BlackRock UK Absolute Alpha Fund. For the six months ended 31 August 2015

Transcription

1 INTERIM report BlackRock UK Absolute Alpha Fund For the six months ended 31 August 2015

2 About the Fund Managers BlackRock UK Absolute Alpha Fund Nigel Ridge, Managing Director and portfolio manager, is a member of the UK Equity team within BlackRock s Fundamental Equity division of BlackRock s Alpha Strategies Group. He is responsible for covering the utilities sector. Mr. Ridge s service with the firm dates back to 2004, including his years with Merrill Lynch Investment Managers ( MLIM ), which merged with BlackRock in At MLIM, Mr. Ridge was a senior fund manager on the UK Specialist Equity team. Prior to joining MLIM in 2004, Mr. Ridge was head of UK retail funds at Legal & General. He has 25 years experience of managing UK equities on both a core and a high performance basis, formerly at Schroders and also at Deutsche Asset Management. Mr. Ridge earned a BSc degree, with first class honours, in electrical and electronic engineering from Loughborough University in Nick Osborne, CFA, Director and portfolio manager, is a member of the UK Equity team in the Fundamental Equity division of BlackRock s Alpha Strategies Group. Mr. Osborne is head of Research for the UK Equity Team, co-manages the UK Absolute Alpha Fund for retail investors and covers the real estate and banking sectors. Mr. Osborne s service with the firm dates back to 1999, including his years with MLIM, which merged with BlackRock in He began his career with MLIM in 1999 as an investment analyst on the UK and Emerging Market teams. Mr. Osborne earned a BSc in Economics from Bristol University in Investment Objective & Policy The BlackRock UK Absolute Alpha Fund (the Fund ) seeks to achieve a positive absolute return for investors and, as such, the Fund will not be managed against any UK equity index. The Fund will seek to achieve this investment objective by taking long positions and using derivatives to take synthetic long and synthetic short investment positions. The Fund will be managed with the aim of delivering absolute (more than zero) returns on a twelve month basis in any market conditions. However, an absolute return is not guaranteed over a twelve month or any period and the Fund may experience periods of negative return. The Fund s capital is at risk. The Fund primarily aims to gain investment exposure to equities and equity-related securities of, or giving exposure to, companies incorporated or listed in the UK. In order to gain this exposure, the Fund invests primarily in derivatives, equities and equity-related securities and, when determined appropriate, cash and near cash. The Fund may also invest in other transferable securities, permitted money-market instruments, permitted deposits and units in collective investment schemes. The Fund was established on 25 April 2005 and was authorised by the Financial Conduct Authority on 29 April The Fund changed its investment objective and adopted its present name with effect from 1 September Authorised Status BlackRock UK Absolute Alpha Fund is an authorised unit trust Scheme under Section 243 of the Financial Services and Markets Act 2000 and is established as a UCITS retail Scheme under the Financial Conduct Authority s Collective Investment Schemes Sourcebook (the COLL Sourcebook ). This Interim Report covers the six months ended 31 August Performance Table Period of Report Six Months to Five Years to Since Launch to CAPITAL Return Income Units BlackRock UK Absolute Alpha Fund A Class +7.5% +14.2% +57.4% TOTAL Return (with net income reinvested) Accumulation Units BlackRock UK Absolute Alpha Fund A Class +7.5% +14.2% +65.0% BlackRock UK Absolute Alpha Fund P Class +6.5% +13.8% +42.2% BlackRock UK Absolute Alpha Fund D Class +6.4% +17.0% +17.4% FTSE All-Share Index* # -6.2% +51.4% % 3 month Sterling LIBOR*^ +0.3% +3.4% +27.2% All Fund figures quoted are based on bid-to-bid dealing prices (the price at which units are sold) and are calculated net of fees. Performance returns are cumulative. All returns are in Sterling. Fund capital returns not available. * The Fund is not managed in reference to a benchmark index. For purely reference purposes we are showing the FTSE All-Share Index as a general indicator of the performance of UK equities and the 3 month Sterling LIBOR as an indicator of the general return on cash investments over the period. # Figures from Morningstar. Since launch figures are from Since launch figures are from ^ Figures from Datastream. All financial investments involve an element of risk. Therefore, the value of your investment and the income from it will vary and the return of your initial investment amount cannot be guaranteed. Changes in exchange rates may cause the value of an investment to fluctuate. Past performance is not a guide to future performance and should not be the sole factor of consideration when selecting a product. Copies of Manager s Reports and Prospectus are available on request. Dealing and Investor Services: blackrock.co.uk 1 BlackRock UK Absolute Alpha Fund 2

