BlackRock Strategic Funds (BSF)

Transcription

1 BlackRock Strategic Funds (BSF) Unaudited Interim Report and Accounts 30 November 2012 R.C.S. Luxembourg: B

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3 Contents BSF Chairman s Letter 2 BSF Investment Adviser s Report 3 Board of Directors 6 Management and Administration 6 Statement of Net Assets 7 Three Year Summary of Net Asset s 10 Statement of Operations and Changes in Net Assets 13 Statement of Changes in Shares Outstanding 16 Portfolio of Investments BlackRock Americas Diversified Equity Absolute Return Fund 19 BlackRock Asia Extension Fund 38 BlackRock Emerging Markets Absolute Return Fund 44 BlackRock Euro Dynamic Diversified Growth Fund 46 BlackRock European Absolute Return Fund 49 BlackRock European Constrained Credit Strategies Fund 52 BlackRock European Credit Strategies Fund 61 BlackRock European Diversified Equity Absolute Return Fund 71 BlackRock European Opportunities Absolute Return Fund 83 BlackRock European Opportunities Extension Fund 87 BlackRock Fixed Income Strategies Fund 91 BlackRock Fund of ishares - Conservative 98 BlackRock Fund of ishares - Dynamic 99 BlackRock Fund of ishares - Growth 100 BlackRock Fund of ishares - Moderate 101 BlackRock Global Absolute Return Bond Fund 102 BlackRock Global Currency Absolute Return Fund 119 BlackRock Latin American Opportunities Fund 121 BlackRock Mining Opportunities Fund 123 Notes to the Financial Statements 125 General Information 133 Subscriptions may be made only on the basis of the current Prospectus, together with the most recent audited annual report and accounts and unaudited interim report and accounts. Copies are available from the Investor Services Centre, the Transfer Agent, the Manager or any of the Distributors. Unaudited Interim Report and Accounts 1

4 BSF Chairman s Letter November 2012 Dear Shareholder I am writing to update you on the activities of the BlackRock Strategic Funds ( BSF ) range over the six months to the end of November The performance of the Funds is covered in more detail in the separate Investment Adviser s Report. While markets have been volatile for much of the period, European equities eventually performed well after firm action was promised by the European Central Bank ( ECB ) to support peripheral nations that were in danger of default. Having sold-off in August after the threat of Greek debt default became increasingly likely, the market recovery was pronounced. Taking a global view, accommodative monetary policy continued to boost market sentiment and economic news was, on the whole, more encouraging. Politics have ruled markets throughout the period, as investors had reasons for both fear and optimism based on the outcomes of various political decisions. Europe was plagued by volatility over the year, led by fears over Greece remaining in the Eurozone, and the ability of nations such as Spain and Italy to pay back their debts. The ultimate worry was that the European Union and the single currency might even suffer a catastrophic breakup. In short, the Eurozone has remained in the headlines. However, fears were calmed when the ECB pledged in the late summer to offer struggling member states unlimited financial support. There was another recent change of direction by policymakers in Europe. The decision to hand Greece two more years to reach its still-implausible 120% debt-to-gross Domestic Product ( GDP ) target. The troika also effectively introduced fiscal loosening in Europe by changing its stance from one insisting on a hardwired calendar of deficit reductions, to a cyclically adjusted programme of deficit reduction. This lets European countries off the hook for a bit longer as they will not have to meet set financial targets at a certain date. A concern which flared as the period came to a close was the US presidential elections. With Obama elected, investors are left trying to figure out the next moves. The reason markets paid such close attention was the potential of a fiscal cliff scenario, which, if left unresolved, could cause a contraction of as much as 5% of GDP. There have also been concerns over growth rates in China, which have slowed. Many fear that the country may suffer a hard landing. The country is a major consumer of natural resources, and slower growth could filter through. Unrest in the Middle East continued following the Arab Spring uprising, with a crisis in Syria. A stalemate existed throughout the period between Syria s controlling government and rebels, with heavy casualties on both sides. Iran continues to pose a diplomatic challenge. Tensions in the region have the potential to severely disrupt the supply of oil. While the global economy is still fragile, the six months to November showed some positive signs and improved investor sentiment following the ECB s comments in the summer. It was perhaps no surprise, therefore, that assets under management ( AUM ) in the BSF range increased from USD 2.05 billion to USD 2.61 billion over six months to November an increase of 27.31%. Markets have generally rallied over the period, and it appears that investors felt more confident in putting their money to work, rather than watching from the sidelines. There were some notable contributions to this overall jump in AUM across the range; Europe is the recurring theme among the funds which increased by the largest volumes during the last six months. Among the biggest winners were the BlackRock European Absolute Return Fund, which increased in AUM over the period from 418 million to 729 million, the BlackRock Euro Dynamic Diversified Growth Fund, which increased from 67 million to 120 million, and the BlackRock European Constrained Credit Strategies Fund, which increased from 66 million to 78 million. Not all of the funds in the range experienced inflows over the period. The BlackRock Latin American Opportunities Fund declined in AUM from USD 173 million to USD 153 million, while the BlackRock European Diversified Equity Absolute Return Fund declined from 226 million to 150 million. The only fund to launch in the last six months was the BlackRock Emerging Markets Absolute Return Fund whereas the BlackRock Emerging Markets Extension Fund was liquidated. Should you have any questions on any of this material, please contact us via our website: Yours faithfully, Nicholas C.D. Hall Chairman 2 BlackRock Strategic Funds (BSF)

