will continue to be deemed to be non-independent of the Manager for a period of five years following his retirement under current guidance set out in the UK Corporate Governance Code.

None of the Directors has a service contract with the Company. The Chairman receives an annual fee of £36,000, the Chairman of the Audit and Management Engagement Committee receives an annual fee of £30,000 and each other Director receives an annual fee of £25,000, with the exception of Mr Ruck Keene who has waived his entitlement to fees prior to 7 April 2017.  With effect from 8 April 2017 Mr Ruck Keene will receive an annual fee of £25,000 pro-rated accordingly to the year 30 November 2017.

As at 31 May 2017 no amounts (31 May 2016: £nil; 30 November 2016: £nil) were outstanding in respect of Directors’ fees.

At the period end, interests of the Directors in the ordinary shares of the Company are as set out below:

	31 May  2017	31 May  2016	30 November  2016
E Warner	94,000	32,000	94,000
C Bell	33,500	33,500	33,500
M R Merton	17,000	17,000	17,000
J G Ruck Keene	14,000	14,000	14,000
	--------	--------	--------

13. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 May 2017, 31 May 2016 or 30 November 2016.

14. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information contained in this half yearly financial report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the six months ended 31 May 2017 and 31 May 2016 has not been audited.

The information for the year ended 30 November 2016 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies. The report of the Auditors on those accounts contained no qualification or statement under sections 498(2) or 498(3) of the Companies Act 2006.

15. ANNUAL RESULTS
The Board expects to announce the annual results for the year ending 30 November 2017, as prepared under IFRS, in January 2018.

Copies of the annual results announcement can be obtained from the Secretary on 020 7743 3000. The Annual Report and Financial statements should be available at the beginning of February 2018, with the Annual General Meeting being held in March 2018.

ENDS

The half yearly financial report will also be available on the BlackRock website at http://www.blackrock.co.uk/brci.  Neither the contents of the Manager’s website nor the contents of any website accessible from hyperlinks on the Manager’s website (or any other website) is incorporated into, or forms part of, this announcement.

For further information please contact:

Simon White, Managing Director Investment Trusts - 020 7743 3000
 

Olivia Markham/Tom Holl, Fund Managers - 020 7743 3000
 

Press enquires:

Lucy Horne, Lansons Communications - 020 7294 3689
E-mail:  [e-mail]

BlackRock Investment Management (UK) Limited

12 Throgmorton Avenue

London

EC2N 2DL