# BlackRock Frontiers Investment Trust shines with strong performance and diverse investment strategy

- Link: https://www.directorstalkinterviews.com/blackrock-frontiers-investment-trust-shines-with-strong-performance-and-diverse-investment-strategy/4121121119
- Published: 2023-06-06T13:37:56+01:00
- Author: Amilia Stone

**BlackRock Frontiers Investment Trust plc** ([LON:BRFI](https://www.directorstalkinterviews.com/company/blackrock-frontiers-investment-trust-plc/brfi.l))
has announced its half yearly financial report for the six months ended 31 March
2023.

**PERFORMANCE RECORD**

The Company’s financial statements are presented in US Dollars. The Company’s shares
are listed on the London Stock Exchange and quoted in British Pound Sterling. The
British Pound Sterling amounts for performance returns shown below are presented
for convenience. The difference in performance returns measured in US Dollars and
in British Pound Sterling reflects the change in the value of British Pound Sterling
versus the US Dollar over the period.

| 
  | As at 31 March 2023  | As at 30 September 2022  | 
| **US Dollar** |  |  | 
| Net assets (US$’000)^(1) | 338,161  | 302,656  | 
| Net asset value per ordinary share (cents) | 178.61  | 159.86  | 
| Ordinary share price (mid market)^(2) (cents) | 166.30  | 142.61  | 
|  | —————-  | —————-  | 
| **British Pound Sterling** |  |  | 
| Net assets (£’000)^(1,2) | 273,493  | 271,124  | 
| Net asset value per ordinary share^(2) (pence) | 144.45  | 143.21  | 
| Ordinary share price (mid market) (pence) | 134.50  | 127.75  | 
| Discount^(3) | 6.9%  | 10.8%  | 
|  | ==========  | ==========  |

| 
Performance | For the six months ended 31 March 2023 %  | For the year ended 30 September 2022 %  | Since inception^(4) %  | 
| **US Dollar** |  |  |  | 
| Net asset value per share (with dividends reinvested)^(3) | +14.5  | -10.9  | +83.0  | 
| Benchmark Index (NR)^(5,6) | +4.5  | -7.3  | +41.4  | 
| MSCI Frontier Markets Index (NR)^(6) | +2.2  | -25.2  | +27.5  | 
| MSCI Emerging Markets Index (NR)^(6) | +14.0  | -28.1  | +19.8  | 
| Ordinary share price (with dividends reinvested)^(3) | +19.8  | -10.0  | +68.5  | 
|  | —————-  | —————-  | —————-  | 
| **British Pound Sterling** |  |  |  | 
| Net asset value per share (with dividends reinvested)^(3) | +3.3  | +7.7  | +129.9  | 
| Benchmark Index (NR)^(5,6) | -5.7  | +12.0  | +76.9  | 
| MSCI Frontier Markets Index (NR)^(6) | -7.7  | -9.6  | +60.7  | 
| MSCI Emerging Markets Index (NR)^(6) | +3.0  | -13.2  | +51.1  | 
| Ordinary share price (with dividends reinvested)^(3) | +8.0  | +8.7  | +111.4  | 
|  | ==========  | ==========  | ==========  |

^(1)     The change in net assets reflects dividends paid and portfolio movements
during the period.

^(2)     Based on an exchange rate of US$1.2365 to £1 at 31 March 2023 and US$1.1163
to £1 at 30 September 2022.

^(3)     Alternative Performance Measure, see Glossary in the half yearly report
and financial statements.

^(4)     The Company was incorporated on 15 October 2010 and its shares were admitted
to trading on the London Stock Exchange on 17 December 2010.

^(5)     With effect from 1 April 2018, the Benchmark Index changed to the MSCI 
Emerging Markets Index ex Selected Countries + MSCI Frontier Markets Index + MSCI
Saudi Arabia Index. Prior to 1 April 2018, the Benchmark Index was the MSCI Frontier
Markets Index. The performance returns of the Benchmark Index since inception have
been blended to reflect this change.

^(6)     Net return (NR) indices calculate the reinvestment of dividends net of 
withholding taxes.

Sources: BlackRock and Datastream.

**CHAIRMAN’S STATEMENT**

**Dear shareholder,**
I am pleased to present the Company’s Half Yearly Financial
Report for the six months to 31 March 2023.

Period highlights

·        NAV total return of +14.5%, well ahead of the benchmark return of +4.5%(
in US Dollar terms with dividends reinvested);

·        Share price total return of +19.8% (in US Dollar terms with dividends reinvested);

·        Share price total return of +8.0% (in British Pound Sterling terms with
dividends reinvested);

·        Declared interim dividend of 3.10 cents per share; and

·        Yield of 4.3% (based on share price at 1 June 2023, interim dividend for
2023 and final dividend for 2022).

**Performance and overview**
Our portfolio managers’ strategy and investment process
has seen the Company perform strongly during the period, outperforming our benchmark.
Their ability to identify and expose the portfolio to different and diverse themes
is, we believe, our competitive advantage.

During the six months to 31 March 2023, the Company achieved a NAV total return 
in US Dollars of +14.5%, outperforming its Benchmark Index which returned +4.5%.
The Company’s share price total return was +19.8%. To provide further context, the
MSCI Frontier Markets Index returned +2.2% and the MSCI Emerging Markets Index returned
+14.0%.

As you will read in the Investment Manager’s Report which follows, global markets
have been dominated by fears of a US-led recession, uncertainty over the trajectory
of interest rates and speculation over when the Federal Reserve (Fed) will reverse
its monetary policy tightening cycle; which many believe will be the catalyst for
a return of confidence.