5 BSF Investment Adviser s Report Performance Overview 1 June November : bouts of risk on and risk off It has been a year of highs and lows for investors, with sentiment apparently driven mainly by a combination of newsflow and policy decisions. Happily, markets generally ended the period on a positive note. Global equity markets delivered a return of about 10% in 2012, having gained 5% of that since mid-november. Recently, the bulk of the action was from outside the US, which outperformed in the first half of the year and outside of Europe, which outperformed in the summer. Uncertainty in Europe was a key driver throughout, and, while it was unclear whether the Union could survive, volatility remained elevated over the first half of the year. However, the President of the ECB Mario Draghi s assertion that the Bank would do whatever it takes to support the Euro, and the greater detail on potential assistance for member states that emerged in early September helped strengthen sentiment. More recently, the Bank s open-ended promise to rescue indebted countries helped fuel a market rally. Focus has now shifted to the US fiscal cliff, where despite the current lack of clarity, consensus is that a deal could be reached early in the New Year. The pace has instead been set by emerging markets with developed markets like Japan, Hong Kong and Australia also rebounding these are some of the more cyclical global equity markets. Other risk assets have also outperformed in recent weeks. High yield emerging market debt spreads have declined, while investment-grade credit has rallied less. Interestingly, commodities remain stuck near average levels, despite some weakness in the US Dollar which should have provided support. So what s driving this risk on phase? In the main, modest improvements in economic data it s not been stunningly good news, but it is not what markets had been priced for. Over recent weeks, we have seen greater evidence of slightly firmer economic growth, albeit from quite a low base. There have been some interesting numbers from China; retail sales are rebounding, while the decline in housing demand appears to be slowing. All this is evidence that China s economy is not likely to suffer a hard landing. We have also seen pickup in Asian technology numbers, while US economic data have also strengthened, Europe is still lagging. All told, it s a slightly more positive picture with which to close out BSF Fund Range Performance The performance of so-called risk assets, such as equities and corporate bonds, was at odds with government bond markets over the period on the basis that the former have continued to respond to promises of credible and practical support from monetary and fiscal policies, particularly from the ECB and the US Federal Reserve ( Fed ). Equity Funds Equity funds generally produced good positive returns over the six months under review, with the MSCI World Index up 7.30% in Euro terms (12.80% in US Dollar terms). The best performing Fund over the period was the BlackRock Asia Extension Fund, which rose to 20.41% in US Dollar terms and outperformed the MSCI AC Asia ex Japan Index, which returned 15.35%. This was mainly due to the Fund s recent shift in positioning towards value insights, including an overweight to companies whose share prices are inexpensive relative to assets or earnings. Many successful positions driven by these insights were within India. The BlackRock European Opportunities Extension Fund was also strong, generating a positive absolute return of 17.72% in Euro terms, and outperforming both the S&P Europe BMI and the MSCI Europe indices, which were both up to 16.05%. The majority of outperformance was generated through the long book as the European equity markets recovered strongly from their deeply depressed levels in the early autumn. The BlackRock Latin American Opportunities Fund was up to 8.14% in US Dollar terms, outperforming both the MSCI EM Latin America Index (+6.53%) and the MSCI EM Latin American 10/40 Index (+6.79%). A decrease in investor risk aversion during the period appeared to be the main driver of returns. Absolute return funds, which use derivatives to profit from downward or upward price movements, have continued to produce positive annualised returns and while lagging the market, they outperformed their respective benchmarks. The BlackRock European Diversified Equity Absolute Return Fund rose to 4.70%, the BlackRock European Opportunities Absolute Return Fund rose to 3.74% and the BlackRock European Absolute Return Fund returned 1.58%, all in Euro terms, compared to 0.14% of the 3-month Euro LIBOR. The BlackRock Americas Diversified Equity Absolute Return Fund performance was 4.86% in US Dollar terms, compared to 0.20% for the 3-month USD LIBOR. The funds are underpinned by risk-aware investment strategies aimed at generating positive absolute returns over the medium to long term with lower level of volatility. The BlackRock Mining Opportunities Fund produced a positive absolute return of 7.60% in US Dollar terms but underperformed its benchmark, the HSBC Global Mining Index, which was up 11.27%. The portfolio s overweight to iron ore producers proved to be the primary source of underperformance for most of the period. Unaudited Interim Report and Accounts 3

6 BSF Investment Adviser s Report Performance Overview 1 June November 2012 continued Bond Funds Fixed income and currency funds within the range also performed well over the period, as monetary authorities on both sides of the Atlantic launched new and unlimited quantitative easing programmes in September. The BlackRock Fixed Income Strategies Fund returned 4.51% in Euro terms, compared to 0.07% for EONIA benchmark. Investment grade non-financials, asset backed and covered bond positions were the largest performance drivers for much of the period. The BlackRock Global Absolute Return Bond Fund was up to 2.03% in Euro terms, while the 3-month Euribor was up 0.14%. The BlackRock European Credit Strategies Fund produced a positive absolute return of 3.84% in sterling terms over the six months compared to the sterling return of 1.16% for the 3-month Euribor, as European bond prices were helped by the launch of the ECB s Outright Monetary Transactions ( OMT ) programme to purchase short-dated government debt issued by peripheral Eurozone countries. Since its launch on 17 February 2011, the Fund produced an annualised return of 4.50%. Currency investments also performed well, with the BlackRock Global Currency Absolute Return Fund returning 2.74% in US Dollar terms over the period, compared to 0.08% for the US Fed Funds Rate. The multi-asset BlackRock Euro Dynamic Diversified Growth Fund performance was up 3.85% in Euro terms, outperforming its EONIA benchmark, which returned 0.07%. Following their launch in September 2010, the BlackRock Funds of ishares have continued to deliver their objectives via a combination of the asset-allocation expertise of BlackRock and subsequent investment in BlackRock s award-winning ishares Exchange Traded Funds ( ETF ) range. Currently there are four funds of ishares, which comprise diversified, multi-asset class portfolios for investors with different risk profiles, namely Conservative, Moderate, Growth and Dynamic. Over the six months, all four funds not only achieved levels of risk appropriate to their respective profiles but produced positive absolute returns. The Dynamic Fund was up to 8.60% (4.26% since launch), the Growth Fund up to 7.71% (6.76% since launch), the Moderate up to 6.67% (9.11% since launch) and the Conservative Fund up to 5.44% (8.99% since launch). Fiscal challenges to pose threat in New Year? It is worth noting that the risk on phase has persisted despite the threat of the US fiscal cliff but how long can this continue? If the debate had been prolonged, this could have impacted markets in the first quarter of There was also a question surrounding inflation going into the New Year. We believe that although there are some longer-term risks, inflation is unlikely to be a major theme for We also suggested that a risk to this outlook could be a material shift in central bank behaviour, with either implicit or explicit moves towards tolerating or encouraging higher inflation. We have seen suggestions that Japan, the US and the UK could be edging in this direction. Leading members of what is likely to become the new Japanese government have floated ideas of adopting a more aggressive inflation mandate. There s still some scepticism from the market on this score, but this is one to watch. In the US, the Fed has also made its views clear on interest rate trends. Previously, it had stated that it would probably keep policy rates on hold until It has now added that it is likely to anchor interest rate guidance directly to economic conditions, keeping rates low until the unemployment rate reaches 6.50%. Since unemployment has declined over the past year by one percentage point to 7.70%, it might seem that the Fed could be forced to bring forward a rate rise. However, it is unlikely that the unemployment rate will decline as sharply as it has done, and rate expectations of financial markets have not shifted on the strength of these statements. Nevertheless, it does give us some indication of what the Fed would do if the economy was to slow sharply over next year or so. Perhaps the most interesting development has been in the UK, where the new Bank of England ( BoE ) governor Mark Carney has made a speech, which included a positive statement on the virtues of targeting nominal GDP rather than a simple inflation target, which is presently the case in the UK. Mr Carney has yet to start in his post, and it is the government which decides BoE objectives and not the Bank, but the Bank can contribute its own ideas. The UK Chancellor, George Osborne, may decide to listen, given the discomfort and distrust of the current mix of monetary and fiscal policy measures. Osborne seems to be interested in exploring these ideas further, but it remains unlikely that there would be any change in 2013, although it is wrong to dismiss this idea completely. 4 BlackRock Strategic Funds (BSF)