3 Performance Record Annual performance to most recent quarter end to to to to to A Accumulation +13.8% +3.9% -3.5% -3.5% +3.1% P Accumulation +13.0% +4.1% -3.3% -3.3% +2.8% D Accumulation +13.1% +4.8% -2.6% -2.5% +3.3% All figures quoted are based on bid-to-bid dealing prices (the price at which units are sold), with net income reinvested. Performance is calculated net of fees. Performance is shown for complete 12 month periods only. Net Asset Value At 31 August 2015 Units in Issue Net Asset Value Net Asset Value per Unit p A Income 99, A Accumulation 501, P Accumulation 113,459, , D Accumulation 32,746,441 46, S Income^ 148 0* S Accumulation^ 102, ^ S Income and S Accumulation classes commenced March * The Net Asset Value for this class is less than 500 but not actually zero, hence the Net Asset Value per unit is calculated using the true Net Asset Value. Distributions Payable The Fund recorded a net revenue shortfall for the period to 31 August Accordingly no distribution was payable. Risk and Reward Profile Lower risk Typically lower rewards Higher risk Typically higher rewards Unit Class A Income A Accumulation P Accumulation D Accumulation S Income S Accumulation `` The risk indicator was calculated incorporating historical or simulated historical data and may not be a reliable indication of the future risk profile of each unit class. `` The risk category shown is not guaranteed and may change over time. `` The lowest category does not mean risk free. `` The use of derivatives will impact the value of the Fund and may expose the Fund to a higher degree of risk. Derivatives are highly sensitive to changes in the value of the asset on which they are based and can increase the size of losses and gains, resulting in greater fluctuations in the value of the Fund. For more information on this, please see the Fund s Key Investor Information Documents (KIIDs), which are available at 3 BlackRock UK Absolute Alpha Fund 4

4 Performance Record continued Investment Report Operating Charges Detailed in the following table are the charges used to meet the costs of running the Fund, which include the costs of marketing and distribution. These charges reduce the potential growth of your investments. The charges may vary from year to year. The charges exclude portfolio trade-related costs, except costs paid to the custodian/trustee and entry/exit charges paid to an underlying collective investment scheme (if any). Unit Class to # to A Income 1.93% 1.93% A Accumulation 1.93% 1.93% P Accumulation 1.68% 1.68% D Accumulation 0.93% 0.93% S Income^ 0.67% N/A S Accumulation^ 0.83% N/A # Operating charges figures have been annualised. ^ S Income and S Accumulation classes commenced March In addition to the above, the Fund is subject to a performance fee on all unit classes with the exception of the class A Income and class A Accumulation units. The performance fee is charged at 20% on any outperformance of the 3 month Sterling LIBOR return subject to a high water mark as outlined in the Prospectus. No performance fee was charged during the period with respect to,s Income and S Accumulation units (28 February 2015: N/A). The performance fee charged with respect to P Accumulation units was 1,805,562 (28 February 2015: Nil) representing 1.1% of the P Accumulation s average Net Asset Value for the period. The performance fee charged with respect to D Accumulation units was 495,165 (28 February 2015: 90,057) representing 1.3% of the D Accumulation s average Net Asset Value for the period. Summary of Performance over the Period The Fund returned 6.5%* over the six-month period from 1 March 2015 to 31 August Fund Managers Commentary As the developed world slowly moved towards a more normal financial state, bonds, currencies and equities all saw large swings, especially Chinese equities. Global share markets experienced a significant decline, given fears about an economic slowdown and deflation as the period drew to a close. The Fund s positive performance was driven by careful stock-picking. Overall, the long book (where we believe a stock will go up), the short book (where we believe a stock could go down) and the Fund s pair positions (where we have matched a long position in one stock with a short position in another in the same sector) all contributed positively. Improving fundamentals in some core long holdings contributed positively, while valuation concerns or structural pressures in companies where we believed a stock could fall helped the short book add to returns. The ongoing UK recovery, the surprisingly conclusive general election outcome and the continued low-interest-rate environment all helped the Fund s consumer-exposed positioning and UK housebuilders in particular. The largest contribution came from online gaming company Betfair as the company grew its market share and announced a potential merger with Paddy Power. Two of our long positions were among the main detractors real estate company Dolphin Capital was hampered by a stall in the debt negotiations in Greece, while the long-term growth story at industrial group Essentra, encountered a weaker trading environment. The Fund is built on a diversified range of liquid companies offering attractive long-term growth and return prospects. Our bias to companies exposed to the US and the UK should mean that the Fund will continue to benefit from the supportive economic backdrop in these regions, more than the negative effects of a slowdown in China. As the last six months have shown, a stockpicking fund capitalising on share prices moving in both directions opens up the opportunity of achieving absolute returns, regardless of whether markets rise or fall. September 2015 * Performance figures quoted are based on bid-to-bid dealing prices (the price at which units are sold) and are not the same as the net asset value reported in the financial statements which is at close of business. Performance is calculated net of fees and is reported for the Fund s class P Accumulation Units. 5 BlackRock UK Absolute Alpha Fund 6