However, there are tailwinds for frontier markets, in particular a weakening US 
Dollar and the re-opening of China, both of which have been beneficial of late for
many of the markets that we invest in. Our portfolio managers also note the relatively
benign fiscal position and accommodative monetary policy applied by many of the 
governments of the countries in which we invest. This is in stark contrast to the
current position in developed markets. This lack of correlation with developed market
economies has always been and remains one of the Company’s key attractions for investors
seeking portfolio diversification.

Your portfolio managers provide a detailed description of the key contributors to
and detractors from performance during the period, portfolio activity and their 
views on the outlook for the second half of the financial year in their report which
follows.

**Revenue return and dividends**
BlackRock Frontiers Investment Trust’s revenue 
return per share for the six months ended 31 March 2023 amounted to 2.74 cents (
six months ended 31 March 2022: 2.31 cents). Further, as at 31 May 2023 the Company
had accrued a total of 5.95 cents in revenue return per share for the period from
1 October 2022 to 31 May 2023. Accordingly, the Board is pleased to declare an interim
dividend of 3.10 cents per share (2022: 2.75 cents per share). This interim dividend
is payable on 7 July 2023 to shareholders on the Company’s register on 16 June 2023.
The shares will go ex-dividend on 15 June 2023. During the period the final dividend
of 4.25 cents per share for the year ended 30 September 2022, which was declared
on 7 December 2022, was paid to shareholders on 14 February 2023.

This higher interim dividend than usual is reflective of an increase in the amount
of revenue generated, which our portfolio managers’ believe is sustainable given
that it is broadly representative of the underlying earnings growth in the companies
held within our portfolio.  There can of course be no guarantee of the level of 
future revenue derived from our portfolio and I should be clear that this should
not be considered to be a dividend forecast.

**Portfolio management team**
As announced on 24 February 2023, Sudaif Niaz was 
appointed alongside Sam Vecht and Emily Fletcher as a named portfolio manager of
the Company. Sudaif joined BlackRock in 2015 and is a portfolio manager and research
analyst in the Global Emerging Markets Equities Team. Sudaif is also a member of
the EMEA and Frontier Markets research team, where he covers South East Asia and
parts of the Middle East. He has worked closely with Sam and Emily for many years
providing support in managing the Company’s portfolio and his addition as a named
manager reflects his significant contribution. There are no changes anticipated 
in the way the portfolio is managed on a day-to-day basis as a result of this change.

**Gearing**
One of the advantages of the investment trust structure is that the 
Company can use gearing with the objective of increasing portfolio returns over 
the longer term. The Company utilised its ability to gear the portfolio through 
its CFD exposure during the year. As at 31 March 2023, net gearing stood at 2.4%.

**Board composition**
On 1 February 2023 the Board announced that, as part of its
ongoing succession plans, and having each served for a tenure of in excess of 12
years, Mr Zok and I would step down from the Board prior to next year’s AGM to be
held in February 2024. The Board has undertaken a process to identify my successor
as Chairman and to identify a replacement for Mr Zok whose in-depth knowledge and
on the ground insights into the culture, customs and business practices in the Middle
East have been invaluable.

I am pleased to announce that it has been agreed that Katrina Hart, our current 
Senior Independent Director, will succeed me as Chairman upon my retirement from
the Board at the AGM in 2024. Katrina possesses a great deal of investment trust
specific expertise and asset management experience, having spent her executive career
in investment banking and equities research. It has also been agreed that Elisabeth
Airey, also a serving Director, will succeed Katrina as our Senior Independent Director.
Further information on their respective backgrounds and experience can be found 
in the half yearly report and financial statements.

**Share capital**
For the period under review, the Company’s ordinary shares traded
at an average discount to NAV of 8.3%, but had narrowed to 6.9% on a cum-income 
basis at 31 March 2023. By comparison, the weighted average discount of the AIC 
Global Emerging Markets peer group during the period under review was 10.8%.

As at 1 June 2023, the discount stood at 8.6% (compared to an average discount for
the peer group of 9.6%). The Directors are keen to ensure that the Company’s share
price does not trade at a significant discount or premium to the underlying NAV.
Accordingly, the Directors, in conjunction with the Company’s broker, monitor the
level of discount closely and will consider the issue of ordinary shares at a premium
or repurchase at a discount to help balance demand and supply in the market if they
believe it is in shareholders’ interests to do so. In determining whether to proceed,
Directors review a range of factors, including the ongoing attractiveness of the
investment offering, the prevailing market conditions and the discount level in 
absolute terms and relative to that of the peer group companies.

The Board continues to monitor the market in our shares and, in conjunction with
the Company’s broker, gives consideration to the possibility of buying back shares.

The Directors currently have the authority to buy back shares in the market equivalent
to 14.99% of the Company’s issued share capital and also to issue new shares equivalent
to 10% of the Company’s issued share capital (excluding any shares held in treasury).
The Board will seek a renewal of these authorities from shareholders at the AGM.

No new shares were issued or sold from treasury during the period or up to the date
of this report.

**Shareholder communication**
We appreciate how important access to regular information
is to our shareholders. To supplement our Company website, we now offer shareholders
the ability to sign up to the BlackRock Trust Matters newsletter which includes 
information on the Company as well as news, views and insights.

**Outlook**
Our portfolio managers believe our Company is well placed to continue
to generate good performance as we move through the second half of our financial
year. Since the period end and up to 1 June 2023, the net asset value per share 
of the Company has increased by 3.7% from 178.61 cents per share to 185.23 cents
per share. The Company’s Benchmark Index has decreased by 0.2%.

Our portfolio is exposed to a range of fast-growing countries with significant natural
resources, such as Chile and Indonesia. Our holdings in South East Asia are also
benefiting as Western countries seek to recalibrate their supply chains away from
China in response to rising geo-political tensions. In Europe, the portfolio managers
have selectively added to Greece and Hungary to take advantage of attractive investment
opportunities. They have also initiated a position in Argentina, a region that has
at times delivered strong returns for BlackRock Frontiers Investment Trust.