7 BSF Investment Adviser s Report Performance Overview 1 June November 2012 continued We are not changing our views on inflation in the near term and inflation risk seems very low, but these potential shifts in central bank policy are some of the key reasons why these inflation views could ultimately turn out to be wrong. 1 Source: BlackRock, Bloomberg 2 Source: BlackRock, DataStream, World Gold Council figures 3 Source: International Monetary Fund 4 Source: DataStream data for six months to 30 November Unaudited Interim Report and Accounts 5

8 Board of Directors 1 Nicholas C.D. Hall (Chairman) Frank P. Le Feuvre Alexander C. Hoctor-Duncan Francine Keiser Geoffrey D. Radcliffe 1 All Directors are non-executive Directors. Management and Administration Management Company BlackRock (Luxembourg) S.A. 6D, route de Trèves L-2633 Senningerberg Grand Duchy of Luxembourg Investment Advisers BlackRock Financial Management, Inc., Park Avenue Plaza 55 East 52 nd Street New York, NY USA BlackRock Institutional Trust Company N.A. 400 Howard Street San Francisco CA USA BlackRock Investment Management, LLC 100 Bellevue Parkway Wilmington Delaware USA BlackRock Investment Management (UK) Limited 12 Throgmorton Avenue London EC2N 2DL United Kingdom BlackRock (Singapore) Limited #18-01 Twenty Anson 20 Anson Road Singapore, Sub-Investment Adviser BlackRock (Hong Kong) Limited 16/F Cheung Kong Center 2 Queen s Road Central Hong Kong Management and Administration continued Principal Distributor BlackRock (Channel Islands) Limited One Waverley Place Union Street St. Helier Jersey JE1 0BR Channel Islands Investor Services Written Enquiries: BlackRock Investment Management (UK) Limited, c/o BlackRock (Luxembourg) S.A. P.O. Box 1058 L-1010 Luxembourg Grand Duchy of Luxembourg All other enquiries: Telephone: , Fax: Custodian and Fund Accountant State Street Bank Luxembourg S.A. 49, avenue J.F. Kennedy L-1855 Luxembourg Grand Duchy of Luxembourg Transfer Agent and Registrar J.P. Morgan Bank Luxembourg S.A. 6C, route de Trèves L-2633 Senningerberg Grand Duchy of Luxembourg Independent Auditors Deloitte Audit, Société à responsabilité limitée 560, rue de Neudorf L-2220 Luxembourg Grand Duchy of Luxembourg Legal Adviser Linklaters LLP 35, avenue J.F. Kennedy L-1855 Luxembourg Grand Duchy of Luxembourg Paying Agents A list of Paying Agents is to be found on page 133. Registered Office 49, avenue J.F. Kennedy L-1855 Luxembourg Grand Duchy of Luxembourg 6 BlackRock Strategic Funds (BSF)

9 Statement of Net Assets as at 30 November 2012 BlackRock Strategic Funds Combined BlackRock Americas Diversified Equity Absolute Return Fund BlackRock Asia Extension Fund BlackRock Emerging Markets Absolute Return Fund* BlackRock Euro Dynamic Diversified Growth Fund BlackRock European Absolute Return Fund BlackRock European Constrained Credit Strategies Fund Notes USD USD USD USD Assets Securities portfolio at cost 1,873,703,052 6,893,249 25,124,082 4,682, ,744, ,073,414 71,395,849 appreciation/(depreciation) 73,732,468 3,399 5,239 86,908 3,113,938 16,400,081 2,742,261 Securities portfolio at market value 1,947,435,520 6,896,648 25,129,321 4,769, ,858, ,473,495 74,138,110 Cash at bank 2(a) 167,418,450 1,174,030 3,827, ,628 9,203,634 74,498,955 4,896,052 Cash equivalent 489,750, ,900,000 Margin cash 2(d) 25,034, ,000 5, ,639 5,752,082 Dividend receivable on contracts for difference 2(c) 7,329, , ,373 Interest and dividends receivable 17,049,955 7,830 16, ,890 1,189,737 1,059,467 Interest receivable on swaps 44,426 11,186 Receivable for investments sold 103,768, , ,907 11,055,091 1,459,368 Receivable for Fund shares subscribed 33,688,837 5,000 4,329, ,406 2,441,051 Net, unrealised appreciation on: Open Future contracts 269, ,642 Open Forward foreign exchange contracts 3,222,099 43, , ,062 Contracts for difference 2(d) 13,012, ,258 1,413,190 8,623,239 Market value of swaps 3,465, , ,435 Market value of purchased options 2,473, ,881 24,967 Other assets 6,040,812 61,436 3,422 2,664 4,478,538 Total assets 2,820,005,110 8,986,606 35,797,252 5,707, ,424, ,412,188 82,107,461 Liabilities Interest payable on contracts for difference 2(d) 408,786 22, ,374 Margin cash 4,867, ,374 35,444 Interest payable on swaps 1,814, ,553 Dividend payable on contracts for difference 199, ,661 Payable for investments purchased 2(a) 157,031, , , ,333 19,139,348 3,284,193 Payable for Fund shares redeemed 13,562, , ,486 1,825,770 depreciation on: Open Futures contracts 5,521,503 3,734,132 49,063 Open Forward foreign exchange contracts 3,450, ,070 Contracts for difference 2(d) 421,886 25,636 Market value of swaps 207,662 Market value of written options/swaptions 855, ,934 14,395 Other liabilities 17,763, , , ,825 8,086, ,675 Total liabilities 206,105, , , ,856 1,698,578 33,250,881 4,098,323 Total net assets 2,613,899,664 8,061,683 35,388,319 5,075, ,725, ,161,307 78,009,138 *: The Fund commenced trading on 15 November The notes on pages 125 to 132 form an integral part of these financial statements. Unaudited Interim Report and Accounts 7