5 Portfolio Statement (unaudited) at 31 August 2015 Holding or Market % of Nominal Value Total Net Value Investment Assets EQUITIES 15.26%; % UNITED KINGDOM 15.26%; % Banks 0.76%; % 1,969,658 Lloyds Banking 1, Equity Investment Instruments 3.59%; % 6,929,315 Better Capital 7, Financial Services 0.00%; % Food & Drug Retailers 0.61%; % 418,877 SSP 1, General Retailers 2.24%; % 914,390 AA 3, ,668 Dixons Carphone 1, , Health Care Equipment and Services 0.80%; % 3,864,915 Circle Health 1, Media 0.29%; % 170,000 Auto Trader Oil & Gas Producers 0.19%; % 934,200 Bowleven ,261,204 Providence Resources Real Estate Investment & Services 4.70%; % 1,065,000 Capital & Counties Properties 4, ,204,380 Dolphin Capital Investors 1, ,223 Dolphin Capital Investors Warrants 31/12/2015* ,600,000 LXB Retail Properties 3, , Support Services 2.08%; % 489,370 Essentra 4, Holding or Market % of Nominal Value Total Net Value Investment Assets BONDS 49.28%; % STERLING DENOMINATED BONDS 49.28%; % ECP Bonds ** 16.11%; % 1,000,000 Macquarie Bank 0% 14/10/ ,000,000 Macquarie Bank 0% 19/10/2015 3, ,000 OCBC 0% 23/11/ ,000,000 Pohjola Bank 0% 9/11/2015 4, ,000,000 Scaldis Capital 0% 23/9/2015 3, ,000,000 Standard Chartered Bank 0% 17/2/ , ,000,000 Sumitomo Mitsui Bank 0% 20/10/2015 3, ,000,000 Toronto Dominion 0% 3/12/ , Variable Rate Corporate Bonds 33.17%; % 1,100,000 Bank of Montreal % Floating Rate European Medium Term Notes 15/1/2016 1, ,200,000 Bank of Nova Scotia % Floating Rate European Medium Term Notes 26/2/2016 4, ,000,000 Bank of Nova Scotia % Floating Rate European Medium Term Notes 18/1/2016 1, ,000 Banque et Caisse d Epargne de l Etat % Floating Rate European Medium Term Notes 4/6/ ,000 Banque et Caisse d Epargne de l Etat % Floating Rate European Medium Term Notes 18/2/ ,000 Banque et Caisse d Epargne de l Etat % Floating Rate European Medium Term Notes 15/7/ ,000 Banque et Caisse d Epargne de l Etat % Floating Rate Senior European Medium Term Notes 29/8/ ,000 Banque et Caisse d Epargne de l Etat % Floating Rate Senior Medium Term Notes 26/8/ ,000 DBS Bank % Floating Rate European Medium Term Notes 1/4/ ,000 DBS Bank % Floating Rate European Medium Term Notes 9/3/ ,000 DBS Bank % Floating Rate European Medium Term Notes 10/6/ ,000 DBS Bank % Floating Rate European Medium Term Notes 8/6/ ,000 DBS Bank % Floating Rate European Medium Term Notes 22/6/ ,000 Erste Abwicklungsanstalt % Floating Rate European Medium Term Notes 20/1/ BlackRock UK Absolute Alpha Fund 8