Success in these markets requires extensive resources, painstaking research and 
local knowledge. Our portfolio managers’ unwavering commitment to meeting the management
teams of the companies we invest in, wherever they may be in the world, is invaluable
and sets us apart.

As we move through the second half of the financial year the Board shares our portfolio
managers’ excitement around the breadth of opportunities offered by the Frontier
Markets in what is a dynamic and ever-changing investment universe.

**AUDLEY TWISTON-DAVIES**
**Chairman**5 June 2023

**INVESTMENT MANAGER’S REPORT**

**Market Review**
In many ways, the six months to end March 2023 have been less 
eventful for our universe than the first nine months of 2022, despite us operating
in a markedly different world. US interest rates are at 16 year highs, the world
appears more divided along geopolitical lines, and although inflation appears to
be retreating somewhat, it remains front of mind for investors alongside the looming
possibility of a US-led global recession. Against this backdrop, the Company has
delivered a strong result, with the net asset value (NAV) increasing by 14.5% in
US Dollar terms and by 3.3% in British Pound Sterling terms over the six month period(
all percentages with dividends reinvested).

Much of 2022 was dominated by concerns about a crippling European energy crisis.
A warmer than usual winter, coupled with a quick ramp up of storage efforts, and
sizeable increases in liquefied natural gas imports, have helped avert a full-scale
crisis. Gas prices have in fact experienced an 86% decline from the record highs
we saw in August last year and gas reserves are now at a comfortable level. Over
the six month period, this has benefited countries in Eastern Europe, in particular
Greece (+49%), Poland (+47%) and Hungary (+40%).

The other notable global event was the quicker than anticipated reopening of the
Chinese economy post-COVID-19. This development supported several countries in our
investment universe, particularly in South East Asia as tourism numbers started 
to recover, notably in Thailand.

Geopolitical tensions remain front of mind for investors. While we saw an easing
of China/Taiwan tensions following the meeting between US President Biden and Chinese
Communist Party General Secretary Xi Jinping at the G-20 in November last year, 
the relationship between the two countries soured again in 2023 after the US decision
to inhibit sales of advanced technology to China. These geopolitical tensions have
accelerated a duplication of supply chains which continues to benefit countries 
in our investment universe such as Vietnam and Malaysia.

**From the Road**
One of the highlights of the last six months was the acceleration
of travel to our investment universe to conduct on-the-ground due diligence. The
team visited more than 15 countries over the period. In Europe, some of the countries
we visited were Georgia, Greece and Hungary. We also travelled to countries such
as Kuwait, Qatar and Saudi Arabia in the Middle East. Among the many countries we
visited in Asia, examples are Indonesia, Malaysia and Vietnam. Our travels also 
took us to several destinations in Latin America, including Argentina, Chile and
Uruguay. We met with representatives from companies, governments and civil society
to stress test our investment views.

Our visit confirmed Greece as one of the bright spots in our investment universe.
Digitalisation there should continue to drive better than expected government revenue
collection and thus investments on top of very significant inflows from the European
Union under the Recovery and Resilience Facility program. The country has seen a
significant increase in exports to Gross Domestic Product (GDP) from 20% in 2006
to nearly 50% in 2023, and we continue to see attractive opportunities in the country.
In Indonesia, we expect the domestic consumption environment and current account
to see sustained improvements. The country has the biggest stock of nickel in the
world, a crucial input in the electric vehicle (EV) battery supply chain, and we
see the country’s transformation from a primarily upstream extractive economy into
a more value additive one as positive for the economy overall.

In contrast, our trip to Vietnam highlighted near-term concerns from the developments
in the real estate sector. While we expect the country to benefit from the relocation
of supply chains from China and an uptick in tourism, we have adopted a more cautious
stance following our recent trip as we try to side-step the fallout from the problems
in the real estate sector. Our position in Vietnam is somewhat separated from these
concerns.

**Portfolio Review**
In the six months to 31 March 2023, the Company’s NAV returned
14.5% (on a US Dollar basis with dividends reinvested) significantly outperforming
its Benchmark Index (the MSCI Emerging Markets Index ex Selected Countries + MSCI
Frontier Markets + MSCI Saudi Arabia Index) which returned 4.5%. Over the same period
the MSCI Emerging Markets Index rose by 14.0% and MSCI Frontier Markets Index rose
by 2.2%. Since inception, the Company’s NAV has returned 83.0%, compared with 41.4%
for its Benchmark Index. For reference, the MSCI Frontier Markets Index and the 
MSCI Emerging Markets Index returned 27.5% and 19.8% respectively (all percentages
in US Dollar terms with dividends reinvested).

Our allocation to Hungary did very well, with low-cost airline Wizz Air Holdings(
+108%) being the single biggest contributor over the period. The company has benefitted
from a rebound in travel demand in a post-COVID-19 environment while managing to
maintain cost discipline, hence preserving margins. Our overweight allocation to
Hungarian bank OTP Bank (+55%) was another significant contributor where a high 
interest rate environment bolstered net interest income. National Bank of Greece(
+64%) and Polish bank PKO Bank Polski (+50%) benefitted from similar fundamentals.
The majority of the banks we own are national champions and are less susceptible
to the much talked about asset-liability mismatches in the regional US banks. Given
their dominant domestic positioning, our bank holdings should benefit from a deposit
flight to safety.

