Portfolio Update

THE BLACKROCK FRONTIERS INVESTMENT TRUST PLC

All information is at 30 November 2011 and unaudited.

Performance at month end with net income reinvested

                                              Calendar

                                  One      Three     Year    Since
                                month     months  to date   launch*
Sterling:
Share price                     -3.9%      -5.2%   -31.5%   -26.5%
Net asset value                  0.1%      -3.0%   -19.6%   -19.9%
MSCI Frontiers Index (NR)       -0.4%      -2.4%   -18.2%   -17.1%
MSCI EM Markets (NR)            -4.2%      -6.5%   -17.8%   -15.2%

US Dollars:
Net asset value                 -2.5%      -6.3%   -19.3%   -19.2%
MSCI Frontiers Index (NR)       -3.0%      -5.7%   -17.8%   -16.4%
MSCI EM Markets (NR)            -6.7%      -9.7%   -17.4%   -14.4%       

Sources: BlackRock and Standard & Poor's Micropal

* 17 December 2010.


At month end
US Dollar:
Net asset value - capital only:               119.99c
Net asset value - cum income:                 123.43c
Sterling:
Net asset value - capital only:                76.29p
Net asset value - cum income:                  78.48p
Share price:                                   73.50p
Total assets (including income):               £74.4m
Discount to cum income NAV:                      6.3%
Gearing:                                          nil
Net yield:                                        n/a
Ordinary shares in issue:                  94,766,267

Benchmark
Sector Analysis   Gross assets(%)*         Country Analysis  Gross assets(%)*

Financials              25.5               Qatar                      16.1
Industrials             18.9               Kazakhstan                 11.1
Energy                  15.8               Saudi Arabia               10.7
Consumer Staples        12.0               Nigeria                     9.6
Telecommunications      10.8               Ukraine                     8.4
Materials                7.3               United Arab Emirates        7.5
Utilities                5.2               Kuwait                      6.0
Consumer Discretionary   4.6               Iraq                        5.2
Healthcare               3.3               Croatia                     4.9
                                           Panama                      3.6                
                                           Jordan                      3.2
                       -----               Oman                        3.1
Total                  103.4               Argentina                   2.9
                       -----               Pan Africa                  2.0
                                           Romania                     1.8
                                           Bangladesh                  1.7
Short positions         -4.8               Pakistan                    1.7
                                           Other                       3.9
                                                                     -----
                                                                     103.4
                                                                     =====

                                           Short positions            -4.8

 
*reflects gross market exposure from contracts for difference (CFDs)

Market Exposure

       31.1   28.2  31.3   30.4   31.5   30.6   31.7   31.8   30.9   31.10  30.11
       2011   2011  2011   2011   2011   2011   2011   2011   2011    2011   2011                       
        %      %     %      %      %      %      %      %      %       %      %      
Long   92.3   96.5  98.0   99.9  103.2  103.3  103.6  105.2  100.7   101.1  103.4
Short     -      -     -    2.0    2.9    2.7    2.8    7.8    7.4     6.2    4.8
Gross  92.3   96.5  98.0  101.9  106.1  106.0  106.4  113.0  108.1   107.3  108.2
Net    92.3   96.5  98.0   97.9  100.3  100.6  100.8   97.4   93.3    94.9   98.6
 
Ten Largest Equity Investments (in alphabetical order)
Company                        Country of Risk
Al Mouwasat                    Saudi Arabia
Al Othaim                      Saudi Arabia
Amiantit                       Saudi Arabia
Commercial Bank of Qatar       Qatar
Copa                           Panama
Gulf Keystone Petroleum        Iraq
HrvatskiTelekomunikacije       Croatia
KazmunaigasExploration         Kazakhstan
QatarElectricity & Water       Qatar
QatarNavigation                Qatar


Commenting on the markets, Sam Vecht, representing the Investment Manager
noted:

Markets

The MSCI Frontiers Index returned -3.0% in November, again significantly
outperforming MSCI Emerging Markets Index which fell by 6.7% over the month. 
Frontier Markets continue to demonstrate their relative resilience supported by
low levels of debt, attractive valuations and high dividend yields. 

Ukraine was the best performing market over the month, bucking the global trend
and rising nearly 11%.  The market bounced on the hope that the government will
successfully negotiate a discount in gas prices from Russia, reducing the
pressure on the currency. 

Qatar rose in November, up 0.3%.  Qatar's economic growth continues apace,
expected to be over 16% in 2011 with the government embarking on ambitious
infrastructure projects, driving credit growth in the country's strongly
capitalised banking sector.

Eastern Europe markets failed to escape the pull of the Eurozone sovereign debt
crisis, with the most notable contagion seen in Serbia, Romania, Bulgaria and
Slovenia which fell on 16%, 12%, 11% and 9% respectively over the month. With
over a third of Bulgarian banks operating as subsidiaries of Greek banks, the
prospects for a major re-structuring of the financial system looms ever larger.

Vietnam was one of the weakest performers in November. The combination of high
inflation, further deterioration in the real estate market and rising NPLs in
the banking system weighed heavily on the market which fell a further 15% over
the month bringing losses to over 40% since the high of February.