6 Portfolio Statement (unaudited) continued Holding or Market % of Nominal Value Total Net Value Investment Assets 6,000,000 Erste Abwicklungsanstalt 0.591% Floating Rate European Medium Term Notes 26/1/2016 5, ,000 FMS Wertmanagement % Floating Rate European Medium Term Notes 20/1/ ,000 FMS Wertmanagement 0.541% Floating Rate European Medium Term Notes 26/1/ ,000 FMS Wertmanagement % Floating Rate European Medium Term Notes 12/8/ ,000 Hong Kong Mortgage % Floating Rate European Medium Term Notes 22/1/ ,000,000 HSBC Bank % Floating Rate European Medium Term Notes 11/3/2016 2, ,000 Metropolitan Life Global Funding 0.619% Floating Rate European Medium Term Notes 17/9/ ,000,000 National Australia Bank 0% Floating Rate European Medium Term Notes 19/8/ , ,100,000 National Australia Bank % Floating Rate European Medium Term Notes 10/6/2016 2, ,000,000 National Australia Bank % Floating Rate European Medium Term Notes 15/7/2016 1, ,000 NRW Bank % Floating Rate European Medium Term Notes 17/2/ ,000 NRW Bank % Floating European Medium Term Notes 12/2/ ,000 Pohjola Bank % Floating Rate European Medium Term Notes 2/3/ ,000 Pohjola Bank % Floating Rate European Medium Term Notes 2/3/ ,000 Rabobank Nederland % Floating Rate European Medium Term Notes 9/6/ ,000 Rabobank Nederland % Floating Rate Senior European Medium Term Notes 26/5/ ,000,000 Rabobank Nederland % Floating Rate European Medium Term Notes 29/4/2016 7, ,500,000 Rabobank Nederland % Floating Rate European Medium Term Notes 23/10/ , ,000,000 Royal Bank of Scotland % Floating Rate European Medium Term Notes 13/11/2015 2, ,000 Toyota Finance Australia % Floating Rate European Medium Term Notes 18/2/ , Holding or N notional Market % of Nominal Value Value Total Net Value Investment Assets CERTIFICATE OF DEPOSITS 19.77%; % 2,000,000 BNP Paribas 0.65% 7/12/2015 2, ,500,000 BNP Paribas 0.68% 7/12/2015 1, ,100,000 Citi Bank 0.575% 2/10/2015 3, ,000,000 Credit Suisse 0.64% 21/12/2015 1, ,000,000 Credit Suisse 0.65% 10/12/2015 5, ,700,000 ING Bank 0.58% 2/11/2015 4, ,500,000 Mitsubishi 0% 6/11/2015 4, ,000,000 Mitsubishi 0% 12/11/2015 1, ,000,000 Mizuho Bank 0% 29/10/2015 3, ,000 Mizuho Bank 0.56% 13/10/ ,000,000 Standard Chartered 0.74% 2/10/2015 3, ,500,000 Standard Chartered 0.75% 9/10/2015 1, ,000,000 Standard Chartered 0.75% 20/10/2015 1, ,000,000 Sumitomo Mitsui Bank 0% 5/10/2015 5, DERIVATIVES (0.35)%; % UNITED KINGDOM (0.30)%; % CONTRACTS FOR DIFFERENCES ( CFDs ) SHORT 1.31%; 2015 (5.66)% 39, Aerospace & Defence 0.02%; 2015 (0.39)% (217,215) Meggitt (1,087) Banks 0.01%; 2015 (0.05)% (810,415) Royal Bank of Scotland (2,745) Beverages 0.06%; 2015 (0.94)% (405,620) Britvic (2,774) (150,600) Diageo (2,663) (5,437) Chemicals 0.06%; 2015 (0.17)% (63,415) Croda (1,963) Electricity 0.00%; 2015 (0.09)% Financial Services 0.06%; 2015 (0.33)% (453,020) Henderson (1,293) BlackRock UK Absolute Alpha Fund 10