Elsewhere, our exposure to Argentina through Vista Oil & Gas (Vista) (+61%) also
performed strongly. Vista owns assets in the famous Vaca Muerta shale formation 
in Argentina. The company benefitted from higher hydrocarbon prices and an increase
in export volumes. Our Kazakh exposure also did well, primarily through our holding
in fintech super-app JSC Kaspi (+33%). Our positioning in the country is driven 
by bottom-up fundamentals. Another notable contributor to the performance of the
Company over this period was our overall underweight allocation to Saudi Arabia.
Significantly higher risk-free rates and lower energy prices weighed on the Saudi
market overall.

While we had no exposure to Turkey (+48%), it is worth highlighting that it was 
the second best performing market in our universe over this period. The Turkish 
elections concluded on 28 May 2023, where current president Recep Tayyip Erdogan
was re-elected for a historic third term. We continue to have no exposure to the
country.

From a stock specific perspective, the biggest detractor over the period was Saudi
National Bank (-33%). The company was the largest shareholder in Credit Suisse. 
While the investment in Credit Suisse relative to the scale of Saudi National Bank
was immaterial, the market questioned the bank’s capital allocation framework. It
was little surprise when the bank saw its chairman resign after the collapse of 
the Swiss bank. Elsewhere in the Kingdom, Saudi Telecom also detracted (-9%). Our
allocation to Qatar Gas Transport Company (-12%) was also a detractor but has since
recovered. In Vietnam, Vietnam Technological & Commercial (Techcombank) (-20%) negatively
impacted returns and post our trip we have taken a more cautious view on the country
given tightening liquidity conditions and the concerns around the viability of some
parts of the property sector.

In terms of positioning, we added to Indonesia as we like the macro setup in the
country. We increased our exposure to companies such as auto conglomerate Astra 
International on the back of a supportive outlook for automotive sales. We also 
initiated a position in food manufacturing company Indofoods as well as in commercial
bank, Bank Central Asia. Hungary is another market where we have conviction and 
we added to OTP Bank and Wizz Air Holdings. We exited Genting Malaysia, a Malaysian
hotel and resort operator, where despite an uptick in tourist numbers, the company
has disappointed on the cost side.

**Outlook**
We still believe global markets are in the process of adjusting to a
world of higher inflation and higher interest rates. The banking sector fragility
we saw over the course of March is one indicator that this level of interest rates
is starting to bite. Equally, we believe we are near a peak in the US Dollar and
that provides a favourable setup for frontier markets that posit supportive economic
fundamentals and policy making.

We retain an overweight exposure in Indonesia and Chile as both fit our macro-economic
framework. In particular, the Indonesian economy is positioned to sustain high single
digits nominal GDP growth given policy-making remains favourable to attract foreign
direct investment and continue to grow its exports base. We have an optimistic view
on Indonesia’s ability to grow its value-added nickel exports that the global EV
battery supply chain will increasingly rely on. Indonesia holds one of the largest
nickel reserves in the world and is quickly developing these into higher density
battery grade nickel for NCM batteries. This will support Indonesian balance of 
payments and allow for more sustainable economic growth given Indonesia remains 
under invested in most sectors by relative emerging market standards. Our favourable
view on Chile is predicated on the country implementing an orthodox monetary and
fiscal policy which has enabled inflation to roll over and we believe there is value
in stocks there as the interest rate cycle normalises.

**GEOPOLITICAL FACTORS**

From a geopolitical standpoint, the world looks increasingly split into three blocks:
the ‘Western’ block such as Europe, US, South Korea, Japan, Australasia, the ‘Eastern’
block such as China, Russia, North Korea, and some Chinese aligned African nations,
and then the ‘Neutrals’ such as India, Brazil, Saudi Arabia and much of the rest
of South America and the Middle East. Most of the countries within our Frontier 
Markets universe are considered ‘neutrals’, and should benefit as the global geopolitical
alliances recalibrate.

It is clear to us that these geopolitical concerns have already prompted a supply
chain recalibration away from China and countries such as Vietnam and Malaysia will
continue to see the benefit of re-shoring of supply chains.

Finally, we observe a marked contrast in the monetary and fiscal policy decisions
taken in the small emerging and frontier markets versus developed markets in the
post-pandemic years, and we find significant value in currencies and equity markets
across our investment opportunity set. We are optimistic over the long-term in our
under-frontiers investment universe which should enable compelling investment opportunities.

**Sam Vecht, Emily Fletcher and Sudaif Niaz**
**BlackRock Investment Management (
UK) Limited**

5 June 2023

**Ten largest investments^(1) as at 31 March 2023**

**1** + **Bank Central Asia** (2022: n/a)
**Financials (Indonesia)Portfolio value:
$16,905,000Percentage of net assets: 5.0% (2022: nil%)

Bank Central Asia is an Indonesian commercial bank headquartered in Jakarta. It 
is the largest private bank in the country, offering commercial banking and other
financial services.

**2** + **Abdullah Al Othaim Markets****^(2)** (2022: 5th)
**Consumer Staples (Saudi
Arabia)Portfolio value: $12,099,000Percentage of net assets: 3.6% (2022: 3.2%)

Abdullah Al Othaim Markets is a large retailer in Saudi Arabia, operating supermarkets,
hypermarkets, convenience stores and wholesale outlets. They also have a small presence
in Egypt. The company is looking to disrupt the current landscape which is largely
dominated by mom-and-pop stores.

**3** + **Astra International** (2022: 12th)
**Consumer Discretionary (Indonesia)
Portfolio value: $11,845,000Percentage of net assets: 3.5% (2022: 2.6%)

Astra International is an Indonesian auto conglomerate and the largest independent
automotive group in South East Asia.