10 Statement of Net Assets as at 30 November 2012 continued BlackRock European Credit Strategies Fund BlackRock European Diversified Equity Absolute Return Fund BlackRock European Opportunities Absolute Return Fund BlackRock European Opportunities Extension Fund BlackRock Fixed Income Strategies Fund BlackRock Fund of ishares - Conservative BlackRock Fund of ishares - Dynamic Notes Assets Securities portfolio at cost 482,699, ,256,655 5,671,693 8,626,233 67,968,708 1,725,395 2,042,078 appreciation/(depreciation) 20,900,942 (394,515) 440, ,134 1,533,902 83,298 72,067 Securities portfolio at market value 503,600, ,862,140 6,112,098 9,276,367 69,502,610 1,808,693 2,114,145 Cash at bank 2(a) 11,650,826 6,581, , , ,156 9,894 33,003 Cash equivalent 16,000,000 7,982,797 7,280,000 1,670,000 Margin cash 2(d) 11,081, ,006 Dividend receivable on contracts for difference 2(c) 5,301,406 20,297 32,956 Interest and dividends receivable 8,799, ,143 14,665 16, , ,573 Interest receivable on swaps Receivable for investments sold 12,040, , ,148 2,732,242 Receivable for Fund shares subscribed 14,712, ,330 10,729 3,019 Net, unrealised appreciation on: Open Future contracts Open Forward foreign exchange contracts ,023 Contracts for difference 2(d) 15, ,943 Market value of swaps 1,675,840 Market value of purchased options 186,933 53,150 Other assets 99,116 1,544 1,551 Total assets 568,666, ,532,959 14,755,690 12,855,674 74,765,058 1,821,041 2,156,291 Liabilities Interest payable on contracts for difference 2(d) 130,374 4,771 3,763 Margin cash 1,290, ,084 91,441 Interest payable on swaps 958,358 84,963 Dividend payable on contracts for difference Payable for investments purchased 2(a) 29,107,471 8,655, , ,035 2,018,521 Payable for Fund shares redeemed 7,233, , depreciation on: Open Futures contracts 369,155 38,213 Open Forward foreign exchange contracts 1,933, ,809 51,707 Contracts for difference 2(d) 304,890 Market value of swaps 159,783 Market value of written options/swaptions 101,063 9,739 Other liabilities 2,852, , , ,062 51,842 5,761 6,005 Total liabilities 43,846,182 10,872, , ,008 2,364,051 5,761 6,005 Total net assets 524,820, ,660,143 13,784,351 12,002,666 72,401,007 1,815,280 2,150,286 8 BlackRock Strategic Funds (BSF)

11 Statement of Net Assets as at 30 November 2012 continued BlackRock Fund of ishares - Growth BlackRock Fund of ishares - Moderate BlackRock Global Absolute Return Bond Fund BlackRock Global Currency Absolute Return Fund BlackRock Latin American Opportunities Fund BlackRock Mining Opportunities Fund Notes USD USD USD Assets Securities portfolio at cost 4,952,574 6,937,135 41,709,055 84,937, ,637,106 10,815,060 appreciation/(depreciation) 232, , ,657 3,847 12,419, ,380 Securities portfolio at market value 5,184,801 7,277,405 41,980,712 84,940, ,056,417 11,739,440 Cash at bank 2(a) 45,956 68,474 4,630,923 9,338,879 5,464,602 29,357 Cash equivalent 10,000,000 Margin cash 2(d) 391,502 Dividend receivable on contracts for difference 2(c) Interest and dividends receivable 8,534 7, ,757 2,085 16,220 5,960 Interest receivable on swaps 22,989 Receivable for investments sold 48,691,183 1,526, ,939 Receivable for Fund shares subscribed 10 58,358 5,000,000 Net, unrealised appreciation on: Open Future contracts Open Forward foreign exchange contracts 24,903 1,703,257 Contracts for difference 2(d) 34,864 Market value of swaps 495,345 Market value of purchased options 39,213 1,424,420 Other assets 2,243 2,976 9,492 Total assets 5,241,544 7,414, ,690,019 97,409, ,063,938 12,002,560 Liabilities Interest payable on contracts for difference 2(d) Margin cash 2,231,499 Interest payable on swaps 204,373 Dividend payable on contracts for difference Payable for investments purchased 2(a) 9,732 53,744,082 2,531, ,183 Payable for Fund shares redeemed depreciation on: Open Futures contracts 57,891 Open Forward foreign exchange contracts Contracts for difference 2(d) Market value of swaps Market value of written options/swaptions 204, ,478 Other liabilities 9,980 10,008 16,993 47,460 1,059,727 20,163 Total liabilities 9,980 19,740 54,228,089 2,536,437 3,591, ,346 Total net assets 5,231,564 7,395,122 57,461,930 94,873, ,472,481 11,831,214 The notes on pages 125 to 132 form an integral part of these financial statements. Unaudited Interim Report and Accounts 9