Portfolio performance

The BlackRock Frontiers Investment Trust returned -2.5% and outperformed the
MSCI Frontiers index by 0.5% (all calculations on a US Dollar basis with net
income reinvested.) 

Asset allocation across markets was once again a strong driver of relative
returns.  The Company benefited from overweight positions in the relatively
strong performing markets of Ukraine, Qatar and Saudi Arabia and a lack of
exposure to Sri Lanka, Vietnam and the smaller Eastern European markets. 

Positions in stocks with operations in the semiautonomous Kurdish Region of
Iraq rose over the month. UK-listed Gulf Keystone and Norwegian-list DNO both
gained on the news that Exxon had become the first of the 'super-major' oil
companies to sign agreements with the Kurdish Regional Government to explore
for oil and gas in 6 blocks in Kurdistan. This development highlighted that
this region is the most exciting untapped energy geography, globally.  Also
contributing to performance in November was the position in Saudi Arabian
supermarket chain, Al Othaim. The company continues to take market share in
what is still an under-penetrated sector of the retail industry.

During November, the underweight position in Kuwait detracted from relative
perforamnce. The Kuwaiti market has been largely range-bound in the second half
of 2011 and continued to be so even as protestors stormed the parliament
buildings, precipitating the resignation of the government. This is the latest
episode in the political deadlock between the ruling Al-Sabah family and the
50-member elected parliament which has long-delayed the implementation of key
economic reforms.

Stocks detracting from performance included Romanian consumer name, Central
European Media, which, despite continuing to report strong operational
performance, was affected by the travails in Western Europe and, Botswanan
miner, Firestone Diamonds, which also reported strong operational performance,
but suffered from increased global uncertainty impacting diamond prices. 

Portfolio Activity

The Company is currently holding 43 long positions and 5 short positions in
stocks across 24 markets. 

During the month, the Company opened a position in Argentina buying energy
company, YPF.  The company made a large oil discovery in November, reporting
the addition of close to a billion barrels of oil equivalent to reserves. 
Having fallen over 35% YTD and now trading on a forward PE of 8.5x with a 10%
dividend yield, we feel that the risks of operating in Argentina are adequately
priced.

The Company increased the position in Bangladeshi telecom, Grameenphone. The
company's superior network and distribution gives them strong cost and brand
advantages and places them favourably to exploit an underpenetrated market and
is currently attractively valued offering a trailing dividend yield of 15%.

The team also reduced the position in Jordan Phosphate after a period of strong
performance. Jordan is not immune from the political turmoil currently
affecting the Middle East; with a number of economic challenges and refugees
fleeing from Syria, Jordan is a market to which we are significantly reducing
exposure.

Outlook

Whilst the outlook for the global economy remains challenged we continue to
believe that Frontier markets are better positioned than Emerging markets. 
Sovereign debt levels are lower than in more developed markets, giving Frontier
governments greater ability to ensure ongoing economic growth, despite the
global environment. 

MSCI announced on 14th December that they will not upgrade Qatar and UAE to
Emerging Market status at this stage, although both countries will remain under
review for potential future reclassification.  Whilst this is a short term
disappointment for the markets, we do not believe that it changes the long term
outlook for these markets which will continue to be supported by strong
economic fundamentals and attractive valuations.  However, the more significant
development in the Middle East is the likely opening up of the Saudi Arabian
market to QFII which is expected in early 2012. Saudi is an exciting investment
destination: the Saudi government has embarked on an ambitious US$125bn
stimulus programme, backed by a twin surplus and record high reserves of over
US$500bn, the stock market is highly liquid trading in excess of $1bn a day and
valuations of 11.5x forward PE are compelling.  If Saudi were to join the MSCI
Frontier Index, it would likely constitute a significant portion of the index,
(our expectation is 10-20%). 

Inflation has been a significant issue for markets in 2011 with food price
inflation contributing to the unrest that eventually lead to regime change in
Tunisia and Egypt.   We also saw food riots in Mozambique and Malawi in Africa
as food prices rose sharply.  In 2012 we expect food disinflation rather than
food inflation to dominate.  Crop prices had been strongly correlated with oil
prices due to the US ethanol blending subsidies.  These were rolled back this
year and the generally good harvests we saw globally have led to declines in
most major crop prices.  Falling prices combined with high base levels should
lead to a quick amelioration in food prices. 

This is positive for countries who have hiked rates aggressively to combat
inflation including Kenya and Vietnam, which as a result showed particularly
poor performance in 2011 with both falling more than 30%. Valuations in these
countries are now becoming interesting and we have begun to open positions in
companies with strong market positions. 

The team recently returned from a research trip to Nigeria. This trip confirmed
our positive secular view of the country where we believe that positive
economic and demographic trends will continue to drive increased demand for
consumer products.  That said, we are not complacent and valuation is still an
important tenet of the investment. For example, Nigerian bank stocks are
trading at distressed multiples despite a 20% return on equity and 8%-9%
dividend yield with ample capital and liquidity. While the country faces
challenges, we believe that there are many stocks in Nigeria which are
attractively valued and the Company remains overweight.

 

15 December 2011

 

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 the Manager's website (or any other
website) is incorporated into, or forms part of, this announcement.