**4** + **Saudi Basic Industries Corporation****^(2)** (2022: n/a)
**Materials (
Saudi Arabia)Portfolio value: $11,054,000Percentage of net assets: 3.3% (2022: nil%)

Saudi Basic Industries Corporation (SABIC), headquartered in Riyadh, is a steel 
and chemicals manufacturer. The company is a subsidiary of Saudi Arabian Oil Co,
and engages in the production of petrochemicals, chemicals, industrial polymers,
fertilizers and metals.

**5** + **PKO Bank Polski** (2022: 7th)
**Financials (Poland)Portfolio value: $10,651,000Percentage
of net assets: 3.1% (2022: 3.1%)

PKO Bank Polski is Poland’s largest bank founded in 1919. It is primarily focused
on retail banking, operating over 1100 branches in Poland and abroad.

**6** + **Bank Mandiri** (2022: 23rd)
**Financials (Indonesia)Portfolio value: $
10,064,000Percentage of net assets: 3.0% (2022: 2.0%)

Bank Mandiri is one of the largest banks in Indonesia. The bank offers a range of
banking products and services from corporate to retail banking.

**7 –** **JSC Kaspi** (2022: 4th)
**Financials (Kazakhstan)Portfolio value: $9,870,000Percentage
of net assets: 2.9% (2022: 3.4%)

JSC Kaspi is the largest payments and fintech ecosystem in Kazakhstan. The company
began as a bank but expanded into peer-to-peer payments and online marketplaces,
proving vital for businesses during the lockdowns of 2020. The company is working
on expanding into other markets in Central Asia.

**8** + **Wizz Air Holdings** (2022: 46th)
**Industrials (Hungary)Portfolio value:
$9,838,000Percentage of net assets: 2.9% (2022: 1.2%)

Wizz Air Holdings, legally incorporated as Wizz Air Hungary Ltd, is a Hungarian 
ultra-low-cost carrier with its head office in Budapest, Hungary. The airline serves
many cities across Europe, as well as some destinations in North Africa, the Middle
East and South Asia.

**9** + **OTP Bank** (2022: 42nd)
**Financials (Hungary)Portfolio value: $9,770,000Percentage
of net assets: 2.9% (2022: 1.3%)

OTP Bank, headquartered in Budapest, Hungary, is one of the leading banking groups
in Central and Eastern Europe. The bank has operations in 11 countries across the
region and serves nearly 16 million customers.

**10** + **FPT****^(2)** (2022: 11th)
**Information Technology (Vietnam)Portfolio
value: $9,638,000Percentage of net assets: 2.9% (2022: 2.6%)

FPT is Vietnam’s largest information technology services company, with a focus on
information and communications technologies. The core business focuses on consulting,
providing and deploying technology and telecommunications services and solutions.

^(1       ) Gross market exposure as a % of net assets.

^(2       ) Exposure gained via long contracts for difference (CFDs) only.

BlackRock Frontiers Investment Trust’s ten largest investments represented 33.1%
of the Company’s portfolio as at 31 March 2023 (30 September 2022: 35.2%).

Percentages in brackets represent the portfolio holding at 30 September 2022.

Symbols indicate the change in the relative ranking of the position in the portfolio
compared to its ranking as at 30 September 2022.

**Portfolio analysis** **as at 31 March 2023**

**Country allocation: Absolute weights (Gross market exposure as a % of net assets)****
^(1)**

|  | % | 
| Saudi Arabia | 17.8 | 
| Indonesia | 17.2 | 
| Thailand | 8.8 | 
| Vietnam | 8.6 | 
| United Arab Emirates | 8.0 | 
| Kazakhstan | 7.8 | 
| Hungary | 7.3 | 
| Chile | 6.0 | 
| Greece | 4.3 | 
| Poland | 3.1 | 
| Argentina | 2.7 | 
| Qatar | 2.4 | 
| Egypt | 2.4 | 
| Panama | 2.0 | 
| Philippines | 2.0 | 
| Peru | 1.7 | 
| Georgia | 1.6 | 
| Malaysia | 1.6 | 
| Colombia | 1.5 | 
| Kuwait | 1.3 | 
| Romania | 1.0 | 
| Kenya | 0.7 | 
| Ukraine | 0.4 |

**Country allocation relative to the Benchmark Index (%)****^(1)**

|  | % | 
| Kazakhstan | 7.2 | 
| Vietnam | 6.9 | 
| Hungary | 6.2 | 
| Indonesia | 6.2 | 
| Chile | 2.8 | 
| Argentina | 2.7 | 
| Greece | 2.1 | 
| Panama | 2.0 | 
| Egypt | 1.9 | 
| Georgia | 1.6 | 
| Colombia | 1.0 | 
| United Arab Emirates | 0.9 | 
| Romania | 0.5 | 
| Kenya | 0.4 | 
| Ukraine | 0.4 | 
| Peru | 0.1 | 
| Lithuania | -0.1 | 
| Tunisia | -0.1 | 
| Estonia | -0.1 | 
| Croatia | -0.1 | 
| Bahrain | -0.1 | 
| Jordan | -0.1 | 
| Mauritius | -0.1 | 
| Oman | -0.3 | 
| Bangladesh | -0.3 | 
| Slovenia | -0.3 | 
| Nigeria | -0.4 | 
| Morocco | -0.6 | 
| Other | -0.8 | 
| Poland | -0.9 | 
| Czech Republic | -1.0 | 
| Philippines | -2.1 | 
| Qatar | -2.8 | 
| Turkey | -3.5 | 
| Thailand | -3.6 | 
| Kuwait | -3.7 | 
| Saudi Arabia | -4.9 | 
| Malaysia | -6.8 |

**Sector allocation: Absolute weights (Gross market exposure as a % of net assets)****
^(1)**

|  | % | 
| Financials | 36.6 | 
| Materials | 15.8 | 
| Energy | 14.1 | 
| Industrials | 10.9 | 
| Consumer Staples | 10.7 | 
| Consumer Discretionary | 6.3 | 
| Information Technology | 5.7 | 
| Communication Services | 3.8 | 
| Real Estate | 2.6 | 
| Utilities | 2.0 | 
| Health Care | 1.7 |

**Sector allocation relative to the Benchmark Index (%)****^(1)**

|  | % | 
| Energy | 6.9 | 
| Industrials | 4.9 | 
| Consumer Staples | 4.3 | 
| Information Technology | 4.2 | 
| Materials | 4.2 | 
| Consumer Discretionary | 2.0 | 
| Real Estate | -1.3 | 
| Health Care | -1.7 | 
| Utilities | -2.7 | 
| Communication Services | -5.3 | 
| Financials | -5.3 |

^(1)     Includes exposure gained through equity positions and long and short CFD
positions.