12 Three year summary of Net Asset s as at 30 November 2012 Currency 30 November May May May 2010 BlackRock Americas Diversified Equity Absolute Return Fund Total net assets USD 8,061,683 6,805,522 Net asset value per: A Class non-distributing share AUD A Class non-distributing share hedged A Class non-distributing share SEK hedged SEK A Class non-distributing share USD A Class UK reporting non-distributing fund share GBP hedged GBP D Class non-distributing share hedged X Class non-distributing share USD BlackRock Asia Extension Fund Total net assets USD 35,388,319 9,075,074 Net asset value per: A Class non-distributing share AUD A Class non-distributing share USD A Class UK reporting non-distributing fund share GBP hedged GBP D Class non-distributing share USD E Class non-distributing share USD BlackRock Emerging Markets Absolute Return Fund* Total net assets USD 5,075,202 Net asset value per: D Class non-distributing share hedged D Class non-distributing share USD X Class non-distributing share USD BlackRock Emerging Markets Extension Fund** Total net assets USD 8,863,137 Net asset value per: A Class non-distributing share USD D Class non-distributing share USD E Class non-distributing share USD BlackRock Euro Dynamic Diversified Growth Fund Total net assets 119,725,879 66,828,783 17,761,370 Net asset value per: A Class non-distributing share A Class non-distributing share SEK hedged SEK D Class non-distributing share E Class non-distributing share I Class non-distributing share X Class non-distributing share BlackRock European Absolute Return Fund Total net assets 729,161, ,453, ,692,214 80,583,277 Net asset value per: A Class distributing share A Class non-distributing share A Class non-distributing share SEK hedged SEK D Class distributing share D Class non-distributing share CHF hedged CHF D Class non-distributing share D Class UK reporting non-distributing fund share GBP hedged GBP E Class non-distributing share I Class non-distributing share BlackRock European Constrained Credit Strategies Fund Total net assets 78,009,138 65,665,525 Net asset value per: I Class non-distributing share * The Fund commenced trading on 15 November ** The Fund was liquidated on 16 November BlackRock Strategic Funds (BSF)

13 Three year summary of Net Asset s as at 30 November 2012 continued Currency 30 November May May May 2010 BlackRock European Credit Strategies Fund Total net assets 524,820, ,259, ,400,755 Net asset value per: H Class non-distributing share CHF hedged CHF H Class non-distributing share H Class non-distributing share USD hedged USD H Class UK reporting non-distributing fund share GBP hedged GBP I Class non-distributing share I Class non-distributing share USD hedged USD I Class UK reporting non-distributing fund share GBP hedged GBP U Class non-distributing share U Class non-distributing share USD hedged USD U Class UK reporting non-distributing fund share GBP X Class non-distributing share X Class UK reporting non-distributing fund share GBP hedged GBP BlackRock European Diversified Equity Absolute Return Fund Total net assets 149,660, ,899, ,914,313 Net asset value per: A Class non-distributing share AUD A Class non-distributing share CHF hedged CHF A Class non-distributing share A Class non-distributing share SEK hedged SEK A Class UK reporting non-distributing fund share GBP hedged GBP D Class non-distributing share USD hedged USD D Class UK reporting non-distributing fund share D Class UK reporting non-distributing fund share GBP hedged GBP E Class non-distributing share I Class non-distributing share I Class UK reporting non-distributing fund share GBP hedged GBP X Class non-distributing share BlackRock European Opportunities Absolute Return Fund Total net assets 13,784,351 22,780,307 9,921,579 Net asset value per: A Class non-distributing share D Class non-distributing share D Class UK reporting non-distributing fund share GBP hedged GBP E Class non-distributing share I Class non-distributing share BlackRock European Opportunities Extension Fund Total net assets 12,002,666 10,575,753 34,621,130 42,598,490 Net asset value per: A Class non-distributing share A Class UK reporting distributing fund share GBP D Class non-distributing share D Class UK reporting distributing fund share GBP E Class non-distributing share BlackRock Fixed Income Strategies Fund Total net assets 72,401,007 67,454,855 60,297,267 39,100,014 Net asset value per: A Class non-distributing share D Class non-distributing share E Class non-distributing share I Class non-distributing share X Class non-distributing share The notes on pages 125 to 132 form an integral part of these financial statements. Unaudited Interim Report and Accounts 11

14 Three year summary of Net Asset s as at 30 November 2012 continued Currency 30 November May May May 2010 BlackRock Fund of ishares - Conservative Total net assets 1,815,280 1,309,304 1,013,909 Net asset value per: K Class non-distributing share L Class non-distributing share M Class non-distributing share BlackRock Fund of ishares - Dynamic Total net assets 2,150,286 1,718, ,404 Net asset value per: K Class non-distributing share L Class non-distributing share M Class non-distributing share BlackRock Fund of ishares - Growth Total net assets 5,231,564 3,962,973 2,361,887 Net asset value per: K Class non-distributing share L Class non-distributing share M Class non-distributing share BlackRock Fund of ishares - Moderate Total net assets 7,395,122 5,183,611 1,924,160 Net asset value per: K Class non-distributing share L Class non-distributing share M Class non-distributing share BlackRock Global Absolute Return Bond Fund Total net assets 57,461,930 50,002,078 Net asset value per: A Class non-distributing share D Class non-distributing share E Class non-distributing share X Class non-distributing share BlackRock Global Currency Absolute Return Fund Total net assets USD 94,873,071 88,723,505 96,534,151 59,851,587 Net asset value per: A Class non-distributing share USD X Class non-distributing share USD X Class UK reporting distributing fund share GBP hedged GBP BlackRock Latin American Opportunities Fund Total net assets USD 153,472, ,326, ,378,746 78,541,418 Net asset value per: A Class non-distributing share A Class non-distributing share USD A Class UK reporting non-distributing fund share GBP hedged GBP C Class non-distributing share USD D Class non-distributing share D Class non-distributing share USD D Class UK reporting non-distributing fund share GBP BlackRock Mining Opportunities Fund Total net assets USD 11,831,214 10,445,632 Net asset value per: D Class UK reporting non-distributing fund share GBP D Class UK reporting non-distributing fund share USD BlackRock Strategic Funds (BSF)

