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Being able to use synthetic ‘shorts’ whereby shares are sold with the intention of buying them back at a lower price in the future, and the willingness to hold a large proportion of the fund in cash has allowed UK Absolute Alpha to deliver positive returns even in extraordinarily poor markets.

BlackRock UK Absolute Alpha is co-managed by Mark Lyttleton and Nick Osborne.

Mark Lyttleton commented:

“Traditional equity funds have found it almost impossible to maintain the value of their clients’ assets when markets have fallen over 35%. They may have done substantially better than their benchmark but not generated positive rates of return. Sadly relative returns are notoriously difficult to spend on the high street and many investors are choosing to go back to the future – shifting their focus towards investment strategies that aim to grow the value of their assets irrespective of market conditions.”

Nick Osborne added:

“We not only have investment flexibility, we use it. Over the last two years the fund’s net exposure has moved from 25% long to modestly short, and cash balances have been as high as 60%. Where we have seen opportunity in other asset classes we have allocated funds in that direction, notably in convertible bonds.”

While UK Absolute Alpha is four years old with a track record of consistent performance, the European Absolute Alpha was launched in April using a similar investment model, aiming to deliver positive returns across all market conditions by investing in equities and equity-related securities across Europe. The fund is managed by Vincent Devlin, a member of BlackRock’s European equity style diversified team and manager of the top performing BlackRock Continental European Fund.

Vincent Devlin commented:

“Equally in Europe investors are seeking alternative investment strategies that deliver a positive return and reduce market risk. The European Absolute Return funds available to both UK and offshore have received a positive response in recent months despite the recent market rally. What I have heard from investors is that they want to use these funds for diversification reasons as they offer considerably higher returns than leaving cash sitting on deposit.”

BlackRock’s European Absolute Alpha Fund enjoys similar flexibility to the UK Absolute Alpha Fund and can exploit value opportunities across a huge universe of European equities and equity derivatives. Europe is seeded with world class companies with truly global business models, many of which are well positioned to benefit from long term structural changes and increasing demand from emerging markets. European companies have around 27% of their sales destined for emerging economies compared with the US level of 21%.

Vincent Devlin added:

“The amount of choice we have in European companies and economies gives us exceptional opportunities to exploit absolute returns from market inefficiencies.”

“At tough times like this, the depth and skill of company management teams are tested, where the most nimble and focused can come out stronger on the other side at the expense of the unprepared and underresourced companies. This divide is a perfect environment for fundamental stock picking to identify investment opportunities.”

Alex Hoctor-Duncan, Head of BlackRock’s UK Retail Business concluded:

“Our two Absolute Alpha Funds have the pedigree to deliver positive returns across all market conditions.

As we did with UK Absolute Alpha before it was launched in 2005, European Absolute Alpha was paper traded from June 2008 until launch in April 2009 in order to stress test the concept across the European investment universe. ‘Buyer beware’ applies as much to absolute return funds as it does to other investments. These are complex investment vehicles requiring substantial investment in investment structure and risk control.

“The success and popularity of BlackRock’s UK Absolute Alpha Fund demonstrates the high level of investor confidence in our ability to deliver. Europe offers an additional and promising area of investment opportunity, with European Absolute Alpha a stepping stone for cautious investors who want exposure to European equity markets, but with contained risk.”

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About BlackRock
BlackRock is one of the world’s largest publicly traded investment management firms. At March 31, 2009, BlackRock’s assets under management were $1.283 trillion. The firm manages assets on behalf of institutions and individuals worldwide through a variety of equity, fixed income, cash management and alternative investment products. In addition, a growing number of institutional investors use BlackRock Solutions® investment system, risk management and financial advisory services. The firm is headquartered in New York City and has employees in 21 countries throughout the U.S., Europe and Asia Pacific. For additional information, please visit the firm's website at www.blackrock.com.

BlackRock UK Absolute Alpha (derivatives warning)
Typically, UK Authorised Unit Trusts invest on a ‘long only’ basis. This means they will rise (or fall) in value based on the market value of the assets they hold. BlackRock UK Absolute Alpha Fund, by employing certain derivative techniques, will establish both ‘long’ and ‘short’ positions. As a result, as well as holding assets that may rise or fall with market values, it will also hold positions that will rise as the market value falls, and fall as the market value rises. Therefore the Fund can be referred to as being a ‘long/short’ fund.

The Fund is principally exposed to UK company share price movements. Certain derivative techniques establish "long" and "short" positions which can lead to movements in the Fund's value which might not correspond with the general direction of the UK stock market. The Manager employs a risk management process to oversee and manage derivative exposure within the Fund.

Investment Performance BlackRock UK Absolute Alpha Fund

From March-06 to March 07: 10.3
from March-07 to March-08: 13.1
From March-08 to March-09: -3.1

BlackRock European Absolute Alpha Fund
The Fund may be exposed to finance sector companies, as a service provider or as counterparty for financial contracts. In recent months, liquidity in the financial markets has become severely restricted, causing a number of firms to withdrawn from the market, or in some extreme cases, becoming insolvent.

This may have an adverse affect on the activities of the fund. The strategies utilised by the Fund involve the use of derivatives to facilitate certain investment management techniques including the establishment of both 'long' and 'synthetic short' positions and creation of leverage for the purposes of increasing the economic exposure of a Fund beyond the value of it's net assets. The use of derivatives in this manner may have the effect of increasing the overall risk profile of the Fund. Investors in this fund should understand that the Fund is not guaranteed to produce a positive return and as an absolute return product, performance may not move in line with general stock market trends as both positive and negative share movements affect the overall value of the fund. The Manager employs a risk management process to oversee and manage derivative exposure within the Fund.

The BlackRock European Absolute Alpha Fund will attempt to reduce (or 'hedge') the risk of currency movements between the Base Currency and the currency in which some or all of the underlying investments are transacted. It should be noted that the hedging strategy employed will not completely eliminate the exposure of the Fund to movements between the Base Currency and these other currencies.

The hedging strategies may be entered into whether the Base Currency is declining or increasing in value compared to the currency of the underlying investments. This may have a positive or negative impact on the performance of the Fund.