7 Portfolio Statement (unaudited) continued Holding or N notional Market % of Nominal Value Value Total Net Value Investment Assets Food & Drug Retailers 0.15%; 2015 (0.47)% (1,080,000) J Sainsbury (2,728) (243,695) Ocado (934) (375,000) Tesco (758) (944,760) Wm Morrison Supermarkets (1,660) (6,080) Food Producers 0.08%; 2015 (0.18)% (106,365) Associated British Foods (3,456) (38,575) Unilever (1,139) Gas, Water & Multiutilities 0.00%; 2015 (0.09)% (4,595) General Industrials 0.04%; % (226,970) Smiths (2,639) General Retailers 0.05%; % (800,000) Debenhams (710) Household Goods & Home Construction 0.02%; 2015 (0.31)% (182,885) Persimmon (3,838) (9) 0.00 (21,385) Reckitt Benckiser (1,281) (5,119) Life Insurance 0.11%; 2015 (0.06)% (142,430) Prudential (2,100) (642,883) Standard Life (2,818) Media 0.00%; 2015 (0.31)% (4,918) Mining 0.01%; % (165,625) Anglo American (1,239) Mobile Telecommunications (0.02)%; 2015 (0.16)% (264,890) Inmarsat (2,564) (33) (0.02) Oil & Gas Producers 0.03%; 2015 (0.08)% (250,000) BP (964) Holding or N notional Market % of Nominal Value Value Total Net Value Investment Assets Personal Goods 0.04%; 2015 (0.24)% (111,440) Burberry (1,659) Pharmaceuticals & Biotechnology 0.04%; 2015 (0.03)% (117,225) GlaxoSmithKline (1,653) Support Services 0.46%; 2015 (1.75)% (390,460) G4S (982) (20) (0.01) (380,675) Bunzl (7,033) (240,000) Carillion (848) (457,835) Experian (5,398) (1,259,720) Regus (3,493) (108) (0.05) (1,971,137) Serco (2,474) (71,685) Travis Perkins (1,511) (21,739) Tobacco 0.01%; % (12,940) Imperial Tobacco (424) Travel & Leisure 0.08%; 2015 (0.36)% (441,680) William Hill (1,657) (1,389,202) Marston s (2,182) (82,153) Restaurant (565) CFDs LONG (2.01)%; % Aerospace & Defence 0.00%; 2015 (0.04)% (4,404) Banks (0.37)%; 2015 (0.04)% 1,180,220 HSBC 6,581 (460) (0.23) 11,255,607 Lloyds Banking 8,997 (288) (0.14) 15,578 (748) (0.37) Chemicals (0.02)%; % 61,150 Victrex 1,143 (46) (0.02) Construction & Materials (0.02)%; % 138,410 CRH 2,709 (49) (0.02) 11 BlackRock UK Absolute Alpha Fund 12