Sources: BlackRock and Datastream.

**Investments** **as at 31 March 2023**

**Equity portfolio** **by country of exposure**

| 
Company | Principal country of operation  | Sector  | Fair value^(1) US$’000  | Gross market exposure as a % of net assets^(3)  | 
| Bank Central Asia | Indonesia  | Financials  | 16,905  | 5.0  | 
| Astra International | Indonesia  | Consumer Discretionary  | 11,845  | 3.5  | 
| Bank Mandiri | Indonesia  | Financials  | 10,064  | 3.0  | 
| Indocement Tunggal Prakarsa | Indonesia  | Materials  | 7,569  | 2.3  | 
| Mitra Adiperkasa | Indonesia  | Consumer Discretionary  | 6,570  | 1.9  | 
| Indofood CBP Sukses Makmur | Indonesia  | Consumer Staples  | 5,047  | 1.5  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **58,000**  | **17.2**  | 
|  |  |  | ==========  | ==========  | 
| JSC Kaspi | Kazakhstan  | Financials  | 9,870  | 2.9  | 
| Halyk Savings Bank | Kazakhstan  | Financials  | 8,446  | 2.5  | 
| Kazatomprom | Kazakhstan  | Energy  | 7,985  | 2.4  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **26,301**  | **7.8**  | 
|  |  |  | ==========  | ==========  | 
| Advanced Info Service | Thailand  | Communication Services  | 8,483  | 2.5  | 
| Bangkok Bank | Thailand  | Financials  | 6,706  | 2.0  | 
| Bangkok Dusit Medical Services | Thailand  | Health Care  | 5,651  | 1.7  | 
| Airports of Thailand | Thailand  | Industrials  | 5,006  | 1.5  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **25,846**  | **7.7**  | 
|  |  |  | ==========  | ==========  | 
| OTP Bank | Hungary  | Financials  | 9,770  | 2.9  | 
| Wizz Air Holdings | Hungary  | Industrials  | 8,735  | 2.6  | 
| MOL Group | Hungary  | Energy  | 4,995  | 1.5  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **23,500**  | **7.0**  | 
|  |  |  | ==========  | ==========  | 
| Cervecerias Unidas | Chile  | Consumer Staples  | 8,744  | 2.6  | 
| Banco Santander Chile | Chile  | Financials  | 6,309  | 1.9  | 
| Empresas CMPC | Chile  | Materials  | 5,184  | 1.5  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **20,237**  | **6.0**  | 
|  |  |  | ==========  | ==========  | 
| Emaar Properties | United Arab Emirates  | Real Estate  | 8,701  | 2.6  | 
| Air Arabia | United Arab Emirates  | Industrials  | 6,224  | 1.8  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **14,925**  | **4.4**  | 
|  |  |  | ==========  | ==========  | 
| National Bank of Greece | Greece  | Financials  | 7,682  | 2.3  | 
| Titan Cement International | Greece  | Materials  | 3,916  | 1.2  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **11,598**  | **3.5**  | 
|  |  |  | ==========  | ==========  | 
| PKO Bank Polski | Poland  | Financials  | 10,651  | 3.1  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **10,651**  | **3.1**  | 
|  |  |  | ==========  | ==========  | 
| Vista Oil & Gas | Argentina  | Energy  | 9,265  | 2.7  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **9,265**  | **2.7**  | 
|  |  |  | ==========  | ==========  | 
| Qatar Gas Transport Company | Qatar  | Energy  | 8,167  | 2.4  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **8,167**  | **2.4**  | 
|  |  |  | ==========  | ==========  | 
| LT Group | Philippines  | Industrials  | 3,800  | 1.1  | 
| Jollibee Foods | Philippines  | Consumer Discretionary  | 3,108  | 0.9  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **6,908**  | **2.0**  | 
|  |  |  | ==========  | ==========  | 
| Copa Airlines | Panama  | Industrials  | 6,868  | 2.0  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **6,868**  | **2.0 ** | 
|  |  |  | ==========  | ==========  | 
| Credicorp | Peru  | Financials  | 5,890  | 1.7  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **5,890**  | **1.7 ** | 
|  |  |  | ==========  | ==========  | 
| Frontken Corp | Malaysia  | Industrials  | 5,454  | 1.6  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **5,454 ** | **1.6 ** | 
|  |  |  | ==========  | ==========  | 
| Bank Of Georgia | Georgia  | Financials  | 5,447  | 1.6  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **5,447 ** | **1.6 ** | 
|  |  |  | ==========  | ==========  | 
| Ecopetrol | Colombia  | Energy  | 4,954  | 1.5  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **4,954 ** | **1.5 ** | 
|  |  |  | ==========  | ==========  | 
| Eastern Company | Egypt  | Consumer Staples  | 4,759  | 1.4  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **4,759 ** | **1.4 ** | 
|  |  |  | ==========  | ==========  | 
| Mobile Telecommunications | Kuwait  | Communication Services  | 4,341  | 1.3  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **4,341 ** | **1.3 ** | 
|  |  |  | ==========  | ==========  | 
| BRD–Groupe Société Générale | Romania  | Financials  | 3,444  | 1.0  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **3,444 ** | **1.0 ** | 
|  |  |  | ==========  | ==========  | 
| Equity Group | Kenya  | Financials  | 2,411  | 0.7  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **2,411 ** | **0.7 ** | 
|  |  |  | ==========  | ==========  | 
| Ferrexpo | Ukraine  | Materials  | 909  | 0.3  | 
|  |  |  | —————-  | —————-  | 
|  |  |  | **909 ** | **0.3 ** | 
|  |  |  | ==========  | ==========  | 
| **Equity investments** |  |  | **259,875 ** | **76.9 ** | 
|  |  |  | ==========  | ==========  | 
| BlackRock’s Institutional Cash Series plc – US Dollar Liquid Environmentally Aware Fund (Cash Fund) |  |  | 75,824  | 22.4  | 
|  |  |  | —————-  | —————-  | 
| **Total investments (including Cash Fund)** |  |  | **335,699 ** | **99.3 ** | 
|  |  |  | ==========  | ==========  |