15 Statement of Operations and Changes in Net Assets for the period ended 30 November 2012 BlackRock Strategic Funds Combined BlackRock Americas Diversified Equity Absolute Return Fund BlackRock Asia Extension Fund BlackRock Emerging Markets Absolute Return Fund* BlackRock Emerging Markets Extension Fund** BlackRock Euro Dynamic Diversified Growth Fund BlackRock European Absolute Return Fund Notes USD USD USD USD USD Net assets at the beginning of the period 2,046,884,138 6,805,522 9,075,074 8,863,137 66,828, ,453,107 Income Bank interest 207, ,295 90,672 Bond interest 20,772,462 6,299 14, , ,448 Swap interest 105,109 17,825 Dividends 3,520,602 93,339 1,740,721 Contracts for difference dividend 2(d) 584, , , ,842 Total income 25,189, , , , ,907 1,831,393 Expenses Bank interest 50,832 Interest on contracts for difference, net 2(d) 5,662, ,447 99,025 77,735 1,183,920 Swap interest 6,793,778 Contracts for difference dividend 2(d) 2,598, ,703 Administration fees 5 2,136,160 10,916 18, ,305 50, ,682 Custodian and depositary fees 6 315, ,161 53,039 Custodian transaction fees 6 774,094 43,952 39, ,363 12,736 59,764 Luxembourg tax 8 403,221 1,844 4, ,645 10, ,993 Management fees 4 11,113,250 51,930 93, , ,926 3,518,900 Performance fees 7 8,635,062 73, , ,235 2,616,502 Distribution fees 4 170, ,551 Brazilian transaction tax 9 34,295 Other charges 1,691 1,264 Total expenses before reimbursement 38,688, , , , ,426 9,245,318 Reimbursement of expenses 4 93, ,198 10,927 Total expenses after reimbursement 38,595, , , , ,499 9,245,318 Net investment income/(deficit) (13,405,496) (189,295) (176,832) (585) (18,131) (67,592) (7,413,925) Net gain/(loss) realised on: Investments 37,404,945 5,473 8,147 6,417 10,941 (501,357) 12,394,352 Contracts for difference 2(b) 8,969, ,437 34,359 7, ,775 (4,164,053) Futures contracts (4,920,925) (59,650) 334 (494,508) (2,614,166) Foreign currencies and forward foreign exchange contracts (3,981,018) (34,371) (10,009) 982 (262,429) 880,426 Swap transactions 15,078, ,220 Options contracts (6,311,357) 148,748 Net realised gain/(loss) for the period 46,240, ,539 (27,153) 15, ,050 (896,326) 6,496,559 Net change in unrealised appreciation/ (depreciation) on: Investments 76,205,844 1,715 2,137 86,908 (2,041) 2,191,684 18,435,947 Contracts for difference 2(b) 6,010,729 (65,077) 2,124,792 (25,636) 1,106,920 (440,884) Futures contracts (7,492,955) ,249 (6,049,611) Foreign currencies and forward foreign exchange contracts 9,021, , (1,053) 1,673,048 (161,014) Swap transactions (24,699,871) 235,825 Options contracts (1,233,809) 154,571 Net change in unrealised appreciation/ (depreciation) for the period 57,811,118 55,697 2,127,895 60,219 1,104,879 4,381,377 11,784,438 Increase/(Decrease) in net assets as a result of operations 90,645, ,941 1,923,910 74,813 1,268,798 3,417,459 10,867,072 Movements in share capital Net receipts as a result of issue of shares 887,797,433 2,108,095 24,389,335 5,000, ,096, ,350,945 Net payments as a result of repurchase of shares (498,374,700) (1,239,875) (10,132,412) (4,617,332) (127,509,817) Increase/(Decrease) in net assets as a result of movements in share capital 389,422, ,220 24,389,335 5,000,389 (10,131,935) 49,479, ,841,128 Foreign exchange adjustment 2(f) 86,946,839 Net assets at the end of the period 2,613,899,664 8,061,683 35,388,319 5,075, ,725, ,161,307 *: The Fund commenced trading on 15 November **: The Fund was liquidated on 16 November The notes on pages 125 to 132 form an integral part of these financial statements. Unaudited Interim Report and Accounts 13