8 Portfolio Statement (unaudited) continued Holding or N notional Market % of Nominal Value Value Total Net Value Investment Assets Financial Services (0.25)%; % 1,003,650 3i 5,294 (359) (0.18) 346,280 Hargreaves Lansdown 4,069 (176) (0.09) 1,330,060 Paragon Group of Companies 5, ,803 (500) (0.25) Food & Drug Retailers (0.01)%; % 459,628 SSP 1,377 (23) (0.01) Gas, Water & Multiutilities (0.01)%; % 183,565 National Grid 1,607 (28) (0.01) General Retailers (0.05)%; % 542,707 Dixons Carphone 2,430 (91) (0.05) Health Care Equipment & Services (0.01)%; % 90,090 Smith and Nephew 1,072 (25) (0.01) Household Goods & Home Construction (0.05)%; % 2,556,910 Taylor Wimpey 5,242 (97) (0.05) Life Insurance (0.04)%; % 1,060,000 Legal & General 2,765 (86) (0.04) Media (0.24)%; % 1,156,685 ITV 2,988 (94) (0.05) 940,735 RELX 10,198 (374) (0.19) 13,186 (468) (0.24) Mining (0.09)%; % 76,535 Rio Tinto 2,005 (178) (0.09) Oil & Gas Producers (0.20)%; 2015 (0.01)% 252,685 Royal Dutch Shell class B shares 4,711 (402) (0.20) Pharmaceuticals & Biotechnology (0.17)%; % 92,505 AstraZeneca 4,015 (207) (0.10) 44,685 Shire 2,379 (135) (0.07) 6,394 (342) (0.17) Real Estate Investment & Services (0.10)%; 2015 (0.49)% 12,150,000 Dolphin Capital Investors 2,217 (198) (0.10) Holding or N notional Market % of Nominal Value Value Total Net Value Investment Assets Support Services (0.32)%; % 424,211 Ashtead 4,038 (26) (0.01) 29,630 Essentra 255 (2) ,048,675 Hays 3,466 (195) (0.10) 466,020 Howden Joinery 2,307 (65) (0.03) 161,170 Intertek 4,247 (162) (0.08) 1,563,250 Rentokil Initial 2,371 (53) (0.03) 1,164,735 SIG 2,246 (61) (0.03) 172,190 Wolseley 7,326 (86) (0.04) 26,256 (650) (0.32) Technology Hardware & Equipment 0.02%; % 90,000 ARM Tobacco (0.16)%; % 103,800 British American Tobacco 3,924 (316) (0.16) Travel & Leisure 0.08%; % 137,405 Betfair 3, ,100 Carnival 10,218 (488) (0.24) 119,720 Compass 1,240 (2) ,804,967 Enterprise Inns* 2, , FUTURES 0.40%; 2015 (0.38)% (420) FTSE 100 Index September 2015 (26,728) (172) FTSE 250 Index September 2015 (6,039) CANADA 0.01%; 2015 (0.52)% CFDs SHORT 0.01%; 2015 (0.52)% (32,767) Software & Computer Services 0.01%; 2015 (0.52)% (30,000) CGI class A shares (736) UNITED STATES (0.06)%; % CFDs LONG (0.06)%; % Household Goods & Home Construction (0.06)%; % 33,325 Edgewell Personal Care 2,005 (126) (0.06) 13 BlackRock UK Absolute Alpha Fund 14

9 Portfolio Statement (unaudited) continued Holding or Market % of Nominal Value Total Net Value Investment Assets INVESTMENT FUNDS 9.21%; % Short-term Money Market Funds 9.21%; % 18,500,000 Institutional Cash Series plc Sterling Liquidity Fund*** 18, Portfolio of investments 187, Net other assets 13, Total net assets 200, Unless otherwise stated, all holdings are quoted in ordinary shares and listed on a recognised exchange. Note: comparative figures show percentages for each category of holding at 28 February The Contracts for Differences (CFDs) shown in the Portfolio Statement on pages 10 to 14 are expressed at both their mark-to-market and original notional value, which when added together represent the current notional value of the CFDs. The current notional value of a CFD represents the reference amount used to calculate payments between the counterparties to the CFD. The full notional value represents the economic interest in the security underlying the CFD, but does not change hands in full between the counterparties. * Investments which are less than 500 are rounded to zero. ** An ECP (European Commercial Paper) Bond is an unsecured, short-term loan issued by a bank or corporation in the international money market, denominated in currency that differs from the corporation s domestic currency. *** Managed by a related party. The Fund will not be subject to any initial subscription or redemption fees on its investment into an underlying fund managed by a related party. The Fund may indirectly incur management charges by investing in an underlying fund. The Fund invests, where possible, in a share class of an underlying fund that is not subject to management charges. Alternatively, where this is not possible, the Manager will rebate management charges to the Fund. The credit rating profile of the portfolio at 31 August 2015 is shown below: % of Total Net Assets Investment grade Not rated Non-debt securities Net other assets 6.83 Total net assets Statement of Total Return (unaudited) for the six months ended 31 August Income Net capital gains 15,253 8,525 Revenue 968 (150) Expenses (3,851) (1,859) Interest payable and similar charges (370) (345) Net expense before taxation (3,253) (2,354) Taxation Net expense after taxation (3,253) (2,354) Total return before distributions 12,000 6,171 Distributions Change in net assets attributable to unitholders from investment activities 12,000 6,171 Statement of Change in Net Assets Attributable to Unitholders (unaudited) for the six months ended 31 August Opening net assets attributable to unitholders 200, ,799 Amounts received on creation of units 11, Amounts paid on cancellation of units (23,461) (43,711) (12,112) (43,354) Stamp duty reserve tax (2) Change in net assets attributable to unitholders from investment activities 12,000 6,171 Closing net assets attributable to unitholders 200, ,614 The above statement shows the comparative closing net assets at 31 August 2014 whereas the current accounting period commenced 1 March BlackRock UK Absolute Alpha Fund 16