CFD portfolio

| 
Company  | Principal country of operation  | Sector  | Fair value^(1) US$’000  | Gross market exposure^(3) US$’000  | Gross market exposure as a % of net assets^(3)  | 
| **Long positions** |  |  |  |  |  | 
| Abdullah Al Othaim Markets | Saudi Arabia  | Consumer Staples  |  | 12,099  | 3.6  | 
| Saudi Basic Industries Corporation | Saudi Arabia  | Materials  |  | 11,054  | 3.3  | 
| Elm Company | Saudi Arabia  | Information Technology  |  | 9,622  | 2.8  | 
| Yanbu National Petrochemical | Saudi Arabia  | Materials  |  | 8,216  | 2.4  | 
| Arabian Drilling | Saudi Arabia  | Energy  |  | 6,362  | 1.9  | 
| Saudi British Bank | Saudi Arabia  | Financials  |  | 3,254  | 1.0  | 
|  |  |  |  | —————-  | —————-  | 
|  |  |  |  | **50,607**  | **15.0**  | 
|  |  |  |  | ==========  | ==========  | 
| FPT | Vietnam  | Information Technology  |  | 9,638  | 2.9  | 
| Vietnam Technological & Commercial | Vietnam  | Financials  |  | 8,225  | 2.4  | 
| Petrovietnam Drilling & Well Services | Vietnam  | Energy  |  | 5,772  | 1.7  | 
| Vietnam Dairy Products | Vietnam  | Consumer Staples  |  | 5,564  | 1.6  | 
|  |  |  |  | —————-  | —————-  | 
|  |  |  |  | **29,199**  | **8.6**  | 
|  |  |  |  | ==========  | ==========  | 
| Borouge | United Arab Emirates  | Materials  |  | 6,914  | 2.0  | 
| Abu Dhabi Commercial Bank | United Arab Emirates  | Financials  |  | 5,411  | 1.6  | 
|  |  |  |  | —————-  | —————-  | 
|  |  |  |  | **12,325**  | **3.6**  | 
|  |  |  |  | ==========  | ==========  | 
| Commercial International Bank | Egypt  | Financials  |  | 3,432  | 1.0  | 
|  |  |  |  | —————-  | —————-  | 
|  |  |  |  | **3,432**  | **1.0**  | 
|  |  |  |  | ==========  | ==========  | 
| Titan Cement International | Greece  | Materials  |  | 2,575  | 0.8  | 
|  |  |  |  | —————-  | —————-  | 
|  |  |  |  | **2,575**  | **0.8**  | 
|  |  |  |  | ==========  | ==========  | 
| Wizz Air Holdings | Hungary  | Industrials  |  | 1,103  | 0.3  | 
|  |  |  |  | —————-  | —————-  | 
|  |  |  |  | **1,103**  | **0.3**  | 
|  |  |  |  | ==========  | ==========  | 
| Ferrexpo | Ukraine  | Materials  |  | 286  | 0.1  | 
|  |  |  |  | —————-  | —————-  | 
|  |  |  |  | **286**  | **0.1**  | 
|  |  |  | ==========  | ==========  | ==========  | 
| **Total long CFD positions** |  |  | **3,339 ** | **99,527**  | **29.4**  | 
|  |  |  | ==========  | ==========  | ==========  | 
| **Total short CFD positions** |  |  | **(490)** | **(13,228)** | **(3.9)** | 
|  |  |  | ==========  | ==========  | ==========  | 
| **Total CFD portfolio** |  |  | **2,849 ** | **86,299**  | **25.5**  | 
|  |  |  | ==========  | ==========  | ==========  |