16 Statement of Operations and Changes in Net Assets for the period ended 30 November 2012 continued BlackRock European Constrained Credit Strategies Fund BlackRock European Credit Strategies Fund BlackRock European Diversified Equity Absolute Return Fund BlackRock European Opportunities Absolute Return Fund BlackRock European Opportunities Extension Fund BlackRock Fixed Income Strategies Fund BlackRock Fund of ishares - Conservative Notes Net assets at the beginning of the period 65,665, ,259, ,899,516 22,780,307 10,575,753 67,454,855 1,309,304 Income Bank interest 18,600 1,633 1,208 12,953 Bond interest 1,499,288 12,083, ,241 1,094,865 Swap interest Dividends 26,308 26,396 18,472 Contracts for difference dividend 2(d) 1,419 75,323 Total income 1,499,288 12,083, ,841 29, ,927 1,107,818 18,472 Expenses Bank interest 9,101 27,830 Interest on contracts for difference, net 2(d) 2,856,670 46,284 25,298 Swap interest 569,303 4,568,500 89,588 Contracts for difference dividend 2(d) 1,230,558 Administration fees 5 17, , ,506 8,878 16,969 43, Custodian and depositary fees 6 6,684 36,289 1,920 1, ,737 2,655 Custodian transaction fees 6 54,293 85,029 97,516 35,452 38,196 37,614 5,827 Luxembourg tax 8 3,634 36,166 34,624 1,464 3,038 10, Management fees 4 350,352 1,506,711 1,063,700 89,410 84, ,905 4,695 Performance fees 7 481,244 2,519, , ,681 21,475 Distribution fees 4 45, , Brazilian transaction tax 9 Other charges 17 Total expenses before reimbursement 1,492,129 8,940,162 5,766, , , ,037 14,526 Reimbursement of expenses ,833 Total expenses after reimbursement 1,492,129 8,940,162 5,766, , , ,037 4,693 Net investment income/(deficit) 7,159 3,143,114 (4,876,973) (316,654) (88,449) 810,781 13,779 Net gain/(loss) realised on: Investments 1,496,310 9,466,777 (301,843) 547, ,613 2,684,260 1,132 Contracts for difference 2(b) 10,568,602 (344,311) 254,107 Futures contracts (35,244) (90,507) 1,907 (440,029) Foreign currencies and forward foreign exchange contracts (163,554) 997,405 2,476,875 (1,481) 57,948 22,597 Swap transactions 1,334,022 10,657,226 (512,010) Options contracts (456,780) (2,917,270) (74,945) Net realised gain/(loss) for the period 2,174,754 18,113,631 12,745, , ,668 1,679,873 1,132 Net change in unrealised appreciation/ (depreciation) on: Investments 1,759,151 17,133,200 (361,482) 798, ,659 (712,473) 64,885 Contracts for difference 2(b) 2,475,222 (39,051) 185,967 Futures contracts 13,549 (135,032) 336,702 Foreign currencies and forward foreign exchange contracts 604,131 (1,581,941) (577,379) 14,844 (67,141) 1,113,919 (86) Swap transactions (2,515,497) (17,143,677) 143,769 Options contracts (70,829) (760,833) (19,461) Net change in unrealised appreciation/ (depreciation) for the period (209,495) (2,488,283) 1,536, , , ,456 64,799 Increase/(Decrease) in net assets as a result of operations 1,972,418 18,768,462 9,404, ,449 1,758,704 3,353,110 79,710 Movements in share capital Net receipts as a result of issue of shares 10,371, ,344,791 26,501,899 2,368,455 2,137,364 3,994, ,892 Net payments as a result of repurchase of shares (78,552,423) (112,146,201) (12,023,860) (2,469,155) (2,401,831) (72,626) Increase/(Decrease) in net assets as a result of movements in share capital 10,371,195 32,792,368 (85,644,302) (9,655,405) (331,791) 1,593, ,266 Foreign exchange adjustment 2(f) Net assets at the end of the period 78,009, ,820, ,660,143 13,784,351 12,002,666 72,401,007 1,815, BlackRock Strategic Funds (BSF)

17 Statement of Operations and Changes in Net Assets for the period ended 30 November 2012 continued BlackRock Fund of ishares - Dynamic BlackRock Fund of ishares - Growth BlackRock Fund of ishares - Moderate BlackRock Global Absolute Return Bond Fund BlackRock Global Currency Absolute Return Fund BlackRock Latin American Opportunities Fund BlackRock Mining Opportunities Fund Notes USD USD USD Net assets at the beginning of the period 1,718,713 3,962,973 5,183,611 50,002,078 88,723, ,326,906 10,445,632 Income Bank interest 6,983 12,828 Bond interest 181,306 34, ,922 Swap interest 63,037 Dividends 25,086 57,610 77, ,766 62,339 Contracts for difference dividend 2(d) Total income 25,086 57,610 77, ,326 47, ,688 62,339 Expenses Bank interest 1,524 1,311 Interest on contracts for difference, net 2(d) Swap interest Contracts for difference dividend 2(d) Administration fees ,337 3,161 13,542 38, ,526 17,160 Custodian and depositary fees 6 2,750 3,265 3, , ,559 2,706 Custodian transaction fees 6 3,684 2,968 5,786 21,796 21,466 19,155 13,795 Luxembourg tax ,247 1,706 4,065 8,848 39,026 3,850 Management fees 4 5,869 14,020 18,966 2, ,634 1,625,758 57,201 Performance fees 7 1, ,758 Distribution fees 4 1,720 1, ,548 Brazilian transaction tax 9 34,295 Other charges 19 Total expenses before reimbursement 15,499 25,044 33,227 43, ,080 2,753,149 96,023 Reimbursement of expenses 4 9,371 12,747 16,628 8,086 Total expenses after reimbursement 6,128 12,297 16,599 35, ,080 2,753,149 96,023 Net investment income/(deficit) 18,958 45,313 60, ,071 (129,700) (1,878,461) (33,684) Net gain/(loss) realised on: Investments (730) 1,094 1, ,902 2,542,265 (193,251) Contracts for difference 2(b) Futures contracts (67,798) Foreign currencies and forward foreign exchange contracts (58) 210,999 7,000 (9,506,518) 79,191 Swap transactions (90,337) Options contracts (54,632) (1,951,330) Net realised gain/(loss) for the period (687) 1,118 1, ,134 (1,944,330) (6,964,253) (114,060) Net change in unrealised appreciation/ (depreciation) on: Investments 135, , , ,735 1,686 21,651,435 1,000,107 Contracts for difference 2(b) 34,864 Futures contracts (57,891) Foreign currencies and forward foreign exchange contracts (685) (570) (780) 89,094 7,422,805 64,701 (22,822) Swap transactions 274,388 Options contracts 75,883 (427,303) Net change in unrealised appreciation/ (depreciation) for the period 134, , , ,209 6,997,188 21,716,136 1,012,149 Increase/(Decrease) in net assets as a result of operations 152, , ,904 1,432,414 4,923,158 12,873, ,405 Movements in share capital Net receipts as a result of issue of shares 391,579 1,085,290 1,985,870 6,027,438 1,226,408 12,124, ,177 Net payments as a result of repurchase of shares (112,833) (141,062) (156,263) (44,852,717) Increase/(Decrease) in net assets as a result of movements in share capital 278, ,228 1,829,607 6,027,438 1,226,408 (32,727,847) 521,177 Foreign exchange adjustment 2(f) Net assets at the end of the period 2,150,286 5,231,564 7,395,122 57,461,930 94,873, ,472,481 11,831,214 The notes on pages 125 to 132 form an integral part of these financial statements. Unaudited Interim Report and Accounts 15