10 Balance Sheet (unaudited) at 31 August Assets: Fixed assets Investment assets 192, ,582 Current assets Debtors 2,811 1,350 Cash and bank balances 14,938 6,206 Total assets 209, ,138 Liabilities: Investment liabilities (5,068) (17,199) Creditors Bank overdraft (30) Cash collateral payable (530) (4,782) Other creditors (3,478) (1,224) Total liabilities (9,106) (23,205) Net assets attributable to unitholders 200, ,933 Notes to Financial Statements (unaudited) for the six months ended 31 August 2015 Accounting Policies The financial statements have been prepared in accordance with the Statement of Recommended Practice for Authorised Funds (the SORP ) issued by the Investment Management Association ( IMA ) (now known as the Investment Association) in May The SORP was revised in May 2014 to concur with Financial Reporting Standard 102, the new financial reporting standard applicable in the UK and Republic of Ireland. The transition to the revised SORP on 1 March 2015 has not resulted in any restatement to the financial position or financial performance previously reported as at 28 February Certain presentational amendments have been required which have no impact on the total return or net asset value in either the current or prior accounting period. All other accounting policies used to prepare the interim financial statements are as per the audited financial statements for the year ended 28 February N C D Hall (Director) M T Zemek (Director) BlackRock Fund Managers Limited 15 October BlackRock UK Absolute Alpha Fund 18

11 Stamp Duty Reserve Tax ( SDRT ) General Information Prior to 30 March 2014, SDRT was levied on the dealing of units in unit trust schemes under Schedule 19 of the Finance Act 1999 ( Schedule 19 ) at the rate of 0.5% on the value of units surrendered. In order to increase the competitiveness of the asset management industry in the UK, the charge to SDRT under Schedule 19 has been abolished since 30 March 2014 and there is no SDRT charge levied on the surrender of units in unit trust schemes after this date. Manager & Registrar BlackRock Fund Managers Limited 12 Throgmorton Avenue, London EC2N 2DL Telephone: Dealing and Investor Services: Member of The Investment Association (formerly the Investment Management Association) and authorised and regulated by the Financial Conduct Authority. Directors of the Manager G D Bamping R A Damm N C D Hall* R A R Hayes A M Lawrence A J Stenning E E Tracey M T Zemek* (appointed 2 June 2015) * Non-executive Director. Trustee BNY Mellon Trust & Depositary (UK) Limited 160 Queen Victoria Street, London EC4V 4LA Authorised and regulated by the Financial Conduct Authority. Investment Manager BlackRock Investment Management (UK) Limited 12 Throgmorton Avenue, London EC2N 2DL Authorised and regulated by the Financial Conduct Authority. Auditor Ernst & Young LLP 1 More London Place, London SE1 2AF Custodian The Bank of New York Mellon (International) Limited 1 Canada Square, London E14 5AL Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. BlackRock s proxy voting agent is ISS (Institutional Shareholder Services). This Report relates to the packaged products of and is issued by: BlackRock Fund Managers Limited 12 Throgmorton Avenue, London EC2N 2DL Telephone: Dealing and Investor Services: blackrock.co.uk For your protection, telephone calls are usually recorded. 19 BlackRock UK Absolute Alpha Fund 20

12 ABOUT US BlackRock is a premier provider of asset management, risk management, and advisory services to institutional, intermediary, and individual clients worldwide. As of 30 June 2015, the firm manages 3 trillion across asset classes in separate accounts, mutual funds, other pooled investment vehicles, and the industry-leading ishares exchange-traded funds. Through BlackRock Solutions, the firm offers risk management and advisory services that combine capital markets expertise with proprietarily-developed analytics, systems, and technology. Through BlackRock Solutions, the Firm provides risk management and enterprise investment services for over 200 clients. BlackRock serves clients in North and South America, Europe, Asia, Australia, Africa, and the Middle East. Headquartered in New York, the firm maintains offices in over 30 countries around the world. For more information blackrock.co.uk