Portfolio Update

BLACKROCK FRONTIERS INVESTMENT TRUST PLC
All information is at 31 December 2015 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							-0.7			-0.2				-5.0					-3.4				38.3		18.2
Net asset value							-0.4			2.0				-4.3					-2.9				35.8		25.7
MSCI Frontier Markets Index (NR)							1.8			1.5				-5.8					-9.5				26.9		9.5
MSCI Emerging Markets Index (NR)							-0.1			3.4				-11.8					-10.0				-10.6		-14.3
US Dollars:
Share price							-2.8			-2.9				-11.0					-8.6				25.6		12.0
Net asset value							-2.5			-0.8				-10.3					-8.1				23.3		19.1
MSCI Frontier Markets Index (NR)							-0.3			-1.2				-11.7					-14.5				15.1		3.5
MSCI Emerging Markets Index (NR)							-2.2			0.7				-17.4					-14.9				-18.9		-19.0
Sources: BlackRock and Standard & Poor’s Micropal * 17 December 2010.
At month end
US Dollar
Net asset value - capital only:																				155.24c
Net asset value - cum income:																				159.72c
Sterling:
Net asset value - capital only:																				105.33p
Net asset value - cum income:																				108.37p
Share price:																				103.50p
Total assets (including income):																				£163.2m
Discount to cum-income NAV:																				4.5%
Gearing:																				Nil
Gearing range (as a % of gross assets):																				0-20%
Net yield*:																				4.2%
Ordinary shares in issue:																				150,621,621
Ongoing charges**:																				1.5%
Ongoing charges plus taxation and performance fee:																				1.6%
*The Company’s yield based on dividends announced in the last 12 months as at the date of the release of this announcement is 4.2% and includes the 2015 final dividend of 4.15 cents per share declared on 18 December 2015, payable to shareholders on 19 February 2016 and the 2015 interim dividend of 2.40 cents per share announced on 18 May 2015 and paid to shareholders on 3 July 2015. **Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs for the year ended 30 September 2015.
Benchmark
Sector Analysis				Gross assets(%)*									Country Analysis									Gross assets(%)*
Financials				34.8									Bangladesh									10.4
Consumer Staples				20.1									Argentina									10.2
Telecommunications				9.9									Pakistan									9.6
Energy				9.1									Romania									8.1
Utilities				6.0									Kuwait									7.8
Health Care				5.5									Sri Lanka									7.7
Industrials				5.1									Kazakhstan									7.3
Consumer Discretionary				3.6									Ukraine									6.0
Technology				2.1									Morocco									4.9
Materials				1.7									Kenya									4.9
Information Technology				1.4									Vietnam									4.3
				-----									Nigeria									4.0
Total				99.3									Eurasia									3.1
				-----									Caribbean									2.6
Short positions				-1.7									Slovenia									2.2
				===									Estonia									1.9
													Other									4.3
																						-----
													Total									99.3
																						-----
													Short positions									-1.7
																						===
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
	31.01  2015     %	28.02  2015     %	31.03  2015     %		30.04  2015     %	31.05  2015     %			30.06  2015     %			31.07  2015     %			31.08  2015     %		30.09  2015     %				31.10  2015     %			30.11  2015     %		31.12  2015     %
Long	101.1	102.0	106.4		105.9	105.8			101.5			102.9			103.1		101.8				99.6			100.3		99.3
Short	1.6	1.6	1.7		1.7	1.1			1.0			1.5			1.5		1.0				1.2			1.7		1.7
Gross	102.7	103.6	108.1		107.6	106.9			102.5			104.4			104.6		102.8				100.8			102.0		101.0
Net	99.5	100.4	104.7		104.2	104.7			100.5			101.4			101.6		100.8				98.4			98.6		97.6
Company								Country of Risk										% of gross assets
MHP								Ukraine										3.9
Kuwait Foods (Americana)								Kuwait										3.6
Grupo Financiero Galicia								Argentina										3.6
Hub Power								Pakistan										3.5
MCB Bank								Pakistan										3.3
Square Pharmaceuticals								Bangladesh										3.3
KazMunaiGas Exploration Production								Kazakhstan										3.2
Coca Cola Icecek								Eurasia										3.1
BRD Groupe Societe Generale								Romania										3.1
Equity Group								Kenya										2.9
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:
Portfolio Performance
In December, the Company’s NAV fell by 2.5%, underperforming the benchmark by 2.2%. Since its launch in December 2010, the Company’s NAV has returned 19.1%, outperforming the MSCI Frontier Markets Index by 15.6%. (All calculations are on a US dollar basis with net income reinvested.) December was a challenging month for Emerging and Developed Markets which fell by 2.2% and 1.8% respectively over the month.  Increasing concerns over the health of the Chinese economy, and the potential negative effects on the US economy dragged down markets.  Frontier Markets once again proved resilient falling by only 0.3% during the month, although disappointingly, the Company’s performance was somewhat weaker.  Positive contributions to performance came from Argentina, where we saw substantial benefits from stock selection. The new government have shown impressive speed in implementing a number of measures which represent a return to orthodox economic policies. These include reforming the exchange rate system and reducing energy producer subsidies. While these measures are likely to be positive for Argentina’s medium term prospects, some individual stocks such as state-controlled energy producer, YPF, were negatively impacted. In December the weakness in oil prices, which fell by 16% (brent crude) over the month, continued to impact our holdings in Kazakhstan and Iraq given the reliance on oil of the economies in these two countries.  However, despite the oil price weakness, our underweight positioning in Nigeria also detracted from relative performance during December. For the second year running, this was driven by substantial positive moves in large benchmark weighted stocks in the final days of the month, which have subsequently reversed. The Central Bank policy of maintaining the current Naira peg to the US dollar is creating increasing stress in the domestic economy with a number of companies reporting shortages of vital goods and parts. While valuations of some stocks are compelling, our macroeconomic concerns mean that we are 10.0% underweight relative to the MSCI Frontier Market Index.
Portfolio Activity
We increased our position in Coca-Cola bottling franchise, Icecek. Listed in Turkey, the company is seeing substantial volume growth from its operations across Pakistan and the former Soviet Republics which we expect to result in returns on invested capital increasing over time.  The company is the highest-growth bottler across the Coca Cola franchise universe with some of the lowest market penetration figures, meaning it has good long-term potential. For example, if consumption rose to UK levels, a moderate level globally, Iraq volumes could grow 4 fold, and Pakistan volumes could grow 7 fold.  Falls in raw material prices including sugar will likely have a positive impact on margins in 2016, which, combined with growth profile, makes the stock an attractive proposition.  We also increased our position in Equity Group in Kenya.  The bank has a very strong domestic franchise with a market share of deposit accounts of around 34% which we believe gives them a sustainable funding advantage in a country which is persistently reliant on external funding sources.
8 January 2016
ENDS