18 Statement of Changes in Shares Outstanding as at 30 November 2012 Shares outstanding at the beginning of the period Shares issued Shares repurchased Shares outstanding at the end of the period BlackRock Americas Diversified Equity Absolute Return Fund A Class non-distributing share AUD A Class non-distributing share hedged 767 1,290 2,057 A Class non-distributing share SEK hedged ,097 8,391 54,036 A Class non-distributing share USD 49,950 1,786 51,736 A Class UK reporting non-distributing fund share GBP hedged D Class non-distributing share hedged 11,122 5,773 8,418 8,477 X Class non-distributing share USD BlackRock Asia Extension Fund A Class non-distributing share AUD 188, ,459 A Class non-distributing share USD 99,803 39, ,747 A Class UK reporting non-distributing fund share GBP hedged D Class non-distributing share USD E Class non-distributing share USD BlackRock Emerging Markets Absolute Return Fund* D Class non-distributing share hedged D Class non-distributing share USD X Class non-distributing share USD 49,840 49,840 BlackRock Emerging Markets Extension Fund** A Class non-distributing share USD 99, ,809 D Class non-distributing share USD E Class non-distributing share USD BlackRock Euro Dynamic Diversified Growth Fund A Class non-distributing share 52,062 25,212 5,224 72,050 A Class non-distributing share SEK hedged 164, ,865 21, ,425 D Class non-distributing share 174,306 26,358 6, ,711 E Class non-distributing share I Class non-distributing share 233, ,757 30, ,664 X Class non-distributing share 189, ,863 BlackRock European Absolute Return Fund A Class distributing share 74,163 95,812 18, ,711 A Class non-distributing share 1,551,255 1,181, ,005 2,372,708 A Class non-distributing share SEK hedged D Class distributing share D Class non-distributing share CHF hedged 55,332 2,059 22,628 34,763 D Class non-distributing share 1,573,556 1,788, ,984 2,790,740 D Class UK reporting non-distributing fund share GBP hedged 66, ,816 E Class non-distributing share 176, ,360 99, ,380 I Class non-distributing share 83, , ,309 BlackRock European Constrained Credit Strategies Fund I Class non-distributing share 634,801 97, ,651 BlackRock European Credit Strategies Fund H Class non-distributing share CHF hedged 4,220 4,220 H Class non-distributing share 318, ,170 53, ,076 H Class non-distributing share USD hedged 22,533 21,945 19,706 24,772 H Class UK reporting non-distributing fund share GBP hedged 5,001 22,904 19,820 8,085 I Class non-distributing share 1,089, , ,199 1,600,545 I Class non-distributing share USD hedged 551,559 96, , ,096 I Class UK reporting non-distributing fund share GBP hedged 434,250 3, , ,908 U Class non-distributing share U Class non-distributing share USD hedged U Class UK reporting non-distributing fund share GBP X Class non-distributing share 1,400, ,377 1,265,687 X Class UK reporting non-distributing fund share GBP hedged 520,298 18, ,095 * The Fund commenced trading on 15 November ** The Fund was liquidated on 16 November BlackRock Strategic Funds (BSF)

19 Statement of Changes in Shares Outstanding as at 30 November 2012 continued Shares outstanding at the beginning of the period Shares issued Shares repurchased Shares outstanding at the end of the period BlackRock European Diversified Equity Absolute Return Fund A Class non-distributing share AUD 38,991 38,991 A Class non-distributing share CHF hedged 1,490 1,490 A Class non-distributing share 241,832 37,340 33, ,019 A Class non-distributing share SEK hedged 5,179, ,467 3,095,621 2,957,902 A Class UK reporting non-distributing fund share GBP hedged 2,429 5, ,265 D Class non-distributing share USD hedged 81,514 66,509 15,005 D Class UK reporting non-distributing fund share 683,680 64, , ,297 D Class UK reporting non-distributing fund share GBP hedged 42,198 5,814 36,384 E Class non-distributing share 221, , ,007 I Class non-distributing share 235, , ,978 I Class UK reporting non-distributing fund share GBP hedged 135, ,173 X Class non-distributing share BlackRock European Opportunities Absolute Return Fund A Class non-distributing share 24,013 7,091 15,626 15,478 D Class non-distributing share 14, ,653 10,259 D Class UK reporting non-distributing fund share GBP hedged ,474 E Class non-distributing share 3, ,960 1,890 I Class non-distributing share 172,280 12,994 89,279 95,995 BlackRock European Opportunities Extension Fund A Class non-distributing share 96,112 15,992 18,731 93,373 A Class UK reporting distributing fund share GBP 6, ,883 3,413 D Class non-distributing share D Class UK reporting distributing fund share GBP E Class non-distributing share 2,077 2, ,809 BlackRock Fixed Income Strategies Fund A Class non-distributing share 5,254 23,698 4,343 24,609 D Class non-distributing share 305,595 10,201 17, ,425 E Class non-distributing share 3,516 3, ,485 I Class non-distributing share X Class non-distributing share 332, ,056 BlackRock Fund of ishares - Conservative K Class non-distributing share 124,245 41,307 6, ,451 L Class non-distributing share 615 4, ,326 M Class non-distributing share 1, ,865 BlackRock Fund of ishares - Dynamic K Class non-distributing share 119,201 33,897 2, ,465 L Class non-distributing share 37,689 3, ,324 M Class non-distributing share 22,732 1,427 8,019 16,140 BlackRock Fund of ishares - Growth K Class non-distributing share 360, ,328 9, ,904 L Class non-distributing share 22,767 1,311 2,369 21,709 M Class non-distributing share 16, ,119 14,864 BlackRock Fund of ishares - Moderate K Class non-distributing share 496, ,417 11, ,140 L Class non-distributing share 4,801 1,132 1,092 4,841 M Class non-distributing share 5, ,956 3,928 BlackRock Global Absolute Return Bond Fund A Class non-distributing share D Class non-distributing share 58,831 58,831 E Class non-distributing share X Class non-distributing share 500, ,000 BlackRock Global Currency Absolute Return Fund A Class non-distributing share USD 199,142 1, ,463 X Class non-distributing share USD 138, ,262 X Class UK reporting distributing fund share GBP hedged 336,836 6, ,425 The notes on pages 125 to 132 form an integral part of these financial statements. Unaudited Interim Report and Accounts 17