**Fair value and gross market exposure** **of investments** **as at 31 March 2023**

| 
Portfolio | Fair value^(1)  | Gross market exposure^(3)  | Gross market exposure as a % of net assets^(3) | 
|  | US$’000  | US$’000  | 31 March 2023  | 31 March 2022  | 30 September 2022  | 
| Equity investments (see footnote 1(a)below) | 259,875  | 259,875  | 76.9  | 75.8  | 74.8  | 
| Total long CFD positions (see footnote 1(b) below) | 3,339  | 99,527  | 29.4  | 35.3  | 31.3  | 
| Total short CFD positions (see footnote 1(b) below) | (490) | (13,228) | (3.9) | (2.3) | (5.2) | 
|  | —————-  | —————-  | —————-  | —————-  | —————-  | 
| **Total gross market exposure** | 262,724  | 346,174  | 102.4  | 108.8  | 100.9  | 
|  | ==========  | ==========  | ==========  | ==========  | ==========  | 
| Cash Fund | 75,824  | 75,824  | 22.4  | 23.3  | 23.6  | 
|  | —————-  | —————-  | —————-  | —————-  | —————-  | 
| **Total investment and derivatives** | 338,548  | 421,998  | 124.8  | 132.1  | 124.5  | 
|  | ==========  | ==========  | ==========  | ==========  | ==========  | 
| Cash and cash equivalents^(1,2) | 6,032  | (77,418) | (22.9) | (30.1) | (25.7) | 
| Other net current (liabilities)/assets | (6,400) | (6,400) | (1.9) | (2.0) | 1.2  | 
| Non-current liabilities | (19) | (19) | 0.0  | 0.0  | 0.0  | 
|  | —————-  | —————-  | —————-  | —————-  | —————-  | 
| **Net assets** | 338,161  | 338,161  | 100.0  | 100.0  | 100.0  | 
|  | ==========  | ==========  | ==========  | ==========  | ==========  |

The nature of the Company’s portfolio and the fact the Company gains significant
exposure to a number of markets through long and short CFDs means that to the extent
the Investment Manager has elected not to be geared, the Company will always hold
a level of cash in a money market fund on its balance sheet representative of the
difference between the notional cost of purchasing or selling the investments directly
and the lower initial cost of making a margin payment on a long or short CFD contract.
The Company was geared through the use of long and short CFD positions and gross
and net gearing as at 31 March 2023 was 10.2% and 2.4% respectively (31 March 2022:
13.5% and 8.8%; 30 September 2022: 11.3% and 1.0%). Gross and net gearing are Alternative
Performance Measures, see Glossary in the half yearly report and financial statements.

^(1       ) Fair value is determined as follows:

(a) Listed investments are valued at bid prices where available, otherwise at latest
market traded quoted prices.

(b) The sum of the fair value column for the CFD contracts totaling US$2,849,000
represents the net fair valuation of all the CFD contracts, which is determined 
based on the difference between the notional transaction price and market value 
of the underlying shares in the contract (in effect the unrealised gains/(losses)
on the exposed long and short CFD positions). The exposure to securities held through
long CFD positions directly in the market would have amounted to US$96,188,000 at
the time of purchase, and subsequent movement in market prices have resulted in 
unrealised gains on the long CFD positions of US$3,339,000 resulting in the value
of the total long CFD market exposure to the underlying securities increasing to
US$99,527,000 as at 31 March 2023. If the long positions had been closed on 31 March
2023, this would have resulted in a gain of US$3,339,000 for the Company. The notional
exposure of selling the securities gained via the short CFD positions would have
been US$12,738,000 at the time of entering into the contract, and subsequent movement
in market prices have resulted in unrealised losses on the short CFD positions of
US$490,000 resulting in the value of the total short CFD market exposure of these
investments increasing to US$13,228,000 at 31 March 2023. If the short positions
had been closed on 31 March 2023 this would have resulted in a loss of US$490,000
for the Company.

^(2       ) The gross market exposure column for cash and cash equivalents has been
adjusted to assume the Company purchased/sold direct holdings rather than exposure
being gained through long and short CFDs and forward currency positions.

^(3       ) Gross market exposure in the case of equity investments is the same 
as fair value. In the case of long and short CFDs it is the market value of the 
underlying shares to which the portfolio is exposed via the contract.

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**
A detailed explanation of the risks relating
to the Company can be divided into various areas as follows:

·        Investment Performance Risk;

·        Income/Dividend Risk;

·        Legal and Regulatory Risk;

·        Counterparty Risk;

·        Operational Risk;

·        Political Risk;

·        Financial Risk; and

·        Market Risk.

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 September 2022.
A detailed explanation can be found in the Strategic Report and in note 17 of the
Annual Report and Financial Statements which are available on the website maintained
by BlackRock at: www.blackrock.com/uk/brfi.

Certain financial markets have been volatile during the financial period due primarily
to continuing geo-political tensions arising from Russia’s invasion of Ukraine. 
The Company has no exposure to Russia and a small exposure of 0.4% of net assets
to Ukraine. The Board and the Investment Manager continue to monitor investment 
performance in line with the Company’s investment objectives.

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

**Going concern**
The Board remains mindful of the ongoing uncertainty surrounding
the potential duration of the Russia-Ukraine conflict and its longer term effects
on the global economy and the current heightened geo-political risk. Nevertheless,
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.

Based on the above, the Board is satisfied that it is appropriate to 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
them. Ongoing charges (excluding performance fees, finance costs, direct transaction
costs, custody transaction charges, VAT recovered, taxation, prior year expenses
written back and certain non-recurring items) were approximately 1.36% of average
daily net assets for the year ended 30 September 2022.

**Related party disclosures and transactions with the AIFM and Investment Manager**

BlackRock Fund Managers Limited (BFM) is 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
and performance fees payable are set out in note 4 and note 14. The related party
transactions with the Directors are set out in note 13.

**Directors’ Responsibility Statement**
The Disclosure Guidance 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 the UK-adopted International
Accounting Standard 34 – Interim Financial Reporting; and

·        the Interim Management Report, together with the Chairman’s Statement and
Investment Manager’s Report, includes a fair review of the information required 
by 4.2.7R and 4.2.8R of the Financial Conduct Authority (FCA) Disclosure Guidance
and Transparency Rules.

The Half Yearly Financial Report has been reviewed by BlackRock Frontiers Investment
Trust’s Auditors.

The Half Yearly Financial Report was approved by the Board on 5 June 2023 and the
above Responsibility Statement was signed on its behalf by the Chairman.

**Audley Twiston-Davies**
**For and on behalf of the Board**5 June 2023

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